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Quest Means Business

European Leaders Visit Kyiv As E.U. Tightens Sanctions; E.U. Banning Investments In Russian Energy; Global Companies Caught In Middle Of Russia- Ukraine Conflict; China Locks Down 37 Million As COVID-19 Cases Rise; Goldman Sachs Clarifies CEO's Comments On Russia; Bloom Raskin Withdraws Nomination For The Fed; Profitable Moment. Aired 4-5p ET

Aired March 15, 2022 - 16:00   ET

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

[16:00:08]

RICHARD QUEST, CNN BUSINESS ANCHOR: Closing bell ringing on Wall Street. A very strong performance, robust gains as the bell rings and the trading day

ends and everyone is -- there you go.

Thank you, Madam.

Business is done for the day, and a gain of 600 points, just about the best of the day for the Dow. Everyone is waiting for the Fed meeting tomorrow.

The markets as they are looking and the events of the day, I must bring to your attention.

A dramatic show of European support for Ukraine. Three European Prime Ministers in Kyiv amid intense Russian attacks.

E.U.'s Energy Minister tonight live on this program explaining how Europe will wean itself off Russian energy.

And Goldman Sachs chief executive clarifies his statement, a debate over Wall Street's role in punishing Russia.

We're live in New York. It is Tuesday, the Ides of March. I'm Richard Quest, I mean business.

Good evening.

Remarkable pictures and news tonight. The head of three European countries are in the capital of Ukraine, as the E.U. tightens the economic noose on

Russia and the capital is under bombardment from the Russians.

The Prime Minister of the Czech Republic, Slovenia, and Poland, you see the pictures here all went to Kyiv where they met the Ukrainian President

Zelenskyy.

Poland's Prime Minister, who you see there in the middle with the glasses says it is their duty, in his words, to be where history is forged. They

are doing so as Kyiv is entering a 35-hour curfew. There is intense fighting, Russian shelling.

The European Union has now approve new sanctions that will target Russia's energy sector. The European Energy Commissioner will be with me, Kadri

Simson will be with me in just a moment.

First, I need to update you with what is happening in the country. Scott McLean is in Lviv and joins me.

Scott, everybody is watching to see the results, or at least to see this very strong support from three major European countries by the Prime

Minister's arriving.

SCOTT MCLEAN, CNN CORRESPONDENT: It is hard to understate the significance of this, Richard. Look, there have been European leaders come to Poland

before to express support for Ukraine, some have gone right up to the border. And it would be one thing if we had people start showing up here in

Lviv, where it is still relatively safe. There aren't bombs falling here, there isn't artillery shelling here, at least not yet.

But it is a totally different ballgame to have these three Prime Ministers showing up in Kyiv. This is a city that is not very safe right now, not by

any stretch of the imagination. We know that the train ride there would have taken seven to eight hours. And by the time they got there, again,

they are in a city that has been taking some serious shelling as of late.

Four residential buildings were hit just today. Four people were killed. Fires were started in at least two of those apartment complexes. People had

to be rescued.

I mean, again, it is hard to overstate how dangerous this assignment was, but they said that they wanted to go there to really show their support for

Ukraine, to announce a new package of aid and there is one thing that I want to read you quickly just from the Polish Prime Minister.

He posted on Facebook earlier today explaining the rationale for being there in person because of course, a lot of this could be done virtually in

the year 2022, and he said it is our duty to be where history is forged, because it is not about us, but about the future of our children who

deserve to live in a world free from tyranny.

Now, the difficulty now or something to think about now is how are they going to get back? Of course, the curfew in Kyiv has already kicked in. The

Polish Prime Minister's office told us earlier that originally, the plan was to go and come back same day. But obviously plans have changed. They

don't want to get into details because of security concerns, of course, but getting back will be just as difficult as it was to get there -- Richard.

QUEST: And Scott, although I can hear President Zelenskyy saying as he did say to the Canadian Parliament today and to the U.K., and I suspect he'll

say to the Congress tomorrow, I can hear him saying, well, thank you. Fine words are very nice and it is kind of you to have come here, but I need

more than good wishes. I need you to close the airspace. I need you to increase the military aid. In other words, I need you to get your hands

dirty.

[16:05:06]

MCLEAN: Yes. And he said, as much today, he made very clear to the Canadian Parliament that he would like them to do more. He said also later

on in the day that, look, if the door to NATO was really open for Ukraine, then perhaps Ukraine wouldn't have to go through 20 days of intense

bombardment and invasion from the Russians to convince them to close the sky, which, of course, they still haven't actually been able to do. And he

also said that NATO Article V, that's the mutual defense treaty is as weak as it has ever been.

