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Quest Means Business
Greek Euro Exit Fears Revived; European Stocks Slump on Grexit Fears; Varoufakis Says Greece Needs Time to Negotiate; US Stocks Fall; Report Says HSBC Aided Tax Evasion; Illy Enters Single-Serve Coffee Market
Aired February 09, 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)
PAULA NEWTON, HOST: An end of another day on Wall Street. What can we say? We can say it could have been worse as Wall Street follows Europe
into the red as tensions rise over the future of Greece. It's Monday, the 9th of February.
Tonight, a call for calm from Athens. The Greek finance minister tells CNN talks of a Grexit could rip Europe apart.
HSBC is accused of assisting large-scale tax evasion. It calls itself the world's local bank. Now it's in a world of trouble.
And are you watching TV, or is your TV watching you? Samsung's televisions get a little too smart. I can assure you, it's pretty spooky.
I'm Paula Newton, and this is QUEST MEANS BUSINESS.
Good evening. Tonight, stocks tumble as fears of a Greek exit from the euro resurface. Now, the country's European partners are calling the
prime minister's plan to end austerity unrealistic and unworkable.
After meeting with Alexis Tsipras, the Austrian chancellor said it's up to European leaders to keep Greece in the euro. Finance officials are
worrying about economic damage to the eurozone and beyond if a deal can't be reached. Mr. Tsipras says he's optimistic and insists nobody has come
up with a better plan than the one he's put on the table.
(BEGIN VIDEO CLIP)
ALEXIS TSIPRAS, PRIME MINISTER OF GREECE (through translator): I am confident there will be a deal with our partners on the basis of our plan.
We haven't yet heard any specific and viable alternative proposal. I don't believe there is any serious reason for a deal not to exist between Greece
and its partners, only political reasons.
(END VIDEO CLIP)
NEWTON: Now, in the meantime, European stocks fell sharply on Monday. Investors were spooked by fears of a Grexit -- who could blame them? --
along with disappointing trade data from China and an upsurge in violence in Ukraine. Now, Greek stocks were, of course, the hardest hit. The Athens
Composite closed down nearly 5 percent on the day.
Now, the Greek finance minister, Yanis Varoufakis, spoke with CNN's Christiane Amanpour just a short time ago. He said his sole priority is to
get European leaders to listen to his plans.
(BEGIN VIDEOTAPE)
YANIS VAROUFAKIS, GREEK FINANCE MINISTER: Our government is all about reforming Greece deeply so that we never go back to where we were in 2009,
2010. But we can't do that when we are in a debt deflationary trap.
Remember, Greece has 175 percent of debt as a proportion of GDP, and at the same time, we have a broken banking system. It doesn't work as a
credit mechanism. We have negative investment, and we have a commitment -- this is a commitment undertaken by previous governments, this is part of
our bailout program -- that we should produce almost 5 percent of primary surpluses every year.
This is like trying to extract more milk from a sick cow by whipping it. You will kill it, you will not get more milk out of it. So, in order
for us to repay our debts and to grow, we need more fiscal space, we need a primary surplus. We are committed to having balanced budgets and indeed
for having a primary surplus.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: So, obviously --
(CROSSTALK)
VAROUFAKIS: Of something like 1.5 percent.
AMANPOUR: Obviously, many people want to know how you would become more competitive, and you talk about raising -- I know it's a small
percentage, but nonetheless, raising minimum wage. But I just do want to ask you about leaving the eurozone. You have said it will cause a disaster
for the rest of the eurozone. Other countries seem to be making contingencies.
My question to you is, do you not fear that there'll be a panic in Greece, that people will try to do a run on the banks? Are you going to
forbid them from taking their money out? What are you going to do to prevent a panic and make your economic situation worse if you do, in fact,
leave?
VAROUFAKIS: We're not going to leave. Grexit -- Greece's exit from the eurozone -- is not anywhere near thinking process. We consider
ourselves to be part of the eurozone. Whatever criticisms one may have of the eurozone, once you are in it, you should stick with it.
Mario Draghi in Helsinki in November put it succinctly and brilliantly when he said that for the euro to succeed anywhere, it must succeed
everywhere. And those who are toying with the idea of jettisoning or amputating Greece from the eurozone are being extremely reckless.
Because this is an experiment that has never happened before. Those who believe that they can amputate Greece and keep the eurozone intact,
they have absolutely no evidence for that. It's never been tried.
And we should not be playing around with people's lives with a prospect of having a gradual fragmentation of the eurozone. Because the
awful centrifugal forces that are going to be unleashed may very will tear the whole of Europe apart.
And the world economy -- the American economy, the Chinese economy -- the last thing they need is this kind of turbulence coming from Europe at a
time when everybody's struggling to recover from the 2008 debacle.
(END VIDEOTAPE)
NEWTON: You can see the full interview with Yanis Varoufakis on Amanpour in around an hour from now.
Now, the Greek finance minister, as you just heard -- and he's been warning over and over again that as goes Greece, goes the euro. Now, he
compared the euro to a castle of cards, and that the foundation is looking shaky as Greece and its neighbors take opposing positions.
