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Quest Means Business
Dow Jones Closes With a Small Gain; Turmoil for Travel Industry. Aired 4-5p ET
Aired November 24, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
RICHARD QUEST, HOST: Early losses on Wall Street because of global events were reversed as the day moved on.
The Dow Jones closes up with a small gain of around 20 points. Telecom Indonesia, a robust gavel to bring trading to a close on Tuesday the 24th
of November.
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QUEST: Turmoil for the travel industry. Turkey's downing of a Russian jet which deepens the global crisis.
Cracking encryption to fight terrorists, tonight on this program, Manhattan's District Attorney says law enforcement needs the tech sector
help.
And what goes up thankfully comes down in this case. Jeff Bezos tells us how he has succeeded where others failed bringing a space rocket safely
back to earth.
(END VIDEO CLIP)
QUEST: We have an hour together. I'm Richard Quest and of course, I mean business.
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QUEST: Good evening, tensions are flaring around the world and the effects are rippling through stock markets and threatening one of the globe's most
important industries, travel and tourism.
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QUEST: We begin tonight on the border of Turkey and Syria where a Russian war plane, as you can see here, was shot out of the sky by a Turkish air to
air missile.
The two Russian crew members parachuted clear before the aircraft crashed on the Syrian side of the border. Russian state media say one of the pilots
was killed in the air by gunfire from the ground. We don't know what happened to the second pilot.
A Russian marine was also killed during a rescue operation when a helicopter was hit by gunfire and had to make an emergency landing. .
(END VIDEO CLIP)
QUEST: Now there is a fundamental disagreement between the Turks and the Russians over what transpired early on Tuesday morning.
If you join me at the super screens you'll see exactly what the two sides say.
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QUEST: This is the area there's Syria, there is Turkey. Now this image is the plane's position according to Turkish radar. President Erdogan says his
forces brought the plane down after it had repeatedly violated Turkey's air space and ignored ten warnings over five minutes. You can see here -- there
of course is supposedly where it all took place.
In the last hour a U.S. official told CNN it calculates the jet was in Turkish in 30 seconds or less. Vladimir Putin maintains the plain was hit
while it was over Syrian territory on the other side of the border. He says it was carrying out a mission against ISIS and posed no threat to Turkey.
And he says this incident on this side of the border would have serious consequences for Russia's relationship with Turkey.
VLADMIR PUTIN, RUSSIAN PRESIDENET: Today's loss for us was a stab in the back from terrorist accomplices. I cannot describe it in any other way.
(END VIDEO CLIP)
QUEST: Both sides are entrenched with their versions of what took place and now others including NATO are involved. .
Nick Paton Walsh in Istanbul gave me his assessment on what are likely the next steps.
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NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: The question now being given I think frankly a fairly cohesive and serious response from
NATO backing up its member Turkey, here, what's Russia's options? Well we may see more weaponry brought into the arena here. Economic diplomatic
moves already (inaudible) A foreign minister visit here, Turkey cancelled and Russians encouraged not to take Turkey -- holidays to Turkey at this
stage. But still I think this has been a day in which the sheer volatility of that border area and the many air forces flying around in it has been
emphasized clearly, Richard.
(END VIDEO CLIP)
QUEST: Nick Paton Walsh in Istanbul. Now Tuesday's events add to a stormy cocktail of tensions and terror threats that are in the travel industry.
And it's serious worries for one of the world's most important industries.
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QUEST: It's estimated that the globe's - that travel and tourism makes up 10% of the global economy. And look here you see U.S. Airline stocks,
American down 2.5%, United are 3%, Delta down 3%. , IAG which is British Airways and Iberia, 3.25%. The biggest loss was 4%, that was Lufthansa.
Hotels, Acore, the French Group, they were down nearly 5%. International Hotels Group, second largest just off a bit. And even cruise lines,
Carnival was down 2%. Across the globe tourism companies are hitting hard.
[16:05:00]
QUEST: Authorities are warning about the heightened danger and companies are heeding the advice. This is what's been happening so far. Russian tour
operators are suspending their trips to Turkey. It's an immediate effect.
