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Quest Means Business
Ukraine Claims It Attacked Russian Military Vehicles; European Stocks Fall; Crisis in Ukraine; Some European Leaders Rethinking Russian Sanctions; Finland Feels Russian Sanction Effects; Stocks Fall on Geopolitical Worries; Crisis in Iraq; Ebola War Zone; Ebola Fears at Youth Olympics
Aired August 15, 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: The market comes to a close. Despite all the geopolitical problems around the world, it's held its nerve, just off a
couple of dozen points, it had been worse during the course of the session. Hit the hammer! It's the end of trading, it's Friday, it's August the
15th.
Tonight, investors may retreat, violence flares, Ukraine the issue. I'll ask the Finnish prime minister how Europe intends to respond to the
latest developments with Russia.
Also, freezing the assets of ISIS. The UN cracks down on Iraqi militants.
And we'll give you a lesson in pope-onomics. Pope Francis warns of the human cost of too much materialism.
I'm Richard Quest live from New York City, where of course, I mean business.
The ides of August it may be, no sun, but a glorious day in Manhattan, and a very warm welcome to QUEST MEANS BUSINESS. No humidity, a lovely
day. And so obviously, we're taking the opportunity, with it being August, to bring you the program from out and about, Central Park behind.
Now tonight, we start with a major escalation in the conflict in east Ukraine. Ukraine says it has destroyed most of a column of military
vehicles, similar to these, which have crossed the border from Russia overnight.
European ministers meeting in Brussels say the EU will consider any unilateral military action on Russia's part as a blatant violation of
international law. Russian officials have denied sending any armored column into Ukraine.
It all happens as there appears to be an agreement in the last few hours for how that Russian convoy of humanitarian aid, which is making its
way from Russia to Ukraine, will be dealt with once it reaches the Ukrainian border. The International Committee of the Red Cross now says
that agreement has been reached.
Well, markets in the United States and Europe were negative on the news of the potential wipeout of a Russian military vehicles. The DAX
wiped out its gains made on Thursday. Vladimir Putin had said he wanted to stop the blood flowing in eastern Ukraine. Even so, the DAX, look at the
market. Look at that! You can see that sharp fall off a cliff, down 1.4 percent when the news came.
Now, in a moment, we'll be talking to the Finnish prime minister, Alex Stubb. He'll be joining us to give us his reaction on this variety of
developments. First, we do need to update you on the latest on the ground. Our correspondent Will Ripley is in Kiev.
We'll take this point by point and briefly, Will. What do we know about this allegation that the Ukrainians attacked a bunch of Russian
troops who'd infiltrated overnight?
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, I'll tell you what, the Ukrainian government confirms that they were tracing this convoy
from the time it crossed the border in the Rostov region. They said they waited until it got deeper in, and then they attacked. And they claim
destroyed part of the convoy.
Russia is dismissing this as a complete fantasy, but Richard, you have several Western media correspondents and NATO along with the Ukrainian
government all saying that this happened, and they saw it. So, another he said, he said, with a lot at stake right in the middle, Richard.
QUEST: Will, the issue, then, becomes after the allegation of attacking the Russian convoy, this supposed agreement about how the
humanitarian aid will be treated once it reached the Ukrainian border. Is it your understanding that that aid will now be allowed in?
RIPLEY: Word just coming in within the past couple of hours that a deal is imminent to allow that Russian aid in. But here's the catch: one
of the people on the trucks has to get off, one of the Russians, and they have to put a Red Cross volunteer on to make sure those trucks go in, go to
Lugansk, deliver the aid, and then leave the country.
QUEST: Will Ripley, joining us tonight in Kiev. Even as the military crisis escalates, some European leaders are calling for a rethink on
sanctions against Russia. The Hungarian prime minister Viktor Orban says Europe shot itself in the foot and has called for compensation for affected
businesses.
Slovakia's PM has called for the sanctions saying they are "meaningless" and they'll undermine economic growth in the EU.
Finland's president warns the world is on the brink of a new Cold War. He's traveling to Kiev after having met with Vladimir Putin on Friday.
With its economy struggling for growth -- the latest numbers we reported yesterday showed just the situation -- Finland's one of those
countries which can ill-afford more tit-for-tat sanctions. Half of Finnish businesses are reporting they're feeling the effects. Russia is Finland's
third-largest export market.
The counties share a long and complicated history. Finland was part of the Russian empire back in the 19th century. They went to war in the
1930s and 40s. They joined forces to defeat the Nazis. And in the Cold War, Finland stayed neutral to protect its trade relationship with the old
Soviet Union.
The prime minister of Finland, Alex Stubb, joins me now, live from Helsinki. First of all, Prime Minister, my first opportunity since you
became prime minister to congratulate you on the elevation to your country's top political post.
And in doing so, now you have the very difficult task of dealing with the Ukrainian situation. So first and foremost, sir, what's your
understanding on this attack -- or alleged attack -- by Ukraine on Russian soldiers?
