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Quest Means Business
IMF Warns on Ukraine Default; Tension on Ukraine-Russia Border; BMW's $1 Billion U.S. Expansion; Reinventing America; Latest on the Search for Flight 370; Drone Deliveries on the Rise; BlackBerry's Next Move
Aired March 28, 2014 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: It is the end of the week. The closing bell has run on Wall Street. It is Aerohive which closed off the week. The market was up just a tad. I have no idea what they are throwing but I suspect that they couldn't be.
When all was said and done, a small gain on the Dow, a small loss for the week on the Nasdaq. It is Friday. It's March the 28th.
Do or default, the IMF tells me Ukraine must reform. It's not an option to do anything else.
On the program tonight, Sir Richard Branson says we must condemn governments like Turkey which restrict access to the Web. You'll hear him on the program.
And more bloom than gloom, Steve Forbes on the program tells me why the U.S. economy is on the way back, thanks to manufacturing.
We have a busy hour together. I'm Richard Quest. I mean business.
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QUEST: Good evening. The IMF's European chief says it is impossible for Ukraine to go on without the fund's help. Reza Moghadam, who's the director of the fund's European department, has spent the past few weeks crafting the $18 billion bailout plan that was announced this week.
And tonight he tells me Ukraine will default if it does not succeed. Join me at the superscreen and you'll see exactly how the week progressed. The country's economic -- economy is at the precipice of disaster. The currency is near an all-time low. Just look at how it has moved the hryvnia against the dollar. Obviously we had this very sharp fall as the week went on. And even the prospect of IMF assistance hasn't helped because one reason, of course, is the part of the reforms will involve a -- the restrictions coming off the hryvnia against the dollar and other currencies and allowance to it to free float, that free float will cause a devaluation which, in the long term, should be competitively good for Ukraine.
But just as with Greece, Portugal and Ireland, the fund will not give support without exacting a contribution from Ukraine by way of painful reforms. A looser exchange rate the chief just talked about, along with the end of gas subsidies, new taxes and spending cuts.
While past IMF missions have been met with violence, Reza Moghadam at the IMF fund says Ukraine will not become the next Greece.
So putting it all together, I asked him if Kiev was preparing to take some very nasty medicine.
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REZA MOGHADAM, EUROPEAN DEPARTMENT DIRECTOR, IMF: Unfortunately, Ukraine, unlike many other countries, in Central and Eastern Europe, has not been successful in implementing reforms to enhance its potential and its growth in the medium term.
So in that case, Ukraine is behind others and therefore the catch-up needs to take place. And some of that adjustment will obviously be challenging.
QUEST: Why should the Ukrainian people, who were warned by the last out government or the last prime minister and the last president, who refused to sign the deals, the last deals with Europe, they basically said that Ukraine was going to turn into another Greece.
Now that the details of the restructuring, for want of a better word, austerity packages being known, you can see a certain logic in the argument, can't you? It does seem as if they were right. Ukraine is going to suffer the same fate.
MOGHADAM: I don't think so. I think Ukraine has a lot of potential to improve its growth, improve employment, improve investment climate in the country. What is interesting is that when you talk to the current government and when you talk to those who are currently in opposition, when you talk to those who are in parliament, you see a high degree of ownership for the reforms that are necessary to build the basis for higher and stronger growth and more sustainable growth going forward.
QUEST: What is it about the Ukrainian economy that gives you hope and that gives you encouragement? I know you were there recently and you said that you were very encouraged by what you found when you were talking to people.
So tell me what that was.
MOGHADAM: I think first you see an awareness of the problems they face. You see an understanding of the reforms that need to be put in place and you see a willingness to put those reforms in place.
And when you look at Ukraine versus other countries in the region, other countries in Eastern and Central Europe, you see that the potential for catching up in those countries is very large. So the reforms are difficult, but the potential gains are also very high.
QUEST: The critics will say this is the usual Western prescription, cut back on entitlements, cut back on welfare spending, cut the deficits, privatize the state assets. And I think, you know, you would have to agree, sir, there will be a nasty deep recession with high unemployment. That is an economic given.
MOGHADAM: Unfortunately, the problems are there to start with. The question is how to address those problems in order to have higher growth, more employment in the future. And the international community, the IMF, are going to provide support, very large support, in order to make that adjustment easier. It's not possible not to have the adjustment, but it is possible to try and mitigate the impact of that adjustment to some extent through providing financing. Without that, Ukraine would not be able to meet its international or, indeed, domestic obligations and without reforms, it will not have the growth necessary to sustain employment in the medium term.
