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Quest Means Business

Violence Worsens in Eastern Ukraine; Investigators Remove MH17 Wreckage; Ruble at Record Low; Russian Sanctions; Military Situation in Eastern Ukraine; New Video on MH17 Crash; Japan Unexpectedly Enters Recession; British PM Warns on Global Economy; Mega-Mergers Boost US Stocks; Band Aid 30 Years On

Aired November 17, 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: No records on the Dow at the start of the new week. The market has been trading just about five or six points off a

record high. But as the day comes to an end, not a record in sight. They hit the gavel for Monday, November the 17th.

Tonight, prepare for war. New violence in Ukraine as Europe calls for tougher sanctions.

A triple dip and a double merger. A day of ups and downs on the market.

And we'll tell you how they're taking a wide-body jet to extremes. Airbus want's to patent a doughnut-shaped plane.

I'm Richard Quest, live tonight in Abu Dhabi, where of course, I still mean business.

(RINGS BELL)

QUEST: Good evening. Tonight, peace in eastern Ukraine looks ever further away. Ukraine's president is quotes as saying that the country is

"prepared for all-out war" with Russia. The European Union says it will put sanctions on more Ukrainian separatists, and that's a further measure

against Russia. At the moment, that's not on the cards.

(BEGIN VIDEO CLIP)

(EXPLOSIONS)

(END VIDEO CLIP)

QUEST: The violence is escalating in eastern Ukraine, even though a cease-fire is meant to be in force. This footage is showing artillery

shells bursting near the airport in Donetsk. It happened just a few hours ago.

Investigators from the Netherlands have recovered more wreckage from the site where Malaysia Airlines Flight 17 crashed in July. Now, there's

much more work to be done before there are definitive answers as to why the plane came down, even though, of course, the initial report from the

Netherlands did most certainly suggest and say that it was as the result of armaments, but of course stopped short of saying which country was

involved.

As the tensions ratchet up, the Russian ruble sank to a record low against the dollar on Monday. One ruble is now worth a little more than

two US cents. The EU's foreign policy chief Federica Mogherini explained earlier why Europe is not stepping up the economic pressure on Russia right

now, bearing in mind the circumstances that she seems to find.

(BEGIN VIDEO CLIP)

FEDERICA MOGHERINI, HIGH REPRESENTATIVE OF THE EUROPEAN UNION FOR FOREIGN AFFAIRS: The instrument that we have used so far in our policy,

not a policy in itself, but an instrument, the economic pressure with sanctions that are an effective tool in a broader strategy, and in this

view, we decided today additional listings of individuals.

(END VIDEO CLIP)

QUEST: So, whether these sanctions are working and whether there should be a ratcheting up is the issue at hand from the European

perspective. Jamie Rubin was the assistant US secretary of state under President Clinton and believes it's clear that the sanctions have not

worked as a deterrent neither to Russia nor its president.

Jamie Rubin joins me from London. If they haven't worked, is that simply because of the way they have, in your view, they've been

implemented? Should they have hit harder and faster?

JAMES RUBIN, FORMER US ASSISTANT SECRETARY OF STATE: Well, we don't know if early on -- remember, this has been going on for six months, now --

early on, very, very tough sanctions could have been imposed, and in the early weeks and moths, they were really rather mild.

They were just imposed on a few individuals around the Kremlin leadership. No what are called sectoral sanctions on banking or oil or

other major categories of trade were imposed early in. So, we don't know if they would have worked.

What we do know is that none of the sanctions that were imposed by the European Union appear to have deterred President Putin from taking the next

step.

QUEST: Right.

RUBIN: First it was Crimea, remember? He took over Crimea, and then he moved into eastern Ukraine, he moved troops and equipment in. Right

now, he's pledged not to allow additional tanks and artillery to go in to eastern Ukraine when --

QUEST: Right, but --

RUBIN: -- that's exactly what's going on.

QUEST: As you saw President Putin at the G20, he sometimes looked a little beleaguered. His spokesman said they were satisfied, but --

shunning the man will not get the policy changed. So I ask you, what needs to be done?

RUBIN: Well, what we really need to do is make sure there's no misunderstanding about the potential next step. The potential next step is

if Russia were to engage in some aggression against a NATO member, like one of the Baltic states, where there are many Russians living -- Ethionia

(sic) -- sorry, Estonia, Latvia, or Lithuania.

And they're NATO countries, and there we're pledged to respond militarily. But Putin may not believe us, given what we've done so far,

given the weakness of our response. I could understand why the Kremlin would believe they could go into one of those countries and get little

response.

If that were to happen, and we were to respond, because they misread us, that's how you have a real war. So, a hundred years after the start of

World War I based on misunderstandings, I think it's crucial that Vladimir Putin understand how serious we are about a potential next step.