Now, the Greek prime minister insists he will stick to his pledge -- his campaign promise -- to end austerity. The European Commission
president, meantime, Jean-Claude Juncker, is pushing back, saying look, the EU will not give Greece all it's asking for.
(BEGIN VIDEO CLIP)
JEAN-CLAUDE JUNCKER, PRESIDENT OF THE EUROPEAN COMMISSION (through translator): Greece should not assume that sentiment in Europe has changed
so much that that the eurozone will adopt Tsipras' plans in their entirety. The group will discuss the issue during its meeting next Wednesday.
(END VIDEO CLIP)
NEWTON: Meantime in the UK, the government is focusing on what happens if Greece exits the euro. The prime minister met officials from
the Treasury and the Bank of England on Monday to put together some type of contingency plan.
Meantime, Alan Greenspan, the former Fed chair, says the fears of a Grexit are likely to be realized. He is now saying -- and he told the BBC
-- that he didn't see anyone willing to give Greece a new lifeline. And he warned more than that, the eurozone could see other countries forced out
unless member nations became more politically integrated.
Now, Vicky Pryce is the author of "Greekonomics." She joins me now, live from London. I mean, look, there are a lot of dire predictions in all
of that. And as someone who knows, I want to get your take on a lot of the rhetoric.
And as many people have said today, Greece just threw the kitchen sink, basically threw whatever they had at the European Union in rhetorical
terms today. Do you think they mean it, or do you think they're just looking for a better deal here? We have the finance minister on record
here at CNN in the last few hours saying we have no intention of leaving the euro.
VICKY PRYCE, AUTHOR, "GREEKONOMICS": That's absolutely true in terms of what the Greek population wants and what the government in Greece wants.
They do not want to leave the euro, and they think they do hold some of the cards. They may be disappointed in terms of what they get.
But if you are negotiating, you will try and throw everything you can, just as you said, and hope you can get a few things back. And I think the
interesting thing about the Greeks, and the reason why the vote was for Syriza, which is now the ruling party, is that they want some change.
They don't mind what sort of change, as long as it takes some of the austerity pressure off. They don't expect miracles. They don't expect to
see the debts suddenly being written off. But what they do expect is a little bit of solidarity from Europe and understanding that they have, as a
nation, suffered hugely as a result of austerity.
NEWTON: OK, that's what Greece wants. And I think many in Europe would say, Vicky, look, we're sick of what Greece wants. Greece put itself
into debt, and now they're taking the rest of us down with them. Is there a realistic measure of how this negotiation can go so that Greece begins to
grow again, which is in everyone's interest. But Europe doesn't feel, for lack of a better term, ripped off by the whole process.
PRYCE: Indeed. I think there will be compromise on both sides. I think the most interesting thing is what happens about the program, which
is the bailout program, which was still in operation, had been suspended, if you like -- extended, rather, until the end of February.
What is coming out of Greece now is that they're saying, can we extend it, please, by six months? Which is more or less what the previous
government was offered before they'd said no, we'll just have two and we'll go for an election. This is what brought the crisis up that we've seen now
in Greece.
So, they may get some extension with the bridging loan -- that's what they're asking for -- during which period they can renegotiate some of the
bailout conditions and some of the debt.
What they have offered in return, and they are going to, in fact, say a lot more in the meetings that are going to be happening very soon, is we
will also do continuation of those reforms that you Europeans wanted us to do. We're not abandoning those. We're going to offer you most of the
conditions of the program anyway. We just need some breathing space.
And the question is whether the Europeans will give it to them. In my view, it would be silly if they don't.
NEWTON: Well, the Europeans have a choice, and there are a lot of political players at the table, all with different interests in their own
country. Do you believe in the end, Vicky, that Europe is going to come to the table and give Greece the better deal it's looking for?
PRYCE: If I was thinking as a logical person, I would say absolutely what they'll do. However, politicians are not always rational --
(LAUGHTER)
PRYCE: -- we found that in Europe, anyway. And they take a long time to get to the right decision. But I think at the end what they want is to
keep the euro intact.
And I have heard from commissioners saying that they're considerably worried that if Greece goes, then the whole political infrastructure of the
euro might be in doubt, and they don't want to see that. So, I suspect a compromise will be reached.
NEWTON: Yes, we'll wait and see. I think everybody is assuming that there'll be a compromise. And in the meantime, boy, a lot of fireworks in
between. Thanks so much for your insights on this. Appreciate it.
Now, US stocks fell for this session, and the Dow closed down nearly 100 points, down from the lows. Paul La Monica is here from CNN Money.
Paul, try and make sense of this. I heard -- saw -- a lot of shrugs on Wall Street about the whole Greek thing, even though people say that
they are concerned. At the end of the day, are they really only saying look, this just makes Europe weaker, but it doesn't mean we're going to
have a full-blown crisis in Europe?
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: I think as long as Greece remains in the eurozone, you can probably avoid any concerns about a
crisis. But the thing that is still very startling and what a lot of people are just trying to get their hands around is will Greece actually
leave or not? The comments from Alan Greenspan --
NEWTON: Didn't help.
LA MONICA: -- it definitely did not help at all. We've been expect - - well, we've been talking about a Grexit since 2011 and we always avoided that worst-case scenario. So, now that things are starting to look really
problematic again, that's why you have these jitters.
