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Quest Means Business
Combating Terrorism in Africa; US-Africa Leaders Summit; Fox Withdraws Time Warner Bid; Dow Down, European Markets Up; Ecclestone Settles Bribery Trial; Ebola Outbreak; Sierra Leone's Most Infected Area; Why Murdoch Dropped Time Warner Bid
Aired August 05, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: They are celebrating border protection at the New York Stock Exchange, 225 years since the first customs laws came into the United
States. That's why they were ringing the closing bell. It is a down day on the Dow, we're off 140-odd points. Put it all together, it is Tuesday,
it's the 5th of August.
Tonight, Kenya's president tells me, "We helped you, now it's your turn to help us."
Airlines face Russia's wrath over their flight plans across Siberia.
And Bernie Ecclestone call himself "a bit of an idiot." It's cost him $100 million.
I'm Richard Quest. I mean business.
Good evening. There's a warning tonight from Kenya that the world isn't offering enough support in the country's fight against terrorism. Speaking
to me on this program, Kenya's president, he slammed the international community for its failure to provide the support and partnerships necessary
to keep Africa secure.
His strong words come as African and US leaders are calling for closer economic and trade ties at the US-Africa summit in Washington. President
Barack Obama spoke at that summit just moments ago.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: That's a sentiment we hear over and over again. When I was traveling throughout Africa last year,
what I heard was the desire of Africans not just for aid, but for trade and development that actually helps nations grow and empowers Africans for the
long term.
As president, I made it clear that the United States is determined to be a partner in Africa's success. A good partner, an equal partner, and a
partner for the long term.
(END VIDEO CLIP)
QUEST: Trade and aid and economic benefit is one thing, but President Uhuru Kenyatta told me Kenya is isolated, or feels isolated at the moment, in the
international community. And he says security is not just a Kenyan problem. Join me over at the super screen.
He talks about the international problem of terrorism security requiring a global partnership to find a solution. If you just take a look, we were
familiar, of course, from late last year, Kenya faced on ongoing threat from Islamic extremist al-Shabaab.
That happened when gunmen attacked the Westgate shopping mall last September. A military standoff ensued through four terror-filled days, 61
civilians were killed.
And then, of course, you have the travel warnings. This May, hundreds of tourists were told to leave Kenya when several nations warned of high
threat of terrorist attacks. When you put that in together, these travel advisories are still in effect, much to Kenya's fury.
And then, of course, the Kenyan government blamed al-Shabaab for the June attack that turned a World Cup viewing party into a blood bath. I asked
President Kenyatta what needs to be done to alleviate security concerns, and what he's looking for from the international community on the question
of security and terrorism relief.
(BEGIN VIDEOTAPE)
UHURU KENYATTA, PRESIDENT OF KENYA: On our part, what we are doing is increasing tremendously our investment in the security sector, because we
recognize that security is key towards ensuring long-term investment and stability as well.
But I think what is important for all of us to recognize is that the problem security that is posed in Kenya is not actually a Kenyan problem,
it's an international problem. It is a problem of terrorism that is not Kenya-specific but worldwide.
And the need for us to recognize that we need to all work together to fight this particular issue. And America itself -- and this is something that I
constantly remind people -- has been a victim of terror. And when it was a victim of terror, the whole world rallied behind the United States in
support of our battle against terror.
And this is the way we need to actually focus on our current challenges in East Africa and realize that this is a global threat, and a global threat
that requires global partnership in order for us to be able to defeat and secure. Not just Kenya --
QUEST: Right.
KENYATTA: -- but the world from this particular threat.
QUEST: So, reading between the lines, you don't feel that you're getting that. You may be getting public support, or you may be getting public
expressions of support, but if I understand you right, Mr. President, you're not getting that underlying support, whether it's travel --
KENYATTA: Absolutely. Absolutely. Because if you look at it especially from the point of view of travel advisories, I don't think that helps us
defeat the security threat. It actually encourages it.
And what we're looking for are people to be able to understand that those kind of travel advisories don't necessarily only hurt the country, but they
actually give encouragement to the very same people we're trying to defeat.
And that's why, for example, when we get positive statements, like from Richard Branson, for example, when looking at the Kenyan situation, and he
goes out there and he says, no, let's not issue these travel advisories.
We should actually face up to the enemy, we should actually invest more, we should actually be more in Kenya. Because this is truly the longterm way
of defeating this particular threat.
QUEST: I just want to return to this point that you've said, again, this question of the public level of support that Kenya is getting that perhaps
you don't feel you're getting at the moment in your battle on the security issue.
KENYATTA: We think that it would require and does need much more support, especially from the international community. We as a region are doing
everything that we can with the limited resources that we have.
And we believe that we need much more partnership, yes? Especially in supporting not just our forces, supporting the Somalian government, so that
the operations that are ongoing can be expanded to cover a greater part of Somalia so that we can reduce the area of operation of people like al-
Shabaab.