Easy jet and British Airways have cancelled flights to Sharm El Sheikh through to the end of the year and possibly as late as February. UK's
advising citizens to avoid travel to the Red Sea destinations.
There's heightened alerts of course in France because of the Paris attacks and in Belgium where Brussels still remains on partial lockdown and where
there is serious security concerns. Metro stations are closed in Paris. The subway is still shut in Brussels. And the U.S. government has issued a
global travel warning to American travelers.
President Obama called on European leaders to act with all this happening. He wants to ensure a greater cross flow of information, so so-called PNR,
passenger records from Europe to the United States.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In the wake of terror and the threats in Belgium, there's also a growing recognition among European
nations that they need to ramp up additional efforts to prevent the flow of foreign terrorist fighters.
As part of that, I'm calling on the European Union to finally implement the agreement that's been long in the works that would require airlines to
share passenger information so we can do more to stop foreign terrorist fighters from entering our countries undetected.
(END VIDEO CLIP)
QUEST: The seriousness of course of the issue affecting the tourism industry is the sheer size and scale of it.
As I said a moment ago, it's estimated 10% of the world is in some way engaged in travel and tourism. And it is an industry which has although
been traditionally resilient is now finding great difficulty fighting this sort of backlash.
Taleb Rifai is The Secretary General of the UNWGO, the United Nations World Tourism Organization. He joined me from Montreal and I asked him these
concerns what it meant for such a globally important industry.
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TALEB RIFAI, SECRETARY GENERAL, UNWGO: What we know is the following. That events like this in the past, although this is quite unique, have had a
very short-lived impact, not long-term or medium-term impacts. So we just have to wait and see. That's all that I can say at this point in time.
It has not affected the overall demand yet.
(END VIDEO CLIP)
QUEST: What would you call on travel authorities, travel ministers and associations, what would you call on them to be doing and thinking about?
RIFAI: Two things. One, please act in a global manner. This is not a national or regional issue. It's not an issue of Belgium or France. It's
not an issue of Europe, it's not an issue of Turkey or Russia. It's a global threat. And it's a global response that is required on this
occasion.
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RIFAI: And countries of the world must work together. But the second important thing that I would like to also second as a message is please do
not panic. Fear is the worst enemy we can have. We have to be vigilant, we have to be careful but we must continue our way of life in the best
possible way that we can.
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RIFAI: We're approaching the holiday seasons now and we cannot afford to panic, not just because it's economically damaging, because it is a victory
that we give to these forces of darkness that are trying to disrupt our way of life and our joy and our attempts to celebrate everything that is
beautiful in life, Richard. I think we should never panic and we should never let fear get into our minds and souls.
QUEST: Do you think things like the U.S. Global travel warning are helpful? I mean in the sense that they merely tell us the world is a dangerous
place. I'm not sure what purpose they serve other than just to warn.
RIFAI: Well, I have read the warning carefully and it doesn't say more than please be careful, please be vigilant and please be observant of things
around and report whatever you see suspicious. I don't think that it will have any damaging effect. I think it's normal for any country to want to
protect the citizens. I feel that its language also was placed in a rather reasonable and very responsible manner.
QUEST: President Obama has once again called for the Europeans to provide more information as part of the PNR, passenger records that are transferred
for passengers going to the United States. But of course that has its own legal problems back in Europe, which merely shows how difficult it is to
get anything that actually works comprehensively.
RIFAI: And that's very consistent with what we have been calling.
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RIFAI: When we talk about the global response, that's exactly what we mean. When we talk about travel here Richard, we're talking about an industry
that connects the world and the connection of this world is by definition a global issue. It cannot be solve d by national sovereignties and national
laws alone.
(END VIDEO CLIP)
RIFAI: This has to be dealt with very quickly and cannot wait for the bureaucrats to try to deal with it or for legal impediments to stand in our
way.
[16:10:23]
QUEST: The head of the U.N. WTO, Taleb Rifai, talking to me earlier. And if you needed further proof of the damage that's happening to the tourism
industry than the airlines say a Chief Executive of Air France says any airline could be the target of a terrorist attack and so could every other
form of transport.
