Return to Transcripts main page
QUEST MEANS BUSINESS
Belgian Prime Minister Believed to Be Front Runner for European President; AOL Poised for Job Cuts
Aired November 19, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: The EU's presidential election, choosing a leader, European style.
The recovery picks up speed but not in the labor market. And prepare to be disconnected, AOL poised for savage job cuts.
I'm Richard Quest, tonight, I mean business.
Good evening, Tony Blair is out. The question is, who is in? After hours of haggling, the field of candidates to become the first president of the European Union, under the Lisbon Treaty, that list has narrowed.
The prime minister of Belgium is now believed to be the front runner. He is a man relatively unknown outside his own country and the corridors of power in Brussels. What the EU is looking for is a statesman who can build consensus within the Union, and then translate that to the wider world.
There are reports this evening that the leaders have also agreed who will be the high representative for foreign affairs, effectively the foreign minister of the European Union.
Let's go to Brussels. Jim Bittermann is in Brussels.
Jim, now, first of all, the man who looks like he's got the job, Herman Van Rompuy, is a man that, frankly, most of us have never heard of.
JIM BITTERMANN, CNN INT'L. CORRESPONDENT: Well, I think you are absolutely right, there, Richard. Outside of his native Belgium I think that he is not that well known. One of the things that he has put forward as one of the reasons why he'd make a good candidate for this job is the idea that he has done a lot to sort of build consensus in Belgium. And that has not been always easy, given the fractious nature of this country.
So, in fact, he says that's a good idea. That is something that would put him forward as something of a compromise candidate.
The other person you are mentioning, the foreign minister candidate, is someone who you might know, might be a little bit more familiar, anyway, to the British audience, and that is Catherine Ashton, Baroness Catherine Ashton, from St. Alban's. Who, in fact, is already in Brussels as a European commissioner for trade. And she is being talked about and, we think, pretty much has it -the job, as the foreign minister for the European Union.
So, the decisions aren't final yet. The heads of state, the heads of government are upstairs dining on un-scaled sea bass, and wild mushrooms and truffles, topped off with a little chocolate cake and a zest of lime. But after all of that, they are going to get around to deciding , for sure, that those are the two names. The two names that we talked about are, in fact, going to be the top two jobs holders of the European Council, Richard.
QUEST: And as a gastronomy, yourself, Jim, I'm impressed the way you remembered that menu. Without even having to look down at your notes, never mind Baroness Ashton.
Look, is the Union about - the blunt question - is the Union about to shoot itself in one foot and then amputate the other by putting in power to people that the rest of the world will say, who?
BITTERMANN: Well, is exactly the question that is being asked around here. The problem is I think originally when Tony Blair was being flashed around quite a bit -- in fact, he was the favorite candidate originally of President Sarkozy of France -that is one of the reasons that they liked Tony Blair, was this high-profile nature. Everybody in the world would know who he was. He could get access to world leaders. He'd have a little clout when he went in to talk to, you know, the president of the United States, or the Chinese premier, or whoever he was talking to, he'd have some clout.
Here, you have somebody who is pretty much unknown, if it does indeed turn out to be Herman Van Rompuy. And there was a quote earlier from an Indian official, who said, by the way, if it is the prime minister of Belgium that is knocking on my door to take a meeting, I'm not sure we'll have time for him. So, that is exactly the kind of question that is being asked around there. On the other hand, these leaders, they are heads of state, in government, they are heads of sovereign states. They do not necessarily want to have a strong figure as the president of the European Council, because the problems he could cause -he or she could cause.
QUEST: Thanks to you, Jim. At the end of the day I suspect the menu is more interesting.
All right, Jim Bittermann. Listen, the moment there is more to report, Jim will be back to tell us. So, we've got Herman Van Rompuy looking as if he is going to be the candidate, not confirmed. And Baroness Catherine Ashton, possibly for the foreign affairs job. We'll bring you more details on that.
The world's leading economies are doing better than the experts previously thought, so says the Organization For Economic Cooperation and Development, which has raised its forecast for next year. Now, this is interesting stuff.
According to the OECD, the 30 (ph) member countries will see growth of almost 2 percent. A few months ago it was expecting less than 1 percent for 2010. The OECD describes the recovery that we are seeing as "timid". Now that is an interesting use of words. Not weak, or easy, but "timid". And not strong enough to stem the flood of job losses from around the world.
The U.S. jobless rate, it believes, will peak in the first six months of next year. In Europe, unemployment will go on rising for another year after that. It all would suggest that unemployment will eventually, within both the Union and the United States, which is already there, will be well over 10 percent.
This is according to the OECD. Let's put some perspective. It believes that the main driver of all of this is China. One, of course, the countries where there is limited exposure to the financial crisis, massive financial stimulus packages, and growth of 10.2 percent in 2010, 9 percent the year after.
