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Lebanon Looks Toward Uncertain Future As Crises Mount; Lebanese Cabinet Resigns After Last Week's Explosion In Beirut; French FM: Lebanon Must Rapidly Form New Government; Kodak Shares Tumble After U.S. Halts $765 Million Loan. Aired 3-4p ET

Aired August 10, 2020 - 15:00   ET

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

[15:00:15]

RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: Sixty minutes of trading left on Wall Street. The Dow is heading to a five-month high. All

the markets are looking very strong as we enter the last hour of trading.

We'll explain and understand what's going on, a very robust performance. What's interesting about the way that is, it starts up. Has a dip at

lunchtime, by 11:00, and then roars back up again.

The markets and the factors affecting the day.

Lebanon's government has resigned, saying that the corruption is too much to handle. We'll be live on the streets of Beirut.

Donald Trump tries to bypass Congress with his new stimulus order. I'll speak to the man who helped craft the original plan about whether this one

is even legal.

And Kodak shares are plunging. The pharma deal with the U.S. government now appears to be in doubt.

Now, live from New York. It is Monday. It is the 10th of August. I'm Richard Quest, back in New York where, of course, I mean business.

Good evening. We start tonight in Lebanon, in Beirut, where the government of Hassan Diab resigned today, saying that it could no longer handle the

corruption in the country.

The announcement was expected, but even so, just deepened the woes and misery in a country that has faced so much since Tuesday's giant explosion.

The irony is, the outgoing government has voiced the same frustrations as those protesters on the street: the seemingly insurmountable problem of

corruption in the country.

Ben Wedeman is live in Beirut for us today.

All right, well, now, the government is going or gone. I assume the horse trading begins to try, if possible, to find a new one. Is that going to be

possible?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: It's going to be almost Mission: Impossible, but it's obviously going to have to go ahead.

The sort of the largest bloc in Parliament that resulted in the formation of this now resigned government was the free patriotic movement, a

Maronite-Christian group, allied with Hezbollah and Amal-Shia Party and therefore, they're obviously going to be the first candidates to form a

government.

And that's obviously we're going to be starting back at square one because this was a government that the United States, many European powers, and

also Arab Gulf governments, because of its Hezbollah component, simply didn't want much to do with.

They didn't offer it any assistance as the pound, the Lebanese lira, and the economy collapsed. They didn't offer it much political cover. So, we're

really sort of back to where we were back in January before this government was formed, and keep in mind, Richard, that forming a Lebanese government

requires so many back room consultations and back and forth between the various warlords and others who are the real power brokers in this country,

that it can take time.

The last parliamentary election was in May 2018 and it took nine months of intense consultations to finally choose a Prime Minister in that case, Saad

Al Hariri. So, it takes time. It's very complicated -- Richard.

QUEST: Right. But in the meantime, this government continues in a technocrat sense and basically a care taking mode, but that -- how will

that prevent or delay or it might even help the negotiations that have to take place with international creditors and those who are giving donations?

WEDEMAN: Well, one of sort of the basic rules of a caretaker in Lebanon is that the government cannot take decisive decisions.

Basically, its role is to make sure that government continues to function, even though government doesn't really function in Lebanon.

Essentially, keep the light on, even though I must add again, the lights often go out here in Lebanon. But basically, it cannot take decisive

decisions beyond just running the show to the extent that it can run.

[15:05:09]

QUEST: Ben Wedeman who is in Beirut. Ben, thank you.

Now, the crisis in Lebanon is merely one of many that the country has faced. Today, though, some suggest, is the first move towards real

political economic reform.

The basic issues of governance won't be easy to fix. These are some of them.

First of all, poverty is already severe. It's now getting even worse, and the destruction of the port stands to bring hunger, too.

The explosion has exacerbated the overall economic crisis, and when you talk about corruption, well, the government has admitted, it now simply

can't handle it.

(BEGIN VIDEO CLIP)

HASSAN DIAB, LEBANESE PRIME MINISTER (through translator): This devastating catastrophe that hit Lebanese in the heart which was the result

of a chronic corruption in the country and the regime.

Previously, I said the corrupt establishment hit all parts of the country. However, I discovered that the corruption organization is bigger than the

state, and the state is controlled by this, and it cannot face it or get rid of it.

(END VIDEO CLIP)

QUEST: Sam Kiley is in Martyrs' Square. The violence tonight, the demonstrations and the protests, I see that things seem to be quieter, at

least you've been able to remove some of the protective gear that you were wearing earlier. Have the protesters gone home?