But again, as you point, the Dow falling 100 isn't that big of a deal in the grand scheme of things. It's been a very volatile market this year.
We've had lots of similar moves up and down.
NEWTON: Yes, with valuations still sky-high. I want to talk to you about another story. Of course, oil, the other big story at play here.
What happened with oil today, and where is that story headed? Because the predictions have been wild. Like we'll go back to higher levels, and then
other people saying, look, oil is going to fall even further.
LA MONICA: Yes, if you believe OPEC, we're going back to $200. If you believe Citi, OPEC is dead and we're going to $20. So, obviously, the
answer is somewhere in between those two I would hope. It's not going to be one of those two extremes.
Oil prices have rebounded. They did go up again today. But what's interesting is that we had finally this decoupling, if you will. Oil
prices have really been moving stocks, and that didn't happen today. Even though you had that rebound in oil, the broader market fell.
I think the Greek worries, also some concerns about China economic growth, too. So, oil may not be the be- all end-all with stocks the way it
has been for the first few weeks this year.
NEWTON: Yes, and a sign that the market has settled in. There will be this volatility in oil, and we're going to go deal with it. Paul,
thanks so much, always appreciate --
LA MONICA: Thank you.
NEWTON: -- you coming in. Now, concealing clients' wealth and suitcases filled with cash. It's all spelled out in a report that says
HSBC was at the center of a tax evasion scandal.
(COMMERCIAL BREAK)
NEWTON: Now, data that was taken from one of the world's biggest banks points to a vast tax evasion conspiracy at HSBC's Swiss division.
Now, the International Consortium of Investigative Journalists says it's examined the documents and they show that HSBC helped clients keep their
wealth hidden from tax authorities.
Now, some reports say the bank let certain clients make undeclared withdrawals, sometimes involving enough money to fill a suitcase. The
clients that supposedly benefited include individuals with close ties to some big names: former Egyptian president Mubarak, Syrian president Assad,
and former Tunisian president Ben Ali.
Now, the documents, which were stolen by a former HSBC employee, have now been shown to tax authorities and to more than ten countries. Some
countries have already acted on the data, and in others, such as France, Belgium, and Argentina, investigations are still ongoing.
This is an incredible story, isn't it? HSBC put out a statement, though, saying, look, "We acknowledge that the compliance, culture, and
standards of due diligence in HSBC's Swiss private bank, as well as the industry in general, were significantly lower than they are today," the
statement said.
Now, some lawmakers in the UK are questioning whether HSBC should actually keep its license to operate as a bank. A minister in the Treasury
said it was time for banks to change their ways.
(BEGIN VIDEO CLIP)
DAVID GAUKE, FINANCIAL SECRETARY TO THE UK TREASURY: I think what I would say when it comes to banking licenses that this is perhaps not a
matter where politicians should be directly involved, that we have a regulator for that purpose.
But the point about ensuring that there is a change of behavior in our banks is to say the behavior that we all have been appalled about over the
last few hours, and some of us for longer, occurred some years ago at the same time when we were seeing banks acting recklessly in a number of way.
It really is important that the banking sector gets its house in order.
(END VIDEO CLIP)
NEWTON: Now, earlier, I spoke to Margaret Hodge, who chairs Parliament's influential Public Accounts Committee. Now, she's been
critical of the British tax office for not prosecuting more cases of tax evasion. I asked her, at worst, what she believed HSBC may be guilty of.
(BEGIN VIDEOTAPE)
MARGARET HODGE, CHAIR, PUBLIC ACCOUNTS COMMITTEE: Well, it's not just that they were an innocent bystander while people who opened accounts in
Switzerland took steps to avoid or evade tax, they were an active driver of it, advising their clients on how to evade the tax. And in some case,
actually taking action here in the UK to get people to avoid taxes.
One example used in the film where they came over to the UK, signed documents to give this guy a bank card that he could then go and draw money
out of cash machines without paying tax. And they were giving people millions -- millions of euros, dollars, pounds, to take off in suitcases
out of their Swiss bank accounts and bring them back to the UK.
I think what's new about this is that we knew about people having the bank accounts. We knew about HMRC and whether it was doing too little or
too late. What we didn't know about was the activities of the bank itself. And I really think in the UK, the authorities should look at taking action
against the bank.
NEWTON: And you're talking legal action, and you're saying that -- the accusation that you've made against Lord Stephen Green, he's the former
chairman of HSBC, you're saying actively aiding and abetting, that ignorance at this point, you're saying, is no defense for him. What if he
comes up and says, look, I had no idea this was going on?
HODGE: Well, he was the boss at the time. So, if he didn't know, he was asleep at the wheel. And if he did know, he was colluding in
deliberate practices to avoid tax. So, either way, he has certainly got questions to answer, and he can't run away from the fact that he was the
boss.
And what's particularly worrying is by the time he was appointed as a peer and a government minister by this government, HMRC already had details
of the 7,000-plus UK residents who had bank accounts in Switzerland. So, they knew the extent of the abuse by the bank of our law, and they knew the
extent of the bank's connivance, really, in helping rich people avoid paying their fair share.
