Return to Transcripts main page

Quest Means Business

Spectacle in the Sky: Rare Eclipse Dazzles Millions; White House Press Secretary Karoline Leavitt Leaving Role; U.S. Inflation Slows to 3.4 Percent in July as Energy Prices Ease; Zelenskyy Says Kyiv Needs More Patriot Stock; Exploring the "Ice Silk Road." Aired 4-5p ET

Aired August 12, 2026 - 16:00   ET

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

BRIANNA KEILAR, CNN HOST: -- a one in 292,201,338, but you're saying there is a chance.

BORIS SANCHEZ, CNN HOST: You can't win if you don't play!

KEILAR: That's right! That's right! "The Arena" with Kasie Hunt starts right now.

SANCHEZ: Thanks for joining us.

[16:00:16]

PAULA NEWTON, CNN INTERNATIONAL HOST: You see the bell there. Wall Street shrugging off the latest inflation data as the market wondering where

inflation goes next. Those are the markets and these are the main events.

A stellar day in Europe. Companies cash in as a rare solar eclipse makes its way over the continent.

A major shakeup at the White House. President Trump announces his Press Secretary Karoline Leavitt is resigning.

And Ukrainian President Volodymyr Zelenskyy tells CNN his country is nearly out of crucial patriot missiles.

Live from New York. It is Wednesday, August 12th. I am Paula Newton, in for Richard Quest, and this is QUEST MEANS BUSINESS.

And a good evening.

Tonight, the celestial event of the year. Large crowds have gathered right across Europe as a total solar eclipse passed over parts of the continent.

It was the first total solar eclipse in Europe for 27 years. It started in Russia and Greenland before passing through Iceland, a small corner of

Portugal and Spain.

The moment of totality brought cheers as viewers could see the glow of the sun's corona become visible around the moon. Spectacular!

Isa Soares is in Land's End, England. What a point to be at.

Isa, what was it like? I am going to assume you haven't been through it before. I went through it a couple of years ago and I can tell you it was

like an out-of-body experience.

ISA SOARES, CNN ANCHOR AND CORRESPONDENT: I completely agree with you, Paula. I didn't know quite what was -- I didn't know what I was feeling at

that moment until I looked up and I started to see, of course, the moon starting to cover the sun and it was incredibly, you know, inspiring. It

was moving.

But also, it kind of grounds you, doesn't it? It makes you feel so, so small and it does take your breath away.

Look, people have been saying here, Paula, for and waiting for the sunset to set in the last 10 minutes, I would say. We have seen whales. One person

who is keeping an eye on what is happening up in the skies. As you can imagine, many people here throughout the day, one person saying to me,

that's a comet we've just gone past.

So the whole day has felt so magical, so celestial. I want to show you a little clip of what that moment was like earlier on today.

(BEGIN VIDEO CLIP)

SOARES: We are almost there. it is not going to be near totality, as you well know, as we've been talking about here. But about 96 percent here in

Land's End in Cornwall.

Now, although the music is still playing in the background, people almost started whispering. There is almost a whisper element in the air. The

shadows are getting sharper and people are really in awe of what they are looking at.

The glass is now in full force. Sunglasses are on, heads tilted for this truly magical moment.

(END VIDEO CLIP)

SOARES: It was incredibly, incredibly moving to see to be part of this. I know you've been part of this.

And Paula, you know, these -- the glasses that we've had throughout the day, it was so -- I mean, they were going for quite a bit of money up to

about $45.00 at one part of Cornwall. Now, it is worth completely worthless because you can't use them again when the next eclipse comes in 2090. But

it was such a moment to be here and to see children as well.

You've probably gone through this. You've seen this when your kids were probably younger. You know, kids making the sunglasses with cardboard

cereal boxes, some people with colanders, people getting creative to be part of this moment for the very new generation -- Paula.