ALEXANDER STUBB, PRIME MINISTER OF FINLAND: Well, it's difficult to paint a full and complete picture because there's a clear information war
going on. So, obviously, all parties involved are trying to find out through satellite and other means what is actually happening.
That's probably what my president is doing as well, he's trying to get a clear picture what's going on in Russia and what's going on in eastern
Ukraine as well.
QUEST: You have said that you do not see a role for Finland to mediate between Ukraine and Russia. But your prime minister -- your
president, forgive me -- is meeting the Russian president, he's got talks with the Ukrainian prime minister, so isn't Finland uniquely positioned to
exact that very role?
STUBB: I sort of want to say yes and no. It's very difficult to mediate because we are in a football team called the European Union, so
it's a little bit like trying to be a referee in between two teams, and it doesn't really work.
But what we're trying to do is to open the channels of diplomacy, open the channels of discussion. All of us have been on the phone frantically
over the holidays to try to solve the issue, but no one has really met face-to-face with Putin.
And we felt it was very important to open that channel of dialogue and try to get things going. After all, face-to-face discussions are probably
the best way to try to solve a crisis.
QUEST: When we talk about sanctions, if the situation remains as it is, the status quo remains, Europe has its sanctions, Russia has its
sanctions, you do not see any escalation from Finland's point of view. But you are prepared to move if Russia moves again?
STUBB: Well, definitely. This is not a trade war. We must look at the different steps that took place from the beginning. Number one, Russia
did wrong. It violated international law. It annexed the territory of a sovereign state.
And step number two, the European Union set forth sections. The Russians retaliated with counter-sanctions, but the basis of the European
sanctions is simply foreign policy. We're trying to find peace, we're trying to get around the negotiating table. So this is not a trade war.
But of course, if Russia continues to destabilize the situation in Ukraine, if it continues to support the separatists, then it is quite
obviously that further sanctions must be taken. But that is not the case right now.
QUEST: It's not the case right now, but you just heard me say, I think, Prime Minister, that already the first cracks, if you like -- Viktor
Orban, your fellow prime minister from Hungary, he says shot -- they've shot themselves in the foot. Slovakia says this is the case. So, I'm
wondering how long does this unity on sanctions amongst EU members last?
STUBB: Oh, I'm sure it will last. And don't worry about that. This whole crisis has actually brought European member states and the European
Union closer in its Russia policy. But you must remember that we're 28 members states. And to try to coordinate these types of sanctions, it's in
the interest of every member state to make sure that their companies are not hit very hard.
At the same time, it's very important to remember that if we get into a situation whereby one member state gets unfairly treated and unfairly hit
by the sanctions, then I think it's very important that we somehow in the European Union try to help. It's called economic solidarity, and we had
plenty of it throughout the financial crisis.
QUEST: Economic solidarity will have to trump subsidies to affected industries, and when I -- I'm thinking now about your agrarian industry,
which you've admitted is going to be disproportionately affected. So, even though your economy, frankly, is teetering on the brink of negative growth
-- the last numbers yesterday showed just how precarious the situation is - - you are going to have to help some of your industries.
STUBB: Well, we'll see how it goes. On the agricultural side, we have more specifically one company which is in the dairy business, cheese
and milk, which gets hit quite hard. About 5 percent of our trade with Russia goes with these sanctions, that's about 0.5 percent of our overall
trade, and it's a big chunk of the turnover of this one particular company.
Of course, we're trying to alleviate the pain and trying to find different types of solutions. I think that's quite natural. But we must
remember the macro picture. If the Russian economy declines 3 percent, the Finnish economy declines 0.5 percent, but we're not there yet.
QUEST: Finally, Prime Minister, pull the strands together about this. How on earth have we ended up so quickly in a situation where we're talking
about violence and warfare between Ukraine and Russia.
We're talking about the European Union or the eurozone heading back towards recession potentially. Russia, potentially recession. You're
talking about a return to the Cold War. In 12 weeks, this thing has gone over the cliff.
STUBB: Yes, it hasn't been a good patch of foreign diplomacy, there's no question about that, no denying that. It only feels like yesterday when
we had the Sochi Olympics, and everyone was in fanfare about how well they went. And then, things started to go sour after that.
Unfortunately we are now going through a very rough patch in EU-Russia or Russia and West relations. And I think it's very important for all of
us to try to find a solution and a way out. And I think that's what everyone is trying to do at this particular moment, that includes the
European Union and its leaders, and that includes my president today and tomorrow.
QUEST: Prime Minister, thank you for joining us this evening. Very much appreciate your time, sir, thank you.
STUBB: My pleasure, thanks.
QUEST: Now we turn to the markets, and US stocks closed down having spent the afternoon languishing in the red. Alison's with me.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: And what's interesting is they languished because they're worried -- meaning investors are worried --
not so much about this latest tense moment between Ukraine and Russia.
It's the worry that this is going to escalate into something more, and it's going to create that piling on that you mentioned. Could we see
another recession in the eurozone? And it goes on and on and on.
