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Quest Means Business
Deep Divisions on Greek Debt Extension; Varoufakis Style Raises Eyebrows; Row Escalates between U.S. and Gulf Carriers; Ricard Takes Aim at Craft Spirits; Bitter Cold Threatens Power Sources; Tomorrow Transformed; ISIS Wreaks Havoc on Libya's Economy; Risky Business in Mexico's Energy Hub; Unretouched Beyonce Photos Leaked; Photoshop Turns 25 Today; Samsung Buys LoopPay; T-Mobile Adds 2 Million Subscribers
Aired February 19, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAGGIE LAKE, CNN HOST (voice-over): U.S. markets dip below 18,000 on the eve of a crucial day for Greece. It's Thursday, the 19th of February.
Tonight Germany says no; Greece is now scrambling to reach a debt deal with Europe.
Walmart, the largest employer in the U.S., finally gives its workers a raise.
And apology rejected: Emirates tells Delta your CEO's credibility is now in question.
I'm Maggie Lake. This is QUEST MEANS BUSINESS.
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LAKE: Good evening. Tonight European leaders say talks over Greece are not yet done after Germany rejected a Greek request for more credit. The
day began with Greece asking its European partners for a six-month extension to its emergency loan program.
Within hours, Germany smacked it down. The finance ministry in Berlin said the proposal offered no substantial solution and accused Greece of trying
to duck its obligations.
All eyes now turn to Brussels for the final day of meetings among Eurozone finance ministers. The prospects for an agreement are poor but Germany's
vice chancellor says negotiations will go on.
(BEGIN VIDEO CLIP)
SIGMAR GABRIEL, GERMAN VICE CHANCELLOR (through translator): Mr. Schaeuble rightfully said that the contents of the letter from Athens are not enough
in order to reach an agreement. Mr. Schaeuble and the German ministry of finance keep negotiating with the Eurogroup and that is the right thing to
do.
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LAKE: Friday is the deadline E.U. imposed for reaching an agreement. But the divisions between the parties at the negotiating table run deep. The
latest proposal from Greece offers major concessions. Greek officials say it's time for the Eurozone to accept or reject its proposal. The European
Commission says the letter is a positive sign.
Jean-Claude Juncker hopes it can pave the way for a compromise.
German officials, meanwhile, called the letter a Trojan horse proposal, speaking on Wednesday, though, the German finance minister said officials
have a responsibility to maintain stability in Europe.
The extension also faces opposition from countries that have endured painful austerity measures at home. Leaders in Spain and Portugal are
worried about political damage if they appear to go easy on Greece.
Valdis Dombrovskis will be at the table on Friday. He's from Latvia and he's the European Commission's vice president in charge of the euro. I
asked him if Germany's opposition to a loan extension reflects the will of the whole European community.
(BEGIN VIDEOTAPE)
VALDIS DOMBROVSKIS, EUROPEAN COMMISSION V.P. FOR THE EURO: Well, European Commission has been making this point very clear, that most realistic way
forward being this situation is an extension of the bailout program for Greece.
This is exactly what also Eurogroup has been suggesting to the Greek government. But also making clear that while requesting this extension,
Greece should also stick with the commitments within the program. And also indicating that there is some flexibility to negotiate some of the program
conditions.
LAKE: The Greeks don't seem to be under that impression. They are saying they're being given an ultimatum to accept the same old same old and they
were elected by their people to find some breathing room.
What is that flexibility that you're talking about?
Where is the room for negotiation and compromise?
DOMBROVSKIS: Well, first of all, it's worth noting that this bailout program is actually where the money is. So for Greece to be able to tap
the finances, they need to extend the program and successfully conclude the program and there is also clear signal from the Eurogroup, for example, if
Greek authorities does not like some of the measures within existing program, Greek authorities can propose some alternative measures with equal
fiscal value and to replace those measures and also there is some possibility to look at the fiscal targets while not undermining their
sustainability but taking into account real economic situation.
LAKE: I spoke to an analyst earlier today, who said despite all the technical -- getting away from all the technical speak about extension or -
- that European leaders are missing the point, that it's not just Greece, that people across Europe, the citizens of Europe, are growing tired of
austerity. They're losing faith in the European experiment and that it's not being recognized on a leadership level.
What would you say to that?
DOMBROVSKIS: Well, first of all, if we look at the European economy, European economy is now recovering from serious economic crisis. But
European economy is back to the growth and this year we expect economic growth in all 28 E.U. member states, provided there is no major shift in
policy like, for example, in Greece.
And we also see that those countries which undertook ambitious structural reforms are now among fastest growing E.U. economies, like Ireland, like
Spain, like previously Baltic States and so on.
(END VIDEOTAPE)
LAKE: Friday's crucial meeting may hinge on how Greece's firebrand finance minister handles the talks. His negotiation style has raised plenty of
eyebrows and annoyed some of his peers.
