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Quest Means Business
As President Trump Calls The Shots On Iran, Europeans Scramble To Save The Nuclear Deal, Walmart Goes Shopping And Buys India's Leading E- Tailer, 21st Century Fox Has Reported Earnings For The First Quarter That Missed Analyst Expectations, Trade Dispute Between the US and China Has Claimed A Major Victim. Aired 4-5p ET
Aired May 09, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BIANNA GOLODRYGA, CORRESPONDENT, CNN: It is Wednesday, the 9th of May. Now, as President Trump calls the shots on Iran, Europeans scramble to save
the nuclear deal. Walmart goes shopping and buys India's leading e-tailer. And a special interview of the CEO of Emirates tells Richard how he manages
global risk in the airline business.
I am Bianna Golodryga, in for Richard Quest and this is "Quest Means Business."
Tonight, Donald Trump has singlehandedly changed the game on Iran. Now, America's European allies are trying to stop this new sanctions from
torpedoing their investments. The EU was looking to shield its businesses from so-called secondary sanctions which could scare some companies away.
The German finance minister says, its companies in Iran would be protected.
(START VIDEO CLIP)
OLAF SCHOLZ, GERMAN FINANCE MINISTER: (Through an interpreter). We will try to do everything in our means so that European companies will be
affected as little as possible.
(END VIDEO CLIP)
GOLODRYGA: The new US Ambassador to Germany is already under fire after he said German companies in Iran should wind down operations immediately. It
was Richard Grenell's very first day, the head of the German's Social Democrats said he needed some tutoring.
For now, European companies seem to be playing it safe. Daimler's new statement this morning is in keeping with what most firms are doing. It
says, "We are closely monitoring the further developments after President Trump's announcement and will then evaluate the potential impact on our
business.
Atika Shubert is in Berlin with the latest. Atika, you know, the Europeans are saying, you know what, we are paying close attention to what's
happening right now, but we are not alarmed at this point and we are going to keep on working on this deal with Iran with or without America. Behind
closed doors, however, are they a big more nervous?
ATIKA SHUBERT, CORRESPONDENT, CNN: I think that's certainly the case. I mean, I spoke to Siemens yesterday when the news first broke, and they
said, you know, they are going to try and assess what's happening, but when I pressed them on it, they said, "Listen, we need facts. You know, we need
some sort of understanding of what the way is going forward."
And right now, nothing is clear at all. All that companies know is that they have a wind down period of somewhere between 90 to 180 days depending
on what the business is, and then they could face consequences from the United States if they are still doing business in Iran.
So, it's making companies here very nervous even if governments are trying to assure them that they will be protected from this. Now, all we know for
certain is that the EU says they are sticking with this deal. It's not clear however what kind of an impact that is going to have on businesses
that do choose still to stay doing business with Iran.
GOLODRYGA: And obviously, this had been something that the President had been signaling for months. The President of the United States that is, has
been signaling that he will do for months even going back to his campaign before he was elected. One would wonder whether European companies and the
countries had some sort of fall back plan sensing that this in fact would develop.
SHUBERT: Well, I think it was certainly making people nervous here, but the fact that you saw Chancellor Merkel, President Macron making those
trips out to Washington DC and really pushing President Trump to keep in the deal, I think there was some perhaps expectation that there would be at
least more of a grace period or a reprieve.
Now, even if they prepared for it, they realized the clock is ticking, and I think that's what makes people nervous when they start hearing that there
are these wind down days, you know, and you heard the tweet from the US Ambassador to Germany, Richard Grenell saying, this better start
immediately. That's the kind of language that tends to make businesses nervous.
And it's not just you know, one or two, we are talking about major businesses - Siemens as you mentioned, Daimler, Volkswagen, Lufthansa, BASF
- these are just some of the businesses we contacted today, all looking for guidance.
GOLODRYNA: And it does appear that the President would be steam rolling as far as European businesses, European ideas going forward and their
platforms as well, putting his first, right, he put - America first was his agenda. We saw that first with the Paris Climate Accords. He got out of
that. Now, the Iran deal, what is the sense at home there on the ground given that A, the US and the EU are each other's biggest trading partners,
and B, our closest allies.
SHUBERT: Yes, I mean, the sense that ever since really, President Trump won the election and was inaugurated is that Europe needs to step up to the
plate more. You know, whether it's something like defense spending on NATO or whether it means, taking the lead on...
[16:05:16]
SHUBERT: ... climate change for example, but now, with this - with the US pulling out of the Iran deal, it really puts even more pressure on Europe,
not only to try and salvage the Iran deal, by broadening it out and coming up with a completely new deal, but also in European companies.
So, they are the ones that are really feeling the pressure more than Iran at this point. But you know, you point out that this America first policy
that President Trump has been putting forward. It's something that businesses are now taking into account. I mean, companies like BMW for
example that have plans in the United States have really taken you know, a feeling like they are taking a lot of criticism from the President even
though they have factories that are helping US workers over there.
So, a lot of German companies and EU companies are now fighting back to say, "Hey, you know, we need our interests protected, too."
