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Quest Means Business
US Expands Treasury Powers to Combat Hackers; Iran Nuclear Talks to Continue Thursday; Deal Could Open Market to Iranian Oil; Lufthansa CEO Visits Germanwings Crash Site; Investigation Into Germanwings Leaks; Greece Proposes New Economic Reforms; Warren Buffett on Grexit Impact; European Shares Gain on Manufacturing Data; Down Closes Down; McDonald's to Increase Wages
Aired April 01, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:53] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: It's no April Fool, the market is down half a percent, a loss of about 80-odd points. Primerica ringing the closing
bell. I've got a feeling it's going to be a heavy gavel day from the man who's going to hit it.
(GAVEL HITS)
QUEST: No, I think the army was more brutal yesterday, but the market is closed. It's Wednesday, the 1st of April.
Tonight, President Obama declares a national emergency to stop hackers attacking the United States.
Police are questioning the head of the Germanwings investigation over unprecedented leaks.
And to leave or not to leave. Warren Buffett tells us why a Grexit would leave him stumped.
I'm Richard Quest. Middle of the week, and of course I mean business.
Good evening. We start tonight with the words of President Obama as he declares a national emergency in the war on cyber terrorism. By
executive order, the White House has expanded the powers of the Treasury Department to impose sanctions on hackers threatening the United States.
US Treasury Secretary Jack Lew says the new powers will expose, financially isolate those who hide in the shadows of the internet. Just
look at exactly the size and scale of the problem and it makes it clear.
The United States faces a near constant digital threat from cyber hackers from around the world. So, this week, China is thought to be
behind the attack which took down GitHub, a site that lets programmers share computer code. The site was down for five days.
This was just the latest example. Over the past year, hackers from Russia have been bombarding the e-mail systems of the United States State
Department, even the White House. Officials have called it the worst ever cyber attack against a federal agency.
And that's the public, if you like, enterprises that have been hit. The most high-profile case came from North Korea, when North Korea
allegedly -- they've denied it -- attacked Sony Pictures.
When Christine Romans asked the US Treasury Secretary what keeps him up at night, just look at this map and this graph, and Jack Lew said cyber
security was a top concern.
(BEGIN VIDEO CLIP)
JACK LEW, US TREASURY SECRETARY: It's something that I think I and most people in leadership positions worry about today in a way that they
didn't a few ago is cyber security. It is just -- it is a new phenomenon where the risk if great and the learning curve has been fast.
I think we in the Treasury Department as the sector lead for financial services have been doing an effective job, moving quickly in that space.
But as kind of an economy and as a country, it's an area where we really need to be on our guard.
(END VIDEO CLIP)
QUEST: Howard Schmidt is the former Cybersecurity Czar for the Obama administration and joins me now from Milwaukee in Wisconsin. Sir, very
good and glad to have you with us tonight to give us the perspective that we need. By calling it a national emergency and creating this executive
order, the president gains new powers of forfeiture enforcement, he can sequester. Is it enough?
HOWARD SCHMIDT, FORMER OBAMA ADMINISTRATION CYBERSECURITY CZAR: I think for the most part it's a really good start. It's -- this is
something we've been working on since 1998 with President Clinton, 2003 with President Bush.
2011 we proposed legislation with President Obama asking Congress to do this for us, give us that extra authority, but none of those things have
really materialized. So, this is a good step, but we have to be very, very careful in moving down this road.
QUEST: I'm not sure I fully understand who these -- this national emergency and who these sanctions, if you like, are targeted at. Because
if in the three examples I gave at the beginning of the program, they are state-sponsored, who are you sanctioning? Who are you forfeiting? Who are
you going against?
SCHMIDT: Well, there's different tiers. There's truly the national security or the nation-states that are out there that you can use the same
powers that you would be able to use if they were building weapons of other sorts.
QUEST: Right.
SCHMIDT: So, this is those sort of sanctions associated with it, the financial things they can do, the things that they can invest in, the
places where they put their money, that's one piece of it.
You move down to another level, though, where you look at the criminality. We have a number of very, very workable forfeiture laws, we
have them all around the world with all our world partners to look at that not only from the money laundering perspective, but also the ill-gotten
gains.
This, then, give more attention on this that we couldn't get before with that failed legislation where we said give us the powers.
[16:04:59] QUEST: Right, but you've got the powers now, although they're under the executive actions. Now you've got to get on with it.
How do you find the people who are responsible, because there is one commonality if you like: they're very difficult to get because you don't
know where they are. And even if you do know where they are, how do you sanction somebody out of the jurisdiction with no assets in it?
SCHMIDT: Well, that's what I don't understand about this, because -- and use the FBI for example. They do a tremendous job tracking down what
they can track down. But there's -- the system has out-scaled. There's more of them than there are of the good guys.
We start looking at the international components because what we've done, other countries will start to emulate. Now we have issues going back
and forth about American hackers and UK hackers, and it's just -- it's really going to get more complicated, I think, than spending more time on
trying to reduce the vulnerabilities.
