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Quest Means Business
Russia in Crisis; Doing Business in Russia; Perspectives on Putin; Saudi Arabia: No Cuts to Oil Production; Empowering African Businesses; Alstom Hit with Record Fine for Bribery
Aired December 22, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: Yes, it is; no, it's not; yes, it is; no, it's not. We're dickering around, just at the record area. He's closed
the stock exchange. Let's see how the number looks just at the moment, at 17,962, that is a new record on the Dow Jones industrials after all the
volatility of recent weeks, a new record on Monday, December the 22nd.
On our program tonight, Russia in crisis mode: the former finance minister's predicting turmoil in 2015.
The taps will stay on, so says the Saudi energy minister. He says we'll never cut oil production -- ever.
And North Korea goes offline. It's the latest twist in the Sony cyber attack. We start this holiday week together. I'm Richard Quest. And I
mean business.
(MUSIC PLAYING)
QUEST: Good evening. It's certainly worth a ding on the bell after all the volatility of recent weeks, all the concerns over what was
happening with growth. If you've had any -- let's look, 155 gain on the Dow at 17,959.89. I was looking for me piece of paper that reminds me.
We are just literally under a point, about just a fraction of a point into a record for trading on the New York market. It looks like it settled
at 0.76, just -- it is a record. Well, my producer says it's not a record, but I'm disagreeing with him on this because -- my producer's finally
agreed with me.
Thank you. We are at one. While we sort out exactly what he's talking about and how much of the cooking sherry he's had over lunch, we'll
talk about more serious matters.
If you had any doubts about whether Russia is in full-fledged economic crisis, put them to rest. Today the former finance minister, Alexei
Kudrin, made it very clear things are likely to get worse.
(BEGIN VIDEO CLIP)
ALEXEI KUDRIN, FORMER RUSSIAN FINANCE MINISTER (through translator): Today I can say that we have entered or we are entering a real economic
crisis, a full-scale economic crisis. Next year we will feel all the effects of it.
(END VIDEO CLIP)
QUEST: Now Mr. Kudrin, who's a Putin ally, also said that much of the blame for the crisis rests squarely on the Russian government. Moscow did
not handle financial problems fast enough. And as he continued, Kudrin highlighted a future that will likely include a debt rating downgrade for
the Russian government to junk status.
There's going to be a rash of defaults, including medium-sized and large-sized companies. We've already seen one bank that's been announced
to be in trouble in Moscow. And Kudrin warned that a slide in living standards will likely to discontent throughout society and potential
political upheaval.
Now putting all this together, I'm joined now by the chief exec, who's trying to keep a business running in Russia right now, Michael Tuch, the
chief executive of Svyaznoy, Russia's second largest mobile phone retailer.
I apologize, sir. I think I just mangled the name of your company. I'm so overcome by the record on the Dow Jones.
Let's start with Mr. Kudrin's comments.
Do agree with him, that the economy is in crisis and do you think it's getting worse?
MICHAEL TUCH, CEO, SVYAZNOY: Hi, Richard. Thanks for having me on the show.
Well, certainly it's a challenging environment and the real wages of course are evaporating from many clients that are our customers. But
Russians are resilient. Every 10 years they have to go through a serious crisis. So this is something in adapt as well. But certainly the
environment is getting worse by the day.
QUEST: If it's getting worse, where do you see it playing out? I know you're a business man; you're not a politician. But what are people
like you now looking for? Because you're really caught in the middle here, aren't you?
TUCH: Sure. We have a -- we are a $3.5 billion company with a very wide range, not only mobile phones, but we also have exposure to financial
services, insurance services, travel services. So we see customers' behavior first-hand. I must say from looking at the holiday season,
Russians certainly have a few essentials -- bread, sugar and iPhones.
(CROSSTALK)
QUEST: OK. So they've got their bread, they've got their sugar and they've got their iPhones. But you have to put in place a strategy for
2015. So knowing what you -- what Kudrin said, knowing what Putin has said -- in two years, maybe even two quarters, whatever, what's your strategy in
2015?
TUCH: Well, clearly, first thing we've done is we cut all the capital expenditures. So we're not going to be investing much into anything
except for providing essentials for serving our customers as best we can in the environment. We have over 1.5 million customers visiting us every day.
So our job is to make sure that they get the best possible service.
As much as we can, we're going to keep the prices down for the consumers.
QUEST: Well, you're going to have to, because if you don't keep the prices down, you'll go out of business because certainly there's not the
money there in the economy at the moment.
What do you want the government to do? Now, come on, look, I'm not naive; I know that politics and economics and business and government is
run slightly differently in Russia.
What do you want from Putin?