CNN's Jim Bittermann asked Alexandre de Juniac if he was aware of specific threats against Air France.
(BEGIN VIDEO CLIP)
ALEXANDRE DE JUNIAC, CEO AIR FRANCE AND KLM: I think an aircraft is always a symbol everywhere. Our colleagues from Metrojet and from Russia have
experienced that terribly.
You know in two weeks ago it's been - it has been a drama for the airline industries and for our colleagues of Metrojet.
So any - you know any transportation system but also any public location, whether it is train, it is busses, or aircraft or boat, or cruise boat, or
whatever you know has been one day or another considered a target.
You'll remember the cruise boat in the Mediterranean Sea in which people were taken hostage. There was an attempt in the (inaudible), it was a few
months ago. So the event in Paris that have touched you know a performance area, Le Bataclan, so any public location everywhere can be considered a
target. And I mean everywhere is everywhere. It's not only in Europe.
JIM BITTERMANN, CNN CORRESPONDENT: Dangerous times.
DE JUNIAC: Dangerous times but I think the authorities are - and French authorities (inaudible) have taking the appropriate measures.
BITTERMANN: And nervous times for someone in your position.
DE JUNIAC: It's not - it's not nervous. We have to pay attention to stay particularly calm but determined. I am determined to do whatever has to be
done to protect our employees and passengers.
BITTERMANN: This has been a tough year for Air France.
DE JUNIAC: For Air France, but at the same time, it's a tough year and it is the year of recovery. Because for once in - for seven years in a row Air
France was losing money. KLM was making a profit. And this year Air France and KLM will be profitable. So the group will be profitable and both
companies will be profitable. So that's the positive part.
On the negative or more uncertain part, we haven't succeeded in concluding on negotiations in Air France. In KLM it's done, so the negotiation with
the pilot, the cabin crew, the ground staff has been successfully conducted. But in Air France we are still in the middle of these
negotiations with our stuff.
You must know that perhaps you can - you can find it slow. But when you look at all our colleagues and competitors in the world, these negotiations
take an enormous amount of time.
(END VIDEO CLIP)
QUEST: That's the Chief Executive of Air France/KLM. As we continue, escalating tensions between Russia and Turkey push markets lower at the
open and the conflict now threatens deeper economic damage. Quest Means Business from New York.
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[16:16:27]
QUEST: The tensions between Russia and Turkey (inaudible) markets around the world. U.S. stocks fell after the Russian fighter jet was shot down.
Interesting way the day sort of progressed. That's obviously the morning session where you're seeing the end of Europe and the immediate if you like
after effects of what's happened. But as the day moves on, the Dow climbs back up again. I think it's a reflection of that day that the Dow really
never gets much beyond 20 points higher. So it's selling - if you like it's buying into a down or depressed market.
On the other side of the Atlantic it was red simply across the board, as you would expect. Worst losses in Istanbul where the market was off four
and a third percent, and that's hardly surprising. Even the Xetra Dax was off nearly one and a half percent.
(END VIDEO CLIP)
QUEST: Vladimir Putin said the shooting down of the Russian jet in his words are a stab in the back. Hostility between Russia and Turkey has the
potential to cause widespread economic harm to the region and the world.
You see Russia is one of it Turkey's top trading partners. The two have been involved in tourism, food, exports, construction and energy, an entire
range.
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QUEST: Turkey is the second largest foreign buyer of Russian national gas. It's a pipeline of course you'll be aware the Black Sea pipeline comes
across and indeed a new pipeline to take Russian gas to Europe via Turkey thus bypassing Ukraine just over there is very much on the cards.
(END VIDEO CLIP)
All of this we now need to question. Joining us now from London is Phillipe Dauba-Pantanacce, the Senior Economists at the Standard Chartered Bank.
Sir, good to see you.
How much of this is a serious-I mean obviously, militarily and geopolitically it's serious so are there economic repercussions that Russia
will extract against Turkey, do you think?