NEWTON: Yes, the glasses are definitely a hot ticket item when this is coming. What was it like though? It really is. It is something else to try

and get a hold of those glasses. What was it like in terms of this? You guys had some great weather, as I can see. And what was the atmosphere

like? Because these are the summer holidays. It hit at a perfect point in time and also so close to sunset.

SOARES: Absolutely. Look, the last solar -- total solar eclipse in the U.K. and this obviously wasn't total. This was, you know, tantalizingly close at

about 96 percent. The last one was in 1999. Muhammad Darwish, my producer, was telling me that he was little, but he remembers it, he was so excited

looking forward to that moment. But it was cold, it was damp, and it was cloudy. So FOMO, he didn't really catch a glimpse of anything.

Today was beautiful, clear skies. The sun was shining. It is summer. Kids are still on holiday. A lot of people who are traveling in this part of the

country, as you well know, and there are so many people from all over the world who have come here for this very moment.

[16:05:10 ]

So it was incredibly, incredibly special to be here, to be present because it wasn't just where I am here. If I move out the way, all the way along

the coast here, you will see people sitting down and they have their chairs, they have their picnic blankets, they have their food because it

was the perfect hour. 6:00 to 7:00 here, local and people -- families were coming together to enjoy that really wonderful work show of nature that we

will ever have seen.

NEWTON: Isa Soares, thank you so much for bringing us the atmosphere there and such a poetic destination from Land's End, England. I hope everyone

there enjoys the evening.

Thanks, Isa.

Now the eclipse is not only drawing large crowds, but also large tourist numbers. Spanish authorities were expecting up to six million visitors

across the eclipse's path. Many of those places are rural areas. Some are opting to see the eclipse by boat, though.

Ambassador Cruise Line offered a solar eclipse cruise, it set off from Dundee, Scotland a few days ago and is sailing around Scotland and Iceland.

It also offered a cruise around France and Spain. This was the view from that ship during the moment of totality. They really had a front row seat

to that.

Christian Verhounig is the CEO of Ambassador Cruise Lines, and he joins us now.

Really, a celebratory time in the last few hours, given the show the Planet Earth and the sun and the moon put on. You know, you guys have coined this

astro tourism. Why do you believe this kind of a cruise has so captivated customers for you?

CHRISTIAN VERHOUNIG, CEO, AMBASSADOR CRUISE LINES: Well, essentially a topic of a cruise, a real travel experience becomes more and more important

for the travelers and in this instance, the ship becomes the viewing platform. At sea, you have a wide, unobstructed horizon. You're away from

buildings and large crowds. And unlike a fixed hotel or land based viewing site, the ship can move. So we can use the best available weather and

navigational information to put our guests in a strong position to enjoy something that extraordinary.

And it is much more than just these few minutes of totality. Across our three ships, which are, as you said before, one is off the coast of

Greenland, one in the north of Spain and one in the Balearics, we have built a full enrichment program around the evening with astronomers,

eclipse specialists and other experts on board, helping guests to understand what they are seeing and why it is so special.

NEWTON: And Christian, we were looking at some of the video now from one of the ships. I mean, just so I understand you, I know in some places they

were disappointed because the weather wasn't good. That's not true for the ships' locations. So you're saying the Captain can actually adjust given

the weather conditions, so they can get the best vantage point?

VERHOUNIG: He can obviously adjust based on weather information and navigation information, adjust. He obviously can't change the country, but

he can adjust the course and the position to enable those best viewing points and we have been lucky.

And you have seen the footage from the ships, you know, with the crowd being amazed and basically it is the climax of a cruise, which is an

enrichment topic where people are booking far in advance to be able to secure this holiday around the event that lasts only a few minutes. Yes,

but that has built up the entire cruise and is supported with those specialists telling you everything about it and making it, you know, more

scientific and learning experience as well.

NEWTON: And that is key, right? Because this is astro tourism. While we can't count on an eclipse all that often, are you booking -- you are

booking more vacations just around things like the Northern Lights?