(END VIDEOTAPE)
QUEST: Now the fund also admits the tense situation with Russia is making things worse. Ukrainian officials say as many as 88,000 Russian troops are now stationed at the border. U.S. officials put the number at 40,000. They can't be sure. The Russian foreign minister Sergey Lavrov told reporters in Moscow Europe needs to accept the situation for the sense of reality, the phrase he used, the country's former president, Viktor Yanukovych, is calling on all Ukrainians to demand a referendum on the future of each region, similar to the disputed vote held in Crimea. The first deputy minister of Crimea says the region will be better off as part of Russia. The minister says the region's economy can go from strength to strength.
(BEGIN VIDEO CLIP)
RUSTAM TEMIRGALIEV, CRIMEAN FIRST DEPUTY MINISTER (through translator): We expect an economic boom, an economic growth. Unfortunately, as part of Ukraine, Crimea was a region with a rate of development and per capita income were below average. The population is rather poor. The infrastructure is rather undeveloped. We hope to finally all of this will change.
(END VIDEO CLIP)
QUEST: Ukraine, the challenge now, is to find the resources to bolster its own military presence. As CNN's Karl Penhaul reports.
(BEGIN VIDEOTAPE)
KARL PENHAUL, CNN CORRESPONDENT: This is Northeast Ukraine, and just a short distance away through forests and over farmland, there the Russian border. And it's across on the other side that Pentagon officials say that up to 40,000 Russian troops are now massing. Ukrainian government puts that figure almost twice as high, saying also that the Russian troops are backed by tanks and by helicopter gunships.
Of course the Ukrainian army and the border patrol are beefing up security. But men like these, civilians, have turned out and are now forming self-defense committees, the ones setting up small checkpoints like this, and they say, too, they will join the fight against the Russians.
Now look at some of the preparations here. You see old car tires tossed against barricades where there are sandbags as well. They say that if the Russians do come, they'll set light to these and set up a smokescreen across the highway.
Ringing this checkpoint as well, trenches, several yards of trenches. They say that the military, the Ukrainian army can use these areas as fallback positions to fight from here against any Russian advance.
And walk through, they have this little camp set up, again, very rudimentary. And you see some of the men; there's a mixture of military uniforms; none of this has been issued by the government to them. This gentleman, for example, wearing a British military uniform. He, like the others, say they simply went to army surplus stores, paid about 100 euros and are uniforming themselves.
And look across here, supplies of food, pickled foods in jars, other supplies. And these have been donated. We've seen it. People just pulling up at roadside and unloading boxes of food for them, saying that they have to support this effort by these self-defense committees.
Now of course the big question is, the Pentagon still don't know what Russia's real intentions are, whether they really intend to roll across that border and try to annex parts of Eastern Ukraine. But these men are arrayed in these self-defense committees, certainly believe that this could be the next potential front line. They certainly believe the Russians may be coming -- Karl Penhaul, CNN, Ukraine.
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QUEST: Now when we come back, building a stronger American economy. You're going to hear from the chairman of Forbes about reinvesting American manufacturing, how it can all drive growth, in a moment.
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QUEST: BMW is to pump more money into its American operations as the U.S. economy revs up into a higher gear. The German carmaker's spending $1 billion. It will expand its factory in South Carolina over the next two years.
It'll make the largest BMW production plant in the world. In doing so, 800 jobs will be added to the site. More car jobs: Ford says it will invest half a billion dollars to upgrade an engine plant in Ohio. Three hundred new jobs will be created at the revamped factory.
The executive vice president Joe Hinrichs says it's a good time to be manufacturing in the United States.
(BEGIN VIDEO CLIP)
JOE HINRICHS, EVP, FORD MOTOR COMPANY: In the last three years or so we've added over 12,000 jobs to our plants and major investments in plants like this in Lima, Ohio. And it's all about that growth, customer demand for our products, but also more competitive operating environment here in the U.S. for our manufacturing. And that's very exciting.
(END VIDEO CLIP)
QUEST: Boosting U.S. manufacturing was at the heart of a conference that's finished in Chicago. Forbes, the magazine and media company, brought together leaders from business, education and government. It was called "Reinventing America." I spoke to Steve Forbes, the chairman and editor-in-chief of Forbes Media.
With so many developments, Americans now seem to be doing something right in revamping manufacturing. And the only question is what.
(BEGIN VIDEOTAPE)
STEVE FORBES, CHAIRMAN AND EDITOR-IN-CHIEF, FORBES MEDIA: Well, it's starting to happen already. We all know it's happening with the abundance of natural gas, which is bringing back chemical companies to the United States and making that cost of the manufacturing go way, way down, which frees up money for other things.
So you're starting to see that on the education side. As you know, we have 600,000 jobs in this country that are not being fulfilled because people don't have the skills. Local community colleges and others are starting to fill that gap. Big changes in railroading and in terms of moving oil and other things, technology there.