PHILLIPE DAUBA-PANTANACCE, SENIOR ECONOMIST, STANDARD CHARTERED BANK: Well you know Richard, what was very striking to me today is if you were on the
trading floor today the market was really fixating actually on Turkey for two events. You had the Central Bank meeting and you had the very crucial
announcement of the new cabinet. These had been completely wiped out by the news of the Russian jet being shot down. And I think to me this is really a
testament of risk premium -- geopolitical risk premium being factored in Turkish a assets again when it had started to disappear after the election
of November.
Now generally speaking I think you mentioned everything. It's Turkey and Russia is a lot about tourism and gas dependency. This is what we're going
to have to look into in the upcoming month.
QUEST: Right, but is it your feeling that Russia does exact some form of economic price for what has happened? And if Russia were to do that, where
would it do it? Would it be on the gas pipeline? Would it be on gas exports or somewhere else?
DAUBA-PANTANACCE: Listen, I think that really what is happening now is that we are in the middle of this crisis today and we're going to see some of
this unfolding probably in the upcoming days. But I do believe that there's going to be a de-escalation, an engineered de-escalation of that crisis.
Simply because both parties, both Russia and Turkey have a vested interest in making sure that the trade links, which have been already affected in
recent months are being restored.
[16:20: 12]
DAUBA-PANTANACCE: And you mentioned really very clearly that it would be very difficult for Russia to make without Turkey in terms of gas delivery.
Turkey is the second export market for Russia. And in the current environments where you have oil prices at the level that we know, gas
prices have also to come down. I think that Russia cannot - definitely cannot afford to lose another market such as Turkey.
Now they have mentioned the tourism aspect, which would be you know for Russia definitely something little to probably lose. For Turkey, it would
be - it would be something for sure.
QUEST: Sir, thank you for joining us, good to see you tonight, thank you for coming in.
DAUBA-PANTANACCE: Thank you.
QUEST: The next milestone in the space race isn't on the moon or it's on Mars, it's actually on earth.
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QUEST: And one firm has pulled a huge lead. We're going to show you Mr. Bezos far from just delivering to your doorstep, where else he might
deliver. Quest Means Business.
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QUEST: To the final frontier and back, a company founded by Jeff Bezos the man behind Amazon announced a special delivery a few hours ago. You're
looking at it here. It sent a rocket to the edge of space and then it landed it safely back on earth. By doing so, it dramatically opens the door
to cheaper space flight. To celebrate the first, Bezos did something he's never done before, he tweeted. He said the rarest of beasts used rocket
control landing, not easy but done right and can look easy. A not so subtle dig at Elon Musk and Spacex which has tried similar landings, those rockets
always managed to well as you see there - well let's enjoy that a again. They always managed to topple over.
Jeff Bezos spoke to Rachel Crane earlier. Rachel joins me now.
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QUEST: This is an amazing feat and to watch it being done so effortlessly, what did he tell you?
16:55:04]
RACHEL CRANE, CNN CORRESPONDENT: Well you know it's important to know that this is only Blue Origin's second attempt at landing his rocket and they
nailed it beautifully as you see in that footage right there.
And reusability is sort of the holy grail of the space industry because it would dramatically reduce the cost of space exploration some estimate by
100 fold.
(BEGIN VIDEO CLIP)
CRANE: Now blue Origin is going after the space tourism industry much like Virgin Galactic, Spacex also Xcore.
I asked Bezos this morning about when we're going to be able to get a reservation on one of these flights and how much it's going to cost us.
Here's what he had to say Richard.
JEFF BEZOS, FOUNDER, BLUE ORIGIN: We don't know yet what the ticket price is going to be, but we'll figure that out sometime within the next couple
years. For people who are interested they can go to the Blue Origin website and sign up. We'll send you e-mail updates and let you know when we have
the ticket price.
CRANE: What's your vision for the future of space exploration?
BEZOS: What we want to see is millions of people living and working in space. So this - you know it's -- right now I think the record number of
people in space simultaneously is something like 13. So we have a long way to go before we have millions of people living and working in space.