Nina dos Santos has this report.
(BEGIN VIDEOTAPE)
YANIS VAROUFAKIS, GREEK FINANCE MINISTER: I was invited because I'm the new kid on the block.
NINA DOS SANTOS, CNN CORRESPONDENT (voice-over): As the face of Greece on the international stage, Finance Minister Yanis Varoufakis certainly walks
the walk, beating a path to Paris, London, Rome and Frankfurt.
VAROUFAKIS: And I'm now proceeding, I'm moving on to Berlin.
DOS SANTOS (voice-over): To explain why his country should take an ax to austerity. He's also talks the talk a lot, too.
VAROUFAKIS: Just like when you will recall The Eagles' song, "Hotel California, "You can check out any time you like, but you can never leave."
We have resembled drug addicts, craving the next dose. What this government is all about is ending the addiction.
If this is like trying to extract more milk from a sick cow by whipping it.
DOS SANTOS (voice-over): When it comes to the dress code, the 53-year-old minister's by no means average. The economist and former professor has
worn biker boots to Downing Street and a Burberry scarf to Brussels. Don't forget his image for a moment, what about the results?
UNIDENTIFIED FEMALE: Well, he's certainly shaking things up in terms of actual concessions from the rest of the Eurozone. And I think there have
been very little so far.
DOS SANTOS (voice-over): Make or break talks are ongoing, more deadlines are set by the day. And with Greece's bailout due to expire at the end of
the month, Germany is talking tough as well.
WOLFGANG SCHAEUBLE, GERMAN FINANCE MINISTER: We will do our very best to fight for what is urgently needed but the rule of (INAUDIBLE) is admitted
(ph) and it's not only by member states. It's an altogether.
JENNIFER MCKEOWN, SR. EUROPEAN ECONOMIST, CAPITAL ECONOMICS: It's become clearer and clearer that this isn't just a game of chicken, as people had
assumed at first. But the positions of the Greek government on the one hand and the (INAUDIBLE) finance minister on the other are a very long way
apart.
DOS SANTOS (voice-over): As the war of words continues, some signs that Greece is softening its stance.
VAROUFAKIS (through translator): I wanted to convey to you the climate of optimism and the good relations are being built day by day, hour by hour,
email by email.
DOS SANTOS (voice-over): Whether in those emails, discussions or draft communiques, Greece gets that message across, will be pivotal to the
country's financial future -- Nina dos Santos, CNN, London.
(END VIDEOTAPE)
LAKE: Robert Shapiro is chairman of the economic advisory firm, Sonecon. Before that, he was U.S. Undersecretary of Commerce and Economic Affairs.
He joins me now from Washington.
Robert, you're perfectly placed to give us some insight on this. You're no stranger to political negotiations as well as economics.
Do you sense that a lot of this what appears to be disagreement is political posturing that they'll be able to get over?
Or are we seeing really deep important divisions laid bare?
ROBERT SHAPIRO, COFOUNDER AND CHAIRMAN, SONECON: No, I think it is largely posturing. You're seeing the public side of a long negotiating process.
This has been the pattern of the relationship between Greece and Germany in particular since the crisis began several years ago.
The fact is that at this time as in the past it is strongly in the interest of both parties that they avoid the cliff. That means they won't resolve
it. They will figure out a way to kick the can down the road another couple months and then will be back at this.
And that's the way they have handled this crisis and the reason is that the economics are fairly clear and the economics, frankly, favor the Greek
position. But the politics of this are very complicated, particularly in Germany. And the politics are getting more complicated because the
European public's tolerance for absorbing economic costs in the context of the promise that the Eurozone was going to produce great economic benefits,
that -- their patience is running out. And we see that in the rise of nationalist anti-E.U. parties in England, in the Netherlands, in France,
even in places like Denmark.
LAKE: Yes, and I know that is something that the administration here is watching with great concern. We know the Treasury Secretary was working
the phones himself this week.
Let me ask you, are you convinced that they will get past this?
Will Greece stay in the Eurozone?
Or are you worried that there is somehow an accidental exit?
We saw U.S. Congress learn the hard way the financial markets have their own mind when you play with fire. We watched what happened with TARP.
Are you worried that Europe could go the same way, believe they have the situation under control but somehow it slips out of their grasp?
SHAPIRO: Yes, in a word, I am worried about that. I'm not worried about in the very short run but I am worried about it over the next year. I was
very worried about it in 2011 and 2012, when it really looked like the system was on the brink of collapse, which would have brought down the
European banking system and with it the U.S. economy.
The banking system's a little stronger now. It's not strong enough to withstand a investor flight from Italy or Spain, for example, triggered
possibly by Greek's exit, forced exit from the E.U.
But the European banking system would be very, very badly damaged because, after all, that is if there were a spread of concern back to the larger
economies, because unlike the mortgage-backed securities in our financial crisis, sovereign debt, the debts of the governments of these countries,
are held in very large quantities by every bank in their system.