QUEST: So, in this environment, admittedly middle of August, Hamptons, Berkshires --
(LAUGHTER)
QUEST: Caribbean. Anywhere else except maybe here. But do you get the impression there's a deep-seated worry, or is this just a little bit of
anxiety?
KOSIK: I think it is a worry. I don't know how deep-seated it is, but it is real, because you're seeing this market not necessarily even move
on the data. Not even move on second-quarter earnings, which by the way, were some of the best we've seen in a while. So, you're seeing the market
move on these headlines.
So, because of that, it's going to get its momentum from what comes out of the headlines. That's what you saw today. Mind you, we did see
stocks come off of those losses. We saw the Dow only fall about 40 points. But we did see the Dow fall 130 points. It had erased, at one point today,
all of its gains for the year. It did come back, though, in the end.
QUEST: It's summertime.
KOSIK: It is! I'm going to the Hamptons, actually.
QUEST: You are?
KOSIK: Yes. Do I get to ring the bell? I hope I do it right this time.
(KOSIK RINGS BELL)
KOSIK: Oh, I did it! Thank goodness! Great, Richard.
(LAUGHTER)
QUEST: She'd have never spoken to me again. When we come back after the break, we'll turn our attention to the very serious situation, what's
happening in Iraq. Europe's pledged to send arms to Kurdish fighters battling ISIS. This is QUEST MEANS BUSINESS. We're live, we're outside,
we're in New York.
(COMMERCIAL BREAK)
QUEST: Seventy degrees Fahrenheit in Old Money, as they used to say. Jenny Harrison will tell us exactly what that is in New Money. It's 4:15
in New York, and you are most welcome, QUEST MEANS BUSINESS, we're live, once again, on the roof at Central Park.
"A crisis meeting in a crisis summer." Those are the words of Sweden's foreign minister, Carl Bildt, speaking in Brussels, where
officials were discussing Iraq, amongst many other problems. Ministers agreed to send more arms to Kurdish fighters, who are battling ISIS
militants.
Several nations pledged more humanitarian aid. Carl Bildt told CNN's Hala Gorani that the move is imperative.
(BEGIN VIDEO CLIP)
CARL BILDT, SWEDISH FOREIGN MINISTER: I think primarily, the ISL threat has to be beaten back by the people of Iraq themselves, by a
government that is credible in Baghdad, by the Kurds, who are defending their own areas. But we ought to give them the support that we can.
That's humanitarian, that's political, and in certain cases, they do need, also, military supplies.
(END VIDEO CLIP)
QUEST: The Iraqi delegate to the United Nations is speaking at the moment at the UN. Delegates unanimously adopted a resolution aimed at
weakening the militants by cutting off funding and the flow of foreign fighters. The ambassador's still talking. Richard Roth joins us, live
from the United Nations.
Fifteen to nothing was the vote from this to condemn ISIS. But here's the point, Richard. ISIS are hardly going to be quaking on the
mountainside because the United Nations has voted unanimously against them. These are bloodthirsty murderers. So, what purpose does this vote stand?
RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT: Ambassadors say it sends a strong message, and they feel that if enough people get the
word from the council to stop funding ISIS and to stop sending foreign fighters, perhaps it'll begin to make a difference.
But the UK ambassador did say this is a long-reaching process. You've got to start somewhere. It's not just the emergency humanitarian aid. You
mentioned Old Money earlier in the program, New Money.
It's about money that the council wants to stop fueling ISIS, whether it's oil fields or getting money from the banks they overrun, or from
elsewhere. Turkey and Syria alleging -- excuse me, Syria and Russia alleging that the council should have mentioned Turkey as an intermediary
for funds that are -- oil going to consumers in Europe.
Here at the Security Council, the vote was fifteen to nothing to crack down on ISIS, a unanimous vote, very rare, considering the council is often
divided when it comes to Syria and Ukraine. US ambassador to the United Nations, Samantha Power, talked about one of the key points in the
resolution, trying to curb foreign fighters joining up with ISIS.
(BEGIN VIDEO CLIP)
SAMANTHA POWER, US AMBASSADOR TO THE UNITED NATIONS: The numbers of foreign fighters in Syria and Iraq, as well as their source nations, are
unprecedented. Reportedly, as many as 12,000 have participated in the conflict.
And the return of radicalized, battle-hardened jihadists to their home countries or other vulnerable destinations has the potential to widen the
scope of the violence. This resolution should help stem the flow of money and people, and I urge all members states to expend very effort to help
achieve these goals.
(END VIDEO CLIP)
ROTH: The Security Council resolution, Richard, was really a point to say, look, we don't like you. They've already said things about al Qaeda,
and they have resolutions and sanctions on the books with these people, but they decided to broaden it out. They named six people in connection with
al Qaeda who are now part of the ISIS brigade.
But yes, it is true, this resolution is not going to make ISIS suddenly wake up and withdraw from territories tomorrow morning. Richard?
QUEST: And Richard, the -- what happens next? Because clearly, they have been attempting to -- they've had the Mount Sinjar issue. We've had,
of course, the President Obama saying that there's no -- going to be no further movements to move people off the mountain. So what happens? What
does the international community do next?