Space is an adventure. It has limitless resources that you know we're finding that the earth is a very finite place. And we humans need to go
into space if we're going to continue to evolve our civilization.
(END VIDEO CLIP)
CRANE: And you know Richard, I asked Bezos how he was feeling when he saw that rocket land. And he said it was actually one of the happiest moments
of his life.
(BEGIN VIDEO CLIP)
CRANE: And in regards to that tweet that he sent earlier, I asked why he was so reticent before you know especially in comparison to Elon Musk and
Richard Branson who are very public and very vocal about their space plans. He said that he was waiting for this day when he was able to prove that his
rocket was reusable.
QUEST: And Rachel, proving that his rocket is reusable and I know the likes of you and me always want to know when are you going to have a - you know
when does the first tourists go.
(END VIDEO CLIP)
QUEST: What is it about space that drives these extremely rich billionaires that they just want to conquer something else. What do you think it is?
CRANE: Well you know I asked Bezos about that this morning and he said it was actually watching a man land on the moon when he was 5 years old and
that's what inspired him to start this space company.
(BEGIN VIDEO CLIP)
CRANE: He's always wanted to travel into space, that he thinks that it is - you know the next frontier in order to make sure that civilization
continues to exist that we need to extend ourselves beyond just the boundaries of earth and colonize another planet. And you know cracking this
nut of reusability is essential to making that happen.
(END VIDEO CLIP)
QUEST: Rachel, thank you.
CRANE: Thank you so much Richard.
QUEST: So Google and Apple, why the Manhattan District Attorney has his eyes set in the war against criminals and terrorists and he believes Google
and Apple and their smart phones are high on the list. .
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[16:31:37] QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when we'll give you an exclusive look at some of
the world's biggest oil fields and they are deep inside Iran.
And the Pfizer fallout continues. U.S. lawmakers are slamming the year's biggest merger. We're going to be in Washington with the top Democrats of
the House Ways and Means Committee.
And before all of that (RINGS BELL) this is CNN and on this network the news always comes first.
A Russian marine has been killed during a mission to try to rescue two bomber pilots shot down by a Turkish jet. Turkey says the Russian warplane
was downed after it repeatedly violated Turk's air space, something Moscow denies.
Russian media says one of the two pilots was killed in the air as he parachuted down over Syria. The second pilot's fate is unknown.
The Turkish prime minister said the country has a duty to act if its borders are breached.
(BEGIN VIDEOCLIP)
AHMET DAVUTOGLU, TURKISH PRIME MINISTER: We have never been a country which had designed against another country. But everyone should know that
Turkey has the right to respond if its airspace is violated despite repeated warnings.
(END VIDEOCLIP)
QUEST: Tunisia's government's declared a state of emergency after 15 people were killed in an explosion in the capital.
The prime minister's office says there was an explosion on a bus which was carrying members of a presidential guard. Authorities are treating the
incident as terrorism.
Police in Belgium have released these photos of a suspect they're looking for in connection with the Paris attacks.
They say they believe Mohamed Abrini was driving a car that dropped off one of the suicide bombers at the Stade de France. Police say he is armed and
dangerous.
The terror attacks in Paris have brought disagreements about encryption, particularly encryption on phones to the fore.
Now encrypted communication with apps like Telegram have been seized on and used by the extremists.
Intelligence agencies are frustrated that terrorists can benefit from secret communications because they are so well encrypted on particularly
Google Android phones and on Apple iPhones.
You'll remember Edward Snowden's revelations about U.S. spying prompted changes across the whole tech industry - communications and clouds are now
locked down. And phones are encrypted as well.
So you start off with locks on both phones and in the cloud. Now with older operating systems, customers and companies were able to access their
devices. They had the key.
Law enforcement could compel companies to unlock phones when necessary. But there's been a change. Apple and Google's latest operating systems
have given only the users the key. Encrypted data can only be read by using the password from the user.
Now the Manhattan district attorney says the police need all these keys too. And he wants to force companies to create phones that law enforcement
can unlock.
[16:35:06] Or at least cannot be locked. The companies say backdoors can be exploited by hackers, oppressive governments and the like.