So China, with its stimulus package is the reason the OECD believes things are looking so much better.
The United States, however, for its part, well, that is also slightly a bit different. The government stimulus has seen a rebound in world trade and things are looking better, but that has to be counted with an unemployment rate of more than 10 percent. And GDP growth that, at best, is sluggish, until a consumer jumps in, that is according to the OECD.
As for the European Union, well, the EU believes that benefits from the same growth factors, as do United States, job growth is likely to be weaker. And of course, because of the disparate nature of the European Union, well there, of course, you are going to see the difference within the countries from the east to the west, to the north to the south.
It was all to be discussed with the chief economist of the OECD to try and understand what was really happening, and whether this increased growth forecast was sustainable.
JORGEN ELMESKOV, ACTING CHIEF ECONOMIST, OECD: It is clear that we have revised up our projections. And we also think that the risks around the projections are not as pronounced than they were a half a year ago. So, from that perspective the news is pretty good. But still we are looking at what is a pretty weak recovery for the OECD area.
QUEST: Let's talk on the question of the warning that the organization is giving on this issue of exit strategies. You are basically saying that you want more detail now, about exit strategies and countries should be thinking about what they are going to do. Why is that?
ELMESKOV: You are absolutely right. We think it is very important at the this moment to put out exit strategies, both as regards monetary policy, financial policy, and fiscal policy. The point is that you need to establish credibility with the private sector, that is both financial markets and ordinary households. You need to establish credibility that you have a master plan for getting out of what is, after all, a pretty messy situation on the policy side.
QUEST: How detailed -
ELMESKOV: Once you have established -
QUEST: How detailed do you want those plans to be? Because we know from the G20 process, the IMF has not been given this role of consulting and coordinating on exit strategies. So, are you saying that you want governments to be putting their plans forward now?
ELMESKOV: I think governments should get plans out as soon as possible. The point is if they do that, and if the plans are reasonably specific, then they generate credibility in the markets. And then governments can be a bit more flexible about the implementation of the plans. So, what we are asking them to do is to put out plans that are specific, but are contingent in nature on how the economy is going to pan out in reality.
QUEST: Isn't that simply unrealistic in the sense that no government is going to say now, when they are only just dealing with the recession and the aftermath, how they are going to pull back the stimulus. They can't even agree at this point, whether more work will need to be done to ensure sustainability and durability.
ELMESKOV: Well, I don't think it is all that unrealistic. As a matter of fact, some governments have put forward plans to get back to, as it were, the straight and narrow on the government budget side. And some have also indicated how they are going to do on financial policies. So, I think it is possible. And what we are asking for is not that governments specify on such and such a date, I'm going to do this, that, and the other. What we are saying is that the government should make clear what are the instruments that they are going to use. And what are the kinds of conditions under which they would use those instruments.
QUEST: That, of course, the chief economist at the OECD. Their report suggesting that there will be an improvement in growth forecast.
European stock markets were sharply down. Just a few days ago they seemed to be climbing to their highest levels in more than a year. Well that, as they say, was then, this is now.
Down hill ever since, a drop in metal prices, which hit mining shares, Xstrata down over 5 percent. The biggest loser in the Parisian market was the dairy company, Dannon. Sales forecast was cut. The tech sector had a bad day after Bank of America, Merrill Lynch cut its recommendations on several stocks. The interesting one, Alcatel Lucent, fell more than 3 percent.
The news headlines joining us now. Max Foster at the CNN News desk.
QUEST: A straightforward yes or no, to you, Max Foster. A straightforward question: Should they replay the match? Yes, or no?
MAX FOSTER, CNN NEWS ANCHOR: Do I have to just do one word?
FOSTER: I think, no. They need rules.
QUEST: All right. I'm with you. We could have both possibly offended a large number of people there.
FOSTER: I do think they need to sort of look the system that other sports have.
QUEST: Here we go! Here we go!
FOSTER: So they don't get in the situation in the first place.
QUEST: Oh, there he is rowing backwards fast as he can, before he does any more damage.
QUEST: Before he does any more damage. Max Foster at the CNN News Desk.
I think I'm with Max on this one. If you have an ump, if you have a ref, and he's absolute, then that is the way it has to be.
Now, the jobs of job stimulus and keeping your job, in just a moment. AOL, part of Time Warner, which is the parent company of this network, slashing costs and that means staff as well.
Also, frustration overflows on Capitol Hill. Lawmakers are making trouble for the U.S. Treasury secretary.
QUEST: Welcome back to QUEST MEANS BUSINESS.
The major averages in the United States are all lower. There are worries over the health of the recovery. The Dow Jones off 138 points, down 1.3 percent. At this point I would say a correction is underway and questionable whether 10,000 is in danger. Probably not today, by any means, but in the next couple of days. Wall Street has been mulling jobless claims and leading economic indicators numbers.