ROTH: Well, in 90 days, they're going to get an update here on the effectiveness of this resolution, but I think a lot of countries are
putting all the stock in this new Iraqi government, and hoping that the big divides between Sunnis and Shia perhaps could be closed a little, and then
ranks could close to go after ISIS.
QUEST: Richard Roth, joining us from the United Nations. Richard, thank you. In a moment, we'll have a break. And then it's the
international aid organization are likening it to a war zone. I'm not talking about Iraq, Ukraine or, indeed, Israel and Gaza. It's Ebola.
(COMMERCIAL BREAK)
QUEST: The world might seem to be in a very desperate state this Friday afternoon. That's the globe that's at the foot, the southwest foot
of Columbus Circle and Central Park here in New York by the Trump International Hotel.
We turn our attention now to one of the other major stories that we're following at CNN. Doctors in West Africa say they are on the ever-changing
front line in this war against Ebola. The virus is moving fast and advancing. There is no indication as to where or when it will attack next.
That's the assessment of the international aid group Medecins Sans Frontieres.
The group's international director, Joanne Liu, has just returned after a ten-day tour of the affected area. Dr. Liu spoke to CNN's Michael
Holmes, she joined him via Skype, and said the countries battling Ebola need massive amounts of aid to prevent the spread.
(BEGIN VIDEOTAPE)
JOANNE LIU, INTERNATIONAL PRESIDENT MEDECINS SANS FRONTIERES: What is clear to us is the situation is deteriorating faster than how we can
respond. So unless some massive capacity in the country where people have hands on, where they can do and work at different levels in clinic, it
would match that we won't be able to contain it.
When I think of working at the (inaudible), we need to work in terms of community mobilization and awareness at the (inaudible) level to get the
right figures and the right picture of where is this epidemic going. And we need to be able to bring care to the people who are infected.
MICHAEL HOLMES, CNN INTERNATIONAL CORRESPONDENT: And the needs are great, as you've pointed out. I think one quote from MSF was that there
needs to be a massive deployment on the ground to these main infection areas. I mean, people -- everything, I think, from gowns and boots to
humans.
LIU: Yes. So, there is the logistic part that is needed. But what these most outcrying need is in terms of human resources. And just to take
an example right now, we are having a treatment center, a medical care center for Ebola, that is meant for 40 persons, 40 beds. And as of this
morning, we had 139 patients who are suspected with Ebola.
And what is going on right now is we have people who are suspected of Ebola, but we're not able to confirm because we don't have enough lab
facility. We don't have enough room in our center. And it may be very dangerous. It's dangerous for the patient, it's dangerous for the health
worker.
HOLMES: What is the level of concern about global spread?
LIU: Well, there is some concern, and I guess it's a well-taken concern. On the other hand, the only way to prevent this from becoming
reality is a much better case management and capacity locally in the countries who are affected today.
It's not by barricading ourselves in our home country and stopping the airlines that would make a difference. What will make a difference is to
bring a massive influx of aid in those countries in terms of logistics, but in terms of human resources of people.
We'll be able to treat, people will be able to follow up and do surveillance of the number of cases and the contact of people who are
infected. People who will help the population to understand what is Ebola.
(END VIDEOTAPE)
QUEST: Now, just to show you the wide-ranging extent of what's happening with Ebola, fears over the disease are preventing some athletes
from competing at the Youth Olympic Games in China.
The International Olympic Committee has told athletes from infected countries they will not be able to participate in swimming or combat events
for fear that the virus could spread. The move has left some African nations feeling mistreated. Kristie Lu Stout has the story from Nanjing.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN INTERNATIONAL CORRESPONDENT: A deep concern over the Ebola outbreak has reached here, mainland China, in Nanjing, host
of the 2014 Youth Olympic Games, 3,500 athletes from all around the world are here to compete, but not the teams from two countries: Liberia and
Sierra Leone. Two West African nations currently battling the deadly outbreak.
In fact, the International Olympic Committee has told CNN that both teams are not here to compete. In fact, both teams never arrived in
Nanjing. And the Sierra Leone Youth Olympic delegation told the Associated Press that they were told by the Chinese embassy not to come to China due
to concern over Ebola.
UNIDENTIFIED FEMALE: I think they should have come. It's a great experience, so I wouldn't -- I would rather come.
UNIDENTIFIED MALE: It is very much unfair, because, OK, not all the participants are affected with Ebola.
UNIDENTIFIED MALE: Man, that's depressing.
UNIDENTIFIED MALE: Yes, I hope no one's really got anything too bad. I hope they're all right. But that's a real shame, because it's, like I
said, absolutely fantastic here.
STOUT: The International Olympic Committee says it is working with the relevant authorities to find the right approach under the guidelines of
the World Health Organization.
In a statement, the IOC says this, quote: "We clearly need to balance the safety of all the participants with the rights of the young athletes
from the countries affected. We regret that some will not be able to compete, and we understand they are suffering twice, with the outbreak in
their country, and then not being able to take part."