The Manhattan District Attorney Cyrus Vance joined me a few moments ago and as he put forward his case - to stopping Google, stopping Apple from
encrypting their phones - he insisted he's not changing the rules.
(BEGIN VIDEOCLIP)
CYRUS VANCE, JR., MANHATTAN DISTRICT ATTORNEY: In the United States for example in state court where I am the district attorney, 95 percent of the
cases in the country are state court cases.
The rules are that we need a neutral judge to determine there is probable cause that on a device evidence of a crime exists. Those are the rules.
I'm not asking for a backdoor, I'm not asking for a secret key, I'm asking four judges to be able and prosecutors to be able to enforce judge-
authorized search warrants.
But the reason why it's - this is all an important issue - is that you and I and everybody in the world now lives their life on cell phones. So do
the criminals. And what we need to understand as a country is that if you do not provide access at all to these devices, public safety is going to
suffer.
QUEST: How much has your argument been strengthened -- and I think I know the answer to this even before I've asked the question - by the events of
Paris and by Brussels at the moment?
VANCE: I think the argument has risen to the public's attention in a way that it had not in the preceding ten months. Apple and Google made the
decision in September of 2014 on their own that they were going to change their phones to not be able to be encrypted.
And the public, I don't think, really understood the consequence of that decision, not just in rape, robbery and murder, but in crimes where
terrorists may be communicating.
As events, tragic events occur around the world, then we understand that criminals are using cell phones, the public is understanding that the issue
of encryption is actually really important for public safety.
QUEST: You see, here's the problem - and you know this better than anybody. On the one hand the public says we know you need help fighting
the terrorists, but on the other hand, we're damned if we're going to let you into our private lives.
VANCE: Well this is exactly why it's important that this subject be talked about more openly and with less venom as it is today.
Here's my point - everybody should respect privacy and I believe we try to, only being able to access devices under certain circumstances. And
everybody is entitled to public safety.
But what happened was that two companies independently decided that they were going to draw the line between privacy and public safety all the way
over here.
I don't believe, Richard, that two private companies should get to decide the path toward justice for victims.
I think this has to be done by the Congress, it has to be done after an airing of the true facts on the issue and an intelligent discussion leading
to a compromised solution.
QUEST: I'm not suggesting that the public is on the side of the terrorism in this next question -
VANCE: I'm sure you're not.
QUEST: -- but I am suggesting that as between Apple and Google versus the government and the right for the government to hook in, probably many
people would say we have more faith and trust in Apple and Google.
VANCE: Here's the question and here's the problem. I was yesterday in my office with a mother of a young woman who was eight months pregnant who was
murdered in another state. She went to the door, in answering the door, and just before she'd gone to the door, her eight-year-old daughter had
seen her mother talking on the phone and texting.
The door is opened, she's shot to death and the eight-month-old fetus dies six months later. The phone falls to the floor. The phone cannot be
opened. The phone cannot be opened because Apple has created a phone that can only be opened by the owner or someone who has the code.
Now, if people in America understood that cases like that which are so - so obviously cry out for law enforcement to be able to get information to
determine what happened, I think people would want a balanced solution to the problem.
QUEST: Not a fair point in one respect, sir, because in the example you've given of course everybody says they should have access to the phones.
But I have one word for you which you know well and it's Snowden. And the onus is on the government now surely to prove you need this access.
VANCE: Well let me say that my point as the Manhattan district attorney and speaking on behalf of state and local law enforcement, 95 percent of
the cases are state and local cases around the country. We only get into phones with probable cause and a court-authorized warrant.
[16:40:01] I'm not talking about bulk data collection. I can't speak to the federal government's actions.
Clearly Snowden and what happened in Snowden angered people. It has prompted a reaction, I understand that.
My point is the reaction is going to be too extreme in its own right.
QUEST: Sir, finally whatever happens, one thing your report does and one thing that - you're pleased that you've started the debate?
VANCE: I couldn't be more pleased. We were able to testify in front of the Judiciary Committee of the Senate this summer. I hope that Apple and
Google will come to the table and understand that where they've drawn the line is going to impact public safety severely.