QUEST: Are you feeling a bit alone?
KENYATTA: Well, let me not say we're feeling alone, because Kenya is not alone in Somalia.
QUEST: Yes, but I'm -- I'm talking about in your battle against al-Shabaab, in your battle on terror, when you've got advisories, travel advisories --
KENYATTA: Yes.
QUEST: -- when you've got these. Are you feeling a bit like --
KENYATTA: We do feel like the world isn't doing enough to support us in confronting the challenges that we have, especially when we recognize that
those challenges are not just Kenyan challenges, but are global challenges which require global effort.
(END VIDEOTAPE)
QUEST: That's the president of Kenya on the security and terrorism aspect of it. The conference taking place, of course, the summit taking place is
on economics, trade, and how greater partnership, particularly in relation to infrastructure and power. Zain Asher has been speaking to some of the
chief execs at the African summit. Zain joins me now life from Washington.
As I look at the groups that are there, this is about policy, this is about statements of intentions, it's about partnerships. What's your feeling for
how the CEOs are responding?
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hi, Richard. Well, actually, even before the summit even started, there were about $17 billion worth of deals
that were made. I actually spoke to the CEO of Caterpillar, who said that Africa is no longer this scary place.
I do want to talk about terrorism, just jumping off of your interview with President Kenyatta there. There was this question here, how do you
continue to attract private investment as a company when you have to deal with terrorism?
How do you continue to pump billions of dollars into infrastructure, into building roads, bridges, railway, only to have them destroyed by rebels and
separatists? And if you send your team over to Africa to invest in a new unit, can you really guarantee their safety?
I did actually also speak with the CEO of Moneygram, Pamela Patsley, who explained to me that her business, Moneygram, has a unique challenge when
it comes to dealing with terrorism, because terrorists are rumored to use Moneygram and Western Union to finance their transactions. Take a listen
to what she said about her company, Moneygram, is dealing with that. Take a listen.
(BEGIN VIDEO CLIP)
PAMELA PATSLEY, EXEC CHAIRMAN, MONEYGRAM INTERNATIONAL INC.: Every transaction is run through lists of names, whether they're on OFAC lists
and all those sorts of lists that other countries produce.
We rely on our agents, also. So, it's not just about Moneygram knowing our agents, but it's our agents knowing their customer. And we provide a very
rich training program to our agents, and what they need to be aware of to identify customers.
(END VIDEO CLIP)
ASHER: So, security is a number one issue for Moneygram. It's also a number one issue for Stephen Schwarzman, who I also interviewed, the head
of Blackstone. He, by the way, is investing about $5 billion in electricity, on a side note, in Africa. But he said it is a number one --
security is a number one issue.
He also explained that as a result of this summit, you're going to see some African countries benefit at the expense of others. You're going to see
money flow towards Ghana, even though they've had currency issues. Investors are drawn stability.
Nigeria, even though they've had terrorism issues, investors are also drawn to growth potential at the expense, of say, somewhere like South Sudan.
So, Mr. Schwarzman said that he doesn't necessarily think that imbalance is necessarily a bad thing. Take a listen.
(BEGIN VIDEO CLIP)
STEPHEN SCHWARZMAN, CEO, BLACKSTONE: I think it's inevitable that countries with the best prospects, the best rule of law, the more stability, the best
regulations, will attract capital. In a way, that's not the worst outcome. Because what it does is it shows other countries, in effect, the way to
attract capital also.
So, if capital flows to fewer countries, and other heads of state will look at that and say, why is that?
(END VIDEO CLIP)
ASHER: Right. So, it's certainly an uphill battle dealing with the challenges of terrorism. But as I mentioned, as a result of this summit,
you have seen $17 billion in terms of deals being made. And Africa is really no longer about aid, but more about trade and partnership, as
President Obama just mentioned. Richard?
QUEST: Zain Verjee -- excuse me. Zain Asher, my apologies. Zain, thank you. Old habits die hard. Good to see you, thank you for joining us from
the conference in Washington.
I was slightly betwixt and between news. We're talking about big deals in Africa. Let me allow you to bring you some news. Rupert Murdoch and his
Fox company has withdrawn its bid for Time Warner. It was an $80 billion bid. Rupert Murdoch has now -- it was a bid that had been rejected by Jeff
Bewkes and the board of Time Warner.
Fox now apparently has withdrawn its bid, just in time for the analyst calls and the results, which are due to be published tomorrow, where no
doubt, there were many questions about whether Time Warner is still in play. It behooves me, as always, to mention at this particular point --
you can almost all chorus along -- Time Warner, parent company of CNN.
US stocks were down sharply on Tuesday. It was renewed Russia fears, perhaps preparing to invade Ukraine, as troops gathered on the border. And
Poland's foreign minister, of one of Poland's ministers suggested as such. The Dow, the S&P, they were all down roughly one percent. Interestingly,
they're now back at May levels, and all the gains of the year seem to have gone.
