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Quest Means Business
US Imposes New Sanctions on North Korea; Russian Government Moves to Help Banks; Russians Seek Help as Ruble Plummets; Lithuania Adopts Euro; Draghi Plans to Tackle Inflation; Piketty Refuses France's Highest Honor; Montblanc Enters Smartwatch Market; Classic Timepieces Still Timely
Aired January 02, 2015 - 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: An extremely odd day on Wall Street. The Dow was down for much of the session. Made a late recovery, up 17 points. On
the first trading day of the new year, the man hits the gavel. Oh, dear. That was not a hit of the gavel. That was a wimpy gavel. And a wimpy
gavel on Friday, January the 2nd.
Tonight, striking back on the Sony hack. President Obama puts new sanctions on North Korea.
Welcome to the club. Lithuania's foreign minister tells me why his country has now joined the euro.
And France's legion of problems grows as Thomas Piketty turns down its highest honor.
It's our first show together of the new year. I'm still Richard Quest, and I still mean business.
Good evening. We begin tonight with the response from the United States to North Korea. President Barack Obama has signed an executive
order imposing new sanctions on North Korea after federal investigators said the country was responsible for cyber attacks on Sony Entertainment
last month.
Our senior White House correspondent Jim Acosta joins me now from Honolulu in Hawaii. Jim, before we even get to those sanctions, with that
backdrop behind you, I'm surprised you can even keep a straight face and not burst into a sort of an "I'm here and you're not."
(LAUGHTER)
QUEST: But let's get on with the sanctions. What are the sanctions? How widespread are they?
JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right. It is also difficult to imagine, Richard, that the president would get this
sort of serious piece of business out of the way before leaving Hawaii, but he's doing just that, slapping these new sanctions on North Korea.
The Obama administration maintains, Richard, that North Korea is responsible for that cyber attack on Sony Pictures that the president
talked about before leaving for Hawaii a couple of weeks ago.
But let me tell you about what these sanctions involve. They really are going after, according to senior administration officials, any and all
officials of the North Korean government, its political hierarchy.
And get this, Richard: these sanctions are going after the chief intelligence agency for the North Korean government, something called the
RGB. That is primarily in charge of the government's cyber operations in Pyongyang. So, there's the cyber connection there.
In addition to that, these sanctions are going after individuals and entities that are involved in arms dealing and in the business of, I guess,
defense research and development. So, these entities essentially provide cash to Pyongyang, the North Korean government. They're being hit as well.
And there's a statement from White House press secretary Josh Earnest that I think is very interesting, Richard. I want to share some of that
with you, because in that statement, the White House is saying that this is really just the first part of the US response.
And Josh Earnest, the press secretary, saying, "We take seriously North Korea's attack that aim to create destructive financial effects on a
US company and to threaten artists and other individuals with the goal of restricting their right to free expression.
At the end of that statement, again, Josh Earnest saying that this is the first aspect of the US response to what they say North Korea did to
Sony pictures.
Why is that interesting, Richard? I'm sure you've already figured that out. Well, there was that vast internet outage in North Korea in the
days after the president's comments, before he left for Hawaii. There was all this speculation the US was behind it
On a conference call with reporters earlier this afternoon, US officials were cagey about that, but they did say that perhaps North Korea
may have done that to themselves.
QUEST: Right, but --
ACOSTA: So, suggesting that the US was not behind that.
QUEST: What about that report from last week that suggested that the US -- that North Korea was not behind the Sony hack. There is this chap
out there who says, no, it's a disgruntled employee.
Well, I assume, judging by the fact that -- I think, as the lawyers would say, the facts speak for themselves. The fact the president has done
this means that the White House doesn't give any credence to that.
ACOSTA: NO, they don't give any credence to that, and they're saying at this point, yes, the FBI investigation is still underway, but they
believe that all the hallmarks of a North Korean cyber attack are there, and that is why the White House --
And they're saying that these are "broad an powerful measures," that's the way they described these sanctions on a conference call with reporters,
and that this is a rare move for the US government to take.
So, you add all of that up, and the White House is fully confident that North Korea was behind that attack. They believe it's possible that
the North Koreans created their own internet outage to sort of place some blame on the US government, but the White House saying -- suggesting today
that that was not the case.
And then, with this whole slew of companies and individuals, there are some ten individuals that are named in these sanctions, Richard. Many of
these individuals work for something called KOMID, which is the main arms dealer for North Korea.
But when asked by reporters whether or not these individuals actually have assets in the US, the White House, these US officials would not say.
But it certainly does tighten the economic squeeze that exists on North Korea right now, Richard.
QUEST: Jim Acosta, who is in Hawaii for us tonight. Jim, thank you.
Now, as the US sanctions continue with North Korea, well, sanctions also are, of course, in place against Russia, and Moscow is now spending
billions of dollars to prop up the country's banks. Join me at the super screen.