So beneath the surface of things, for all of the gloom and doom, positive things are happening. As soon as we get a better environment, which eventually we will, this thing's going to blossom, just as in the terrible 1970s, a terrible decade. We had things like Apple, Amgen, Oracle, Microsoft and other companies, FedEx rising up and then booming and blooming.
QUEST: Right. But you're not bringing people together merely to pat each other on the back and say how good things are.
So where do you want the focus to be on what needs to be done next?
FORBES: Well, that's why we brought these parties together from the public sector, academia, entrepreneurs, the established businesses like Honeywell, to a brainstorm and figure out how do we move from here.
So not just the sessions, but ideas are being exchanged, brainstorming, so people are really feeling they're getting information, ideas to make this thing move forward. And exchanged ideas on how to make that happen.
So this is a can-do conference and I think the reason there's real excitement there is people are feeling, by golly, this thing is starting to come together. So it's a can-do, getting the tools to make this happen that we put this summit together.
QUEST: America is a manufacturing base. It's certainly enjoying a renaissance and a resurgence. But it isn't a high-tech level. You know, the old argument is America won't make shoes and apparel again, but it might make computers, smartphones and biotech.
Do you buy that, Steve?
FORBES: Well, we'll certainly do the cutting edge stuff. But even in traditional industries, you take auto manufacturing, we're highly competitive there. The legacy companies have finally gotten their act together through a painful process. But in other parts of the country, particularly the southern part of the U.S., almost foreign manufacturers have put in facilities there. And America's now become a major car exporter.
So it's traditional areas and new areas, including through new areas like 3D printing. So it's both sides, taking the old and modernizing it and creating the new.
QUEST: Is government doing enough to prime the pump and are banks doing enough to fund the developments?
FORBES: Well, priming the pump the way the government has done it has been an abysmal failure, which is why our recovery from 2009 has been so miserable. And on the Federal Reserve, perversely -- this sounds counterintuitive, but the more the Fed tapers, the more the Fed gets out from buying long-term bonds, the better our economy will be, because it frees up money for small and new businesses, which have been starved for credits since 2009. And small and new businesses are where you create most of the new jobs. Of the $7 trillion of credit created since 2009, $6 trillion has gone to the government, $1 trillion to large entities and zippo for small and medium businesses. That's beginning to change. Bank lending to small and medium sized businesses, new businesses, is starting to really move, very, very decisively, in the last 4-5 months.
QUEST: Right. I'm going to give you a magic wand, Steve. You can have one change, all right, to improve manufacturing in America, to create this resurgence, this new nirvana for manufacturing. You've got one wish with your magic wand. What's it going to be?
FORBES: Simplify the tax code. Bring the flat tax so we can focus on real things instead of the idiot complex code we have today that the IRS told us last year -- we spent almost 6.5 billion hours filling out tax forms, the equivalent of 3 million jobs, utter waste of brainpower and time. Let people focus on real things instead of this dumb stuff.
(END VIDEOTAPE)
QUEST: I can honestly say when I offered him a magic wand to make one change, I wasn't really expecting him to say change the tax code. But maybe I should have done, knowing his love for the flat tax proposal.
The Dow Jones -- beg your pardon -- well, look, I look at the way the day went, some good gains in the morning, but then it sort of all petered off towards the afternoon. Managed to mete out a small gain, up 58 points, again up just a third of 1 percent. It was a rocky day for the S&P, the Nasdaq as well.
To Europe, where the stocks rallied, with most major markets closing the session higher. The best gains of the session -- look at that, the Xetra DAX 1.5 percent higher, London FTSE wasn't that much behind.
So to Europe, where they, of course, have the ECB launching stimulus packages in Europe, Spain is expecting deflation, where prices are actually falling and Germany is seeing a slowdown in inflation. That is the macroeconomic area in Europe. But in Italy, the government is selling off part of its fleet of executive cars. The new prime minister, Matteo Renzi, has put them on eBay and you can see the sale includes some rather smart BMWs, Lancers, Alfa Romeos and the intense bidding. It's all idea, the government is selling 151 of these so-called cars once used by officials and bureaucrats. If Mr. Renzi sends them all, it'll only help a little bit, because ambitious plans, we've got to, of course, increase spending -- he's got to -- he may increase borrowing. He's also got to increase spending cuts as well, and that involves cutting taxes for low-income workers at the cost of nearly $14 billion.
If you look further for a hint of what might happen, well, of course, perhaps an example could be set by His Holiness, the pope, who famously has rather enjoyed taking public transport rather than actually taking his limousine somewhere on the way.
When we come back after the break, later in the program, we're going to be talking to Sir Richard Branson about what he thinks on (INAUDIBLE).
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QUEST: Voters in Turkey head to the polls for local elections on Sunday. They won't be hearing from their prime minister this weekend. Prime Minister Erdogan's lost his voice and so has canceled his speeches at campaign rallies. On Thursday, his government blocked access to YouTube and it's widened the controversial clampdown on social media.