TUCH: Well, look, honestly, I'm not a politician as you said. And I'm a business man so what I do every single day, I want to make sure that
my 22,000 employees have a bright future in my company and my customers get the best service.
If President Putin or President Obama would give me advice how to do my job better, I probably wouldn't take it seriously, much as I wouldn't
like to give them my advice. Being a business man, I would certainly do the best I can for my country and for my people, as I would expect Mr.
Putin to do.
QUEST: Right, and, please, just as we say -- as I thank you, do give me the correct pronunciation of your companies there. I feel most guilty.
TUCH: Svyaznoy.
QUEST: Svyaznoy. It's much easier to say than it looks when it's written in front of me.
Sir, thank you for joining me.
2014 --
TUCH: Thank you for having me.
QUEST: -- for Vladimir Putin. Well, when you look at the year as it was, it really can be summed up in just a few words. But they are
significant and they do tell us the whole of the past 12 months. Sochi, Crimea, Malaysia Airlines Flight 17, sanctions --
(LAUGHTER)
QUEST: -- oil.
(BEGIN VIDEOTAPE)
QUEST (voice-over): The year began with pageantry and pyrotechnics. Vladimir Putin, savoring the moment, at the pricey Sochi Olympics. At an
estimated $50 billion, it was the most expensive games ever.
FAREED ZAKARIA, CNN HOST: If you look at the way the year began, it seemed that Vladimir Putin was riding high. Oil was at -- well over $100 a
barrel. He had planned the Sochi Olympics. It seemed like a grand success.
QUEST (voice-over): Soon after Sochi, it was all downhill for Russia's relationship with the West. As revolutionary Ukraine descended
into chaos, Kiev became a battlefield.
Pro-Russian President Viktor Yanukovych fled the capital and office.
Then Russia annexed Crimea.
An outraged President Obama announced sweeping sanctions.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is not our preferred outcome. These sanctions would not only have a significant
impact on the Russian economy, but could also be disruptive to the global economy.
QUEST (voice-over): To this day, President Putin refuses to break with the pro-Russian separatists in Eastern Ukraine and successive rounds
of Western sanctions, totaling tens of billions of dollars, have taken their toll on the Russian economy.
RANA FOROOHAR, ASSISTANT MANAGING EDITOR, "TIME": And the most important thing about sanctions is that right now they're preventing Russia
from renegotiating its $600 billion in debt. That's a big deal because, as the ruble starts to lose value, that becomes more and more impressive as
inflation rises.
QUEST (voice-over): The crisis in Ukraine took an even more grave turn when Malaysia Airlines Flight 17 was shot out of the sky near the
Russian border. Ukraine says it was a Russian missile which brought the plane down. Russia and the pro-Russian separatists in control of the area
denied responsibility.
ZAKARIA: That was perhaps the point of greatest arrogance that you saw in Russia, where Putin didn't even bother to try to explain or
apologize for any of this. In a sense, he was saying, stuff happens; this is a dangerous area.
QUEST (voice-over): The situation was bad but then came the oil shock. Since June, the price of crude has fallen, more than 40 percent.
It's delivered the one-two punch to a Russian economy that was reeling from sanctions.
FOROOHAR: Seventy-five percent of its exports depend on oil and gas. So it's basically a petro state. You have a petro autocrat at the top of
it and so when oil prices fall, things tend to collapse.
QUEST (voice-over): As oil dropped, the Russian ruble fell in tandem. And a desperate round of central bank interest rate hikes failed to
strengthen the currency. It hit record lows. Many Russians rushed to buy foreign imported goods as the ruble fell. So far, they're standing by
Putin. The issue, of course, is for how long?
IAN BREMMER, FOUNDER, EURASIA GROUP: They've been looking more and more like a submerging market, not an emerging market. While Putin's
popularity within Russia has only increased and clearly as we close 2014, the disparity between those two trends is an absolute chasm.
QUEST (voice-over): At his yearend press conference, the Russian president said the pain would be temporary.
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): This situation could continue approximately -- nobody can say exactly -- for two
years. The situation can improve sooner, even first or second quarter of next year.
QUEST (voice-over): Putin says the Russian economy needs to diversify. That will take time. Russia needs a rebound in oil in 2015.
(END VIDEOTAPE)
QUEST: Now U.S. stocks, they were higher at the open and as you've seen as the day went on, look at that nice graph. A sea of green across
the board. The gain was over 154 points as against, just doing the calculation, 0.4, it's basically three-quarters of a point into record
regions, 17,959 versus 17,958. It's the fourth straight day of gains.
Remember, of course, it is a short week of trading, it being Christmas Week. So we'll be keeping an eye to see how the close on Christmas Eve,
when, of course, we always have that singing.