You'll remember, of course, the banks have been shut out of the short- term lending market and, in fact, most of the lending market, the sort of money that the -- that all banks around the world need on a regular basis.
So, the Russian government stepped in to provide funding for the lenders, like VTB, which got $1.7 billion. Gazprombank, $680 million. And
Trust Bank has been given $1.7 billion.
When you put this all together, and you bear in mind that many of these banks will have other bonds and debts that will be maturing in the
days and weeks ahead, which the Russian government may have to provide the cash to do with, some ordinary Russians now fear if the government doesn't
help them, they will end up on the streets this winter. So, whether it's the banks or ordinary Russians, here's CNN's Erin McLaughlin in Moscow.
(BEGIN VIDEOTAPE)
(MAN SPEAKING RUSSIAN INTO MEGAPHONE)
ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT (voice-over): People here say this is their last hope. A desperate plea for help to Russian
president Vladimir Putin. To have their voices heard, they're willing to stand in temperatures well below zero.
They didn't know that interest rates would spike and the ruble would collapse in value, the results of falling oil prices and Western sanctions
for Russia's alleged actions in Ukraine. People you see here have mortgages in a foreign currency. They say either the government steps in
or they'll end up on the streets.
MCLAUGHLIN (on camera): According to a state-run mortgage agency, foreign currency loans account for 3.3 percent of all mortgage debt, but
critics say the government is playing down the problem. They say as many as 150,000 people could be affected.
MCLAUGHLIN (voice-over): It's here that we meet Marina and her family. She asked we not use her last name. She blames the banks for
being greedy. Despite trouble, she says she believes President Putin is doing things the right way.
MARINA, HOME OWNER: I'd rather lose my apartment but not lose Crimea.
MCLAUGHLIN: A heavy price to pay for Russia's foreign policy. But she hopes it doesn't come to that. She says she's counting on the
government for help. A year ago, in a working-class suburb of Moscow, she purchased her first apartment. Her new place a source of pride for a
single mother of three. She says the bank would only offer her a mortgage in dollars.
MARINA: Grab it or we don't give it to you, they said.
MCLAUGHLIN (on camera): And you just decided that it was worth it.
MARINA: I decided it was better to live in my own apartment.
MCLAUGHLIN (voice-over): Now she says her mortgage is twice her monthly salary, and she's behind on her payments.
MARINA: If it's banks taking, so, take it like this.
MCLAUGHLIN: Plans to remodel have been put on hold. The family lives in half the apartment. The rest is a construction site.
MARINA: And I have to count money right now and decide what to do: to spend on food or paying the banks.
MCLAUGHLIN: And so, Marina is taking action. This is her second protest.
MCLAUGHLIN (on camera): So, are you confident that President Putin will help you?
MARINA: Yes, he will help, yes. Come in six months, and I'm going to tell you the result. Or I'm going to be on the street.
MCLAUGHLIN (voice-over): This time of year, the streets of Moscow are about as cold as Russia's economy, and for these people, it looks like it
could be a long winter.
Erin McLaughlin, CNN, Moscow.
(END VIDEOTAPE)
QUEST: My word, that's -- the mortgage is twice the amount of the person's monthly salary. That puts it into perspective.
As we look at what's happening with Russia and we go a bit further afield, the next country was the first Soviet republic to declare
independence in 1990. Twenty-five years on, and Lithuania has now adopted the euro in its latest move towards the West.
On the New Year's Day, the country's prime minister withdrew euros from a bank machine in the capital Vilnius. Well, I'm sure he's grateful
that that worked. Along with everybody else who took money out.
The event marked the start of Lithuania's eurozone membership. Actually, to be truthful, of course, it's only notes and coins that came in
just then. They were members of the eurozone before that. But let's not be semantic in the new year.
The old currency, the litas, will be phased out over the next few weeks -- two weeks to use litas before it's all euro. Now, Lithuania is
the 19th member of the eurozone. The move comes as Russia has been engaged in military conflicts on the region.
And you can see, not only do you have the on claim of Russia to the West, but you have Russia over here and major Russian partners, like
Belarus, on the corner. Russia and its military activity very much in the past threatening the three big Baltic countries, Estonia, Latvia, and
Lithuania.
Russia annexed Crimea last year, and it's been supporting the Russian rebels who want to break away from Ukraine. Put all this together, and the
worries of those three Baltic states -- and I spoke to Lithuania's foreign minister, and I asked him why the euro was so important for Lithuania.
(BEGIN VIDEOTAPE)
LINAS LINKEVICIUS, LITHUANIAN FOREIGN MINISTER (via telephone): It's indeed getting us closer not only to the co-ops, to the family, but also
empowering us to have influence on the decision-making process, because the countries of the so-called euro group, they're taking decisions, and others
are following. So, I believe by involving ourselves, we can add value.