NEWTON: And it certainly is an explosive issue in the UK and, quite frankly, all over the world, especially after the financial crisis. Do you
believe something more has to be done in the sense of criminal charges?
HODGE: Well, I think for us in the UK, our tax authorities are doing too little too late. They've only taken action on 1100 of the 7,000.
They've only brought in 135 million pounds in tax owed. And they've only taken one case to court.
Now, is this an issue about people who were cheating on their benefits, they'd be queuing around the court having litigation against
them. Because it's an issue of cheating on your tax, only one case is taken to court. So, I think that's the first thing.
I think Stephen Green has got questions to answer, and he should be public about it. And then, I think it's very important that we maintain
trust in our banks. It's one of our key institutions in society. This undermines that trust, and HSBC should be brought to account, should be
forced to explain what they did, why they did it, and if necessary, action against them should be taken.
NEWTON: Ms. Hodge, those explanations have not been forthcoming so far. Do you expect to get more answers in the coming weeks?
HODGE: This week, we have a hearing in front of my committee with the tax authorities. I want to see how that hearing goes and how much extra
information we can get from that. But I don't think any member of my committee -- and we're a cross-party team -- will (inaudible) from bringing
to that committee representatives either of the bank or, indeed, the ex- boss himself, Lord Stephen Green.
(END VIDEOTAPE)
NEWTON: Now, where you smell coffee, Illy smells profit. The company is making big plans out of tiny pods. CEO Andrea Illy will tell me how he
plans to take on the coffee giants. That's right after this.
(COMMERCIAL BREAK)
NEWTON: Now, the coffee wars are heating up. Lilly Caffe is entering the single-serve coffee business with its iper -- is that the way you say
it, iper capsules?
ANDREA ILLY, CEO AND CHAIRMAN, ILLY CAFFE: IperEspresso.
NEWTON: IperEspresso, look at that. I'm a good Italian, and I can't even pronounce that. It's the company's first foray into a business that's
growing rapidly and already crowded with Nestle, of course, and Keurig. Andrea Illy joins me now here in New York. Thanks so much for coming in,
really appreciate it.
ILLY: My pleasure.
NEWTON: Before we get to the issue of coffee -- and we know this is big business all over the world -- look, you're a European company, your
roots are in Europe. We've just been talking a lot about what is rattling Europe these days with Greece, the low growth. What really concerns you
when you look at the European landscape right now?
ILLY: Well, Europe is in a long path, hopefully, towards becoming the United States of Europe, but we are not there yet. The road map is not
very clear. So, we have a European currency, but no fiscal unification. We have a central bank with not full powers. The governance is very
bureaucratic with a -- so, it's quite a complex environment.
And as a matter of fact, Europe is being shaped along the way by basically managing the different crises that we have. So, it's something
which is evolving, and the consequences is basically a no-growth scenario. Because of also the type of political -- economical policies, which are
very, as you say, prudent and conservative, that in order to reduce as much as possible the debt.
Greece is one example. Greece is not a big deal, because it's only 2 percent of the European GDP and 3 percent of the debt. But it is against
the European treaty and rules, what's going on. And now there is a negotiation, a kind of power play, because Greece cannot -- believes that
it cannot --
NEWTON: They want a better deal. They want a better deal.
ILLY: Exactly. Exactly. So, we will see. On the other side, this film has already been seen in 2011.
NEWTON: Yes.
ILLY: And Europe did learn a lot, so we have many more parachutes and tools in order to manage a possible crisis.
NEWTON: Yes.
ILLY: And I strongly believe that there will be no big economical crisis, and I strongly believe that they will not -- Europe will -- Greece
will still be part of Europe --
NEWTON: Sure.
ILLY: -- and they will find a deal.
NEWTON: Well, I certainly agree with the composure that a lot of European CEOs have had to show through the last few years of this crisis.
And in the meantime, you guys are making a foray into these individuals cups here. You're a late entrance to the market.
Why now? Why at all? Your coffee is known as very high-end and something that is a very good-tasting, high-end coffee. Why the capsule?
ILLY: As a matter of fact, iperEspresso, this capsule, was already existing since five years in this market. And this is a system which
introduces a next generation espresso, because it's an innovation which delivers more aroma in a better velvet mouth feel to the coffee, thanks to
the different technology.
What we added, which is American market specific, is the drip capsule so that the consumer can use the same system in order to get the best of
the Italian espresso as well as the American coffee.
NEWTON: Now, we all know Europeans are real snobs about the drip coffee.
(LAUGHTER)
NEWTON: Have you tasted this? What do you think? How does it stack up with what you've already put on the market?
ILLY: This -- we have the same blend inside. And we did design the - - this filter capsule in a way to deliver the Illy taste in a perfect way. So, it's -- there is a special technology, special filter inside, a
special, let's say, way to process the blend in order to really get the same drip coffee that you would get with the best brewer.
NEWTON: Now, I have to ask you before we go, there had been a lot of criticisms about these saying, look, they're not environmentally friendly.
Why go down this route at all?
ILLY: As a matter of fact, environmental friendliness of coffee, if we look in the coffee agriculture side, can be pretty good in terms of
carbon and in terms of water footprint. As far as the consumption side, the only impact is the packaging one, but you can decide to use renewable
materials.
