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Quest Means Business
Israeli Parliament Dissolved; US Stocks Fall; Greece Gets Bailout Extension; US Attorney Sues Deutsche Bank; Uber Banned in Delhi; Dutch Court Bans "UberPop" Service; Uber Strong Despite Bans; Sony PlayStation Network Hacked; North Korean TV Praises Attack on Sony; Sony's Troubles; Israel Boosts Cyber Security
Aired December 08, 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: Well, it's a round number, give or take, but the market is down. There's no sign of 18,000 on the Dow at the start of a new
week. The market off the best part of 100 points, give or take, when all was said and done on Monday, it's December the 8th.
Tonight, Israel dissolves parliament and sets a new election date. We're live tonight in Jerusalem.
Also this hour, Uber calls it an horrific crime. Now it's banned in India's capital over a rape allegation.
And a second assault on the house of Sony. Hackers strike again.
I'm Richard Quest, live in the Israeli capital, where I mean business.
Good evening tonight, where the program is coming to you from the Israeli capital. We're in Jerusalem, where within the last hour, Israel's
Knesset has cleared the way for early general elections. A short time ago, lawmakers voted to dissolve parliament and to hold elections that will take
place in 99 days' time. Yes, the elections take place in the middle of March.
What's happened follows months of turmoil inside a deeply divided Israeli government. The Israeli prime minister Benjamin Netanyahu is
looking for a fresh mandate after he fired two senior ministers.
(BEGIN VIDEOTAPE)
QUEST (voice-over): This is the early election which has been building for months. Ever since the coalition between Benjamin Netanyahu
and Yair Lapid was formed nearly two years ago. The two sides of the government had major disagreements on everything, from security to economic
policy. So, with Lapid running the Finance Ministry, fireworks were bound to happen.
The final catalyst for collapse was Lapid's plan to cut VAT on cheaper properties to zero to help new home buyers. Netanyahu objected and fired
his finance minister and others, saying they were undermining his premiership.
BENJAMIN NETANYAHU, PRIME MINISTER OF ISRAEL (through translator): A month and a half ago, I convened in my offices the head of the opposition
parties and I said, this has to come to an end. These attacks have to come to an end. If you want to carry on together, let's move on together.
Unfortunately, those attacks that I've just described increased yesterday, today. And that is why we have to vote in a new and stronger
government.
QUEST: Yair Lapid has made no secret of his distaste for the way Netanyahu is running the government. Speaking to me on QUEST MEANS
BUSINESS, he left no one in any doubt as to his view.
YAIR LAPID, YESH ATID PARTY LEADER: I said -- and my thinking is -- this is not a good time to announce settlements outside of Jerusalem and
outside of the big blocs that everybody understands will be part of Israel in any future agreement.
QUEST: Now, after just two years, the government has fallen and an election will be held. All this would be bad enough if the Israeli economy
was in good shape, but it isn't. The Gaza conflict in the summer led to the economy turning negative. Investment and tourism is down. The worry
is, a full recession could be next
So, while this election may be early, it's an election which many here say is unnecessary.
(END VIDEOTAPE)
QUEST: Joining me now is David Horowitz, the founding the editor of "The Times of Israel." Sir, good to see you. Thank you --
DAVID HOROWITZ, FOUNDING EDITOR, "THE TIMES OF ISRAEL": Thank you.
QUEST: -- for joining us. This election -- I've been at the Globes Conference here, and the one thing I've heard again and again is, it's not
necessary, this election. It is the whim of the prime minister.
HOROWITZ: It's two years since the last election and it's an almighty gavel. There was no imperative. The Israeli public is not particularly
looking forward to new elections. I think it's a safe bet that Israel's going to move to the right, but will all those votes go to Netanyahu?
QUEST: So, if that's the case -- the only thing I'm hearing is that it's by no means a foregone conclusion --
HOROWITZ: Right.
QUEST: -- that he'll be the next prime minister in whatever form of coalition finally comes through. Do you follow that?
HOROWITZ: Yes, absolutely. I think the -- the reasonable bet will all likely be him, but I wouldn't guarantee it.
QUEST: This was all about a VA -- zero VAT on new houses. It's all about the economy at one level, isn't it?
HOROWITZ: Yes, one level. But really, it's about a fractious coalition with rivals who wanted to unseat him. And basically, he's called
their bluff, and we'll see if it was a smart move.
QUEST: Was it inevitable?
HOROWITZ: Not necessarily. He could have avoided it. He could have jockeyed. And I think lots of the Israeli public will say all these people
should have put the public interest first and spared us the election.
QUEST: The economy in this country -- look, following on from the Gaza conflict, there was a quarter of negative growth. Some might say you
may get a technical recession, but growth will return. But there's a feeling that something's wrong with the economy at the moment.
HOROWITZ: Look, I think the wider picture is the essence here. We're in such a volatile region, and Israel is becoming -- it's sustaining itself
as an island of stability. But it's a difficult region. That impacts the economy. When you have a 50-day war in the summer, that impacts the
economy. So, people are feeling that.