Europe's stocks were higher, tentative rebound from last week's losses. Portugal's bank rescue has eased some concerns.
When we return after the break, fighting a vicious killer. An exclusive look inside the biggest Ebola treatment center in Sierra Leone. It's QUEST
MEANS BUSINESS. Good evening to you tonight.
(COMMERCIAL BREAK)
QUEST: The trial of Formula 1's most powerful man has come to a screeching halt on Tuesday. Bernie Ecclestone agreed to pay a $100 million to avoid a
possible conviction on bribery charges. A conviction could have cost Ecclestone his position and landed him in prison for ten years.
But he's still $100 million poorer. And so now, of course, Isa Soares reports with the details of why he chose this agreement.
(BEGIN VIDEOTAPE)
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Bernie Ecclestone has one week to pay $100 million and put an end to his bribery trial. The Formula 1
boss went on trial in Munich earlier this year over allegations he'd paid a former banker $44 million to steer and smooth the sail of the bank's
controlling stake in Formula 1 to an investment fund he favored so that he could remain in charge of the sport.
Well, Ecclestone denies any wrongdoing, and his defense says the settlement is not an admission of guilt.
SVEN THOMAS, DEFENSE LAWYER (through translator): The court has also made clear -- and this is very important to us -- that the amount to be paid is
only oriented on the income. It is not whatsoever related to a chance of a conviction. I hope that puts an end to any talk of redemption money. It
was a clear message of the court. The amount has nothing whatsoever to do with guilt. It is quite the opposite.
SOARES: With no ruling, Bernie Ecclestone can continue running the sport hat he has built for four decades. Meanwhile, the former German banker
who received the $44 million, is in prison. He was sentenced to eight and a half years in 2012.
Well, the court ruling that is legal under German law has roiled up so many people on Twitter who see this as one rule for the rich, another for the
less well-off. Well, Steve Cummings writes on Twitter, "How ironic, Bernie Ecclestone bribing the German court to get out of bribery charges. Still,
must be nice to have $100 million to throw around."
And Will Riley had this to say: "While Bernie Ecclestone has paid 100 million pounds" -- I believe it's dollars, there -- "to halt his bribery
trial. Is that the actual definition of irony?" he asks. Well, irony or not, Bernie Ecclestone is free, and for now, back in the driver's seat.
Isa Soares, CNN, London.
(END VIDEOTAPE)
QUEST: And we'll be back with more after the break. QUEST MEANS BUSINESS, good evening.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: The government of Sierra Leone has deployed more than 700 medical officials to locations across the country in an effort to contain the
deadly outbreak of Ebola. Citizens have been asked to avoid work and stay at home. You can see now, of course, the number deaths, 887, more than
1600 cases, and the three major countries affected -- Sierra Leone, Guinea, and Liberia.
More than 270 of the deaths are in Sierra Leone alone. The country's foreign minister told CNN the world is realizing this is a global issue.
(BEGIN VIDEO CLIP)
SAMURA KAMARA, SIERRA LEONE FOREIGN MINISTER: I think the declaration of the emergency has given the fight against Ebola a new momentum. It's
building up a greater sense of awareness in the people of Sierra Leone, but also in the international community that the Ebola is not so much a problem
for Sierra Leone as a country, but because of the potential for its contagion, it's now becoming an issue for Sierra Leone, but also for the
entire world.
(END VIDEO CLIP)
QUEST: CNN's David McKenzie has driven into the country's most-affected area, and there he found deserted streets and the country's capital,
Freetown, a virtual ghost town.
(BEGIN VIDEOTAPE)
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: We're on the road, driving into the worst Ebola epidemic in history. They're quite extraordinary.
There's hardly an cars on the road. All the shops are closed, just one or two people walking on the street. When I'd been here before at this time,
it would be absolutely jam-packed. You could barely move. Freetown is a ghost town.
MCKENZIE (voice-over): The government shut down the entire country for a day, for reflection, they say. Hammering three countries, the outbreak is
worst here, in Sierra Leone, and the World Health Organization says Ebola is now spreading faster than they can contain it.,
The fear is spreading with it. For months, the public's response has been dominated by denial and rumors, while Ebola silently kills. As the death
toll mounts, they are tightening access to the roads that help spread the disease.
And they're getting the word out to calm the panic. Like the rest of the nation, Mamadout Sous (ph) stayed at home today. "The elders put out the
word to stay at home, and we need to respect that," he says, "and we need to stop Ebola."
But Ebola keeps spreading, affecting more people and wider areas than ever before. Health officials say that at best, it could take months to stop
it. But there are no guarantees even of that.
MCKENZIE (on camera): So, the whole country's shut down?
UNIDENTIFIED MALE: Yes, the whole country.
UNIDENTIFIED MALE: This is a national issue. The whole country, Ebola issues still room.