Russia's crisis has been largely driven by the glut in oil supply and a fall in oil prices. Saudi Arabia's energy minister will tell us that the
world should get used to it. He was talking exclusively to John Defterios and you'll hear him after the break -- QUEST MEANS BUSINESS.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Tonight, the world prepares for a new normal in oil prices as Saudi Arabia tells CNN it will never cut oil production. Yes, you'll hear
the word never used. Crude prices are down some 2 percent. It's at $60.15 for the day; 48 percent of their all-time high in June, or the high that we
saw earlier in this year.
If you look at how it's moved, well, this is the year so far. And then you get this extraordinary precipitous fall, big falls over here.
That's where you've got OPEC's production decision not to cut production. But it continues to fall much further, obviously with no support. Prices
fall below $70 a barrel. And now that they're hovering down around $60 and one oil commodity trader I was talking to over the weekend did suggest that
it could go perhaps as low as $50.
OPEC ministers say they're prepared to go as low as $40 before they'll consider cutting production. It's taking a toll on everybody in the
industry. Now the oil price fall -- as you and I have discussed on many occasions -- is very bad news for the producers, including, of course, the
U.S. and Russia. Extraction costs are higher in Russia and the U.S. than, say, in the Gulf.
Low oil prices may force some to shut down. Saudi Arabia's energy minister spoke exclusively to CNN's John Defterios, who asked the minister
if there was any rumor that OPEC's targeting other countries. Is the strategy to try and drive higher production oil such as fracking or shale
in the U.S. out of business?
ALI AL-NAIMI, ENERGY MINISTER, SAUDI ARABIA: These rumors, or whoever generated them, is completely mistaken. I was the first minister to
welcome production and the addition of shale oil to the world in 2008-2009. Why? Because it would give better stability and assurance to the world
that peak oil, is a theory now that is there, but at that time, peak oil was a big deal.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: But we've moved in the opposite direction now. So is this price, around $60 a barrel, healthy for
long-term investment? Some would argue it's not. But Saudi Arabia and others get to hold onto their market share.
AL-NAIMI: Saudi Arabia, you know, we are going to continue to produce what we are producing. We are going to continue to welcome additional
production if customers come and ask for it. There is no effort against anyone in the international oil market. There are no conspiracies against
any country. And that is what I said in my speech. I wish somebody would take that translation and use it.
DEFTERIOS: Final point: if non-OPEC producers come forward and offer cuts at this stage, would OPEC step up to the table and do the same?
Or are you happy to leave production where it is?
AL-NAIMI: I think it's too late now.
DEFTERIOS: And why do you say that?
AL-NAIMI: If they want to cut production they are welcome. We are not going to cut and certainly Saudi Arabia isn't going to cut.
DEFTERIOS: And this is a position you'll hold for, what, the first six months of 2015?
AL-NAIMI: The position we will hold forever, not 2015.
(END VIDEOTAPE)
QUEST: Well, it couldn't be much clearer than that, not just a position that they'll hold for the first six months . We're not going to
cut production. We're not going to cut never ever.
Mohamed el-Erian is the chief economist, chief adviser at Allianz.
Well, that was clear enough. So what does that mean for economic growth? Factor in what you've just heard and guide me on the way.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: So basically what Ali was telling you is the paradigm has changed. They will no longer be
the swing producers. They will no longer cut production. OK, they want to maintain market share, and there's a reason for that. Last time, they
played the role of swing producer, it took them a very long time to restore market share, which means for the global economy significantly lower oil
prices for quite a long time. It is a tax cut for most people. That's the good news. But as you said earlier, it means less investment in energy,
both traditional and alternative, and it tips certain countries over the cliff including Russia.
QUEST: Now if Saudi isn't a swing producer, then obviously the U.S. is the next largest producer, could be. But there's only one problem
there. The U.S. does not produce en masse. It produces individuals, individual wells, individual companies. So it's very difficult for the
U.S. to have a coordinated cut in production, other than through market forces.
EL-ERIAN: That's absolutely right. Market forces, that's a key issue. And what's going to happen is lower oil prices will cut down in
supply over time and will stimulate higher demand. So it's going to take a long time and that's why oil prices will stay low for quite a long time.
QUEST: One more on oil, then we must talk Russia, Mohamed.
When we talk about oil, give me the net-net in terms of -- because all this whole story is about the winners and the losers. Net-net global
economy, are we better with these lower prices, even though it's hurting oil-producing countries?
EL-ERIAN: Yes, we are. We are better off in terms of both growth because remember, oil is an input to so many things. So we're better off
in terms of growth and importantly it is the consumer that will benefit.