With thousands of young athletes living in close quarters here at the Youth Olympic village, authorities here are not taking any chances.
Kristie Lu Stout, CNN, Nanjing.
(END VIDEOTAPE)
QUEST: There are CEOs and then there are CEOs. After the break, the chief exec of an organization with 1.2 billion souls. No wonder Pope
Francis is being hailed as an elite leader. We'll explain after the break. It's QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest in New York. There's more "Quest Means Business" in just a moment. This is CNN, and on this network the
news always comes first.
Ukraine says it has destroyed most of the column of military vehicles similar to these which crossed the border from Russia overnight. Russian
officials have denied sending any armored column into Ukraine. European ministers meeting in Brussels say they're prepared to consider fresh
sanctions on Russia in the light of escalation on the ground in Ukraine. Speaking to me on "Quest Means Business," Finland's Prime Minister Alex
Stubb said the current situation does not warrant more action. The European leaders must consider the effect of sanctions on all E.U. members.
(BEGIN VIDEOCLIP)
ALEXANDER STUBB, FINNISH PRIME MINISTER: It's very important to remember that if we get into the situation whereby one member state gets
unfairly treated and unfairly hit by the sanctions, then I think it's very important that we somehow in the European Union try to help out. It's
called economic solidarity, and we had plenty of it throughout the financial crisis.
(END VIDEOCLIP)
QUEST: At least 80 men have been killed and 100 were in kidnap by ISIS militants during an attack on a Yazidi village in Northern Iraq.
According to the Kurdish regional government, the women have been taken to Mosul and other areas. Ninety-seven young men have been kidnapped by Boko
Haram militants in Nigeria. The raid occurred in a town called Doron Baga in Borno State in the country's northeast. Twenty-eight other residents
were reportedly killed and 25 more injured. In April it ripped more than 200 school girls from a village in the same province, and so far, they've
have not been located.
The Ebola outbreak is turning West Africa into what's known as a war zone. The organization Medecins Sans Frontieres blames fear, confusion and
an infrastructure breakdown for the virus' spread. Ebola's infected more than 2,000 people since it broke out this year. At least half of the
victims have since died.
The Pope is sounding like a good old-fashioned economist on his first papal trip to Asia. Speaking on wealth distribution and warning against
inhumane economic models. The people's Pope isn't just talking the talk. On Thursday Pope Francis was picked up from the airport in Seoul in a lowly
Kia compact sedan, a local vehicle. And today when weather canceled his planned helicopter ride to Mass, the Pope hopped onto the high-speed train
instead and why not? At the Mass, the Pope voiced concern over the world's growing wealth gap.
(BEGIN VIDEOCLIP)
POPE FRANCIS: We are troubled by the growing gap in our societies between rich and poor. We see signs of idolatry of wealth, power and
pleasure who've come at a high cost of human lives.
(BEGIN VIDEOCLIP)
QUEST: Now, Shawn Tully is the editor-at-large for "Fortune" magazine. He recently profiled Pope Francis and called him an elite
manager. It's his article that's entitled "The Pope Means Business." Sort of "Quest Means Business" - I think we'll allow His Holiness his license on
this. Shawn joins me now. A wonderful piece, incidentally, wonderful piece.
SHAWN TULLY, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: Thank you, Richard.
QUEST: But the fascinating part is, what he said isn't new. He said it before if you remember his early comment about capitalism and greed in
our society. But he's banged in on it again and again.
TULLY: He is. What the story's about is juxtaposing his criticism of capitalism with what he's doing to bring the Vatican's reputation back up
after all the scandals that have happened at the seat of holy power at the Vatican, involving the Vatican Bank, the Vatican's finances, the arrest of
monsignors who were laundering money. So he's got a very interesting view of money.
QUEST: Right. He's got an interesting view of money but he knows that is the system within which he has to work, so he'd better play the
rules for his purpose.
TULLY: Exactly. So what he's doing is he's downsizing the Vatican, mainly through attrition. He doesn't believe in slashing jobs or doing
what capitalist companies would do. But he does believe in efficiency, hard work and bringing costs down so they have a self-sustaining budget at
the Vatican.
QUEST: Let's look at the numbers of organizations -
TULLY: Yes.
QUEST: -- that he's brought in which you referred him -
TULLY: Yes.
QUEST: -- because if you look at this list, you've got E&Y - Ernst & Young, you've got Deloitte and Touche, you've got KPMG, you've got
McKinsey, you've got Spencer Stuart - all these are, I mean bastions of managerial capitalism -- to make an organization more efficient.
TULLY: Yes, and this is the first time that the outside firms, and especially lay financial experts have also been brought in from all over
the world. The George Shell (ph), former prime minister - or rather foreign minister - of Singapore - he's part of one of the big advisory
commissions and many, many other - Christopher Patten who was the last governor of Hong Kong is planning along with McKinsey the whole
restructuring of the media area which is a big money loser, especially Vatican radio runs heavy deficits.
QUEST: What's the purpose of it all? I mean, at one level to make the Vatican a leaner, more efficient operation for obviously the spreading
the good word as seen by the Pope.