QUEST: Right. Do you think the vacuum in -- or perceived vacuum in leadership, either because of the US electoral agenda and diary for the

next two years, or because of a wishy-washiness in Europe, with that in mind, who needs to lead?

RUBIN: Well, that's been the question, really, all along. Right now, most of the world has relied on Angela Merkel and Germany to be the

decisive player. She's someone who grew up under the boot of Communism in East Germany. People have hope that she understood the nature of Russian

aggression and the risk of Russian aggression.

And she has become increasingly vocal about Vladimir Putin living in an unreal world. So, I think most people are relying on Angela Merkel. If

anyone can guide the world to a real response, it's going to be her.

QUEST: Jamie Rubin, thank you, sir, for your analysis and your perspective tonight. We needed to hear it as the situation deteriorates.

Thank you.

Now, we do need to get to the situation on the ground in Ukraine. Phil Black joins us from Donetsk. You were hearing, of course, the

discussion with Jamie Rubin. So, Phil, firstly, we'll deal with what they've been finding and the new evidence they've been finding. What's the

situation with the fighting, with the military situation?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: It's still going, Richard. Not that this is a new thing, necessarily. It's worth pointing

out in context, the cease-fire signed back in September lowered the intensity of the fighting across this region, locked each side into some

set territory, and established a line of battle, if you like. But there have been a number of key flash points where the fighting has continued.

And we've been listening to it all day, out in the direction of the Donetsk Airport. A piece of infrastructure that is still in the control of

the Ukrainian government, but for some months now, it has been a very intense flash point for the violence that has continued. A lot of heavy

weapons, artillery, rocket fire being lobbed back and forth by both sides.

It's been going on over the weekend. The Ukrainian government reports as many as six of its soldiers were killed over the last 24 hours or so.

So, this is the current context, the cease-fire that has never really, truly, stopped everyone from shooting at each other.

And at the moment, there is now this greater fear, based on the assessment of Ukraine, NATO, and so forth, that this could escalate further

because of the Russian troops, weapons, and armored vehicles that they say have been flooding into this separatist territory. Something that, of

course, Russia denies, Richard.

QUEST: And we saw today some new pictures, some new video, of the moments -- we assume they're literally the moments after MH17 came down in

the field in eastern Ukraine. You've seen the pictures. You were the first television correspondent on the field there within hours. What do

you make of these pictures, Phil?

BLACK: They're quite extraordinary pictures, Richard, and I think extraordinary considering they're only coming out now, some four months

after that terrible disaster. What they show almost certainly is the point where the largest piece of the wreckage hit the Earth.

Remember, MH17 broke up in the sky. What you're seeing with these pictures is the impact point of the midsection of the fuselage: the wings,

the engines, the rear undercarriage as well.

And they confirm, these pictures, really, what we all suspected from standing at that location. And that is that there was an enormous inferno

at that point. A huge impact. And those pictures really convey that, as well as the confusion of the locals as they run around and try to deal with

it. And also showing just how lucky they were because of the proximity to their homes and that actual impact point.

QUEST: And the -- obviously, the black smoke is where the fuel tanks would have been, and therefore, what you're seeing is the fuel-fed fire.

Phil, finally, the work of removing that wreckage is now disgracefully late, but it is now underway. And it has to be done, as I understand it,

before the winter sets in.

BLACK: Yes, late, but at least it is happening now. That's right. I a few weeks' time, it would've been too late, and it would've been delayed

for a further months at least, once the winter did come. Snow falls and blankets over this countryside. That's what's going to happen.

So at least now, before that time, these Dutch investigators are getting access to the site. They are supervising local workers who are

literally lifting up these pieces onto the backs of trucks, cutting them down, in some cases, so that they're more manageable to deal with.

And the intention here is to transport them eventually back to the Netherlands, where the investigators, who have assumed the burden of

responsibility for determining just what happened to this aircraft, they're going to try and piece it together, to try and make some sense of this.

But I think as you pointed out just a few moments ago, their preliminary findings are already pretty substantial. They point to high-

velocity things piercing the fuselage, which very much supports the theory of a missile strike.

It is just that question of what sort of missile? Who fired it? And it's not entirely certain that the investigation will ultimately be able to

answer those precise questions, Richard.

QUEST: Phil Black, who's in Donetsk, running our coverage on the situation in Ukraine. Thank you, Phil.

Now, world leaders are facing a range of risks with struggling economies and geopolitical unrest. That much we know so far. The latest

hit and a growth commitment from the G20 leaders. They met over the weekend, and we need to consider whether anything meaningful came from it

all.

(COMMERCIAL BREAK)

QUEST: Ah, the Corniche in Abu Dhabi, beautiful sight as the evening or the night moves on, I should say. As you can tell, it's coming up to

quarter past 1:00 in the UAE, a very good evening to you. QUEST MEANS BUSINESS tonight from Abu Dhabi.