VERHOUNIG: Essentially, the eclipse is only part of a wider shift towards a very experience-led travel. And you know, many holidaymakers, the question

increasingly is not simple where shall I go? But what do I want to experience? And this we see throughout all European countries right now.

You know, we as the Ambassador Cruise Line, we listen to our guests, but also to research. And we are at the moment in a situation where 65 percent

of Britons are willing to give up everyday luxury to save for a special holiday where they experience; three-quarters are booking their next

holiday rather than now, than to wait and 50 percent prioritize value for money for those exceptional experiences.

NEWTON: Christian Verhounig, thank you so much. As we see that the passengers there got quite a view of this totality, the solar eclipse.

Thanks so much. Appreciate it.

VERHOUNIG: Thank you very much, Paula.

NEWTON: Now, in a surprise move, White House Press Secretary Karoline Leavitt has announced she is leaving her job. She says it is to spend more

time with her children.

[16:10:10]

President Trump says Leavitt will leave at the end of the month, calling her one of his most trusted aides. Alayna Treene is at The White House for

us and Alayna, I think it is genuine that this was a surprise, right? I mean, fill me in.

I know you guys are used to seeing her behind-the-scenes, both of her children are actually quite young, but we are learning more right about the

fact that she not really going to leave as one of the President's trusted aides.

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: That's right. I think this is a surprise. First off, Paula, you're exactly right. Particularly to people

like me who, you know, meets and speaks with Karoline regularly in the course of my reporting and it is a big shock because of just her closeness

to the President.

I do think the relationship that Karoline Leavitt has with the President is much closer than oftentimes you've seen that relationship with, you know,

presidents of the past.

She is someone who was with him on the campaign trail. She also worked for the President during his first term and his first White House. But she is

also a group of a very, I should say, a part of a very small group of advisors who is in the room for a lot of these key meetings, many times

high level or even classified meetings with the President, because she is one of the people that's part of that core group of very loyal advisors

that has been with him for years.

So this is a big shock. I will say in the conversations I've had with Karoline in recent weeks, ever since she came back from her maternity

leave, I should note she did recently have a daughter who was born on May 1st. She took about a month of maternity leave before coming back, it has

been a struggle for her and she has very young kids. Her other son is, you know, just a year or two old at this point.

So, you know, she is citing this family matter. She did put out a lengthy statement, Paula, on social media confirming this. This news was first

broke, and I should note, by the President himself. But she had said she didn't believe essentially that she could be a good mother to her two young

children, while also doing this very demanding role that she has as Press Secretary the justice it deserves. I am paraphrasing there, but that was

essentially the message she had.

She did say, though, however, that the President had asked her to stay on as an advisor to him, obviously outside of The White House, but still

advising him on key issues. It seems that she has agreed to that.

So there are still questions, though, about what is going to happen next. I think we have to note the timing of this. Her departure as the key

messenger for this White House comes just three months before the November midterm elections. And there isn't, I think, an obvious choice who will

fill her shoes.

When she was on maternity leave, when she was gone for the month of June, there were some Cabinet secretaries, people like the Secretary of State,

Marco Rubio, who came out to the podium and do a briefing. You heard as well from the Vice President, J.D. Vance. He came out and did a briefing,

but obviously, you didn't really hear from a core person to take up the helm as Press Secretary.

So that's still a question we need to have answers to. I will tell you from the reporting I've been doing in just the last hour since this news broke,

less than that, I don't know if it is clear yet to people inside The White House who that will be either. I am not sure that decision has been made --

Paula.

NEWTON: Yes, and as you are pointing out, a very tough position to fill as she is leaving, given how close she is to the President. Alayna Treene for

us at The White House, appreciate it.

Now, a softer U.S. Inflation Report has energized many investors. Here is the market reaction. We will take a look at the data, next.