It's also not just President Zelenskyy saying it, Richard. In this country, you come up with -- you run into any government official, any official in

any capacity, it seems, and they will tell you, please, please close the sky. Even random people on the street will stop us when they see our

camera. They'll either say one vulgar things about President Putin, or they'll tell us, please, please tell the United States to close the sky.

Tell NATO to close the sky.

The Ukrainian position is that they believe that if bombs aren't falling out of the air, if there aren't artillery shells hitting random apartment

buildings, they think that the Russian ground invasion is rather slow, rather predictable, not very dynamic, so they think that they can take the

Russians on the ground. They're just having much more difficulty with this terror coming down from the sky.

You can imagine how civilians in places like Kyiv, places like Kharkiv, places like Mariupol are feeling right now; places under constant

bombardment that are undoubtedly feeling terrorized.

QUEST: Scott McLean, who is in Lviv for us, and will continue to monitor when we hear more from that meeting. Thank you, sir.

The European Union and the United Kingdom announced fresh sanctions on Russia's elite and oligarchs. The E.U. sanctions include a ban on steel

products, the export of luxury goods, and any new investment in Russian energy firms.

Anna Stewart is in London, why does this set of sanctions -- why is it much better, tighter, more effective than what we've had so far?

ANNA STEWART, CNN REPORTER: This round is quite interesting. It's something that was discussed at the end of last week, it's kind of in line

with what we've had in the U.S. and Canada already, and I think what's different about this round is it really targets rich Russian consumers with

a ban or restriction on buying luxury goods from Europe, I think it's 300 euros or $330.00, for instance, on designer handbags, or diamonds or caviar

from Europe, also another restriction on luxury cars as well.

And it's also targeting trade and in slightly different ways, what we saw last week. So now, looking at a ban on importing Russian steel to Europe.

Now, that will hurt some European industry. Russia is a major market, I think it provided 15 percent of all steel imports.

So that has an impact, but Richard, still no sanctions, of course, on energy or some of the other metals that they really rely on Russia for

aluminum, copper, palladium, that sort of thing.

QUEST: Okay, so we have these increasing sanctions. We don't have them on oil and gas, substantially. And are they working -- is what everybody's

asking because this economic sanctions are the main tool, the main weapon being deployed.

STEWART: I think you can look at in two ways: What's working and what's not working. What is not working, I wouldn't necessarily say is maybe

adding more oligarchs to lists, weeks and weeks after the Russian invasion, because so many assets have already been shared and shifted. We've seen you

and I, superyachts, darting across oceans out of the reach of Europe, and the U.K.

Roman Abramovich's yacht is a very good example. What is working perhaps, though, is just the general squeeze on your average Russian and how they

are feeling in the country because we have seen plenty of -- not plenty, but we've seen some people come out and be critical of the Kremlin at great

personal risk even I think last week, it was of course, he is called the Nickel King, one of the richest men in Russia.

And so that's been interesting, and that to me, suggests that actually overall sanctions are probably working.

QUEST: Any word -- do we know where Roman Abramovich is in a sentence?

STEWART: In a sentence, I believe he was last spotted getting on a private jet. We don't know whether he got off at Turkey or whether he made his way

all the way to Moscow.

We do believe is a big assets, private jets and superyachts are probably out of the reach of the authorities at this stage.

QUEST: Anna Stewart in London, thank you.

So to oil and gas and Europe's reliance on Russian oil and gas, will test its unity when it comes to standing up to Moscow. Europe gets around 45

percent of its natural gas from Russia, Hungary, Slovakia, Austria, and Germany are amongst the most energy dependent, and the E.U. has pledged to

cut its reliance on Russia by two-thirds this year.

The union has been looking at alternative sources of oil and gas and the potential includes Algeria, Turkmenistan, and beyond.

Kadri Simson is the E.U. Commissioner for Energy. I am very grateful the Commissioner is joining us tonight.

Thank you, ma'am. It is good to -- I saw your speech today about geothermal. I've seen your comments.

The reality is, it's not going to be easy as the Commission President has said, to wean Europe off oil and gas in short order.

[16:10:24]

KADRI SIMSON, E.U. COMMISSIONER FOR ENERGY: When indeed, but for Europe, this is a turning point. There is a strong consensus that we must end our

dependence on Russian energy as soon as possible. And it is clear that it is very challenging, but it is doable.

And as you mentioned, well, more than 40 percent of our gas comes from Russia and this is about 155 billion cubic meters a year. And most of this

is pipeline gas. It cannot be replaced overnight.

But we believe that we can increase the LNG deliveries by around 50 PCM annually. And in fact, LNG deliveries have already increased significantly,

and particularly from the United States, so this has helped us this winter and we do have also good contacts with other reliable partners with some --

we do have pipeline on.