In Japan, there is some serious economic issues as the world's third- largest economy unexpectedly slipped back into recession. Japan's economic output shrank. It was at an annual rate of 1.6 percent, that's the

shrinkage in the third quarter. Economists got a surprise.

They thought it was growing moderately. Look at how you'll see how that recession or how that growth has been so poor. We've had going back

to the Great Recession, and then you had the second dip three quarters, and then the third one, which was three quarters, and now you've got two

quarters of negative GDP.

The prime minister, Shinzo Abe, has expected to call for elections to be held in the coming weeks. He's possibly doing this to bolster his

political position if he wants to resist calls to raise sales taxes again. The PM staked his reputation on his ability to restore growth. At the

beginning of the year, he was declaring Abenomics a success.

(BEGIN VIDEO CLIP)

SHINZO ABE, PRIME MINISTER OF JAPAN: Japan's economy is just about to break free from chronic deflation. This spring, wages will increase.

Higher wages, long overdue, will lead to greater consumption.

Our fiscal situation has also made steady improvement. Japan is now getting on track for fiscal consolidation.

(END VIDEO CLIP)

QUEST: On track for fiscal consolidation. Well, maybe not just at the moment, more like in recession. Richard Clarida is PIMCO's global

strategic advisor, joins me now from New York.

Richard, the recession that they've just been hit with, is that because Abenomics is going wrong, or is it because of that first tranche of

the sales tax? It seems extraordinary that a relatively small sales tax should have that effect.

RICHARD CLARIDA, GLOBAL STRATEGIC ADVISOR, PIMCO: Well, that's an excellent point. I think it's too soon to judge Abenomics. I think they

got off to a good start. I think the recession was unexpected. Japan, I think, was expected to sort of muddle through.

I think in part the weak economic activity in Japan really reflects a global slowdown. Most of the major economies outside the US have been

disappointing on growth. So, that was some factor as well.

But clearly, compared to the optimism that you saw expressed in that clip, definitely more uncertainty about the Japanese outlook right now,

Richard.

QUEST: Right. But the prospect of a second sales tax rise is probably gone on the back burner. But it begs the question, why would you

be introducing a sales tax anyway? Which of course has a contraction effect --

CLARIDA: Right.

QUEST: -- on economic growth. It's hardly the sort of thing you're wanting to do. It may repair your fiscal balance sheet, but it's not going

to get growth moving.

CLARIDA: Well, that's exactly the point, and that's why Mr. Abe really faces a very significant challenge. Official debt numbers show a

debt load of 240 percent of GDP, roughly twice of what Italy is right now.

And so, as a result, what Abe's trying to do is to defeat deflation through monetary policy at the BOJ, to put in the structural reforms to

improve growth, but then a piece to show some progress on the fiscal side. And of course, they're going to be delaying that.

But ultimately, Japan faces some tough fiscal and monetary challenges ahead, and this is seen as being a down payment on that.

QUEST: Now, the British prime minister, David Cameron, has warned the world may be heading for another crisis. He was writing in the British

newspaper, "The Guardian," when Mr. Cameron wrote, "Red warning lights are flashing on the dashboard of the global economy." He says the headwinds

from abroad could hurt an economic recovery in the UK.

Richard Clarida, we know the eurozone is teetering on deflation. Growth is anemic to be polite. But what's he thinking of particularly?

Are things that bad?

CLARIDA: Well, what I would say -- and I actually did some calculations knowing I would be on your show today, Richard. In the last

year, outside of the US, economists have marked down their view on global growth by about three quarters of a percentage point.

Now, that doesn't sound like a huge number, but we're starting from a pretty low base. So, whether or not you look at China, Brazil, Russia, the

eurozone, Japan, it's hard to find a major economy in which people are actually getting more optimistic.

So, when you start with a slow rate of growth on average and you're marking that down, that's really where you get into the situation that

Cameron was talking about. In part, remember, we're patting ourselves on the back as oil prices are falling, but remember, oil prices are falling in

part because of the weak global economy, and so it's not quite the bonus that some expected.

QUEST: In a sentence, Richard, are you a glass half full, or a glass half empty man tonight?

CLARIDA: I think I'm glass half full, but just barely, 51-49.

(LAUGHTER)

QUEST: I think you've hedged your bets, there.

CLARIDA: OK.

QUEST: Richard Clarida, thank you for joining us.

Now, news of two mega-mergers helped offset the poor Japanese GDP. Oil field service provider Halliburton says it will buy a rival firm, Baker

Hughes, $35 billion. Halliburton says it may sell assets to quell anti- trust concerns.