And the gulf between haves and have-nots in Israeli, widening. I think that will be an election issue, as well as the regional questions.
QUEST: But if there is that gulf, both haves and have-nots, the economy's faltering, what you're saying is, it's going to split further in
the divisions between right and left.
HOROWITZ: What I think is going to happen is the country will move the right because the region is so unpredictable.
QUEST: So, that's bad for people like Lapid.
HOROWITZ: That's potentially bad, although Lapid could push himself or present himself as a bit of a rightist. But I think it will be a bit
of a personal election. I think it might be really almost a referendum on Netanyahu. Yes, we want a country that's kind of center-right, but do we
want Netanyahu leading it?
QUEST: Throughout this program, we're going to talk about the startup nation. Does any of this -- is this a country that, by and large,
continues to thrive despite what the politicians do, not because of it?
HOROWITZ: Well, Netanyahu, one of his key campaign points, I think, will be that he has maintained relative stability in Israel in a region
that is so threatening. And his great advantage is that there isn't an obviously alternative candidate with lots of security experience, with
proven capacity to keep things relatively calm.
The question will be, are people so dissatisfied at having been dragged back to the polls, do they so blame Netanyahu --
QUEST: Which is what the president said in his statement yesterday.
HOROWITZ: Look, the president's worried that people won't turn out to vote. He thinks --
QUEST: Is he right?
HOROWITZ: -- people are fed up. You know, I think the issues here are so cardinal and so life and death, people do come out to vote
nonetheless.
QUEST: Good to have you. And you'll help us next March. It's a long election process is what one can say. Thank you very much, indeed, sir.
Now, we just turn to the markets and how they are trading. Investors are waiting to see if the Dow would break through the 18,000 level. Well,
the Dow didn't, and it actually ended the session down 105 points.
Oil prices fell more than 4 percent. They're now around $66 a barrel. That's quite considerably lower. In fact, it's the lowest level in some
five years. Alison Kosik is in New York. Alison, down 106? That's a sort of a -- a little bit of the turn of the books. And as I look at that
chart, it all happened in the late afternoon.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. And in the late afternoon, Richard, is when you saw oil really plunge. As you said, down
at the end of the day 4 percent. It is actually the third-worst drop of the year.
You're seeing stocks take a U-turn. Where we were talking about Dow 18,000, that's now a pipe dream with the Dow 106 points or more away from
18,000.
Also, we kept an eye on shares of McDonald's, which reported for the sixth month in a row, a big drop in worldwide sales. It looks like people
want customized burgers, and McDonald's seems to be behind the curve. We did see, Richard, shares in McDonald's drop 3.9 percent. Richard?
QUEST: Customized burgers. There's a thought for you.
(LAUGHTER)
QUEST: Alison Kosik, who would never be seen having a burger.
KOSIK: Oh, I love burgers, are you kidding?
QUEST: At least not at --
(LAUGHTER)
QUEST: Well, I was being charitable.
KOSIK: OK.
QUEST: Thank you, Alison. We'll see you at -- I'll see you when I'm back in New York. Good to see you.
The eurozone finance ministers have approved -- it's a two-month extension of the Greek bailout. It's meant to give the government time to
meet the conditions for a final tranche of EU funds. On Monday, Greek lawmakers approved a budget for next year.
The official numbers show the country's deficit has shrunk next year, or will shrink next year, and predict there'll be a sizable pick-up in
growth. The stocks in Greece rose slightly. Most European indices were down, look at the numbers. The oil prices dropped again, and the S&P cut
its ratings on Italian bonds.
Now, I do need to bring you some news that is just into CNN. The United States district attorney in Manhattan, the USDA in Manhattan has
filed a lawsuit against Deutsche Bank. This suit is seeking more than $190 million -- or I suppose it could be more if you look at the way some of the
fines have gone.
It alleges the bank engaged in a scheme to evade federal income tax. Attorney Preet Bharara says Deutsche Bank fraudulently made tax liabilities
disappear -- wouldn't we all? -- and called its actions a "shell game."
As we continue tonight, Uber is being kicked out of Delhi. There are serious allegations against one of its drivers, and the reaction from the
company, they say they're horrified by what is alleged to have taken place. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Tonight, the car service company Uber, it's under attack in one of its biggest markets as authorities in Delhi have banned the taxi
booking service after one of its drivers has been accused of rape. Transport regulators also said Uber had violated local rules on hiring
drivers.
Now, in the last few hours, Travis Kalanick, the Uber chief exec, has released a statement in which he's called the alleged rape "despicable."
And he said, "We will do everything to help bring this perpetrator to justice and to support the victim and her family in her recovery." CNN's
Mallika Kapur is in Mumbai for us tonight.
(BEGIN VIDEOTAPE)
MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT: Uber has been banned in India's capital, New Delhi. Authorities say it's because the taxi
service did not have the necessary permits to ply in the capital.
But there's another reason Indian officials are cracking down on Uber. On Friday night, police say a 26-year-old woman was raped in an Uber car.
The alleged rapist, now in police custody for three days.
(CROWD CHANTING)
KAPUR (voice-over): The incident has shaken India, that's working to make its cities safer for women.
