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QUEST MEANS BUSINESS
BP Stock Price Soars On Rumors Of Asset Sales To Raise Funds For Gulf Disaster. Unprecedented Disaster Forced BP To Invent Technology To Cap The Well
Aired July 12, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Cap and capture, BP battles to stop the flow of oil.
From recession to recovery, can football's euphoria boost Spain's economy.
And on shifting foundations, how earthquake engineering could change Istanbul's future city.
I'm Richard Quest, we have an hour together, because I mean business.
Twelve weeks of bad news and then, worse news, but finally, BP maybe a few steps away from having a more hopeful tale to tell us. BP is on a twin-track effort to contain the Gulf oil leak. Now it can't be said yet to be a success, but there may not be much longer to wait.
Tonight, we'll also have on the story-excuse me-the breakfast of champions. I sit down with Spain's ambassador in London, and his Dutch counterpart. They've been talking to me about what the World Cup does their economies, over a Spanish omelet, in fact.
First, though, in the Gulf of Mexico, BP says it is too close to putting a new lid on the broken well. If it works, BP will be able to capture most of the oil that is gushing freely into the sea at the moment. BP removed the earlier containment cap to fit the new one. It is believed, right now, up to 60,000 barrels a day, are bubbling up, out of the well.
The man in charge of the response effort says he is optimistic this new-this latest cap-will work successfully.
THAD ALLEN, OIL SPILL RESPONSE COMMANDER: This containment cap will have the ability to actually close down valves and slowly contain all the oil. Once we do that we will know how much pressure is actually in the well. That could lead to one of two positive outcomes. It could tell us that the well is withholding the pressure and we could actually shut the well in, or just cap it, if you will. And if there is a need that we can produce oil and have enough platforms up on the surface where we can contain all the oil and produce it.
Either way those are two pretty good outcomes, but they pinned a well integrity test. And it has to be conducted later on today. And I've asked BP for plans on how to do that. We're reviewing them right now. And hopefully we'll make a decision to more forward on that later today.
(END VIDEO CLIP)
QUEST: Separate efforts to permanently plug the well are also at a crucial stage and engineers are within a few feet of completely those relief wells. Once they intersect with the original one that is nearly 4,000 meters below the sea bed, around 13,000 feet down, the relief wells will intersect and then BP will attempt to plug the well for good. One way or another, BP says it may be able to kill the spill by the end of the month if things go according to plan.
I spoke to our correspondent, Ed Lavandera, who is in New Orleans, Louisiana, and I asked him about this latest decision to place a new cap on the well. And with the relief nearly done, why was it necessary?
ED LAVANDERA, CNN CORRESPONDENT: Well, let me break this into a couple of different parts. I think, first of all, the reason this is being done is that BP officials and the federal government here in the U.S. essentially signing off on this believe that one of two things will happen here in the coming days. Either this new cap that is being put on it will either allow them to capture what they believe would be all of the oil coming out of that damaged blow out preventer at the bottom of the Gulf of Mexico. Or it would allow them to capture all of it.
But they also say it could essentially cap it completely and none of it would be coming out, which would buy them time and would save them another three, possibly four weeks, for those relief wells to continue doing their work. It would save millions and millions of more gallons of oil to creep into the Gulf of Mexico. So they believe, right now, that one of two options will happen here in the coming days.
QUEST: If it is such a good idea now, why didn't they do this originally? Because the blow out preventer is still there. There is nothing-no circumstances have changed?
LAVANDERA: Right. The essentially, and this kind of goes back to what the big picture criticism of the oil industry in this case, is that the technology to battle these particular situations was essentially non- existent before this tragedy happened here in the Gulf of Mexico. BP officials say that this new cap has, essentially, they have had engineers working on this. Essentially, this didn't exist several months ago. Or if it did exist, it did exist in the position that it was able to be deployed quickly. So this is as fast as they have been able to roll this out. This is why we are seeing this cap now.
Also, remember, over the course of the last almost three months, we've seen different variations of these caps and they have worked, some have been catastrophic failures, others have worked a little bit better than others. So there has been a great deal of learning going on throughout all of the oil industry in this. And BP says, look, they have said it over and over again, this is the first time any of this has been done at these depths.
QUEST: Finally, Ed, briefly, what is the earliest date for the killing of the well, by the relief wells, and the outside date?
LAVANDERA: Well, if things continue to move as they are right now, we will see that first relief well will intercept the damaged well by the end of July. But it will then take a couple of more weeks probably for all of that come on line, for them to go through all the technical things they need to do there to start injecting what they call the kill mud, and essentially begin the process of shutting down this well. So we are still looking to early to mid-August before that happens.
QUEST: That was Ed Lavandera in Louisiana.
