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Quest Means Business
Russia in Focus at G20 Summit; Uncertain Times Ahead for Russia; Eurozone Economy Grows 0.2 Percent in Q3; European Stocks Up; World Bank Says Ebola Response Too Slow; Equatorial Guinea to Host AFCON 2015; Squabbling Over FIFA Corruption Report
Aired November 14, 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: Ringing on Wall Street, no record at the end of the week. It's been a very busy week, as we will point out to you. And
the man with the hammer brings the week to a close.
(GAVEL POUNDS)
QUEST: We only got one tonight. Good evening, it is Friday, the end of the week.
Tonight, the world is watching Russia as Vladimir Putin lashes out on sanctions.
Greece flourishes, Germany flounders. The eurozone's fastest-growing economy is now in the south.
And the head of the World Bank tells us the effort to tackle Ebola is still not up to speed.
I'm Richard Quest. It may be Friday, but of course, I still mean business.
Good evening. Tonight, it is all about Russia, politically, militarily, economically. Western leaders say they will confront President
Vladimir Putin at the G20 summit in Brisbane in Australia after Russian planes and a suspected submarine made ominous moves closer to foreign
powers.
Now, as the president arrives in Australia, the West is preparing to round on Mr. Putin at the G20 summit. He's been denouncing Western
sanctions and he says he's bracing for what he calls a potential "catastrophic slump" in oil prices.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): It is harming us to some extent, but it is harmful for them as well because it
undermines the whole system of international economic relations. But I really hope and I am coming from the conviction that finally an
understanding will be reached and all of this will be left in the past.
(END VIDEO CLIP)
QUEST: If you need to understand just the seriousness of the situation, and I don't just mean militarily, but economically, understand
that the G20 summit is taking place at a pivotal moment for Russia's economy, and if you join me at the super screens, you'll see exactly what
I'm talking about.
So, the Russian economy is extremely dependent on, obviously, oil, which is its main export. And whichever way you slice what's happening at
the moment, the situation is serious. I want to begin with sanctions.
Sanctions imposed by the West is having difficulties for Russian banks, which are having to go to the central bank to refinance their debt.
Those sanctions are also meaning a lack of availability of equipment for things like the oil industry and, of course, it is creating a depressing
effect on economic growth in Russia. So, the sanctions on themselves having an effect.
Now, factor in energy and oil prices. Bearing in mind 70 percent of Russian exports are oil. The fall in the price of oil is leaving a hole of
about $40 billion to $50 billion in the Russian budget. That also has an effect -- a depressing effect on economic activity.
You've now got two major push-downs, oil and sanctions. So, throw in the currency issue, and you start to see the currency is now pushing down
on the economy. The central bank's let the ruble float freely. It has devalued. The result of that, of course, is inflation.
With no growth from these, inflation from that, a worsening economy, it's not surprising that President Putin is facing stagflation in the
Russian economy and, of course, a recession.
All this week on this program, as we've covered the serious situation, you've heard the biggest names in Russian business and economics expressing
their concerns about this uncertain situation.
(BEGIN VIDEO CLIP)
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Says it will let the ruble exchange rate be set by the forex markets.
RUCHIR SHARMA, HEAD OF EMERGING MARKETS EQUITY, MORGAN STANLEY: You've seen it in the long-term perspective that the Russian currency has
fallen a lot, or it appears to have fallen a lot. But it started out being one of the most expensive currencies in the world. It was egregiously
valued, and now what the currency is doing is adjusting and coming back to reality.
TIM ASH, HEAD OF EMERGING MARKETS RESEARCH, STANDARD BANK: There's fundamental reasons for ruble weakness: low oil prices, low growth, the
conflict with the West. Sanctions are hurting.
(END VIDEO CLIP)
QUEST: The man who runs the second-largest bank in Russia compares his situation to being held hostage.
(BEGIN VIDEO CLIP)
ANDREY KOSTIN, PRESIDENT AND CHAIRMAN, VTB BANK: We did not invent these sanctions, we did not introduce the sanctions, so we are the hostage
of, we believe, the geopolitical situation.
(END VIDEO CLIP)
QUEST: Russia's economy is still growing for now. It's slowing, and new figures today don't yet show the worst of what's happening.
(RINGS BELL)
(BEGIN VIDEO CLIP)
SERGEI GURIEV, ECONOMICS PROFESSOR, SCIENCES PO: In a status quo scenario, sanctions don't change, there are no more political disturbances,
let's put it this way, no more foreign policy escalations, and even if oil price doesn't go further down, then still Russia is very likely to face
recession next year.
(END VIDEO CLIP)
QUEST: Now, let's talk about this with Marin Katusa, the author of "The Colder War," who joins me from New York. Sir, the oil price factor,
this massive fall in oil, which is acting as a catalyst to other economies, a growth, if you like, it's really turbo-charged some economies, is having
exactly the opposite effect on Russia.