(COMMERCIAL BREAK)

[16:16:12]

NEWTON: U.S. markets mostly rebounded after a cool inflation report. The S&P 500 finished a quarter of a percent higher. The NASDAQ there, you see

it rose half a percent. The Dow finished, we will call it flat. The latest data show the annual inflation rate slowed to 3.4 percent in July. That was

compared to last year. The drop was partly due to energy costs.

Now, gas prices fell almost three percent from June. Housing costs were also kept at bay and grocery prices fell slightly.

David Goldman is with me.

Listen again, as you always remind us, these inflation numbers were backward looking, but what did we see behind the banner number there?

DAVID GOLDMAN, CNN BUSINESS SENIOR REPORTER: Well, I mean we were at 3.5 percent the month before. So, you know, we will take 3.4 percent. It is not

where we want it to be, we want that closer to two percent. But sure, that's lower and we will take it.

But remember, we were down in the month of June and now, we are back up in the month of July when you look month-over-month.

So, you know, it depends on how you look at it. Was this a good report or a bad report? But, you know, I think most people are taking this as a pretty

strong report.

If you strip out those energy prices that you were talking about, I mean, we are only at, 2.5 percent again, close to that two percent range that the

Fed likes and we will talk about that in a second. But, you know, again, we were a little bit higher month-over-month than we were for that headline

number.

Does any of this really matter? Well, it matters to the Federal Reserve because they are the ones who are going to have to decide whether to cut --

I am sorry, to hike or to hold rates.

Right now, the market seems to think that they are going to hold rates steady. It was about a coin flip, Paula, right before the announcement. And

now, it is more like 60/40 that they are going to hang on to it.

Remember, we've got that not so great Jobs Report a Friday ago. Well, now, we've got a pretty decent I guess inflation report and so that's weighing

on the market right now. Energy as you mentioned was the big factor. We are still up 15 percent over the course of the year. We did lose 1.5 percent as

gas and oil prices ticked down just a little bit in July, as you mentioned, this is backward looking. We are back up to almost $90.00 a barrel for oil,

so we will see what happens there.

The big thing, though, was shelter costs. Housing makes up two-thirds of the total increase that we had. When you're up 3.2 percent over the course

of the year, that does make a big difference. And one of the big reasons why people don't think this economy is affordable.

Also, airfares are up 25 percent over the course of the year. Medical care up three percent. Furniture, there are your tariffs right there up 2.2

percent.

So overall a decent enough report, but still a lot of these prices are going in the direction that most people don't want them to go, which is up,

up, up -- Paula.

NEWTON: Yes, and a reminder that for the Fed, two percent is the goal. They are not exactly near that now.

David Goldman, thanks for wrapping up the numbers for us. Appreciate it.

Now the Nobel Prize winning economist, Paul Krugman is with us. And I am curious to see what you make of this latest data. It is beyond inflation at

this point in time, because we had lower GDP, right, and lower job growth.

So what do you think we are looking at?

PAUL KRUGMAN, ECONOMIST AND COLUMNIST, "THE NEW YORK TIMES": Oh, gosh. I mean, you know, the inflation report was definitely -- it won't change

anybody's mind report. There was nothing dramatic and people can believe whatever they want to after that report.

The Jobs Report was also really in effect. What we got was -- it confirmed the narrative that we are now a slow job growth economy, but we are also a

slow labor force economy, largely because of the immigration crackdown.

[16:20:05]

So the Jobs Report isn't really giving you much guidance, you know, to look at. And I think the really big thing we should say about the inflation

report is that that is backward looking. It is reflecting a fall in energy prices that is over. And in a way, you know, looking at the price of crude

oil, it is kind of the wrong indicator because we've had a huge rise in the crack spread.

The difference between the price of crude and the price of the products that are refined are crude, which is what people actually buy and the crack

spread is really high. The look at something like the price of diesel, it is almost back to its peak at the worst of the of the closure of the Strait

of Hormuz, although it is still closed. But, you know, the worst of the war fears.

So, you know, we are more or less guaranteed, I think that the next Inflation Report will be worse than because it will reflect what has

already happened to the prices of gas and diesel.