KAPUR (on camera): Uber, a private taxi service, was seen as part of the solution. Considered safer than public transport, it quickly became
popular with women across India. Uber exists in 11 cities, making India Uber's largest market outside the US.
Where it falls short is its vetting process of drivers, Indian police say. Uber refused to answer any questions when approached by our sister
network, CNN-IBN.
UNIDENTIFIED MALE: I cannot comment, please.
KAPUR (voice-over): But in an earlier statement, it said Uber would "work with the government to establish clear background checks currently
absent in the commercial transportation licensing programs."
While the debate continues about who's responsibility it is to conduct background checks of drivers, people are taking safety into their own
hands.
UNIDENTIFIED FEMALE: I always prefer having someone escorting me late at night. I prefer not to travel alone after 8:00 in the night.
Definitely. I don't take risks like that.
KAPUR: India is now just a week away from the second anniversary of the Delhi rape that shook the nation to the core. Many question if the
country is any safer at all.
Mallika Kapur, CNN, Mumbai.
(END VIDEOTAPE)
QUEST: There was another blow for Uber on Monday after a Dutch court upheld a ban on one of the company's services known as "UberPop." That's
where a private individual registers to be an Uber driver and uses their own car.
The Dutch authorities say that's not allowed because the drivers are unlicensed. Uber says that's an outdated law and it's promising to appeal.
The body that represents the Dutch taxi drivers says that the court was right to stand up to Uber.
(BEGIN VIDEO CLIP)
HUBERT ANDELA, ROYAL DUTCH TRANSPORT FEDERATION: Uber is not allowed to work with people who are not licensed as taxi drivers. And of course,
that was already clear, but Uber didn't -- it didn't stop Uber from doing it, and now the court said they are fined, according to law, and the fine
is as it should be. So, the court confirmed that Uber is working outside the law with their concept "UberPop."
(END VIDEO CLIP)
QUEST: Now, Uber has been attacked on many fronts in may jurisdictions, from Paris to London to Berlin, in Asia, and now, of course,
in Delhi. For a company valued at $40 billion, the controversy is quite extraordinary.
What is, perhaps, the difficult thing to understand is why the price has held up if it's in so much trouble in so many markets. Here are some
of the places where Uber is finding itself with regulatory problems in the form of fines and outright bans.
CNN's Laurie Segall joins me now from New York. It is a conundrum because although everybody has tried, in many cases, to attack Uber,
they've not truly been successful.
LAURIE SEGALL, CNN MONEY TECHNOLOGY CORRESPONDENT: It's so true, Richard. And you get on the phone and you talk to investors, even in
investors in Uber, and they said it doesn't matter. They've had a lot of PR disasters recently, but the company's revenue, the company's growth, is
just extraordinary.
This will be a black eye. But you look, they just raised a billion dollars. They're at a $40 billion valuation. They look to do that for
international expansion.
I actually spoke to Travis recently, back in June, and I asked him about women's safety, because that's something -- safety in these cars,
that's going to be something that if they don't get this under control, if they don't take this very seriously, it will have an impact on that massive
valuation. And I asked him specifically about women's safety and Uber. Listen to what he told me back in June.
(BEGIN VIDEO CLIP)
TRAVIS KALANICK, CEO, UBER: First of all, safety is number one on Uber. So, every driver that comes onto the system has pretty extensive
background checks. So, federal background checks, multi-state database, as well as county checks. Far superior to anything that taxi systems are
doing in the country.
So, we just make sure that the foundation is in place so that customers get the safest ride possible. And then, of course, if something
goes wrong, we're going to do everything we can, everything in our ability to make sure that the rider is taken care of.
(END VIDEO CLIP)
SEGALL: In part, Richard, part of what we're seeing here is, they have an extensive -- they say they have extensive background checks here in
the United States, but if we look, the accused driver was reportedly a convicted sex offender, and he had a government-issued license.
So, they didn't do the background check there. They thought this was already taken care of. So, it's not really a one-size-fits-all when it
comes to expanding into international markets. This something they're going to have to look at as they expand.
QUEST: Laurie Segall keeping the studio warm in New York, where apparently it's going to be quite cold and chilly over the next few days,
so doing sturdy work. Thank you, Laurie.
SEGALL: Yes.
QUEST: When we come back, Sony's woes continue. There's a second cyber attack in less than a week. We're going to look at why hackers keep
breaking into the hackers keep breaking into the house of Sony. And we're also going to consider the Startup Nation, where tech seems to be king and
the rules of the game here. QUEST MEANS BUSINESS in Jerusalem tonight.
(COMMERCIAL BREAK)
QUEST: QUEST MEANS BUSINESS in Jerusalem tonight. Sony has been hit by a second security breach in less than a week. Yes -- what's the old
line about to hit lightning once, and then to hit it twice or something? Well, this latest hack took its PlayStation network offline for a few
hours.
Customers saw the message. The message said, "Page not found. It's not you, it's the internet's fault" when they tried to access the site.
Sony's investigating the group that calls itself Lizard Squad has said it did it. A new one on me.