LAKE: Absolutely. We have a lot to get through the program today. Robert Shapiro, thank you so much for joining us.
SHAPIRO: Anytime, Maggie.
LAKE: Now Emirates has rejected an apology from Delta Air Lines over comments made by the Delta CEO on this program. Richard Anderson drew a
strong backlash after he appeared to make a link between airlines based in the Persian Gulf to the September 11th attacks.
(BEGIN VIDEO CLIP)
RICHARD QUEST, CNN HOST: And to the allegation that, well, you restructured under Chapter 11. You -- the U.S. fleet certainly gains
benefits from the civil defense fleet. American has just restructured. The argument is that you in your own ways have had your hand in the bailout
trough.
RICHARD ANDERSON, CEO, DELTA AIR LINES: That is categorically false. And it's a great irony to have the United Arab Emirates from the Arabian
Peninsula talk about that, given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the
Arabian Peninsula, that caused us to go through a massive restructuring.
And in the United States, our restructuring process is transparent and there is no government subsidy. And in fact, there were billions of
dollars of equity and unsecured debt that were wiped out through that process.
(END VIDEO CLIP)
LAKE: Delta then apologized for his comments in a statement released just a short time ago. Emirates said, "Emirates rejects the apology issued by
Delta Air Lines. We believe the statements made this week by Mr. Anderson were deliberately crafted and delivered for specific effect. This brings
into question his credibility as a CEO of a U.S. public listed company."
The big three U.S. carriers have accused their Middle Eastern rivals of unfairly benefits from government subsidies.
The chief executive of Qatar Airways and Emirates are already smarting over his comments on subsidies. They took issue with those comments.
(BEGIN VIDEO CLIP)
AKBAR AL BAKER, CEO, QATAR AIRWAYS: I think he should be ashamed to bring the issue of terrorism to try to cover his inefficiency in running an
airline. I think that he should not be talking about this. He should very frankly state that he used this Chapter 11 to fix the problems he has in
his carrier.
(END VIDEO CLIP)
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TIM CLARK, EMIRATES CEO: I'm a little bit concerned that Mr. Anderson crossed the line in some of the statements he made with regard to what went
on with regard to 9/11. And I know that has caused great offense in this part of the world and I'm sure will be dealt with at the governmental and
state level.
But apart from that, I'm fairly, let's say, used to it. I believe our position is utterly defensible and will be. And we will demonstrate that,
by offering quality products into the United States, we will continue to draw business to points that currently the American carriers don't serve,
have never served and probably never will serve.
QUEST: And as to the 9/11 comments, you believe they will be taken up by others?
CLARK: Well, put it this way. As an airline manager, I cannot speak for what the States may do. But I have to say that I wonder whether Mr.
Anderson considered the feelings of his SkyTeam partner, Saudia, when he made these allegations or these carefully crafted statements -- words.
Unfortunate, but there we are. He must answer to those questions.
(END VIDEO CLIP)
LAKE: After years of labor disputes, is Walmart turning into the ideal employer? Coming up, why working for the world's biggest retailer is about
to get more rewarding.
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LAKE: A reprieve for France's Socialist government as it tries to push ahead with pro-business reforms. It survived a no confidence vote in
parliament earlier today, but the economic challenges continue. Inflation has turned negative for the first time in five years. That is a concern
for companies like Pernod Ricard, the wine and spirits company behind Absolut vodka, Malibu and Jameson whisky.
Alexandre Ricard took over as the company's CEO last week. He is the third generation of the Ricard family to run the business. And he joins us live.
Thank you so much for being with us.
Congratulations. This is -- it's an interesting time in your business because we see not only the competitors that you're used to dealing with
but the rise of what's being called the craft movement.
How do you plan to tackle that?
And how much of a threat is it really?
ALEXANDRE RICARD, CHAIRMAN AND CEO, PERNOD RICARD: Well, you know, we're lucky enough to have the largest portfolio of premium brands in the
industry, more than half of our top 14 strategic brands have more than 100 years in existence. If you take Martell cognac for instance, we're this
year we're celebrating the 300th anniversary of Martell. It was born in 1715 and Louis XIV was still alive when Martell was launched.
So that is an authentic brand with substance, with a heritage and it is our job to communicate and engage with Millennials to explain that.
LAKE: Yes, it is impressive but the times are a-changin', and we do see phenomenal growth. I mean, I've interviewed whether it's beer, whether
it's spirits, we see a big push for whisky here in the U.S.
It's all about local as well. Again, how are you countering that? What is the message you are telling these young buyers to try to woo them?
RICARD: Yes, the three drivers of growth in the U.S. market are first of all premiumization and actually 86 percent of value growth over the last
six months were driven by premium plus brands. And two categories, the whisky category and the cognac category.
From the whisky side of things, we have magnificent brands such as Jameson Irish Whiskey or the Glenlivet single malt, which is the leading single
malt brand here in the U.S. market.