QUEST: "National emergency" is the phrase that's being used.
SCHMIDT: Right.
QUEST: And I think that anybody who's covered this in any detail knows that that's not hyperbole. But the crucial part is, it's going to
get worse before it gets better, if indeed it ever does get better.
SCHMIDT: And that's the thing, I think, we're constantly challenged with. You look at all the things that we can do on the internet today.
Virtually everybody that I know outside the government today went to work, logged in, did their e-mail, they booked their flights on airlines, they
did online banking, purchased things from the online e-tailers, and everything works fine.
But with these more concentrated efforts by people that are stealing identities, credit cards, interfering with operations and stuff like that,
there is a good chance that it will, indeed, get worse. And that's why the extra focus is great.
But I'm not sure that we're doing the things we really need to do to make sure that they can't get into those systems. And that's the same
thing. It's the same thing we're doing over and over again and failing to stop some of the things that we know they're going to happen.
QUEST: We'll talk more about it in the future, sir. Thank you for joining us. Very glad that you've given us your perspective tonight on
QUEST MEANS BUSINESS. Thank you.
Just as the US considers who's next in line for sanctions in the cyber world, it's working on a deal which could end the trade embargo against
Iran. US Secretary of State John Kerry and his Iranian counterpart, the talks continue over Iran's nuclear program. Iran's foreign minister Javad
Zarif told reporters the negotiations, in his words, "a unique opportunity," and the US, in his words, "must seize the moment."
A self-imposed deadline for the outline has come and gone. The US State Department says that Secretary Kerry will remain in Lausanne for
talks on Thursday. A spokesman said progress is being made.
After decades of isolation, Iran is ready to open its doors to foreign investment. A deal that eases sanctions against investment and oil
exports, it could be a real global energy power. Our European and Emerging Markets Editor John Defterios reports.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR (voice-over): The intense discussions that have unfolded in Lausanne have undermined what was only a
tepid price recovery since the start of 2015. The mere prospect of having sanctions lifted on Iran's oil exports has capped any gains prompted by
Middle East security concerns, especially in Yemen.
Iran's petroleum minister is ambitious, wanting to increase exports by one million barrels a day within three to four months.
ROBIN MILLS, ENERGY STRATEGIST, MANAAR ENERGY: We think that Iran could add something like another 800,000 barrels a day to the market
within, let's say, six to nine months, and it could release also oil from storage within a period of one to three months after sanctions ease. And
that, obviously, in an oversupplied market is going to push prices even lower.
DEFTERIOS: Iran's potential reemergence could not come at a worse time for energy producers. The big three global players in the world today
have not trimmed their sales despite falling prices.
OPEC heavyweight Saudi Arabia is producing close to 10 million barrels a day. Russia is nearly at the same rate, focusing on new Asian customers.
And the United States has so much oil it is nearly out of storage capacity.
DEFTERIOS (on camera): Iran, if it can open the door wide open to investment, could move up the league table of the energy giants around the
world. After a few years of very tight sanctions on the oil and banking sectors, the country is starved for cash and the technology know-how of the
European and US oil companies.
MILLS: It's a country in its oil and gas sector very much needs an injection of new technology, and it'll need an injection of capital as well
because of the financial situation of Iran has been badly affected by sanctions.
DEFTERIOS (voice-over): But Iran could be a sizable force. It has the fourth-largest oil reserves at 157 billion barrels, 18 percent of
proven gas reserves, and just four years ago was producing 4.3 million barrels a day.
[16:10:00] CORNELIA MEYER, CEO, MRL CORPORATION: It could be a huge player. It could be -- in gas, it could be as big as Qatar. In oil, it
can be a truly second place in OPEC. If Iran comes out now and can get the right investment, it can become a very, very strong player in OPEC indeed.
DEFTERIOS: And medium term, with Iran and Iraq more closely aligned politically, with combined proven reserves larger than Saudi Arabia, it
could challenge the supremacy of the kingdom in oil.
John Defterios, CNN, Abu Dhabi.
(END VIDEOTAPE)
QUEST: It was a somber moment followed by an angry exchange with journalists. The chief executive of Lufthansa expressed his deep sorrow
for the victims of last week's crash in the Alps. Today, he visited a memorial and made a new pledge to the families.
(COMMERCIAL BREAK)
QUEST: The chief executive of Lufthansa made a vow to help the families of those killed in the crash with Germanwings 9525 for as long as
was needed. It was the promise made by Carsten Spohr as he visited the crash site in the French Alps. You'll remember, of course, 150 people were
killed when the flight crashed last week.
Carsten Spohr laid a wreath at a memorial for the victims. In his words, "There were no words to truly express the deep sorrow." CNN's Karl
Penhaul was there for the visit.
(BEGIN VIDEOTAPE)
KARL PENHAUL, CNN INTERNATIONAL CORRESPONDENT (voice-over): Aboard an executive chopper, Lufthansa and Germanwings bosses arrive to observe
recovery efforts. Motorcycle outriders escort them to the mobile lab where crash victims' remains are identified. Then a short drive to the foot of
the mountains where Flight 9525 went down.