Separately, North Korea said it doesn't know who breached Sony's systems last week. That break-in lead to the upcoming movies being stolen
and shared online. Employees recorded embarrassing internal memos, including salaries of stars. Can you believe it? North Korea's state-run
media certainly weren't condemning the attack.
(BEGIN VIDEO CLIP)
UNIDENTIFIED ANCHOR (through translator): The hacking into Sony Pictures might be a righteous deed of the supporters and sympathizers with
the DPRK in response to its appeal.
(END VIDEO CLIP)
QUEST: Our business correspondent Samuel Burke joins me now from New York. Samuel, is there any connection in the two events?
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Richard, it doesn't appear that there is any connection at this point. But imagine coming home last
week, finding out that your house was burgled, and this week finding out that there's graffiti on the house of Sony, in this case. This time, it
was Sony PlayStation as you mentioned.
It doesn't look like the intruders got into the house this time. They say the intruders weren't able to access the network, that's according to
Sony. And more importantly, the intruders weren't able to go into the drawers inside the house and get personal information from the PlayStation
game console that was offline for just a few hours.
Nothing compared to the hack last week, Richard, where intruders got into the house. We already know that there were leaks -- not leaky
faucets, but leaks of films. The social security numbers of employees, the passports of employees, Richard.
And now, people are still investigating whether it was North Korea who put up their flag in front of the house of Sony. Re/code, a well-respected
media tech blog in Silicon Valley reported that last week. But Richard, so far, Sony has come out and said that publicly as they continue their
investigation into who's been getting into the house of Sony.
QUEST: Look, why Sony? All right, so they've got lots of movies and they've got -- they were able to release the details of employees' social
security numbers and salaries of stars. But is there a reason? Is there a theory as to why Sony? Or was that just the weakest link?
BURKE: It looks like it may just be the weakest link. To answer your question, it's two separate answers. On the one hand, North Korea was
upset about that film, "The Interview," the comedy about assassinating Kim Jong-un.
On the other hand, this group that maybe graffitied that house of Sony, Richard, Lizard Squad, you mentioned, we don't know who they are, but
it doesn't look like they have any ties to North Korea, at least not on the surface.
And they have a website that's based in Russia. Do we know they're Russian? No. But we know that this website is based in Russia. So, it
looks like a bad string of luck for the house of Sony.
QUEST: Samuel Burke in New York. Bad luck for you, Samuel. Don't touch the bell. You can't, I brought it with me.
(RINGS BELL)
QUEST: Here in Israel, cyber security is taken particularly seriously. Earlier this year, the Israeli government set up a national
cyber defense authority to protect the civilian network. The protection's crucial for the country's flourishing tech scene. Joining me now is Moshe
Hogeg, the founder and CEO of Mobli Media. Good to see you, sir.
MOSHE HOGEG, CEO AND FOUNDER, MOBLI MEDIA: Very nice to meet you.
QUEST: So, the -- the hacking, the cyber hacking. The rest of the world suffers, but in Israel, of course, you have to make it an industry to
be against cyber hacking. Which you've done quite well, actually, haven't you?
HOGEG: Yes. I think the main reason is that Israel is not busy with the security of your e-mail address, with no offense to the privacy of e-
mail addresses and phones, phone numbers. It's more about the nation-level security with what terrorist organizations can do with --
QUEST: But the government has certainly spotted an opportunity to carve out a thriving industry in cyber security here.
HOGEG: A hundred percent. And again, the main reason, we need to remember, is that the Internet of Things is becoming closer and closer, and
the ability to affect the physical world by affecting the virtual world is becoming closer and closer. So, for Israel, it's a real threat, and we
need to address it.
QUEST: And in doing that, you've created an entire industry.
HOGEG: A hundred percent, yes we did. I think that south of here is where we've achieved by becoming the cyber security capital of Israel, and
there are a lot of companies, obviously, with it.
QUEST: You travel extensively with Mobli. You see different environments. I've read "Startup Nation," I'm sick and tired of hearing
that phrase, as I'm sure you are, the Startup Nation. But what is it that makes this country so conducive, so available for entrepreneurs like you?
HOGEG: I think it's the circumstances. We don't have oil. Think about it. We don't have oil, we don't have any natural resource. The only
resource we have is the human brain, which is probably the most powerful resources. And we don't have a choice. We are surrounded by enemies. If
we're not going to use our brains, there's nothing else we can do.
QUEST: But is it really thriving? You're here today, but you've got to be careful there's somebody out there that wants to push you over the
edge, and you'll be gone tomorrow. So, you all have to keep each other.
HOGEG: A hundred percent, yes, we do. So, the competition, the size of the country, the threat from the surroundings. All of those together
creating the -- whatever --
QUEST: Ah! Go on, say it!
HOGEG: The Startup Nation. Yes. I said it, I said it.
QUEST: Thank you very much, sir.
HOGEG: Pleasure to be here.
QUEST: Nice to have you on the program. Thank you very much, sir.