NEWTON: And so the issue is now over to you, Chair Kevin Warsh. Markets, especially the bond market, still don't know really what to make of him

yet. What do you make of his first meeting, his first press conference and whether or not he is serious about trying to get to that two percent

inflation target.

KRUGMAN: Oh boy! I mean, I am not -- I am on record as not being a great admirer of Warsh. And I think he has no idea what to do. I mean, I think of

him as an ambitious guy who is now in the position of the dog that actually finally caught the school bus. And now what does he do? I mean, he really

has -- you know, he talks like an inflation hawk, but promises or has, you know, indicated to the President that he is going to be good for lower

interest rates. And I think he has not figured out any way to square that circle.

So I don't think he is not going to make the decision. You know, the next interest rate decision will be made by the members of the FOMC with or

without Warsh's support. And right now I think they are still very much on the edge.

I remember that what the Fed looks at is not the CPI, it is the PCE, the Personal Consumption Expenditure and we -- you know, the people who I

follow who are actually data nerds on this are looking at it, they say, give me tomorrow's PPI report and I will tell you what the PCE might be and

that's going to make it easy, it is all alphabet soup and the answer is basically we are sitting on the cusp. You could go either way.

NEWTON: And in terms of him though trying to show credibility, it will be interesting just to see where he sits on that because some have speculated

that, look, it is just talk at this point until he actually makes a move. I do want to get to this issue, though, of affordability, which is also a

political issue. It is also a political issue as people are bringing up things like socialism and communism.

If we go to Abdul El-Sayed, who does not call himself a socialist, just for the record, you know, you have written, you know, the fact that if you look

at one of his, you know, main centerpieces of his campaign going forward in Michigan will be Medicare-for-All -- healthcare-for-all. And you're saying

basically that's a system that already exists by another name in the United States.

How do you think that economic framing will work going into the midterms? Because, again, we have not just two radical choices, meaning between

Republicans and Democrats? No, now, on the Democratic side, we also have a choice between moderate and left.

KRUGMAN: Yes, I mean, the thing about Medicare-for-All is that most of the healthcare experts that I talk to say, if we could do it from scratch,

that's what we do that a single payer system just is less complex, has lower administrative costs. It is simpler.

And since we have a system in which, in effect, the government already pays two thirds of health insurance, you know, we -- as I wrote, we have a

system that is basically socialized with partial privatization and it is not clear that the private sector is doing anything productive, that that's

not really what you want.

The argument has always been that, if I wanted to get there, I wouldn't start from here. That the problem is that a Medicare-for-All system would

require that you shift a lot of people off private insurance onto a Medicare-type system, which is a very heavy lift and it is actually

requiring that people have faith that you're going to pull it off, and realistically, it is not going to happen for quite a while.

So this is in many ways is kind of more a signaling thing that El-Sayed is saying I care about health care, and I know that you're having trouble

affording it and I want to propose not more business as usual, but I am really going to tackle it. And, you know, we will see. But I actually

suspect that most Americans are so sick of having everything called socialism that they're just going to tune this stuff out.

NEWTON: Yes, we are not that far from the midterms. And again, given what we are seeing in the Strait of Hormuz right now, that affordability issue,

the energy prices, what you just discussed, the crack spread and interest rates to come, all will be on the agenda.

KRUGMAN: Pointing out, that you know, wages -- wage growth has been slowing. So although the Inflation Report was fairly benign, prices are

rising faster than wages.

NEWTON: Right, Paul Krugman we have to leave it there. Thanks so much. We will speak to you again soon.

KRUGMAN:

[16:25:17]

NEWTON: Now, the former CEO of Disney has made a play to buy one of the most successful basketball franchises in NBA history. A source tells CNN,

Bob Iger and venture capitalist, Josh Kushner, he is, yes the brother of Jared Kushner, have agreed to buy the Los Angeles Lakers for $12.5 billion.