MARIN KATUSA, AUTHOR, "THE COLDER WAR": Well, one thing people have to understand, the major export of Russia is oil, and now, Russian oil is
becoming a lot cheaper for China, for Europe. So, that is an advantage on the margins for the Russian oil company, something the media's not really
expressing.
QUEST: Even so, Russia would have no growth, arguably a recession, the ruble's depreciation will -- because there can't be domestic demand to
pick it up, there isn't the goods and resources in Russia to make up many of those products and services, therefore importing inflation, stagflation.
KATUSA: Great point, and I don't disagree with you. But what's really important to put into perspective is what weapons does Putin have?
His number one weapon is energy, and to put things into perspective, during the last financial crisis, when OPEC had to pull back on production, it was
actually the Russian energy sector that expanded and took advantage of the situation.
And remember, Russia's near its all-time highs, almost touching its previous Soviet highs for oil production. So, even at $75 oil, the
Russians will do just fine.
QUEST: Well, if you're right, then President Putin -- and bearing in mind your book is on the Cold War and the new Cold War, if you like --
KATUSA: "The Colder War."
QUEST: Well, the Colder War, yes. When President Putin turns up in Brisbane, does he have -- if you like, does he have the ability to be
brazen and the ammunition to back it up?
KATUSA: Well, he is. He's -- blatantly been brazen. Look what he's doing with China. These sanctions, first of all, go against what the laws
and the UN the Security Council's been about. More importantly, these sanctions have pushed Russia closer to China, and that was a big mistake on
the EU and also the US.
So, it's coming back to haunt, for a country like Germany, for example, 300,000 jobs are directly related to the Russian export, so
there's a lot of problems in the EU facing these sanctions that have backfired.
QUEST: Right sir. Many thanks for joining us, put us -- putting that side of the story. Let's stay with the global macro economic perspective.
Steve Hanke joins me, the economist from Johns Hopkins University, live from Baltimore. Steve, always good to have you with us on the program.
We were hearing there about the, if you like, the ability of Putin to be brazen in all of this, but as I read your views in your articles, you're
not so sanguine about the long-term effects, or at least the effects on the Russian economy.
STEVE HANKE, PROFESSOR OF APPLIED ECONOMICS, JOHNS HOPKINS UNIVERSITY: Well, the first point is that the sanctions are doing a lot of damage in
conjunction with the oil prices that have dramatically been reduced in the past few months, Richard. You can't forget the oil.
So, you've got kind of a number of things going on here at the same time. Everything putting a lot of momentum behind the downside on the
Ruble. And as the ruble collapses due to lower oil prices and also sanctions, but I must emphasize that probably oil has been as big a factor
as this story as you can get.
Because the break-even price to balance the budget in Russia for crude oil is about $102 a barrel, and it's below $80 a barrel now.
QUEST: All right.
HANKE: So, that is pinching and pinching hard.
QUEST: If the -- if this is really a political battle, Steve, if this is really more about the reappraisal or putting Russia back, if you like as
a global player, then the president is prepared to pay whatever price is necessary. Which makes economics interesting, but until crisis,
irrelevant.
HANKE: Well, I think that diagnosis is generally correct, Richard, and the point is that you have Putin's popularity soaring as these
sanctions have come into play. I've always been adamantly opposed to sanctions for a variety of reasons, but the main one is that they are a
means which never accomplishes their stated ends or goals.
And this is a perfect example. These things have backfired massively. They've made Putin extremely popular at home. And as long as he remains
popular, he can be very brazen.
QUEST: And that brazenness -- all right, so, the G20 -- Steve, you've been around more G20s, G7s, G8s, then most of us will ever have hot
dinners. What should the right -- briefly, what should the right reaction of the coalition or the allies or the West at the G20 be?
HANKE: They should abandon the sanctions immediately, and I think there's now a lot of pressure will be developing, especially in parts of
Eastern Europe, not all of Eastern Europe, and even the big core country Germany, because as the ruble collapses, Richard, the big story in the
ruble is going to be the following. It is putting a lot of pressure on exports coming out of Germany --
QUEST: Right.
HANKE: -- that would be going into Russia. It makes any importation of goods and services by the Russians much more expensive, including the
Germans. So, I think that the German business community is going to start getting --
QUEST: Right.
HANKE: -- pretty resistant to Merkel's adamant calls for more sanctions.
QUEST: Steve, thank you for joining us. I appreciate it tonight. And later in this program, you're going to hear maybe a different view. A
man who says that actually sanctions should be increased and that the way to deal with this is the opposite of what Steve was just saying, but
actually to ratchet up the pressure at the G20.
We turn to Europe in a moment. The economic tortoises have outpaced the hares. The surprising centers of growth. It's in the eurozone and
it's next. It's QUEST MEANS BUSINESS, it's a Friday, good evening.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: A welcome surprise. The eurozone is growing again, and the best performing countries are far from the usual suspects. Greece,
actually, showed the strongest growth, and revised numbers from the first quarter reveal the country is very firmly out of recession.