Now, when we come back, the new European Union trade chief says it's time to speed up Transatlantic trade talks. She's talking about a fresh
start, a fresh start with trade. An exclusive interview with Cecilia Malmstrom, commissioner, in just a moment. It's QUEST MEANS BUSINESS in
Jerusalem.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest in Jerusalem tonight. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network,
the news always comes first.
Israel's Knesset parliament has cleared the way for early elections. A short time ago, lawmakers voted to dissolve parliament and hold elections
in 99 days. It follows months of turmoil inside a deeply divided government. The prime minister Benjamin Netanyahu is looking for a mandate
after firing two senior ministers.
Syria and Iran are condemning a suspected Israeli airstrike near Damascus. They've called it an act of aggression. Syria's military says
there were attacks in two places, one of them at a civil airport. No casualties were reported. Israeli officials, as is customary, have not
responded to the accusations.
A British man accused of plotting to have his bride murdered during their honeymoon in South Africa has walked free from court. A judge threw
out the case against Shrien Dewani, saying the prosecution failed to produce any convincing evidence.
US Marines around the world are on alert. It's precaution ahead of the release of a report on enhanced interrogation techniques and tactics.
The heightened alert means marines will be ready to deploy faster in case a crisis erupts.
And the US Supreme Court has rejected BP's challenge over the amount it should pay for the Gulf of Mexico oil spill. BP argued some businesses
were getting compensation payouts even though their losses did not stem from the spill. The company has said it could end up paying $10 billion or
more in claims.
The goal is to rebut some myths and misconceptions. Well, that's the goal and the dream of the new E.U. trade commission Cecilia Malmstrom
who's just taken office. The commissioner told me it's a big part of the current round of transatlantic trade talks myths and misconceptions. And
so she's leading the European side on the transatlantic trade and investment partnership - the TIP - or TTIP as we've discussed many times on
this program.
Well, the critics are worrying TTIP could undermine the sovereignty of elected governments, supporters see jobs, many cynics say it doesn't really
matter since the thing will never get passed anyway before Obama's out of office and the whole thing will get bogged down in Congress and Parliament.
In an exclusive interview, I asked the commissioner how open/how different these talks will be.
(COMMERCIAL BREAK)
CECILIA MALMSTROM, E.U. TRADE COMMISSIONER: This is the most transparent, but there is a growing suspicion and criticism to what's the
TTIP, which is the agreement between E.U. and the United States. And in order to counter that, we will open up as much as possible. We have put
the --
QUEST: Right.
MALMSTROM: U.S. - the American - sorry - the European - mandate on line, and we are trying to engage as much as possible to give the facts and
to rebut some of the myths and misconceptions.
QUEST: Do you imagine that there - or do you foresee - a change in substance on the negotiations either in terms of the areas, or indeed on
the positions being take n by the E.U. on those areas?
MALMSTROM: Well that's exactly what we're going to take stock today. This has only been one month into my trade portfolio, so we are going to go
through all the chapters where we are to identify the difficulties, hopefully give some homework to our chief negotiators on the whole spectrum
when it comes to tariffs, service, public procurement, investment, regulatory so that we can really get into negotiations next year and
hopefully conclude it as soon as possible.
QUEST: Well, concluding soon as possible is one big problem, you're well aware of of course, Commissioner. And that is the U.S. political
gridlock. Now, the fact that the Congress is now demanding a greater say in the negotiation and it's unlikely anything will get done between now and
the next presidential election. That must be depressing from your point of view, because you can negotiate as much as you like - it's not going to go
anywhere.
MALMSTROM: Well, I don't agree with that assessment with all respect. I think there is a willingness among the two parties in the Congress as
well - I mean the Senate of course too - to really get moving on this. And I heard President Obama very clearly saying that this is important for him.
Both of course of the negotiations that you have with the Pacific, but also with us. So we think we can make considerable progress the next year and
then exactly how much before the end of the mandate, that remains to be seen. But from our side, we're truly committed in moving as soon as
possible and as fast as possible.
QUEST: So realistically, Commissioner, do you expect to have an agreement before the presidential election?
MALMSTROM: That is an aim. I don't know if it's possible. It's a little bit too early to say, but we will do from our side the our outmost
to make that. Having said that, of course it has to be a good agreement, it cannot only be a speedy agreement. And I think that goes for both your
part and ours. But it's not - it's not - impossible. We'll see. We'll try. Optimism is a good thing.
QUEST: Well, (LAUGHTER), indeed it is, Commissioner, and then of course you'll have to deal with the French and the whole question of the
French content issue, which has been put on the backburner, correct?
MALMSTROM: Well, we are 28 countries in the European Union, and every country have their -
QUEST: Right.
MALMSTROM: -- specific sensitivities. But they're also - unanimously they have said that they want this agreement. And I think everybody
realizes that in an agreement, you have to give and take.
(END VIDEOCLIP)
QUEST: That's the E.U. trade commissioner. Of one thing I am certain, we'll be hearing much more from her and hopefully she'll be on our
program many more times in the years ahead as long as she's commissioner.