So, Illy Caffe's policy is to use always renewable material. You can fully recycle the metal tin, you can fully recycle the plastic. So the
consumer using the Illy capsule can choose -- adopt the system of recycling. We will collect the capsule and then the capacity will be --
(CROSSTALK)
NEWTON: Yes, unfortunately, not enough people do that. I hope that hopefully what we see on the market is something that at least we can reuse
or, perhaps, something that will --
ILLY: This depends also on the system for waste processing. For instance, in Europe, it is absolutely normal to recycle 100 percent.
NEWTON: I know. And not so normal on the --
ILLY: In the United States, we have still a little bit of work to do.
(LAUGHTER)
ILLY: This is why the recycling needs a little bit more effort from the consumer.
NEWTON: Well, we all know exactly how competitive the coffee market is, and I appreciate you coming in just to let us know about this process.
Appreciate your insights. Thank you so much.
ILLY: My pleasure.
NEWTON: Now, Barack Obama says he's not ready to start arming the Ukrainian military. Angela Merkel says Ukraine must be defended, but she's
talking diplomacy, not force. We'll be live in Washington right after the break.
(COMMERCIAL BREAK)
NEWTON: Welcome back, I'm Paula Newton. Coming up on "Quest Means Business," the managing director of the World Bank tells me emerging
markets have a lot to gain from the fall in oil - price of oil. And David Beckham tells us how he aims to tackle poverty and why his kids are getting
involved too. Before all that, these are the top news headlines this hour.
U.S. President Barack Obama has accused Russia of violating every commitment it has made to end the fighting in Ukraine. Mr. Obama was
meeting German Chancellor Angela Merkel in Washington He said the U.S. had not yet decided whether to provide arms to Ukraine, a move Germany opposes.
As you can see there, the violence is escalating in Eastern Ukraine. Ukrainian troops fired Grad rockets Monday at rebel-held positions near the
city of Debaltseve.
In Donetsk meantime, an apartment block was set ablaze by shelling. It happened near the site of a large explosion at a chemical goods factory
Sunday.
Egypt is investigating violence at a football stadium in Cairo that left at least 19 fans dead. There are conflicting reports about how those
clashes started. The interior ministry says ticketless fans rioted while people at the game said they were tear-gassed by police. Premier League
Games in Egypt have been postponed indefinitely.
North Korea has tested what it describes as a cutting-edge anti-ship missile. Analysts say the weapon being tested appeared to be Russian
designed and it comes a few weeks before military exercises are to be conducted jointly by South Korea and the United States.
Australian Prime Minister Tony Abbott survived a no-confidence vote. Mr. Abbott who took office 17 months ago won the vote among his own party
members by 61 to 39. Critics have challenged some of his policy decisions and a budget that has stalled in the country's Upper House.
Now Germany's Chancellor Merkel says the peaceful order of Europe is at stake if the crisis in Ukraine is not resolved. She and President Obama
gave a joint news conference after their talks in Washington earlier. Obama said that despite calls for the U.S. to arm the Ukraine, economic
sanctions on Russia could still bring about a diplomatic solution.
(BEGIN VIDEOCLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It has not yet dissuaded Mr. Putin from following the course that he is on, but it has
created a measurable negative impact on the Russian economy and that will continue. My hope is that through these diplomatic efforts, those costs
have become high enough that Mr. Putin's preferred option is for a diplomatic resolution.
(END VIDEOCLIP)
NEWTON: CNN's senior White House correspondence Jim Acosta joins me now from Washington. Jim, I know you were watching very carefully through
that whole press conference.
JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Right.
NEWTON: It seemed to me that they went to great pains to make sure that there was no daylight between us, when in actual fact, Obama probably
came as close as he's going to come to saying, `Look, if this doesn't work by Wednesday, we're arming Ukraine.'
ACOSTA: Yes. That's right. It was a united front, Paula, from two leaders on very separate pages when it comes to that issue of arming the
Ukrainians. The President could have said, `Well, you know, we're just going to wait and see what happens on Wednesday' when Angela Merkel and
Francois Hollande, Petro Poroshenko and Vladimir Putin sit down in Minsk, but instead he said no, these are options that I have on the table, I am
thinking about defensive military weapons to Ukraine and the President making it clear.
And I think other members of his administration are making it clear that he might be leaning in that direction. And, Paula, as you know from
covering American politics for a very long time, the President has the sort of consistent set of critics -- people like John McCain and Lindsey Graham,
Republicans in Congress, who are constantly going after him over his policies - foreign policy - but in this case, he has lawmakers from both
sides of the aisle - very close allies - who are saying t that the President needs to move forward with this step.
And so I think what we're going to see here in the coming days is, is if that Minsk Agreement does not come to pass on Wednesday, there's going
to be a lot of pressure on this president domestically to do more.
NEWTON: And yet do you think that'll put so much more pressure on this administration, an administration that has, quite frankly, fumbled on
a lot of these issues. I mean, the Europeans are saying, `Look, it's - this fighting isn't going on on your back doorstep,' right? You're an
ocean away. It's easy for you to say that you're going to sit there and arm Ukraine. Do you think the administration - and we've heard this so
many times - has an endgame here if they arm Ukraine?