Our correspondent Ivan Watson is in Istanbul.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN CONTRIBUTOR (voice-over): Meet two Turkish voters with completely different ideas about who to vote for in Sunday's local election.
UNIDENTIFIED MALE: There is no problem with her speech.
WATSON (voice-over): Yavuz Yigit is a 28-year-old business man who teaches debate classes at a foundation that's sponsored by the Justice and Development Party, which is led by Turkey's long-serving prime minister, Recep Tayyip Erdogan. Yigit says Erdogan's party will get his vote on Sunday.
YAVUZ YIGIT, AKP SUPPORTER: Did very well about infrastructure. They have improved school system; they have improved the hospital system. We see railways. We see highways. And they're doing it. They're working. And but I'm looking to the opposition party. I don't see any projects.
WATSON (voice-over): Emel Ertas is a freelance marketing consultant who's going to vote for the Republican People's Party, the biggest of more than a half-dozen opposition parties competing in Sunday's election.
EMEL ERTAS, CHP SUPPORTER: I'm a female who's single, 41. And my prime minister is telling me that I don't belong because I'm not married and don't have three kids, blah, blah, blah. My freedom is being restricted every single day. So these elections is very important because I am scared. If this government keeps going on, what other rights will I lose?
WATSON (voice-over): Voters are only supposed to be electing the mayors of Turkey's cities and towns on Sunday. But Prime Minister Erdogan dominates the campaign debate, even though he's not a candidate.
YIGIT: It's like a general election except I don't like it, actually. I really want to talk about the real problems of the country, because he really --
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WATSON (voice-over): Yigit argues the government is on the defensive against what he claims are months of violent protests aimed at overthrowing Erdogan and a series of politically damaging recordings of Erdogan's private phone conversations that have been leaked on the Internet, prompting a government crackdown on social media.
YIGIT: There are recordings, which are incredibly private. And if the YouTube doesn't decree, doesn't erase that media, how are we going to protect our country?
WATSON (voice-over): In her spare time, Ertas advises Turkish Internet users how to evade the new Turkish blackout of YouTube and Twitter.
ERTAS: So what I'm trying to do is trying to tell people what we can get to our browser.
WATSON (voice-over): She argues freedom of speech is at stake.
ERTAS: When I was coming here, my friends told me not to in case I get thrown into jail because right now, we just don't know what the right law is because law has -- when every -- if you base an opinion or a speech that contradicts with the prime minister's and ruling party's, you can be represented as a traitor.
WATSON (voice-over): Turkish society is bitterly divided right now. And it's hard to see how Sunday's election can heal the wounds and bring this increasingly polarized country back together -- Ivan Watson, CNN, Istanbul.
(END VIDEOTAPE)
QUEST: Sir Richard Branson said he's saddened by the Turkish government's curbs on social media. The British millionaire's campaigning for more Internet freedom and wants voting and elections to be held online.
Sir Richard joins me now live via Skype from the British Virgin Islands.
Good to see you, Richard, as always, thank you for taking the time to join us.
The measures to ban both Twitter and YouTube in Turkey, you believe they're worrying and a worrying trend. But at the same time, if they are revealing leaked documents, what can the Turkish government do other than this?
SIR RICHARD BRANSON, FOUNDER, VIRGIN GROUP: He's got nothing to hide. The truth will come out. And you have something to hide, then go and ban newspapers, ban Twitter, ban everything. But ultimately the truth will always come out. So it's so much better for the government to be brave, let Twitter continue, let debate continue. And if you ban that honorably, you have nothing to fear.
QUEST: So are we seeing, do you think, and it will come onto your proposals for elections, but are we seeing in Turkey sort of an old- fashioned style of censorship in a new era, that the two are colliding, do you think?
BRANSON: I think you're definitely seeing an old-fashioned style of censorship. And for a country like Turkey, that has had the respect of the world up until 100 years ago, it's just incredibly sad to see it move in the way that the dictatorships move. And so we just have to hope that after this election, they - that they seize sense and that they -- that they revert back to freedom of the press or at least a little bit more freedom than they're allowing today.
QUEST: We would all love to vote online. It would send voting turnout into the 90s if not, you know, everybody would be so convenient.
But Richard, the logistical challenges to ensure integrity and security, can we work them out, do you believe?
BRANSON: Online banks have worked it out. Online payments now have been worked out. In some countries, like Estonia, they've already been doing online voting for years. And there are countries like Australia, France, Canada, India, Lithuania, who are experimenting with it.
So yes, it definitely can be worked out. And I think that once it's worked out, you'll find that the turnout will increase dramatically. Old people who can't get to voting polls will vote. Young people who spend a lot of time on the Internet will vote. And you'll get a much truer democracy, I think, than you do today.