QUEST: Right.
LINKEVICIUS: And frankly speaking, now we are in front of this crisis, among the fastest-growing economies in the European Union, in spite
of the sanctions from Russia. And in spite of the damage to our GDP growth, we are still considered as a most growing GDP country in the European
Union. So, I believe --
QUEST: I've --
LINKEVICIUS: -- by adding ourselves, we will really help to solve the problems.
QUEST: Some leaders of the Baltic countries have been quite clear that they do believe that Russia has either territorial ambitions or in
deed at least is determined to be a destabilizing force. Now, we know what's happening with Ukraine. Well, after Ukraine, the Baltics aren't far
off. So, are you worried?
LINKEVICIUS: Of course we do -- we are worried, because all these military maneuvers around our country in the sea and the air, attempts to
violate airspace, it's a really direct threat, not only to security, but also to civil aviation, I would like to say.
It's definitely not contributing to the confidence building in the area. And it's spoiling, also, other relations, including trade. So, this
is really something that is very wrong. But I believe we will manage, and we'll stay united.
QUEST: Your president, of course, has been absolutely outspoken against Russia.
(BEGIN VIDEO CLIP)
DALIA GRYBAUSKAITE, PRESIDENT OF LITHUANIA: It is the test of leadership for European leaders and for NATO leaders. And Putin knows how
long and how much he can go. And we need to show that he cannot go too far.
(END VIDEO CLIP)
QUEST: With that in mind, now you're in the euro, do you see the euro as part of this buttressing Lithuania's defenses -- economic, political,
military, whatever way you want to take this, Minister -- against Russia?
LINKEVICIUS: First of all, this euro -- this step towards eurozone, it's a logical extension to all the process we took part so far. So, this
is really kind of a logical, so to say, accomplishment of the European picture.
On the other hand, as you said, against Russia, I do not share the views when somebody is saying, especially in Russia, that somebody's
building coalition against Russia. No, there's no coalition against Russia. We do not wish Russia to collapse or to stay and cower.
We are for the coalition for the values, for the commitment, for the rules internationally accepted. And this is really a coalition not
against, but in favor. And this is really our stance.
So, the president, when she spoke -- and as you said rightly, she was outspoken, she named names, she called things as they really look like. It
was not wishful thinking, it was a real assessment of the situation.
But it's not against. It's just in favor of our values and in favor of what we should defend, all of us, and make sure that others will listen.
Otherwise, it will be very difficult to achieve our goals.
(END VIDEOTAPE)
QUEST: That's the foreign minister of Lithuania who, of course, is now spending euros, not litas.
The breakout economist of 2014 has been offered France's highest distinction. Now, Thomas Piketty is saying no thank you, or non merci, to
the Legion of Honor, and we'll tell you why. QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Mario Draghi sent the euro tumbling on Friday as he prepares to tackle deflation. The European Central Bank president says he ready to
act if falling prices keep consumers from spending. His words are, "We are not there yet, but we need to tackle this risk," he said in an interview
with a German newspaper "Handelsblatt." It's a strong indication Europe could be headed for a dose of full QE.
The euro fell to its lowest points against the dollar, just take a look. This is the euro, and down she goes, down to -- look at that, down
in January from $1.36 and change now down to $1.17. It's at the lowest dollar since the heels of the Draghi comments. A bold start to what may be
his most critical year as head of the European Central Bank.
Now, the threat of deflation, which of course, bearing in mind, QE is coming on, as we see in this graph, is one of the key risks facing Europe's
economy at the moment. Already, prices are falling in four European countries. They are Bulgaria, Spain, Poland, and Greece. I beg your
pardon. So, there you are, the ones where you actually have full-scale -- or at least falling prices at the moment.
Inflation everywhere else is below the 2 percent target, or give or take. And the important point is, look at euro area inflation at the
moment. It's 0.3 percent, and European Union inflation is 0.4 percent.
And at those levels, that is perceived to be well and truly within the danger area. Well and truly. Because getting the numbers up, getting
inflation up, is often more difficult once you get down to these low areas.
It sounds very odd, let's face it. Most economists and most governments spend most of their time seemingly trying to get inflation
down. Gillian's with me.
GILLIAN TETT, US MANAGING EDITOR, "FINANCIAL TIMES": Hi. Good to see you, Richard. Happy New Year.
QUEST: Why -- happy New Year to you. Why --
TETT: Well, not so happy for Europe right now.
QUEST: Well, we'll get to Draghi and co. in a moment, but I can hear viewers say, what's so wrong? In New Year, let's have a bit of a primer on
this.
(LAUGHTER)
QUEST: What's so wrong with low and falling prices?