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Richard, they've been driven home. They were driven out of a side street leading between Martyrs'

Square, effectively, with a dogleg down towards the Parliament. That was their target.

There were several hundred demonstrators there. Those at the front throwing rocks, fireworks, bits of metal, occasional Molotov cocktails towards the

police lines.

Then, pretty much on the stroke of the moment, Hassan Diab, the Prime Minister started his address to the nation. The police and the military

moved in, in substantial phalanxes. They came down this street behind me. This is Martyrs' Square. Down to the junction there where they were also

forced away from the Parliament, the route leading towards the Parliament, back across Martyr's Square and off away into the town using great volleys

of teargas.

The protesters fired back with fireworks and at least one Molotov cocktail, but eventually, actually, pretty rapidly, were driven away.

But of course, this was all happening whilst the Prime Minister was speaking, and I think the real issue is going to be how do people respond,

obviously, to this new development, and as Ben was saying, it's a new development, but seems like deja vu all over again.

QUEST: Indeed. But the issue here is, everyone knows the problem. Everybody knows what needs to be done. Nobody wants to do it, and

therefore, are these protests and do these protesters stand any chance?

What's different, Sam, this time round? You have been there many times over -- not wishing to age you -- many years, but now, what's different?

KILEY: Well, people say what is different has been that blast last Tuesday which was not only catastrophic, but in so many ways, they say, reflected

the absolute cynical incompetence of successive governments and perhaps the Constitution that underpins their ability to remain in power.

That ammonium nitrate, 2,700 tons was there for nearly seven years. It was stored, clearly, next to something explosive, which caught fire and was

able to set it off, causing this massive devastation.

The incompetence, the deals, the back room deals, the sort of alliances that make no kind of philosophical sense between, for example, Hezbollah

and a Maronite-Christian Party. There's no ideological love lost between them. How can this system continue?

So, the people are saying, and the younger activists in particular are saying they've got very precisely worked out they are saying, plans to

occupy government buildings to physically drive this government out of power -- Richard.

QUEST: Sam Kiley joining me from Beirut.

Jad Chaaban is also with me. The Associate Professor of Economics at the American University of Beirut. It is good to have you, Professor, with me.

When we are looking at this, and there's $300 million being pledged for immediate help. Well, that's sort of the really serious stuff of immediate

healthcare, immediate medical emergency care. But longer term, who would lend Lebanon a penny?

[15:10:40]

JAD CHAABAN, ASSOCIATE PROFESSOR OF ECONOMICS, AMERICAN UNIVERSITY OF BEIRUT: Yes, I mean, that's a very legitimate question, because in the

past 30 years, a lot of countries were lending Lebanon and the ruling class was just stealing the money and wasting it.

I'll just give you one example about this port in particular where the explosion happened. This port, people don't know, but this port didn't have

an authority which was ruling over it for 30 years. It was a temporary authority.

The Director of the Port was a temporary person. The Board was a sectarian allocation, each party and sect had a seat. And they had millions and

millions of dollars just stolen.

There was only a few months ago, a big problem with the contract that was worth, on paper, $40 million, and the Director of the Port, with this

board, voted in $270 million as expenses for the same contract and the story goes on.

It's corruption to the background to the floor of this regime.

QUEST: Right. Right. So, Professor, accepting what you have said and the level of corruption, which I think is quite clear, bearing in mind what the

Prime Minister said tonight, is there any hope that the protesters manage to get either the elites out because the elites are not likely to suddenly

have a change of heart and make for good governance?

CHAABAN: You know, I don't think they have a chance anymore. I mean, the money has run out. Nobody will lend them money. And at the same time, the

regional powers are also tired of their cronies here. And at the same time, the people are really fed up.

This explosion that happened, this criminal act comes on top of decades of slow death by cancer, by pollution, by corrupt deals. You know, we had the

waste crisis, electricity crisis, and now this.

QUEST: But Professor --

CHAABAN: I think people will not accept anything less than an independent government that will oversee independent elections and that will put people

accountable to that.

Anything less than that, the comeback of Hariri, whoever was in the previous government, this is not acceptable. People will stay on the

streets until they get their rights.

QUEST: But I don't understand how you get to that point, because you said an independent government with an independent mandate for reform. But as

long as the existing 75 post-Civil War Constitution requires there to be a divvying up of roles and Cabinets and this, that, and the other, to make

for sectarian purposes, then nothing changes.