GOLODRYNA: Yes, that's right and one remembers of course what Angela Merkel said a few months ago in a speech saying that we're basically on our
own. We can't necessarily rely on our closes ally in the US the way we did before. So, it will be interesting to see how this fall out from the US
pulling out of the deal impact Europe as a whole. Atika, thank you so much for joining us.
Well, the price of oil is soaring. Crude is up now 3%, Brent is above $77.00 a barrel. If Iran's oil exports are restricted, it is unclear who
will fill the supply gap. John Defterios is our "Emerging Markets" editor and he is Bahrain, so John, well I guess the first question that comes to
mind, why the rally and will Iran's production drop impact - who will fill that void?
JOHN DEFTERIOS, EDITOR, EMERGING MARKETS: Well, Bianna, first and foremost, I think that the fear factor has set in and Iran is at the core
for two key reasons - geopolitically, the fallout in the Middle East where I am sitting and talking to you from tonight, but also, as you suggest, on
supplies, it's put some context into this.
Iran produces almost four million barrels a day, half of that to the export market, two million barrels, that's double the level they had when they
were under sanction. So, we are looking at stake here, about a million barrels a day, whether Iran comes in or out of the market over the next
three to six months as the US starts to tighten the screws on Iran.
Now, it raises the question here number on supplies, but who would fill the void. History would suggest that would be Saudi Arabia. It stepped up
during the Iran-Iraq war. It did so during the Gulf War, as well in 1990- 1991 and even when the US invaded Iraq. It always filled that void in the past. It has the spare capacity. The Ministry of Energy in Saudi Arabia
put out a statement today from Riyadh suggesting it wants to mitigate any problems in the oil market going forward and talk to the OPEC, non-OPEC
producers who agreed to cut 1.8 million barrels out of the day.
Do they loosen up on that accord at the June meeting? Do they see if this rally continues and they call in an emergency meeting perhaps in the third
quarter of 2018? It's too early to make that call. This is where it gets a little bit complex and we can bring up the map.
At the core of the Gulf where I am sitting tonight, Bianna, we have Saudi Arabia, the UAE and Bahrain who support the White House move. They are not
friends of Iran. They think they have basically taken too much political space in the Middle East. They are happy the President has taken action.
But this spill in to the OPEC, non-OPEC discussions right now where Saudi Arabia decides to take a more tougher line going forward.
This has never happened before, but we have to watch out for it.
GOLODRYGA: Yes, and when you go back to the President's initial goal, one of them that he has been very open about is wanting to squeeze Iran,
wanting Iran to feel abandoned by all of its trading partners and its allies, will Iran be abandoned the way the President is anticipating?
DEFTERIOS: Yes, and in fact, in an usual twist, Bianna, President Trump is even suggesting he will give incentives to the countries that buy crude
from Iran right now to cut down on the imports from Iran or eliminate them altogether.
So, even if it is China which takes in the Iranian crude, they don't want to have the sanctions from the United States, maybe the White House would
give them a break if they cut those supplies. I don't see that right now. My premise here, this evening, is that the emerging markets will probably
come to the rescue of Iran. Again, let's go back to the map, China is not only a big importer of Iranian crude, but a big investor in the Iranian oil
and gas fields and have been for the last 10 years.
I was in those fields a couple of years ago, and you couldn't miss CNPC of China. Just over a month and a half ago, Vladimir Putin was meeting with
Hassan Rouhani, the President of Iran signed a number of energy deals, particularly with Russneft, the big giant player in Russia. I don't see
Vladimir Putin giving up that political clout. He is going to stay into play. India is a big importer...
[16:10:16]
DEFTERIOS: ... as well. The big question mark going back to Atika's discussion here, what happens to the European oil producers like Total of
France, Eni of Italy, which have expressed an interest, there is a lot at stake. Iran wants to try to raise $200 billion between now and 2025 for
oil and gas projects, that's a lot to leave on the table, but Total for example, has exposure to the United States. They don't want the backlash
there because they have an interest in Iran in the future.
GOLODRYGA: Yes, it really puts the European allies in a tough position right now. All right, John, thank you.
Will the US announcement put more pressure on Iran's currency? It now takes more than 65,000 rials to buy one American dollar on the black
market. Compare that to 43,000 at the end of last year. Economists say, Iranians are buying foreign currency as it hears about new sanctions take
hold.
Joining me now is Dr. R. Seetharaman, who is the Chief Executive of Doha Bank. Doctor, thank you so much for spending some time with us. How do
you see all of these falling out specifically in terms of oil prices and its effect on the region?
DR. R. SEETHARAMAN, CHIEF EXECUTIVE, DOHA BANK: Thank you for having me. It is very delicately poised, isn't it? In terms of global disruptions,
trade and investment, banking and finance, financial markets especially, currencies or commodities, bonds are going to have highly volatile
situations, while the withdrawal of the United States was build out, the dimension then needs to be bifurcated in multiple form and substance.
I mean, that's where the challenge is. After signing the agreement in 2015, plenty of initiatives taken by global functional make ups whether it
is countries or continents, now, all are getting disrupted. We need to dimension it in details.