QUEST: It looked and perhaps it is self-serving within Europe, not to sanction the one thing that would have deprived Russia of most of its

revenue, which is oil and gas. Now, I understand there would have been a price to be paid by European countries, particularly Germany, but it looks

self-serving, that those countries weren't prepared to do it.

SIMSON: Well, we just summed up with the fourth package of sanctions since the beginning of the war and there has never been a response on this scale

by the European Union, and in such close coordination with our allies, and these sanctions are actually working. So we see the effect on the Russian

economy already, the stock market is closed, and ruble has lost half of its value and the companies are fleeing the country.

So we have imposed sanctions also in the energy sector, to exporting energy technologies to Russia and we have also banned any investment in the

Russian energy sector.

So what we are doing in parallel is reducing the amount of Russian energy we consume. So we cannot stop using it overnight, but we can make this

progress very fast and we are determined to do that.

QUEST: Is nuclear power part of your grand plan to wean off Russian oil and gas and indeed for the energy transition? Now, look, I agree, nice to

have wind, solar, geothermal, all of these will play a part, I'll give you that. But nuclear power will give it in large doses and actually, perhaps

is the key. Are you countenancing that?

SIMSON: Well, we are -- I am counting on all the alternatives. So yes, we have mapped all the additional gas volumes that we can get from our

partners well starting with Azerbaijan and Algeria, or LNG from United States, Qatar or Egypt.

We are also planning to double our own biomethane production, and then of course, where we consume natural gas a lot, this is housing. We have to

renovate buildings so that we can save gas with electricity production more --

QUEST: Commissioner, I want to -- I'm asking you, though, it sounds like Europe is trying to make an omelet without breaking eggs. Are you prepared

to say that nuclear power must be part of the energy solution?

SIMSON: Nuclear has always been part of our energy solution. Now, even with our long-term goal to become climate neutral, we always have counted

that partially our consumption will be covered by nuclear power plants.

QUEST: And as you look now, at the way in which -- I mean, look, it's really difficult. This is impossible, isn't it? Whichever way Europe moves

on this is going to be difficult and painful.

What would your message be to Europeans tonight?

SIMSON: Well, we are keeping a very close eye on the security supply situation and we are making sure that our contingency plans are up to date.

But on top of that, there are other work streams so we are helping Ukrainians where we can and then of course we have to well, keep in mind

that we do have vulnerable consumers whom we have to support from our side.

But right now, I think that the most important thing that we can do here is helping Ukraine so we are planning to link Ukraine's electricity grid to

the European one to keep their system stable. This is the least we can do from my field of responsibility.

[16:15:17]

And then of course, we have to send them necessary commodities. So gas, diesel and all other supplies and that is what we're doing. But in the

medium term, we are preparing for the next heating season in the way that our dependence on Russian gas and oil will be significantly smaller than it

was last year.

QUEST: Commissioner, I'm very grateful that you've come on and put it in such clear terms tonight.

Thank you for taking the time. I know you're very busy. These are major issues that have been dealt with and it is good to see you ma'am. Thank you

so much.

SIMSON: Thank you.

QUEST: Russia may nationalize the assets of foreign-owned firms. The chief executive of Mercedes-Benz on what's at stake, coming up next.

(COMMERCIAL BREAK)

QUEST: Russia has been threatening to retaliate against Western sanctions. Well, an apparent proposal would be to nationalize the assets of companies

that are more than 25 percent owned by countries that are deemed unfriendly.

Well, you can put Mercedes-Benz in that category, and Mercedes-Benz says $2.2 billion in assets that Russia could now be in jeopardy. A factory

outside of Moscow, six subsidiary companies operating across the country, a thousand employees.

Ola Kallenius is the chief executive of Mercedes-Benz. He joins me from Tuscaloosa, Alabama.

We have a very bad delay, sir. But I know why you're in Alabama. It's about your new factory and your new battery plant. We will get to that once we've

dealt with this bigger question: I mean, you were very quick to pull out of Russia. Are you now getting ready if your assets, pardon, are seized?

OLA KALLENIUS, CHIEF EXECUTIVE, MERCEDES-BENZ: Well, Richard, it's good to be with you today. We made the decision in this very, very, very difficult

and terrible war that is going on in Ukraine that we would stop exporting vehicles to Russia and also ramp down our production.

We have to see how things develop. I don't want to speculate on what might happen next, but right now, we're a little bit in a holding pattern.

[16:20:10]

QUEST: If you're in this holding pattern, waiting to see, do you think it's important that CEOs of major companies, and indeed major companies

themselves make it clear where they stand. In other words, it's not business as usual. You're not rushing back the first day this war ends,

that there has been a change in the way you now view doing business in that country. Is that fair?