A wreath of pink roses, salmon carnations, and pale orchids. No written dedication. Silence as they stare to the snow line.
CARSTEN SPOHR, CEO, LUFTHANSA: There is not a single hour where we don't think about this terrible accident, the victims, and the relatives
and friends of these victims.
PENHAUL: Reading from a statement prepared earlier, Lufthansa CEO Carsten Spohr still calls this an accident. But investigators say it was
no accident but a deliberate act by the co-pilot
SPOHR: I think it will take a long, long time for everybody, all of us, to understand how this could happen.
PENHAUL: That's the question on everybody's lips. In a March 26th interview with CNN, Spohr denied Lufthansa had prior knowledge of co-pilot
Andreas Lubitz's six-year battle with mental illness.
SPOHR: The pilot has passed all his tests, all his medical exams. Crew can report without being punished their own problems, or they can
report about problems of others without any kind of punishment. There hasn't been used either in this case.
PENHAUL: But on Tuesday, the airline conceded it had turned up corporate paperwork from 2009 indicating Lubitz reported his own mental
issues when he suspended flight training. So why was his mental health not regularly monitored?
(REPORTERS SHOUTING QUESTIONS)
[16:14:59] PENHAUL: The airline bosses were not taking those questions Wednesday.
UNIDENTIFIED MALE: Mr. Spohr, can you tell us why you didn't stop a man with psychological issues flying your plane?
PENHAUL: A pledge to the families.
SPOHR: We don't only help this week. We want to help as long as help is needed. That's also my promise.
PENHAUL: And then they fly out of this mountain graveyard.
Karl Penhaul, CNN, Seyne-les-Alpes, France.
(END VIDEOTAPE)
QUEST: As Lufthansa is working out how it's going to compensate the families, the French authorities have been questioning the head of Air
France's air crash investigation unit over the repeated leaks to the media.
This is where we start. First of all, the number one leak: details of the cockpit voice recorder that were leaked to "The New York Times."
That happened just hours after the accident. And that story to the "Times," it was described as a "senior military official" who told "The New
York Times," and that's where we first heard the pilot had been locked out of the cockpit before the crash. That is leak number one.
Then, over the weekend, you have "Bild" from Germany, which published details of that transcript from the final moments of the recording. And
most recently, yesterday, "Paris Match" and "Bild" both have an article, a collective article, in which they say they've obtained details of cell
phone video from inside the plane right up to the crash.
Now, the French authorities dispute that that video has, in fact, been there, but three significant leaks, all of which raises the question how.
Let's bring in CNN aviation analyst and the aviation attorney, it's Mary Schiavo, former inspector general in the US.
Mary, good Lord. Leaks are nothing new. That's a starting point. They happen. But they don't happen at the level, at the severity of these
facts.
MARY SCHIAVO, CNN AVIATION ANALYST: Well, and they don't have a -- and Richard, you know this, but for your viewers, the French system is
different. In the United States, we have the National Transportation Safety Board, and that's civil. But when there's a criminal indices, it
goes over to the FBI.
The leaks from a criminal investigation -- now, in the French system it's different, and it's considered criminal and the prosecutors, they
prosecute like they're doing a criminal case because crashing a plane in France is considered criminal.
So, for leaks like this out of a criminal investigation are especially problematic because, for example, let's start with the cell phone video,
that is something that was undoubtedly taken from a crime scene. That's a crime in and of itself.
And it's somebody's property. What people are also forgetting is all the personal affects of the persons on the plane --
QUEST: Right.
SCHIAVO: -- belong to them, and they have to be returned. So, we've got a conundrum on top of a crime with what's going on here. It's bad. I
have -- I've seen lots of leaks, but this is pretty bad.
QUEST: Right. Except here we were also getting reports, because he was questioned, the head of the investigation from the BEA side. Now,
Mary, you and I have talked on air about the BEA, which has an enviable, spectacular reputation. But it seems to be --
SCHIAVO: Yes, it does.
QUEST: It seems to be suggested that the leaks have come from the BEA side. If that's true, that would be remarkable.
SCHIAVO: Well, it would be. And I think partially what they could do to perhaps relieve some of the problems is take a lesson and not saying
that they're so much better than anybody else. But they are used to dealing with the media. Take a lesson from the NTSB, who in the wake of a
crash has daily briefings with the families.
And I think the daily briefings, putting out as much information as they are able to release it, cuts down on this huge pressure to leak. But
it's still inexcusable to leak, but it goes on all the time.
QUEST: All right. So, if we take a look at the leaks that we've had and the whole question, now, of what Lufthansa knew and when they knew it,
this question of Carsten Spohr speaking so soon afterwards and the 100 percent fit to fly. We can perhaps allow a latitude, but he shouldn't have
said it, should he?
SCHIAVO: He shouldn't have said it, and he doesn't understand kind of the cardinal rule of an air crash investigation, and that is it only gets
worse for the airline. Because why wouldn't it? You're discovering things about lax procedures and things that went wrong.