UNIDENTIFIED MALE: It is family
UNIDENTIFIED MALE: I can pray with this family.
MCKENZIE: Why do people need to pray?
UNIDENTIFIED MALE: Well, because of this problem we are encountering, this Ebola issue.
MCKENZIE: We've been through a series of checkpoints. Each one is stricter than the last. One Red Cross official told us that along this road, Ebola
is everywhere. But it's through this point, into Kailahun District, where it is the epicenter of this unprecedented epidemic. And it's there that
the biggest battles are being fought.
David McKenzie, CNN, on the road in Sierra Leone.
(END VIDEOTAPE)
QUEST: Now to the story we've just been reporting to you: 21st Century Fox has withdrawn its offer for CNN's parent company, Time Warner. The
chairman and chief exec, Rupert Murdoch has sited opposition from the Time Warner board and said moves in Fox's stock price made the offer
unattractive.
If I also read some of the statements, it says, "It was always going to be a friendly bid. Time Warner management and its board refused to engage
with us to explore an offer. The reaction of our share price, these factors, coupled with our commitment, has led us to withdraw our offer."
Joining me now, our senior media correspondent, Brian Stelter, who's going to make sense of it all for me.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Well, I'll try.
QUEST: You'll succeed.
(LAUGHTER)
QUEST: Right. So. Why did they withdraw now? Is it anything to do with the fact that tomorrow they've all got earnings and they've all got to
answer analysts' statements on conference calls?
STELTER: I think Rupert Murdoch probably was dreading having to answer questions about this on his earnings call this time tomorrow. Time Warner
reports earnings in the morning, Fox reports earnings in the afternoon, and Murdoch is getting out ahead of that with this statement.
Time Warner's stock, by the way, down almost 12 percent in after hours training. It had been bid up as soon as these reports of Murdoch's
interest came out a month ago. So, we're now seeing a rebalancing, maybe.
I just asked one of the top analysts in this industry, Michael Nathanson, I asked him what his reaction was. He said smart move. Stock gets its stock
back up. Time Warner's stock gets pushed down, and this makes Fox shareholders feel better. It's a return to the status quo, at least for
now.
QUEST: OK. So, now we have the unfortunate business, you and I, of talking about our own company --
(LAUGHTER)
QUEST: -- and criticizing, potentially, the management decisions of our own bosses. But there we are, that's the business we are in.
(LAUGHTER)
QUEST: How has Jeff Bewkes played this?
STELTER: I don't think we've had any comment from Time Warner yet, but from the beginning -- well, we've heard from Time Warner, and by beginning, I
mean a month ago, when this proposal first leaked, was that Time Warner will be better off as an independent company and will return more value to
shareholders that way.
The sense then in the weeks since then, we've seen stories in the press about the pretend it is at HBO, for example. We've seen stories about what
more Time Warner could be doing.
I have to think that those stories have come out in part because Time Warner is trying to signal to shareholders, we have a plan, and we don't
need to be acquired by another company in order to raise our share price. That's my personal impression of what's going on.
QUEST: Right. But now, the pressure is on, because the question really becomes, is Time Warner in play, or does the fact that Fox has withdrawn
its offer pretty much now give Bewkes and the board the leeway they seek?
STELTER: I don't think Wall Street is going to interpret this as a signal that Time Warner's out of play. I think they're going to interpret it as a
signal that Murdoch, for the time being, has backed off. That doesn't mean he may not try again in the future.
The speculation last month -- and I think it holds true now -- is that Time Warner is interested in bidders a year or two or three years from now.
They're interested in having multiple bidders, and not just Murdoch.
But to have just Murdoch come to the table and make this offer, an offer that Time Warner thought was far too low, that that wasn't very appealing.
I think Time Warner, and other media companies for that matter, possibly, will be interested in a Google or an Apple or another possible acquirers
down the line. Not necessarily right now, but down the line.
Right now, a lot of those possible bidders are tied up with other acquisitions. Comcast is busy with Time Warner Cable. AT&T --
(CROSSTALK)
QUEST: Does Time Warner --
STELTER: -- is busy with Direct TV.
QUEST: But does the -- to the core point of Time Warner, does it have to do a deal?
STELTER: Does Time Warner have to?
QUEST: Yes.
STELTER: I -- my instinct is it doesn't have to, but that it's interested in the right deal at the right time. Time Warner has shed assets, and it
certainly looks appealing as a company to be acquired. It shed just a couple months ago Time, Inc., its publishing unit. Before that, it shed
AOL. And before that, Time Warner Cable.
So, it is a very pure play content company now, very valuable to any number of other content companies that may want more scale.
QUEST: Brian, good of you to come. Thank you. Excellent.
STELTER: Trying to figure this out, right?
QUEST: Absolutely. And I need to give you the health warning, as always. CNN is part of Turner, Turner is part of Time Warner.