CHAABAN: Well, that's exactly the point. I mean, we have tried for decades, you know. I was born here. I've lived here, and every single time,

coalition government. Every single time we have sectarian, you know, coalitions and formations and every single time we're told, wait. It can

wait. We're going to reform and nothing happened. Things got even worse.

Right now, all we're asking is, give us a break. Give us six months break. Let's do some reforms. Let's do the humanitarian support and rebuilding,

and we'll do elections in six months for a new -- and we can change.

QUEST: Stop there. Right. Tell me the reforms you want. Give me a specific reform that would improve the situation, bearing in mind the complexities.

CHAABAN: Well, first thing, we need independent judiciary inquiry, help by international partners to the causes of what happened. That's the first

reform. Right now, we only have Lebanese investigation that nobody trusts.

Second reform, we immediately want to put on the table reforms of the electricity sector, of the major infrastructure, and in alignment with what

the international donors require in terms of transparency and other key reforms.

Third reform, we want a fair electoral law where there is more limits on electoral spending and maybe wider circumstances, anything that would -- I

don't have illusions. I'm sure most of them might come back.

But I'm sure that a representative majority of the opposition will be able to come with a fairer law and this is at least what people are requiring

right now.

But what people don't want right now is that the same faces, the same actors come back and smile again on TV and say, well, you know, we're

saving Lebanon. They were killing Lebanon and their place is in jail.

[15:15:27]

QUEST: Good to see you, sir. Thank you, Professor. Jad Chaaban joining us.

CHAABAN: Thank you.

QUEST: We will talk more about it. Joining us from Lebanon.

Still to come, President Trump is taking the coronavirus relief into his own hands. He made an executive order which he says basically fulfills all

the requirements of the next bit of help and further stimulus or at least unemployment benefit protection for those out of work. But does it?

The former Chair of the White House Council is here to discuss it -- in just a moment.

(COMMERCIAL BREAK)

QUEST: President Trump says that the Democrats now want to hold a meeting so that they can make a deal. It follows, of course, President Trump

signing an executive order by sidestepping Congress in a way to get coronavirus relief to an increase, of course, or restore increased

unemployment benefits to those still suffering. Four executive orders were signed.

In just a moment, Kevin Hassett, the former Chair of President Trump's Council of Economic Advisers will be with us to discuss exactly what this

means.

First, though, the background on what was signed and the four measures being put in place. Lauren Fox reports.

(BEGIN VIDEOTAPE)

LAUREN FOX, CNN POLITICS U.S. CONGRESSIONAL REPORTER (voice over): With negotiations for a new stimulus package at a standstill on Capitol Hill,

President Trump tried to sidestep Congress and take coronavirus relief into his own hands, signing executive orders.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I think it actually works better if we do it the way we're doing it. You can't beat the deal we

made.

(END VIDEO CLIP)

FOX (voice over): But the President's move does not provide a clear path to help millions of Americans out of work.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA): My constitutional advisers tell me they are absurdly unconstitutional.

SEN. CHUCK SCHUMER (D-NY): Unfortunately, the President's executive orders described in one could be paltry.

(END VIDEO CLIP)

FOX (voice over): Part of Trump's memorandum, reducing the additional unemployment benefit from $600.00 to $400.00 per week, leaving it to states

to pitch in $100.00 for every resident enrolled.

By Sunday, the President said it's possible the Federal government could pick up the whole tab if a governor requests it.

(BEGIN VIDEO CLIP)

TRUMP: It will depend on the state and they'll make an application. We'll look at it and we'll make a decision. So, it may be they'll pay nothing in

some instances.

(END VIDEO CLIP)

[15:20:11]

FOX (voice over): Earlier, President Trump's economic adviser said states could afford it.

(BEGIN VIDEO CLIP)

LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: I think they will be able to make room so based on our estimates, the states will be able to

provide the extra hundred dollars.

(END VIDEO CLIP)

FOX (voice over): But for states with budgets already stretched thin by the pandemic --

(BEGIN VIDEO CLIP)

GOV. NED LAMONT (D-CT): Look, that would cost us about $500 million between now and the end of the year. I could take that money from testing.

I don't think that's a great idea.

(END VIDEO CLIP)

FOX (voice over): And in another executive order, the President said --

(BEGIN VIDEO CLIP)

TRUMP: So, I'm protecting people from eviction.

(END VIDEO CLIP)

FOX (voice over): In reality, Trump's executive order does not explicitly provide help for homeowners and renters.