ACOSTA: Right. Well, the endgame for this administration is always caution. I mean, that is - that is a hallmark of this presidency, it is
going to be Barack Obama's guiding principle when it comes to foreign policy until he leaves office. He does not go into these things with a
heavy hand.
And so, you know, if Angela Merkel says to him on Wednesday, `Look, we need more time,' I think it's going to be a very critical moment for this
relationship. Because as you know it's already strained because of those eavesdropping revelations that came out the U.S. was spying on Angela
Merkel's cell phone and so forth.
And so the relations have been strained somewhat, but at the same time, you know, Angela Merkel - and, you know - go back and listen to what
she said today, Paula. I thought it was very interesting. There were some moments during this press conference when she conceded that the world may
be running out of diplomatic options. And so, you know, I think that all of this is going to be fascinating to watch in the coming days.
And a lot of this is going to be dictated by Vladimir Putin. You know, the President has said in the past he doesn't see himself as playing
Cold War chess with Vladimir Putin. But look what Vladimir Putin's been able to accomplish. He's been able to maneuver the situation such a way
that now he has the President and Angela Merkel on separate pages. It's been sort of a deft move on his part.
The question or not is whether or not - and you mentioned those sanctions earlier - whether that economic pain is being inflicted enough to
make him think otherwise, to think twice about moving further into Ukraine. I think that's the next step we'll have to watch.
NEWTON: That's an interesting point though that you made, Jim, there's obviously that caution. The White House will always sit there and
lay on that caution at the end of the day. Thank you so much, Jim, appreciate it.
ACOSTA: Yes, you got it.
NEWTON: Now as violence continues, the European Union has agreed on new sanctions. However, it says they won't be implemented just yet.
(BEGIN VIDEOCLIP)
FEDERICA MOGHERINI, E.U. HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS: We discussed and adopted the list of additional names of 19 individuals and
nine entities that would be subject to asset freeze and visa ban, as it was decided to be followed up in our last meeting ten days ago. In order to
give space for our diplomatic efforts in these hours to be developed with the maximum of chances for success, we decided unanimously, united to put
the entry into force of the measures on hold until Monday 16th as we believe it is our duty to give this attempt that we're doing a chance.
(END VIDEOCLIP)
NEWTON: Now Western sanctions are not the only reason Russia's economy is in a squeeze. As Richard Quest explains, looking at all the
pressures facing Russia and its president is like getting to the center of a Russia doll.
(BEGIN VIDEOCLIP)
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: When it comes to the Russian economy, President
Putin likes to keep a polished exterior.
VLADIMIR PUTIN, RUSSIAN PRESIDENT, VIA INTERPRETER: Our strategic goals of course remain the same. We have to overcome pressure by external
factors by strengthening our financial and economic sovereignty.
QUEST: Those external factors are clear -- falling oil prices, Western sanctions, the conflict in Ukraine. Whether Russia can withstand
all this depends on what's inside. There's the ruble which has lost more than half its value against the dollar in the past six months.
TIM ASH, ECONOMIST, STANDARD BANK: What we learned last year in terms of the central banks, management of the exchange rate - or mismanagement of
the exchange rate when we saw huge movements in a day -- with foreign exchange reserves out uberstrategic. But they do not like to spend them.
QUEST: The foreign reserves are Russia's economic muscle. Still looking pretty healthy despite some decline.
MOHAMED EL ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: The Russian sovereign has hardly any debt falling due and they've still got about $380
billion of reserves. So the issue is not the sovereign. Russian companies and banks are going to have a lot of challenges.
QUEST: The banks could tip the balance with interest rates at their current level of 15 percent. Moody's predicts the banks will lose around
$15 billion this year.
ANDREY KOSTIN, CEO, VTB GROUP: The government is using the number of measures we should use in 2008/2009. But of course situation is quite
different that we cut off from the international markets for political reasons, not for economic reasons.
QUEST: For the banks, there's those foreign exchange reserves to fall back on. To keep the support of his people, high inflation is one of
Putin's key challenges. At 15 percent, it's the highest in 16 years.
ASH: The Russian economy, you know, we have to remember that compared to say '91, or even '98, it's a much higher level. Russians have a lot
more reserves, a lot more savings to ride through a -- an -- extended recession.
QUEST: There's one final crucial number inside all of this - Putin's approval ratings -- at 85 percent in the latest January poll.
ASH: I do not expect a Orange or a Coloured-style revolution in Russia any time soon. I think it's very unlikely that oligarchs will move
against President Putin.
QUEST: Keeping that patriotic inner core is key for Putin's economy - at least if history is anything to go by. Richard Quest, CNN New York.
(END VIDEOCLIP)
NEWTON: Now the calendar says it's 2015 but we may just be living in 1984. Samsung says its so-called smart TV is listening in your living
room. Is this the technology we've dreamed about? Or an Orwellian nightmare? Details after the break.