Now, when it comes to oil price, it is definitely, as John has mentioned, it is going to have a definite positive impact for price going up. It's
good for the Gulf states. They can supplement additional supply from Saudi Arabia. That's definitely in the cards, but in my opinion, the supply
disruption from Iran will have - will move back to the bottles (ph) trading whether it is Turkey of China or India, those are the markets which were
consuming Iranian oils.
And it remains to be seen what is the oil future because of the geopolitical changes we have seen the reflection in the past, oil may touch
even $100.00 in the next few months' time.
GOLODRYGA: And you mentioned that higher oil prices would be good for the Gulf states, Saudi Arabia in particular, but I can imagine a regional
instability would be good for those countries as well, so it's either or, right? You have President Trump hoping to squeeze Iran to the point where
there may be an internal revolt within its own government or is that something that the region is willing to tackle at this point?
SEETHARAMAN: Absolutely, right, Bianna. We don't want to be excessively priced. So that's why there has to be a balancing act. It was coming
together well and OPEC and non-OPEC came together and they were moderating their stand. Now, this geopolitical flash is going to create much bigger
confusion.
Now, what sort of development in the next few months is going to decide the financial markets and commodity market is directly connected with the
currency market. We have seen dollars shipping out well. Now the dollar index is going up and you will see the reflection in the currency market
and the commodity market as well.
So, all of these are interconnected and this disruption is going to create more and more speculation in the international markets.
GOLODRYGA: When we talk about isolating Iran, one country that we know has been isolated over the past year because of the blockade is Qatar, how has
that impacted the economy over the past year?
SEETHARAMAN: We are self-reliant. We have realigned our new normal. We have moved in terms of logistical - our financial stability has been
showcased well, and we have great partnership with global functional make ups, and plenty of recognition that market liberalization is a bigger
opportunity, it turned out to be a very stable functional enrolment in the last 11 months.
GOLODRYGA: Is this something that is sustainable though going forward? I mean, at what point do you call it de tente and hope to get back to
relations as normal?
SEETHARAMAN: Actually, it is stable and functional. We have seen the reflection of IMF reports in the spring meeting and Qatar is set to grow
not less than 2.6% to 2.8% and you have the current economic sales price with oil price going over $70.00 and fiscal consolidation is taking place
plenty of non-hydrocarbon growth.
So, the market liberalization taking place more and more reassurance in terms of social governance and political progression and social
progression, so that is a reflection we are seeing in the new normal of Qatar.
GOLODRYGA: Sounding rather optimistic, Dr. Seetharaman. Thank you so much, we appreciate you joining us.
[16:15:16]
SEETHARAMAN: My pleasure. Thank you.
GOLODRYGA: And later in the show, we will be hearing how Venezuelans are hoping a spike in oil prices will help their economy. Don't miss Paula
Newton's special report.
And after the break, Walmart may be reversing out of Europe, but it's full steam ahead in India, where it is buying into major e-commerce player,
Flipkart. Details coming up next.
Walmart is shelling out $16 billion hoping to crack the Indian market. It plans to buy a controlling stake in Flipkart, the country's most popular
online retailer. Investors however don't seem thrilled with the move. Walmart stock is down around 3%.
Paul La Monica is here to explain more. The biggest deal, thus far for Walmart. Why aren't investors buying it?
PAUL LA MONICA, CORRESPONDENT, CNN: Yes, I think investors might be a little nervous that it is a pretty pricey deal, $16 billion. It's going to
get them 77% stake in Flipkart, but you do have concerns about whether or not Walmart is getting into this market a little too late.
Amazon is already a big player in India. They have been very aggressive, so you have this head to head battle continuing now in India, it's already
clearly a one on one battle for online commerce supremacy here in the United States, now Walmart is taking it to India as well. Can Walmart
replicate the low price model that's been successful with here in India? And I think that remains to be seen.
GOLODRYGA: No doubt there is still room for growth, however, in investing in India, an emerging economy, a growing economy at that. Is it that
investors don't like the price tag?
LA MONICA: I think the price tag might be part of the problem and you know, also Walmart has had slowing growth on the e-commerce side a little
bit, still very strong, but it started to cool off a little bit, and I think investors are worried about whether or not Walmart, which has done so
many big deals, it did Jet, it then went on and did a lot of these smaller deals, companies like ModCloth, and Bonobos, whether or not they are just
spending too much to try and catch up to Amazon and Amazon we know has really continued to dominate global e-commerce no matter who has tried to
threaten it.
GOLODRYGA: And it is fascinating, every sector seems to be nervous about what Amazon is doing.
LA MONICA: They are the second most valuable company in the world right now.
GOLODRYGA: That's right. That's right. Well, Paul great to have you on.
LA MONICA: Thank you.
GOLODRYGA: Thanks so much. News just in to CNN, 21st Century Fox has reported earnings for the first quarter that missed analyst expectations.
Revenue came in as expected, but lower than in the same period last year. Shares are flat in after-hours trading.