And the drug maker Actavis said it will pay $66 billion for Allergan, the maker of Botox. It follows a series of failed bids for Allergan by

Valeant, a rival firm backed by another investor. Alison Kosik is in New York. So, Botox is sold. I can only say, Alison, I only ever tried it

once, and I never managed to move again.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Seriously? You did try it?

(LAUGHTER)

QUEST: Of course! I was making a program, "Quest for Beauty," and it involved me having to be Botoxed across the top. Not for me.

KOSIK: You're already beautiful, Richard. You're already handsome. You don't need any of that Botox.

QUEST: Aw!

KOSIK: But don't tell Allergen and Actavis that, as they have this merger. Which by the way is the biggest deal of the year. So, it was this

merger Monday that really helped stocks get back in the green. You see the choppiness where the market really started.

What also helped the markets get back into the green today? Soothing words from ECB president Mario Draghi on exactly what Richard and Richard

were talking about just before, that recession in Japan kind of putting a downer on the markets.

But those soothing words from ECB president Mario Draghi saying listen, if necessary, I'll put more stimulus into the economy. Those are

the magical words, aren't they, Richard?

QUEST: They are, indeed. Thank you for the markets. Up 13 points, no records. Let's see what Tuesday brings. In Europe, the stocks overcame

early losses, and they ended the day also positive.

Those words that Alison was talking about from President Draghi said the ECB may increase stimulus by buying government bonds. Merck shares

were up 3.5, German drug maker will collaborate with Pfizer in developing oncology treatments.

This is QUEST MEANS BUSINESS, we're in Abu Dhabi tonight. One Direction, Bono, Chris Martin, and more, all joined forces to raise money.

(BEGIN VIDEO CLIP)

(MUSIC - "DO THEY KNOW IT'S CHRISTMAS?" BY BAND AID)

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(MUSIC - "DO THEY KNOW IT'S CHRISTMAS?" BY BAND AID)

(END VIDEO CLIP)

QUEST: It was 1984, and it was Band Aid, and the song and the video that was released to raise money to fight famine in Ethiopia. Thirty years

on, there's to be a new single and a different and equally urgent task: it is, of course, the fight against Ebola.

It'll be a new generation of British pop stars that are uniting in song, and with the help of some social media, they're raising $1.5 million

with a minute of the track being released. The track, the money, the story, from CNN's Max Foster.

(BEGIN VIDEOTAPE)

MAX FOSTER, CNN INTERNATIONAL CORRESPONDENT (voice-over): The biggest names in British music showed up in solidarity in the fight against Ebola.

One Direction, Ed Sheeran, Coldplay.

UNIDENTIFIED FEMALE: I think it's going to a really good cause, and there are some really good celebrities doing it.

UNIDENTIFIED FEMALE: I think it's really good, because you know, it's nice to know they actually care. It's good to know celebrities are joining

up to do things together.

FOSTER: Inside, it was down to work.

UNIDENTIFIED MALE: Hopefully, it gets to number one, and it raises a lot of money for a really worthy cause.

BONO, SINGER: As a group, as a movement, we want to make sure that people have what they need to fight the next Ebola. That's what this is

all really about.

FOSTER: The video was turned around in near record time to emphasize the urgency of the Ebola crisis.

(MUSIC - "DO THEY KNOW IT'S CHRISTMAS?" BY BAND AID 30)

FOSTER: "Do They Know It's Christmas" was first recorded 30 years ago for famine relief in Ethiopia. It was the brainchild of Bob Geldof, who's

using the same concept now to raise funds to tackle Ebola in West Africa.

BOB GELDOF, ORGANIZER, BAND AID 30: They don't have the doctors, nurses, hospitals, state assistance that they have in Texas or Madrid. And

so, once again, through no fault of their own, this virus is out of control in states where there are no systems because there's no money.

FOSTER: It's a familiar song that's achieved great results in the past. This latest incarnation made relevant for a modern-day crisis and

today's generation.

(MUSIC - "DO THEY KNOW IT'S CHRISTMAS?" BY BAND AID 30)

FOSTER: Max Foster, CNN, London.

(END VIDEOTAPE)

QUEST: I remember the first Band Aid for the fight against famine, @RichardQuest, I'm sure you remember it, too. The words, the music, the --

it is still as haunting now as it was then, and the record being released for an equally worthwhile cause.

We will return in just a moment. The fighting -- the ISIS funding machine, Bahrain's central bank governor has told CNN why no illegitimate

funds will slip through the net, at least from Bahrain. It's QUEST MEANS BUSINESS from Abu Dhabi.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes

first. The headlines.

The parents of Peter Kassig are vowing to forgive their son's killer as they mourn his death. ISIS terrorists say Kassig is the fifth Westerner

that they've executed. He was captured while doing aid work in Syria last year. In the last hour, Kassig's mother spoke to reporters in Indiana.