(COMMERCIAL BREAK)
NEWTON: "Any sound that Winston made above the level of a very low whisper would be picked up. You could be seen as well as heard. There was
of course no way of knowing whether you were being watched at any given moment. How often or on what system the Thought Police plugged in on any
individual wire was guesswork." Chilling, isn't it? The passage from George Orwell's dystopian novel "1984," the world he described where Big
Brother is always watching is compared to Samsung's interconnected smart TV. I kid you not! Where users can control the device with their voice.
We're told this is progress because now it seems Samsung is always listening as their own privacy policy makes clear - it's in the fine print,
now folks, -- it says "Please be aware that if your spoken words include personal or other sensitive information, that information will be among the
data captured" - and get this - "transmitted to a third party through your use of voice recognition."
Samuel Burke has been listening in on this story. Samuel, you're going to give me the short translation of this. Get me to the point of
this. I'm sitting in my living room, the TV is on all the time listening to what I'm saying! It is so creepy - it is beyond creepy. What makes
them think that we need this TV in our living rooms or any of this technology?
SAMUEL BURKE, BUSINESS CORRESPONDENT: Oh I love the part where they say, "If you speak personal or sensitive information' - that's the place
where you speak personal information.
NEWTON: (LAUGHTER).
BURKE: You're sitting back, relaxing with your husband or your wife (inaudible). You're talking smack maybe.
NEWTON: (LAUGHTER).
BURKE: Why a smart TV that can listen to what you can say? Well just like you can talk to your phone, Paula, you can talk to your television and
give it commands and all that third-party mumbo jumbo in the privacy policy is saying we're sending your voice commands somewhere else, and they're
listening to it and they're getting the commands maybe to open up a game, tell me the weather and Samsung says, look, we're not selling this
information, we're not even storing this information. But I worry about, Paula, isn't Samsung so much. I worry about what if somebody hacks my
television - not Samsung - and then they can use that microphone to listen in to all the intimate, very intimate conversations I have in front of my
television.
NEWTON: Oh, it's just absolutely creepy. But it makes you want to turn off everything all the time. OK, this wasn't the intended purpose,
but when you're in product design and you're talking about something that people use a lot, I mean, what are we supposed to be looking out for now?
Because I don't think that that would have been the first thing that struck me about voice recognition. But it's logical, isn't it? It does have to
be on all the time in order for it to work.
BURKE: I just got off the phone with somebody who said, `Oh, I saw one of the reports you were doing earlier and I hadn't thought it, but,
yes, I have one of those televisions and it does have voice recognition. So I think we need to be cognizant of the fact that not just your
television and not just your phone, but so many of the devices around us now have these and you should have the right to turn it off if you want and
Samsung does give you that right. You can go into the settings and turn it off. And if you're not using it, then why not turn it off just to be on
the safe side? But I think we have to have this new level of consciousness about these things because one day this will be hacked. Maybe not a
Samsung product, but inevitably - in fact you reported on baby monitors that were hacked and a Russian website was putting them up for the world to
see. So, it will happen. So if you can turn it off, why not?
NEWTON: And the other thing about this - when reading through the privacy policy - again, I encourage everyone to read this fine print now -
I had a lovely day. You know, it says that because it's internet- connected, that a lot of what you do on there, that they're collecting all that data on you. Now we know that they do that on a lot of TVs now, but -
is it going to get to the point where it can even become a selling feature that these TVs are actually finally private, that there are more controls
on it - like the privacy controls we have on social media?
BURKE: I just want to make the point that Samsung says that they don't hold the information, but you're absolutely right to bring up this
point, because so much of what we do is saved so that companies can understand more about you for analytics and so that they can sell it. So I
could perfectly envision a time where your television is collecting data on you, and a company might be willing to sell it, so, yes, it absolutely
could happen. So we need to be very vigilant about all this technology.
NEWTON: My gosh, Samuel. I - it's distressful. You brought the story to my attention today and it's incredibly stressful. I'm looking at
every device with suspicion now. (LAUGHTER).
BURKE: Well, just like the television, I listen to your every word, Paula.
NEWTON: Yes, yes, get out of here. (LAUGHTER). Say, Samuel, thank you so much for coming in. I appreciate it. He's known for being a
captain and a leader, now David Beckham's next opponent is global poverty. He tells us why this is such a personal issue. Up next.
(COMMERCIAL BREAK)
NEWTON: Economic experts admit they're confused. They can't work out how fast one of the world's largest economies is growing. The country is
India. Government statisticians have adjusted the way they calculate growth, but now people are wondering which figures to trust. Sumnima Udas
reports.
(BEGIN VIDEOCLIP)
SUMNIMA UDAS, CNN CORRESPONDENT: For the past few years, we've all been talking about how India's economy is stagnating, even though it's one
of the fastest-growing major economies in the world. It lags behind China but new data just released by the Indian government paints a very different
picture - saying India's economy is actually red hot and has been for a while.
GDP numbers released on Monday shows the Indian economy grew by 7.5 percent in the third quarter and 8.2 percent in the quarter before that.
This is all a result of the new methodology India's using to calculate GDP. The minister of statistics here changed the base here to make the numbers
more current and is now factoring market prices rather than production costs. Indian officials point out this new method of calculation is in
line with global practice and the IMF. Still, many economists say they are confused by the numbers because they're not consistent with other key
economic data - like corporate earnings or car sales which have actually slumped in the past few years.