TETT: Well, a lot of people might ask that. The Bank of Japan, which is very relevant for Europe, actually did a survey in the last few years,
which showed the majority of voters in -- or the majority of people in Japan actually preferred deflation to inflation, because guess what? If
you're a household and your prices are going down, you think it's great.
The problem, though, is that falling prices tend to be associated with a lot of economic uncertainty. They don't give businesses the confidence
to actually go out and invest. And once you get into a deflationary track, as the story of Japan shows, it's very hard to actually get out of it.
QUEST: Why is it more difficult? We know how to get rid of inflation: you tighten up -- you tighten the nuts and you raise interest
rates. Why is it more difficult to create inflation?
TETT: Well, the problem is that essentially you're trying to ignite a sense of confidence in people to go out and actually spend money and to get
activity going. And what we've seen in the last few years is that when you pour money into a system, if the so-called transmission mechanisms, the way
that you actually pass money from the Central Banks into where the economies are broken --
QUEST: Which they are at the moment.
TETT: Absolutely. What you get is basically get money piling up unused. And so, it's a bit like the plumbing system of a house, if you
imagine it. If it's basically blocked, you can keep pouring money into the pipes, into the pipes.
QUEST: Right.
TETT: Eventually, they overflow. They don't actually get the system working again.
QUEST: Do forgive me. I think I'm a bit chesty today.
(LAUGHTER)
QUEST: There's a lot of it about.
TETT: Yes.
QUEST: OK. So, Mario Draghi. Would you say in Europe -- what's he waiting for? This canary has sung. He should be doing full-scale QE by
now, don't you think?
TETT: Well, as a former central bank governor put it to me very well, he said that Mario Draghi is pulling off the most extraordinary tightrope-
walking exercise probably ever seen in history.
He's trying to keep the Germans happy and persuade them he's not selling the whole of euro down the river through excessive monetization.
And at the same time, though, he's trying to keep investors believing that there's going to be jam tomorrow.
The problem is, he's walking on that tightrope without any clear sign of where he's actually heading to. And right now, it's incredibly hard,
because he can't go and do --
QUEST: But he's -- he's doing exactly the opposite of what every other successful central bank did during this crisis, which is awe and
shock, bold and beautiful.
TETT: Well, the problem is that the actual governing structure of the European Central Bank is probably more fragmented and more based on
consensus than almost any other central bank out there.
And so, unlike the Federal Reserve, that could simply act boldly, he's trying to keep everyone happy. And right now, that is an impossible task.
QUEST: Thank you very much.
TETT: Thank you.
QUEST: It's going to be a good year, eh?
TETT: It's going to be an interesting year. Lots of news. Not good, but interesting.
QUEST: We'll see you in Davos.
TETT: Thank you.
QUEST: Now, Thomas Piketty is so furious with the French government's handling of the economy, he's joined an exclusive -- or inclusive or
exclusive club, including Marie Curie and Jean Paul Sartre, in refusing the Legion of Honor, the nation's highest distinction.
The economist and best-selling author said it isn't up to the government to decide who's honorable. They would do better to concentrate
on reviving growth. Christian Malard is an international diplomatic consultant, and Christian joins us now from Paris. Many French people --
CHRISTIAN MALARD, INTERNATIONAL DIPLOMATIC CONSULTANT: Good evening.
QUEST: Good evening. Happy New Year to you. Many French people --
MALARD: Happy New Year to you.
QUEST: -- might say even if he doesn't agree with the government, it's a little bit offensive to turn down an honor which is not given by a
government, but given by a country.
MALARD: Yes, you are right. It might be considered as being offensive. A few people think about that. But at the same time, Hollande
-- President Hollande is so much disliked that I heard a lot of people saying, well, I think Piketty did right.
It's a political blow, economic blow, because as you know -- and you know that very well, Richard -- Piketty has been one of the pro-Hollande.
He has been voting for Hollande. He tried to help him to make a real fiscal reform, and he is very disappointed by the handling of the economy
by Hollande in France today.
So that at the same time, it was a certain way to say I disagree with Hollande, with his policy. It's too much center, center-right.
QUEST: Right.
MALARD: I want him to go more on the left wing. And this is a big disagreement.
QUEST: But if he has refused this -- and Piketty said on this program that he wanted more growth, that he believed in more growth, he believed
the policies were wrong. How is he viewed by the French? Is he regarded as a man who is calling out the truth? Or is he regarded as a man
bordering on traitorous activity?
MALARD: No, he is regarded who is reliable, who is very well- considered as one of the top world economists, very well-known, very much respected. And definitely Piketty is telling Holland, change your way.
You cannot bet on one percent growth rate for 2015 and believe you are going -- the companies will be able to hire more and more people, when you
see how high the rate of unemployment is today.
QUEST: Right.