So, Greece, compared the previous quarter, 0.7 percent. Slovakia 0.6, and even Spain, which of course, has actually done quite well in recent
quarters, also performing remarkably well.
The two core eurozone countries didn't fare nearly as well. They did beat expectations, which is something. Germany has avoided another
recession, just barely. Doesn't get more barely than that, just an inch over the edge. And the French economy grew three tenths of a percent. But
put this into perspective, of course, seven tenths to 0.1.
Hans-Werner Sinn is the president of the IFO Institute. He joins me now from Munich. All right, I will accept your criticism, sir, that the
Greece number is a sort of massive bounce back, if you like, and it's unlikely to be permanent or reflected. But Germany's weakness is
disturbing, isn't it?
HANS-WERNER SINN, PRESIDENT, IFO INSTITUTE: Well, don't overdo it. Germany has a very low rate of unemployment, completely different from the
Southern European countries, which are still in deep, deep trouble.
It is true, the growth rate slowed down, and we will have only a little bit more than 1 percent this year, and a similar forecast has been
made for next year.
QUEST: The eurozone is growing, we have now, with the exception of Italy, which is still sort of minus, but the countries are growing. So,
the issue becomes German growth at 1 percent isn't strong enough. Domestic policies in Germany need to get that moving again.
SINN: Well, I'm not sure. One percent growth for Germany is the long-run growth rate. Germany doesn't have a growing population, so we
don't have North American growth rates.
But looking for Keynesian demand-creating measures, that is borrowing to boost demand, is a little bit early. For that, I would look forward to
a recession, but I don't see the recession. It's just an average sort of growth, no longer the boom that Germany had the last three years.
QUEST: And well, that, if you like, is the traditional German view when it comes to growth, but the eurozone view on German growth surely must
be that Germany has to pick up the speed, by whether we call it Keynesian, through borrowing, or just simply by stimulating consumer and German
domestic demand. That particular for a country, as you're aware, that runs a trade surplus, as Germany does.
SINN: Yes, but part of the problem is that this surplus -- the trade surplus is an export of savings. So, rather than investing in Germany,
investors move to other countries, to the large world, including Southern Europe, and here we are coming to the European policies.
Basically, the policies in recent crisis yeas have been to escort German savings again to Southern Europe, where it doesn't want to go. We
had a decade before the crisis when there was too much capital export from Germany to Southern Europe. Part of the money was eaten up, part was
invested --
QUEST: Right.
SINN: -- in real estate, which now stands idle. And then, the investors wanted to correct, and then the policymakers said no, you should
not correct. You should keep going --
QUEST: Right.
SINN: -- to these places. And that is the problem. You should not complain about low German investment if you want German savings to be
exported to other countries.
QUEST: Now, when we look at the next move of the ECB, is it likely that the Bundesbank, or that the conservatives in Germany won't, the
conservative view in Germany -- but is it likely the Bundesbank would go along with a full-scale QE by the Bundesbank -- by the ECB?
SINN: Well, going along in the sense of participating in the actions if it was a majority decision, yes. Going along in terms of saying yes, I
doubt that. The president of the Bundesbank has clearly said that he does not like QE at all because he thinks it's forbidden if it incurs buying
government bonds. Article 123 of the EU treaty expressly forbids state finance.
QUEST: Right.
SINN: And don't forget, even the Fed in America would not buy Californian government bonds if California is in trouble. If you
transplant the European Central Bank to America, it would buy California government bonds.
QUEST: Oh!
(LAUGHTER)
SINN: It is much more aggressive than the Fed ever is.
QUEST: That's an interesting point, sir, that you and I will have to talk about --
(CROSSTALK)
SINN: Yes, I hope you understand what I say.
QUEST: I do understand, but of course, there's a sophistry in that there's no equivalent in the sense of the US treasury at the center that
would replicate. But we shall have to discuss that in the future, if we may, sir. I appreciate your joining us tonight.
SINN: We don't -- well --
QUEST: We've got to move on. Thank you, sir. Now, the GDP numbers helped push most European stock markets high. We will be back with him in
the future to talk about that interesting question.
In Pairs, Airbus and Bouygues got -- both rose on the back of strong earnings and raising of forecast. International demand help offset a
slowdown in France, where the numbers were.
The world isn't even close to containing the Ebola outbreak. It may not be the lead story of the news every night, but the words of the World
Bank president Jim Yong Kim are a sobering reminder. And we're going to hear from him on QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Over the next few days, the world's richest countries, 20 of them, are meeting in Brisbane. And while they're enjoying whatever food
the Australians are putting on and trying to solve their problems, the Ebola crisis in three of the world's poorest countries is growing.
The outbreak has claimed 5100 lives, 5,100 lives. Help, everybody agrees, is slow to arrive. The World Bank president, Jim Yong Kim, has
been on this program many times, has now been calling for an emergency fund, not only now, but particularly to help contain future outbreaks.
Speaking to Andrew Stevens, the president says the resources required are enormous.