Fox is at the center of a web of deals. It is competing with Comcast to buy Sky, the British pay TV provider, at the same time, Disney which is
trying to buy most of Fox may need to fight off a rival bid from Comcast.
Here to help us understand it all, Alice Enders is Head of Research at Enders Analysis and an expert on media. We need an expert on this subject,
Alice. So many questions now. First that comes...
[16:20:15]
GOLODRYGA: ... to mind, why all of a sudden are we hearing from Comcast so late in the game?
ALICE ENDERS, HEAD OF RESEARCH, ENDERS ANALYSIS: Comcast has crafted here crafted here an international expansion strategy and I think it feels that
Sky is a really good stepping stone into the international world. It is not only a British pay TV company, but it's also an Italian and German one,
and those markets are historically underprovided for pay TV.
So, I think Comcast really sees an opportunity here with Sky to establish a strong presence in Europe and in a sector where it sees upside and
development potential in terms of revenue diversifying away from the US.
And Comcast of course owns NBC Universal and so, it sees with the Fox situation, also an opportunity to enlarge its studio assets bearing in mind
that this all does rely on the outcome of the Department of Justice's case proceeding against AT&T and Time Warner seeking to block that merger.
So, there's an awful lot of scenarios going on around here that basically make it a very interesting time for media analysts like myself, I think we
might see an awful lot of mergers if the Department of Justice doesn't win its case, but I think it's going to always be a little bit more complicated
than that.
GOLODRYGA: Yes, so much attention on the AT&T and Time Warner deal. I was struck by what one analyst said though about Comcast now joining in the
fray and we hear that Comcast will prove to be a formidable rival to Disney because it would face fewer issues with regulators in getting Fox a deal
approved.
So, assuming that again, as you said, so many are going to be focused on the outcome of the AT&T/Time Warner deal, how nervous would Disney be if in
fact, the government loses in that deal?
ENDERS: Well, I think you know that Disney of course is a very, very important business all on its own, and it occupies a very specific niche
you know, in the market, namely children's and it has got studios, it has got merchandise, it has got theme parks, it has got a very diversified
business.
Comcast of course is already a vertically integrated pipes and content company, I think it would - you know, it clearly sees that it's an
opportunity now to snap up an asset like Fox, you know, Time Warner is a much bigger piece, so you know, there, I think there is going to be an
awful lot of movement going on once all of these outcomes become super clear.
GOLODRYGA: And we should of course note that Time Warner is the parent company of CNN. So, I need to put that out there for our viewers as well.
Well, thank you, you did answer a lot of our questions, so we appreciate having you on. Thank you.
Well, the trade dispute between the US and China has claimed a major victim. ZTE, one China's most successful tech companies has halted major
operating activities. It blames the US government which has banned American companies from selling parts and services to ZTE.
The US accuses ZTE of violating sanctions on Iran and North Korea. ZTE was already on thin ice in Washington. Earlier this year, American
intelligence officials said ZTE's devices were a security threat to their users.
The head of ZTE's mobile phone business told CNN he was trying to repair relations.
(START VIDEO CLIP)
LIXIN CHENG, CEO, ZTE USA: We understand the concerns and respect the concerns of different agencies of the United States government and we
promised we are going to work very openly as we did before - transparently to address their needs and their concerns, and I am confident we can earn
their trust also as we did in the past.
(END VIDEO CLIP)
GOLODRYGA: Here to help us understand what happens next, Joan Salzman, the senior reporter at CNET. Joan, thanks for coming on the show. We
appreciate it. How significant is this latest news and is ZTE just one casualty or is it a sign of what's to come?
JOAN SALZMAN, SENIOR REPORTER, CNET: It's a critical blow for ZTE. ZTE might be the biggest electronics maker that most people have never heard
of. They are the fourth biggest vendor of phones in the US. They always appealed to people who wanted to have the elements of a high-end phone at a
low-end price.
And it definitely shows that there are going to be casualties in this dispute between the US and between China that it is not going to be
something that's only on face value.
GOLODRYGA: What message does this send to the Chinese government?
SALZMAN: Well, the message that the Chinese government is spinning is that this is their opportunity to invest in their own electronics. So, ZTE
can't use US conductors, it can't use...
[16:25:14]
SALZMAN: ... US glass, but it could use something from China. China's semiconductors has been a market that hasn't been able to keep up with
other companies and the rest of the world, and this is giving the Chinese government and opportunity to reinvest in their own semiconductors and spin
it as a way to enhance their own.
GOLODRYGA: With what many Americans would argue is, it's still in IP, right? So at some point, if that is what the US is going after, right? To
punish the Chinese which many are sympathetic with, right, with how the Chinese have handled taking IP technology, does this at all impact what
China's movement is going to be going forward when it comes to intellectual property rights.
SALZMAN: Well, it will definitely have an impact on one of their biggest companies, and so, that's really going to be sending a message.
GOLODRYGA: And from a US-China relations standpoint, you know, you hear these harsh words and the President will come out and say, "I have great
respect for President Xi, and we actually get along quite well." Are we going to continue to hear those kind of words reciprocated from President
Xi and his government towards the US following on announcements like this?