The President also promised to suspend payroll taxes. That's money paid into Social Security and Medicare.

(BEGIN VIDEO CLIP)

TRUMP: If I'm victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax.

(END VIDEO CLIP)

FOX (voice over): Trump's plan is actually a deferral and only Congress has the power to change tax law.

Meanwhile, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer are looking to meet yet again with White House Chief of Staff Mark

Meadows and Treasury Secretary Steve Mnuchin to try to work out a deal.

(BEGIN VIDEO CLIP)

STEVEN MNUCHIN, U.S. TREASURY SECRETARY: We've said, let's pass legislation on the things we agree on and knock these off one at a time,

and they've refused to do that.

REP. NANCY PELOSI (D-CA): We're in a stalemate because the Republicans, from the start, never understood the gravity of the situation that we are

in.

The problem has grown, and it has become an enormous economic problem.

(END VIDEOTAPE)

QUEST: Kevin Hassett is with me, the former Chair of President Trump's Council of Economic Advisers who helped draft and put together the first

bailout or the first CARES Plan.

Kevin, this is depressing. The two sides in Congress can't agree. The House puts forward a plan, the Republicans can't agree it, the President does

executive orders that some say are unconstitutional, and in any case, won't work. It's downright depressing.

KEVIN HASSETT, CNN ECONOMIC CONTRIBUTOR: You know, you're right, it's depressing, and it seems like every time we legislate in Washington, that

happens, but the unconstitutionality, that argument is just incorrect. So I know you like to focus on the facts.

Let's look at the two main ones. In terms of the payroll tax, the Treasury Secretary under the I.R.S. regulations has the authority to defer tax

liabilities for up to a year, and in a time of emergency, he can even extend it past that. So the payroll tax deferral is very, very well

established part of the Code.

Now, you're right, to forgive it, the President would have to legislate, but he could definitely forgive the payroll tax for a year right now and

that would be fully consistent with existing law.

In terms of the unemployment insurance benefit, they've got enough money in the emergency fund to fund, I think, about $44 billion worth of

unemployment insurance, and it is an emergency, and so I think that, you know, those funds also could go there, quite legally.

Finally, and I promise you that I'm not going to filibuster, the thing is that the President has put the Democrats in the really awful position for

them, negotiation-wise, because if they litigate this, then they're trying to take benefits away from ordinary people. If they don't litigate this,

then President Trump gets a big victory.

And so, my guess is they're going to come back to the table and try to legislate instead.

QUEST: But the mere fact that the two sides were unable to agree on something and allowed the $600.00 to expire, let's put it crudely. You and

I are not short of the price of a cup of tea and will not be short if a month or two goes by.

But the people who this was meant to help are living month-to-month, week- to-week, day-to-day. Do you not think that politicians should be hanging themselves in shame at their inability to make this sort of -- basically do

their job?

HASSETT: You're exactly right, and I think the President is right to use the emergency funds to help those folks out, just as you suggest.

But it is very frustrating that the talks broke down, but I want to put the Democrats ask in perspective. They're asking for almost a trillion dollars

in bailouts for the states. State spending, you know, it's about $3 trillion a year, so for the rest of the year, it's about a trillion and a

half dollars in normal times.

So they're basically asking the Federal government to pick up almost the entire budget or a seemingly more than half of their spending for the rest

of the year, and so, really, it's not really about COVID emergency spending. It's about trying to bail out some of the states that were broke

before COVID and that is something that Republicans were just never going to swallow.

QUEST: Well, no, but that's not entirely -- that's not entirely the full picture, Kevin, in the sense that you take somewhere like New York which

has not only had the increased healthcare costs with COVID, but also will have a dramatic reduction in revenue, sales tax revenue, and business

revenue and property taxes and all the other things.

So, to some extent, the states are looking to central government, one way or the other from the Federal government, to help make up that shortfall.

[15:25:24]

HASSETT: Right. And -- but the question is, how big a shortfall is it going to be? It looks like GDP this year might be as much as 10 percent

below what it was a year before. You know, and the bailout that they're asking for the states is more like 40 percent say of spending for the year.

And so, they're asking for way more money than GDP is coming up short and they're doing that basically because there are a bunch of blue states that

were broke before this happened and they're holding, you know, the poor folks who need their unemployment insurance hostage in order to try to bail

out their friends.

And so, you know, I think the Republicans have pretty high ground on this one. And you know me, I'm not always -- I am not a partisan guy, at least I

try not to be, but if I were going to call it the other way, I would.