So net-net, we are better off; but there are major compositional issues that I suspect you and I will be talking about for the next 6-12
months.
QUEST: Well, hopefully, you'll be talking about it here on this program, on QUEST MEANS BUSINESS.
Now Russia: well, the canary has finally sung. Kudrin says it's a crisis. Putin didn't think it was. Is it a crisis?
EL-ERIAN: Oh, it's absolutely a crisis. It's a crisis in the foreign exchange market. It's a crisis in terms of capital outflows and it's a
crisis for the average Russian who's going to experience lower growth, higher inflation and shortages.
QUEST: But as I look at this, Mohamed, I can't see any easy way out, even saying pigs might fly and Putin decides to pull back on his policy on
Ukraine, even then this cake is baked and it's almost difficult to see how he gets out of it.
EL-ERIAN: Well, he needs three things to help Russia get out of it. One is he needs a comprehensive policy response. They don't have that yet.
They're focusing mainly on central banks and lost wages. But convincing people to surrender to foreign exchange.
Secondly, he needs a better external environment, either higher oil prices or a lifting of sanctions. That's not happening anytime soon.
Thirdly, he needs an external balance sheet and I don't see that external balance sheet coming available.
So I agree, it's going to be hard. However, they will be able to tranquilize the markets, calm them down once in a while. But it's going to
be just for a short duration of time.
QUEST: Well, have a lovely break. Have a good holiday season and we look forward to talking to you in the New Year. Thank you, sir, for always
coming on our program and making sense for us with these issues.
EL-ERIAN: Thank you.
QUEST: Thank you.
Now in Nigeria today, a deadly bombing at a bus station in the northeast city of Gombe. At least 20 people were killed. It was a
homemade bomb that exploded as people were boarding buses. The officials in Nigeria are blaming Boko Haram insurgents for the attack.
Along with this violence Nigeria's facing the pain of lower oil prices. We were talking about there with Mohamed el-Erian.
Around 70 percent of the country's income can be traced to oil exports. Moody's says the West African country is still showing resilience
in the face of this oil selloff and is -- with the oil price and the violence and the economic difficulties, the Nigerian currency, the naira,
remains deeply under pressure against the dollar.
The central banks hold a small amount of dollars to help boost its value but as you and I have discussed many times, that is ever only short-
term effect.
Joining me over in our C suite this evening is Tony Elumelu.
Good to -- good afternoon, sir. Thank you for joining us.
Now our guest here is the Nigerian-born business man, who's also one of Africa's richest entrepreneurs.
That's a fair description of you, isn't it?
TONY ELUMELU, NIGERIAN BILLIONAIRE: Thanks, Richard.
(CROSSTALK)
QUEST: Now, tell me sir, how worried are you about the economic situation in your country at the moment?
ELUMELU: I like to say, Richard, the economic situation in Nigeria is far more nuanced beyond the impression that's been created. First is this
current administration and the one before this actually have significant (INAUDIBLE) about the country.
QUEST: But the oil price is having an effect. It's certainly hurting the economy at the moment.
ELUMELU: Yes, oil, the cost of the (INAUDIBLE) of our foreign (INAUDIBLE) comes from oil and also (INAUDIBLE). Yes, the oil price has
acting part on the economy. But the economy has proved to be quite more resilient than that. And if you look at the other sectors of the economy,
like agriculture, which is very vitalized, and which country rules over 60 percent of our GDP, then you begin to appreciate the fact that while oil is
significant, (INAUDIBLE) actually in the economy (INAUDIBLE).
QUEST: One of the most vibrant parts of the Nigerian economy has to be the entrepreneurship and that's why you're here to talk to us today.
When we look at entrepreneurship, you think there's room to be optimistic. And yet many entrepreneurs leave the country, don't they?
They go to make their fortune elsewhere.
ELUMELU: Yes. But some of us have been born in Africa, in Nigeria and we work in Nigeria and (INAUDIBLE) fortune.
QUEST: Why is it like this? Why is there such entrepreneurship there?
ELUMELU: I think there are a lot of opportunities in Nigeria, a lot of opportunities across Africa. And (INAUDIBLE) you have a lot of
challenges but also opportunities. In Nigeria I would say in my own case, I make testimony to entrepreneurship in Africa and Nigeria. I believe in
entrepreneurship. And I have seen that nowhere they maybe cannot (INAUDIBLE) make in Nigeria and across Africa in fact.
But in truth, in the narrative on Nigeria, is so that you wouldn't want to see as far as opportunities. But in their way, is -- which, in
their way, is not bad for local entrepreneurs.
(CROSSTALK)
QUEST: But there does need to be some changes in regulation, doesn't there?
There does seem to be a certain strengthening of certain aspects, even with good entrepreneurship.