The pair released a statement on Wednesday, saying, in part, "... as a lifelong NBA fans, we are deeply honored for the opportunity to become

stewards of the Los Angeles Lakers, one of the most iconic sports franchises in the world." This is set to be the largest deal of its kind

pending NBA approval.

Brian Stelter, I know you have been watching this. My gosh, did this number get my attention this morning when I heard it.

BRIAN STELTER, CNN CHIEF MEDIA ANALYST: You know, we are talking about the sports world and this is a trophy. This is one of the biggest trophies in

the entire sports world. These rights to the NBA have become more and more valuable. The Lakers, of course, bigger than almost any other team with a

more international footprint than almost any other basketball team. So, we see this extraordinary valuation for this team.

It was valued about a year ago, just at about $10 billion. Now you have these new owners willing to pay $12.5 billion, and it seems there is no

limit to just how valuable these teams can become.

When it comes to the Lakers, there are a lot we don't know. We don't know how much Bob Iger is paying, how much Josh Kushner is paying and we don't

know if other investors will also be coming aboard, although it seems that that will be the case. So we don't know the exact details of this yet and

how it is going to be put together, but it is a new ownership consortium for the Lakers.

Just about a year after Mark Walter, whose company, Guggenheim Investments, bought the team. He didn't buy 100 percent, but he bought most of the team

for that $10 billion figure. Now Walter has been mired in legal trouble. Some of his financial business is facing federal investigations. This might

be a way for him to free up some money to get out from under the Lakers' ownership to sell it to Iger and Kushner, more to come on that as well, but

another extraordinary moment where we see this ballooning valuation for one of the most famous NBA teams in the world.

NEWTON: Yes, Brian, we have to leave it there, but so interesting that the new owner of the Seattle Seahawks has said that, look, if A.I. is going to

disrupt everything, he is saying, it won't disrupt live sports, which might have something to do with why this price tag is so high.

Brian Stelter, I hope to talk to you about that in the near future. Appreciate it.

Coming up, China opens up the Ice Silk Road, sending container ships through the arctic to avoid the current maritime choke points. We will have

our details.

(COMMERCIAL BREAK)

[16:30:54]

NEWTON: Ukraine's president tells CNN that Kyiv only has a fraction of the missile interceptors it had last year. Volodymyr Zelenskyy says he is

following up with the White House daily after President Trump said Washington would give Ukraine a license to produce Patriot interceptors. He

also says his country currently has about 1 percent of America's stockpile.

Nick Paton Walsh has been speaking to Ukraine's president. He joins us now from Kyiv.

I mean, a great interview to have at this critical point, especially when we see that Russia continues to target civilians in Ukraine, and yet the

interceptors just aren't on hand.

NICK PATON WALSH, CNN CHIEF INTERNATIONAL SECURITY CORRESPONDENT: Simply no detail as to how bad the situation is. They clearly don't want to give away

the exact numbers of how many interceptors they have left, but it could frankly be zero given what we've seen over key Ukrainian cities over the

past week or so, no interceptions at times.

Kyiv, like many nights, on edge again, that there may be another massive Russian missile attack again in which they have limited or no interceptors

to tackle it. An increasing civilian death toll, July the worst month since April 2022 for Ukrainian civilian dead. And a very urgent plea here from

Ukraine's president, giving rare details about his efforts and exactly what it is they need directed at the United States.

And U.S. president, who said he'd like to see Ukraine get a license to make their own Patriot interceptors. That hasn't come to reality yet at all.

Zelenskyy was clear and also detailing exactly how many they need simply to survive through the winter. Here's what he said.

(BEGIN VIDEO CLIP)

PATON WALSH: Are you out of interceptors now? Do you have none left?

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: No, I will explain to you how it works. So this year we have two and a half times less interceptors than we

had in 2025 first. Russia has two times more ballistic missiles per month than they had before. We pay 100 percent to Americans.