KALLENIUS: Well, as a European, I think you have to be very concerned about what's going on in the Ukraine and that is why we made the decision

as a company to stop exporting and also ramped down our production.

Of course, everybody is hopeful that there will be some kind of a de- escalation and negotiated solution that things will take a better turn from here. But the way it looks like right now, we felt that this was the in the

best interest of our company to do this.

QUEST: Let's talk about -- we'll come back to this in just a second -- let's talk about why you are in Alabama with the rollout of some new

vehicles and also, a plant, a battery plant. Because this goes to this heart -- I mean, this goes to the heart of I was talking about a moment ago

with the European Energy Commissioner that we are going to dramatically have to rethink the way we use energy and fossil fuels, oil and gas, and

that is what this is all about, isn't it?

KALLENIUS: It is indeed. We, as Mercedes-Benz, we have made a clear strategic decision to go all in on electrification. It is about

decarbonizing our complete business and for us building cars, it means electric vehicles. That's why we're here in Alabama today announcing that

we are putting -- starting production over our new electric SUVs and we are putting in more than a billion dollars into investment, building up a brand

new battery factory here, and converting this plant of luxury SUVs also into electric vehicles.

So on the path towards a CO2 neutral future, as you say, it is about an energy transition. And for us, the obvious choice is then to change the

power train from a combustion based one towards electric.

QUEST: Do you get the feeling that we've -- that what has happened in Russia and Ukraine, it has sort of made us all wake up, in a sense, and I

put myself in that category as well, not that we'd become -- we had become complacent about energy. We have become complacent about peace, we've

become complacent about the status quo.

And although we've had dramatic financial crises, this is the first time we've really had to look inside and questioned certain fundamentals. Would

you agree?

KALLENIUS: With regard to ultimate de-carbonization, going to CO2 neutrality, I think we were already awake. We, as a company, definitely. We

already made three years ago, the very clear commitment with our so-called Ambition 2039, that we are going to be CO2 neutral 10 years ahead of the

Paris Agreement.

So the overriding strategic decision and discussion here is getting off of fossil and making sure that we reduce the risk of climate change.

A thing like the Ukraine is a wake-up call in terms of energy security for Europe, where you suddenly see how dependent Europe is, and maybe that you

strategically need to address that. But our journey into electrification started before this and hasn't really changed. That is a firm decision that

we are implementing.

QUEST: Good to see you, sir. I'm grateful. Thank you for joining us tonight from Tuscaloosa, in Alabama, in the south. I appreciate it.

The markets, just look at that. They are closed now because of the time change difference, and we want to keep the program at the same time for

you, but the clocks have moved forward in the United States, and it is now a gain of three percent on the NASDAQ. The Dow is two percent, strong

performance all round.

As you can see, oil prices also, they fell to less than $100.00 a barrel, 27 percent down from their recent highs, and that's only a week ago. It

just shows the volatility and perhaps, you can't really take one price because frankly, if there was a disruption to supply, that would go back up

to $130.00 before I finished this sentence. So we take it with a pinch of salt.

However, if you're running an airline, lower fuel is good news for your industry in the short term and that's why you're seeing UA up nearly 10

percent, American is -- you're seeing strong performances not so much from Southwest. There is a reason for that shorter flights, therefore it doesn't

gain as much from the oil price as say, for example, a United, American, or Delta.

The Chief Executive of Qantas, which really gets it hard, or would be if it wasn't hedged, Alan Joyce was in New York and he told me that the recent

rise in fuel costs eventually will lead to higher fares, but he said travel demand in a post COVID world is recovering dramatically.

(BEGIN VIDEOTAPE)

ALAN JOYCE, CEO, QANTAS AIRWAYS: I mean, what we're seeing now is that things are dramatically opening up. We've got huge levels of demand that we

haven't seen before. This pent up demand for two and a half years, basically, has made people want to see the family, friends, want to take

that business trip, want to travel around the globe, want to travel around Australia. So we're in a great position to benefit from that big build.

QUEST: We're seeing dramatic increases in the price of fuel.

JOYCE: Yes.

QUEST: As an airline, your percentage of fuel tends to be higher because of your stage lens being much longer. So, we're talking surcharges sooner

rather than later, if not already.

JOYCE: We don't like surcharges. Americans, you have to put surcharges in. We'd rather deal with air fares and revenue management. And on average, we

believe to cope with the current fuel levels, we need around a seven percent increase in air fares, or RASK, or C-factor. And that's what we'll

be aiming for.