When we come back after this break, business travelers flying between Europe and Asia may see hours added to the trips. It'll also become more
expensive. The latest in tit-for-tat sanctions, it's next. Good evening.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: 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.
There are fears that Russia is preparing to stage another military intervention in Ukraine after NATO said 20,000 Russian troops were gathered
along the country's eastern border. The number of Russian troops in the area has almost doubled in the past week. The country's Defense Ministry
says it's staging military exercises nearby.
A 72-hour humanitarian cease-fire in Gaza appears to be holding. More than 1900 people have been killed over the past four weeks of the conflict.
Both Israel and Hamas saying they are ready to hold further peace talks in Cairo if this temporary truce lasts.
A Nigerian doctor has been diagnosed with Ebola nearly three weeks after he treated a Liberian-American who died from the virus. The Health Ministry
has quarantined eight other people. The infectious disease has claimed the lives of 900 people in West Africa, according to the World Health
Organization.
A US general has been killed in an attack at a defense training university in Kabul in Afghanistan. An Afghan soldier is believed to have opened fire
at a key leader event. At least 15 coalition troops were also injured.
Kenya's president says his country needs more help from the international community in fighting terrorism. Speaking to me on QUEST MEANS BUSINESS,
Uhuru Kenyatta says he fears his country's being left alone in its battle against al-Shabaab.
(BEGIN VIDEO CLIP)
KENYATTA: We do feel like the world isn't doing enough to support us in confronting the challenges that we have, especially when we recognize that
those challenges are not just Kenyan challenges, but are global challenges which require global effort.
(END VIDEO CLIP)
QUEST: Twentieth (ph) Century Fox has withdrawn its offer for CNN's parent company Time Warner. Rupert Murdoch cited opposition from the Time Warner
board and said moves in Fox's stock price made the offer unattractive. Of course Time Warner is the parent of CNN.
Now, flights between Europe and Asia will likely get much longer if Russia goes ahead with its plan to block E.U. carriers from over-flying Siberia.
According to a report in a Russian newspaper, "Vedomosti", the agreement saves around $30,000 in fuel and fees for each flight. If you just look
here - here you see Delta - Lufthansa - from Shanghai to Frankfurt. It has clearly taken the Trans-Siberian route as many other flights will be doing
backwards and forwards. Here you have another one - you have Air China going from Munich back towards Shanghai. You have other flights. All of
these aircraft are taking advantage of this benefit that comes when they are allowed to actually do that flight.
Now, as a result of this, Aeroflot could also lose $300 million in over- flight fees because Aeroflot, incidentally, receives the money from the extra fees that the flights play - pay - to actually go over this route.
Aeroflot's already been hit by sanctions. Its subsidiary, Dobrolet, forced to stop operations. I want to show you how all this actually works. If
you come in here, you'll see this - you'll see here - this is Europe.
Now, of course the long - the long way - 'round to Asia is this way because planes normally try to take the great circle. So the best and quickest
route is to go over the top in that way - across Russia. And that's exactly the route that's likely to be restricted, the route that
we are seeing over here if things are moved along. You've got Madrid to Incheon from Korean Airlines. It doesn't matter where the airline is
based, investors are reacting negatively. Aeroflot was down at least 6 percent, shares of Lufthansa, B.A.'s parent company IAG and Air France
(inaudible) down and one 4 percent, Finnair shares were down some 5 percent.
Joining me now is Sir Tony Brenton, a former U.K. ambassador to Russia. Tony, as you can see, we've just been showing on the map on the globe that
I have here the ability to go trans-Siberian is a great benefit. You obviously have been involved in the negotiations in the past, you know
about the way these things are significant. Is it likely that Russia would withdraw this authority?
TONY BRENTON, FORMER U.K. AMBASSADOR TO RUSSIA: I think it's perfectly possible. And what has been surprising in the way the Ukrainian crisis has
developed, is how reticent the Russians have been about reacting to Western sanctions. They listed a few people from I think the United States in
particular, they've banned imports of Polish fruit, but they have been very, very - as I say - reticent in reacting in any vigorous way to Western
sanctions. It's very uncharacteristic of them. Normally they work on the basis of strict reciprocity. So I imagine and indeed Mr. Putin I think has
said today they're now looking for responses to Western sanctions. And one rather obvious thing to you is the geography with regard -
QUEST: Right.
BRENTON: -- with regard to (inaudible) air route.
QUEST: But if they go down this route and if they take this idea and ban the over-flight, that's a fairly dramatic sanction to take. That is going
to have a much greater immediate effect than, say, some of the sanctions that have been introduced over - on Russia at the moment. Is it out of
proportion?
BRENTON: Well it is quite dramatic, but Europe and the U.S. have over the last few days in effect excluded from receipt of finance from City of
London and from New York big companies and big Russian banks. It is arguable, in the Russian eyes, it would be proportionate.