But right, I think the President has put the Democrats kind of on the ropes. I think that they have to come back and legislate and they are going

to have to move off of this massive bailout of the blue states.

You know, I was in the Senate hearing room negotiating the Phase 3 deal as you mentioned in the introduction, and I can remember that at one point,

the Democrats came forward with bailouts for the states and the Republicans are kind of like, well, no, you know, our states, our red states have been

very careful to build rainy day funds and we're a little bit short, but we got money in our rainy day fund for that.

And why should you take money from my state and give it to your state that's been reckless with spending?

And pretty much that shut the thing mostly down back then, but the Democrats are trying again now, and I think they're going to fail again.

QUEST: How much of all of this -- actually, it's a naive question, but you are in the room, as you've just said, Kevin. How much of it is positioning

for the election, which is less than a hundred days from now? Both sides -- both sides, the President is trying to say, look what I've done, look what

I've done.

The Democrats are trying to say, we need it more, we need it more. The Republicans in Congress, I'm not sure what they're trying to say.

HASSETT: You know, I think up until now, up until Phase 4, it's been pretty remarkable how bipartisan it's been. And I think Richard, you've

watched economies for the longest time, I don't think you've ever seen a negative shock as big as the second quarter.

And yet, you know, the jobs numbers have been rebounding in a way that it's shocked me, it's probably shocked you, too, and I think that the reason is,

there was this massive policy response that, you know, passed with unanimous consent.

You know, every Democrat and every Republican voted for it. So now we're in a Phase 4 deal. I think the fact that the jobs numbers surprised on the

upside takes a little bit of the emergency pressure off folks and so they're playing more traditional politics this time around.

I expect the Democrats will come back to the table and that they'll still get to a pretty good deal that splits the difference, more or less, and

that they'll do so in the next week or two.

QUEST: So, let's lose the -- let's move from politics and skate to thicker ice of economics. On this jobs question, the jobs numbers were better,

absolutely.

But the fear is twofold, isn't it? Firstly, that after September-October, there's a -- not even a second wave, but the hardened job losses start to

hit.

And the second thing is that output never recovers to where it was. Historically, it doesn't happen, and therefore, we are entrenching into

this long-term unemployed.

HASSETT: Right. I think to state your risks the way I've been talking about it since January, just slightly differently, if we wake up and we've

got seven percent, say, less GDP than we did at the start, then we've got way too much fiscal capacity and so why would anyone engage in capital

spending and people would probably lay off workers as well.

So, when COVID clears up and God-willing it will be soon, then people are going to look at their capacity and they are going to look at their demand

and it could be that capacity is way in excess of what you need to meet demand, and that's a big risk going forward, and I think that's one reason

why it's so important that we sort of stop the squabbling and get a really big Phase 4 deal through right now.

QUEST: And your answer, sir, is the main reason we love having you on QUEST MEANS BUSINESS, bridging politics and economics in elegance, too,

sir.

Thank you, Kevin. It is always good to have you. Thank you very much.

Now, when we come back after the break, the nation is looking for change. It is, of course, Lebanon in this case. The people are demanding it.

They're on the streets. The problem is, the elites who govern the country and the corrupt warlords who have taken all the money, they don't have any

vested interest in real political change.

After the break, it's QUEST MEANS BUSINESS. Good evening to you.

(COMMERCIAL BREAK)

[15:30:00]

QUEST: HOST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. The U.N. is urging speedy and generous donations to help

Lebanon. But exactly what that means and who's likely to give? We'll get to grips with that. And Kodak shares fall very sharply, they plunge back,

having, of course, risen on the back of the deal for the U.S. government to buy vaccines. Now, there are serious questions about that deal. Before we

get to any of it, this is CNN. And on this network, the news always comes first.

Lebanon's Prime Minister and his entire cabinet have resigned on the third day of angry street protests, demanding sweeping political change. Hassan

Diab acknowledged chronic and widespread government corruption, and said it's to blame for the deadly blast in Beirut. Protests have taken to the

streets in Belarus. They're angry about the preliminary election results that showed the long-time President Alexander Lukashenko winning in a

landslide. Opposition leaders say the election was rigged. E.U. officials say they are -- they too are concerned about the validity of the vote.

It's inevitable that there'll be a flare up of COVID-19, and nations need to be prepared for it. That's a message from the senior World Health

Organization official. He said nations must figure out how to shut down flare ups before they spread. China has imposed sanctions on 11 Americans

including several prominent U.S. senators, for in their words, behaving badly on Hong Kong issues. The move follows the U.S. imposition of

sanctions last week on Hong Kong's chief executive and 10 other officials in Hong Kong and the mainland. It was punishment for Hong Kong's

controversial new security law passed recently.