Japan's economy is in a deeper recession that previously thought. Look at the latest GDP numbers - output shrank at an annual rate of 1.9
percent in the last quarter. The first estimate was 1.6. Now you can arguably even say 1.6/1.9 - what's a smidgen between friends? But it's
certainly not good news for the Prime Minister Shinzo Abe who's up for reelection next weekend. He's asking the voters to support a raft of
policies that the prime minister says are geared to all-out growth.
That deadly storm that swept through the Philippines has now weakened as it comes closer to the capital in Manila. The officials have shut down
schools, office as and financial markets as Hagupit, now the tropical storm is called, claimed at least 27 lives. CNN's Andrew Stevens flew by
helicopter to one of the areas in the firing line.
(BEGIN VIDEOCLIP)
ANDREW STEVENS, CNN ASIA-PACIFIC EDITOR: The reports that we've been getting says that the small town of Delores is one of the hardest hit in
this entire region. It's on the island of Samar, about 100 kilometers northwest of Tacloban. We're going up there now. They were reports that
there were real fears of a storm surge there, but we haven't heard anything from that town. This island Samar was Hagupit's first landfall where it
hit with the highest intensity.
We reached Delores 40 minutes later. From the air it looks battered, but not devastated. Trees down, houses unroofed and just north of the town
this resort clearly showing the scars of nature's fury. We were the first international journalists, locals tell us, to reach this remote town.
We've arrived here in Delores and this is the grounds of the school here which is now the main evacuation center of the town. And you can see
there are literally hundreds of children here who sought safety from the storm. You can also see these downed trees as testament to the sheer power
of Hagupit. All around this around this area, big trees, all of which have been uprooted. Delores took a direct hit from Hagupit. It roared ashore
with winds of up to 230 kilometers an hour. But no sign of a deadly storm surge. The damage here looks like the result of high winds, smashing
houses as it came through.
Female: The wind is very, very super strong.
STEVENS: Did you - what happened to your house.
Female: My house is broken. My house is broken. Many, many houses day lay (ph) but I'm reporting are broken.
Female child: It's really destroyed our house. On many -- many houses of our neighbors got destroyed.
STEVENS: And do you know - have you seen any people who've been hurt?
Female child: Nothing I can see because (inaudible) earlier so we got to way (ph) so everyone is safe.
(CHEERS)
STEVENS: Gratitude here for the early warnings from PAGASA, the national weather service. Others we spoke to told us injuries here, but no
deaths. But they do tell us the island's just offshore took a much harder hit than Delores. What you can see from here - you see some damage
certainly, but certainly not the devastation that was associated with Haiyan at the school ground which dominates really this village. All the
fishing fleet has been pulled up out of harm's way. So obviously they had plenty of time to prepare for what was coming.
These low-lying islands and coastal communities are among the most vulnerable to the path of storms that frequently ravage the Philippines.
For most, the best hope of survival is simply evacuating - getting out of harm's way. The lesson, at least for now, appears to have been learned.
Andrew Stevens, CNN Delores, the Philippines.
(END VIDEOCLIP)
QUEST: As we continue our coverage tonight from Jerusalem, next on "Quest Means Business," I'll be talking to this gentleman - now, good
evening, sir. You are described as one of Israel's leading tech venture capitalists. You will tell us exactly what is happening in the economy in
the venture capital world in this country, and what about innovation. If you used the phrase `the startup nation,' it's going to cost you dinner.
JOHN MEDVED, CEO AND FOUNDER, OURCROWD: (LAUGHTER).
QUEST: That's next.
(COMMERCIAL BREAK)
QUEST: Israel's currency, the shekel, traded very slightly stronger on Monday. Parliament has now voted - it's official there will be
elections in March. In recent weeks, though, the shekel's been on an ever- steeper decline. Last week it sank to four shekels to the dollar - its worst performance in many a year. This is what has happened since July -
18 percent fall since the conflict with Gaza over the summer. Now, there are possible linings (ph as there are in any currency story. The weaker
currency will support exports and exports make up some 40 percent of the Israeli economy. And in this country, they're pretty much obsessed by the
value of the shekel. And so that's causing some consternation as you can find out.
Israeli companies and how particularly tech are getting in on the climate - John Medved is the chief exec of OurCrowd, an equity-based crowd
funding platform. Sir --
MEDVED: It's great to see you.
QUEST: You're going to the polls. An election. An election that many people say wasn't necessary. Do you think it was necessary?
MEDVED: I think that the voter has already spoken. He wants to see elections, there's going to be elections here. It's going to be a while -
a hundred days - before the voters decide.
QUEST: But as a business leader, how do you cope with - not just with an election - but repeated elections and that fervent atmosphere that's
always existed.
MEDVED: First of all, until now we've had pretty stable governments for the last decade or so - four-year governments. This is the first one
that's only two years. So there's no Italian situation. By the way, the economy is firing on all cylinders here -
QUEST: Except for the last quarter.
MEDVED: No, but the quarter that happened with the shekel decline is great for us because we're all exporters. Our tech economy is about
export. It's about intel/exporting, about Cisco exporting from Israel are hundreds and thousands of startups in this country. So it turns out that
our growth the year - the report recently on Japan - our growth this year is going to be between 2.2 and 3 percent again. OK, we're continuing to
grow. This is the (inaudible).