Or also with the likes of J.P. Wiser's rye whisky, which is a Canadian whisky which we have just launched here in the U.S. market, as well as
small batches like Pike Creek or Lot 40 that are small-batch, crafted whiskies.
LAKE: That's right, sometimes we forget because they're under the brands and yet under the company umbrella.
I want to ask you about China. That of course, so many people looking at; it's a real growth area. You're dealing with two separate challenges
there, aren't you, the slowing economy but also this crackdown on consumption or luxury. How are you going to confront that?
And can you work around it? Very hard when you're talking about government rules being put into place.
RICARD: You're right. There are two things in China. There's the macroeconomic slowdown on one side and the sustained pressure in terms of
anti-extravagance campaigns.
That being said, we're experiencing, we're noticing some gradual improvement in underlying trends in China. But at the end of the day,
actually today is a key day for us and the Chinese people because today, 19th of February, is the Chinese New Year.
LAKE: Very quickly, because we're out of time, where is the growth? Is it spirits? Is it wine? A lot of debate about what the Chinese consumer
wants. Where are you putting your money?
RICARD: Premium spirits and wine. We have a magnificent brand in China called Jacob's Creek. It's an Australian wine.
LAKE: I'm familiar with it, yes.
RICARD: Yes. And spirits, obviously with cognac, Martell cognac is the leading player in the Chinese market and one of its preferences is Noblige.
And it is growing right now and as well scotch whisky with a Chivas 12, which is the leading scotch whisky in China.
LAKE: Absolutely. Well, huge opportunity and a fascinating time to be there. Thank you so much for coming in.
RICARD: Thank you very much.
LAKE: Now the largest private employer in the United States is gearing up to give half a million people a pay boost. That's a lot of people.
Walmart says all current employees get a raise to at least $10 an hour by this time next year. That is $2.75 above the minimum wage in the U.S. The
retailer has come under fire in the past for the way it treats its staff. Walmart's executive vice president told CNN's Cristina Alesci the cause for
these new plans won't be passed on to the consumer.
(BEGIN VIDEO CLIP)
DAN BARTLETT, EVP, WALMART: Well, everyday low prices is something that we take very seriously here. It's in our DNA. And so the levering on that
low price for our customers will not be compromised one bit by today's decision.
In fact, it'll make us strive for other ways to find how we can be more efficient in order to so that we can both reward our associates and our
customers with everyday low prices.
(END VIDEO CLIP)
LAKE: And Cristina joins me now.
Cristina, great to see you. A lot of people were surprised about this. They had been getting hammered and hammered about how they treat their
employees, the wage their employees get. And then this came out of the blue it would seem.
CRISTINA ALESCI, CNNMONEY CORRESPONDENT: Yes, it came out of the blue on multiple levels. But the pay increases isn't the only thing they
announced. They announced more flexibility for employees over their schedules, a little bit more of a heads-up on your schedule, also
opportunities to move ahead but the headliner of course are these wage increases. This is a pretty bold move for a relatively new CEO. And it
caused a huge stir. It was a very effective PR marketing campaign to address some of those critics. And it's something that we haven't seen the
company really do before.
What's interesting is you can't make everybody happy, right? Wall Street said $1 billion is a lot of money and that's why we saw the stock react the
way we did today. It was down about 3 percent. You know, some analysts that I spoke to said we're kind of scratching our heads to see what Walmart
gets on the dollars and cents side of things.
What are the productivity gains? Can you give us anymore specifics? And some of those analysts that I spoke to were frustrated because they didn't
understand what Walmart is getting for that billion dollars.
LAKE: Yes, and we'll have to wait and see, although we know a lot retail's about customer service now. And if you're trying to get those people
through the door, they'll be frustrated; they don't like it, they walk out. Well, we'll see. It's going to take time. Cristina, thanks so much for
the update.
It takes a lot of energy to keep a modern city moving. Now new smart technology is helping to keep the power on even in extreme conditions.
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LAKE: Here in the United States, freezing winter weather has brought record low temperatures across the entire East Coast. The mercury has sunk
to as much as 45 degrees below average and as if that's not enough, there have been power outages across the country.
In this week's edition of "Tomorrow Transformed," Richard explores how new technology will be able to keep the lights on.
(BEGIN VIDEOTAPE)
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QUEST (voice-over): In 1882 on Pearl Street in New York City, Thomas Edison opened the world's first commercial electric grid, lighting up local
homes and businesses with cables connected to his power station.
Today, while the cars, the fashion and the skyline may all have changed, the way we power our cities substantially hasn't.
What if we could bring the whole grid up to date? Let's visit Mannheim in Germany.
Every house in Mannheim is connected to a smart energy network, making the most of renewable energy. Now this is not just a set of smart homes. It's
a smart city.