And on the question of jobs going, the Internet company, used to be called America Online, now AOL is to shed a large slice of the workforce as it prepares for life on its own. The current owner of AOL, Time Warner, which of course is the parent company of CNN, is to spin off AOL in just a few weeks' time. It is all part of the restructuring on Time Warner, to a content oriented company.
Maggie Lake is in New York. She joins me now.
And first of all, let's begin with the announcement today.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, and Richard not the kind of news anyone wants to hear as we head right into the holidays. These job cuts were expected but a little bit steeper than some of the talk that I had seen. Over 2,000 are going. That is a third of the workforce. AOL looking to save somewhere around $300 million by doing this. As you mentioned it is all part of this restructuring, as they get ready to be spun off, early in the month, in December.
You know, listen, this is a company specific issue, obviously. These kinds of things happen all the time. The problem is that this kind of news is not being matched on the other side by news of any companies hiring. And that is what is really sort of weighing on sentiment, and creating all of this sort of fear about the job situation.
And all of this comes at a time we have a story that -- on Money.com, that they are running today -up to a million people face running out of benefits in January if Congress doesn't act to extend them again. So you have an awful lot of fear out there, still, when it comes to the jobs situation. Both, in the financials circles and in the political circles.
QUEST: The reality is, if that number is true, the administration will have, no doubt, have to actually take some sort of actions. But the heat must now be coming really on to both, not only President Obama, but Tim Geithner. They can only say, jam tomorrow, for so long.
LAKE: That s absolutely right, especially when you are running up the deficit in this manner. And boy, Richard, that frustration, that anger really spilling out on Capitol Hill today, where Timothy Geithner was testifying. Some of his Republican -the Republican lawmakers going so far as to suggest that he shouldn't have his job.
(BEGIN VIDEO CLIP)
REP. KEVIN BRADY (R), TEXAS: The public has lost all confidence in your ability to do the job and it is reflecting on your president. .
TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: Congressman, please look at -
BRADY: Conservatives agree, liberal Democrats agree, that it really is time for a fresh start.
GEITHNER: If you look at any measure of consumer and investor confidence today, if you look at any measure of the strength and stability and health of the American economy, if you look at any measure of confidence in the financial system, it is substantially stronger today than when the president of the United States took office. Mr. Congressman, this administration -
BRADY: Tell all of that to the millions of Americans who no longer have jobs.
(END VIDEO CLIP)
LAKE: And that was the tone throughout, Richard. Obviously, those are Republican opponents. They are trying to capitalize, politically, on the situation. But it has to be said that there is a sense of frustration in the country that this recovery isn't starting to spread into that jobs area. And it is going to be a problem for the Obama administration the longer it drags on.
QUEST: All right. Maggie Lake, who is in New York, at CNN Center in New York.
Now, let's go to put this into a market perspective. The market, you have already seen, the Dow Jones is off more than 130 points. Susan Lisovicz at the New York Stock Exchange.
And I suppose, what I am seeing in those sort of numbers, would be consolidation, correction, that sort of behavior that suggests just a tampering down?
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: I think it is too soon to call it a correction, Richard. I mean, of course, we are coming on the heels of the sell off on Wednesday. But you have to remember what proceeded it, which was nine out of the 10 previous sessions the Dow had risen, all three major averages were at their highs for the year.
So, a give back, not surprising and not surprising when the dollar is actually feeling some strength and we are seeing a sell off in commodities. Right now oil is down nearly three dollars. Gold is actually flat right now, after hitting record high, after record high.
We did see one of the major reports today. Leading economic indicators, I think you mentioned it briefly it is the seventh straight month of gains. And in terms of initial jobless claims, you know, those numbers came in pretty much as expected. You know, still high numbers, but we are not seeing them get worse.
We do have another layoff announcement, in addition to AOL that Maggie was just speaking about. We have Aetna, which is a big health insurer, laying off more than 600 workers immediately, another 600 next year. It is in preparation for health care reform and regulatory change, Richard. .
QUEST: There is change in the air. Susan Lisovicz, at the New York Stock Exchange, with perhaps not the most cheerful news of the day.
When we come back, in just a moment, plain disappointing, the feeling of how the Dubai air show turned out for aircraft manufacturers. We are going to hear from the chairman of Emirates, talking about the market for planes and the airlines themselves.
QUEST: The Dubai air show is over and sales are vastly down on last year. Airlines ordered just $14 billion worth of planes. That is a pin prick compared to sales of $155 billion two years ago.
Now, look at this. This, of course, well, you will be aware is an A380. And I could wax lyrical about this particular aircraft. Emirates airlines bought more than 50 of them, 58 of these planes. They have already got five in operation at the moment.
Shekh Ahmed Bin Saeed Al Maktoum - Shekh Ahmed, basically -is the boss of this airline company. Talking to Cal Perry, he explained why this year's Dubai air show has been so flat.