And so, usually that's -- any statement like that taken, drawing a line in the sand, is usually proven erroneous.
QUEST: Mary, thank you for joining us. Good to see you. Thank you.
SCHIAVO: Thank you, you too.
QUEST: We'll turn to the economic agenda of Athens, which has now proposed a new set of economic reforms. It's unlocking desperately-needed
bailout cash. That's the idea. We'll tell you the reforms and whether it's likely to work when we come back. This is QUEST MEANS BUSINESS.
[16:20:00] (RINGS BELL)
(COMMERCIAL BREAK)
QUEST: The Greek government hopes its new reform plan will be enough to keep the country from going bankrupt in the next few weeks. The cash-
strapped nation's desperate to unlock bailout money from its European partner. The plan was obtained by "The Financial Times." It includes --
(RINGS BELL)
QUEST: -- various efforts to crack down on tax evasion and fraud.
(RINGS BELL)
QUEST: New spending measures with a gradual increase in the minimum wage, and plans to reinstate a program to help pensioners facing poverty.
Those very pensioners took to the streets on Wednesday, furious about pension cuts, and they expressed fears about their futures.
(BEGIN VIDEO CLIP)
IRENE CHARALAMBIDOU, PENSIONER (through translator): We are asking the government to restore our pensions to what they were. They have cut my
pension by half. How will I live? Am I not a human being?
(END VIDEO CLIP)
QUEST: So, in Greece, you've got the government, which is introducing perhaps more easy, relaxed reforms, and you've got the international
organizations saying they must stick the course. Well, Greece's labor minister believes Europe must respect the will of the Greek people as it
considers reforms. Speaking to me on Tuesday, he said Greece would not go back to the ways of the past.
(BEGIN VIDEO CLIP)
PANOS SKOURLETIS, GREEK LABOUR MINISTER (through translator): Our country, when it moved into this bailout program, had already major debt.
Now five years on, that debt has increased.
We're talking about a failed recipe, so I think that no one can ask us to continue this bad recipe, which has proved it has killed the Greek
people. And as a result, I think we should give a political reply to this issue and be more flexible.
QUEST: Europe still wants to see more reform in Greece. Will Greece give it?
SKOURLETIS (through translator): Yes, it's correct. But we should define what reforms. The measures of the previous period were also called
reforms, but they were toxic, and they were bailout reforms.
After this very negative experience, we should go forward, and of course we shouldn't forget that it is the will of the Greek people. So, if
Europe wants to have good relations, and it should, then they need to respect the opinion of the Greek people, who gave this concrete mandate to
the Greek government.
(END VIDEO CLIP)
QUEST: Greece's labor minister. Now, Warren Buffett says it's hard to tell if a Greek exit from the eurozone might actually be a good thing
for the single currency. Mr. Buffett said the eurozone needs to harmonize its policies as he was talking to Poppy Harlow
(BEGIN VIDEOTAPE)
POPPY HARLOW, CNN CORRESPONDENT: Do you think we will see a Greek exit from the eurozone?
WARREN BUFFETT, CHAIRMAN AND CEO, HATHAWAY: I don't know whether we'll see it. I just have no notion on that. I do know that the euro has
had certain what I would call structural weaknesses since it was -- that doesn't mean it isn't a good idea, it doesn't mean that they can't be
corrected. We've amended our constitution many times.
But putting together a group of countries with significantly different fiscal policies, labor laws, cultures, and then trying to tie them all to a
single currency can present strains as you go down the road. And --
HARLOW: As we're seeing.
[16:24:55] BUFFETT: As we're seeing. And they either have to learn to harmonize or be forced to harmonize some other important economic
characteristics of the countries more, or they can't all stay on a common currency. You can't have one thing that moves in lockstep and everything
else scattered around the horizon.
HARLOW: When you say harmonize, it makes me think this: do you think that it is realistic, even if there are big structural changes, say, in
Greece that we will see Greece and Germany sort of singing Kum Ba Yah together?
BUFFETT: It does seem a little far-fetched, doesn't it? But whether it'll be Greece or not, I don't know. But I do think that the countries
have to operate on reasonably harmonious arrangements in fiscal policy and labor laws. You can't have two different -- we could not hook up with
Venezuela and have a common currency.
HARLOW: So, could it be --
BUFFETT: But we could hook up, perhaps, with a Canada and have a common currency.
HARLOW: Sure. Do you think that a Greek exit for the eurozone may actually be better in the long run?
BUFFETT: It's hard to tell. But if it leads to a sounder basis for the resulting euro, yes, it certainly could be.
(END VIDEOTAPE)
QUEST: The Sage of Omaha, that's Warren Buffett talking to Poppy.
European markets were higher on Wednesday. It was strong manufacturing numbers across the eurozone. Manufacturing activity
accelerated more than expected. And the FTSE, which had been clobbered yesterday came back quite nicely. It wasn't the best of the day, Paris was
the best of the day, but all good gains across the major markets.