(BEGIN VIDEO CLIP)

PAULA KASSIG, MOTHER OF PETER KASSIG: Peter's life is evidence that he has been right all along, one person makes a difference. Our hearts are

battered, but they will mend. The world is broken, but it will be healed in the end. And good will prevail as the one God of many names will

prevail.

(END VIDEO CLIP)

QUEST: Fighting has erupted again between Ukrainian forces and pro- Russian rebels in eastern Ukraine. Gunfire can be heard in this Reuters video from near Luhansk on Monday. There's also been fighting near Donetsk

Airport.

A state of emergency has been declared in the US state of Missouri ahead of a grand jury decision on the killing of an unarmed black teenager.

The jury's deciding whether to charge Officer Darren Wilson on the death of the 18-year-old Michael Brown. His death sparked huge protests in the

area, often violent, and Ferguson Police were criticized for using excessive force.

An American surgeon who had been receiving treatment for Ebola has died. Dr. Martin Salia was treating patients in Sierra Leone when he

contracted the virus. He arrived in Nebraska on Saturday in a critical condition. He is the second person to die of Ebola in the United States.

A Palestinian bus driver's been found hanged in his vehicle in West Jerusalem. Police claim the incident was an apparent suicide. For many

Palestinians, though, it looks like he was murdered.

France's interior minister says there's a high chance that a French citizen participated in the mass killing that was seen in the latest video

released by ISIS. Analysts believe one of the murders is a 22-year-old from France who went to Syria last year. CNN's senior international

correspondent Nic Robertson is in Washington. Nic, I'm going to start if you'll permit me, Nic, with the very moving words - quite extraordinary -

by Peter Kassig's parents that we've heard in the last hour or so saying that they will forgive the killers, saying talking their being one God.

But, Nic, the way in which this horrific murder has been released and taken placed is different in some respects. Help me understand what's happening.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: It's perhaps the sort of most significant different when we're seeing ISIS execute

Western hostages in the past - James Foley, Steven Sotloff, David Haines, Alan Henning - they have put them in orange jumpsuits, they have forced

them to speak in front of the camera prior. This doesn't happen in this video. Pete - Kassig's, Peter Kassig's - murderer stand above the remains

of Peter Kassig and pronounces his death. And says that Kassig has nothing more to say on this matter. So it's not clear why this is different. The

location is also different, a location that's important to ISIS. We don't know if it is the place that they say in Northern Syria, but it's important

because they say this is where Muslim and Christian armies will face off in their final battles, and this is part of a much longer propaganda video

here. Richard.

QUEST: Absolutely, terrifyingly horrific, and it has to be seen, Nic, as you hopefully will help us understand now, in this other context of

these - this - mass murder that's taken place because it wasn't just Peter Kassig - bad enough - that was beheaded, there was the Syrian soldiers.

What can you tell us about this?

ROBERTSON: Yes, it's almost as if Peter Kassig's murder portion of this message is a minor portion - almost an afterthought. They take - ISIS

takes - great care to shoot in explicit detail almost Hollywood style with cut shots and theatrics the murder, the brutal beheading and moments of

killing people - it says Syrian government air force officers. The way that it does this - its ISIS fighters in their uniforms taking the

prisoners in their sort of dark blue jumpsuits. Everyone's dressed the same, it's coordinated. It's like it was theatrics put on by a director in

Hollywood. But it's not, it's brutally real. There's cut shots of the ISIS fighters walking by this bin and picking up identical combat knives

before the brutal act begins. So, this is really from what we've seen, the most brutal video so far by ISIS. And it goes beyond what they've done

before. Some of these people -- come to -- hearing from the French authorities now - were unmasked when they committed these brutal acts, and

one of them at least - the French think, as you were saying - they've begun to identify some of them.

QUEST: Nic Robertson in Washington. Please keep following and come back of course when there's the moment more to report. Thank you. Now,

the UAE - the United Arab Emirates - where I am tonight in the capital in Abu Dhabi is at the center of a major push in the Middle East to cut off

sources of funding for ISIS. On Saturday, the UAE controversially blacklisted 83 organizations, obviously including ISIS, and has designated

them as terrorist groups. The United States Treasury estimates the Islamic State ISIS earns a million dollars a day from the oil sold on the informal

market. CNN's John Defterios sat down with the governing of Bahrain Central Bank to discuss Bahrain's efforts to curb the cash flow to

terrorists.

(BEGIN VIDEOCLIP)

RASHEED AL MARAJ, CENTRAL BANK GOVERNOR, BAHRAIN: I haven't seen any kind of evidence of what the magnitude of money that is allegedly going out

of this region. And Bahrain and I and I believe the rest of the Gulf, there has been very strict rules and regulation when it comes to transfer

of funds outside of this region.