So let me ask you, as a business man, what is the one thing you want now from the government?
ELUMELU: As a business man, there are quite a lot of things you want from government. But one of the things we want from government is first we
are qualified as a lot has gone on in the (INAUDIBLE) the economy, the passage (INAUDIBLE) information, the agricultural transformation. These
are very good. However, we want to make sure that the inevitable environment for businesses and entrepreneurs to continue to do what
(INAUDIBLE) put in place.
I believe strongly in the power of entrepreneurship in providing economic solutions to the continent and Nigeria's challenges.
But for entrepreneurship to do it, the -- inevitably the environment has to be put in place.
QUEST: Sir, may I wish you a very good holiday season, sir. And thank you very much for coming in and talking to us.
ELUMELU: Thank you. Richard.
QUEST: Now when you put it all together, it is outstanding, astounding, brazen and the consequences are global. What Alstom did to
incur a record fine for bribery -- it's QUEST MEANS BUSINESS.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: At the end of a traumatic year, one that included a takeover deal with General Electric, Alstom has now received the largest ever
criminal fine for bribery. The fine came from the United States.
Alstom pleaded guilty, agreeing to pay $772 million for giving bribes across several continents. It's to do with the Foreign Corrupt Practices
Act, the FCPA. Now anybody, anybody who works internationally or works for a global corporation is well familiar with the pitfalls and promotions of
the Foreign Corrupt Practices Act.
Our senior international correspondent is Jim Bittermann, who joins me now from Perth.
Jim, we've had many -- I've sat through many tutorials and seminars here at TimeWarner and Turner Broadcasting about the Foreign Corrupt
Practices Act. Arguably those in Alstom haven't done something similar.
JIM BITTERMANN, CNN SR. INTL. CORRESPONDENT: Apparently not, Richard. You know, I think both of us have heard those things said before about our
parent companies, for example, the idea that you can't trade in corrupt ways if your company's listed on the American Stock Exchanges and of course
Alstom apparently has done that -- not apparently; in fact, they pleaded guilty to doing that. They pleaded guilty to paying something like $75
million in bribes to win $4 billion in contracts in places like Egypt, Indonesia, Taiwan and other places, for all kinds of things, power grids
and that sort of thing.
And they paid those bribes through something called sales consultants. These were basically outside contractors who went in and sometimes members
of the families of some of the high officials in various countries abroad and offered money in exchange for the contracts. And some of the stories
were something like out of a novel or something. These guys that were doing the contracting were known as things like The Quiet Man, Mr. Geneva,
Old Friend and things like that.
When one of the officials being bribed complained that they were just offering them something like pocket change, apparently Alstom sent in a
second consultant to offer them more money.
QUEST: Right. Now so the question of course becomes what was their defense? Or did they basically do the old criminal's version of you've got
me bang to rights, Guv?
BITTERMANN: I think the latter, Richard. They basically didn't mount much a defense. Once the Justice Department started saying that they were
going to go after officials of the company with criminal charges. At that point, suddenly Alstom decided that they'd better start cooperating and the
head of the company, CEO of the company, Patrick Kron said today that he admitted to some past errors of the company had made and he was glad to
have these things now put behind him so the company could look to the future, and part of that future by the way is that big GE deal that you
talked about.
QUEST: Jim Bittermann who's in Paris where it looks like it's a glorious evening this evening, thank you for joining us. When we return,
North Korea's Internet is having problems. But who did what and why now? The President of the United States says we may never find out how they have
retaliated against North Korea. It's a wrong (ph) business.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment. This is CNN, and on this network the news always comes first.
The man driving a minivan's driven into a group of pedestrians at a Christmas parade in Nantes in France before then stabbing himself to death.
Ten people were injured. One French lawmaker is calling it a criminal act. It comes a day after another man drove into a crowd in the city of Dijon
while apparently shouting, "God is great" in Arabic. Twelve people were injured in that incident. At least 20 people have been killed following an
explosion at the bus station in the Nigerian city of Gombe. A homemade bomb was detonated as passengers boarded a bus. Boko Haram's being blamed
for the attack.
Another blast went off at a market around 150 kilometers away in the town of Bauchi. It's not yet clear if that was also terrorist activity.
New York City Mayor Bill de Blasio has called for calm after two police officers were shot dead over the weekend. Before the attacks, the
killer had posted messages about the death of Eric Garner who of course died after being put in a chokehold by New York police earlier this year.
Some police officials have criticized de Blasio for his handling of the protests following Garner's death.
Tunisia has chosen a new president in an historic election. The veteran politician, Beji Caid Essebsi, took 55 percent of the vote
according to an announcement on state TV from the Independent High Authority for Elections. Sunday's vote was the first time in decades
Tunisians were able to choose their leader in a free and fair election.