[15:35:00]

Protesters appeared on the streets again in large, noisy, sometimes violent demonstrations taking place in Beirut. The issue, of course, is political

change and what they want. The reality is how do you get that change? And anyway, is it even possible? CNN's Sam Kiley is in Beirut.

(BEGIN VIDEOTAPE)

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: If you're in the Lebanese opposition, this is democracy in action.

30 or 40 yards down the street, it's barricaded there. It's the outer call into the Lebanese Parliament. The demonstrators are absolutely dead set,

they've told me, on getting into more and more government buildings to try and demonstrate that the government itself is really a chimera. It is

hopeless; it's a sort of joke.

As the cleanup continues after thousands of tons of fertilizer is believed to have blown up and destroyed parts of Beirut, activists are adamant that

Lebanon's sectarian system is dynastic politics, corruption, and negligence led to the blast.

SAMIRA EL AZAR, PROTESTER: We will go to the parliament. We will go to their houses. We will go to each place to get them down. They will go to a

place they will be -- they will not be able to go by to the streets, ever. The killed people is a big thing to us.

KILEY: Lebanon's Parliament which 128 seats are shared among Christians, Sunnis, Druze, and Shi'a under electoral law following the Civil War 30

years ago, was dissolved Monday, ahead of new elections. But Walid Jumblatt, the Druze leader, who inherited his role from his father, and has

arguably benefited from the existing system is pessimistic that even early elections would bring change.

WALID JUMBLATT, LEBANESE DRUZE LEADER: When I see the protesters, the revolutionary, when I saw them, and I see them yesterday, and they want to

change Lebanon. They want the new Lebanon. But the obstacles to change in new Lebanon is in this specific point, alliance of minorities and the

electoral law because you cannot change Lebanon. So, let's say a military coup d'etat. It's impossible.

KILEY: Close to the epicenter of Tuesday's blast, the Kataeb party's headquarters is in ruins. It's a largely Christian Maronite party. Its

Secretary General was killed in the explosion. His bloody handprint still visible. The grandson of the party's founder and son of a former president,

nephew of another president, who was murdered, Samy Gemayel supports the street protests.

SAMY GEMAYEL, LEBANESE MEMBER OF PARLIAMENT: We are all from families that were part of the old Lebanon. This is how the new -- the new generation

didn't come from nowhere. And it's our duty to do our revolution -- our own revolution each one in his society and the place where he is.

KILEY: But in Martyrs' Square, protesters now include former Lebanese commando leader, Colonel Georges Nader. He wants to see the old guard swept

away entirely.

COL. GEORGES NADER (RET.), LEBANESE COMMANDO LEADER (through translator): Change is coming, and I recommend they leave peacefully, or we will go to

their homes and do it by force.

KILEY: That night, it was the protests who were eventually swept away, but not for long. They have plans to harness public anger over the Beirut blast

to a more powerful revolutionary rage. Sam Kiley, CNN, Beirut.

(END VIDEOTAPE)

QUEST: So, Sami Atallah is with me, the Director of the Lebanese Center for Policy Studies. He joins me from Beirut. And the -- we've heard it, time

and again, that there needs to be coming together, there needs to be political reform, there needs to be this, there needs to be that, but how

do you get rid of these elder elites and tribal warlords who are not going to be shifted?

SAMI ATALLAH, DIRECTOR, LEBANESE CENTER FOR POLICY STUDIES: Good afternoon, Richard, thank you so much for having me here. Indeed, Lebanon is at an

impasse. The huge explosion that we just witnessed a few days ago is a disaster for the country. And it's largely the responsibility of the

political elite that have mismanaged the country. It's time for them to go. Now, how do you actually get them out of the power? And this is going to be

a very difficult process. This requires a change. Either you do it democratically through a change in the electoral law, and that should

actually take place -- Richard, are you with me? Can you -- can you hear me? Hello?

QUEST: Yes. No, I can. You know, I can hear you, sir. I can hear you. Can you hear me?

ATALLAH: Yes, I can hear you. Because at one point, I lost you. So, I just want to make sure we're --

[15:39:57]

QUEST: Okay. But -- no, no, you didn't lose me. No, no, you didn't lose me. But I'm going to jump in with a question. And I hate what you say and I

follow what you say, but I'm -- I cannot see how you get to that destination of a change in the electoral law or constitutional change, when

there are so many people with vested interests in the status quo, no matter how many protests.

