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Quest Means Business

Greece Gets Four-Month Loan Extension; Ukraine One Year after Revolution

Aired February 20, 2015 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, CNN HOST (voice-over): The closing bell is ringing on Wall Street. Trading is coming to an end. The Dow is an all-time record,

hit the gavel. It's been an extremely busy day and it's Friday, a record, the 20th of February. The deal is done. Greece gets the loan extension

from Europe, we're going to be live in Brussels and Athens -- interpretation, analysis, what did they agree?

Relief on the markets, new highs as well as a deal of each of nearly 1 percent over 18,000. And consider it a catastrophic mistake. A report

accuses Europe's leaders of letting Ukraine spiral out of control.

It's going to be a very busy day, a very busy hour. I'm Richard Quest and of course I mean business.

(MUSIC PLAYING)

QUEST: Good evening, Greece has a critical lifeline, or at least it will do once the deal is complete. A couple of hours ago a preliminary

agreement was reached to extend the financial rescue package. It heads off the immediate threat of a Grexit. It also gives Athens a little bit

breathing room to negotiate over the longer term financial support while indeed a review is put together.

Athens in return has to provide by Monday a list of the financial reforms it will introduce under the existing terms of the current

agreement. The Eurogroup president, Jeroen Dijsselbloem, called the agreement a positive step.

(BEGIN VIDEO CLIP)

JEROEN DIJSSEBLOEM, EUROGROUP PRESIDENT: To summarize, let me say that I think this is a very positive outcome. It will allow us step by

step to get the work we have to do together with the Greeks back on track and hopefully we can make a good start with that next week.

(END VIDEO CLIP)

QUEST: Now a few moments ago, the Greek finance minister Yanis Varoufakis said the deal, which came as a result of negotiation and

compromise, would benefit all parties.

(BEGIN VIDEO CLIP)

YANIS VAROUFAKIS, GREEK FINANCE MINISTER: We're not in the business of shortchanging our partners. We're not in the business of coming here in

the tug-of-war to say give us something when you lose something.

We refuse to look at this negotiation as a zero-sum game where our gain is somebody else's loss. We genuinely and faithfully targeted one

objective and that was the interest of the average European. And we believe that today the agreement that we reached through this negotiation

does place the interest of the average European above all else.

(END VIDEO CLIP)

QUEST: So let's have some analysis on this. The finance minister of Cyprus, Harris Georgiades, joins me now on the line from Brussels.

Minister, this deal was done but as I look at it, I mean, we're not talking winners and losers here but as I look at it, it does seem that the

Eurozone held firm to its principles of current deal negotiation.

HARRIS GEORGIADES, CYPRUS FINANCE MINISTER: Well, that's not necessarily bad. I think it's excellent news. It is a very positive

development but it's not -- there isn't a winner and a loser. I think Greece and the Eurozone stand to benefit and mainly we have removed the

shadow of uncertainty that was hanging over us, over Greece and over the Eurozone, for the last few weeks. So I think we have a way forward and

this is very positive.

QUEST: There has to be this list of reforms which are going to be produced by Monday and then a very tight timescale for the extension, the

four-month extension.

Why did you decide on four months, not six?

GEORGIADES: Well, four months are considered sufficient for this program extension. And also for time to be provided in order for a new

arrangement, a new contract essentially, that will carry the process through until eventually Greece achieves sustainable market access. That

should be the (INAUDIBLE) objective because that's what will spell the final end of any support program. And that's what we should all aim (ph).

QUEST: The fact is this four months now is going to be four months of brutal, hard negotiations because these are the negotiations until April,

where Greece is going to be looking for relief. It's going to be looking for flexibility, some form of -- whether net asset value or other form of

value, debt reduction.

Are you minded, sir, on behalf of Cyprus, to give that?

GEORGIADES: Well, there will be obviously negotiation. But primarily there is going to be an opportunity but also a responsibility to implement

reform, to continue with the fiscal consolidation, (INAUDIBLE) what is needed. Obviously things will have to be discussed and negotiated. But

this is not the real work. The real work is the -- is the commotion of reform, structural changes (INAUDIBLE) the competitiveness of our

economies, the Greek economy included. And from Cyprus' stance, we are basically conducting a very similar effort. We are doing the same

basically, also implementing reform and fiscal consolidation. And that's the way to proceed. Obviously through a threat (ph) program until we

achieve a sustainable market access.