JOHN DEFTERIOS, "CNN'S EMERGING MARKETS" EDITOR AND ANCHOR OF "GLOBAL EXCHANGE": SO the numbers that people have talked about of $200 million

over the last 18 months coming from Gulf families - you don't buy this number? Is that what you're suggesting?

AL MARAJ: I would - I would dispute this because we have no evidence for us in Bahrain. We have not seen any money going out to any

organization outside Bahrain that is not a legitimate, and Bahrain has been on the forefront of introducing laws and measures and regulations in order

to ensure that our financial system is clean from this tainted money.

DEFTERIOS: Any arrests? Anybody taken to trial for money-laundering or financial terrorism in Bahrain themselves - can you actually point said

`we did this'?

AL MARAJ: We did. Recently we have indicted a company that is involved in money-laundering. The company went to trial and we monitored

this continuously.

DEFTERIOS: How do you clean up the charitable organizations that perhaps have the right intention initially but the money gets funneled into

a terrorist organization in the end. There's some that are still sympathetic to the Sunni cause as you know.

AL MARAJ: Yes. There is a very comprehensive rules and regulation and processes in Bahrain on how to collect and distribute funds - locally

and outside Bahrain. So it is not that things will just flow freely out - without any kind of inspection and oversight -

DEFTERIOS: You're suggesting that the tracing - all the way to the ground - all the way to the very end recipient -- ?

AL MARAJ: Through the financial organization there is absolutely no way that any fund - any alleged funds can go out of this system.

DEFTERIOS: Governor, what do you say to the critics that suggest not enough crackdown on those supporting the Sunni cause in Bahrain, but plenty

of crackdown on the dissidents that we've seen over the last three or four years? That's a very constant legal procedure, and less so when it comes

to those supporting the Sunni cause.

AL MARAJ: No, no, I don't agree to this kind of analogy. We apply the laws universally with no prejudice against any one. Anybody who

violates the law of the land, will have to face the court.

(END VIDEOCLIP)

QUEST: The governor of the Central Bank of Bahrain talking to John Defterios. The stock market and the trade deal. In a moment we'll talk

about two ways that China is opening up its economy. From Abu Dhabi in the UAE (RINGS BELL) - this is "Quest Means Business."

(COMMERCIAL BREAK)

(BEGIN VIDEOCLIP)

(GONG RESOUNDS - APPLAUSE)

Male: Shanghai/ Hong Kong stock index has begun!

(END VIDEOCLIP)

QUEST: Well that beats ringing a bell. Hits a gong instead. A landmark day for the Chinese stock market. For the first time foreign

investors from hedge funds to day traders were able to buy shares which are listed in China - or Mainland, China - more than $2 billion of foreign cash

has poured in. Until now the access has been limited to a handful of foreign financial institutions. The new link between Shanghai and Hong

Kong is called the stock connect now of course changes all that.

China has been busy. It's one of two signs today that China's taking steps to open up its economy. CNN's David McKenzie now tells us on a major

trade deal that's been signed with Australia.

(BEGIN VIDEOCLIP)

DAVID MCKENZIE, INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL BASED IN BEIJING, CHINA: After nearly a decade and 21 rounds of

negotiations, Australia and China have signed a major bilateral free trade agreement on Monday in Canberra.

(BEGIN CLIP)

TONY ABBOTT, AUSTRALIAN PRIME MINISTER: This is a very good day for both our countries. In particular, it's a very good day for Australia.

And this agreement is the first that China has concluded with a substantial economy, with a major economy and it's the most comprehensive agreement

that China has concluded with anyone.

(END CLIP)

MCKENZIE: The agreement will cover many goods and Australia says that within four years, 93 percent of exports from Australia will be tariff -

free coming in to the massive Chinese market. Things like minerals, agriculture and finished products will all enter China more easily. And it

will also open up the huge Chinese market to the service trade industry from Australia - moving from the so-called mining boom to the dining boom

as Australian politicians like to call it. China will also be allowed to more freely invest in the Australian economy. There's broad-based support

for the deal in Australia, though some critics have said that China should freely float its currency to allow for a level playing field between the

two countries.

The deal of Prime Minister Abbott's administration comes on the back of similar deals with both South Korea and Japan this year. David

McKenzie, CNN Beijing, China.

(END VIDEOCLIP)

QUEST: The deal is a small piece of positive news in the sea of threats and worries that we've been talking about on this program tonight.

Whether it's the shaky economies in Japan and Europe, the geopolitical turmoil far and wide or of course the awfulness of events taking place in

the Middle East. It's against that backdrop that G20 leaders promised measures to add $2 trillion to economic growth by 2018. The -- Andrew

Stephens spoke to the IMF's managing director Christine Lagarde and asked Ms. Lagarde exactly how that growth was going to happen.