We think the demand is there, Richard, to get there. We're very optimistic domestically and internationally. In fact, very recently, domestically, our

competitor raised their fares by around five percent.

QUEST: I mean, your load factor must be tremendous as you ramp up.

JOYCE: Well, we are now trying to ramp up and trying to keep it slightly ahead of where the demand is to get there. And so by the middle of the

year, we're expecting our domestic operation to be back over a hundred percent. Qantas is 113 percent of pre-COVID levels, Jetstar 120 percent of

pre-COVID levels. So we think there is a restructure of the domestic market that gives us more market share.

And internationally, we are activating aircraft, we are actively getting the aircraft back out of the desert. So we're only 22 percent of pre-COVID

levels internationally, this quarter. Next quarter, we go to 44. By early 2023, we're close to a hundred percent.

So it's taken a little bit longer with international to get there.

QUEST: Why is that? Because the demand is absolutely there.

JOYCE: So on the markets where the demand is, we're back to -- and we're seeing pre-COVID levels.

QUEST: That's Europe and --

JOYCE: And North America, but a lot of our network is into Asia and that is staggering its opening. So Japan, we're hoping it'll open by April;

Korea, hopefully in April. Nobody is sure on China. We think China may be later in the year, but some are saying it could be into 2023.

We've got places like the Philippines. So, they stagger into next year, and even New Zealand. I mean, they'd been in tighter controls than Australia.

New Zealand is saying hopefully before July, and that's a big market.

QUEST: So as you come out of COVID, the priorities, get the fleet back up and running, rebuild the route network. What about product? New routes?

Where are you going to grow?

JOYCE: Yes. Great question. So domestically, we started 50 new routes during COVID, 50 -- five zero -- and all of those routes are just about

working really well.

We've already launched a few new international routes. We're back into India for the first time in 20 years, back into Rome for the first time in

20 years. And the product this week, we announced the relaunch of first class. We've opened up all of our lounges domestically, 35 of them, and

we've announced the opening up of all of our lounges internationally. Most of them are opening, but the last ones are there.

So our product is going to be even a lot better coming out of COVID that was going in.

QUEST: Today's, Qantas is different to that which went into the pandemic. Tell me how.

JOYCE: So huge amount of differences. One, the airline is going to be a lot stronger coming out of there because we will end up around 70 percent

of the domestic market. Before COVID, we had 62 percent, and it is one of the biggest domestic markets in the world. Melbourne and Sydney before

COVID was the second largest city pair.

Secondly, we've taken a huge amount of our sales to be able to recover from COVID, so we've taken around a billion dollars every year, ongoing out of

our cost base. Unfortunately, that's meant our workforce has gone from 32,000 people to 22,000. We'll recruit some more to grow again. But it's

going to be a smaller organization in employees, a bigger organization eventually in terms of revenue and capacity.

(END VIDEOTAPE)

QUEST: We'll be talking more with Alan Joyce and finding out the future quarters including of course, the sunrise flight tomorrow.

Now, as COVID cases are surging in China, they are seeing levels not being experienced as the early pandemic.

Beijing is pursuing an increasingly costly zero COVID policy and we will look at that after the break.

(COMMERCIAL BREAK)

[16:30:14]

(JOINED IN PROGRESS)

QUEST: Now as COVID-19 cases are surging in China, they're seeing levels not been experienced as the early pandemic. Beijing is pursuing an

increasingly costly zero COVID policy. We'll look at that after the break.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: I'm Richard Quest. A lot more QUEST MEANS BUSINESS as we continue tonight.

China's zero COVID-19 policy is being put to the test as never before. The widening lockdowns are roiling the country's stock markets.

David Solomon of Goldman Sachs had said it's not Wall Street responsibilities to rein in Russia. Tonight, Goldman Sachs clarifying its

CEO's statement for us.

We'll get to all of it but only after I've updated you, because this is CNN and, here, the news always comes first.

(MUSIC PLAYING)

QUEST (voice-over): The White House has said President Biden will join NATO allies at a special summit in Brussels next week. The White House says

leaders will discuss support of Ukraine and NATO's response to Russia. Officials haven't confirmed if the president will meet also Ukraine's

president or if he'll visit Poland, as has been reported.

A Russian state TV journalist, who disrupted a live television newscast to protest against the war has been found guilty of organizing an unauthorized

public event. A court fined her about $280. Russia just passed a new censorship law and that effectively criminalizes public opposition to the

war in Ukraine.

Pfizer may soon ask U.S. regulators to authorize a fourth dose of its COVID-19 vaccine for people 65 and older. Its chief executive has said

three doses are effective against hospitalization and death but more variants are coming. Pfizer's hoping make a vaccine that will protect

against Omicron and other variants.