UNIDENTIFIED MALE: What I think is that the power grid can become a brain for a city by all that information that are generated in the grid. We
first thought about, OK, how should the future smart will look like?
So we started with a very small number of houses in the first project space with 20 households. Then we grow that to 200 households in the next year.
And then the year after, we went to large scale project with 1,000 private customers connected to our grid.
QUEST (voice-over): At the heart of the network lies a butler, not like Mr. Carson from "Downton Abbey," but the energy butler, a small box that
monitors how much power you're using when boiling the kettle or watching your favorite movie, for instance. All this information is then fed back
by a series of smart meter to a central system that learns how much power is being used, where and when.
UNIDENTIFIED MALE: We were using (INAUDIBLE) power line communication technology in order to transfer data from A to B over the power grid
itself. We can send information back from the meters, from measurement devices, about power quality, about the current status of the grid.
QUEST (voice-over): The network is designed to use as much renewable energy as possible and as well as being good for the environment, it's
designed to help your bank account, too.
UNIDENTIFIED MALE: With the availability of renewable energy, always leads to a lower price of electricity. And we use that mechanism and forward it
to the private customers.
QUEST (voice-over): What's happening in Mannheim is but an experiment. And it's a vision for the future because what's happening in Germany could
very quickly be adopted on a much larger scale elsewhere.
UNIDENTIFIED MALE: It would work everywhere because power grids worldwide are operated more or less the same way. We developed this architecture.
But it can be implemented everywhere.
QUEST (voice-over): With a smart grid in place, the future of our cities would just be a little brighter.
(END VIDEOTAPE)
LAKE: It is a failing state with a failing economy as the rise of ISIS pushes Libya to the brink. John Defterios takes a look at the country's
descent into chaos. His report after the break.
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MAGGIE LAKE, CNN HOST (voice-over): Hello, I'm Maggie Lake. There's more QUEST MEANS BUSINESS in a moment. We'll speaking to the managing editor of
Jezebel on the market for unretouched celebrity photos and the former boomtown ravaged by Mexico's deadly gang violence.
Before that, here's the top news headlines we're following for you this hour.
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LAKE (voice-over): The leaders of Ukraine, Russia, France and Germany have spoken by phone to look for a way to end the heavy fighting that's been
going on in Eastern Ukraine despite the cease-fire of course. All sides called for the cease-fire to be respected along the entire front line.
Germany has rejected a request from Greece for six more months of emergency funds. Eurozone ministers will meet in Brussels tomorrow to consider the
proposal. Speaking to me on QUEST MEANS BUSINESS, one of the European Commission's vice presidents said he still hoped a deal could be reached.
U.S. President Barack Obama says it is a ugly lie that the West is at war with Islam. He's urging governments around the world to confront the roots
of extremism.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you very much.
LAKE (voice-over): Chelsea Football Club is temporarily banning three people from its home ground, Stamford Bridge, after video footage showed
them blocking a black man from boarding a Paris Metro train. The club says if there's sufficient evidence against the three, they will be banned for
life.
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LAKE: Oil prices dip back below $50 a barrel in the United States after a report showed stockpiles in the U.S. hit a record high. Prices in Brent
and WTI have been climbing higher over the past few weeks, mounting a modest recovery so far in 2015.
In the past, oil prices have often risen at times of unrest in the Middle East. At the moment, it's Libya that's causing concern. The influence of
ISIS in Libya has come to wider attention with Egypt sending in airstrikes against the terror group.
Now Libya is burning through its reserves as oil revenues dwindle, threatening even more harm to a fractured economy. John Defterios has
more.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Libya's been an open, festering wound for the past four years. The killing of 21 Egyptian
Christians by ISIS a stark reminder that inaction in this lawless state has spread beyond its porous borders, impacting neighboring states like Egypt.
SALEM AL ISMAILY, CHAIRMAN, ITHRAA: If you have instability in Egypt, you cannot maintain the stability of the region. So it's extremely important
to contain in Libya before it spreads into other places.
DEFTERIOS (voice-over): ISIS meanwhile is spreading terror into Libya's oil sector. Here are pictures posted by Libya's national oil company,
showing damage to two key oil facilities there -- and it's having the desired impact.
Over the past month alone, daily output has fallen to just 200,000 barrels a day, down sharply from the start of the year and is now only an eighth of
its pre-uprising level of 1.6 million barrels a day. There are worries, strategists suggest, that ISIS may try to repeat what it has done in Syria
and Iraq and take control of Libya's oil reserves, the biggest on the African continent and the 9th largest in the world.
The state-run oil company is asking the ministry of defense for protection; if not, it may be forced to shutter all production. That damage sparked a
mini-rally in energy markets after tumbling from $115 in June of last year down to below $50; prices spiked back above $60 this week. With ample
supplies from North America, Russia and the Gulf states, the market ignored the potential security threat that had underpinned prices for the last four
years.