QUEST: Richard, good to talk to you as always. Thank you, sir, for joining us. Sir Richard Branson, always good to hear his views on the program.
What a program so far. Steve Forbes, the managing director of at least one of the senior officials from the IMF and Sir Richard Branson, all in the same program. And you'd better not go a moment further from here because we have a great deal more after the break. After weeks of hopes being raised and dashed, new information sends the search for 370 to a totally different part of the ocean. We'll update you in a moment. This is QUEST MEANS BUSINESS. (INAUDIBLE).
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(COMMERCIAL BREAK) RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN, and on this network the news always comes first. Vladimir Putin has called President Obama to discuss the American plans for a diplomatic solution to the crisis in Ukraine. Mr. Obama told the Russian president a diplomatic solution is possible if Russia pulls back its troops from the Ukrainian border. Military personnel at the Ukraine army bases have been told to hand -- head -- inland this weekend as Russian troops gather on the border between the two countries. Ukrainian officials have told CNN as many as 88,000 Russian troops are on the border. Russia says they are carrying out military exercises in the area. The director of the IMF Europe Department says Ukraine will default unless its bailout plan is successful. Reza Moghadam is one of the architects of the Fund's $18 billion rescue. Speaking to me on this program, he says there is difficult work ahead on the Ukrainian economy.
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REZA MOGHADAM, EUROPEAN DEPARTMENT DIRECTOR, IMF: The Ukraine is behind other and therefore the catchup needs to take place and some of that adjustment will obviously be challenging.
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QUEST: A dramatic shift in the hunt for the flight 370 after what's being called a credible new lead. Investigators now say the plane couldn't have flown as far south as previously thought. Crews have shifted their search to a new area closer to the Australian coast. So, Australian officials searching for Malaysia flight 370 have been forced to admit they've been looking in the wrong place. Nearly three weeks - in facts it's three weeks tonight - since the aircraft vanished. Join me at the Super Screens and you'll see what I mean. The search area has been shifted to more than a 1,000 kilometers north. Investigators looked at satellite data and realized the plane was flying faster. Now look, what they did is they basically recalculated all the speeds at the top of the first part of flight and then worked out it had to be further coming down. It had to actually be here, not down there because so much fuel was used up at the beginning, there wouldn't have been as far to get down. We know the flight, for example, lasted six hours after last known point and therefore it's a simple - it's not simple, but it's a case of mathematics. So, almost immediately spotter planes were dispatched to the new area and almost immediately they reported sighting various objects. It's not clear yet whether they are significant. We're waiting for more details. The new zone is closer to the Australian coast by some - well it's quite a distance actually. It does mean that they can fly - it takes less time to fly there, they have more time over the search zone. It's still a large area, roughly the size of Poland. Kyung Lah was on board the plane which flew over some of the objects. Kyung is with me now from Perth. What's interesting about this is the planes in the old zone looked for objects seen by satellite and found virtually none. All the planes, or most of them, found something on Friday.
KYUNG LAH, NATIONAL CORRESPONDENT FOR CNN BASED IN LOS ANGELES: And part of it, Richard, may be because we're just talking about very different water. The water that we were seeing on the P8 - I was embedded on the United States P8 Poseidon - and went to the new search zone with them in the overnight hours. What I can tell you that we saw is that the water was almost placid. It was very flat, extremely clear conditions. And one of the crewmates said that if they were going to spot anything, this is where they would see it because conditions were so clear on this day. So, this may be an issue of just having great weather, flat water and just a lot of visibility to see the debris that might not have been seen -
QUEST: OK --
LAH: -- further south. So I can tell you, Richard, from just having seen that area, that may explain part of it.
QUEST: So, let's put this in perspective. How soon before ships can get there and pick some of this debris up?
LAH: It's a little difficult to know because what I was hearing on the plane isn't exactly matching with what we're hearing from AMSA. The understanding that we have from AMSA is that they are on the way. And what I heard on the plane was that they seem to be a little closer than that. So we're not quite clear on exactly where the sea vessels are. But what I can tell you is that when the debris was spotted - and we did spot some objects on the water on the P8. What they did was they marked the spot and they requested that a sea vessel go there to check it out. We just don't know exactly how long it will take to get there.
QUEST: Right. It's half past 5 in the morning for you, Kyung. The planes, judging by the way you've talked to us through the week, they should be taking off - what, in the next hour or so.
LAH: Yes, and actually some - one - of the planes over the last couple of days, Richard, has taken off at 5 a.m. The Chinese plane has seemed to be taking off at 5 a.m. from Perth International, and then we've seen some military planes taking off from this airbase here. What we do know from AMSA this morning is that the search is scheduled to take place -
QUEST: Yes.