Joe Cocker has died. The English rock and soul singer was known for his cover of the Beatles' "A Little Help From My Friends" and the haunting
"You are So Beautiful." He was famous for his smoky, gravely voice and all-out live performances. Joe Coker. He died, aged 70.
Well, North Korea's hack at Sony Entertainment continues to take bizarre twists and turns. Now you'll remember because we were talking
about together on Friday when President Obama said the U.S. would retaliate proportionately. Now all Internet access is out in North Korea according
to analysts at DYN Research. It is unclear if it's related to any kind of attack. Apparently North Korea does have such - is prone to Internet
outages. Samuel Burke joins me now live, our technology correspondent. Let's go through these quickfire. Is this U.S. retaliating?
SAMUEL BURKE, BUSINESS CORRESPONDENT: It would be pretty surprising because it would be so obvious. The Internet is completely down in North
Korea at this current time. So, Obama, yes, he talked about proportional response, but he said you may not even notice when we did it. Think back
to Stuxnet - how long it took for the world to figure out what had happened at those Iranian nuclear plants. So this would be rather brazen. It could
be Anonymous - that famous hacking group. They could be retaliating against North Korea if they believe that it was North Korea indeed that
hacked Sony. It could be the Chinese - a lot of the Internet in North Korea's routed to the Chinese.
QUEST: Or it could just be a bad infrastructure in North Korea.
BURKE: Well, I want to show you that chart again -
QUEST: Please do.
BURKE: -- that we had up for a second -
QUEST: Please do. Let's have a look.
BURKE: The director of the company behind this research said if you look, purple represents Internet, Richard, white represents no Internet.
You see at first over the past 24 hours a couple of blips. He said that's normal. Sometimes the Internet goes down, especially in a country like
Internet (ph), but he sees these longer blips - the red line there represents two hours without Internet. It's actually been longer than that
since this has been posted. He said he's never seen something like this before.
Another option could be that the North Koreans are taking down their own Internet, Richard, as they prepare for an attack or a retaliation if it
was them indeed who carried out the attacks against Sony. So we've never seen something like this before in North Korea according to these
researchers. .
QUEST: Right. Now, "The Interview" - I need to just quickly ask you about that. Sony on Friday of course said that they never intended that it
shouldn't be released and now do we have any more details when it might be released?
BURKE: Well now BitTorrent which is a file-sharing website kind of like Napster has offered their support, saying that they would help
distribute it. Kind of ironic though because BitTorrent is for example, whoever hacked Sony - if it was the North Koreans, they leaked all those
other films - "Annie" and what not - the other Sony films - on websites like South - on websites like BitTorrent. So it'd be rather surprising if
Sony turned to somebody who's really been kind of enemy to the industry.
QUEST: Now finally, briefly, you look at this whole - this is your meat and veg - you do this every single day. I had a chance , so give me a
perspective on how serious this Sony story has been.
BURKE: I think it's the most serious because it's been the most visible. So many of these hacking stories are so hard to tell people. You
hear about credit card numbers and you snooze. And I think this one is important because we've had images to show people. They can understand a
movie was supposed to be released. It's something more tangible, and I think that's why it's more important. There've been many hackings in the
past, but this is the one that has made people conscious of the fact that this affects all aspects of life - business, everything that you can
imagine.
QUEST: Samuel Burke, thank you. North Korea's threatening cyberattacks against the United States. Would be somewhat difficult since
the internet's down. Even though the regime continues to deny it had any role in the Sony hack, our White House correspondent Michelle Kosinski is
traveling with President Obama in Hawaii and sent this dispatch.
(BEGIN VIDEOCLIP)
MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: North Korea now openly threatening U.S. security, vowing, "Nothing is a more serious
miscalculation than guessing that just a single movie production company is the target. Our toughest counteraction will be boldly taken against the
White House, the Pentagon and the whole U.S. mainland, the cesspool of terrorism." And even while denying responsibility for the Sony hacking,
North Korea now promises escalation, saying the hackers are "sharpening bayonets" to do damage thousands of times greater.
Do you think this was an act of war by North Korea?
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: No, I don't think it was an act of war, I think it was an act of cyber vandalism that was very
costly, very expensive. We take it very seriously.
KOSINSKI: But that characterization, not as cyber war or even terror, but vandalism has launched the President's critics here at home.
JOHN MCCAIN, U.S. SENATE REPUBLICAN: This is a manifestation of a new form of warfare. When you destroy economies, when you are able to impose
censorship on the world, and especially the United States of America, it's more than vandalism and we need to react and react vigorously.