BP is overcoming enormous technical challenges to make this work. They are operating under thousands of meters of water and drilling through further thousands of meters of rock. Using remotely operated robots, aiming to hit a target not much bigger than a dinner plate. Iraj Ershaghi is the director for Petroleum Engineering at the University of Southern California. Iraj has helped us understand this throughout this crisis. He joins me now, via broadband from Los Angeles.
Iraj, so they've got this-this new containment, I asked our correspondent why they didn't come up with this earlier? Why do you think they didn't?
IRAJ ERSHAGHI, PROFESSOR, UNIVERSITY OF SO. CAL: Actually this is what we have been all asking. Of course, it takes some time to prepare such a device, you just can't do it within a week. But still the whole process of cutting the riser and unbolting it and removing it, so you would be able to put a new BOP or a new containment, it is the right thing to do. This is done all the time, if there is any sign of blow out offshore. And in fact, even in offshore operations (ph) have been done.
So, we were all wondering why BP delayed it that long. I understand the actually had a second BOP in the drill sheet (ph). So at some point, perhaps, the can answer it. But I have to give them credit, to all of the engineers that do such a difficult operation right now. And so, hopefully they will succeed. Of course there could be some problems developing after you put this containment device, but let's hope those, things don't happen.
QUEST: Right, if we look at-so we've got this containment device, which is going to take most of the stuff, and might, actually prevent-or seal it. But these relief wells, explain to me why does it take so long? If you are already in the vicinity, why not just get on with it? Bore through and start pumping the mud down?
ERSHAGHI: Well, again, if I can maybe draw a diagram for you, I can explain.
ERSHAGHI: What is happening? So, first of all, you have to look at the scales. So, let's say this is the surface of the water. And this is the sea floor. So, what do you have, you have the seals are coming out and you have this original BOP. Now, connected to that BOP, of course, you have the riser, with bolts, now most of the time this riser has to be easily disconnected because it was (UNINTELLIGIBLE) or something. You should be able to disconnect the riser, but for some reason they had problems doing that. So now the riser, originally was like that broken. It took while for them to go and cut that. They should have done that within the first two weeks, or the first three. And after they removed this, and that is what they are doing, they removed this. So this is now open, so they are going to put another BOP here, and they are going to bold it down absolutely. Now, BOP, once you are able to close it, this well is sealed totally.
The problem-the problem that could develop is the following: It is everybody's expectation, as far as I know, that the oil may not be coming necessarily though this casing. It may be coming from around it. If that is the case, this may work, but you would be releasing some oil.
ERSHAGHI: Yes, go ahead.
QUEST: But is the significance of insuring that they don't destroy the well bore casing? Because I keep reading that it is really important that the pressure in that casing, that they don't destroy it.
ERSHAGHI: Yes, and extremely important. I think people need to understand. Let me explain this to you. It is extremely important issue. You have a geological formation here. I tried to maybe magnify it a little bit. And in theory, you have a casing over here, and if you-this is the way, when are at the well, that is the way the well was. You are supposed to have cemented this perfectly so there is cement between the geologic formation and the casing. Now we all know tat this cementing job wasn't done perfectly. So the crude oil, in all likelihood, is finding its way through the broken cement. It is coming up they think there may be another line of casing. We think this crude is coming up.
The problem is that if there was this way, which is usually the case, by shutting the casing you control the well. If this is the case even if you shut that, now you are pressurizing and the pressure will increase and then what could happen the oil could come between the two cases into the sea floor, and that could cause major problems.
ERSHAGHI: Because now you could have (UNINTELLIGIBLE) you know a huge area that would be extremely difficult to control. That is the reason why-why they're capping that. The pressure hopefully is controlled. The weight of the crude so some extent controlled, but if the crude is coming from around, which some of us think is happening. This well-
ERSHAGHI: Yes, go ahead.
QUEST: We need to leave it there. You and I will talk more about this. We thank you for that. What an excellent diagram. And we will talk more about this at the next stage. I appreciate your time. Iraj Ershaghi joining me there from Los Angeles.
And, now, you understand. But on the markets, somebody put a rocket under BP shares on the session. They surged in New York. Jim Boulden is with me to explain what happened.
JIM BOULDEN, CNN INT'L. CORRESPONDENT: Richard, we have seen the share price of BP doing very well over the last couple of weeks. You see here, up more than 9 percent. Closed that higher in London. Up around 7. 5 percent in New York so far. Let's not forget they were 13 percent higher last week as well. So, there is a lot going on that people in the markets certainly think that getting close to capping the leak, certainly helping BP stocks look more attractive.
And also talk that BP is about to sell off some if its major assets to help pay for the spill. We know BP will be doing that for sure, but the rumors this weekend, anyway, is that they might be selling their stake in Prudhoe Bay, one of the largest production assets in the U.S. That could raise some $10 billion. The theory is it could go to the Apache Corporation. This is an independent oil company based in Houston, Texas.