TULLY: Right.
QUEST: But there has to be more to it than that.
TULLY: Yes, absolutely. He's been very explicit about the goal, like a good CEO. Strategic - he doesn't read balance sheets, doesn't talk about
cash flow, but he's very explicit about his goal. And his goal is I want to have more money for charity that's given to the Vatican that doesn't
have to be used for operating that can be given to the poor and the needy.
QUEST: Do you - sorry - do you --
TULLY: He wants bigger surpluses --
QUEST: Yes.
TULLY: -- and a more healthy budget to preserve more charitable giving - or more giving to the Vatican to pass on to the poor.
QUEST: Forgive me interrupting you there, but this is so fascinating, I've got so many questions I want to get in. Why are we seeing here a
different Pope, say to Benedict, who had lived his entire professional life within the Vatican structure. But even John Paul had been a bishop he had
been an archbishop, he had been a - what was it about Francis? What did he see in this need?
TULLY: Well, Francis had been the archbishop obviously of Buenos Aires, and he had been a very tough financial manager there. For example,
money had been deposited by the Archdiocese at a number of banks, they were giving loans that were very low interest - special, privileged loans to the
Archdiocese. He said it was a big conflict of interest, he sold all their shares, he deposited the money in banks where they had no financial
relationship with, he declined to do fundraising -
QUEST: Right.
TULLY: -- or the fancy dinners. So when the cardinals got together in March of 2013 to choose a new Pope, there was - financial reform was -
really a major agenda item.
QUEST: I'm guessing that none of us would actually like to have to submit our expenses to Pope Francis.
(LAUGHTER)
QUEST: It'd probably take a very sharp palo (ph).
TULLY: He would. Thank you, Richard. I really enjoyed it.
QUEST: Now, when we come back after the break. You know the country's in trouble when even the statisticians are getting their maths
wrong. In Canada, their faces are more than red. Think of the maple leaf and that sort of color. We'll explain after the break. It's "Quest Means
Business." Good evening to you tonight.
(COMMERCIAL BREAK)
QUEST: Holidaymakers enjoying the mid-August weather in Columbus Circle at the middle of Central Park. And a warm welcome back. It's
"Quest Means Business," it's a Friday so we're deciding to enjoy a bit of the last few days of summer. Maybe I'll show you a little later on. Over
in Central Park just over there, you can just see the first tinges of the leaves starting to turn. We'll show you those in a moment or two. Can
autumn and fall be far away?
Now, it's being described as one of the biggest data mistakes in history. Canada has had to correct its July job numbers after admitting it
was completely wrong. But if you join me - allow me to give you a little bit of an economic one-on-one tutorial. Now, the initial number that was
from the statistics agency said that - I'm ready for this - initially they said 200 jobs had been added. Yes, just 200.
That was a major shock, it was far worse than expected. Four days after that number came out, it was released - it was withdrawn and they
said a mistake had been made. Today, the corrected number came out. Remember the original was 200 - 200. Today, the new number, 42,000. Not
much difference. Only a difference of 20,000 percent.
So, in other words, if we were marking the work of the statisticians in Canada - wrong, right. Oh, dear. Could do better. The stat agency
says human error was to blame. Thousands of people accidentally were not counted. Derek Holt is vice president of Canada's Scotiabank Economics.
He says he's never seen anything like this mistake before. He joins me now live. How - (inaudible) - how on earth do you make a mistake of 20,000
percent? And the crucial point is not that the mistake was made, but then nobody realized the discrepancy was so vast before they published the
number?
DEREK HOLT, VICE PRESIDENT OF ECONOMICS, SCOTIA CAPITAL: Well you're right. It's unfortunate that something like this happened, but it is an
aberration along the trend. I mean in the grand global context, Statistics Canada is recognized as among the elite global statistical agencies
anywhere, and so what - part of the reason for the shock here is the fact that it's very rare for this sort of thing to happen to Statistics Canada.
QUEST: But, here's my point. When they realize that the number was 200, you might've thought somebody at Statistics Canada would say that
can't be right. The consensus was 30,000 or $40,000 or whatever it might have been. Two hundred - we'd better go back and check the numbers. Why
didn't they? Or if they did, how did this get through?
HOLT: You know, it's a good question. When we first saw the numbers we flagged a number of inconsistencies that we thought existed in the
report. But to Statistics Canada's credit, they came out fairly soon after that and said, what a minute, we recognize there's a problem, we're going
to step on it right away and revise the numbers. And in many other countries around the world, you wouldn't see that revision until a month
later or there about, and so to their credit, they stepped in front of a problem that they had and on occasion humans do make mistakes, and
unfortunately that did happen this time.
QUEST: You're right, and we mustn't beat them up too much, because, as I say, let him without a mistake is the man or woman who has done
nothing or whatever that paraphrasing of that famous quote is. Let's talk about the actual economics - the underlying economics of Canada at the
moment. We look and we see obviously what happened in Germany in the European Union this week. We've seen the growth of the United States as
well. Are you worried if Canada and the potential of a battle against Russia - because obviously on the Western side, there are some serious
issues?