QUEST: So, does this thing play out, because at the moment, there does not seem to be any - I mean, Vladimir Putin has said he's calling for talks
over Ukraine, but nobody seems to be trying to ratchet it down in any degree. Is this how he thinks, from your experience, where does the
breakthrough come?
BRENTON: Well from my experience, the West has assumed that somehow it can dismiss Russia with regard to Ukraine. The Russians are absolutely
determined that they will not be dismissed in this way. Their reaction to our sanctions, I hope, will get some sensible talks going. All the
Russians are looking for with regard to Ukraine which is non-joining of NATO and some protection of the Russian population in Ukraine is not
unnegotiable. The problem at the moment is that nobody is talking to anyone else, as you say, and I would rather hope that the galvanizing
effect of the prospect of Russia introducing serious reactions to our sanctions will get some serious talks going.
QUEST: Finally, then, when we hear tonight NATO warning and potentially 20,000 troops massing along the Ukrainian border, Russia says it's military
exercises. Is this President Putin's way of turning up the heat? I mean, is it likely that he would go for a military adventure into Ukraine?
BRENTON: President Putin faces a very difficult decision. His (guise/guys) - the Eastern Ukrainian dissidents - are losing the war at the moment.
It'll be a huge blow to his standing and prestige and to his view of Russia's security if they lost. He must be contemplating the choice
between letting that happen or intervening militarily. And I suspect he's gathering his troops in case his decision goes towards military
intervention.
QUEST: Sir, thank you for making sense of it all, and helping us understand what's happening. I appreciate your time tonight -- very kind of you.
Former U.K. ambassador to Russia joining me. Coming up next, a new kind of currency -- we'll explain what loyalty, reputation and sweat has to do with
your spending power. In a moment.
(COMMERCIAL BREAK)
QUEST: Coins, notes, plastic and perhaps sweat - the currency of the future could look very different indeed. In this week's "Future Finance," Paul
Kemp(son) (ph)-Robinson from Contagious Communications explains how one well-known brand got people running for their money.
(BEGIN VIDEO CLIP)
PAUL KEMP-ROBERTSON, CONTAGIOUS COMMUNICATIONS: My job is focused on innovation in marketing. I look at new consumer behaviors and the impact
of emerging technologies on brands. I'm an ad man. I don't profess to be an economist by any means, but from where I'm standing, I can see the
imminent possibility that brands creating alternative virtual currencies to run alongside traditional forms of money. Surveys such as the annual Trust
Barometer by the P.R. firm Edelman showed that people all over the world now trust business leaders more than politicians.
Now, obviously, I'm looking at this through a marketing prism. Brands stand or fall by their reputation. So I suggest that reputation has now
become a currency. This means that loyalty is now a micro economy. You think about reward schemes such as air miles. People are comfortable being
rewarded for their loyalty. In Mexico, Nike ran a campaign called Bid Your Sweat. Now, Nike shoes have got these sensors in them called Nike Plus, so
until recently you could buy a fuel band - it's wrist device - that tracks a user's movements, energy and calorie consumption.
So what you can do now is that the more that you run, the more Nike fuel points we will award you. And then we'll have an auction where you can buy
exclusive products using your sweat as a currency. You cannot buy this stuff with pesos.
But if you think that the notion of branded currencies feels a bit far- fetched, my company ran a survey recently and found that 45 percent of 25 to 34-year-olds in the U.S. would be comfortable using an independent or
branded currency. Will new technology make paper money feel outmoded? Will we decof (ph) all money from the traditional institutions and turn
brand loyalty into a new form of currency? I wouldn't bet against it.
(END VIDEO CLIP)
QUEST: Now to the weather forecast. Jenny Harrison is at the World Weather forecast - World Weather Center. You've got a busy few moments ahead of
you to get me up to date.
JENNY HARRISON, CNN METEOROLOGIST: I have indeed. Richard, a lot going on, particularly tropical-wise, so let's start straight toward this one graphic
which actually shows all of these storm systems have pretty much interlined and all are heading the same direction. This is Typhoon Halong heading
towards Japan. I'll come on to that in just a moment. We've got a Tropical Depression Genevieve which is actually going to skirt around the
Hawaiian Islands and should eventually dissipate. We've got Hurricane Iselle heading towards Hawaii with Julio hot on its heels. Another system
could well develop here in the East Pacific and we're also watching Tropical Storm Bertha as it heads its way to the eastern side of the
Eastern Seaboard of the U.S.
But this is Halong. Certainly in the last few hours we've seen impact to the Northern Philippines, certainly in terms of cloud. Not really in terms
of the winds or even rainfall. All of those moving away, but of course heading ever closer towards Okinawa and western areas of Japan. We've got
winds right now sustained that have come down a little bit - 150 kilometers an hour and gusting to about 185. And we should see it peak to sort of
this sort of power over the next couple of days. But the main thing with this storm system is not so much the winds though they are very strong and
of course dangerous.