QUEST: One final thought on this, because the new Greek government came to Brussels and in fact went 'round the whole of the E.U. or Eurozone,

saying that they would not accept an extension, that they would not accept the same terms, that they would not accept a review into the troika.

They seem to have accepted all of that.

GEORGIADES: Well, I'd rather look for (INAUDIBLE). It's very promising news for Greece. But it will continue along the path of reform

and consolidation a member of the Eurozone, that's the ultimate objective and I'm sure that the new Greek government, if it focuses its attention on

this effort, it will do good for the Greek people and also for Europe and that's definitely the path that we are also following and implementing in

Cyprus and I think this is the way forward.

QUEST: Minister, thank you for joining us this evening. Congratulations on a job done and the interpretation of course, will be in

some weeks ahead. Minister, thank you for joining us.

Now Friday was the E.U.'s self-imposed deadline to get a deal because prospects for an agreement looked bleak as late as Thursday. Now that was

when Germany referred to the proposals from Greece as a Trojan horse. That was the letter -- the letter that was sent from the Greek government to the

Eurogroup. Speaking before the meeting, the minister had said he was hopeful.

(BEGIN VIDEO CLIP)

VAROUFAKIS: I have no doubt that there's going to be a very collegial discussion and hopefully at the end of this, come out and some white smoke.

(END VIDEO CLIP)

QUEST: So the minister, Mr. Varoufakis, got his wish. He got his white smoke that comes out . There was a four-month extension. Now that is

less than the six months the Greeks had wanted. On the other side, the Greek government will now have to present its reform measures by Monday of

next week. And here's the crucial part: those measures have to be on the current conditions.

The institutions, better known as the troika, will decide if the reforms go far enough. If all this goes according to plan, then various

accession and formats will be agreed by the end of the month, depending on various countries, the various countries' requirements, whether it has to

go through a government or a parliament or the other.

Now to get the view from Athens, we turn to Panos Polyzoidis. He's the news and current affairs editor at SKAI TV. He joins me now.

Sir, thank you for joining us. It's good to see you tonight.

Whichever way we look at it, all the noise, fury and bluster of Mr. Varoufakis, going to Brussels, saying he wouldn't agree to any of all of

this, he's agreed to most of it.

So how will this go down at home?

PANOS POLYZOIDIS, SKAI TV: Well, I can't agree -- I can't disagree with you, Richard. Yes, he has given way in most fronts and I think the

main political task that Prime Minister Tsipras will have to face now will be to persuade his public that, well, no, we haven't given up our targets.

We are still true to our election pledges and so on and so forth. It will be difficult because it's more than obvious that the current program is

being extended, even if only by four months. But then again, I think at the end of the day, what will matter is whether the government will deliver

on more tangible things, like whether the lives of some Greeks or a few Greeks or more Greeks will improve spectacularly more or less anyway, will

improve within the foreseeable future. That will be the crunch point.

QUEST: And that, of course, depends on the negotiations that take place between now and April during this review period. So really, if the

government, if the Tsipras government and the Syriza government is going to hold true to its election promises, it has to come out of this next phase

with more than it got in the last phase.

POLYZOIDIS: It will be difficult because it's being under extreme pressure in terms of state revenues. The economy has all but halted ever

since the political upheaval began a few months ago, when the previous prime minister, Antonis Samaras, announced that he would initiate the

proceedings for the election of the president, which failed and then we were forced to a general election.

So the economy has all but halted, as I said, as a result of that, the state's revenues have been suffering a lot. And there is a realistic

danger of the state budget being derailed. I can't see many of those pledges being realistic under these circumstances, Richard.

QUEST: Panos, you obviously are steeped in the internal politics of Greece and that's why we need to speak to you this evening.

So pull the strands together for us finally.

How has Varoufakis, how have Tsipras, how have Syriza, how have they in the opinion of commentators in Greece, handled this first Greece versus

the Eurozone?

POLYZOIDIS: I think it's -- I mean, the commentary you listen to and you read in Greece is highly partisan. They do -- there's a lot of

commentators who believe there's a general feeling in the public opinion that they handled it well and there is a sense of national pride in the way

Varoufakis and Tsipras have stood up against Germany, particularly against Germany and Wolfgang Schauble in the last couple of weeks.

I think when people look at the exact result of that negotiation, they will realize that we didn't quite -- we Greeks didn't quite get what we had

hoped for. But then again, as I said, there's a general feel-good factor, yes. You know, we Greeks, we can stand -- we can make a stand and in that

sense, they are very popular. I mean, the approval rate of Tsipras is phenomenal, apparently.