SHEKH AHMED BIN SAEED AL MAKTOUM, CEO EMIRATES AIRLINES & GROUP: I think, maybe, we'll not see as many as deals as we saw in 2007, but not because it is a crisis now, but you don't expect every year of an air show that you will do the same.
CAL PERRY, CNN INT'L. CORRESPONDENT: When do you think the global aviation recession is going to come to a close?
MAKTOUM: You know, if we look at this part of the world it is not as bad as what has been announced. The U.S. market is down, maybe some airports within Europe are down, but it doesn't mean this part of the world.
PERRY: British Airways has had to merge, U.S. carriers are filing for bankruptcy, Chapter 11, they are cutting costs. But you are still making a profit. And many people say it is because you are not paying landing costs, you are getting fuel cheaper. How would you respond to that?
MAKTOUM: You know, I think a lot of people they have been saying this for the last 15 years, and they know better. That Emirates really did profit and has been a profitable airline from, I would say, the first year. It is because we have an excellent reputation. We have an excellent product. We are always managing our costs very well. And I think, also, after this world crisis, where every body was really focused, I think we will become even stronger. So they have to watch out.
PERRY: Are you worried about market saturation? We are talking about three major airlines in one region?
MAKTOUM: The market is there. You know, I mean, it will be for everybody. And we can also increase our market share, year on year, by doing the right stuff. At the end of the day we should be complementing each other. I think all the carriers who operate in the Gulf, they are marketing their own state, but they are marketing the whole area.
PERRY: What is the status of Maktoum International Airport? It has been reported a year form next October, we'll see the first runway, and then by 2020 it will be up and running. Is that still on schedule.
MAKTOUM: We are targeting, really, June/July to start our cargo operation. And October to start our first operation for passenger aircraft.
PERRY: So, you are not concerned about delays?
MAKTOUM: In terms of - I don't think there will be any delays. I mean, those are the target dates and we will meet them.
PERRY: This airport is literally 40 minutes from Abu Dhabi. Is this your strategy to take a direct shot at your competition? Hit at Etihad airlines?
MAKTOUM: No, not really. I mean, we decided to go now, because we cannot be saturated here, at Dubai International Airport. And we have to build up that airport to be able to meet all of the demand in the future. This is the reason it is not competing with Etihad.
QUEST: Shekh Ahmed, talking about the fortunes of Emirates.
Now, we move into some difficult areas now. Because, of course, we just need to bring you the gossip and speculation that is taking place at the moment in Brussels. It is being speculated, no confirmation, that Herman Van Rompuy has been selected as the new president of the new European Union. And that Catherine Ashton has been selected as the high commissioner for foreign affairs. The high representative, I beg your pardon, for foreign affairs.
That is the word on the street, in the coffee bars, and around the salons at the European Headquarters in Brussels. Nothing is confirmed.
OK, when we come back, rewriting the financial rule book. U.S. Treasury Secretary says change is urgent. Tim Geithner's mission, to ensure there is no repeat of the crisis.
QUEST: Welcome back. I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN.
We do need to you update you, not only with events in Brussels, at the EU summit, but the market that is open is taking a bit of a tumble. The Dow Jones industrials has come back just at tad, but still over 10,300. We are off more than 1 percent down, losses of 121 points.
U.S. Treasury secretary is urging all law makers in the United States to overhaul the nation's financial rules. Tim Geithner told members of Congress the regulatory system had failed badly last year. It now needs to be brought up to date.
(BEGIN VIDEO CLIP)
TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: There is not growth, no economic growth, and no innovation without access to capital and credit. But if you let the financial system become too fragile and too unstable, if you allow risk to evade the safeguards we establish in the system, if you allow firms to escape protections for consumers and investors, if you create incentives for excessive investments, excessive risk taking, excessive investments in real estate, if you allow moral hazard to spread the consequences will be brutal and the damage indiscriminate and long lasting.
(END VIDEO CLIP)
QUEST: The Treasury secretary was questioned about TARP, the $700 billion bailout of the financial system. Now, that, of course, is different than the stimulus package, but then you remembered that. It's been more than a year since the government authorized the program.
CNNMoney.com's Poppy Harlow is in New York with a look at what comes next.
TARP, of course, was the plan that Congress initially rejected, which then became vastly inflated. And it was used -- I'm just reminding our -- our viewers. It was used to bailout the banks. I'm surprised there's so much money left in it.
POPPY HARLOW, ANCHOR, CNNMONEY.COM: Right.
QUEST: How much is that?
HARLOW: I mean, Richard, we're talking about roughly $300 billion left of TARP money that hasn't been spent. And most folks around the world assume that, well, you just spend all the money and then the program ends.