MALARD: I think Piketty is more believed than President Hollande on his economic --
QUEST: OK --
MALARD: -- policy. There is no doubt on that.
QUEST: Now, finally, so, Hollande starts a new year. His -- and let's be crude about it -- his approval rating is down in the toilet. Is
there anything he can do to recover himself before elections, do you think?
MALARD: The funny thing, Richard, is Hollande a few days ago on the night of 1st -- 31st of December, told the French we need to take
initiative, you have to take initiative. What kind of initiatives is he taking?
No. Hollande is just betting on low euro currency, low oil barrel price, low interest rates, and America economy taking off again. He's only
betting on a better future. But does he take any decision? Any great steps to relaunching the economy in France? People will tell you here, no
way.
And we are two years and a half from French presidential elections, and already we know that Hollande will run again.
QUEST: Christian Malard, we are so grateful in this new year that we have you to help us understand what's happening. It looks like a cold but
beautiful night in Paris. I send you love and good wishes for the new year, sir.
MALARD: Thank you. Thanks, Richard.
QUEST: Now, when we come back, forget the smartwatch. Fans of traditional time pieces say time is on their side. This is QUEST MEANS
BUSINESS. We're starting a new year together. This is fun.
(COMMERCIAL BREAK)
QUEST: Montblanc is the latest traditional watch manufacturer that's decided to delve into the smartwatch world. It's unveiled its new e-Strap.
It fits into a traditional analog watch. Now, the smart screen on the underside of the watch and the wrist displays alerts, notifications.
The rise of the smartwatch has some wondering about the fate of a traditional timepiece. Well, you can't go wrong when you've got a
traditional sort of thing on your wrist. As Clare Sebastian reports, fans of the classic timepiece don't seem to be too worried.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN SENIOR PRODUCER (voice-over): This is after work drinks with a difference. Alongside the cocktails and snacks, a large
selection of rare and valuable watches.
ADAM CRANIOTES, WATCH FANATIC: Yes, you have a more contemporary chronograph.
UNIDENTIFIED MALE: Yes.
CRANIOTES: The Patek Philippe 5980 is a classic by any stretch.
SEBASTIAN: Adam Craniotes started this group, known as the Red Bar Crew, seven years ago.
CRANIOTES: We started meeting once a month, and then pretty soon, there are three of us. Then there are five of us. Then there ten of us.
SEBASTIAN: Now, several dozen like-minded watch lovers meet once a week in a Manhattan bar. The exact location is secret. After all, there's
serious cash involved.
SEBASTIAN (on camera): This is one of the rarest watches here tonight. It's a 1978 Rolex Daytona. The owner of this watch has actually
just sold it to another collector for $35,000.
SEBASTIAN (voice-over): It's money in the bank, says Steve Kivel.
STEVE KIVEL, PRESIDENT, CENTRAL WATCH: When you buy a secondhand Rolex, the depreciation already happened.
SEBASTIAN: And he should know. His store in New York's Grand Central Station has been selling and restoring classic timepieces for 63 years.
KIVEL: What do you think, how it came out?
UNIDENTIFIED MALE: Looks great.
KIVEL: Watches are a great place to invest your money. If you pick some of the more well-known brands, like Patek Philippe and Rolex, those
watches in our industry will always sell and will always appreciate in value.
SEBASTIAN: Smartwatches, he says, are not even part of the equation.
KIVEL: It's total apples and oranges. It has nothing to do with what we do here. It has nothing to do with watch making.
SEBASTIAN: He's not the only one who's confident.
CRANIOTES: The four-letter word in every watch industry conversation now is the Apple Watch. But if anything, I think it's perfect. People
who've never even considered wearing a watch will consider wearing one of those.
SEBASTIAN: Adam's current favorite, the big Pilot Top Gun from Swiss brand IWC, set him back almost $40,000.
CRANIOTES: It's one of the hardest materials you can make a watch out of. The only that that can scratch that is a diamond.
SEBASTIAN: Timeless, time-proof, and a great excuse for a night out.
Clare Sebastian, CNN, New York.
(END VIDEOTAPE)
QUEST: There's rough weather in Indonesia, and that is a major obstacle in the AirAsia recovery effort. Just how serious it is and when
they expect to make serious progress, we'll be live in Surabaya after the break. QUEST MEANS 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.
President Barack Obama has put new sanctions on North Korea after accusing the government of hacking Sony Pictures. Mr. Obama signed an executive
order that prevents North Korean individuals and three entities from entering the U.S. or accessing property. There's ten North Korean
individuals who are named in the order. The U.S. calls the cyberattack destructive and coercive. North Korea's denying any involvement in the
hack.