HOLT: I think Canada's ins somewhat of a sweet spot in the global economy. It's - in fact, let's serve the country well throughout the
entire crisis period. It's - in terms of deficits, they're among the smallest in the world. In fact, at the federal government, we'll see a
return to surplus next year. The banking system has been among the soundest anywhere in the world. We didn't employ a lot of the more
aggressive funding techniques -
QUEST: Right.
HOLT: -- and some of the more questionable securities that were (AUDIO GAP) United States or United Kingdom. And so we avoided many of
those problems, and that balance sheet strength allowed a lot of resilience to shine through in the Canadian economy. I think we're probably in a
period where we'll see relatively soft growth going forward, but it's a nice spot to sit in the world.
QUEST: Sir, thank you for joining us, and hopefully the sums will all be right in the future. Thank you very much, Derek, good to talk to you.
Now, a moment or two ago I referred to what I can see as the hint, the scintilla, the very suggestion of a turning of the leaves. Well look at
this - you'll see exactly what I'm talking about. There you see. Jenny Harrison's at the World Weather Center. Look at that, Ms. Harrison.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes.
QUEST: The first leaves are turning in Central Park. There's some more over in the far gone. Can we doubt that autumn is far off?
HARRISON: Well, I guess not. It's the middle of August - we all know it's going to come `round eventually, Richard. Of that thing we are
certain. We know eventually after summer, autumn is going to arrive. But a little bit early maybe, a little bit early for the leaves to be turning,
but I tell you what. There's been some very, very stormy conditions. We of course have had them in this week across the northeast of the U.S. and
there's been rains of course, but also across in Europe.
We've had really nothing but storms across this region for the last few weeks, and again the last few hours it has been a similar sort of
picture. And in particular we've had quite a few waterspouts that've been reported in the last 24 hours. You remember a waterspout is a tornado that
forms over water, hopefully it doesn't obviously reach land. But we've had a few reported here in the Baltic Sea, close to the coast of Sweden. Also
very close to the coast of Norway as well, as well of course more hail. In fact in northern areas of Italy, hail fell to a depth of 20 centimeters,
just under 8 inches. We're about to clear it using bulldozers.
Now, the storms that are clearing as we go through the weekend will usher in some much cooler air behind. That's not a bad thing because
temperatures have been so much above the average. More rain unfortunately across the northwest, and with that area of low pressure, some very strong
winds potentially as well. But those storms continuing to work their way eastwards. Again, there's more heavy rain and there's some large hail just
like we had again on Thursday, and also the chance of some tornadoes.
Temperature-wise it's still warm on Friday, but those temperatures are beginning to come down and they really will come down once that front has
gone through. Look at this - 35 in Scopje, 5 degrees above average. The same 5 degrees above in Bucharest with a high there of 33 this Friday. As
I say, things will actually begin to ease off. So, for example, in Bucharest getting down to the mid to high 20s as it goes through the
weekend. Near the 20s in Kiev and a similar sort of story - it may be about 28 in Scopje by Tuesday. But in fact those temperatures are a little
bit below the average.
I mentioned those strong winds coming in with the area of low pressure. There it is - particularly strong on all of these west-facing
coasts, and we could see winds actually in Glasgow getting up to around 75 or 80 kilometers an hour. The rains coming in as well and it really
actually picks up more rain as it works its way across the northeast, so really depositing some heavy rain there into the low countries as we head
through the weekend. It's been very cool and wet as we know across those central regions - as much as 150 millimeters above the average. Also in
the U.K., the Met Office has been put out their report so far into August. And already Scotland has seen above the average and also England and
Northern Ireland. So it's an unsettled picture.
Temperature-wise on Saturday, mid to low 20s generally, nice and warm still in the Med. We've got 28 in Rome and 36 Celsius in Athens. And not
a bad weekend for you, Richard. Maybe some sundry showers on Sunday in New York.
QUEST: We thank you for that. Jenny Harrison at the World Weather Center. I'm going to now tell you the full quote of course is, "Show me a
man who has never made a mistake and I'll show you a person who has never achieved much." When we come back, a mounting PR nightmare and awful
earnings. SeaWorld's admitted it needs to change. We'll be live with a former SeaWorld after the break. It's "Quest Means Business." We're in
New York.
(COMMERCIAL BREAK)
QUEST: SeaWorld has promised to double the size of its killer whale habitat and increase the maximum depth to 15 meters by 2018, and that's
about 50 feet. Killer whales can grow up to 9.8 meters in length. The animal rights group, People for Ethical Treatment of - PETA -- of Animals
said they were not satisfied, saying that a bigger prison is still a prison. The controversial amusement park has suffered a major PR problem
since the airing of "Blackfish" last year. It was a CNN documentary which traced the troubling history of killer whales in captivity.