(BEGIN VIDEOTAPE)
JIM YONG KIM, PRESIDENT, WORLD BANK: Right now, we're still not yet at the stage where we're mounting the actual public health response. In
other words, even in Liberia, we don't have enough people or enough resources to do contact tracing.
So, in Nigeria, which was a great success story, you have to remember, one cross-border case led to 19 other cases, they spent $13 million, 200-
plus physicians, 600-plus other health workers, 19,000 home visits in order to get that country to zero.
That's the kind of response we're going to have to have in each of these three countries to get them to zero. We're not even close to doing
that yet. So encouraging, but there's still a long way to go, and we're going to need a lot more people and a lot more money to get there.
ANDREW STEVENS, CNN INTERNATIONAL CORRESPONDENT: You said a little more than a month ago that the international community had failed miserably
in its response, its initial response to Ebola. A month later, has it changed much, or are they still -- is it still failing miserably?
KIM: We're still behind, and we're still not, as I said, doing what we're supposed to be doing in terms of the full public health response.
But it's much better than it was before. The US has scaled up tremendously in that period.
STEVENS: But not good enough?
KIM: It's still not good enough because we've got to get those three countries to zero. So, good enough would mean that not only are we
treating the people who are sick, but we're tracing all the contacts and then going to their homes and taking their temperatures. We're nowhere
near being able to do that.
STEVENS: What is your message to the G20, the 20 richest countries in the world about the fight against Ebola?
KIM: The message is, we are just at the beginning, and we've got to have the stamina, we've got to have the commitment to continue until we get
these countries to zero.
STEVENS: Well, let me ask you about that. Because you have called for a $20 billion fund, which would be, effectively, a rapid response in
dealing with any sort of outbreak, how close are you to seeing that being realized?
KIM: Well, we're not calling for countries to put money into a fund. At the World Bank, and with many other multilateral development banks,
there are really interesting ways for us to utilize our existing balance sheet to raise money on international bond markets.
And so what we would do is just get an agreement ahead of time for countries to say, if there is an epidemic that needs funds quickly, we
authorize you, World Bank, IMF, all of you, to go to the bond markets and raise as much as tens of billions of dollars at a moment's notice to
disperse to tackle these epidemics.
STEVENS: And have you got that agreement?
KIM: Not yet. We don't have -- we don't have it yet, but everyone I've spoken with has said to me, that makes perfect sense.
(END VIDEOTAPE)
QUEST: The Africa Cup of Nations has found a new last-minute home. The 2015 tournament is now going to be held in Equatorial Guinea in West
Africa. The original hosts, Morocco, had tried to postpone the event until 2016. They used the fears of Ebola. CNN's "World Sport" Don Riddell joins
me. Don, so Equatorial Guinea now gets it.
DON RIDDELL, CNN SPORTS CORRESPONDENT: Yes.
QUEST: What happens to Morocco? And can they join in?
RIDDELL: No. No, they were only in it by virtue of the fact that they were hosting the tournament. Tournament hosts always get to play.
QUEST: Right.
RIDDELL: So, they're not hosting any more, so they're out of it. And what's fascinating about Equatorial Guinea's situation is that their
football team earlier this year was banned from the tournament because they'd fielded an ineligible player, but now because they've offered to
step in and save the day at the last minute, they get to play as tournament hosts.
QUEST: Where -- I've asked this question several times in recent weeks, and I'm still not sure I understand it. Where does reasonableness -
- who was right in all of this? Was it reasonable for Morocco to say we don't want to do it? Or is it more reasonable for CAF to say you're going
to -- this goes ahead? Where's the balance?
RIDDELL: Honestly, I don't know. I guess it depends on how serious you think the spread of Ebola is in various parts of the African continent.
I can tell you that there were a lot of countries that didn't want to host it, and in the end, CAF only really had Equatorial Guinea as an option.
Ghana didn't want to do it, South Africa didn't want to do it. Morocco as a country was glad to be shot of it. It's a tourist
destination. They didn't want to damage that. Their tourism minister said it's a good thing we don't have it.
QUEST: I need to talk FIFA. So, the man who wrote the report says that the man who did the investigation may have misunderstood the report,
which based on his investigation. This is Garcia verses Eckert, and Eckert is now saying there must be a misunderstanding. Kafkaesque wouldn't be too
far.
RIDDELL: I -- yes.
QUEST: What do you understand had happened?
RIDDELL: Well, I can tell you what's happened now. Michael Garcia, the man who originally did the investigation, and he spent 18 months and
wrote the 430-page report, he didn't even see the version that Eckert published yesterday.
Eckert is saying, well, I can't understand why he'd be surprised by it anyway, because a lot of what I put in was copied word-for-word form his
original anyway. So, Eckert can't understand what the problem is.
The two of them, apparently, have been trying to speak today, or at least Eckert has been trying to get in contact with Garcia today without
success. Make of that what you will in the 21st century, but I do understand they're going to be speaking in the next few days. Meanwhile,
FIFA have confirmed that Garcia has appealed. They have received his appeal --
QUEST: Ouch! Ouch!