(MUSIC PLAYING)

[16:35:00]

QUEST: China's strict zero COVID policy is now jolting its stock markets. The country has locked down 37 million people, as COVID cases are hitting

the highest level since the start of the pandemic.

In Hong Kong, the Hang Seng closed down 5 percent on Tuesday, 10 percent so far this week. It's a sign investors are growing increasingly worried about

the wider economic fallout from the lockdown. CNN's Kristie Lu Stout is in Hong Kong.

(BEGIN VIDEOTAPE)

KRISTIE LU STOUT, CNN ANCHOR AND CORRESPONDENT: Well, into this third year of the pandemic, China's reporting a significant surge in new COVID-19

infection. In fact, on Tuesday, China reported over 5,000 new cases of COVID-19 from the previous day.

This according to the national health commission in China. It's China's biggest outbreak since Wuhan in early 2020.

If we bring up the map, you'll see this, over 21 provinces and municipalities across China are reporting new cases of the virus. Five

Chinese cities with more than 37 million residents are under some form of lockdown.

The epicenter of this current outbreak is the northeastern Chinese province of Jilin. It borders North Korea. Jilin City has reported hundreds of

neighborhoods are under lockdown. There have been multiple rounds of mandatory testing that has been launched there.

On top of that, Jilin province has banned travel inside and outside the province. Two major industrial cities are under some form of lockdown; one

located in Jilin province, a very significant automotive manufacturing hub, as well as Shenzhen in the south, home to one of the world's busiest

container ports. It's also a tech hub.

In fact, Foxconn, a major Apple supplier, has suspended operations in Shenzhen. We're also closely monitoring the situation in Shanghai, the

financial capital of China, a megacity home to about 25 million people. Schools are closed there.

And we've also learned from the aviation authority in China that international flights that are set to touch down in Shanghai will be

diverted to other domestic Chinese cities. This will be starting from March 21st until May 1st.

Now China has been fighting the outbreak, using the full force of its dynamic zero COVID strategy. But the economic toll is high. In fact,

according to Nomura, the Japanese financial services company, in a note supplied to Reuters, it says this.

Quote, "China's economy could be severely hit again. The outbreak has now reached almost every part of China with significant economic importance."

Earlier this month the government set an economic target of around 5.5 percent. That's the lowest official target China has set in decades. And

despite the economic costs, China is not going to quit its zero COVID policy -- Kristie Lu Stout, CNN, Hong Kong.

(END VIDEOTAPE)

QUEST: Now it's a question for Jamie Metzl, the senior fellow at the Atlantic Council, who's with me from New York. You heard there, they're

not going to quit.

Why?

Can't they see that the rest of us have gone back to normal life de facto in most cases?

What does this zero COVID policy give them when there's such economic and health damage?

JAMIE METZL, ATLANTIC COUNCIL: Well, there are two issues. First, the Chinese Communist Party has staked its credibility on doing a better than

everybody else job in suppressing COVID in China. And there's a huge risk that, if they drop their guard or even if they don't drop their guard,

there's going to be a much greater experience of the pandemic in China than at any time but for in the earliest days.

And then second, the Chinese population is, in many ways, a virgin population, because they haven't been exposed to Omicron, because the

vaccine, the Chinese made vaccines just don't work as well as the Western vaccine.

So on one hand, they're going to have to ultimately drop their zero COVID policy; on the other hand, they've built it up so much that the

consequences of their doing so seem significant to Chinese party leaders.

QUEST: All right. So, the view on when China opens, it's sort of -- at the beginning of the year, everyone was saying, ah, the party congress in

October and November. But now Nomura, I think it was, says they don't expect it to open until early 2023.

METZL: We just don't know. It's not that the pandemic is over; certainly conditions are better here in the United States than in some other parts of

the world. But in other parts of the world, particularly the areas where they did a pretty good job of suppressing the outbreaks in the earliest

days -- and particularly places like China, where their vaccines are substandard.

[16:40:00]

-- and that's also the case in Africa -- there's a very real likelihood we're going to see greater jumps in those areas. And viruses variate (sic)

so it could get worse everywhere.

QUEST: But at what point do they become so concerned?

I pretty much guarantee, if the U.S. stock market dropped 10 percent in a week on top of previous weeks, the Fed would be concerned that, the wealth

effect, the disruption and dislocation in the market.

How much economic pain are they prepared to take here?

METZL: There are two things that are happening now in the Chinese markets, Richard. The first is COVID and the possibility of a greater outbreak in

China.

And the second is, that at least the reports, that China's considering arming the Russians for their invasion of Ukraine -- and I think that both

of those are being factored in to concerns about the Chinese stock markets.