That is actually not the case. The TARP program ends in a few weeks, December 31st of this year. However, Treasury Secretary Geithner has the authority to extend it. It's likely that that's what's going to happen. However, it could be very politically unpopular if he does it. A lot of critics, although there are those that say we would have had a catastrophic collapse of the U.S. financial system, possibly the global financial system, without TARP.
But when you look at the real economy in the United States, not much improvement, honestly, Richard. Soaring unemployment -- over 10 percent here. And we just heard the Treasury secretary yesterday tell a group of small business leaders in Washington that the credit crunch is not over, so the lending hasn't increased as we heard it was and would when TARP was implement.
He had a hearing today on Capitol Hill and he was pressed about financial regulatory reform. But a lot of lawmakers, Richard, simply asked him why not let TARP die?
And here's how he responded to that.
(BEGIN VIDEO CLIP)
GEITHNER: We are working to put the tax -- the TARP out of its misery and no one will be happier than I am...
UNIDENTIFIED MALE: Well, according to the (INAUDIBLE)...
GEITHNER: ...to see that program terminated and un -- and unwound. And I want -- I want you to -- I want to point out that we are moving very aggressively to close down and terminate the programs that defined TARP at the beginning of the crisis.
(END VIDEO CLIP)
HARLOW: All right. But a lot of talk, Richard, about the fact that well, potentially, we should use that additional $300 billion that is sitting there, that hasn't been used yet, to aid in job creation in the United States, direct aid or directly aid small businesses that are having such a hard time tapping the credit lines here, Richard, in the United States.
And, legally, that's a fuzzy area. But we're going to want to watch that as the year wraps up.
Will that money be used for something else instead of bailing out the banks, at this point, Richard?
QUEST: I have looked at the Treasury's online database. It's quite extraordinary, the detail that they do go into -- that -- the hundreds of banks...
QUEST: ...that have got money from TARP of one shape or another.
But TARP itself was put in place with huge oversight and regulation by independent oversight committees.
Has that been successful?
Are they happy with it?
HARLOW: Yes. You know, they're not fully happy. I mean the woman that chairs the oversight committee is Elizabeth Warren. She's a Harvard professor. And she is tasked with overseeing how Treasury spends TARP. She just wrapped up a hearing today in Washington, as well, looking at TARP's effectiveness. And honestly, Richard, one of her main criticisms is that TARP has just simply not done enough to help Main Street America.
Here's what she told us on that point.
(BEGIN VIDEO CLIP)
ELIZABETH WARREN, CHAIR, CONGRESSIONAL OVERSIGHT PANEL: We shoveled money into the large financial institutions and instead of lending it, they held onto it. And we didn't put any restrictions on that back on the front end. The single biggest mistake was a year ago. If we had intended that money to go into the hands of smaller businesses and to be loan money, then we should have put some restrictions on it up front.
(END VIDEO CLIP)
HARLOW: All right, hindsight, Richard, as you know, 20-20. Nothing they can do about that now. But it really begs the question of what to do with that additional $300 billion. What do you do at this point, since the restrictions were not put on it that she would have liked to see at the outset last fall -- Richard.
QUEST: I'm actually amazed that there was that much money left. If you had asked me before we spoke, I would have said there was probably $2.50 and a...
QUEST: ...and a subway token left in the kitty.
All right, many thanks, indeed.
Poppy Harlow joining us from New York.
We all want to make the most of our money, TARP or otherwise. In just a moment, I will explain to you how this map could help you do some extraordinary things and balance your risk.
QUEST: Welcome back.
If you're looking around for somewhere new to put your money, some countries could be safer bets than you first thought.
Behind me, you can see the world -- well, that -- that much is clear so far -- as it looks to an investor. Dark red indicates countries where risks are perceived to be the highest. In just a moment, if you're not -- if your geography is not as good as, perhaps, it might have been at school, well, we'll tell you where they are in a moment. I think we can all guess the lighter colors are the European Union, then Australia and parts of Asia.
And there -- those are relatively safer areas. Greater risks equal greater rewards. The map was drawn by the Control Risks, which is a leading business risk consultancy. Five countries which most investors overlook because they are deemed to be too risky, 2010 could be the year to take it. Make a note of them -- Indonesia, Iran, Mozambique, Peru and Ukraine. None has yet fulfilled its potential over the past decade -- underdevelopment, political issue, a whole variety of reasons. And yet each has impressive natural or social resources.
The chief executive of Control Risks is Richard Fenning.
He joins me now.
There is a reason, Richard, why these countries have not reached their potential, isn't there?
RICHARD FENNING, CEO, CONTROL RISKS: There certainly is. I mean some on that list are actually well on their way. I would give Indonesia as an example of a country that has been probably under produced for a while, but probably pretty well established now as being a much better bet than it was.
At the other end of the spectrum, we're putting Iran down there.