(BEGIN VIDEOCLIP)
"BLACKFISH" CNN DOCUMENTARY: We started having difficulty getting them all into this one small steel box to be honest. That's what it was -
it was a floating steel box. That's where food deprivation would come in. We would hold back food and they would know if they went into the module
that they would get their food. So if they're hungry enough, they're going to go in there. And during the winter, that would be from 5 at night `til
7 in the morning. When you let them out, you'd see these new two streaks, and sometimes you'd see blood.
Closing that door on him and knowing that he's locked in there for the whole night, it's like - to staff and (inaudible.)
QUEST: SeaWorld said the film's inaccurate and misleading, it isn't fair and balanced. In March the company's chief exec said, "We can see no
noticeable impact on our business. The movie in some ways has actually made people perhaps more interested in marine mammal parks and actually
even about us." That's what he said then. Well, SeaWorld's stock plunged 33 percent on Wednesday after it reported weak earnings and announced poor
attendances for the year . The company has now acknowledged attendance has been hurt by the recent media attention. To put into perspective what one
of their improvements is this 50-foot that they say is now 50 foot deeper, we're going to - we want to - show you how deep that actually is. The
chalkboard over there or blackboard, whatever, shows the distance from where I am to over here. That is 50-foot difference. They say that's a
difference in water volume of 5 million gallons I think it is - 5 to 10 million gallons. But you, sir, John Hargrove, former SeaWorld trainer and
featured in the documentary "Blackfish" - you would say that this really means very little.
JOHN HARGROVE, FORMER SEAWORLD TRAINER: Absolutely. You're still going to have all of the same health issues that these animals have from
being in captivity. Even if you give them an extra pool, if you double their size, triple their size, it doesn't matter. These animals are not
suited to thrive in captivity, and it's right before us. You can just look at those animals and you can see the host of health issues that they have.
And to use the quote that Jim Atchison put out in the media today, he said, `We're not going to apologize for the way - for what we do or how we do
it.' And I think his statement says it all.
QUEST: Right, but do you believe - I mean, we've seen the numbers that are down, we've seen the stock that is down, SeaWorld says there are a
variety of other reasons including bad weather, all other attractions in the area, all these other things. You have a cynical smirk on your face.
HARGROVE: Well, it's interesting - yes, I've heard the rain theory excuse, I've heard the Easter being in a different quarter, but it didn't
seem to affect Universal, it didn't seem to affect Disney World. And they're in the same area. So how could it only affect SeaWorld and not the
other two major destinations in the area? So -
QUEST: Fundamentally, though, (inaudible) around the block, you may not be as familiar) with this whole broikas over SeaWorld. Are you saying
that the orca whale cannot be kept in these conditions - kept in a captivity situation or that the situation in this case is wrong. Is it all
or nothing or should it never happen?
HARGROVE: It should never happen. We cannot give them - like I said before - you can't - even if you double or triple it, we cannot give them
what they need for them to thrive and be healthy. These animals are too large, they're too smart to be held captive. In my 14 years' experience, I
wish I could give you a different answer. But my 14 years proved because I saw it every single day between three different killer whale parks, all of
these health issues that they have from being -
QUEST: But you continued doing it.
HARGROVE: I did it because - for a lot of reasons. Because you're in love with the animals -
QUEST: Right.
HARGROVE: -- you have these relationships it's so hard to walk away from and you think you want to try to fix it.
QUEST: Sir, thank you for joining us.
HARGROVE: Thank you.
QUEST: Thank you very much.
HARGROVE: Thank you.
QUEST: Now, when we come back this weekend - you don't escape us just yet - the world of banking as we know it is often shrouded in jargon and
legalese. In the "Best of Quest" this weekend, one book cuts through the double-speak. "The Bankers' New Clothes" is the choice of Kingsley
Moghalu, the deputy governor the Central Bank of Nigeria and a published author himself. He praises the book's plain English approach.
(BEGIN VIDEOCLIP)
KINGSLEY MOGHALU, DEPUTY GOVERNOR, CENTRAL BANK OF NIGERIA: They just break it down and say beyond all this, the real problem is banking rests
too much on leverage, which is to say borrowed money - other people's money. That's what's dragging banking, and that's a very risky proposition
to want to make a profit on the basis of borrowed money, and that there should be more equity in banks. The shareholders should put more of their
money in banks.
(END VIDEOCLIP)
QUEST: How wonderful - you can have the "Best of Quest." Make sure you have a digestive biscuit and a cup of tea or maybe something a little
stronger and we'll get together for a weekend chit-chat. It's only on CNN, it's 7:30 London time. You might need something a little stronger. I'll
have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." We're up on the roof and joining the middle of days of summer. Well, who can remember an August
quite like this one? Doesn't matter whether it's Ukraine and Russia, whether it's Iraq and Yazidis, whether it's Israel and Gaza, whether it's
Ebola and the awful, awful deaths taking place there. No one in this industry can remember a summer quite like it. And yet in all of this time,
we've got to make sure we do take that moment to take a rest, to recharge, to be prepared. After all, if this is what it's like in the summer, who
knows what it's going to be like by the time the fall arrives. And that's "Quest Means Business" for this Friday. 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 next week.
END