RIDDELL: I mean, it's --
QUEST: This is nasty.
RIDDELL: It's very he said, she said at this point.
QUEST: Well, he said, he said.
(LAUGHTER)
RIDDELL: OK.
QUEST: But I get your point.
RIDDELL: Yes, I was using the established phrase.
QUEST: Right.
RIDDELL: But again, who knows where this goes next?
QUEST: Hash tag -- Don't. Touch. The bell.
(LAUGHTER)
RIDDELL: It's almost out of arm's reach. I'm not tempted today.
(LAUGHTER)
QUEST: Viewers have been distressed --
(LAUGHTER)
QUEST: -- by him touching the bell.
When we come back, QUEST MEANS BUSINESS continues. It's all smiles in public in Brisbane. In private, Russia's president can expect to face
anger from Western leaders. It's the weekend G20 summit, which is arguably a waste of time anyway, but it's happening in Australia. Get off!
(LAUGHTER)
(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.
Barack Obama's arrived in Brisbane in Australia for the G20 Summit. His Russian counterpart Vladimir Putin had arrived earlier in the day. The
host is the Australian Prime Minister Tony Abbott and says he will confront Mr. Putin over Russia's role in the downing of the Malaysia Airlines flight
17 over Ukraine in July.
A suicide attack has killed six people in the Northern Nigeria city of Kano. According to police in the region, it comes after the military group
Boko Haram seized the town of Chibok where more than 200 school girls were abducted in April. In Mexico, the former mayor of Iguala, the city where
43 students have disappeared in September, has been charged in relation to their presumed murders. Jose Luis Abarca is facing six counts of
aggravated homicide and one of attempted homicide.
U.S. lawmakers have voted in favor of building a giant pipeline from Canada to the Gulf of Mexico. The House has voted for the Keystone Project
which is currently under review by the Obama administration. The Senate is to vote on the project for the pipeline on Tuesday.
Ukraine's president says that his country is ready and able to fight back if the cease-fire with Russia falls apart. Kiev believes Russian
troops and tanks are streaming over the border into Eastern Ukraine. This is a claim that Moscow is vehemently denying. CNN's chief U.S. security
correspondent, Jim Sciutto reports from Washington.
(BEGIN VIDEOCLIP)
JIM SCIUTTO, CHIEF NATIONAL SECURITY CORRESPONDENT: This is a rare view inside the fighting in Eastern Ukraine -- a gun battle at the airport
in Donetsk, then a rebel tank fires and destroys a Ukrainian military position. These are Ukrainian forces battling separatists armed and
supported by Russia, and now more Russian heavy weapons are on the way.
New images of Russian military vehicles and artillery rolling into Ukraine. Ukraine's president says his country had lost control of its
eastern border.
PETRO POROSHENKO, UKRAINIAN PRESIDENT, VIA INTERPRETER: The Ukrainian-Russian border under independent monitoring is repeatedly crossed
by the Russian regular forces.
SCIUTTO: Now those same Russian forces say NATO's Supreme Allied Commander are firing at drones from the International Observer mission.
Reiterating Moscow's frequent denials, today the Russian foreign ministry spokesman said no Russian forces of any kind are in Ukraine.
ALEXANDER LUKASHEVICH, RUSSIAN FOREIGN MINISTRY SPOKESMAN, VIA INTERPRETER: There are no military forces or any military movement across
the border. Moreover, there is no presence of our troops in the territory of Ukraine.
SCIUTTO: Jim Sciutto, CNN Washington.
(END VIDEOCLIP)
QUEST: Whichever part of the world we look at the moment, there certainly seems to be an issue of where Russian military or quasi-military
activity is causing problems. Let's take a look at the Moscow's ominous movers around the world. Jim talked about Russia denying that its troops
are in Eastern Ukraine, having moved across the border where the fighting is of course Crimea having already been hived off.
Now, at this very moment, Russia is parking war ships off the Brisbane coast in Australia. The Australians say they're not too concerned -- that
this has been the sort of thing that they've seen before. Russian president is in Brisbane, but those war ships are off the northeastern
coast. Put it into perspective - Sweden has confirmed that there was a foreign submarine in its waters outside Stockholm and that they heard an
urgent message that was in Russian. The Swedes of course did the most deep searching, the biggest search in Swedish history. They found nothing, but
they have concluded something was there.
And U.S. fighters have been intercepting Russian bombers. That not only happened off the coast of Alaska, but also down off the West Coast in
the United States. And putting this in perspective, Russia's defense minister said that Russia will be putting more boats, ships and planes into
international waters off the West Coast of the U.S., Eastern Coast and into the Gulf of Mexico. You're getting the picture.
Earlier, I spoke to Peter Brookes, Deputy Assistant Defense Secretary under President George W. Bush. Only one question - what is Russia up to?