KOSINSKI: What America can do and when is the question. Possibly sanctions against the already-strapped regime's economy, its banks or
military. The U.S. has now reached out to China and asked for cooperation. But what exactly that would look like, U.S. officials decline to say. What
has been stated in no uncertain terms at the highest levels is that options against North Korea are being weighed as we speak.
OBAMA: They caused a lot of damage. And we will respond. We will respond proportionally and we'll respond in a place and time and manner
that we choose.
KOSINSKI: So while this is all going on, today in an unprecedented move, the U.N. Security Council will take on North Korea's dismal human
rights record, one the U.S. ambassador calls systematic and one of the worst in the world. They'll be looking at possible referral to the
International Criminal Court for crimes against humanity. Michelle Kosinski, CNN Honolulu.
(END VIDEOCLIP)
QUEST: Costa Rica is always said to be the happiest place on the planet. Well next I'll take you inside an oxcart parade. It's one of the
things you can do when you visit this happy place - assuming you don't get too close to those horns. That's the president of the country. You'll
hear from him next.
(COMMERCIAL BREAK)
QUEST: The "Business Traveller" update for this week. Sun, fun and friendly people. Who could ask for more? Those sun, fun and friendly
people also lived to ripe old ages. Throw into the mixture the culture, the history and the natural beauty, and you've got a place where once
you're there, you might want to just abandon your return ticket home. It's Costa Rica.
(BEGIN VIDEOCLIP)
QUEST: Costa Rica -- here life can be summed up with one phrase -
Female: Pura la vida.
QUEST: Pura la vida - the pure life. And here it's pure positivity. Time and again Costa Rica tops the list as the happiest country on earth.
It's also a blue zone - part of the world where people live the longest. Healthier, stress free and seemingly never in a hurry. So this has to be
the perfect place for me to discover how to travel and still be happy. This is really something quite extraordinary. It's the San Jose oxcart
parade - a celebration of Costa Rica's most famous iconic mode of transport. Oh, look at this!
Male: (SHOUTING COMMANDS TO OX).
QUEST: How do you stop them?
Male: (SHOUTING COMMANDS TO OX).
QUEST: Who better to show me how to lead a happier life than the country's President Luis Guillermo Solis.
LUIS GUILLERMO SOLIS, PRESIDENT OF COSTA RICA: If the country was just easy to handle as an oxcart and these oxen, things would be very, very
good.
QUEST: If only the congress was a lead (inaudible).
SOLIS: (SIGHS). I would live - I would be a very happy Costa Rican.
(LAUGHTER)
QUEST: So this is the happiest country on earth?
SOLIS: Yes, so they say. I'm very happy myself and I figured there are lots of people that are very happy in Costa Rica.
QUEST: What makes it the happiest place?
SOLIS: Well you know, I think we enjoy a situation of peace as you have been able to see.
QUEST: Time and again, Costa Ricans put their happiness down to two factors - security and abundance. The country disbanded the military. And
here there's a never ending supply of nature, warm weather and warm people. Not only babies get a presidential kiss in Costa Rica.
SOLIS: (KISSING A CITIZEN).
QUEST: And a hug. The polls show the people are happy with his government although for the president, staying happy under all that
pressure is no easy task. Do you get overwhelmed.
SOLIS: Yes.
QUEST: Because the -
SOLIS: Because everything seems to be important, everything's urgent.
QUEST: Interior comes in and says we've got problems with roads. Somebody else comes in and says we've got problems with healthcare.
Somebody else says I need a new telecom structure.
SOLIS: And then my wife comes and says we are not taking care of the nest too much - you have to spend more time with the family. Yes, I know.
I mean, it's - but that happens everywhere. I mean, you have to make choices and you have to decide where you're going to put all your - where
are you going to put all your efforts.
QUEST: A key priority for President Solis is fostering Costa Rican culture. After all, he believes a cultured people are a happy people
SOLIS: I'm going to show you our National Theater which was built with resources that came from the coffee exporters at the end of the 19th
century.
QUEST: This is a grand building in a humble country.
SOLIS: And we have a booth which presidents have used since 1897.
QUEST: You have a good seat.
SOLIS: A very good seat which I enjoy very much.
QUEST: You don't have to make a reservation.
SOLIS: I don't have to make reservations. That's presidential privilege. Not only patronage but privilege. You know, Richard, there was
a very wonderful former president we had. He said, 'Why should we have tractors if we don't have violins?' And I think that notion that a nation
that's cultured produces more, educated people are more aware of the world in which they live. I think it's a very wonderful thought and this is a
result of that.
QUEST: Dual roles that President Solis believes he too can play.