QUEST: Sir, thank you for taking time. Know it's a busy night for you in your work. And we appreciate your giving us your understanding and

your assessment this evening. Very good to see you. We'll talk more about this.

And it's coming to you tonight from London, gorgeous night in the British capital, not too cold by any means, certainly not as cold as it is

in New York, where -- look at that -- 18,140. I think that's worth a second ding on the bell.

Up 154 points because it is a record, the market started down. It's ended up and that's a good moment for us to say back in a moment.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: And let us welcome the Greek bailout extension, the Dow and the S&P, although it all happened just towards the end of the closing

trading day, they both closed at record highs. You can see the number there, the Dow was S&P both at a record. The euro rebounded against the

dollar in those last moments.

Joining me now, Vicky Pryce, chief economic adviser of the Centre for Economic and Business Research, also the author of "Greekonomics" and we

need your help to understand -- look as I -- I saw the agreement, as I read the statements, they agreed to everything that they said they wouldn't

agree to pretty much.

VICKY PRYCE, CENTRE FOR ECONOMIC AND BUSINESS RESEARCH : But it's interesting. On the surface, I would agree with you. But if you read the

details of what disagreements -- particularly the words, first of all, there's no mention of program. I mean, the Greeks didn't want this program

which is the sort of terrible word. So they've been using it to explain what the troika plans were, which were imposed on Greece.

So that's disappeared. You probably noticed that this is all arrangement. And when Christine Lagarde made her contribution to the press

conference afterwards, she said program, and then immediately corrected herself and said "contract" we're signing with the Greeks.

First of all, that has disappeared. Second, there's no mention of troika. It's now the --

(CROSSTALK)

PRYCE: -- which are going to look at it.

Third, yes, you're right about saying the conditions but the conditions are general conditions, which has to do with fiscal acceptance

so that everything is properly costed and funded. It's got to do with ensuring the growth of returns to Greece.

So it's things which are not going to get them backwards but that were going to move them forwards. And those are accepted by exactly where those

would be. It's a Greek swap proposing. They may get turned down, but they're proposing what those measures are going to be.

QUEST: And of course the key issue -- I mean, in favor of what the Greeks got -- was this agreement to renegotiate during the four-month

review period with a view to a new arrangement afterwards.

PRYCE: And that negotiation may well also have some element of debt restructuring --

QUEST: It would have to.

PRYCE: Absolutely, because that is unsustainable --

QUEST: -- the whole core of the whole issue.

PRYCE: Indeed. But they had given up on write-offs, which they were talking about before the election as part of the (INAUDIBLE) pledges.

That's disappeared. Now they're not talking about that. They may remerge but they're not. So they can go back to the Greeks and say we have

actually a few (INAUDIBLE). Plus particularly the fact that the primary surplus they're going to have to achieve this year, given the economic

situation, is going to be considerably less than what was originally expected.

QUEST: If we pull the strands together, I mean, we could argue or discuss, debate backwards and forwards, who got what. But the reality is

that the Greek debt burden has to be restructure or reduced. I read your interesting piece today that you wrote and I think it was in (INAUDIBLE).

That whichever way we cut it, if they do not deal with that then effectively they will swing in the wind.

PRYCE: Absolutely true. And I think what they need to do is look at ways in which -- easy ways in which the burden every year can be reduced.

And it can, quite easily, through other extending maturities or doing something about exactly when you start having to pay something back. Still

leaves everything on the books, still leaves the Germans happy that this is going to be -- this is a performing loan, if you like. But takes away a

lot of the austerity measures which the Greeks would (INAUDIBLE) do otherwise.

QUEST: Because the one thing they can't afford to do is go into renegotiation and revisit all these issues.

PRYCE: Absolutely, absolutely because I think the markets are not going to like that at all. And I think the Grexit thing, we come back

again.

QUEST: Oh, please, we just got here for tonight. Lovely to see you. Thank you so much.

Good to see you, Vicky Price joining me.

Now it's been one year since the bloodiest day of the Ukrainian revolution. We're going to look at how far Ukraine has come and how far it

still has to go. We'll have the former chief exec of Microsoft Ukraine. He joins me after the break -- QUEST MEANS BUSINESS.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: It has been a time of commemoration in Kiev in Ukraine for a day that sparked the revolution in the country. Forty-nine activists lost

their lives on this day a year ago when Independence Square became the site of anti-government protests. They say government snipers opened fire.