(BEGIN VIDEOCLIP)
PETER BROOKES, FORMER U.S. DEPUTY ASSISTANT SECRETARY OF DEFENSE: I think it's a strategy for returning Russia to its former glory. I mean ,
we all remember that in 2005 Vladimir Putin said to the Duma, the Parliament that the greatest geopolitical tragedy of the 20th century was
the fall of the Soviet Union. And I think ever since then, Putin has been trying to return Russia to its former glory, and part of that is military
power, and I think he's showing us - signaling us - that Russia is back, it's resurgent and its willing to project its power - military power -
around the globe.
QUEST: But President Putin surely must understand that everybody else isn't just going to sit quietly. Or maybe he is - maybe he has the
calculation correct - that the West, the other countries will just shrug, make a bit of noise but do nothing. And you believe that would be
dangerous.
BROOKES: Oh, I think it would be dangerous but I think, Richard, that that's exactly what he's expecting. He doesn't want confrontation, he
doesn't want a military war. We all know the cost of that. But he does want us to acquiesce to Russia's rise or re-rise in the international
system. I mean, I think Putin calculates that what he's doing in Ukraine is not getting a lot of resistance. I mean, we've seen what he's done -
the reports of him sending tanks and artillery and air defense systems and little green men - you know, soldiers without insignia into Ukraine.
What's been the international response? Nothing. In fact, we're hearing back-channel that the Europeans aren't willing to even increase the
sanctions that are already being put on Russia over Ukraine. So I think he expects the international system to acquiesce. And then of course he can
always pull back if he does receive some sort of confrontation.
QUEST: Final thoughts, sir, how can the West look strong? It has the leader of the free world that's just had more than a shellac-ing by his own
electorate at the U.S. midterms, so he's weakened, a U.S. Congress that is damned if it's going to do any form of business that it doesn't absolutely
have to with the executive. Europe which can never agree much on where to sit, let alone what policies to implement and even members of the European
Union may be hungry, for example, but aren't on board.
BROOKES: You're absolutely right. You make some very good points there. The problem is is that if they don't come together and show
strength and unity, what's the alternative? I'm sure those in Eastern Europe - the frontline states or if you're Poland, you're very nervous. If
you're the Baltics, you're very nervous. So what I'm worried about is that if we don't - if there isn't a united and strong response to Russia's
activities, that Russia will go further because it feels it can. And that's very much my concern. Is this bluster on the part of Putin? Is
this a bluff? We're not sure, but the fact of the matter is is that in my view, rarely does acting and responding in a strong united way lead to, you
know, worse consequences. So I think we have to be strong here, show Putin what we're thinking about and otherwise Putin may go further than he
already has.
(END VIDEOCLIP)
QUEST: On this week's "Best of Quest" in our weekend digest, the president of Russia's second largest bank will tell us that his business is
a hostage of geopolitics. You're going to hear from the astrophysicist why a comet 300 million miles away holds the key to life on earth perhaps, and
Lufthansa's chief exec vows to push ahead with restructuring even if it's more strikes. It's the "Best of Quest" at noon on London CNN.
U.S. stocks, the market (RINGS BELL). This was the fourth week of gains, the market - for the week. For the day it was down, so no records.
The decline was slowed by rebound in U.S. retail sales. Shares of Hertz Roth (ph) up 4 and 1/2 percent. Remember that where the market is now, the
Dow is now up about 6.4 percent for the year so far.
Virgin America has had a triumphant debut as a public company on the NASDAQ. VA, which is the ticket symbol is, markets itself as a hip way to
fly. They rang the opening bell. The stock took flight - it was up 30 percent on the day. I asked the Virgin America President and Chief Exec
David Cush and pointed out it has a great reputation, superb customer demographics and his company has only made money one year in all the years
they've been flying.
(BEGIN VIDEOCLIP)
DAVID CUSH, PRESIDENT AND CEO, VIRGIN AMERICA: I think the key thing to keep in mind is, you know, when you start an airline, your network is
immature. It generally takes us 12 to 15 months for a route to reach revenue maturity. Of course you get 100 percent of the cost day one, so,
you know, that's really the math that were dealing with in the early days when we were growing at 30 percent. It's math we expected, it's math that
our investors were comfortable with - that you had to build some critical mass, get the network to maturity and then the bottom-line results look
like they do today.
QUEST: You're an airline that is punching dramatically above your weight in terms of size. I think we can agree on that - the three majors,
possibly nutcracker left and right, you've then go the Southwest. You're there, but there but the area you're now carving is always at risk.
CUSH: Yes, it is, you know, but I think - when we look at a market- by-market basis, when we compete against the big guys, we do very well. You know, our cost structure is about 30 percent below where the legacies
are, but we actually generate the same, you know, revenue as all these big, competitive routes such JFK, LAX. So we're comfortable competing with them
on a route-by-route basis. We're not going to be all things to all people - we're comfortable with that. You know, we want to provide a great
product and provide a good return to our investors. That's really our focus.