King Abdullah of Saudi Arabia is suffering from pneumonia and was temporarily placed on a breathing tube. According to the state-run Saudi
Press Agency, the king is 90 years old and was admitted to hospital on Wednesday for tests. The King's been the country's monarch since 2005. At
least 11 people have been killed in Cameroon after Boko Haram militants opened fire on a bus. The attacks took place late on Thursday close to the
border with Nigeria. Six more people were injured.
For the second time this week a crewless ship carrying hundreds of migrants has been found drifting off the coast of Italy. The Italian
coastguard is now taking it to shore. The air force said the vessel is flying the flag of Sierra Leone.
Thirty bodies have now been recovered from the wreckage of AirAsia flight 8510, according to Indonesian officials, and four of those recovered
have now been identified.
(VIDEOCLIP PLAYS)
QUEST: The caskets - transported them back to Indonesia where they will be identified. The chief executive to AirAsia, Tony Fernandes, is to
accompany the body of one of his flight attendants as she makes her final journey home for burial. Fernandes said there were, in his words, "No
words to describe the emotion" and what he was now having to face.
Crews meanwhile have found what appears to be a piece of the fuselage. Well, as you can tell, it's quite clearly the windows of the aircraft. The
picture which has come from the Singaporean Defense Ministry were part of the - obviously the experts are going to be looking quite closely. They
will be looking at things like this - this is the serial number.
You'll be able to tell details from which section of the plane it's come from, how it's come from, how it - and if you look at the top, in the
fullness of time they will be able to work out the sort of ways in which the fuselage would have come apart. What it won't tell them of course is
what happened in air. It will merely tell them how the plane may have disintegrated. Search pilots say finding passengers though remains the
priority even over finding wreckage like this.
(BEGIN VIDEOCLIP)
YOSY HERMAWAN, HELICOPTER PILOT, VIA INTERPRETER: It's about a 30- mile area that we are searching. The first priority is to evacuate survivors if any are found or to recover bodies. And second to find debris
or objects that can help the National Commission of Safety Transportation.
(END VIDEOCLIP)
QUEST: David Molko is live in Surabaya for us tonight. David, we have now moved into this deeply, deeply sad moment where recover of bodies
takes place and funerals now have to be arranged.
DAVID MOLKO, CNN SENIOR PRODUCER: That's right, Richard. 4:30 in the morning here on Saturday morning in Surabaya about a half hour away from
first light. Let's talk first about those families. You know, four passengers and crew members identified. You mentioned the flight attendant
Khairunnisa Haidar Fauzi known as Nisa by her family. I had a chance to spend some time with both of her parents Haidar and Rohana yesterday along
with her brothers and cousins in their hotel. They were waiting for news about Nisa.
What struck me about this family is how strong and resilient and just positive they seemed in light of everything that was going on. You know,
we looked at some Instagram photos of their daughter, a beautiful 22-year old young lady. Her mother told me how she loved to fly, she loved to
travel, she was living her dream. A few minutes later they got a call to come here to the crisis center to identify their daughter's remains. About
an hour after that, those remains were handed over to the family in a solemn ceremony. Richard.
QUEST: David, in this moment of intense grief, where are the families getting their comfort from? Is it - is it in - is it in religion? Is it
from the nation? What - you're talking to them and what I have been most moved about is listening to the relatives, time and again they seem to be
finding maybe in these early days an acceptance in what's happening? Or was I just misreading it?
MOLKO: No, Richard, I think that's right. There's an acceptance of perhaps the inevitable. But still as you talk to these families, including
Nisa's family just yesterday, before they got that call, still some hope. A little semblance of hope - hope for a miracle. You know, the mayor of
Surabaya here 78 people onboard that flight were from this city saying she's telling people to hope and pray for miracles as well.
QUEST: Right.
MOLKO: They're talking to grief counselors. They have religious leaders here with them. They have family members. The mayor also told me
she is individually and her staff are reaching out to the teachers of young passengers and trying to bring everybody together as one family - so that
the - so that everybody has the support they need in these days.
QUEST: David, finally we are now seeing pieces of wreckage coming in. We are getting an impression that although there is still much searching to
be done, the authorities are very confident they are obviously in the right place and are quite close.
MOLKO: Richard, maybe quite close but the weather is proving so challenging out there. You know, you've covered so many of these - Air
France 447, for example in 2009 and of course in that case, this was out in the middle of the ocean hundreds of miles from land - very, very -- very,
very deep water. They didn't find the main wreckage for years in fact. Nothing like this here. You know, we're looking at 30 to 40 meters. But,
you know, three to four foot swells on the surface, a murky sea bottom, making it difficult for teams to get in and out of the water. You know,
our understanding now from Malaysian search and rescue officials is that there are a few ships out there already towing devices, underwater
microphones - you're familiar with them that are listening for sounds from the black boxes as we speak. Richard.