LAH: -- that they feel pretty confident about the weather, that they are feeling good about a good day's search today.
QUEST: Kyung Lah, as soon we have - you have - more to report, please come back immediately and we'll talk to you then. While the international effort to find flight 370 has been unprecedented, the level of cooperation has been variable. I want you to look at this map, and it really makes it clear. Just look at the number of countries that are involved. Obviously Australia has primacy in this zone. You've got Malaysia, Indonesia, Thailand, Vietnam, you've got Japan which is an asset here. But all - and of course you've got China which was the country where most of the nationals were from. But all of these countries have regional tensions between each other. There are many disputed lands and parts of water which have raised the stakes. But yet somehow they've managed to cooperate up to a point as CNN's Jim Clancy explains.
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JIM CLANCY, ANCHOR ON CNN INTERNATIONAL AND ANCHOR OF "THE BRIEF" SHOW: The search for flight 370 compelled rivals across Asia to come together as partners.
HISHAMMUDDIN HUSSEIN, MALAYSIAN ACTING TRANSPORT MANAGER: In an area in Southeast Asia where we were fighting over rocks in the middle of the sea, now working together. I think that is a great achievement.
CLANCY: From the Sea of Japan to the Malacca Straits, disputes over islands, oil and gas riches and fishing rights are being crushed in the 24- hour news cycle. Social media burst as a vanished airliner with 239 passengers captivates the world.
JAMES CHIN, PROFESSOR, MONASH UNIVERSITY MALAYSIA: Basically I think all the governments in the region are reacting to this tremendous pressure put on by the public to do something about locating this plane.
CLANCY: Do something. Planes and ships from China, Japan, South Korea, Australia, New Zealand and the United States are searching, steered by satellites in space. While its own technology and resources fall short, Malaysia is using diplomacy to bring two dozen nations into the search for flight 370.
MANON MANSOR, VICE PRESIDENT, MALAYSIA PILOTS ASSOCIATION: I think never in the history of Malaysia we have got this 420 - more than 24 countries helping us out - very encouraging indeed. If you go to some place like international airport (ph) of various military aircraft now parking down there.
CLANCY: There have been problems. China, whose citizens made up nearly two-thirds of the miss passengers, openly criticized Malaysia's handling of the crisis. Repeated protests had government approval at the very least. Malaysian officials reminded Beijing its own faulty satellite photos squandered precious search time. Chinese tourists know for the cash they spend while traveling, even threatened to boycott. Not everyone offered full cooperation. National security kept some from giving up their military radar records even as they joined the search.
CHIN: We also saw a level of distrust among many countries of the region. Counties close to Malaysia like Indonesia, Thailand and Cambodia and Vietnam, they all had radars but they all refused to share that data in the first initial hours where it was crucial in finding out which direction the plane was flying.
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QUEST: Jim Clancy reporting there. Facebook says drones can help connect everyone in the world to the World Wide Web - after the break. Interesting ideas and we'll see whether they'll fly.
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QUEST: Now, there's little doubt commercial drones are on the rise. Come on and look some of the uses have been put to. Some of them can film disaster zones, some of them can deliver sushi as Jim Boulden discovered in London. They do it rather badly. Some can carry Amazon parcels - or at least that's Amazon's hope, and in Dubai, there's even a drone plan that will ultimate deliver government papers, documents, identity cards to citizens thus saving costs. It's all rather interesting. None of them do it terribly well, but now Facebook wants to use them to deliver the internet. Mark Zuckerberg who is reportedly in talks about (Joe Maker) says they can be used to provide web access anywhere on the planet he wrote on a blog. Today we are sharing some of the details of work Facebook's connectivity is doing to build drones, satellites and lasers to deliver the internet to everyone. Sounds to me a bit like cashing in on an idea. It's not only the giants who are jumping on the drone wagon. A man in San Francisco is testing a drone delivery service. Joshua Ziering is taking advantage of a judge's ruling making it legal to fly commercial drones in the United States. The Federal - the FAA - is trying to overturn on safety grounds. In the meantime, Ziering firm quickly is testing how drugs can be delivered from - to homes - in a relatively easy way. Look at the way in which they would say they would do it. Joshua Ziering joins me from San Francisco. OK, so your idea is to deliver simple things like medications and the like. The drone flies down, stops 20 feet away, you buzz the person out, they swipe and it drops them on the head. Basically that's the idea.
JOSHUA ZIERING, FOUNDER, QUIQUI: That's absolutely right.
QUEST: So, why do you think it's a viable idea and why is it a runner?
ZIERING: Well, one of the things that we wanted to do is we wanted to make sure that, you know, a populated area we have the ability to deliver things quickly. So, what would - what could we deliver quickly? We could deliver pharmaceutical items and where could we do it? We picked San Francisco's Mission district to start with.