ATALLAH: Yes, absolutely. I mean, that's going to be very, very difficult. I totally hear you. But, in fact, they cannot govern the country anymore.

So, we're going to reach a stage where either we're going to continue postponing our problems and impoverishing the people where there's nothing

left because it's the same people that have hollowed out the system and have hollowed out the state, you know? They're going to realize either

they're going to continue business as usual and will be nothing less than govern over or they're going to say, look, you know, let's actually have a

group of people take over for a particular period of time to actually set - - reset the country and put it on a different path. This is the key juncture for Lebanon right now. Yes, Richard?

QUEST: That is not going to happen. And the reason I say that's not going to happen is because despite the awfulness of the blast, memories will

quickly forget that. The warlords and the tribal leaders, the parliament that can't even agree in negotiation with the IMF. And also, let me add,

there is no external pressure from the Diaspora from Lebanese outside of the country, who some of whom, many of whom have this romantic notion of

what the country used to be.

ATALLAH: Yes. Look, there definitely need to have a pressure actually from all sorts of groups, whether the Diaspora even the international community,

they cannot actually support this government or the future government that is a national unity government, because what they're trying to do, and if

they do so, they're just propagating our problem. So, one thing that they can do and they add the pressure, while you have the pressure from the

streets, you can have pressure from the international community to say to the Lebanese establishment, the political party, your time is up.

And those guys, they need the money. They have run out of money; they have actually bankrupted the economy. Now, they're actually at an impasse. I

hope that they don't use the explosion as an -- as an opportunity for them to actually regain power. To me, this is a clear juncture for all the

international community Diaspora and the Lebanese on the street.

QUEST: Sami, we'll talk more. Thank you. I appreciate it. (INAUDIBLE) There's a lot more we need to get to grips with, and they'll be plenty of

time for us to do it in the days ahead. Thank you, sir. Now, the French Prime Minister says that Lebanon must move quickly. We've heard that

before. But let's see just what he means. Cyril Vanier will be with us live from Paris after the break. It's QUEST MEANS BUSINESS. Good evening to you.

(COMMERCIAL BREAK)

[15:45:00]

QUEST: France has called upon Lebanon's government to form a new government as quickly as possible. President Macron has also spoken to his counterpart

in Beirut. Cyril Vanier joins me from Paris. The French, of course, have also put together the donation conference, 300 million was raised, but they

want a lot more. Ten billion is supposedly the number needed to stabilize Lebanon at the moment, so where's that leave them?

CYRIL VANIER, CNN INTERNATIONAL ANCHOR: Well, Richard, that's been the number that's been floating around for a while because France and other

international countries have been trying to give that money to Lebanon, right? And I'm saying this right, France and other international countries

have been trying to give upwards of $10 billion to Lebanon for the last two years. But not for free. Not a blank check, as Emmanuel Macron would say.

This has always been promised in exchange for deep structural reforms of the country's political system. And those reforms have not happened and

that is why Lebanon has not had that money. So, Emmanuel Macron and those countries now see that there is renewed political opportunity for them to

try and turn up the pressure on Lebanon's ruling class and obtain the change that they haven't obtained in the last two years.

They are essentially going to harness, I believe it was Sam Kiley saying those words earlier to you, Richard, harness the anger of the Lebanese

people to try and get that change that they have so far failed to secure.

QUEST: But I always feel like I can vent my frustration with you, Cyril, that I can't with some of our guests, of course, which is this feeling of

going round in circles, another 10 billion here that they couldn't get earlier. But eventually, that the Western countries or other countries feel

obliged to put in if only to keep Iran out, to keep Russia on the backfoot, and to prevent Lebanon from becoming a full throttle proxy wall.

VANIER: Yes, absolutely, Richard. And the international community does not want to do this again. Nobody wants to put money on the table for Lebanon

that will just bankroll this country to keep doing for the next two, three, five years what it has been doing for the last five years. So, it comes

down to this question that you've been asking of why would this time be different?

And it comes back to this answer that Emmanuel Macron and the other international countries that he has managed to bring along with him,

believe this could be a turning point, a turning point because there is anger on the street at a level not seen before in Lebanon and they want to

use a carrot and stick approach. The anger of the protesters is the stick and they are providing a carrot that is money for the country, provided it

reforms itself.