But again, as I said earlier, the Chinese government has a legitimacy question. They have staked their legitimacy on doing a better job at

handling COVID than anybody else. Should that shift, that would be seen as very significant blow to them.

QUEST: We'll talk again, Jamie. We'll need your help to understand seemingly the inexplicable. That's what you'll explain in future for us.

Jamie Metzl, I'm grateful. Thank you.

The CEO, the head of Goldman Sachs, David Solomon, says it's not Wall Street's responsibly to ostracize Russia. That's what he supposedly said.

Well, now Goldman Sachs tonight has issued to us a clarifying statement on what he meant. We'll have the statement when we come back.

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QUEST: Got this video I want to bring to your immediate attention. It's President Zelenskyy of Ukraine, meeting with the prime ministers of the

Czech Republic, Slovenia and Poland. It's just arrived. You know about the meeting there.

There you see the Polish prime minster. And he is briefing -- Poland's prime minster said the trip was not about them but the future of our

children, who deserve to live in a world free of tyranny.

We don't know how long they're going to stay in Kyiv. But we'll obviously have other details as and when it is released.

Tonight, Goldman Sachs has provided CNN with a strong statement in support of the U.S. government's policies against Russia.

[16:45:00]

It comes after its chief executive, David Solomon, kicked off a debate about Wall Street's role in the Ukraine war. David Solomon was talking to

"Time" magazine when he said, quote -- or, as it's reported, "You ask, are we doing a good job ostracizing Russia?

"That's not our job."

The bank says the comment was taken out of context. In the last hour, the CEO said in a statement to CNN, "As the first major financial institution

to announce the winddown of our operations in Russia, we firmly believe it is our responsibility at Goldman to lead the way in supporting the U.S. and

international community's efforts to punish Putin and his regime for the invasion of Ukraine."

Well, you can't get clearer than that. Richard Edelman is the chief executive of Edelman, the markets and consultancy and advising firm.

Richard's with me now.

The way in which David Solomon had to clarify -- because the original quote was so astonishing, that somehow Wall Street was so ungenerous when it

comes to all of this, that they said he was out of context. It shows the difficulty for CEOs now.

RICHARD EDELMAN, CEO, EDELMAN: Richard, I don't think it's difficult. I think that CEOs have been very clear about leading their companies out of

Russia.

And it is a very significant change in corporate behavior, equivalent to the behavior in the '70s and '80s on South Africa. Geopolitics is the new

trust litmus test. And therefore, it is very significant that Goldman and 350 other companies have pulled out.

QUEST: The cynical say, firstly, they pulled out because they didn't want to get caught up in the sanctions regimes. Secondly, they pulled out

because it, quote, "looks good" now.

And thirdly and perhaps the most important, once this is over, they'll be back before you can say one, two, three.

EDELMAN: So Richard, I actually think that business moved ahead of government in this case, that it wasn't a response to sanctions, that it

was a response to employees and consumers and, ultimately, investors. And that's why it's so significant.

It started with sustainability, then on diversity and inclusion in the wake of the murder of George Floyd and #MeToo and rescaling and now it's

geopolitics. And again, as business is the most trusted institution in the world, according to the Edelman trust barometer and trust is local in my

company and my CEO, there's big expectations of business to act.

QUEST: But the CEO can't be -- and this is a bad example, a bad question for a bad example in a sense with all the bigger issue -- they can't be at

the whim of every cause, every, you know, moral issue. Again, a bad example, perhaps, with regret. But you know what I mean.

EDELMAN: Look, again, I think companies need to weigh in on policy issues, to do a better job of rescaling in the wake of automation, job loss. But

politics, stay out except if it's in your home state. So, for example, you'll remember Delta Air Lines on the voting rights bill in Georgia

weighed in because, again, it affected a lot of their employees.

So that really is the litmus test forward.

QUEST: So when you get to those organizations -- and I'm thinking of ICANN, the internet registration, if you like, the internet major

authority, who, when asked why you don't just cut off Russia from the rest of the world, they said, well, because, you know, it's better to have

dialogue and diplomacy, the usual arguments.

But if we are prosecuting a war by economic means, which we are, in my view, then surely you have to use every weapon at your disposal.

EDELMAN: So these are multinational companies. I think there are three categories of companies. The first movers were the energy companies that

were in joint ventures with Russian state enterprises. That was clear, to get out.

The second was tech companies or financial services that were asset light, were sending, you know, mobile phones and other things for sale in Russia;

pretty easy to get out.

The third category is food companies, which are supplying basic commodities to consumers in Russia. And they're making the argument that, in fact, it

is their responsibility to continue to serve products.