And people are going to start figuring that out. At the same time, government needs to prove that it's going to play by the rules and people
have to start believing they will. In the middle is a reasonable way forward that will protect both privacy and public safety.
(END VIDEOCLIP)
QUEST: A robust debate with the Manhattan district attorney. @RichardQuest you'll have some thoughts on that.
Should companies be allowed to choose where they're going to set up their domicile? Well, tax inversion with Pfizer and Allergan after the break.
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QUEST: Shares in Pfizer and Allergan have rebounded a day after they announced the merger of the year. Politicians from both sides of the aisle
in the United States are now criticizing the deal. They are outraged by the billions of dollars the company's likely to save by shifting its tax
domicile from the United States to Ireland.
Joining me now from Washington is Sandy Levin, the top Democrat on the House Ways and Means Committee. Congressman, how very kind of you, sir, to
give us time this evening.
In our coverage of this, I mean, you can't blame the companies, surely, for doing a tax inversion deal if that's what the law allows and their
shareholders benefit.
SANDY LEVIN, U.S. HOUSE DEMOCRAT: Well it's not clear the shareholders will benefit. But, look, we're trying to change the law and it's resisted.
They're essentially taking advantage of a loophole that we've been trying to close and so they can't defend saying they're just following the law
when companies like Pfizer have been fighting - are changing the law - so there can't these inversions.
Let's be clear, all they're doing really is changing their address, and a typical taxpayer can't do that.
[16:45:06] And so there's anger in this country and I think in other countries including Europe when companies essentially use a kind of a
loophole in shifts.
This is actually a double inversion because Allergan shifted to Ireland a few years ago. And now they're - now this is a second example of that and
it costs a lot of money to taxpayers.
Our bill would raise $41 billion getting at this loophole.
QUEST: So how do you close this loophole to prevent companies from doing something, which at the moment is legal?
LEVIN: Well our bill does it by changing from 60 to 50, in other words, the amount of stock that's held by the stockholders.
So it can be done but we have to step up to the plate and understand the unfairness in this. Look, they're going to essentially keep all of their -
all of their work - in the United States that's now here.
They're taking advantage of all of the benefits that we have in the United States, all of the work that's done, all of the research that's done, all
of the R&D tax credits - they're going to be American for everything except an -
QUEST: Right.
LEVIN: -- address.
QUEST: Congressman, what about the fundamental point on the wider political issue which is the U.S. should lower its corporate tax rate, and
if the rate wasn't so different, say, than Ireland, then frankly companies wouldn't have the incentive to do this.
LEVIN: Well first of all we should have tax reform and I think it means some lowering of the corporate tax rate. But people have suggested a 25
percent corporate tax rate in this country instead of what it's now, but still there'd be inversions because the Irish tax rate is lower.
So there would still be an incentive unless we get it disabused. This is abusive - you just have to say it very simply.
There may be other reasons why companies combine, but in this case and so many others, a major reason is to avoid taxes. And the typical citizen in
this country and in Europe and other places say we can't do that, why should Pfizer be able to do that?
QUEST: Sandy Levin, thank you, sir for putting the point of view. We appreciate your time in a busy day -
LEVIN: Thank you, thank.
QUEST: -- much appreciate you joining us from Capitol Hill.
Now it's time for some "Business on the Move."
(BEGIN VIDEOCLIP)
QUEST: It's been a tough quarter for the blue boxes. Tiffany's has posted disappointing third quarters and cut annual forecasts. And the reason -
the big, strong dollar which has hurt tourist spending.
A new roadblock for Volkswagen. The German prosecutors have launched tax probes linked to emissions scandal in Germany's vehicle that pollute more
or tax higher.
But now those false emission numbers could mean incorrect taxes.
Campbell's Soup says cost-cutting and means implementing are now paying off. They expect $80 million to $100 million to be saved this year. And
Campbell's, with its tins of soup has raised whole-year earnings forecasts.
"Business on the Move."