SALZMAN: It's hard to predict the future, and you know, ZTE has the opportunity to appeal this. There are ways to mend fences so to speak, and
they have sent information to the commerce department trying to, in essence ask for an appeal, but we'll have to wait and see.
GOLODRYGA: Does it affect consumers because of this globally? Talk about the ramification this may have on consumers?
SALZMAN: Well, it doesn't have any effect on the consumers necessarily outside the US. Inside the US, you can't buy these phones anymore;
essentially, it's not an outright ban on selling here, but carriers won't carry these phones and sellers, retailers aren't carrying them.
GOLODRYGA: Do we expect other countries in the Europe to follow suit?
SALZMAN: It's a possibility, but it's hard to say.
GOLODRYGA: Yes, well it is. It is interesting to see this finally play out, right? We see the first casualty and as you said, there could be many
more. Joan, thank you.
And after the break, cracking down on fake news or attacking a free press, President Trump threatens to pull credentials from journalists who write
negative stories about him.
Hello, I am Bianna Golodryga, there is more "Quest Means Business" in a moment, when we come back, but the CEO of Emirates tells Richard how it is
coping with geopolitical risk.
Entrepreneurs tell us why they are banking on blockchain to make their millions. Before that, this is CNN and on this network, the facts always
come first.
Right now, three Americans detained for months in North Korea are on their way home. They are expected to land near Washington in 10 hours.
But the U.S. Secretary of State Mike Pompeo: "the North released them as a gesture of goodwill ahead of upcoming talks between leader Kim Jong-un and
the U.S. president." French President Emmanuel Macron has reaffirmed Europe's commitment to the Iran nuclear deal in a phone call with Iran's
president.
He also urged Tehran to take part in future discussions about its ballistic missile program. This counts one day after the U.S. announced its
withdrawing from the agreement. Germany and the U.K. are also pledging to uphold the deal.
A new outbreak of the deadly Ebola virus is raising fears in the Democratic Republic of Congo. The World Health Organization says at least two people
are tested positive for the disease. There are at least 21 suspected cases including 17 deaths.
One man very happy with President Trump's Iran decision is Israeli Prime Minister Benjamin Netanyahu. He was in Moscow today on a high profile
visit to a country that was a signatory of that deal. He was there for a victory day.
A major public spectacle that celebrates the defeat of Nazi, Germany, Nazi chants was in the crowd.
(BEGIN VIDEO CLIP)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Right on, this is a chant for Russians who're seeing what their government has been spending
in years among millions of dollars on over the course of the past decade or so to organize its military, you see behind me.
Russia's main battle tanks are parading past at just at Red Square where they've been saluting the Russian president and a host of other VIPs as
well, among these, Benjamin Netanyahu; the Israeli Prime Minister who's visit here to talk with the Russian President.
He is overshadowing this event because it comes from the immediate aftermath of President Trump pulling out of the Iran nuclear deal. Those
talks will continue today about the Iran nuclear deal with both Netanyahu and Vladimir Putin.
The Russians have been strongly supported of the deal, they helped broker it after all, and they've expressed their deep disappointment of the fact
that United States has now withdrawn, and they've said that they could forge an even closer relationship with Iran that could involve selling
military hardware.
Some of the high tech equipment being paraded today includes the Kinzhal missile, which is a hypersonic weapon which Vladimir Putin, the Russian
president said it can travel at 10 times the speed of sound, avoiding any items in the sectors that mainly avoid against this.
We're also going to see Russia's youth, its generation fight again not only with 57 on display here after the first time, as well as -- as Russia's
fast arsenal of intercontinental ballistic missiles.
It's a very important day in terms of how Russia's nostalgia and its national pride, it's interesting to see all this military hardware, but
it's also an important day diplomatically in the aftermath of President Trump's decision to pull out of that Iran nuclear deal. Matthew Chance,
Cnn, Moscow.
(END VIDEO CLIP)
GOLODRYGA: Now, thanks to Matthew. In the meantime, President Trump is threatening to pull credentials from news outlets that don't give him
positive coverage. In a tweet, the president complained that the overwhelming majority of network news about him is negative or fake in his
words.
Brian Stelter is Cnn senior media correspondent. I have a feeling you have a thing or two to say about this headline from the president, this latest
tweet. And it always puts us in a position of is it worth giving the attention to that he wants or should we ignore it and where do you stand on
that? How seriously should we take his words?
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: This is exactly why the White House correspondents association struggled with earlier today. This
is a group that represents the White House press corps, advocates for greater access.
The leaders of the group -- I had conversations this morning, they essentially said he is trying to distract us, he's just venting, he's never
going to act on this kind of stuff, he's just complaining. However, the talk matters, the venting matters because it sends a troubling signal to
countries all around the world where press freedoms are already more restrictive.
When the president attacks the media in the U.S., it gives even more license to dictators in other countries to go ahead and cut back on the
press there even more. And we've seen that around the world in the last 16 months.
[16:35:00] Certainly leaders use the term "fake news" just like Trump in order to crack down on the press. So even though in this case, Trump is
not going to take away credentials, I will be stunned if he did.