QUEST: The reason I'm thinking of is that they're dangerous. The risk is high. I don't mean the risk of -- well, I suppose there is, in some places, a risk -- a critical (ph) risk. But certainly the risk to investment is real.
FENNING: The risk to investment is absolutely real. But what we want to do here is look over the horizon a little bit and identify those countries, those trends that are going to shift. It may not be next year, but we might start to see signs next year that if the bold investor -- the person who really wants to steal and march on these kind of opportunities - - should start looking for the indicators now.
QUEST: Which one do you like particularly today?
FENNING: Well, the most fascinating one, the most intriguing one, is Iran. I mean nowhere else is anybody talking about Iran as an investment destination. At the moment, it is, in some respects, the epicenter of U.S. foreign policy. It's fraught with difficulties. But it's essentially trapped in its history.
QUEST: And yet if -- we'll come to Iran in a second, because just what you -- if you take somewhere like, say, Indonesia, Mozambique and Peru, they are relatively mature investment areas, but they've still been for risk -- they're sort of risky investments. I mean, you know (INAUDIBLE) I'm going to invest in Peru. It's not brand new.
FENNING: It's not brand new. But Peru, like many other countries, has been fraught with difficult politics. Vast natural resources, but it has proved a treacherous and tricky place over the years.
But that has changed and it's certainly going to change some more.
QUEST: As the crisis has got worse -- the financial crisis -- what have you found investors and -- have been talking to you about?
what have they been asking for?
Because they've lost 30, 40, 50 percent of -- of net asset worth in -- in safe places.
FENNING: They have. The investors that are still liquid, that have still got resources, are, of course, looking for deals.
FENNING: They're looking for things that are going to be cheap now that weren't so cheap before and they're looking at these areas that we've just been talking about that are going to appear around the corner in the next year or so.
QUEST: All the places where I -- well, I'm being prejudicial here. Some of the places that you're -- you've mentioned all suffer from endemic corruption.
FENNING: Right. Yes. Huge swaths of the world, I'm afraid, suffer from endemic corruption.
QUEST: That has to be taken into account in your risk -- in your risk and reward calculations, doesn't it?
FENNING: It certainly does. We have been Evangelical about this risk for about 10 years.
QUEST: Well, in what way?
Do you believe you pay it (INAUDIBLE)?
FENNING: No, we've been telling people that the -- what people have written off as, well, that's just the way it is...
FENNING: ...this is cultural...
FENNING: ...these are, frankly, all excuses. The world has changed fundamentally in this regard. There are regulatory regimes now here, a new bribery bill in the queen's speech, there should be the bribery pact next year, a FCPA -- the Foreign Practices Act in the United States...
QUEST: And, of course, the U.N. -- the U.N....
FENNING: ...convention non-corruption...
FENNING: ...this is all changing the landscape.
QUEST: But aren't -- do you -- find -- and it's fascinating stuff. I could talk about this for hours.
But do you find that investors pay lip service to it?
They say yes, yes, yes, Richard, we know about that. Now go and look the other way.
FENNING: Not now. Not now. It really has changed for them. If they are paying lip service to it, then I'm afraid they'll have to stop doing that. There is a new feeling out there, a new intensity on behalf of regulators in Europe and the United States and elsewhere that this problem of corruption has got to stop.
QUEST: We need to bring -- leave -- leave it there for the second.
Many thanks, because we've got some breaking news.
Herman van Rompuy has been chosen by the European Union as its first full-time president. The diplomats are now telling various news agencies. We can't independently confirm this news. It's on various news wide agencies. It is, of course, the gossip of the -- of the summit.
We're expecting a formal announcement on -- in just a moment.
Let me just go bring you up to date.
The Associated Press says diplomats agreed to appoint Britain's Catherine Ashton as the bloc's new foreign policy chief and on it goes with Herman van Rompuy, a man who most of us had never heard of until the beginning of the week.
We will turn our attention while we wait for word from Brussels to the massive storms that are pounding the U.K. and Ireland. It is -- it is no longer a laughing matter between Guillermo and myself.
GUILLERMO ARDUINO, CNN METEOROLOGIST: No.
QUEST: They are now such of such a -- a ferocity, that they are dangerous.
ARDUINO: And an example of that is that the weather office in the U.K. got 7,000 calls because of the floods that we see in the area. We're talking about 125 millimeters of rain here, quite intense. It's the train of low pressure centers -- system after system that bring the intense rains in here. And it is like -- like a tropical storm, because -- or a hurricane, because the winds are over 120 kilometers per hour.
I'll tell you in a second where we're going to continue to see the bad weather. In the meantime, the weekend doesn't look very good at all for London. We will see the rain, we will see the winds. That means that we are going to see delays at the airports. You know, London has several airports and the winds are going to affect the operations over there.
We're talking about these areas -- Southwest Scotland and into Wales over here, but Cambria being the area where the brunt of the storm is affect right now. But the whole area should be on alert. And, as the red alert says, I mean take action right now. This is -- is very, very bad news because it's a combination of winds and rain that are coming here into the area.