Apache won't comment about this, but they have bought BP assets before in the Gulf of Mexico and in the North Sea. So they are very known for buying assets that the big oil companies give up on. So, this could very well be a true story and that is certainly helping BP shares.
One of the stories more out there, I think, is that ExxonMobil, another giant in the U.S., probably Chevron, rumored to have asked the U.S. government for permission to bid for BP. And some of the reports say that could be a $150-billion bid. Now, I'll question that one in a moment. But so far today is Monday, of course, and every Monday BP tells us how much they've spent so far on the oil spill. Richard, it is $3.5 billion, and of course, counting.
QUEST: Jim Boulden, $3.5 billion on the costs, 9 percent on the shares. We'll watch and see. Many thanks.
In just a moment, after a tough few months, bit test of the U.S. stock market. It is the corporate earnings season. We'll be counting down to the results in a moment.
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QUEST: European stock markets are doing their best to shake off the summertime blues. A day of gains across the region. It was Monday, and that made it five days up in a succession, after a couple of rocky months.
London, Paris, let's see the numbers. Frankfurt, all closed in the black. Look, you are not going to get too excited about that, but it is July. BP was a major mover as you heard earlier. And there was a hint of investors keeping their powder dry. With the earnings season underway in the U.S..
That earnings season, well, it starts really today. We get the first ones. Alison Kosik is at the New York Stock Exchange.
Alison, day one, it is-you know, we get the first results. What are we expecting?
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Yes, ALCOA is kicking off second quarter earnings season after the bell, Richard, today. And it is really going to be a big week; 21 percent of the S&P 500 companies are going to report. And Americans really pay a lot of attention to this, because their retirement funds, their 401(k)s are really pegged to the S&P. We are also going to hear from JP Morgan Chase, Intel, General Electric, Bank of America, Citigroup and Google.
And Thompson Reuters is predicting that earnings are expected to rise 27 percent from a year ago. That sounds like a big improvement, Richard, but it may look a little bit better than what it really is, because second quarter last year was really weak. So the comparison is kind of easier to make.
KOSIK: The bar was kind of low, Richard.
QUEST: Even if the APS is good and the percentage on the S&P is favorable, how much of that is priced into the market from the prices we've seen from the beginning of the year?
KOSIK: Well, you know, I think at this point, Richard, investors are really looking at these earnings as a road block-as sort of a map, what I meant to say. I mean, you know, we've been getting this slew of really bad economic reports and we may wind up getting some really good earnings reports coming out. But what they are really going to be looking for is what these companies are forecasting. They may be less interested in what the past few months have done. They are really going to be seeing what these companies are forecasting, because if their forecasts are really strong, it could give really good indications on whether these companies are hiring, whether they are going to be spending, or investing more. Or are they just hoarding cash? So they are really looking for a lot of answers and a lot of clues, so I see this more as a road map, I meant to say, not a road block.
QUEST: Well, yes, road maps turn into road blocks and back again. But Alison, at our last Q25, when we looked at the various stocks, we had many more green balloons than red. Greens vastly outweighed reds. Would you like to care to predict, this time, well, should I buy more red or green balloons?
KOSIK: Oh, you are asking me my opinion, Richard? Well, you know, I'm not going to pontificate on what you should buy. I don't have a crystal ball. I mean, what you can do is-is that what you were asking, Richard?
QUEST: I was. I was. Whether or not we're going to beat, whether we're going to see more forecasts, but I quite understand it puts us into a very interesting position doesn't it, Alison. A really interesting position for the markets this time.
KOSIK: It really does. And I'll tell you what. As you said earlier, the shares of BP are really on fire today on those rumors that BP is looking to sell off some assets. That is really the talk of the floor today, at the New York Stock Exchange, are those BP shares and what may be happening with the company.
QUEST: Alison, many thanks. Alison Kosik joining us from the New York Stock Exchange
QUEST: And, of course, the Q25 is-we start next week as we look at exactly what the market will be making of the various earnings results.
"Future Cities" is next. We reshape a city to save thousands of lives we are in Istanbul, where you will see how advanced engineering lessens the impact of natural disasters. It could only be a "Future City".
QUEST: Tonight, on "Future Cities", a matter of life and death; 14 million people live and work in an active earthquake zone that is the city of Istanbul, which straddles the divide, of course, between two continents, and spreads across seven hills. Istanbul is preparing itself for the next big tremor.
QUEST (voice over): Turkey's biggest city is also is most vulnerable. Istanbul sits on top of the North Anatolian earthquake fault line.
MUSTAFA ERDIK, KANDILLI EARTHQUAKE RESEARCH INST.: We know what will be coming but we have no clue on its exact time. It can be 10 seconds from now, and yet it may not happen in the next 50 years.