We've decided not to take his conversations or his tweets seriously and that's why the association for example did issue a statement, saying this
will be absolutely unacceptable, if a word ever actually happens.
GOLODRYGA: And you talk about sort of normalizing behavior, right?
STELTER: Right --
GOLODRYGA: He's only been in office for over a year, and yet these kinds of things and tweets and comments, you know, we just rushed them off. And
I was struck even by Jim Comey acknowledging this when he was on his media tour --
STELTER: Yes --
GOLODRYGA: A few weeks ago, and said, you know, look, the president said that, you know, we should be locking up a private citizen. That is not
normal. So when you have a former FBI director acknowledging that, it's interesting because from a media perspective, we're put in this really
uncomfortable position.
We've never really been talked about this, this much, you know, and vilified --
STELTER: That's right --
GOLODRYGA: Especially when the president directly.
STELTER: Yes, the president wants to make the press corps political actors. See, he likes having the media as an opponent and it's difficult
for individual journalists and for institutions not to fall into that trap, not to become his opponent while trying to cover him in fact -- I came and
correct his falsehood.
It is a difficult situation on a daily basis. I think the -- one way to think about what he's tweeting today and what he tweets everyday about the
press is that he's softening the ground especially among his base for action against the press.
Again, I don't expect him to grow credentials, I don't think he's going to take away station licenses the way he threatened six months ago, but he
softens the ground and makes that kind of rhetoric and that kind of conversation more palatable.
So you see in polls, Republican primary voters say a lot of them would like to see the press restricted, a lot of them are in favor of some roll back
of some first amendment rights -- again, I'm not saying it happened.
But you see his base respond to it and support it and go along with it, and that's worrisome because that kind of view of the press, that's going to
last long after President Trump --
GOLODRYGA: And of course, we compete with other networks all the time, but it does seem like it is this type of situation where under a circumstance
like this networks and journalists from all different spectrums should unite, right? And I think acknowledged this --
STELTER: We saw last week for World Press Freedom Day --
GOLODRYGA: Yes --
STELTER: Thirty news outlets all running the same ads saying don't just rate us, watch our rivals as well.
GOLODRYGA: That's right --
STELTER: Remarkable so --
GOLODRYGA: I think for helping each other out. Brian, great to have you on, thank you --
STELTER: Thanks.
GOLODRYGA: And when we return, it's been a banner year for one of the world's biggest airlines, we'll join Richard in Dubai where he's been
speaking to Emirates president about the airlines record earnings and where its next destination might be.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
RICHARD QUEST, CNN: The morning rush hour at DXB where Emirates Airlines has brought in all the big wide body jets and they're getting ready
transferring passengers, and soon now, it will disperse to all points around the globe.
[16:40:00] I could stand on the roof here at the headquarters building and look at these planes all day. Emirates is one of those fascinating
airlines. Not only because it has wide-bodied jets, a fleet of 777 and 380s, but it's the largest airline in the world and the way it's disrupted
so much of international aviation.
Now the challenge is geopolitical, higher oil prices and an airline structure that has to be reconnected to make money in the future. I
discussed this with Sir Tim Clark; the President and Chief Executive of Emirates.
Sir Tim, how is being at the heart of this airline since day one.
TIM CLARK, PRESIDENT & CHIEF EXECUTIVE OFFICER, EMIRATES: The last financial year was lower than we would have liked for reasons well outside
our control and there were many of those.
But the management was required by the shareholders to basically get its act together and rather look forward and look back as to what happened and
that causes to go off the cost -- what causes to go off the foreign program to look very closely at what we were doing, whatever use of -- with regard
to use of the assets.
It causes also to look at our internal cost structures, our HR costs, et cetera. So the team then came together and said we can't carry on like
this, we really have got to improve things.
QUEST: I was fascinated to see your parking planes. Your parking planes because there's not enough pilots. Your -- or even that's an extreme
position. Your lack of pilots is constraining your growth there.
CLARK: No, I would say we have a short-term issue. This summer gave us a temporary problem where the supply line of pilots to match the flying
program wasn't quite where it should have been. That is being resolved.
So by October, November, December of this year, our pilot situation is resolved, and we have our full flying program intact.
QUEST: Fuel prices, as the price goes now north of $70 for brent or WTI. That's described as the sweet spot for the producers, it's an acceptable
spot for yourselves, but it's starting to get to the paying point.
CLARK: Yes, I -- we've been there before, Richard, don't forget, we were up at 140 at one point --
QUEST: Yes, and everybody -- and everybody was crying and screaming.
CLARK: And they were crying, but you know, actually, the whole industry, many, there were casualties. And the higher the fuel price, the more
likely there will be casualties coming along in the next year or so.
But we're better managing the fuel price higher than we used to be. I'm a firm believer of Safari calculus'(ph) changed, that we have geopolitical
issues that are forcing the price of oil up temporarily at the moment. That eventually, the supply push given that the United States is now an
exporter all through the shell and gas production.