QUEST: Let's talk about the relationship with the Virgin Group. Your SEC filing had to make it quite clear that because of the name, even though
the relationship might be arms-length in many ways, there is a risk inherent. That risk has been brought clear with tragic events of Virgin
Galactic. But whether it's Galactic or anything else concerning Sir Richard or the Virgin name, you more than any other airline - your
reputational name is at the risk of others.
CUSH: It is certainly. But what I will say is, you know, Richard is our beacon, he's what we look for - toward - when we think about employees,
about our product and about where we position our brand. So he's tremendously important to the evolution of our company and where we are
right now. You know, as far as what went on with the Galactic, you know, they're trying to do something that is visionary, that is very difficult,
and these things happen, you know. It's had no impact on our business, they're good friends of ours. It's very tragic but it's had no impact on
our business.
(END VIDEOCLIP)
QUEST: The CEO of Virgin America. And that's "Quest Means Business" tonight. I'm Richard Quest at the CNN Center. Whatever you're up to in
the hours ahead, (RINGS BELL) hope it's profitable. Join me in Abu Dhabi on Monday.
(COMMERCIAL BREAK)
(BEGIN "MARKETPLACE AFRICA" SHOW)
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT BASED IN BERLIN: Hello and welcome to "Marketplace Africa." I'm Diana Magnay and this week we're
back in Zimbabwe at the beautiful town of Victoria Falls, best known for the incredible waterfall which shares its name. This town relies on
tourism to keep it afloat, but in the last decade, things have been tricky. But is all that about to change?
(BEGIN VIDEOCLIP)
MAGNAY: Victoria Falls -- Moshi Etonia (ph) - Smoke that Thunders. Even in the dry season, it's a magnificent cite and a major tourist
attraction. The Zimbabwean town of Victory Falls, nestled along its western face, has traded on this wonder for many years. But recently times
have been tough. Once the jewel in the crown of African tourism, over the past decade, Zimbabwe has lost its way because of chronic economic
mismanagement. Trevor Lane, the stalwart of the Victoria Falls tourism industry, explains.
TREVOR LANE, TOURISM EXPERT: From 1990 onwards, it really picked up and through the 90s, it was booming, it really was. I mean, we were
frantically busy. Everyone was expanding, that was the heyday of tourism. But it all came to a sort of grinding halt in 2000. It was the land
invasions and the violence and the bad publicity the country received. It was perceived as a high-risk country after that, and tourism virtually
stopped overnight. A lot of people obviously faltered, left town, what have you. But the rest of us just managed to survive - however, somehow,
and until the sort of revival started again a couple of years ago.
MAGNAY: Now the tide seems to be turning. Vic Falls is expanding its airport, a $150 million project. From this, to this, boosting confidence
amongst those in the trade.
JONATHAN HUDSON, RESORT GENERAL MANAGER, VICTORIA FALLS SAFARI LODGE: Vic Falls Airport is the new four-kilometer runway, the new terminal with -
which - will be able to hold up to five wide-bodied aircraft. New carousels, increased immigration officers. It's going to make a huge
difference to us. Currently capacity, due to a short runway, limits us as to the number of people that can come in on a flight. The planes are quite
small. With this, we can increase the number of seats coming into Zimbabwe. On a daily basis, we've currently got South African Airways,
British Airways coming, Air Namibia, Air Zimbabwe, all flying in regularly along with Fly Africa. And with that, the capacity is starting to
increase. With the new runway, seats - seat capacity - also nearly doubles. And that'll insist in increasing our occupancy in town as well as
the region.
MAGNAY: Jonathan Hudson manages one of the largest hotels in Vic Falls. He highlights another advantage of doing business in this town.
HUDSON: Vic Falls is great. We know everything about each other - that's the small town syndrome. We market the destination along with
ourselves because there's a lot of pride as to who we are and where we are.
MAGNAY: A strong regional sense of community is another reason for renewed optimism in the industry.
HUDSON: Vic Falls is a destination, using as a central pinpoint, within a 500 kilometer radius of where we are, we've got five countries -
Zimbabwe, Zambia, Botswana and Namibia and Southeastern Angola. With that, we've got about 32 national parks and wildlife conservancy areas, we've got
seven international airports and give or take 11,000 beds within that region. So within two hours in any small aircraft, you can be anywhere.
And there's not a lot of places in the world that can offer that kind of - that kind of - wildlife activity around us.
MAGNAY: In recent years, Vic Falls has marketed itself as an adventure destination. If you want to throw yourself off of a cliff,
challenge your rafting skills, cage-dive with a crocodile or walk with a lion, this is the place to visit.
Male: At three years, a lion is an adult. We are going to put this lion in prides and send them into the wild where their numbers are most
diminished, here in Zimbabwe and across Africa.
MAGNAY: Lion Encounter is an organization devoted to increasing the lion population throughout the continent by rehabilitating captive-bred
lions and reintroducing their offspring back into the wild - all projects which need money.