You can see, of course the winds will be increasing as it gets closer towards Okinawa, but it really is about the rain because this storm system
again, like the one of just a few days ago, which headed to the exact same region, introducing some torrential amounts of rain. It's not moving
particularly quickly, so you can see in the next 48 hours some parts of Okinawa could actually pick up as much as 250 millimeters of rain and then
this is heading to an area which is seen over double its annual - its monthly rainfall totals in just a couple of days. So, a very, very
saturated area of ground, so keep a very close eye on that.
Here is Iselle and Julio both right not heading towards the Hawaiian Islands - very, very unusual to have two storm systems a) out there at the
same time, and b) actually following each other literally almost along the same path. Again, this is a few days out. Those paths could of course
vary. Also what is likely to happen - the waters will cool down quite significantly by the time Julio comes along if it takes exact same route
because the waters are being churned by Iselle. So that means not as much energy coming from those waters. But, again, we'll follow very closely the
progress. Certainly both of course bringing rain and clouds and potentially some very strong winds.
This is Tropical Storm Bertha moving up the eastern side of the United States. Winds at about 85 kilometers an hour but moving very swiftly now
over the next couple of days. What's really worth noting about this particular storm is it's going to head across the Atlantic and eventually
it looks like it could impact the U.K. by the weekend -- so, pushing into the northwest of Europe.
Most of the rain with this storm system stays offshore. We could just see a little bit of extra rain, particularly through the Carolinas along those
coastal areas. Now, we've had some very heavy rain again in the last 36 hours to parts of Southeast Europe - 111 millimeters, 120 millimeters -
both of those totals coming down in Croatia. And there's more of that to come.
The good news is some places have been dry, so been able to get the corn crop in this year -- this of course coming in from Germany. But more of
those scattered showers across central areas. Still pretty hot across these eastern areas, and we've still got one - two - storm warnings in
place too. Quite a swathe here of possibility, and then, again, there's areas in the Southeast could actually have some large, damaging hail and
maybe some strong winds.
But temperatures have been about seven to ten degrees above average across some parts of Europe for the last - nearly the last month actually,
certainly since the 15th of July. And, again, a very warm day this Tuesday but not as hot as it was. Thirty-two today in Latvia and it was actually
38 yesterday. That was the hottest day ever recorded in history in that location.
Elsewhere temperatures actually beginning to moderate out. Quite an unsettled pattern. More rain sweeping through the Southwest - the
Northwest - and then fairly widespread showers across much of Europe, Richard.
QUEST: Good grief! What a busy time you've got.
HARRISON: (LAUGHTER). A lot to talk about.
QUEST: Yes, well we are indeed. Yes -- rain over there and sun over there and heat over there. Thank you very much, Ms. Harrison. Good to see you.
Mistress Harrison keeping us informed. Barack Obama is making an historic push for a sweeter relationship with Africa as African leaders descend on
Washington where I met with the with the U.S. Secretary of Commerce who promised nearly a billion dollars in deals at the event.
(COMMERCIAL BREAK)
QUEST: The United States is making a determined effort to gain economic ground where other nations have been investing for years in Africa. I
spoke to U.S. Commerce Secretary Penny Pritzker and asked her why now?
(BEGIN VIDEO CLIP)
PENNY PRITZKER, UNITED STATES COMMERCE SECRETARY: Now is the perfect opportunity. You've got six of the ten fastest economy - growing economies
- in the world in Africa. You've got incomes that've grown over 30 percent over the last ten years, you've got projections of 6 percent plus GDP
growth annually for the next ten years, you've got 250,000 Americans who go to work every day at companies that are selling products to Africa. So
there's enormous opportunity for both African companies and for American businesses and American workers.
QUEST: How far does this play into a wider strategic interest for the United States? China of course has been making the running hugely in
African at the moment. Europe is there as well, but America - until the President's plans have come along - some would argue may have been on the
back foot. Is that part to redress that balance?
PRITZKER: Well look, I think first of all we welcome the presence of China and Europe and other countries in Africa. The point is Africa needs $300
billion of infrastructure investment alone. That's going to take a world effort. And the fact that we're focused right now on what the opportunity
is, we have our business summit tomorrow that brings together heads of 51 African nations as well as hundreds of business leaders, both from the
United States and from Africa to really meet, to talk, to build relationships, to focus on what can we actually get done together is really
exciting to me -
QUEST: Right.
PRITZKER: Many of these companies are doing business in Africa, but many are not. So we're going to really explore - this event's going to be a
catalytic for new activities - not just the activities that are being announced.
QUEST: Now, you see now, you rightly say catalytic activities because the $900 million that has been announced so far, that is very much, if you
like, the showcase. That's in the window. It's really what's in the stock room behind that people will be interested in the future, isn't it? The
supply line of contracts, of deals, of mergers, of all those sort of things. How can one take the principles of this summit and turn it into
reality for the future?