SOLIS: (SPEAKING SPANISH). I've never done this before, Richard, and this piano I have never touched. And this gentleman is the musician who is
tuning the piano. (PLAYS PIANO).
(END VIDEOCLIP)
QUEST: Not every day you get the president to cling the ivories. Airbus has delivered its A350. It's a crucial plane for Airbus and for
airlines, and you may well enjoy flying onboard. You'll see the pictures
(COMMERCIAL BREAK)
(ORCHESTRA PLAYING)
QUEST: From president playing the piano to full 80-piece orchestras, the first movement of Mozart Symphony No. 40. Now the piece of music was
written during the composer's most productive period, and it was played today to mark the delivery of one of Airbus' most productive periods and
the last new major aircraft to be built, launched and flown from scratch. It is the A350. It's Airbus' answer to Boeing's Dreamliner, and today
that's the chief exec - the chief of Qatar Airways. He was - received the keys - Akbar Al Baker got the keys to his first A350. Airbus is banking on
this plane to power its future.
(BEGIN VIDEOCLIP)
FABRICE BREGIER, CEO, AIRBUS: We are just at the beginning of a new family of aircraft, and during the next 20 years, we will constantly
improve it as we are doing on the 320 and the 330. The beauty is that we have invested more than $10 billion euros upfront and these additional
upgrades will be done at marginal costs compared to initial investment.
(END VIDEOCLIP)
QUEST: Now Airbus hopes the A350 will beat buyer (ph) competition from the Boeing Dreamliner and the Triple 7. So have a look and see
exactly what - you've got the Triple 7 up here. Now in its car - in its class - the Triple 7 rules supreme - 350 to 380, 390 passengers, it is the
Triple 7. But once you start getting lower numbers of passengers with new lightweight composite bodies, you're talking about, say, the Dreamliner -
the 787. Here 230 to say 270/280 passengers, depending on the composition and depending. But now you have the 350 coming into this range as well.
At its lower end, it competes directly with the 787.
But as they extend the 350 into different barrier (ph) slates (ph) you're on, it will start to challenge the Triple 7 as well. So the 350
from Airbus' point of view is absolutely crucial, both in attacking the 7-8 and the Triple 7. Of course whether or not it can actually do this is
another matter. Airbus is building the 350, the 900, the 1000 - it' s a fully lightweight composition aircraft, it's 25 percent more efficient than
similar jets they claim, and it is just the future. There's only one problem with it, and this is it which I've - I remember when they announced
it. It's called the 350 XWB, which stands for xtra wide body. And I remember at the time that they announced it, I said, 'That's hardly a
catchy sight in, you know, the name for a plane. The A350 is just one of the major innovations taking flight in the coming years.
It's time. It's time to look into my crystal ball and to look and see exactly - ah - it's a bit cloudy today. So what do we have for the
"Passport of 2015"?
(BEGIN VIDEOCLIP)
QUEST: As we use our passports for 2015, we should be prepared to fly on new planes. Japan's aviation business will be boosted, launching its
first commercial aircraft in around half a century. Mitsubishi's new plane set to rival the regional jets introduced by Embraer of Brazil, Bombardier
of Canada. Its maiden flight is scheduled for the second quarter of the year. Meanwhile, that old rivalry between Boeing and Airbus will continue
to soar. Airbus will put into service A350. With its fuel-efficient carbon wings and fuselage the plane will challenge Boeing 787's Dreamliner,
in the long-haul market. Air mile connectors could find themselves in for a nasty shock or a pleasant surprise. Some U.S. carriers are switching the
basis of earning miles from distance flown to money spent. It's a trend we'll watch to see if it expands.
And finally, our phones have become smart. And now airports need to smarten up too. Shanghai, Miami, and Copenhagen are testing beacon
technology that tracks passengers. He (ph) uses Bluetooth to send signals triggering information to be used like airplane boarding passes, as you
approach check-in, sending promotional coupons to go through duty-free and offering up Wi-Fi codes when at (ph) airport lounges. Updates on gates and
carousel numbers for baggage. It's all designed to save us traveling. Oh, yes, when we travel in 2015, mobile technology will make us smart.
(END VIDEOCLIP)
QUEST: You've got to make sure you have a clear view on what's happening in the future. There's a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: OK, tonight's "Profitable Moment" and the observance on you - of you - will have noticed that Quest Airways - that fine luxury carrier
that goes across the globe in great comfort has clearly bought Triple 7s as you can tell from the empennage in the back. But don't worry, Fabrice, at
Airbus. I promise you the next order will go to Airbus for the A350. Well, maybe. Give me a good price. And that's "Quest Means Business" for
tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. Let's get together
before Christmas tomorrow.
END