On the US stocks, they were down on Wednesday. If you want a reason, well, nothing particularly. They were down at the open. They remained
lower for the whole session.
One bit of news to bring you in the last few moments, McDonald's has announce it's increasing wages and paid time off for employees. Now, this
is significant because it affects 90,000 workers in the corporate-owned restaurants, not the franchised ones, the corporate ones. McDonald's has
faced a backlash over low pay and working conditions in the past. We'll have more details as they become available.
The election is -- or electioneering and campaigning is underway, and now, some of Britain's top businesses have had their say ahead of the UK
election in May. A hundred chief execs and leaders signaled to whom they support. Who is for Cameron, who is for Miliband? After the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS, of course, in just a moment, when we'll be at the New York Auto Show, where
the president of General Motors explains how the company is moving past its safety scandals.
You're also going to hear on this program, Ukraine's energy minister will tell us there's still hope for a full hot-throttle gas deal with
Russia.
[16:29:59] Before all of that, this is CNN, and on this network, the news always comes first.
Iraq's Prime Minister Haider al-Abadi was in Tikrit the day after he declared the city was back in government hands. It marks the end of a long
campaign to retake the city from ISIS. Arwa Damon was there as the city was liberated.
(BEGIN VIDEOCLIP)
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: What is just as important perhaps as the military aspect of this - even though there are
still pockets of ISIS resistance - is going to be what happens next. This is a very sensitive situation. Everyone very concerned about the potential
for sectarian tensions to reemerge here. And so the Iraqi federal police units that we're with are trying their best they say to clear it out,
secure it so that the families can return eventually.
(END VIDEOCLIP)
QUEST: Talks on Iran's nuclear program are continuing on Thursday and will continue. U.S. Secretary of State John Kerry is staying in Lausanne in
Switzerland. He's been negotiating with his Iranian counterpart. Earlier, Iran's foreign minister said other parties must seize the moment and try
not to pressure Iran. A day after historic election victory, Nigeria's president-elect says the country's corruption problems must be arrested immediately. In an
exclusive interview with CNN's Christiane Amanpour, Muhammadu Buhari says the issue was ignored under previous governments.
(BEGIN VIDEOCLIP)
MUHAMMADU BUHARI, NIGERIAN PRESIDENT-ELECT: The laws are there. The problem is that the laws have been ignored for so long, that a culture of
corruption has been developed and that has to be arrested immediately.
(END VIDEOCLIP)
Four people have died in a fire on an oil platform in the Gulf of Mexico. The platform was run by Mexican state-owned company Pemex. Sixteen people
were also injured. Around 30 workers were evacuated from the rig. This is the letter - 100 business chiefs labor threatens Britain's
recovery. It's in "The Daily Telegraph," scores of British business leaders have thrown their support behind the incumbent coalition
government. The letter was an open letter and it was signed, saying that the conservative government has been good for business. It was published
in "The Telegraph" which is a newspaper which has traditionally supported the conservatives - very traditionally supported.
The leaders warned that the labor government - as the article goes - the labor government would threaten jobs and deter investment. Amongst those
who had - earlier in the week labor took out an advert including quote, "From CEOs warning about a British exit from the European Union."
Conservatives have pledged a referendum on that issue. Companies like Siemens (ph) released statements clarifying that they weren't explicitly supporting labor. But what it shows you is whether it's
"The Telegraph" or indeed this advertisement in the "Financial Times," everybody seems to want to show that when it comes to business, either
labor or conservative, which will be better in the election that of course takes place on May the 7th.
The world's largest fund manager has weighed in. BlackRock today published a report. It warns of market volatility if Britain woke up to an unstable
minority government the day after the election. But the interesting thing about the BlackRock report is it postulates both a minority government or a
coalition for the conservatives and warns of what will happen with Europe and in terms of labor what would happen if say for example the Scottish
National Party were their coalition partners because of the issues involved.
Put it all together -- Ewen Cameron Watt, the global chief investment strategist for BlackRock. And I asked him, looking at them, which scenario
was he concerned about.
(BEGIN VIDEOCLIP)
EWEN CAMERON WATT, BLACKROCK INVESTMENT INSTITUTE: There are three sets of outcomes - the outcome where the conservatives basically win and then the
markets worry about a referendum to leave the Euro. There's an outcome where labor wins but rely on the separatist Scottish National Party and the
markets worry about a whole lot of stuff. There's a third outcome in the middle where there's a coalition of sorts
without SNP support and then the markets will probably, you know, get over it reasonably quickly.
QUEST: So, without asking you which outcome you think is going to happen - because everybody agrees that it's too close to -
WATT: (LAUGHTER).
QUEST: -- too tight to - call. Which outcome is the most dangerous for the markets do you believe?
[16:35:00] WATT: I think that the most dangerous outlook is if we have a minority labor government with voting support from the Scottish National
Party. I mean, the SNP has got a separatist agenda - understandably so - they've got a much looser approach to public spending - understandably so -
and all the uncertainties added to that. It will be a pretty tricky outcome for sterling and probably for the U.K. bond market as well.