Producing 10.8 million barrels a day, which is more than Saudi Arabia produces. So in the time that we've been going through all of this, the
supply situation has changed, globally, economy ticks up at 6 percent, 8 percent. It's likely that we'll see some kind of equilibrium.
Where do I think it would be? It should be between 50 and 60.
QUEST: Geopolitical issues in the region, whether it'd be instability because of Syria, whether it'd be because of Qatar, whether it becomes the
whole Middle East question. Your running an airline in the heart of it all, where there are some very real issues at the moment.
CLARK: Agreed, but we carried a lot more passengers than we did last year despite what's been going on. The industry as a whole, it's uptick about 9
percent, so you've got 300 million people traveling by air more than we had over last year at a time when the geopolitical situation has been a little
bit fraud.
So what I'm saying is, irrespective of that, there are some -- a lot of green shoots coming through, not the least of which is what's going on in
Dubai at the moment. We've got expo coming along in a couple of years time. The economy is moving despite there are sort of fix and starts, but
if you look around you, the place is growing quite rapidly.
And so demand for our flights, not only our cross on that but from the United Arab Emirates is growing.
QUEST: I want to just talk -- touch Qantas. From Perth-London, which I was on --
CLARK: Yes --
QUEST: It's a hell of a flight. It's a very long flight. Are you at risk of the hub here becoming marginally less relevant as ultra long hauls start
to move in?
CLARK: And isn't it interesting, Richard, I had the same question in 1988- '89 when the 747400 came along, and they said the hub will be irrelevant because everybody is going to go non-stop with the 747400 to the east and
now to the west, and look what happened.
[16:45:00] But finally, the global economy grows, and providing that the valid proposition in terms of air travel remains a good one. Long
haltering operations into multiple airports not necessary the big hubs will be part of the paradigm change in air travel.
So you will get a lot of these twins flying, it could be Perth-Bordeaux, it could be Perth-Dusseldorf, it could be Perth-Naples, what will that do for
us? That's not a problem. It's a pine that's growing, we're always optimistic.
The fact that you offer more when it's also other carriers means that more people travel and that's good for the industry. One way or the other, we
will get a benefit from it. In fact, we'll remain a very powerful international hub, make no mistake.
QUEST: Emirates Airlines remains one of the most fascinating in the world. Not only because of its unique structure, all wide-bodied giant aircrafts,
and the fact that it's the largest airline in the world. But the reality is, it has been a disrupter for the past two decades.
And now has to decide how to disrupt for the next two.
(END VIDEO CLIP)
GOLODRYGA: Fascinating and wide-ranging interview, Richard, our thanks to you. And let's trace the oil supply lines from the customers back to the
producers and the spike in prices could actually spell good news for nations who rely on it to keep their economy afloat, mainly Venezuela.
The country has been reeling from years of slump in crude prices. Paula Newton looks at the toll it's taken on the country.
(BEGIN VIDEOTAPE)
PAULA NEWTON, CNN (voice-over): Oil, black gold was once Venezuela's cash cow, but not anymore. The country's economic crisis has spared no
industry, not even the ones booming oil fields that are now on the verge of collapse.
Gregory Perez(ph) says he's seen the industry change drastically over the past ten years.
UNIDENTIFIED MALE: As with oil men walking down the street, people used to point and say this guy has money, now your salary, your work is less or
nothing.
NEWTON: Perez(ph) now works two additional jobs using his car to run a taxi service and harvesting vegetables just to make ends meet.
Jose Bordax(ph) is himself a 30-year veteran of the oil industry and leader of the petroleum workers union, this corruption within the government oil
company PDVSA is one of the main things that's killing the industry, and now accounts for more than 90 percent of Venezuela's export income.
UNIDENTIFIED MALE: They pay contracts three or four times and they will build anything, they stole and declare production most above the level that
it is.
NEWTON: Venezuela's chief prosecutor launched a multimillion dollar corruption approach shortly after taking office that has led to the arrest
of the president and five vice presidents of Citgo as well as workers from Chevron.
He accuses his predecessor who fled the country of turning a blind eye to embezzlement. But Bordax(ph) says Maduro's government itself is also to
blame and wants voters to remember that when they go to the ballot box in May.
UNIDENTIFIED MALE: If a government that criminalizes protests and replace workers. It could remain -- which is profoundly anti-worker. This could
remain -- it's not progressive, it is a fraud.
NEWTON: Rampant inflation has reduced the average wage for oil workers to the equivalent of just $2 a month. As a result, workers have fled the
country in their tens of thousands to go to neighboring nations to find jobs.
Those that remain like Perez(ph) wrestle with broken equipment, refinery fires and attacks by criminal gangs.
UNIDENTIFIED MALE: We've been attacked, hit, robbed of our stuff and the company's stuff, be it clothes, boots, phones, everything.
NEWTON: Perez(ph) himself injured in oil rig accident says he has no choice but to stay.
UNIDENTIFIED MALE: People keep working in oil because they're threatened by the government. They're not giving permits, they're not letting anyone
leave.
NEWTON: Cnn reached out to the Maduro government for a response, but has not yet received one. Meantime, oil production in Venezuela continues to
fall, slipping into its lowest level in 30 years, creating even more upheaval in an already decimated economy.