I mean I hope that you get the message, because the weekend is going to be really bad and it started yesterday. The red alerts continue.
Therefore, we're going to see in those areas, even into Scandinavia, in Copenhagen and some other sections of Denmark, we will see delays at airports -- Heathrow, Charles de Gaulle. Well, Charles de Gaulle up here it will be fine. Amsterdam, Dublin, Brussels. And I have more. I told you, Copenhagen, the winds, the rain, the clouds are going to be there.
This is what's happening -- a train of low pressure centers, as I said. The jet stream divided. The area to the north is going to be unstable. To the south, though -- and I include Prague in here, Zurich, Munich, Stuttgart, Vienna, Zurich, if I didn't mention it -- with the influx of the warm conditions from the south, they all are going to see 10 degrees or more above average. Take Paris as an example. It should be 9 at p.m. hours, 3 degrees in the morning and evening. And we're seeing 16 degrees. So almost 10 degrees above average. The weather is not going to be that nice over there. But if we compare Paris with, for example, Prague -- in Prague, we will see the shine there, even on the weekend and temperatures departing more than 10 degrees above average. I mean that is fantastic news for people in the Czech Republic that have seen the chilly conditions. Of course, you know, don't think that in the morning and that in the evening hours it's going to be fantastic and really warm, because it's not. But during the day, it's going to be enjoyable. So you see here's the jet, then the mess continues in Ukraine, Belarus, the Baltics and in Russia.
So this is pretty much the map and temperatures for Friday. You see 15 for Paris, 20 for Madrid, nice lovely 21 in Rome, Athens, 20. The problems again in the north. Though I got an e-mail from one of our viewers -- D. from Norway, saying: "The wind is not that significant here yet."
Well, you know what, D.?
It's going to get you -- and very soon.
Stay with us.
Richard will be back after the break.
QUEST: Now, it's appearing more likely at this hour that the -- according to diplomats -- that the Belgian prime minister, Herman van Rompuy, has been chosen as the E.U.'s first full-time president and Catherine Ashton, the current trade commissioner, will be the new high representative for foreign affairs. CNN is not able to confirm this and an official, formal announcement is expected within the hour. But the wire services and the news agencies are going somewhat bananas on it, which does give, you know, if -- if you're taking the pulse and temperature of these sort of things, it sounds just about right.
Some background on Prime Minister Van Rompuy. The 62-year-old took office a little less than a year ago. He is credited with bringing economic and political stability to Belgium. After all, he is a former economist. He's from the Christian Democrats, which is the center right party. He's also a member of the Bel -- the Belgium Flemish speaking elite, a staunch follower of the Roman Catholic faith. He is a hard line opponent of Turkey's bid to join the E.U. Because he believes it would dilute Europe's Christian heritage.
He has his own Facebook page, writes his own poetry, mainly Japanese- style haiku poetry.
It would be interesting to see how he actually tackles an E.U. Summit in -- in haiku. Yes, I would pay good money to see that.
You may remember last week, my rather pathetic attempts at putting Captain Quest onto an aircraft. I tried my hand at flying a plane. Let's just say I think I'll stick to the day job.
QUEST: We decided...
CAPTAIN MATTHEW DOWELL, PILOT, ETIHAD: I think it's probably not the glamorous job that it did use to be. I mean, I think, probably in the '50s and '60s, it -- it was probably a more glamorous lifestyle. You went around the world and you -- you were treated like gods. Nowadays, it's much more of a workforce than it used to be.
QUEST: (INAUDIBLE) on board. I've been in (INAUDIBLE).
DOWELL: On a day to day basis, when we take off, the computer flies it to its destination. And if you wish, the computer can land it. That's fine. But when trouble starts, that's when the pilot comes into his own, because a computer can see trouble, can see a problem, but it doesn't have the ability that a human has to think of the situations to get you out of that problem.
So if you -- if you have that fundamental belief in your flying abilities, then -- then you'll be OK.
Going to work at 2:00 in the morning, if you don't like flying, it's - - it's going to be difficult to get out of bed. I get paid to do my hobby and I do a job that I love doing. I get up every day and smile. There's not many jobs around that people can do that.
QUEST: When you look at this, what do you think?
I mean, it's like the military, obviously.
Do you like it?
DOWELL: Yes. It's -- it's -- it's my office. It's where I go to work. This is -- if it looks like this, it's a good day. It's when you have a high list of red things on here, then it's a bad day. So when it's like this, the weather is nice, it's the perfect place to work.
QUEST: Have you ever been frightened (INAUDIBLE)?
DOWELL: Not yet. Not in 13 years. I think if your training is good, then you don't have that fear.
QUEST: What's the trick of your trade when you're flying?