TREVOR MCFARLANE, CEO, EMIR: There was a level of complacency that places like Iraq and places like Libya could actually go on. And we saw that for
quite some time with supply and output out of these markets. They weren't so much impacted. You look at what's happening now in Libya and their oil
industry is in serious trouble.
DEFTERIOS: And something else to think about: Libya's less than 1,000 kilometers across the Mediterranean from Italy and there are real concerns
that ISIS can utilize its new base as a beachhead into Europe -- John Defterios, CNN, Abu Dhabi.
(END VIDEOTAPE)
LAKE: Mexico's once grand oil hub, the city of Tampico, is suffering from drug warfare. People call it ultra-violence. The government wants to
transform the state's prospects by pulling in private investment. Tampico is about six hours by road from Mexico City, but it is a different world
from Mexico's capital. The oil industry made Tampico a boom town in decades gone by. CNN's Nick Parker looks at the risky business of trying
to reclaim the city.
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NICK PARKER, CNN CORRESPONDENT (voice-over): A bombed out restaurant's an ominous presence on this Tampico street corner. Yet the city is a future
nerve center for Mexico's energy industry.
PEDRO DANIEL ARELLANO, BUSINESS DEVELOPMENT DIRECTOR, COBSA: Right now we see in Tampico a boom. You can see a lot of nationalities in the airport:
Chinese people, German people, French people.
PARKER (voice-over): As Mexico opens its energy industry, investors are eyeing deep water oil exploration, fields and rich shale basins in the
northern region. Tampico's ports in the Gulf of Mexico make it a unique transport hub for energy firms as well as drug traffickers.
Last year the government sent in a large number of troops after a spike in cartel violence. The city was the cradle of Mexico's energy industry and
retains the colonial architecture from its boom time.
The striking thing about Tampico is that in many ways it resembles a bustling, functioning city. But as you move around there are cartel
lookouts on the streets and evidence of violence.
The threat has long been faced by state energy company, Pemex, which operates Tampico's refinery. It says production levels have not been
affected.
"We have the support of the military to protect the facilities and the workers themselves," says this refinery manager. "We consider that
sufficient."
For residents and small businesses, however, extortion and kidnapping remain a part of everyday life. Blogger Eduardo Cantu lead street protests
against the violence and is now running for public office.
EDUARDO CANTU, ACTIVIST: We have to fight to get back our city. We have to fight to get back our peace. I want a city for my boy with
opportunities.
PARKER (voice-over): There is still a long way to go. Late in the afternoon, we got word of a military operation underway.
So we just arrived at a crime scene in daylight hours just outside the main downtown area of Tampico. Behind me you can see that the army are here.
Just over here you see the federal police -- the gendarmaria. And they are attending the scene of a body lying in the street.
The man had been shot in the head, execution style. We were the only team of journalists there and observers say much of the local media is scared to
report cartel killings. Despite this, violence has actually decreased from last year.
DWIGHT DYER, CONTROL RISKS: In the medium and long term, the situation is bound to improve. There will be bumps along the way but both the federal
and state governments and society in general, which is probably the most important part, are committed to making a difference.
PARKER (voice-over): The hope is that investment can help further reduce violence and improve the lives of residents who have had to bear so much --
Nick Parker, CNN, Tampico, Mexico.
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LAKE: Celebrities caught with their Photoshop down and it's not all about Beyonce. We'll focus on the pictures that just everyone is talking about.
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LAKE: It is the face that launched a thousand reactions. This is an unretouched photo of superstar Beyonce showing her face with blemishes,
taken for a L'Oreal cosmetic campaign in 2013. It was leaked on a fan site and swiftly taken down again. Our own Nima Elbagir looks at what it --
what gets concealed and why.
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NIMA ELBAGIR, CNN CORRESPONDENT (voice-over): This week is the 21st anniversary of the invention of Photoshop. It's changed not only how
brands and companies market to women, but it's also changed how women see themselves.
Beyonce became the latest celebrity to fall victim to an unauthorized leak of un-Photoshopped images and the response from her fans has been
fascinating.
NATASHA BIRD, LIFESTYLE EDITOR, YAHOO! U.K.: There were people who came out and said, oh, gosh, I really didn't want to see that or she looked not
very good. Actually I did notice this overwhelming trend of positive responses saying, well, hang on. She still looks better than me on a bad
day. I don't think her image has been tarnished at all.
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ELBAGIR (voice-over): There have been multiple instances where people believed that she has presented pictures as candid that have been
Photoshopped.
There have been other allegations that Beyonce's skin has been lightened. Now that one is a bit more difficult. And as a black woman, often you see
yourself onscreen looking so much lighter than you are in person. It's not just Beyonce. Kerry Washington on the cover of March's "InStyle" magazine,
was unrecognizable. We know what Kerry Washington looks like.