(BEGIN VIDEOCLIP)

CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: The United States for instance is proposing as a new measure the reform of

the immigration system in the U.S. That will entail labor mobility and that will certainly be a booster for growth. The question is does it

happen? Over what period of time? And this is the job that we at the IMF will be doing - monitoring the implementation of those new measures.

ANDREW STEVENS, ANCHOR AND CORRESPONDENT BASED AT CNN'S ASIA PACIFIC HEADQUARTERS IN HONG KONG: So in effect, the IMF is the police on this?

LAGARDE: We won't be alone doing it, but we have certainly accepted the task of monitoring, measuring and reporting back to the G20. You

committed that, you did that, full delivery, partial delivery - here we go.

STEVENS: I want to ask you about the Eurozone. About a month ago you were talking about the growing risks of recession in the Eurozone. A month

on, do you see any action that has been taken by the relevant authorities in Europe that would ease those risks or is a recession drawing ever closer

do you think?

LAGARDE: As far as the Eurozone is concerned, I talked about the risk of a new mediocre with low growth, low inflation, high unemployment and

high debt. And that's the risk that is looming on the horizon.

STEVENS: Still?

LAGARDE: Still -

STEVENS: Very likely (ph)?

LAGARDE: -- absolutely. Yes, yes, yes, absolutely. And, you know, it was good to hear the new president of the commission - Mr. Juncker - talk

about the 300 billion euros that will be put in place in the next three years to generate the financing of projects. But we believe that more

needs to be done.

STEVENS: I want to ask you about the U.S. economy. Quantitative easing as we know has now finished. The QE3 is over. If there are risks,

do you have concerns still that the economy may need a QE4?

LAGARDE: We don't see it. And I believe that the Fed is having a very cautious policy in measuring both on the inflation side and on the

labor side, to really decide at which point in time in the near - in the future - I didn't say near future - in the future - when actually

transitional policy can again be applied by way of raising gradually interest rates. But we certainly don't see a QE4 as needed in the near

future.

(END VIDEOCLIP)

QUEST: The managing director of the IMF - Christine Lagarde with a whirlwind tour of the worlds of economics. Well after the break, they can

talk, they can clean up and they do it all - they can create jobs. It's the economic power of the robot.

(COMMERCIAL BREAK)

QUEST: Elon Musk is possibly the best-known tech entrepreneur alive and he thinks technology could be humanity's undoing. One report says he

recently posted a comment online saying in the next five to ten years, we could create robots that decide to kill their makers. A cheerful thought

indeed to leave you tonight. Well, if artificial intelligence does evolve that far and fast, don't be surprised if it happens in the city of

Pittsburgh where Maggie Lake went to discover some robotic creations.

(BEGIN VIDEOCLIP)

Robot: Hello, Maggie, how are you?

MAGGIE LAKE, BUSINESS ANCHOR AND HOST, "WORLD BUSINESS TODAY" SHOW: I'm fine, (Herb), how are you? Meet Herb the robot butler, Uncle Sam the

sneak robot. Hah! Feels a little strange! The menacing search and rescue bot, Chimp, and the cheeky game bot Victor.

Robot Victor: Cool. A new guinea pig.

LAKE: They are the new VIPs of Pittsburgh. A once pretty steel town, transformed into a booming tech hub and a leader in the robot revolution.

Pittsburgh was once the steel capital of the United States. Mills worked 24/7, their soot blocking out the sun. But all that changed in the 70s and

80s when cheap imports helped bring Big Steel to its knees.

WILLIAM PEDUTO, PITTSBURGH MAYOR: We went through an economic depression. We lost more people than New Orleans lost after Katrina and

our unemployment was much higher than Detroit's is today. Pittsburgh died.

LAKE: Politicians vowed to reopen the mills, but there was no turning back. As the steel mills that lined these shores shut their doors for

good, another industry was taking hold. It would take time, but robotics would provide Pittsburgh a bridge to the future and a path to prosperity.

Big Steel helped that transformation happen. Carnegie Mellon University was founded by steel magnate Andrew Carnegie. The aid from wealthy

residents proved invaluable.

PEDUTO: The money that stayed in Pittsburgh from the gilded age helped to keep the city's head above the water when we were struggling just

to get by.

LAKE: Now a world leader, Carnegie Mellon's Robotics Institute where Herb and his robot friends reside, has spun off more than 30 separate

companies, employing more than 1,000 people in the Pittsburgh area.

DAVID HEILMAN, PRESIDENT, SEEGRID CORPORATION: There are laser safety standards in here.

LAKE: One of those fast-growing companies is Seegrid, which makes robots used in manufacturing and distribution. Where do you see work

growth going in the next few years.

HEILMAN: It's enormous. We had very nearly a 400 percent increase in deliveries in 2013.