I have the package from the United States, and then my personal involvement, it doesn't work either way. It's my personal talks, meetings

and phones -- phone calls each day with everybody. I try to exchange something to missiles. This year I'm asking American partners to sell me 5

percent, 5 percent of missiles what they have in their stocks. If they sell us 5 percent, we will go through the winter and save people's lives. If

they can sell us 10 percent, we will destroy all the Russians' ballistic missiles.

PATON WALSH: And has that request been answered yet? Have you had a clear indication as to whether --

ZELENSKYY: The answer is for today is next. I have 1 percent. This is in what I live each day. From 1 percent to 5 percent, I have some, you know,

some months and million phone calls and anything else, what can I do? I do some things which I can't even share. And it's not -- it doesn't mean that

it's out of the law. No, but it's -- I can't speak about it.

(END VIDEO CLIP)

PATON WALSH: An extraordinary sense of a president waking up daily, frankly, and doing everything he possibly can to ring allies and beg. You

heard about the opaque deal-making there just to get those interceptors to, frankly, save lives here. I mean, it is remarkable to see how the capital

has changed. People used to walk around nonchalantly ignoring air raid sirens. Now they run for the subway for shelter.

Why is there a shortage? Well, it's global, so much of it down to the U.S. war with Iran. So many interceptors used during that by the U.S. and Gulf

allies, too.

[16:35:05]

But it's here where it's most acutely felt. And a startling picture there of just the extent of how deeply in need Ukraine is, too, and also how they

urgently want to make their own, but are seeing complexity after complexity in their way. And a president who initially said he was pro them getting a

license to manufacture their own, and then later, a week later, seemed to change his mind. And Zelenskyy still unsure really if he's going to get

that license -- Paula.

NEWTON: Nick, so good to have you on the ground there. And I'm sure that was really a stark comment, quite blunt from him. And we'll wait to hear

more from your interview with Volodymyr Zelenskyy.

Nick Paton Walsh for us live from Kyiv. Appreciate it.

And now we turn to something a little different.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: North America. History is made by a joint American- Canadian expedition, as powerful icebreakers smash their way through floes 10 feet thick, the ice locked home of the walrus.

(END VIDEO CLIP)

NEWTON: I haven't seen that yet. Quite a piece of history. For centuries Arctic explorers have sought new trade routes through the icy expanses of

Earth's most northern reaches. Now, with traditional shipping routes disrupted and a fast-changing Arctic climate, one Chinese shipping company

is launching a weekly service over the remote trade route.

It's being dubbed the "ice silk road" connecting the cities of Ningbo on China's east coast to Felixstowe in the U.K. via the northern coast of

Russia. It all -- if it all goes to plan, it should cut through the traditional 40-day voyage between the two ports by about half. That's a

lot. It depends, though, on conditions in the Arctic Circle, which can be at times perilous.

Michelle Wiese Bockmann is a maritime intelligence analyst at Windward, and she joins us now.

Good to have you on the program. I mean, look, Russia, China, Canada, the U.S., Europe, they have all been eyeing this route for the better part of

two decades. You know, have recent developments geopolitically made it even more appealing because the Arctic routes, they do come with specific

challenges?

MICHELLE WIESE BOCKMANN, MARITIME INTELLIGENCE ANALYST, WINDWARD: Good evening. Yes, I do think that geopolitics is definitely shaping this trade

flow more than the commercial viability. There have been lots of test routes done over the past 10, 15 years, but China has been seeking a

greater and more active role in the Arctic. It declared itself a near- Arctic state back in 2018, and I think this signals closer cooperation with Russia and China in the area as much as it does as a commercial

breakthrough for the Arctic.

NEWTON: It is the shortest maritime route between Asia and Europe. I'm wondering how do we expect the route to change as the planet warms?

Because, of course, in many of these instances you would have needed icebreakers. And yet at some times of the year, in some locations of the

Arctic, that's just not true anymore.