QUEST: So to that extent, the issue that we thought had been settled in last year's referendum on Scottish nationalism you're suggesting in the
event - in that eventuality - does come back the SNP use the referendum or independence as the price for support?
WATT: Well, I don't think necessarily referendum or independence is the price for support. They could ask for a lot more devolution of powers and
then start borrowing money in their own right to support those programs. And then you have a situation (AUDIO GAP) years ago where the regions all
borrowed money, and when the crisis came, the center (ph) had to pay for it.
And also under a circumstance where the Scottish National Party - which is separatist - it is the reason for it existing - holds the balance of power
and dictates legislation at Westminster, I think there'll be a backlash in England.
QUEST: The issue of Europe which of course is front and center for the conservatives - if the conservatives win or are the dominant party in a
coalition - which they would be - in that situation, you are and a process is going to begin which will ultimately lead to a referendum on Europe.
How damaging will that be?
WATT: Well the process will be quite damaging, Richard, because it involves a renegotiation of a whole series of agreements with Europe
including changes in treaties. And I don't think the European (AUDIO GAP) that thrilled by some of the things that will be on the table.
When I say it's damaging, you know at the moment the polls say that more than 55/60 percent of people would vote to stay in Europe subject to
renegotiation. But as we saw with the Scottish referendum, you know, these things tend to linger for a while.
(END VIDEOCLIP)
QUEST: And the U.K. goes to the polls on May the 7th. Ukraine's energy minister says he believes he can reach a deal to keep Russian gas flowing
into his country for another year. There's already been an extension of some three months. Volodymyr Demchyshyn says a long-term agreement could
arrive within two weeks. The three-month extension of course gives them time to negotiate a deal that could take them through until March of 2016.
I spoke to the minister just before we came on air, and Russia and Ukraine had extended the plan for another three months. And I asked him to explain
the terms of the extended agreement.
(BEGIN VIDEOCLIP)
VOLODYMYR DEMCHYSHYN, UKRAINIAN ENERGY MINISTER: Today we've made the technical step. Naftogaz and Gazprom have signed an additional agreement
to their main agreement just for three months. And they extended all conditions that were fixed in the previous agreement which was called the
Winter Package for another three months. However, on the 30th of April, we are meeting in Berlin and the plan is to
extend the same deal for another nine months --
QUEST: Right.
DEMCHYSHYN: -- so until the end of March 2016,.
QUEST: What is it you want from this -- an extended deal - that you haven't got in the existing deal?
DEMCHYSHYN: Well, at this point of time, we are getting reasonable price - market price I would say. So this is a sign of economic approach that we
see from the Gazprom side. Before they were playing politics. Now they are talking economics. And this is very important because we are getting
market price and we are ready to buy at this price gas for our consumers. And $248 that we are getting for the second quarter is up to $30 less than
we were able to get from Europe and providers. The key point for the next - for the larger - for this larger deal - is if
you wanted to fix this formula for the entire year. So we will be safe with price, we will be able to buy gas at the market price. I think this
will be good news for European counterparties so that they will know that we will be having additional sufficient gas in our storage and we will be
definitely able to supply gas to our partners in Europe without any interruption anything.
(END VIDEOCLIP)
[16:40:13] QUEST: Seemingly a win-win deal both in the medium term. General Motors has unveiled some new cars at the New York Auto Show this
week. GM's president's going to tell us what the show means to the company after what's been a very difficult year.
(COMMERCIAL BREAK)
QUEST: The "Business Traveller" Update, and we're talking about a classic battle of the small-scale David against the Goliaths of the hotel market.
Now obviously when you are in the hotel business, you're competing with some of the very largest - whether it's Starwood, Marriott, Hilton and
Hyatt. How does a medium-sized chain survive? I spoke to the chief executive when I asked him how he was competing against the five-star
giants. And NH Hotels has their own way doing it.
(BEGIN VIDEOCLIP)
QUEST: NH started with a desire to stand out from the crowd, to shake up the system from the restaurants to the rooms, the lighting to the lobby.
FEDERICO GONZALEZ TEJERA, CEO, NH HOTELS: That's why you need to keep changing. This () is (too late) like this. But actually this started in
another way. When NH is born, it started in Spain with the idea of there are many five-
star properties where you are paying for a lot of things that you may not need, and NH comes the four-stars with a lower price than the five-stars.
And you pay only for what you need. With an obsession to make the category of bafast redunda (ph) (AUDIO GAP).
QUEST: -- five-star feeling. What started out with one property is now a small number of brands but different price points. You are in the most
dangerous position of all because you're a 400 -
TEJERA: Yes.
QUEST: -- you are neither ultra-boutique with 50 properties worldwide - you know - Peninsula, Rosewood - or Marriott/Hyatt - 1,000/2,000, whatever
it is.