For Perez(ph), that means at times can't even afford food for his wife and five children.
UNIDENTIFIED MALE: It hits me hard and sometimes I cry. A son asks his father for things and when the father doesn't have it, it breaks his heart.
NEWTON: Paula Newton, Cnn.
(END VIDEOTAPE)
GOLODRYGA: The ramifications of a once thriving economy now in crisis. And when we return, it's tech's hot topic and many of us struggle to
explain it.
[16:50:00] We'll be meeting those who are sure blockchain will be the next big thing and why they're confident that it will change all our lives.
(COMMERCIAL BREAK)
GOLODRYGA: Cryptocurrency both think these four letters will one day be as familiar as NYSE. Michael Novogratz s launching a new crypto index, the
BGCI on CnnMoney's "MARKET" now, he said every investor should have some crypto exposure.
(BEGIN VIDEO CLIP)
MICHAEL NOVOGRATZ, EX-HEDGE FUND MANAGER: I think it's almost essential for every investor to have at least 1 percent or 2 percent of her portfolio
and not necessarily because of all the gains they're going to make.
But these technologies in two to four years are going to give every vertical a challenge.
(END VIDEO CLIP)
GOLODRYGA: The head of Facebook Messenger is the latest convert, David Marcus is shifting his role to focus on how Facebook can leverage
blockchain technology. Clare Sebastian has more on the new generation of blockchain believers.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN (voice-over): With the cocktails sunset, New York's blockchain believers gather to dream big.
UNIDENTIFIED MALE: Well, I believe that this is the way the world is going to be, I believe that this is lead the world.
UNIDENTIFIED MALE: It's a breakthrough technology, it's something that didn't exist, you know, I had four years ago.
UNIDENTIFIED MALE: This is better than Monday night football.
SEBASTIAN: It's called Crypto Monday, it's a weekly event that has grown beyond even its organizers expectations.
UNIDENTIFIED MALE: We call this a onetime event, we didn't know if anyone was going to come.
SEBASTIAN (on camera): Now, hundreds time out, eager to explain blockchain's promise is the way to do business more easily and securely.
UNIDENTIFIED MALE: The way I explain blockchain technology is that it is a software solution to the social problem of trust.
UNIDENTIFIED MALE: Instead of having a one server and a bunch of users connected to it, you have a bunch of servers and users connected to the
network, that's how the whole blockchain works.
UNIDENTIFIED MALE: That's what's great about it.
SEBASTIAN (voice-over): These believers say blockchain can solve some of society's most intricate(ph) problems in healthcare efficiency.
UNIDENTIFIED MALE: Because it is transparent, suddenly, I can see what are the prices out there? What am I paying in my healthcare insurance?
SEBASTIAN: Others say digital currency is built on a blockchain and transform the way businesses raise money. Ben Ammon(ph) who runs the same
company is hoping to use it to finance movie projects. This is one he has in the works.
UNIDENTIFIED MALE: We were going to do a traditional capital raise, we're now thinking about doing a security company(ph) because it can provide
greater liquidity to investors.
UNIDENTIFIED MALE: We are building the first decentralized ecosystem for sports.
SEBASTIAN (on camera): Across the bar, creating digital tokens on the blockchain is also on the brain for the executives at SportsCastr.
UNIDENTIFIED MALE: I can comment on a game as if I was in an "Espn" studio. The fans will be able to use their token to buy T-shirts, hats,
the access in the next game they watch.
SEBASTIAN: You get paid just for being a sports guy.
UNIDENTIFIED MALE: Exactly, which is everyone's dream, right?
[16:55:00] SEBASTIAN (voice-over): Amid the crowd ambitions, some come here not yet converted.
UNIDENTIFIED MALE: It is so risky, I go online, I have no idea what's going to happen to my money.
SEBASTIAN (on camera): And yet, he still sees opportunity in this room full of true believers. Clare Sebastian, CnnMoney, New York.
(END VIDEOTAPE)
GOLODRYGA: A lot of true believers indeed, and that's it from me for tonight, Richard will be back with a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: One of the Emirates 102 A380s pushing back here at DXB. Tonight's profitable moment, I'm Richard Quest at the headquarters of Emirates. On
this program tonight, you heard Tim Clark talk about the challenges facing Emirates.
And it's a fascinating thought. This airline which has disrupted long haul aviation for the last two to three decades is now having to rethink the way
it creates its routes, its structures and its new deal for example with Fly Dubai.
With the new single airline concept, Emirates continues to be a powerful force in aviation. It is the largest airline in the world by one measure.
Now, it has to work out how to adapt, how to be more nimble, how to maintain its profitability whiles still having a superb product on board.
Make no bones about it, the other airlines are not going to let Emirates get away with it forever. But this airline has proven it knows how to
fight, to disrupt and now adapt. Which is why anyone betting against a Dubai carrier will be a brave airline indeed.
And that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in Dubai. Whatever you're up to in the hours ahead, I hope it's profitable -- now,
excuse me, I have some planes --
END
END