However, the smart ones have put all profits from those sales to commit to human rights organizations and relief for the people. And also smart

companies, Airbnb and others that are still in Ukraine, are offering free housing for refugees as they move.

[16:50:00]

QUEST: Right. Richard, it is good to have you sir. I'm grateful you took time tonight to talk to us. Thank you.

One of Joe Biden's nominees for the Federal Reserve board's withdrawn her consideration and that brings to an end a political stalemate that was

delaying the other four.

Sarah Bloom Raskin's nomination failed to garner enough support in the Senate because of her position on climate change. President Biden has

called the attacks against her baseless and blamed industry and conservative interest groups.

Phil Mattingly is with me.

Is this a bloody nose for the president?

Or is it a tactical maneuver that was necessary?

Or both?

PHIL MATTINGLY, CNN SENIOR WHITE HOUSE CORRESPONDENT: I think it's both, to be honest, Richard. Look, the reality was the president wanted this

selection; Sarah Bloom Raskin to be the vice chair for bank supervision, also a member of the Federal Reserve Board of Governors.

Progressives were very high on this appointment. But this is the reality of a 50-50 Senate. The president may blame conservative interests or outside

interests. But the reality was he didn't have enough Democrats to move this forward.

In a 50-50 Senate, if one Democrat is opposed -- and one was, Senator Joe Manchin, because of Sarah Bloom Raskin's position as financial regulator,

should use their authority to help mitigate financial risk related to climate change, they're short of the votes. That was just the reality.

Sarah Bloom Raskin sent her letter in to the president, withdrawing her nomination earlier today.

Keep in mind, this means it will likely open the door for four other Federal Reserve Board nominees to move forward, really giving the president

an opportunity to remake the Federal Reserve in his kind of image, to some degree.

But I think when you look at what progressives want in particular, having somebody like Raskin, who used to serve on the Federal Reserve board, was a

deputy Treasury Secretary, had no shortage of experience.

But having somebody of her stature within the party, in her position, in the bank regulator role was something progressives deeply wanted. I'd

remind you, this is the second major bank regulatory position that the president has been unable to get across the finish line.

So as progressives push forward for sharpened regulation, the consideration of climate, when it comes to regulation, they have been stopped every step

of the way, most constantly by Senator Joe Manchin, who obviously has a lot of fossil fuel interests in his West Virginia state.

QUEST: Phil Mattingly, grateful. Thank you, sir. I appreciate it.

We'll take a "Profitable Moment," and that will be after this break.

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QUEST: Tonight's brief "Profitable Moment": what is our responsibility in all of this, in terms of the war?

Last night I was looking and had a few problems with my Kaspersky antivirus software. And I had to telephone them and sort it out. One of the reasons I

have it is because it's such a good anti software. Their service is really good.

But after I put the phone down and started to look online, I saw a lot of, "Should you still have it?

"Are they tools of the Russian government?"

And it set me thinking, well, what are we supposed to do?

If Kaspersky is a Russian company, which it is, even though it's under a U.K. holding company, et cetera, do we get rid of it and do I find

something else?

Or do I simply say, no, it's working really well, don't need to do that and don't take it too far?

It comes back to the fundamental point I say again and again: we are in an economic war or at least our countries are. And that means we have to make

decisions. And that means hard choices, sometimes easily made but rarely quickly.

And that's QUEST MEANS BUSINESS tonight. I'm Richard Quest. Whatever you're up to in the hours ahead ...

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JAKE TAPPER, CNN HOST: Welcome to THE LEAD. I'm Jake Tapper.

This hour, an arrest made in the shootings of multiple homeless men in D.C. and New York. What we're learning about the accused suspect.

Plus drivers are seeing record gas prices but the price spikes are so much worse for truck drivers, who must use diesel fuel to move products across

the U.S.

Will those costs be passed down to you?

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TAPPER: And breaking news leading this hour. Right now Kyiv, the capital of Ukraine, is under a mandatory curfew, as more homes have been decimated

by Russian shelling around Ukraine's capital.

Today Ukrainian President Volodymyr Zelenskyy asked Canadian lawmakers to help impose an no-fly zone over Ukraine, something that Zelenskyy will

likely request from members of the U.S. Congress tomorrow morning in a speech.

Today, the White House reiterated President Biden's opposition. Meanwhile, the White House has announced the president will travel to Europe next week

for meetings with the key American allies, who make up NATO, as the Russian invasion of Ukraine continues on its relentless and brutal path.

As CNN's Nick Paton Walsh reports for us now, the Ukrainians who have stayed to defend their cities and those who choose to escape, they are all

facing new terrors and enormous obstacles.

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NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR (voice-over): This is the road down which Russia's war of annihilation may lurch.

END