LAKE: That's creating good-paying jobs and helping drive Pittsburgh's unemployment below the national average. And as the tech wealth pours in,

the skyline is being transformed. PNC Bank is building a 33-story skyscraper here, one of the biggest city projects since the steel bust.

University of Pittsburgh's Chris Briem says the changes have been stunning. Steel mills that once lined this river have been replaced by new

development.

CHRIS BRIEM, UNIVERSITY OF PITTSBURGH: Where we're standing was literally unbroken industrial activity. Both sides of this river had, you

know, a steel plant.

LAKE: Today the steel mills that do remain operate far from the city center. So for Mayor Peduto, Pittsburgh's real sight (ph) is making sure

all residents benefit from the tech boom.

PEDUTO: The goal is to make sure that its econo - in an economy that's there not only for the Ph.D, but for the GED, and to provide those

low-skill workers with an opportunity to break cycles of poverty.

LAKE: There's work to be done - stop staring at me - but even Victor, the Scrabble-playing robot would say, `Pittsburgh's story is spelling

success.' Maggie Lake, --

Robot Victor: This is CNN.

LAKE: Pittsburgh.

(END VIDEOCLIP)

QUEST: I never catch on. At least though not all are in trouble - I am. Now, think of it as a doughnut, think of it as a flying saucer. This

is actually Airbus' vision of how airplanes of the future may look. It's a radical new design. It was revealed in a patent filing. The cabin will be

part of the wing. Passengers would sit in doughnut-shaped enclosures in the middle of the aircraft and they would enter and exit through a hole in the

center of the plane. Airbus says the doughnut design is more efficient in resisting stresses from cabin pressurization.

Traditionally aircraft are reinforced at the front and the rear which adds of course the extra weight. Advantages - the new design increases

space available for passengers. It doesn't plan to make the plane into production anytime soon. It's looking for a legal protection against the -

against the idea. CNN aviation analyst Miles O'Brien joins us. Miles, we've seen ideas before of creating the passengers in the wing - a single

idea as such. But I can't remember a doughnut shape.

MILES O'BRIEN, CNN AVIATION ANALYST: Well, you know, you're right, Richard. But this has been long discussed - the idea of a flying wing is

something that has been greatly enamored by aeronautical engineers, really since World War II. It's a cool idea because it's aerodynamically smooth,

you can eliminate the vertical stabilizers, all kinds of drag and so forth. It's very efficient. But the question has always been if you did this big

wing, how would people look out the window? Well, I think this is Airbus' solution. They went with, you know, theater in the round concept I guess,

and maybe they should get a Shakespeare troop to go right there in the middle. I don't know.

QUEST: (LAUGHTER). Would you fly on it, Miles?

O'BRIEN: I'm not sure I'd want to sit sideways. I'd probably want to be facing more or less forward - I'm kind of a forward-facing kind of guy.

However, the safety experts would tell you the safest seat are the ones that face rearward as you know.

QUEST: And those seats of course are often used on military transports.

O'BRIEN: Right.

QUEST: Miles, the race to find the next big thing in aviation - look, we known supersonic probably is not going come commercial aviation in our

lifetime - it's been and gone. Bigger? Perhaps not another big one - the 380 has been a financial bust for Airbus. So, what is the next thing? Is

it just more lightweight planes to carry more people?

O'BRIEN: I think as you look down the horizon, the flying wing is not a bad concept and is a logical next step. I mean, we've been sealing up

people in these long tubes for a long time, and we've sort of maxed out their efficiency. We improved the engines, we tweaked things, we put in

carbon, we do some things to make them lighter and more efficient, but eventually we're kind of plateauing on this technology. This would

represent a big breakthrough, but it causes all kinds of changes in the way we think about we how we build airports and ultimately how we sit while we

fly. I personally would prefer a croissant. I don't know about you.

QUEST: (LAUGHTER). I love it with frosting and icing on the top. Miles O'Brien, thank you very much indeed.

O'BRIEN: You're welcome.

QUEST: We will have a "Profitable Moment" after the break. "Quest Means Business" (inaudible).

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." So the round doughnut plane may be an aircraft for the future - at least Airbus has patented the idea.

It's not new the idea of creating something that's not a long tube of a plane - maybe something round, maybe something that incorporates the wing.

It's appropriate we talk about that tonight when the program comes from Abu Dhabi, because between here with Etihad, Qatar just up the - across the

water and Emirates down the road in Dubai with a huge fleet, I'm guessing they're looking rather carefully at whether a doughnut might make more

sense than a long aluminum tube. Certainly if there's one for sale, I'd guess that they'd buy them here before anywhere else. And that, as they

say, is "Quest Means Business" for tonight. I'm Richard Quest in Abu Dhabi. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's

profitable. See you tomorrow.

END