PRITZKER: Well first let's talk about the deals and the announcements. You've heard G.E. announce $2 billion in seven major deals that they're
doing. Stay tuned for tomorrow, the President has lots more to announce. But what's going to happen at this summit - you've got people together who
want to do business together. American companies, African companies, America and African government leaders. So this is an opportunity to
really get down to the nitty-gritty as to how do we do more business together. And that depends obviously on continued relationship-building.
(END VIDEO CLIP)
QUEST: That's the U.S. Commerce Secretary talking to me yesterday. Now, Sim Tshabalala's the co-CEO of Standard Bank which is Africa's largest bank
taking part obviously in this week's summit in Washington. He joins me now from CNN in Washington. Sir, thank you for joining us. Good to see you
and nice to have you with us.
SIM TSHABALALA, CO-CEO, STANDARD BANK: Thank you, Richard.
QUEST: Lots of deals, lots of talk, but as a banker, you now need to - you need to make these become a reality because otherwise you leave Washington
having just generated - not you personally, but the summit - a lot of hot air, don't you?
TSHABALALA: Well, Richard, we don't leave having generated just a lot of hot air. If I could just mention five things that we mentioned by the
president of the U.S. this afternoon. First of all, there's a good argument to extend (agua) and the South Africans have made the argument
that it should be extend for - to a period of 15 years and that South Africa should remain involved. Secondly, there is going to be a lot more
support from American businesses on the African continent. Third, there is going to be an extension of Power Africa. There was initially a commitment
of $7 billion. It's now $26 million. And fourthly, there's an extension of trade. So Trade Africa which was focused on the East Africa region is
now also going to be extended. So it's not just hot air, Richard.
QUEST: No, but it's not - so when people go back to their countries, when you go back to your countries, what do you have to do to implement all of
this? What do you need?
TSHABALALA: Well let's use the example of Ghana. There's going to be an announcement today in respect of a contract under the auspices of Power
Africa. The consequences of a contract such as that is that there's going to be work in the distribution and power generation of electricity in
Ghana. There are going to be contracts to be negotiated. There's going to be work done to implement that - such a project -
QUEST: Yes, that's a double-edged sword, isn't it? I mean, you mentioned Ghana, but here's a country that five year, seven years, eight years ago
was part of the Millennium goals and had large amounts of debt written down and now is back at the IMF or will be because it's a country facing a
currency crisis. So, it begs the question - what has Ghana learned? Yes, it's fine for business, the plowing - but what has Ghana has an economy
learned?
TSHABALALA: It's learned that you need fiscal rectitude, you need monetary policy discipline, you need reforms that are necessary, you need to give
comfort to people that will be participating in the Europe bond that is about to be issued, and you need to execute financial management.
QUEST: Right, but hang on a second - that's the chicken and the egg. Ghana was one of those countries that shouldn't have got back into the position
it was in in the first place.
TSHABALALA: It grew by over 6 to 7 percent for an extended period of time, it's having challenges and the leadership of Ghana is addressing those
challenges the best way they know how.
QUEST: All right, so you've got all - you've got these countries, you've got business and everybody wants to actually be partners. And I'm not for
a second denying or doubting the vast rate of growth and the potential in Africa. What I ask you, sir, finally is how do we ensure that that growth
and that investment happens wisely and responsibly?
TSHABALALA: We insist on the rule of law, the protection of property rights, we ask for (tie) regulatory arrangements, we ask for arm's length
negotiation of contracts, we ask for reduction in corruption, we ask for a deepening of institutions and we ask for the implementation of projects
agreed upon.
QUEST: Excellent. Thank you for joining us, sir. Beautifully succinct. I appreciate your time for joining us this evening. Thank you, sir. Now,
let me remind you on how the markets. It was a very sharp fall. It's all about what is global risks at the moment, that and the potential for
military activity 'round Ukraine by Russia and of course what the Fed's likely to do and whether interest rates will go up sooner rather than
later. As a result, the markets were down some - nearly - one percent. When we come back after the break, we'll have our "Profitable Moment."
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." The issue of sanctions against Russia is about to get even more worrying and particularly interesting,
especially if Russia decides to ban E.U. carriers from over-flight over Siberia. It's the fastest and cheapest way to get from Europe to Asia and
back again. Some airlines like Finnair over Helsinki have made an entire industry by claiming to be the quickest way from Europe to Asia over
Siberia.
But if Russia does ban over-flight, not only will it cost European carriers a great deal more as they have to take the longer route around the
circumference of the earth, it'll also cost Aeroflot two. Why? Because Aeroflot gets $300 million a year - those over-flight fees from Siberia
were designated as to going to the state carrier. No one will win if this sanction is put in place and over-flight is banned. But then, frankly, no
one ever really does win when sanctions come into question. It's just is classically tit for tat. And now that we've had the tit, it's time for the
tat.
And that is "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) hope it's
profitable. I'll see you tomorrow.
END