(END VIDEOCLIP)
QUEST: From the sidelines to the super power. We have an exclusive look at Iran's plans to move to center stage in the energy sector. That's, of
course, after you've enjoyed a moment when you can think - you can "Make, Create, Innovate."
(COMMERCIAL BREAK)
[16:51:38] QUEST: Russia and Turkey continue to trade accusations over the shooting down of the Russian plane, and the price of oil has spiked, not
surprisingly.
Brent and Nymex both saw some of their biggest gains this month on fears that supplies in the region could be disrupted.
As we told you on last night's program, Iran is hoping to become a major player in the oil industry and sooner rather than later.
Emerging markets editors John Defterios got exclusive looks at the oil fields of Iran that may hold the key to the country's economic future.
(BEGIN VIDEOCLIP)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: It is a site that no Western broadcaster has been allowed to see until now.
I traveled across hundreds of kilometers of flat deserted marshlands to tour one of the world's largest oil fields. Unexploded bombs from the
Iran-Iraq war used to litter this area. Now beneath this former battlefield, officials say, lie some 60 billion barrels of proven reserves.
Now this is a massive operation, covering some 900 kilometers. About the distance between, say, Los Angeles and San Francisco.
They have more than 300 wells already and that number will double by the year 2020.
Drilling on this rig on the West Karun region is nearly complete and crude will soon be ready to flow, adding to the global glut of cheap oil.
It's not an easy job for workers. After years of sanctions, they struggle with the patchwork of old and rusty equipment. Limited access to Western
technology has stunted production.
It's interesting how Iran has had to survive. This is a Chinese rig but at the core it's American technology - all that bit in yellow. But it was all
purchased before the sanctions took hold.
China stepped into the void created by Western-led sanctions. In North Azadegan, the state oil company built these new facilities with its Chinese
partner CNPC.
UNIDENTIFIED MALE: This is the heart of the central processing (ph) facilities.
DEFTERIOS: This Western-trained petroleum engineer shows off new equipment with it crude (ph) comes in before export to world markets.
MALE: This area -
DEFTERIOS: It's a start, but Iran's deputy minister of petroleum says more investors are needed.
AMIR HOSSEIN ZAMANINIA, IRANIAN DEPUTY MINISTER OF PETROLEUM: All of these need to be developed, and we need more than a few major companies to
partner with and to develop these fields.
DEFTERIOS: But it's fair you need the Western technology?
ZAMANINIA: Yes, that is correct.
DEFTERIOS: While some European companies like Total of France and Italy's Eni had a presence in Iran, U.S. companies left after the revolution in
1979 and never came back.
Whether major oil companies bite depends on how generous terms will be when Iran rolls out $185 billion worth of new projects at the end of November.
An ambitious plan, but one which Iran is banking on to usher in a prosperous new chapter after years of sanctions have taken their toll.
Growth has stalled this year but the World Bank believes Iran could hit 6 percent growth with this increased production.
Good for Iran, but the prospect of a flood of new supply poses a dilemma for a market flooded with oil. John Defterios, CNN West Karun, Iran.
(END VIDEOCLIP)
QUEST: We will have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
[16:56:49] QUEST: Tonight's "Profitable Moment." A look at the map shows us where some of the hotspots, if you are, in the geopolitical situation.
Obviously Russia and Turkey, you have Egypt with Sharm El Sheikh and you have the entire situation with France and with Brussels and Belgium.
And now the U.S. has given a global travel warning. Travel and tourism is the world's largest industry. It's estimated 10 percent of GDP is made up
by airlines, hotels, tourists - people going to see other people and doing business in different parts of the world.
And now of course so much of that is threatened. The terrorists want to make sure that we don't travel. They want to instill fear into us.
Luckily, we know one thing that they don't - travel and tourism rebounds back quite quickly, whether it's being in Africa or in Latin America,
history is always the same. Travel and tourism bounced back, providing the right policies are put in place and that means quite quickly.
So there needs to be security, there needs to be reassurance and there needs to be an understanding that travel and tourism isn't just some little
industry which toddles along on its own fashion way, but it actually needs help right at the top.
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 tomorrow.
END