QUEST: What I don't understand is explain what the advantage of a drone delivering something versus the mail service?
ZIERING: Well, so we're going to aim to do most of our deliveries in under 15 minutes. We're not stopped by traffic or construction, we can fly over all of those problems and deliver you your product very quickly.
QUEST: And are these drones remote controlled in real time or do you program it and send it on its way while you get ready with the next one?
ZIERING: They're autonomous so they'll be flying without the help of a person.
QUEST: So it's not like we see with these military things where somebody's with a joystick going `round the corner, up the street, down the lane?
ZIERING: Not at all.
QUEST: What if it - what if it goes wrong?
ZIERING: What if it goes wrong, well I'm glad you asked. One of the things that we've been working on in QuiQui is redundancy. We want to be able to handle failure gracefully, and those who know me will say that I've been handling failure gracefully for years. So, we're going to try our best to make sure that nothing goes wrong.
QUEST: Isn't this one of those cases that the critics will say - maybe even critics like me will say - `oh, it can't work, oh, it'll never work, oh, it'll all end in tears, oh, what a terrible idea,- and yet I'd have been probably one of the first people saying the same thing about the electric telephone and the light bulb. We just necessarily can't see the future in the way that maybe you can.
ZIERING: Well, I think that the problem we're facing is one of culture and technology, and in the last two weeks even we've seen an unbelievable rise in the technology and the culture coming together to create a viable environment for drones.
QUEST: So, the FAA lost a court case, drones can fly - the FAA's appealing but we'll pull that to one side. When do you deliver your first aspirin tablet by drone?
ZIERING: We're aiming to deliver our first one by July.
QUEST: Right. By July. I won't hold you to them, and I will make it clear as well of course that you're not delivering narcotics, you're not delivering something that could be stolen - or would have value - and if it does land on their head, it won't hurt anybody, correct?
ZIERING: That's absolutely right.
QUEST: OK. If you start delivering bricks, let me know and I'll get out of the way. Thank you very much. Good to see you, sir. Nice to see you. Jenny Harrison is at the World Weather Center and joins us now. Deliveries by drones, Ms. Harrison. You can get the weekly wash and the weekly shop by drone.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: I tell you, it's an interesting idea, isn't it? I wonder how much the weather will play a part, Richard, in the --
QUEST: Oh,
HARRISON: -- successful delivery.
QUEST: -- why didn't I think about asking that a moment ago?
HARRISON: Yes.
QUEST: I should've thought - I should have -
HARRISON: What if it's a windy day, a rainy day, a foggy day? I don't know.
QUEST: Well foggy wouldn't matter. It wouldn't matter in fog because -
HARRISON: Was I not listening?
QUEST: it goes straightaway through.
HARRISON: Oh, well OK. OK. Yes, rainy, windy. We've got quite a lot of all that actually in Europe as we head into the weekend, Richard. I'm going to start by showing you the satellite. In particular, we've had more of this very heavy rain work its way across the Mediterranean. The last few hours of course it is moving eastward. So Greece has really picked up some pretty impressive totals. Twenty-one millimeters of rain in just six hours. That's a big amount in a short space of time. And also, some more big hail. Not as big as the hail we had in Italy yesterday, that was five centimeters. But this as you can see is still pretty big at three centimeters in diameter. So that system continuing to work its way eastwards, and then we've got more rain on the rain on the way across the southwest, but also northern sections of North Africa we'll see some rain, some thunderstorms as well.
It's really the middle sections of Europe as we go through the weekend that we'll see the best weather. That's where the high pressure is because we've got this cold air piling down from the north and the east, so we're going to see any moisture turning to snow here as well in the next couple of days. And then although it's milder toward the west, we've got more rain on the way. And still some fairly blustery winds across the northwest as well. It's all coming in though from this mild direction. But as you can see, some gusts reaching 50 or 60 kilometers an hour from time to time. Not bad, but a little bit blustery. This is showing you the cold air across eastern areas. Good temperatures across central and western areas. And of course with the high pressure in control, it's just really pushing all that cold air well off land areas. So look at what it does to temperatures with that mild area in place. Look at this - Berlin 18 on Saturday and Sunday, the average is ten. Warm days ahead in Warsaw, the high temperature 14 on Sunday and very nice. In Bucharest 21 on Monday and 13 is the average there.