A year later the fallout from that day's events are still unfolding violently in the east of the country. A report by British lawmakers have

now been scathing in its criticism of the U.K. and the European Union in their response to the conflict of Ukraine.

Talks about like catastrophic misreading of Vladimir Putin's mood as things began to boil over. It gets worse. It says that officials were

sleepwalking into the crisis by being too optimistic about Russia's intentions.

Now I spoke to Lord Norman Lamont, who's part of the committee of the House of Lords that issued the report with such phrases, sleepwalking and

the like.

Who was to blame?

(BEGIN VIDEOTAPE)

LORD NORMAL LAMONT, FORMER U.K. CHANCELLOR OF THE EXCHEQUER: The main criticism, though, is of the E.U. and particularly in the negotiations over

association agreement because what the report says is that the E.U. was quite unaware of the Russian dimension of this, the fact that an

association agreement profoundly affected the Russian economy and that Russia's main trading partner of Ukraine and this is a shared neighborhood

and there was no need to make it exclusively an E.U. neighborhood.

And the Russians felt that their concerns economically were not taken into account.

QUEST: Do you attribute the E.U. failure in this regard as incompetence, misfeasance or malfeasance? They just never thought about

it, which is it?

LAMONT: They never thought about it. It was just myopia. They just -- and we got this from certain officials, that they say, no, we didn't

talk to the Russians. No, we didn't know what the Russians were thinking about this.

But this, I'm convinced, was one element that had a big impact on the Russians. Remember, too -- and I'm not in any way defending Mr. Putin. I

think what Mr. Putin has done is completely wrong . But remember this, that for the Russians, E.U. association has normally led to E.U. membership,

which has then led to membership of NATO. And that is something that I think was very much in their minds.

QUEST: Were you horrified at this lack of thought as a result?

LAMONT: Well, I think we were surprised.

QUEST: It's your surprise, my horrified.

LAMONT: Because the Eurasian customs union is a big plank of Russia's economic policy, trying to create economic space for itself. They probably

see it although it's not a good comparison, as being similar to the E.U., giving them a trading bloc.

And as I say, Ukraine is a shared neighborhood. We shouldn't regard the Ukraine just as our neighborhood. It is also Russia's neighborhood and

Russia is bound to be concerned with what is happening in its borders.

QUEST: Which makes the current situation even more relevant because if, as the report says, the E.U. and the U.K., but the E.U. particularly

was negligent in allowing this to go ahead because of its association to its negotiations, now that President Putin has taken the actions he has,

any form of acquiescence or weakness will embolden him.

LAMONT: Well, I think that is the tragedy of the situation and you're quite right. One you've got into this situation, you have to resist it.

But I would say bear in mind Russian interests as well. I think there were other mistakes that were made by the Ukrainians for example, talking about

banning the Russian language, talking about taking away the base in Crimea. The base in Crimea is not just an interest of Russia; it's a vital defense

interest of Russia. And although these things didn't happen, they were in the air; they were talked about. I think actually that gives one some

understanding of why the Russians might have got alarmed.

(END VIDEOTAPE)

QUEST: That's Lord Norman Lamont, who was one of the authors and was on the committee that produced that report. At the time of the revolution

in Kiev, Dmytro Shymkiv was the head of Microsoft in Ukraine. Now he's the deputy of President Petro Poroshenko's staff. He's in charge of reform and

he joins me now from Kiev.

The -- we can all -- we obviously -- the events of a year ago weigh heavily on everybody. But they have to be seen now in -- to some extent

the -- what's taking place in the east of the country and how bad the situation is and how -- what needs to be done. So tell me, sir, more

sanctions against Russia?

DMYTRO SHYMKIV, FORMER CEO, MICROSOFT UKRAINE: I think the world needs to understand that Ukraine is fighting on the front here for European

freedom and for freedom of Ukraine. Russia aggression is clearly seen. We've demonstrated over the present vital time, demonstrated the facts of

Russian aggression, Russian soldiers, Russian terrorists, Russian tanks. I don't think that there is any supermarket where you can buy tanks in

Eastern Ukraine as well as gasoline for so many tanks and weaponry that can continue on this non-stoppable attacks on Ukraine.

QUEST: We've had Minsk 1; we've had Minsk 2. And certainly the violence may have abated marginally. So what more does Kiev want from its

international partners?

Do you want to be armed with more sophisticated armaments and communications equipment?

Are you looking for more sanctions against Russia now?