Viola Davis, an extraordinarily acclaimed actress, she found herself at the heart of so many different conversations simply by just taking off her wig
and her makeup on a primetime U.S. network show, allowing herself to reflect back to so many of her fans the reality that greets them when they
look in the mirror.
UNIDENTIFIED FEMALE: So do you feel makeup takes away from the story that you're reporting?
ELBAGIR: I think it can be a distraction from what you're saying. I think especially with women, it -- most people don't need an excuse to focus on
what you look like, whether that's the good or the bad.
It's not to take away from women who do choose to wear makeup. I think extraordinary and beautiful things can be done but I just don't feel like
me.
The worry is that the industry is not representing these women, not giving representations of women that are true to who they and their fans know them
to be.
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LAKE: Interesting debate. Erin Gloria Ryan is managing editor at Jezebel website that regularly posts unretouched photos as a reply to fashion
magazines which do rely heavily on airbrushing, and she joins me now.
This is fascinating isn't it, Erin, because people feel very differently about this. Not everyone is in agreement as to whether this is a good
idea.
ERIN GLORIA RYAN, MANAGING EDITOR, JEZEBEL: Well, it is a complicated issue and it's a kind of tug-of-war I've had mentally as well. On one
hand, I think it's really important for people to know what real is. And Photoshop is so pervasive now. It's in magazines; it's in advertising.
And it's even on Instagram, like Kim Kardashian regularly Photoshops her Instagrams.
And so I think it's important for us to find out this is what's real, this is what isn't real, especially for women that are younger, that are growing
up and trying to get a good sense of what it is to be a woman.
LAKE: Right, and what real is. And that is the issue, isn't it, that it's sort of creating this ideal of perfection that no one can live up to.
But then I know that the (INAUDIBLE) let's all retouch our Instagram photos are so popular it seems, when given a choice, we all like a little bit of
help and we all kind of want to look our best.
Is that really a terrible thing?
And should we be outing people or outing magazines that do that?
We know going into it what we're buying, don't we?
RYAN: Sure. And I agree with you partly. But I also think it's important for us to have reminders. I think that the fact that Photoshop apps are
popular is part of a symptom of something that's maybe not all good and all healthy for women. The fact that we all feel pressure to live up to this
ideal that we were talking about before is not necessarily healthy.
Like imagine if we took all the energy we used photoshopping ourselves and did it doing something that's actually worthwhile.
LAKE: And (INAUDIBLE) by the way, I use when I have my showered and I'm out at the food store with my hair sticking up in 10,000 directions, I --
yes, I have no shame myself. Where does privacy come into this, though? Because when I hear about -- I applaud Viola Davis who decides to do that;
we know many celebrities do post themselves in very natural settings at home.
But we're talking about when it's leaked or when it's done without permission. Surely that we can't endorse that for some supposed greater
moral cause.
Shouldn't people be able to make a decision themselves about what they want to put out?
RYAN: Yes, I agree with you. I think it gets murky there because on one hand, it's not necessarily -- sometimes it's not just the celebrity and the
public. Sometimes it's the celebrity getting their picture taken and a person in the middle that's like altering it, you know, so the people that
are doing the photoshopping from the ads, the advertising company, and then the public.
So we're not necessarily, I don't think, targeting the celebrity herself when we're leaking Beyonce's photos. I think it's a little bit more
exposing what the advertiser is doing, not what the celebrity is doing. And in that way I think you can morally navigate that practice.
But I do understand that celebrities do want to see themselves in the best possible light and they might not choose to leak those photos themselves.
And that's -- and so it's like I said before. It's kind of a tug-of-war.
LAKE: Well, I have a feeling, based on what that person is saying about the reactions of Beyonce probably gained even more fans when that was
leaked because she did look fantastic and she usually is pretty honest about all the work that goes into the way she appears.
Thank you so much for joining us. Such a fascinating conversation.
RYAN: Thanks for having me.
LAKE: Well, the race to create the wallet of the future is getting tighter after the break I'll be speaking to the CEO of Samsung's latest
acquisition meant to rival Apple Pay.
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LAKE: Samsung is taking on Apple in the mobile payment sector. It's bought the U.S. mobile payments company LoopPay. The South Korean company
says the advantage of its technology is that shops (ph) don't need special equipment to use it. LoopPay's CEO Will Graylin joins me now from Boston,
Massachusetts.
And, Will, first of all, we have to thank you for making your way in. We know that you've been bombarded with snow up there. So thanks very much
and congratulations.
Tell me why go with getting acquired by Samsung and why not go it alone?
WILL GRAYLIN, CEO, LOOPPAY: Great question, Maggie. I think we are innovating a new technology and a new solution that's in the payment space
that needs mass adoption. And Samsung has the tremendous scale from a marketing standpoint, from a hardware manufacturing standpoint that the
largest handset manufacturer in the world.
So we're really joining Samsung because we want to play in a bigger stage to be able to scale this solution to the masses.