QUEST: Cyril Vanier who is in Paris. Cyril, thank you. We appreciate that. Now, in just a moment, when Kodak said it was going to go into a vaccine

production and the U.S. government said it would buy, the share price rocketed. Now, that's not so straightforward. The pivot's in question, the

deal's unlikely and the share price has fallen. I'll tell you more after the break.

(COMMERCIAL BREAK)

[15:50:00]

QUEST: Kodak share prices being cut by a third after U.S. government halted payments $765 million worth of payments and loans to the company to make

ingredients and manufacture ingredients for vaccines. The shares are off sharply. They were down 43 percent at one says I suppose you could arguably

see there's a slight rally. Regulators have looked into allegations of insider trading when the stock shot up 2,700 percent on the loan announced.

Oh, look at that, up like a rocket and back down again. Alison Kosik is in New York. All right. So, let's split this out. What went wrong? I mean, is

Kodak actually being used to make -- comes out manufacture vaccines?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: So, originally, Richard, the whole point of this loan was to, you know, give it to Kodak so we could

sort of reimagine and pay for -- reimagining its factory to make these drug ingredients for generic drugs. The problem is, now it's being investigated

for insider trading, and just how this company got this government deal. You look at how the stock price has been acting since late last month, when

the deal was announced that it got this loan.

It shot up over 2,000 percent over a two-day period. And remember, this is a company that has largely fallen off the radar. I mean, we've forgotten

about this company except for the fact that it was an innovative and it came up with, you know, making the Kodak moment synonymous with picture

taking. Well, now its chief executive is being accused of -- or being investigated for having these stock options or taking these stock options,

thousands of them, literally a day before the announcement was made that this deal with the government was made.

So, the SEC investigating insider trading also investigating the timing of the announcement as well, because the announcement actually was made a day

before the initial announcement, if you can follow me here through a media advisory on a local New York T.V. station first.

QUEST: All right. And Alison, I mean, this is the sort of thing people go to prison for.

KOSIK: It is. I mean, keep in mind, these are just allegations and we very well know that this right now is an investigation in its early stages and

it may not produce any wrongdoing by the company, it may not produce any wrongdoing by individuals. But the reality is, the government has put a

block on allowing this company to loan until, you know, it takes a look at these allegations and see what's what.

Keep in mind, the Trump administration, President Trump himself, he spoke very highly of this deal last month, but then kind of walked back his

comments and said he was not involved in the loan. Richard.

QUEST: Right. And does this mean that Kodak -- I mean, absent the government money and the government loan, does this mean that Kodak will

now no longer be involved in the vaccine search?

KOSIK: You know, that's hard to say. But if you think about it, the big chunk of this money was going to be used to change the factory to be able

to make these ingredients for generic drugs.

QUEST: True.

KOSIK: It's questionable if the factories that are located In Rochester, New York and Minnesota are able to manufacture these drugs without the loan

money.

[15:55:06]

The, you know, the thinking is that it needs this loan money to move ahead with the idea that that it would -- it would produce these drugs.

QUEST: Alison Kosik joining us. Thank you, Alison. Now, the markets before we go or before we take a break, still got profitable moment after that. I

look at the Dow and the way it's moving, it's going to hold on to. It looks as if it'll hold on to the gains of about one and -- well, look at that up

250. It's been a solid. I mean, that's a solid day of gains and 28,000. Still some way away, but it is in -- it is in the mirror. The Dow 30 shows

Caterpillar, Dow and Boeing all doing remarkably well.

Boeing -- sorry, Microsoft is the worst of the day, down two and a quarter percent and that's because there are other potential buyers coming onto the

market. TikTok having had preliminary talks about that's taken Microsoft down. Strong day though overall. Boeing up five percent. Max 737 might fly

sooner rather than later. We'll take a profit -- we'll take a short break and a PROFITABLE MOMENT afterwards. This is QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Tonight's PROFITABLE MOMENT, I've tried really hard to get to grips tonight with why this is different in Lebanon and in Beirut. Yes, the

explosion was the worst and the damage has been horrendous. But will that be enough either for international lenders to put a sufficient to pressure

for change, or for the warlords and the elites and the tribal leaders to basically say, we're going to give it all up and we're going to govern

properly. I don't think that's going to happen any more than you do.

Nor do I think that it's going to be sufficient to make sort of fundamental change required. As one of my guests summed it up beautifully tonight,

those people who have been in power have made a lot of money over a long period of time, and they're not about to head off to the hills any time

soon. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable.

END