SHYMKIV: I think that what is very important and been clearly stated is that there is a Minsk agreement needs to be fulfilled. There is a clear

proposition from the president to bring the peacekeeping troops and there is a support in the international community to consider this proposal.

This is something that we really would like to see, the cease of fire and bringing peace to my country. And what is extremely important is that when

we're talking about border, it needs to be sealed, ceased and we need to stop -- Russians need to stop supplying weaponry to the terrorists.

QUEST: As we come to an end here, sir, as you'll appreciate, it's been a very busy day with Greece, which means we have to cut our discussion

marginally shorter, but I want to focus on your area.

I was in Kiev earlier last year and everybody still says the single biggest problem in the business environment is corruption and the lack of

transparency. I talked about it with the president himself in Davos. Now, sir, what are you going to do about it?

SHYMKIV: Well, last week, we passed a law on the -- one of the piece -- legislative piece for the judicial reform. We currently electing the

head of the anti-corruption bureau. In the summer, we'll see a new police in Kiev. About what is related very much to the economic, it's their

regulation. We currently have a list of 117 initiatives, very clearly understanding what needs to be done. There's several of them already pass

through the parliament and more to come.

We clearly understand that there is a stronger need to reform particularly the energy sector and (INAUDIBLE) reform is to one of the top

priority. Besides that, we all did launch the e-procurement (ph) system, which several ministries already participate in reducing the cost of the

procurement sometimes 25 percent to 10 percent (ph).

QUEST: Sir, next time we speak, obviously hopefully it'll be in a happier time than an anniversary of a massacre like this but also we'll be

talking about the more reforms as you introduce them. Thank you very much, sir, Dmytro Shymkiv joining me from Kiev this evening.

QUEST MEANS BUSINESS live to you tonight, coming from the British capital in London where we will continue in a moment.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: I'm Richard Quest. There is more "Quest Means Business" in a moment when the Belgian finance minister joins me from Brussels as the

Eurozone strikes a debt deal with Greece and also Lord Lamont tells me the austerity was forced upon Greece and he says it was, as you see,

"profoundly wrong."

Before you hear all of that, this is CNN and on this network the news always comes first.

Finance ministers from the Eurozone have agreed on a deal to extend the financial rescue package for peace by four months -- gives Greece time

to negotiate a longer-term plan for financial support. If formalized, it heads off the risk Greece will run out of money by next month.

(BEGIN VIDEOCLIP)

JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: To summarize, let me say that I think this is a very positive outcome. It will allow us step by

step to get the work we have to do together with the Greeks back on track and hopefully we can make a good start with that next week.

(END VIDEOCLIP)

QUEST: At least 15 people have been killed in a terrorist attack on a hotel in Somalia. A car packed with explosives blew up near the gate of

the hotel which is for 25 members of the government. Gunmen then stormed the building and the second explosion was set off inside the building.

Two members of Parliament died in the attack and the deputy prime minister was injured.

Ukraine's been marking one year since the violence in Maidan Square in Kiev. Almost 50 people died and 100 more suffered serious gunshot wounds.

It was the bloodiest day in the violent demonstrations against the country's then-Russian leaning president Viktor Yanukovych.

Fears are growing for three London school girls who have flown to Turkey without their parents' knowledge. It' thought they're planning to

cross the border into Syria to try and join ISIS. The trial of Dominique Strauss-Kahn has now ended with the verdict not expected until the 12th of

June.

The former chief of the IMF could get up to ten years in prison if found guilty on charges of aggravated pimping. He denies knowing that

women who took part in orgies with him were prostitutes and even the prosecution says there isn't enough evidence for conviction.

Johan Van Overtveldt is the Belgian finance minister. You'll recall earlier this week he told me the Eurogroup must hold Greece to its bailout

commitments. The minister joins me now on the line from Brussels. Minister, did they hold to their commitments? Did you make them hold to

their commitments?

JOHAN VAN OVERTVELDT, BELGIAN FINANCE MINISTER: Yes indeed. The Greek government today requested an extension of the existing bailout

program and we will in the coming days look into the reforms the Greek government is proposing to answer that question which we will normally be

doing by next Tuesday.

QUEST: We don't really like to talk about winners and losers in all of this except in this case the Greek did come to Brussels with a

belligerent attitude of refusing to accept existing conditions. But that seems to be what they've done.