But this is a very unsettled weather pattern, so you've got all this snow across the east. Colder air generally in place and then more rain across much of the northwest, and in particular, the southwest. So, temperatures on Saturday looking and feeling pretty respectable - 20 Celsius in Paris, 18 in Rome - good now the rain is cleared away, and 18 Celsius there in Berlin. Now if you're elsewhere around the world, but you want to know of course what is going on as well, so -
It's in New York, we've got quite a bit of rain working its way. Some severe thunderstorms actually in southern sections of the U.S. on Saturday. Sao Paulo we've got sort of scattered showers in between the sunny spells and then for Buenos Aires we've got more in the way of thunderstorms there on Sunday for you. And then heading across to Tel Aviv and Cairo, we've got some good temperatures, particularly in Cairo. Look at this - temperatures here by Sunday 26 under good, clear sunny skies and also Rio, the usual sort of temperatures for this time of year. In then finally just to round things off, heading down to Africa in Johannesburg - again, not a bad Saturday. Thunderstorms likely on Sunday. Richard.
QUEST: Oh, I always do appreciate to know these things. Nairobi looks a bit toasty at 28 degrees as well and as for Lagos, 32 degrees. You need a sparkling water.
HARRISON: Yes you will. (LAUGHTER).
QUEST: Jenny Harrison.
HARRISON: Have a nice weekend.
QUEST: Have a good weekend, see you next week. Now, one other story to bring you. General Motors said it would replace the faulty ignition switch in more than 800,000 models. Ninety-five thousand faulty switches were sold to dealers and aftermarket wholesalers between 2008 and 2011. It's another scandal for GM of course. And next week, Mary Barra, the new chief executive of GM, is giving evidence or giving testimony before the U.S. Congress. A bad day for Blackberry on Wall Street. After the break, we'll explain how the company plans to get out of its smartphone struggle. This is "Quest Means Business."
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QUEST: All right, regular viewers to the program will know that I'm still a fan of the Blackberry. OK, I may be the only one out there, but I still think when it comes to e-mail and the like, it is probably the best device. I have other ones as well. But shares in Blackberry fell more than 7 percent after a wild day on Wall Street. It started with a company announcing losses of more than $400 million in the last quarter. The shares then rose sharply at the open because $400 million (RINGS BELL) was better than expected. But then the shares went dramatically downhill as the day went on. Blackberry shares are still up for the year. The management's planning the company's next move and our business correspondent Samuel Burke now explains what that move might be.
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SAMUEL BURKE, BUSINESS CORRESPONDENT: One look at Blackberry stock prices this year and the -- a --modicum of choice would have to be - surprise. Shares are up by more than 20 percent since January. Blackberry's future though is still very much in doubt. But investors appear to be giving new CEO John Chen one last chance.
JOHN CHEN, CEO, BLACKBERRY: I need to stop that bleeding, I need to stop that erosion.
BURKE: One bright spot for the company, it's instant messaging service BBM. With companies paying $19 billion for rival messaging app WhatsApp, a billion for Viber, BBM or even Blackberry itself could be an acquisition target.
YERO KUITTINEN, MOBILE STRATEGIST, ALEKSTRA CONSULTING: Now that we've seen how some of the other messaging application platforms have been valued over the last month or so, it does look like the BBM has real value.
CHEN: No buyers yet, though, all the more maddening because Blackberry was the pioneer in mobile instant messaging years before the birth of young upstarts like WhatsApp. While it may be too late for BBM to stage a comeback in the U.S., it is still the go-to messaging platform in many important markets. And that could interest companies with deep pockets.
KUITTINEN: It has a pretty good standing in Africa, Middle East and Southeast Asia where a lot of the smartphone growth is currently happening.
BURKE: Shareholders might also love Blackberry's announcement that advertising is coming to the BBM platform. Another possible money maker? A subscription-based high security version of BBM and a payment service. Chen's big challenge for the moment is keeping business clients from jumping. One high-powered customer appears to be holding firm. The Whitehouse is playing down reports that it is testing other smartphones for President Obama.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm still clinging to my Blackberry. They're going to pry it out of my hands.
BURKE: Blackberry hopes to find users as passionate as the president, but without outside cash, some fear is not on Blackberry's side. Samuel Burke, CNN London.
(END VIDEOCLIP)
QUEST: We're going to have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Finally tonight, so the search zone has moved nearly 700 miles to the northeast as you can see from the map, and many people are suggesting that which has gone before was a waste of time - all the searching in the southern part of the southern corridor. I think that slightly misses the point for one simple reason. You have to search with the best information you have at the time. And time and again, whether it's Prime Minister Albert (ph) or the Malaysian transport minister or any official, they all say the same thing. `This is the best lead we've got.' And may I remind you, two weeks ago tonight, the Chinese were bringing out pictures showing debris in the South China Sea. If they had rushed off and searched up there, well, they'd have been rightly criticized for doing so quickly. And they're probably being criticized now because they searched in the middle part of the zone. In other words, you have to take the information you've got and make the best judgment you can. And at the moment, the porosity of facts means the only zone they've got is the place where they're looking now. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours and this weekend ahead, (RINGS BELL) I hope it's profitable. I'll see you again on Monday.
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