QUEST: That's not enough. That's not enough.
MEDVED: No, we need be a -
QUEST: You need a five.
MEDVED: -- four or five. I agree.
QUEST: Right, right.
MEDVED: How do we get there?
QUEST: Yes.
MEDVED: OK, we get there by continuing the investment in the startup sector. We're crowd funders. What we're doing is bringing thousands of
investors to Israel on OurCrowd which is a platform where you basically can choose your Israeli startup. Tomorrow we have 800 people who come from
overseas despite all the conflict to go find the best Israeli startup.
QUEST: But hang on. You need a real economy with manufacturing -
MEDVED: Oh, come on.
QUEST: No, come on.
MEDVED: That's so old school, Richard. I mean - what is --
QUEST: Chemical -- ICL, Israel Defense --
MEDVED: You think hot ash is our future? Excuse me, our future is Mobilot (ph). OK, the company that went public this year in the middle of
the Gaza war. In the middle of the war -
QUEST: Do you get that employment levels of those sort of -
MEDVED: We've got $10 billion of market cap, we've got billions of dollars of taxes, --
QUEST: But what about jobs?
MEDVED: You have the transportation and the food and the service and the marketing. They all support this beating tech heart. We're including
hundreds of thousands of people in this tech economy. We're the pride of the world. You don't like the phrase `startup nation,' but it's true -
QUEST: That cost you dinner!
MEDVED: (LAUGHTER). It's a deal.
QUEST: Right.
MEDVED: We'll do dinner (LAUGHTER).
QUEST: OK, so can you build an entire country by stamping a brand - you know, I heard the prime minister today talk about the startup nation.
Yeah lapid (ph), if we're going to be fair - we're going to talk about both startup nation.
MEDVED: Absolutely. Because first of all, it goes from everything - it's cyber security, it's the internet and other things, it's anti-
collision devices for cars. In my portfolio alone, we have companies who are doing speech recognition by measuring your vibrations on your face. We
have companies doing safe guns so that people don't kill each other, --
QUEST: All right.
MEDVED: -- we have companies doing digital packaging, and we even have a company, OK, that is basically going to give you Google for all
matter. OK, so these things are real businesses and I think this is what's going to drive our economy forward.
QUEST: Good to have you, sir. Thank you.
MEDVED: Great.
QUEST: There's going to be an election in 99 days, let's see if you last out.
MEDVED: (LAUGHTER).
QUEST: When we come back, the price of gold moved higher today. The last refuge of the bankrupt investor - well, we'll talk about reversing
last Friday's losses. Now, it's following better than expected U.S. job numbers. In tough times, investors often turn to gold - the asset of last
resort. In this week's "Future Finance," CNN's Jim Boulden went to Northern Finland to find out about the prospects of gold mining.
(BEGIN VIDEOCLIP)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: You see few workers 350 meters below ground here in this gold mine, 125 kilometers inside the
Arctic Circle.
INGMA HAGA, VP EUROPE, AGNICO EAGLE MINES: An efficient mine is a mine where you don't really see much people. You see big machines working along
like this one here.
BOULDEN: Yes. Much of this work is now done by machines. Really big machines.
HAGA: They're all quite automatic so the operator, he just plugs in the program, he puts that into the machine and he may start the machine and
it operates on itself. Maybe some type of move to the case where everything will be operated from surface. We are not there yet but maybe
one day.
BOULDEN: This mine is owned and operated by a Canadian company Agnico Eagle which is very familiar with mining in tough environments.
SEAN BOYD, PRESIDENT AND CEO, AGNICO EAGLE MINES: We're finding that you have to go further afield to find quality ore deposits. The easy stuff
has been found now. You look at the industry average - gold grade is a little over 1 gram per ton. And so the gold reports in minute particles.
As a result of that, you're having to move much more rock than you used to, to get the same amount of gold.
BOULDEN: It's a laborious process using chemicals to extract tiny particles of gold. The product has been broken down using the grinders
but still not small enough to extract the gold. So it's going to go back into the grinder, being broken down using these very heavy balls. For
security reasons, we're not allowed anywhere near where the gold is formed into bars. It's not even clear how it leaves the site. But when it does,
much of it heads into secure vaults, stored as physical gold or used as jewelry.
BOYD: Shanghai has built a gold exchange over the last dozen or so years. They've just opened it up to international players. Their goal is
to make that the largest physical bouillon market in the world, and that's a sign that the market continues to move to the East. I don't think gold's
going to go away. I think it still has an important role to play in a number of areas. Demand is continuing to grow in a part of the world
that's growing population-wise and is growing from a wealth perspective.
BOULDEN: The Kittila Mine is expected to remain open until at least 2036. The goal - extracting more than 5 million ounces. To achieve that,
they'll need to take this mine down to at least 900 meters below the surface.
BOYD: It's growing as it goes deeper, which means more investment in infrastructure - more investment in tunnels and equipment. But as we move
to the north, we seem to be getting slightly better grades, the deposit tends to get thicker - that helps us and helps the economics as we go
forward.