VAN OVERTVELDT: Well we had very constructive talks with them, they finally agreed with what we as the Eurogroup asked them to agree with, and

I think that's a very sensible answer, I think that's the way forward if they want to have a Greek economy growing again, providing jobs and

providing welfare for the Greek people. That's the way to go and I'm very happy that the Greek government finally realized that there is no

alternative to what the Eurogroup has been outlining for quite some time now already.

QUEST: The negotiations that will begin almost immediately to discuss the longer-term program or plan or contract - whatever the phrase is, the

phrase du jour - how far, how much flexibility will Belgium give to changing the terms for the next agreement.

VAN OVERTVELDT: Of course we will take into consideration the - what the Greek government wants to do, what they promised to their electorate.

But what we certainly will take into account is the existing conditions or the conditions of the existing program.

And that's what's clearly something that the Belgian government wants the new Greek government to stick to. That's very important and I think

it's also a very good thing to do.

QUEST: You say that the Greek government will stick to it, but they - all right, so they have - I'm looking at the contract now or at least the

agreement. The list is based on the current arrangement. How quickly do you think it will be before the review can take place and any existing

monies be disbursed?

VAN OVERTVELDT: Well, by Monday evening the Greek government will have to provide the three institutions what was formerly the Troika - the

European Central Bank, the IMF and the European Commission - with as soon as possible list of the reforms they want to bring about in the economy in

the public sector in Greece in general.

QUEST: Right.

VAN OVERTVELDT: The three institutions will make an evaluation but also the individual Euro member countries will also look into these reforms

and then on Tuesday will really be an important date because then we will try to get to a decision about these reforms and of course also on the

extension of the program.

QUEST: Minister, you used the key word - the Troika. As I look at it now, I mean, it's all about the institutions and there's no program, it's

all about the contract, it's all about the arrangement. Is this just nomenclature, is this just wording or is there a difference do you think in

the way the deal, the way the institutions are perceived?

VAN OVERTVELDT: Well we fully understand that given what's happened in the past, these kinds of definitions or words like the Troika has

derived (ph) a special meaning in Greece, but at the end of the day, not much has changed. I mean, if we're still talking about the same three

institutions - whether you call them the three institutions or the Troika is a question of semantics. We talk now about a contract or - and no

longer of the program although the Greek government people talk like that. But at the end of the day, we're still talking about the same issues and

the same people and the same institutions involved in this process, and it's a good thing because together we can rebuild the Greek economy. There

is no point in leaving that all behind.

QUEST: Right.

VAN OVERTVELDT: Semantics are important - we respect that, but content is even much more important than semantics.

QUEST: Minister, you and I hopefully, please sir, -- come back next week when we need your help to understand the difference between the

semantics and the realities. And thank you for joining us this evening from Brussels. Norman Lamont who you heard earlier talking said that

Greece leaving the Eurozone would have been a devastating blow to the single currency's credibility.

He was in charge of the Exchequer when Britain had its own European currency drama in the 1990s. I asked him the impact of Grexit what it

would be.

(BEGIN VIDEOCLIP)

LORD NORMAN LAMONT, FORMER CHANCELLOR OF THE EXCHEQUER: The main criticism though is of the E.U. and particularly in the negotiations over

association agreement. Because what the report says is that the E.U. was quite unaware of the Russian dimension of this. The fact that an

association agreement profoundly affected -

(END VIDEOCLIP)

QUEST: Well, the astute viewer - and I hope you were paying attention - will have realized you were just about to hear something that

you heard a little bit earlier. Well these things happen on a busy day - it's a Friday. We'll take a break (RINGS BELL).

(COMMERCIAL BREAK)

QUEST: "Business Travellers," going mobile takes on a new meaning in South Korea where people in Seoul have some of the fastest Internet

connections on the planet as I discovered. There are hundreds of free Wi- Fi spots whether it's above ground or below. Everywhere you go it seems, there's connectivity in Seoul.

(BEGIN VIDEOCLIP)

(MUSIC PLAYING)

QUEST: The modern skyline Seoul is a testament to economic and technological success. This city is for the future. South Korea has had

4G connections since 2006. It now has more than 900 free Wi-Fi spots in the capital alone plus one of the fastest Internet connections in the world

at 22.1 megabits per second. This lightning fast foundation is fueling the mobile mania.

The level of smartphone penetration in this country is absolutely astonishing. There are 40 million users - about 80 percent of the

population. And if you talk about the number of phones - well there's more phones than people. Much of that penetration is thanks to the electronic

juggernaut, Samsung with its Galaxy smartphone.