BOCKMANN: No, there's no guarantee of an ice-free summer with the northern sea route. But increasingly, you know, there's been a reduction in the

oldest, thickest multi-year ice by 95 percent since the 1970s. And there are forecasts of an ice-free summer Arctic in, you know, as soon as 2030.

So there is commercial potential. But that said, I believe that the economic viability and the fact that it goes through Russian territorial

waters and the economic exclusion zone, and you need Russian nuclear icebreakers, you know, will deter most Western affiliated and European ship

owners from taking part in these services.

NEWTON: You make a good point there, given the hold that Russia and China already have on the route. And as much as some countries believe the Arctic

route as well is too environmentally fragile to be used as a credible substitute to other routes. But as you just pointed out, China and Russia

are well underway with this. Is this destined to become another great power struggle? Because right now we're talking about it as an alternate route.

And yet in years to come, it may just become another choke point. I know already in terms of territorial claims, it's already quite controversial in

the Arctic.

BOCKMANN: Well, already we're seeing what looks to be like record volumes of Russian oil and gas going through the northern sea route. Winward

tracked a convoy of eight shadow fleet tankers that were going through, and that was in order to avoid going via European coastal states in the

Mediterranean, where those ships have been boarded or interdicted by naval forces there. And also their LNG carriers from their two LNG projects there

had to go to Asia over the winter, the long way around via the Cape of Good Hope to the, you know, one of the most southern-most tips of the planet in

order to avoid the Mediterranean and going via the Suez Canal, where Russian LNG carrier was attacked by a drone in March.

So certainly there are time saving -- savings which are obvious but geopolitically it makes sense for Russia and China to link through the

northern sea route while they can.

[16:40:10]

NEWTON: And you believe this will happen more and more whether or not there is a resolution in the strait or otherwise. I mean, as I said, this has

been going on for the better part of two decades. They've had their eye on the Arctic for quite some time.

BOCKMANN: That's true. And the commercial viability has never, you know, been properly tested. And you have to remember that this inaugural

commercial route, these ships are about -- I think there's eight voyages these ships, so about a quarter of the size of the ever given, which is

that large container ship that got stuck in the Suez Canal. And so they're quite small ships for that vessel class size, large for the Arctic. And the

total volume that will be delivered over that three-month period will probably equate to just one or two very large container ships overall. So,

again, I think it's more about geopolitical strategy than any, you know, real commercial or profitable route for China.

NEWTON: But given you were just talking about the shadow fleet there, again, if you're trying to evade sanctions, it is obviously useful.

We only have about a minute left. But, you know, countries like Canada, the European Union, have expressed concerns about how fragile it is in the

Arctic and environmental concerns. I mean, do you think China and Russia will just ignore that and continue to make this a more viable commercial

route?

BOCKMANN: Well, certainly. In the last few years, we've watched Russia send non-ice class shadow fleet tankers through the northern sea route, which is

environmentally quite a reckless proposition because of the risk of oil spills. So, you know, Russia and China, you know, especially when it comes

to the shipping and the receiving of sanctions -- sanctioned oil have shown, you know, no respect for international maritime regulations.

So, I mean, I'm not saying that that will be the case now, but if you look at the precedents that have been set already, that's obviously one of the

appeals of going there because you avoid any Western touch points.

NEWTON: Yes. And that is key. You just said it. You avoid any Western touch points. And I note that the International Maritime Organization has also

said that Russia and China should be aware of how fragile the Arctic is.

Michelle Wiese Bockmann, we've learned a lot. Thanks so much for being on the program. I appreciate it.

BOCKMANN: Thank you for having me.

NEWTON: Now we're going to take a quick final look at the markets. Relatively flat amid mild inflation numbers. The Dow ended down just 21

points. A reminder that we have another key inflation data point tomorrow.

But for now that is QUEST MEANS BUSINESS. Up next, "MARKETPLACE ASIA."

(COMMERCIAL BREAK)

[16:45:34]

(MARKETPLACE ASIA)

END