BOULDEN: There are other industries here in Northern Finland - winter sports/tourism being the main drivers. But for now, local authorities are
using the tax revenue from the gold mine in order to build up the tourism industry for that one day when the gold runs out or when it becomes too
expensive to mine for gold.
(END VIDEOCLIP)
QUEST: "Future Finance" in lapan (ph). In a moment, doing good for charity with real charm.
QUENTIN BLAKE, ILLUSTRATOR: I like that moment very much because it's the first appearance of the Umpa Lumpas. I respect these because I made
their hair stand on end.
(COMMERCIAL BREAK)
QUEST: It was the biggest names in children's literature, and they have just auctioned off some classic volumes for charity. It was all -
everybody, everything from "Paddington Bear" to "The Snowman." The sale took place about an hour ago in London, and it brought in almost $200,000
to help the House of Illustration and children's literacy. Judith Kerr's "The Tiger Who Came for Tea" fetched close to $20,000. So did "Charlie and
the Chocolate Factory," illustrated by Quentin Blake was also the charity's founder. CNN's Isa Soares went to meet him.
(BEGIN VIDEOCLIP)
BLAKE: "Suddenly, the air was filled with screams of excitement. The screams came from Veruca Salt. She was pointing frantically to the other
side of the river. 'Look! Look over there!' she screamed. 'What is it? He's moving! He's walking! It's a little person!" I like that moment very much
because it's the first appearance of the Umpa Lumpas. I respect these because I made their hair stand on end.
ISA SOARES, REPORTER AT CNN INTERNATIONAL: Quentin Blake has a vivid imagination and a wicked pencil. He's a renowned illustrator responsible
for bringing Roald Dahl's "Big Friendly Giant" and "Charlie and the Chocolate Factory" to life. Now he's teaming up with 34 fellow
illustrators and writers and selling off some of their books at auction to raise money for the House of Illustration.
BLAKE: We found the first editions and asked to make them personal. And as I say, turned it in many different ways which is what's interesting.
Some with added drawings, some with added notes on what they wrote.
SOARES: From Raymond Brigg's Christmas classic "The Snowman" --
BLAKE: This is one for the amount of detail that he goes into anyway.
SOARES: -- full of personal insights including this one where he corrects readers still thinking it takes place in Russia.
BLAKE: Now there you see - the British bobby with his helmet. Yes it is.
SOARES: And there he is.
BLAKE: Yes.
SOARES: To Michael Bond's "Paddington Bear." He reveals how the character was born.
BLAKE: They were triggered off by a small toy bear I bought my wife and we called it Paddington. I wondered what it would be like for a real
bear if it ended up on the station all by itself.
SOARES: And that was the moment.
BLAKE: That's wonderful on page one as it were of the book, isn't it?
SOARES: Even Quentin himself has reengaged with the book he famously illustrated 25 years ago - "Charlie and the Chocolate Factory," creating
two new illustrations.
BLAKE: It's only got two drawings in it, but they're more any other copy of the book, so I put -- this is the only copy of "Charlie and the
Chocolate Factory" with specially-added vanilla fudge. So it is unique in that respect. So they get huge helpings.
SOARES: Fans of "The Tiger Who Came to Tea" and "The Gruffalo" will also be well served with new characters having been added. Inspiration
that is clearly still flowing. But where does it come from?
BLAKE: You know you don't have a moment of inspiration when you think, `Inspiration!' You know, so I mean what happens is you just start
drawing and you meet the people by drawing them frankly, like you begin to know what they look like or what you think they look like.
SOARES: Well for Quentin this inspiration came from the descriptive words of Roald Dahl.
BLAKE: "But there must be people working there. Not people, Charlie. Not ordinary people anyway." "Then who?" cried Charlie. "Ah-ha.... That's
it, you see.... That's another of Mr. Willy Wonka's clevernesses."
SOARES: Words he transformed with a touch of his pencil. Isa Soares, CNN London.
(END VIDEOCLIP)
QUEST: And we'll have a "Profitable Moment" from Jerusalem after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." You don't have to be in Israel for very long to know that even though they may not want this forthcoming
election next March, they're going to attack it with gusto, vim and vigor. Elections in this country are fairly brutal affairs. And when all's said
and done, they don't call it the `startup nation' for nothing. Everybody you talk to has got a plan or a scheme. Everybody's got an entrepreneurial
idea or some sort of profit-making whiz-pop idea. And maybe that's the secret of the success of Israel - that it can adapt, turn and take its war-
torn environment to its greatest advantage. But this election is testing the electorate like few things have before. You've only got to talk to
them. They ask, why election and why now? Well, it doesn't really matter. The Knesset has now voted that the Parliament should be dissolved. The
polls will take place next March. One can only have sympathy, because having been here just a few days and seen the frenzied nature and spirit of
electioneering, one has to ask, `How on earth are they going to keep it going at that rate for the next 100 days?' And that's "Quest Means
Business" for tonight. I'm Richard Quest in Jerusalem. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you
next week.
END