TEJERA: I think actually we are not in the most dangerous one, we're in the most exciting one. And I think it's very different. Why I'm saying
this is because you have big, big companies - extremely big companies - where to change something is extremely difficult, it's slow. In the other
one where you have 40/50 hotels, there are some advantages where (ph) the rental (ph) you may not have in aff (ph) escape (ph).
QUEST: What for you will be a comfortable number of hotels -
TEJERA: (LAUGHTER).
QUEST: -- that you would like to?
TEJERA: As many as I can.
QUEST: You've better get buying.
TEJERA: As many as I can afford. (LAUGHTER).
QUEST: So NH is expanding quite eclipse (ph) -- for instance, purchasing Colombia's Hotels Royal.
[16:45:06] TEJERA: We try and look to the future. The way we did we found the opportunity in Colombia was to buy 83 percent of the rooms in
management. This works out very good (ph).
QUEST: By remaining relatively small, NH has the advantage. It can be perhaps more innovative.
TEJERA: OK, so the idea was how do we create (ph) inside a hotel an innovation room where we can - and actually suppliers can - come and test
new technologies.
QUEST: So you're asking people really to do real live tests?
TEJERA: That's correct.
QUEST: Here at the Euro Building, it's technology for future generations of rooms that the guests are testing. Like the wireless charge (AUDIO GAP)
that's built into the furniture --
TEJERA: And now it's charging.
QUEST: -- or video-calling the concierge.
TEJERA: You will see them but they will not see you.
QUEST: At NH, there's constant change - some of it most agreeable.
TEJERA: Right. But be careful because you may stay here, you will not - you will not - stand up.
QUEST: This is really what it's all about then?
TEJERA: No - not only.
QUEST: It is.
TEJERA: It's not only about that.
QUEST: Others less so. They look just uncomfortable.
TEJERA: They are. (LAUGHTER).
QUEST: Either way, change is always on their terms.
TEJERA: We are immersed (ph) today now. Five years transformation of the company. But it's very important before we go to a bigger expansion that
we make sure we are robust, (inaudible) that is where we are focusing right now.
(END VIDEOCLIP)
QUEST: I absolutely love the idea of the charging pad, that you just put it on and it starts charging it automatically. I think it's somewhere to
go before it'll work properly. The New York Auto Show - the International Auto Show - opens this week.
Top executives from General Motors were at hand to give a preview of the company's latest cars and that includes the revamped Cadillac. It's an
important show for the company as GM tries to move on from safety recalls and strained relations with shareholders.
GM's president Dan Ammann told Paula Newton the car-making giant is a different company after a difficult year.
(BEGIN VIDEOCLIP)
DANIEL AMMANN, PRESIDENT, GENERAL MOTORS: We're changed a lot. We changed obviously the tone and how we're approaching all this. We've made it very
clear to the organization that safety is the number one priority inside the organization and for our customers. We've changed engineering processes,
we've changed the way that we listen and engage with our customers to understand what's going on out in the field so that we can act more
quickly.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Buyers will see it - car- buyers.
AMMANN: Yes, buyers watched the lusiup (ph) and, you know, I think people understood that last year we were very engaged in doing the right thing for
our customers. And you talked about a record number of recalls last year, we also had record sales in the history of this company last year in terms
of the number of cars we sold globally. And that is not by mistake. This was a - you know - we went out of our way to do absolutely the right thing
for customers everywhere around the world.
NEWTON: You know, going forward you're banking on this car - or this brand I should say - right here, the Cadillac, to really be a big driver in
revenue and in profit. Why? What makes you so confident that the Cadillac brand will have the revival you're looking for?
AMMANN: So really a couple of things. We look at the luxury statement overall globally. It's clearly a very big opportunity. We see it as a
huge profit opportunity, a huge revenue opportunity for the business and we have what it takes to win in that segment. We have the technical
capability, the engineering know-how. This car embodies all of that and more. We have an iconic brand that we can build on.
NEWTON: Warren Buffett said yesterday he just bought a new Cadillac.
AMMANN: Right.
NEWTON: What I have to ask you is it is your granddad's Cadillac. Is that really what you want to get out there. Don't you want younger people to be
buying that car?
AMMANN: Absolutely. We want - you know - we want absolutely younger people to buy that car. In the campaign we launched around the Oscars and
we've had out there the initial feedback is that the people that have related most to it are Gen Y - the next generation that's related to an X -
to Gen X.
NEWTON: How important is that whole revival in Cadillac - how important is it for your China strategy going forward?
AMMANN: Oh, China has been a huge growth story already for Cadillac. We've been growing double digits there for the last few years. What's
interesting in China now is the market is maturing quite quickly so it's gone from a market where the majority of cars we were selling, we were
selling to people buying their first car ever. And now what's happening particularly in the tier one and tier two cities
is this is holding much more - it's more of a mature market. People are coming back to buy their second car or their third car and they're moving
up. And that's why we're seeing I think the luxury segment up on the broader market.
NEWTON: Russia is a completely different story than what we just discussed in China - a big pull out there for GM. Why?