Now the implications of all of this is really quite significant. As one economist put it, "It changes everything." It changes the way Indians
and the outside world sees India. It could have a major impact on monetary policy and the budget that's due to be unveiled in the end of this month.
And most importantly, it means India's growth rate is on par with that of China's and India may well overtake China to become the fastest-growing
major economy in the world by 2016/2017 as the IMF and the World Bank have predicted. Sumnima Udas, CNN New Delhi.
(END VIDEOCLIP)
NEWTON: Now the managing director of the World Bank says governments have a big task before them, ensuring they become more competitive as the
world economy becomes more globalized. I asked her what politicians had to do to achieve the best results for their people.
(BEGIN VIDEOCLIP)
SRI MULYANI INDRAWATI, MANAGING DIRECTOR, WORLD BANK GROUP: Each economy need to have and continue to do their liberum (ph) or adjusting
their policy according to the state of development. So you cannot have the expectation that once you do a policy packet and it will then apply for the
whole growth wrap.
So in this case, for the advanced country United States need to do their structural reforms since the crisis 2008/2009, and now Europe and
area is even more in this case whether you are talking about labor market, whether you are talking about investment condition, whether this is in
competitiveness.
And in Japan it's also whether it is on a trade. Many different European countries also doing the same structural reform, and yet it is
about improving their productivity while you are opening and integrating yourself with the global economy. You know that you always have to
continue improving your competitiveness as well as productivity.
NEWTON: You know, when we factor in what's going on right now - this dramatic price - the drop in the price of oil, you have Greece which
continues to be quite a drama on the global stage. What concerns the World Bank most going forward in 2015?
INDRAWATI: Well, for many of the bank client - the World Bank client - which is mostly developing emerging country and low-income country. Many
of them is actually benefiting from this global oil price which is down almost 50 percent since last year. So, they are having the opportunity to
adjust both in term of their fiscal subsidy or in this case in terms of their ability to redesign their subsidy to be targeted to the poor.
(END VIDEOCLIP)
NEWTON: Helping the world's poorest people is something that resonates personally with David Beckham. Now he's announced a new
collaboration with UNICEF and it's going to be a family affair. Our London correspondent Max Foster spoke with him.
(BEGIN VIDEOCLIP)
MAX FOSTER, CNN INTERNATIONAL ANCHOR AND CNN'S ROYAL CORRESPONDENT: There is life after football, and for David Beckham, everything he's done
on and off the pitch he says has led to this point.
DAVID BECKHAM, UNICEF BRAND AMBASSADOR: Now being retired, you know, after 22 years, working with Manchester United, Real Madrid, you know,
different clubs in different countries, you know, having the family that I have, it's led me into a situation where now I can help other people in
other situations.
(CHILDREN TALKING)
FOSTER: Seven was Beckham's lucky number on his football shirts and is the title of his collaboration with UNICEF. Its aim - to make world
leaders put children first. He'll go to areas where children are suffering to see it firsthand, and take his own kids along with him. You've talked
about how your kids have had a good life and you also want them to be involved in this project and you've always talked to them about the really
tough work you've done in terms of UNICEF work, haven't you? So what it is you're trying to do with your children to get them part of this?
BECKHAM: Well just making them aware. My little girl is obviously too young to understand. She understands Daddy goes away and Daddy comes
home and shows her pictures of children and people that he's helped while he's been away. But my oldest, he's at an age now where he can actually
start coming on certain trips with me.
And I think to make children in general aware of what's going on around the world and the emergencies that are happening, devastations are
happening and it's very important. You know, it's - you look after children, you protect them, you shelter them, but there's certain things
that you can't hide from them and the devastations that go on around the world, you can't hide from them because there's something they can do to
help.
You know, children - my children - turn `round to me and say, `OK, how can I help?' So, if my children will turn `round to me and saying that,
then there's other children around the world that would do exactly the same.
FOSTER: Your friend Simon Fuller has described this being a new phase of your life. Is that how you describe it as well? Is this a momentous
step for you as well?
BECKHAM: Obviously the next phase in my life is this. You know, there's certain other things I'm working on, but my number one priority is
the `7' Fund.
FOSTER: Beckham knows the power of football. He says prime ministers want to meet him, and if they don't, their kids do. He's going to use that
to get his message across. Max Foster, CNN London.
(END VIDEOCLIP)
NEWTON: Impressionist painter Paul Gauguin was famed for his money troubles. Now one of his works has set a new record. We'll unveil the
painting and the price right after the break.
(COMMERCIAL BREAK)
NEWTON: The owner of "When Will You Marry?" has answered the question `When will you sell?' and in the process has set a new record. Here's the
painting depicting two Tahitian women. It's by the post-impressionist Paul Gauguin. A Qatari buyer reportedly paid about $300 million for it, and
yes, that's a record. With this purchase, Qatar is cementing its place in the art world. It already owns the painting that was until now the most
expensive in the world - Cezanne's "The Card Players" which Qatar reportedly paid $250 million for some three years ago. That's it for
"Quest Means Business." I'm Paula Newton and I'll see you right back here tomorrow.
END