QUEST: David Molko in Surabaya for us this morning his time, this evening for us. David, thank you for joining us. Now, David was talking
about the weather, and Indonesian officials say the weather is the biggest obstacle for the recovery operation. Karen McGinnis is at the World
Weather Center. When do they expect to get better weather that will allow a consistent search to take place?
KAREN MCGINNIS, METEOROLOGIST: Richard, that is probably one of the most positive things that we can look forward to in this whole calamity
that has unfolded over the past six days or so. It does look as if over the next 48 hours, we're looking at at least a moderate break that we can
expect across this area. Now you have to remember this is a region that is being described as the size of the state of Delaware in the United States.
But they are also in monsoon season. So you expect the heavy downpours and you're also looking at reduced visibility because in the heavy downpours,
you get rainfall rates that are staggering, even in an area that is so used to seeing heavy rainfall.
But here is the key. Here's the information you were looking for, Richard. On Saturday we still have clusters of thunderstorms, these squall
lines very typical of what happens during the monsoon season. We go into - about midday - on Saturday. You can see there's still activity here. I
don't think there's ever going to be a time this entire box area is going to be completely clear.
But what we do see is a dramatic improvement. Some of the rainfall estimates are between 25 and 50 millimeters, or one to two inches of
rainfall, but that's in a very broad area. We have to remember what we have been dealing with has been a very heavy seas on the order of about
four meters or about 13 feet or so, reduced visibility. So anything on the surface of the water is tipping back and forth. This is relatively shallow
water. Also in the skies, you need a certain amount of visibility to even begin to look for something.
So we're going to see the seas calm, the wind calmer, we are expecting those thundershowers to the north and to the south - maybe a little bit of
a break in that monsoonal moisture here, Richard, and for people who are searching for whatever is left with this airplane, this gives them that
opportunity. Back to you.
QUEST: Karen McGinnis, we will watch closely. Thank you for bringing us the details on that. Karen McGinnis at the World Weather Center. And
obviously in the hours and days ahead we'll bring you exactly what is happening in that search as it continues. Our first program together in
the New Year. We have so many more to go, but that's "Quest Means Business" for tonight and for this Friday. I'm Richard Quest in New York.
Whatever you're up to in the hours ahead, let's see if we can make (RINGS BELL) 2015 a little bit profitable. I'll see you on Monday right here.
(END QUEST SHOW)
POPPY HARLOW, JOURNALIST FOR CNN: Hello and welcome to "Marketplace Africa," I'm Poppy Harlow. In this edition, we're going to look at
industry in Uganda starting with sugar cane farming. It is making a comeback since its collapse in the 70s. But it still faces some big
growing pains. Errol Barnett has more.
(BEGIN VIDEOCLIP)
ERROL BARNETT, ANCHOR AND CORRESPONDENT FOR CNN: The harvest is in. Packing the truck with this rough, woody crop is heavy going. Sugar farmer
Wonja Benuli (ph) watches the packers, making sure they use every inch of space in the back of the truck. Transport costs money and Wonja Benuli
(ph) has lots of costs to consider.
WONJA BENULI, SUGAR FARMER, VIA INTERPRETER: There are many challenges in this business. Rent for our land costs about $300 dollars
and then you need to pay people to clear the land. You have to hire a tractor for plowing and tilling the land, and when you add up all these
expenses, it's a big investment.
BARNETT: This sugar cane is headed for one of Uganda's oldest and largest factories - Kakira Sugar Limited. It was founded by an immigrant
from the Indian sub-continent, Muljibhai Madhvani, in the late 1920s.
Male: Now what you see in the back of ground is the first mill to start in 1930 to crush only 150 tons of cane. And the rest is history. So
they started expanding every 20 years, every 30 years. Modernizing, acquiring more land, introducing irrigation, expanding the crushing
capacity. And by 1970, they were producing about 80,000 - 83,000 - tons of sugar.
BARNETT: But history intervened. After a military coup in 1971, army commander Idi Amin seized power and a brutal dictatorship followed. Within
a year, he expelled Uganda's Asian population, at the time numbering around 35,000. The Madhvanis were no longer welcome in Uganda.
Male: When Idi Amin told every Asian to leave and they all left the country and they went to the U.K., all industries collapsed - all trade --
the government (ph) trade -- collapsed. There was no longer available foreign exchange to import the machinery.
Within a few years, Kakira Sugar Limited had collapsed but so is the infrastructure in Uganda -- the social services, everything in Uganda
collapsed. Fortunately after the rehabilitation in 1986, our government invited all the Asians who had left their properties come and repossess
them. So, fortunately the Madhvanis were still available and they insisted (ph) to come and repossess.
The hospital (ph) was a skeleton town (ph), there was no longer a sugar plantation, there was no business to run. So, it was just an empty
shell. So they all borrowed the money from the World Bank - African Government Bank and started to grow sugar cane again and building a new
factory. And what you see - this great facility now, has been put together in the last 25 years.