LAKE: Now the way it works now, we're talking about the advantage that you don't need special equipment. But this is hardware. You do need Loop
hardware to make it work. Samsung has indicated that it hopes to bring that into the phone so that you don't need that.
Do you feel like you have the software expertise that this sort of technology that you'll be able to evolve that way and not be so focused on
hardware?
GRAYLIN: So the hardware component allows the transmission to take place and the software side for us is a natural integration to provide the kind
of consumer experiences that a digital wallet should provide, whether it's checking out in a physical store or even checking out online or in your
app.
So yes, we feel confident that we have the software capabilities to create those kinds of experiences but at the same time we need to couple that
software experience with the kind of hardware that folks like Samsung produce.
LAKE: Now it's going to take some time as you sort of build that together; all the while, Apple Pay is on those Apple phones and it's had time to woo
those customers, woo those retailers and we know that that digital wallet just has not hit mass yet.
Are you concerned about that, that giving them an advantage?
GRAYLIN: Well, the biggest barriers to mobile wallets from taking off is in fact the lack of acceptance at the merchants' point of sale. So while
our competitors that utilize what's called NFC technology or near-field communication technology, those kinds of technology are only accepted at
approximately 200 some-odd thousand merchant locations here in the United States.
Whereas we don't require any changes to the merchant infrastructure. So our technology is accepted at more than 10-plus million merchant locations.
What that means to a consumer is that when you use the LoopPay technology, you'll be able to literally use it just about any place you go to. And now
the digital wallet replacing the physical wallet becomes much more real.
So we don't think the NFC technology is going to reach the mass merchant locations anytime soon. And it just takes a very, very long time to
replace hardware and software at those merchant locations. So that's why our advantage, we believe, will hold for quite some time.
LAKE: Well, according to outlets, there's billions of dollars at stake. Will, we wish you the best of luck. Thanks so much for joining us today --
Will Graylin.
Now John Legere has been called the most dangerous man in wireless. As the CEO of T-Mobile, he has tried to chip away at the bigger players in the
mobile industry. The company reported a nearly 20 percent jump in revenue last quarter. I spoke to Legere earlier and asked him if T-Mobile can
continue to compete without a merger.
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JOHN LEGERE, CEO, T-MOBILE USA: I do relish this role because what this industry needed and what my people needed is somebody that's not afraid to
look the big guy right in the eye and tell him he's not that good and to tell the government what they need to do to support us.
And, yes, secondly, most of what happens in the industry, whether it be the cable industry or content providers or MB&Os (ph), our big players think of
as, oh, my God, competition. I see paths for our company of continuing exactly what we're doing or participating in consolidation of like-minded
players or adjacent industries. They're all more flexible and broader offers for consumers and the good news is T-Mobile's brand, its team, its
presence is carrying huge momentum. So it's a bigger question for others to think, hey, wouldn't you be better off if you considered partnering in
some way with T-Mobile?
And I look at all options. But from a position of strength.
LAKE: I want to thank you about relishing that role as a renegade. You have over 1 million followers on Twitter. I think you're incredibly active
on social media. That is a territory that an awful lot of CEOs stay away from.
Why is it so important to you? How does it help you run the business better?
LEGERE: Listen, I do every minute of the day -- who's in Twitter? My customers, my employees, my competitors' customers. And I hear every
minute of every day how we're doing and what we need to do differently and when I touch as many people as I can, I not only learn and become a better
CEO, but I see customers coming in, some customers are coming in and they say, oh, my God, I can't believe you're on Twitter and you favorited my
tweet. I'm switching.
I'll take that. I mean, that's a pretty good move.
But it's -- listen, in a lot of things that I do, it's not so unique what I do. It's the historical legacy rules as to why they live the way they do.
CEOs, like us, of big companies, very highly paid, spoiled, isolated folks. Now the big trick is, we've created and my social media team that supports
me and I do it myself -- we've created another competitive advantage for advertising, for it to go into customers. How do they respond? You can't.
Can you see Lowell McAdams coming to work today and saying, hey, folks, I've decided to be cool and I want to do Twitter. And then he logs on and
some guy calls him words that he has to ask his kids what does it mean? I don't think they like me.
So it's -- but it's part of the different way we do business. And it's the closeness in our whole organization all about customers. And that's what
the game's all about.
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LAKE: Dinner for 30 and the price: $300,000. I'll tell you who picks up the check.
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LAKE: The smart thing to do if you win big at a casino is take your money and walk away. But that's not what the CEO of Vice Media decided to do
when he was in Vegas last month. Sources say Shane Smith spent $300,000 on dinner for 30 friends and colleagues at the Bellagio hotel's prime
steakhouse. The meal reportedly included bottles of wine costing $20,000 each. The bill was so big it even got a mention on MGM's earnings call.
The CEO of MGM said he hadn't seen such a large bill in a very long time.
And that is QUEST MEANS BUSINESS. I'm Maggie Lake. Join us again tomorrow.
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