STEVE JONASI, MANAGING DIRECTOR, LION ENCOUNTER: Yes, indeed. With the tourists that come in, obviously from the money we get from the walks,
that all is channeled to our rehabilitation program and that helps with that apart from the donations and everything we get selling of making (ph)
bags and all that, so that all --(inaudible) the package (ph) -- that all goes to help with the rehabilitation of the African lion.
MAGNAY: Operating in Victoria Falls suits the managing director of Lion Encounter, Steve Jonasi, well.
JONASI: There's a sense of belonging from everybody. We might be competitors, but at the end of the day, we're saying, `look, we want to do
this for the good of the destination, the good of the country.' So there's a lot of community participation in all we do. And due to that, you know,
people are prepared to spend their money, to go and market the destination, and from that - from the days when Zimbabwe - the two the apentrition (ph)
era, we've managed to stand tall and bring tourists to Vic Falls.
MAGNAY: And when all the adventures become too much, sundown is on the might Zambezi. The Zambezi Explorer, the biggest boat on the river
arrived in town last year, signaling a huge investment in the future.
(Female) DENHURST, GENERAL MANGER, ZAMBEZI: There's going to be big changes coming up with the new airport, new hotels, new projects all
opening up, it's definitely going to be on the up. I think Vic Falls really is on a, you know, gold mine. It's a beautiful location and people
are beginning to hear about it. So, and with Zimbabwe being much safer and people hearing about it more, it will definitely pick up.
MAGNAY: Renewed confidence in the region is palpable. With judicious management, anything seems possible.
LANE: Oh, I think the future looks good, you know, very good. I think what we've got to be careful of is that we don't sort of over-
capitalize it, you know what I mean, and destroy the sort of wildlife feeling of Victoria Falls. You know, when you're driving through the -
through the bush, and we don't want to make it into another Niagara Falls which over-commercialized. I think that's one thing we've got to be very
careful of. The numbers bandying around, whether we can capture them or not remains to be seen. But I do think that the future is very brightened.
It is going to be basically a Southern Africa hub.
MAGNAY: Next, we find out more from Zimbabwe's tourism's regional representative, Barbra Murasiranwa, a woman intent on making sure Victoria
Falls stays on every traveler's itinerary.
(COMMERCIAL BREAK)
MAGNAY: Welcome back to the program. On this week's "Face Time," the regional representative for Zimbabwe's Tourism Council, Barbra Murasiranwa,
talks us through how she sees the future brightening up for tourism in her country.
(BEGIN VIDEOCLIP)
BARBRA MURASIRANWA, REGIONAL REPRESENTATIVE, ZIMBABWE COUNCIL FOR TOURISM: Zimbabwe is pumping when it comes to tourism. We've picked up,
gotten back to the times when - where we were in 1999 -- and we're even surpassing the figures for '99 as we speak right now. We've got a lot of
Americans, we've got a lot of Japanese, we've got a lot of people from Europe as well, and even our neighbor, South Africa, is bringing in a lot
of self-triers (ph) and we are just having visitors coming from all over the world. You can never go anywhere else and pick up the Falls like we
have here in Victoria Falls, Zimbabwe. We also have the weather - our weather is beautiful and if you come here, you can come and it's sunny,
it's welcoming. We also have the people - I would say the people are more welcoming than anything else, because when it comes to tourism, most
countries are offering the same things as we are offering but you can't offer the same people.
We went through our hard times, I wouldn't want to lie about that. We - like in 2008, 2009, 2007 - those are hard times, and I believe every
country has got its own times to go through the troughs and the dips and we're out of it. And people have just discovered that it's not anything
else that stops people from coming for as long as there's a product to come for, they can come and still enjoy the product.
South Africa has also helped us to market the Victoria Falls because they market South Africa and if they come to South Africa, go to Vic Falls.
So it's an odd-on when it comes to South Africa marketing their own destination or even Africa marketing their own destinations, they check
Victoria Falls as an add-on. Right now Victoria Falls is well placed where we are. As soon as we've finished the new airport refurbishments, I
believe that we are at least 500 kilometers from every interesting destination in Africa. They should just come together and make sure
everybody flies in to Vic Falls and gets connected from Vic Falls to all the other destinations like Namibia, Botswana, Kenya, Zambia, South African
and Mozambique. We are actually the central and more focal point when it comes to tourism in Africa.
Africa is a very rich continent and I really believe that if we market things together as a group and as a group of countries and go out there and
showcase what we have, we will definitely lure more people to come to Africa instead of doing it sometimes we compete, sometimes we're not on the
same page. We need to just focus on one thing together and that thing is to bring all the foreigners to Africa.
I would like to encourage people to - not just to -- look up things on the Internet, but also to listen to the word-of-mouth marketing because
people who have been here will never lie, but they will tell you the truth.
(END VIDEOCLIP)
MAGNAY: Thanks for joining us and please tune in next week for more on the business of Africa and you can watch us any time online at
cnn.com/marketplace Africa. I'm Diana Magnay, CNN.
END