BARNETT: Kakira Sugar has almost 8,000 staff members and just as many contract workers - farmers like Wonja Benuli (ph) known as outgrowers.
They farm the lands neighboring Kakira's plantations and are contracted to Kakira supplying 70 percent of its sugar cane needs. Kakira says it's
entered into a partnership with the farmers, creating an independent NGO called KORD which stands for Kakira Outgrowers Rural Development Fund.
Male: This fund is supported by Kakira Sugar Limited by contributing about 125 shillings toward the fund and the farmers, we contribute about
250 shillings for every ton that they deliver - a loto (ph) for everything that we deliver. This money put together which is about $180,000 U.S.
dollars - nearly $200,000 U.S. dollars per year is better than before/default (ph). So KORD - it's this organization/this fund which have
an independent board. They make transparency (ph) decisions and they only deal with their community needs.
BARNETT: KORD runs farming workshops and provides loans to members who meet certain requirements.
Male 2: Because Uganda the major income activities rotate on our green (ph) currency, at least each household has a resource called land.
While it is very difficult to carry money and give people cash, they might even eat the money -- they may spend the money in their own way. So our
major focus is on our green (ph) currency, because it's money that will buy every (inaudible). It has been practiced for years and years - it's the
traditional thing.
BARNETT: Beatrice Katendea (ph) says she's managed to change her life thanks to a bit of help from the Kakira Development Fund.
BEATRICE KATENDEA (ph), ASSISTED BY KORD, VIA INTERPRETER: Before KORD, I was just useless. I used to work as a casual laborer for other
people in the community - digging in their gardens to get some income. But when KORD came into existence, we learned to farm, to save and how to be
self-sufficient.
BARNETT: In 2013, the Uganda Manufacturers Association presented KORD with the best NGO business partnership award.
Male 2: Our projects help everybody. We construct schools, the health centers - we don't construct private ones - they are government
health centers. Whether you have sugar cane or not, we feel Ugandans should be healthy and they should be enjoy from their investments of Kakira
and the farmers.
(END VIDEOCLIP)
HARLOW: Sugar cane isn't the only industry making strides in Uganda. Next we'll talk to the chairman of the country's largest steel
manufacturer.
(COMMERCIAL BREAK)
HARLOW: Welcome back to "Marketplace Africa." Roofings Group describes itself as the leading producer of quality steel products in
Uganda with far-reaching influence across the East African region. In this week's "Face Time," we'll meet the company chairman, Dr. Sikander Lalani.
(BEGIN VIDEOCLIP)
DR. SIKANDER LALANI, CHAIRMAN OF THE BOARD AND CEO, ROOFINGS GROUP: Our group is the manufacturer - leading manufacturer in steel construction
material in East African community. I've been in Uganda for last 20 years, before that I was in Rwanda. And I started this project with a workforce
of 60 people and cored (ph) area of 2,000 square meters.
Now today in 20 years' time, we have the workforce of 2,200 people working with us and a total cored (ph) area of 150,000 - more than 150,000
square meters, both in Lubowa and Namanve. Then Uganda has found a lot of mineral wealth and iron ore reserve is quite high. And I think this - we
are also interested to mine the iron ore and use it in some of our projects and export the balance to the East African community for using a lot of
iron ore to make products like (inaudible) in construction industry.
We are using the local SCRIP available in the country, but the SCRIP reserve is getting really low, so we are obliged to import the billets (ph)
from China, from Europe, from South Africa, from Japan. But if we get the iron ore reserve from here, our raw material input would be local so we are
saving a lot on transportation and developing the industry over here, including the labor force -- we're getting jobs enough and all. And we can
export not - I mean, we can use it not only in Uganda but then export it to East African community states.
The regional corporation, OK, one time they were the East African community which was completely destroyed during the time of Amin and
because of political unrest. But now the community for the last ten years - more than ten years - is growing. With all of the customs union between
states, it takes time. It's very difficult to think globally at this moment. Uganda is a land-locked country, but then we have the regional
market. The East African community the population is 130 million, it's expanding very fast. Uganda is one of the fastest-growing - has fastest-
growing population and the community at large is growing. If you take comwo and allya (ph), it can be a worse community, worse market. We do not
need the other markets to export our goods. We are to - we are to look into the local markets.
The construction industry is very interesting - it's developing. But then at the same time, there is more production facilities you know, some
more competition, but it's developing. It's developing, it's challenging. What we are here to supply is quality product at competitive prices and
when you really go into the quality and you got the good pricing and all, there is not much of a problem. We can be successful and anyone can be
successful.
(END VIDEOCLIP)
HARLOW: Thanks so much for watching this week's "Marketplace Africa." You can find us online any time at cnn.com/marketplaceafrica.
I'm Poppy Harlow.
END