At the Samsung d'light Store in Gangnam, their version of the future is on full display.

(BEGIN VIDEOCLIP)

Male: The traveler needs to travel light and be fast. They're on a schedule but at the same time they need to have everything available to

them. So they need to be rest assured that they'll have what they need in any given situation. So mobile technology addresses that.

QUEST: South Korea has leading international companies like SK Telecom that continue to push limits, rolling out ultra-fast network speed

like LT Advanced. It means you can download an 800-megabyte movie in less than a minute.

South Korea is one of the top countries that's developing all this new t4echnology, isn't it?

Male: We strongly believe we're - when we introduce the 5G services in 2020, we will be able to keep our leadership in this industry.

QUEST: What will 5G give me that LTE doesn't ?

Male: It will give you a much, much higher mobile speed whereby you can enjoy a ultra-high quality visual experience such as virtual (ph)

reality and augmented reality.

QUEST: Mobile is the future. It will be by our side every step of the way, making the business traveller's life easier. But let's never

forget, the good old-fashioned handshake and a face-to-face conversation. Some things just can never be replaced.

(END VIDEOCLIP)

QUEST: There is only so far that the arm can stretch if I'm going to try and take a selfie. In one country after another, the telescopic arms

known as the selfie sticks are running into official backlashes. In South Korea (RINGS BELL), you're OK to use a selfie stick so long as it's an

officially-approved one.

But the sale of unlicensed sticks was really made illegal with a penalty of up to three years for vendors who sell illegally. Selfie sticks

of any kind are facing a growing number (RINGS BELL) of bans at sporting venues. The Arsenal Football Club in Tottenham say they block other

people's views and, perhaps more crucially, they can be used as weapons.

Now fearless for their priceless works of art, museums in New York are banning them too. CNN's Claire Sebastian got out her selfie stick and went

to find out.

(BEGIN VIDEOCLIP)

CLAIRE SEBASTIAN, CNN CORRESPONDENT: This selfie stick has been called annoying, narcissistic, even a nuisance. Now some of the New York's

top museums and galleries are adding dangerous to the mix.

The Museum of Modern Art says it's worried its priceless Van Gogh's and Russos could get damaged. Their policy states, "For the safety of our

visitors and the museum's works of art, we have never permitted visitors to take photos with any camera extension devices."

Although your traditional hand-held selfies are still allowed, the ban is taking all along New York's museum miles. There's the Cooper-Hewitt,

Smithsonian Design Museum which has just undergone a major renovation. There's the Guggenheim which actually doesn't allow any photography above

its ground floor.

And even the Metropolitan Museum is considering a ban. The Met's chief digital officer tweeted, "I'm pro-selfie, but not pro-selfie stick.

They are dangerous to visitors, to arts and to the wielders themselves."

Female: It kind of gets in your. Like just me walking around the street and I see people with them out, kind of like they're about to hit me

in the face.

Female 2: I think that there's a time and a place for everything and -

SEBASTIAN: Jacquelyn Vidier (ph) makes a living selling selfie sticks. It doesn't stop her supporting the protection of art.

JACQUELYN VIDIER (ph), SELLS SELFIE STICKS: You know, however they feel that it's best to protect the works in their care, I'm comfortable

with that.

SEBASTIAN: So, Jackie (ph), selfie sticks are here to stay you think?

VIDIER (ph): I think they're here to stay.

SEBASTIAN: They're good enough for award ceremonies.

KEVIN HART, COMEDIAN: These are my selfie sticks, everybody.

SEBASTIAN: Good enough even for the U.S. president. If you want to get into these museums though, you know where to stick it. Claire

Sebastian, CNN New York.

(END VIDEOCLIP)

QUEST: Talking of where to stick it, there's a nasty dispute that took place on this program between some of the world's largest airline

chief executives. We'll talk about it after the break. (RINGS BELL).

(COMMERCIAL BREAK)

QUEST: Back to Lord Norman Lamont who says Greece leaving the Eurozone would have been a devastating blow to the credibility and he gave

us a view of Grexit.

(BEGIN VIDEOCLIP)

LAMONT: The wider point is that I believe this would bring the credibility of the euro into question. And the next time there was a

crisis or the next time some country were faced with the liquidity or a solvency problem, the markets were worried about its bonds, I think people

would begin to think is this country - be it Spain, be it Portugal - is it the next one to go? And it would damage the theory that the euro is

irreversible.