AMMANN: Well Russia's got a much more challenging set of circumstances around it. Not just in the short-term with all the obvious issues, but
longer-term demographically it doesn't have the kind of profile that a China or India has.
NEWTON: How painful has that pull out been in Russia though? At one point in time - just a few years ago - you guys were very optimistic about that
market.
AMMANN: Yes, we had seen Russia as being a potential growth opportunity and, you know, that has not come to pass and we don't see it coming to pass
any time in the near future.
NEWTON: There's been quite a change in the price of oil. Do you see it as a boon for your industry going forward?
AMMANN: We see obviously a change in mix in the market right now -- you know -- a move towards trucks in particular - trucks are very strong this
year. And some of those four (ph) car statements (ph) are softer and that's natural when you get in this kind of oil price environment. And some
of it's because of, you know, the price of oil itself but some of it's because the lower oil price is pretty up income for consumers. So it's
sort of in some ways like a tax break and they've a bit more money to spend every month and some of it they're putting back into this market.
(END VIDEOCLIP)
[16:50:22] QUEST: I do like the look of that Cadillac - the lights in the front. Well we asked the GM president for his take on the situation in
Indiana. He declined to take a position on the story as indeed many of the people who we tried to talk to about Indiana and the law there - the anti-
gay law. Well we'll be speaking to the executives in the tech industry who, far from declining, are positively champing at the bit to give their
opinion. That's next. "Quest Means Business."
(COMMERCIAL BREAK)
QUEST: Discrimination is bad for business. That's the view of leaders in the U.S. tech sector who are calling on policymakers to put in place
protection against discrimination for the LGBT community. It's being touted as unprecedented and historic. And a joint letter of nearly 50
executives from several high-profile tech companies say civil rights legislation must be amended in the wake of a rash of state laws seen as
anti-gay. These are some of the companies that have been involved in the letters and
of course in the campaign that took place first of all in Indiana and has now shifted direction towards Arkansas - Yelp, Cisco, Zynga, PayPal and
onwards and upwards. Luther Lowe is the vice president of public policy at Yelp. Yelp's chief exec signed the letter and has railed against the
religious freedom law in question. Luther Lowe joins me now from San Francisco. Thank you, sir, for joining me.
LUTHER LOWE, VICE PRESIDENT OF PUBLIC POLICY, YELP: Thanks for having me, Richard. Great to see you again.
QUEST: Yes, now here's the real difficult problem here. As fast as you - you know it's a bit like Whack-A-Mole - as fast as you seem to knock one of
these laws down, attention moves to another state which has got a not dissimilar law. What's going on?
LOWE: Well I think it's important to understand that this isn't a new position from Yelp. We last year sent an open letter to then-governor of
Arizona Jan Brewer who was considering signing one of these bills herself. And we employ a ton of folks in Arizona - we have you know over 500
employees in that state. And we said listen, you can't have active discrimination in the state where we've employed so many people. It's -
QUEST: Right.
LOWE: -- simply unconscionable and we couldn't sit on the sidelines. And so what we've done in this instance is actually an open letter to states
considering that enacting similar legislation to avoid the type of I think Whack-A-Mole you described where -
QUEST: It's quite clear that you have the right to do this of course and many people are applauding you for doing it ultimately against these laws
is it only the weight of corporate money, if you like, -- corporate `we'll take the jobs if you don't change your mind' that works do you think?
LOWE: I don't think that's it at all, Richard. I think the reason that we are doing this is because it's the right thing to do. It's the right thing
to do for employees, it's the right thing to do for the technology industry which has a unique voice in all of this, and it's the right thing to do for
consumers who are using our platform and who we don't want to be discriminated against.
[16:55:09] QUEST: Right. But what I'm saying is it's the right - it may be -- the right thing to do, but the only - but an open letter entreating
them to change goes so far - it's the threat to pull out, it's the threat not to do business, it's the threat to penalize, sir. That's what has the
effect.
LOWE: What we have said is that we will not create, maintain or expand our business operations in states which have these laws on the books.
QUEST: Thank you very much for talking for us. Good to see you, sir, as always. Thank you.
LOWE: Thank you, Richard.
QUEST: We'll be talking about this issues and many more of course as the various laws continue to win their way through the U.S. system. We will
have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." The phrase says it all - a national emergency. That's how President Obama describes the cyber warfare that the
U.S. is now engaged in. And anyone who's been hacked or who has had to change their passwords and their details or even just been over-spammed
knows exactly what he means. But the President really is talking about something much greater.
He's talking about an existential threat that goes to the very heart of the way we will be doing business in the new economy. And the truth is we
haven't even tickled the way in which this cyber security needs to be dealt with. Too many of us treat it as an inconvenience - something for somebody
else to worry about. Well, I tell you, every CEO I now ask - I say, "How important is it?" and they say so important whoever's responsible for cyber
security answers to them. Ultimately cyber security is going to be the threat that dominates
corporations in the years ahead and we haven't even begun. And that's "Quest Means Business for tonight. I'm Richard Quest in New York.
Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you next week.
END