DOWELL: I think probably don't rush into anything. Whenever you have a problem with the airplane, maybe sit on your hands for five seconds, look at the problem, think of the solutions and then act. It's -- if you rush into things, that's when you make mistakes.
(END VIDEO TAPE)
QUEST: Now, that was captain -- the Captain McDowell from Etihad talking to me about the -- the role of being a pilot, which, of course, was our World At Work -- part of our World At Work.
Now, the markets have been interesting. Before we go on, I want to show you about that. I want -- I do need to remind you that the word coming out from Brussels is that Herman van Rompuy has been appointed as the new president of the European Union. It's not confirmed, but diplomats are telling us that that -- he has been chosen. He's Belgium's prime minister, a former -- a former economist who is widely credited with bringing fiscal responsibility to -- to Belgium.
And Mr. Van Rompuy has beaten up an -- an impressive list of candidates. But perhaps the biggest casualty in that was Britain's former prime minister, Tony Blair. Mr. Blair had been a frontrunner when the whole thing started. Unfortunately, his -- his candidacy hit the rocks when countries like Germany and -- and -- Angela Merkel of Germany and Nicolas Sarkozy of France decided they were not going to support him. And he really didn't get the support of the left leaning parties within the European voting blocs.
Once that had gone, it became Plan B. And then everything was up for grabs. So Herman van Rompuy looks to be the man who will be the first president of the European Union.
What that job entails, of course, you pays your money, you takes your choice.
One other thing to point out to you. Catherine Ashton, who's the current trade commissioner, is likely to be the new high representative for foreign affairs, taking over from Javier Solana. That is going to be an interesting mix to put into the foreign policy debate.
The markets down 102 points in New York, 10323. And that's just off 1 percent. Much better performance than we had seen earlier on, where we were sort of 150 odd points. We have just about an hour and 10 minutes still to trade.
You're up to date with the news and the markets.
When I come back in just a moment, we'll have a Profitable Moment.
QUEST: Welcome back.
Herman van Rompuy is to be the new European Union president, according to the rumors and gossip in Brussels.
Jim Bittermann is there now and joins me now -- Jim, are we -- are you able to confirm, as best you can, that Van Rompuy is the man?
BITTERMANN: There's -- there are more than rumors and gossip, but it has on the been confirmed officially yet. We are expecting that any second now -- I don't know if you're seeing the pictures, but, in fact, the leaders -- the 27 leaders have gathered for their -- their family photograph here at the end. And we're waiting for some briefings that are supposed to take place right after that. And we also hear that the Belgian prime minister, Mr. Van Rompuy, has scheduled a news conference.
So that's all indicating that he is, indeed, the new president -- the first president of Europe -- Richard.
QUEST: Well, the pictures that I'm seeing and you may be seeing, it looks like Mr. Van Rompuy being congratulated, Baroness Ashton being congratulated. And there is Javier -- I mean, put it this way -- put it this way, Jim. There are four of them on the podium. If they ain't got the job, then somebody has made a terrible mistake.
BITTERMANN: Yes. So, and a terrible mistake. Exactly. No, that's exactly right. I mean, the fact is that his name has been out in front here all -- all day long. And basically people said that he had the job from very early on. But it still has not been announced, so I guess that's what we're really waiting for. The diplomats here are saying that.
And that Catherine Ashton has stepped into the number two job, the -- the British peer who was, in fact, has been -- been named the trade commissioner for the European -- the trade -- the European trade commissioner, has been named to the number two job here, which is the foreign ministry job, which is, in fact, itself a fairly important job, as she'll be in command of the European Union diplomatic corps, with substantially thousands of diplomats that will be at her command as the representative of Europe in foreign affairs.
So those are -- it looks like the two people, but we still haven't got confirmation. And like I say, just any minute from now, we probably will get that.
QUEST: All right, Jim.
And very briefly, because we're just about out, the jobs that are being appointed now will look very different in five or 10 years time, new -- when other people may come in. This is the beginning of Europe speaking as the federal Europe, some would say.
BITTERMANN: Absolutely. And I think, you know, one of the things -- one of the first jobs for the president, Mr. Van Rompuy, if it turns out to be him, is, in fact, he's going to have to define the job and make the job into something. Because it's been left fairly vague. One of his tasks is going to be building consensus. He's said to be at that in the way he's handled affairs here in Brussels for the Belgium government.
But the question will be, you know, how he'll be able to define the job.
Will he have the weight necessary?
Will he grow into the job and grow the job -- Richard?
QUEST: Jim Bittermann joining us from Brussels.
You can come back when there is more to report.
And that is QUEST MEANS BUSINESS for tonight.
I thank you for your time and attention. It's been a busy program. Always glad to have you on board for it.
Whatever you're up to in the hours ahead, I do hope it is profitable.
"AMANPOUR" is next with Christiane Amanpour in New York.