QUEST: And you have experience of exactly how that market moves, don't you, sir, from all those years ago. I mean, any form of weakness can

be interpreted very rapidly by the markets, can't it?

LAMONT: Well, that's true but I don't think the comparison with the exchange rate -

QUEST: Right.

LAMONT: -- mechanism and the euro is a very good one. The exchange rate mechanism was just tying your exchange rate to another currency

obviously that is reversible. The euro is not meant to be and indeed it is extremely difficult to reverse. I always say the euro is like a lobster

pot. You can crawl into it, but try crawling out. It's extremely difficult.

QUEST: In Europe people are a bit sick and tired of this now, aren't they - in the Eurozone? I mean, you and I can sit and go backwards and

forwards for ages on will they live, won't they leave, will a deal be done - (inaudible)? But six years after - seven years after the crisis - the

U.S. is growing. It's got low unemployment. It's got its own problems, but it seems to be powering ahead. And Europe is still enmeshed.

LAMONT: Well I think this is because of the euro and I don't think that Mr. Draghi's quantitative easing will solve the problem. There are

structural problems within the euro. I think it will be very difficult. It may survive but it will be very difficult.

QUEST: May?

LAMONT: Well -

QUEST: May?

LAMONT: In the long run, yes, it may survive.

QUEST: Not will?

LAMONT: I don't know if it will survive in 30 years' time or 25 years' time. It may well - I'm just saying I don't automatically assume

that it will one day be abandoned, but I don't believe it can ever work very well.

And if I may make one other slightly separate point, I think the policies that were forced on Greece were profoundly wrong. And the

situation in Greece is different from Spain or Portugal or Ireland. GDP in Spain, Portugal, Ireland declined 5/6 percentage points.

In Greece, the economy shrank by a quarter - a quarter. And that is just too severe for any country. And it also made the problem of

indebtedness much worse. So I don't think the Germans can argue persuasively that the austerity was a sensible policy. It was quite

counterproductive.

(BEGIN VIDEOCLIP)

QUEST: That's Lord Norman Lamont on the question of Greece which we follow very closely. Now on also this week, what began as a row over

government support, Middle East Airlines quickly escalated into a very bitter and public argument between some of the biggest names in aviation.

You'll remember of course it all started on this program on Monday with the chief executive of Delta Airlines, Richard Anderson. He said

Delta, United and American had proof about Gulf subsidies of their airlines. And I asked him about, well, the opposition says that your

airlines too are subsidized. And then he made his controversial comments.

(BEGIN VIDEOCLIP)

RICHARD ANDERSON, CEO, DELTA AIR LINES: -- 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 911 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.

(END VIDEOCLIP)

QUEST: Those were the words of Mr. Anderson. Well, within days and hours indeed the reaction came. Qatar Airways chief executive Akbar Al

Baker said he was outraged by it and he said that Delta was trying to distance itself from its own inferior products. But again, he also denied

the fundamental allegation that the U.S. carriers say is that they are not - that they are - subsidized.

We went on as the week went on and we spoke to Sir Tim Clark from Emirate. Now Sir Tim said that Mr. Anderson had gone too far. He rejected

an apology and Emirates now officially says that Richard Anderson's credibility is questionable. He said the airline had crossed the line.

(BEGIN VIDEOCLIP)

TIM CLARK, PRESIDENT AND CEO, EMIRATES AIRLINE: 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 they currently -

the American carriers - don't serve, have never served and probably never will serve.

(END VIDEOCLIP)

QUEST: So what was it really all about? Was it a dispute over who said what? Not a bit of it. Don't be fooled for one moment. What this

was about was subsidies and the deep resentment, the enormous that sometimes reaches personal levels but exists.

The U.S. carriers and the Europeans make no bones about it - Lufthansa's in this camp as well - the Europeans and Americans believe that

these airlines are subsidized, and they believe that until that playing field is leveled, they will be at a permanent disadvantage. That's what

this dispute was about - subsidies and nothing else. "Profitable Moment" next.

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." They won't want to talk about winners and losers in the battle over Greece, but the truth is that the

Greek government came asking for a lot and they've left with pretty much nothing that they wanted.

Instead, the only thing they have got is this promise of a renegotiation. And that will place over the next four months. Greece is

off the agenda for the moment, Grexit is on the backburner. But nobody be under any illusions, we will be back here again before the summer. And

that's "Quest Means Business" for tonight on the day the Dow Jones hit a record. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's

profitable. And I'll see you on Monday.

END