QUEST: Seismologist Mustafa Erdik says Istanbul is better prepared than most.
ERDIK: I don't think there is another city in the world that has taken campaigns for preparedness for a large earthquake.
QUEST: At Sabiha Gockcen Airport earthquake engineering was at the forefront of the architects mind when designing the new terminal building. Here the engineering firm, ARUP and architectural partners, Tekeli-Sisa, have built the world's largest seismically isolated building. This means the terminal sits apart from the ground on hundreds of little things called seismic isolators.
MEHMET EMIN CAKIRKAYA, ARCHITECT, TEKELI-SISA: This is the seismic isolator. There are 300 of those all around the terminal building. This is the column, reinforced concrete column of the basement floors.
They allow movement of the top part of the building independent from the bottom part. When the earthquake starts the basement floors will be moving laterally, quite violently, compared to the upper floors. The upper floors will have a slower and softer movement, so damage to both property and human life will be minimum.
QUEST: This system means the airport should be safe and secure after an earthquake, which would ensure it would remain open and a crucial entry point for aide and supplies.
IRFAN GUNDUZ, SABIHA GOKCEN INT'L. AIRPORT: We tried to create a perfect design for our future operations and for our future operations of Istanbul. This is the first time in Turkey. I'm sure that it is also the first time in Europe we put on all our columns earthquake isolators.
QUEST: Across town the Kandilli Observatory & Earthquake Research Institute has its own sophisticated warning system.
ERDIK: By the end of this year we'll have about 200 sensors distributed all over the city. So in the event of an earthquake what will happen is that I record the motion and then we prepared a map of damage and report to the agencies that would deal with the search and rescue efforts, so that they could direct their capacity (ph) properly.
QUEST: In 2006, Istanbul make a major commitment to earthquake readiness. All over the city, more than 500 buildings have been strengthened. People are being trained and many projects are trying to reduce the risk of major damage, making sure important public buildings, like schools and hospitals, will still be standing.
KAZIM GOKHAN ELGIN, DIRECTOR, ISMEP: From 2006 up to now we retrofit (ph) (UNINTELLIGIBLE) and those reconstructed 357 school buildings, consisting of 550,000 students. For example, hospitals should be in operation while-in the earthquakes, because they are many injured people, not collapsed or demolished.
QUEST: Elgin says every time an earthquake hits another country it is reaffirms the work being done in Istanbul.
ELGIN: When I saw these photos from Haiti, or any other earthquake, in China. What we are doing here is very emotional and very meaningful, very, very meaningful. So, my team is working very hard to prepare this city for an earthquake.
QUEST: The experts here are sharing their strategies with cities around the world.
ERDIK: There is a big project now again, that to replicate what is being done in Istanbul in other major cities in Turkey and the government is allocating funds for this. Istanbul is sets a new example for the city that has been prepared for an earthquake.
QUEST: There is no other city in the world, they say, that is as prepared for the inevitable, whenever it arrives.
QUEST: The old city, and the new ways to prevent it and help protect it for a future city. And if you want to catch the other episodes from the cities, well, you can do it online. You go to CNN.com/quest.
What price a World Cup victory? Spain's ambassador to Britain tells me it is an economic injection.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It is a stimulus package in itself. We are sure that this will raise the moral in the country.
(END VIDEO CLIP)
QUEST: The power of positive thinking, over breakfast, in a moment.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news always comes first.
A Somali militant group with links to al Qaeda is claiming responsibility for its first known terror attack abroad. Al Shabab says it was behind Sunday's bombing in Uganda that killed at least 74 people. Three explosions ripped through crowds gathered for the final of the World Cup match. They were watching it in Kampala.
Al Shabab calls it a retribution for Uganda's military presence in Somalia.
Russian President Dmitry Medvedev says Iran is getting closer to having, in his words, the potential that in principle can be used to build a nuclear weapon. It was at a meeting with the Russian ambassadors that Mr. Medvedev also delivered tough criticisms of Tehran's controversial program, saying Iran is far from behaving in the best way. Russia now has joined other world powers last month in approving new sanctions against Tehran.
The people of Haiti are marking a somber anniversary -- six months since the country was hit by a magnitude 7.0 earthquake. More than 220,000 people were killed. The capital, Port-au-Prince, was left in ruins and thousands of survivors are still living in tent cities.
A hero's welcome in Madrid for Spain's victorious World Cup team. The goal keeper was first off the plane, holding onto the World Cup. The red and gold fiestas continued through the day. The entire team is being honored with a victory parade through the Spanish capital.
Now, here on QUEST MEANS BUSINESS, our Economic World Cup has also reached its own final. This morning, I sat down with the representatives of the World Cup finalists.
We invited the Spanish and the Dutch ambassadors -- the British ambassador from those countries -- to breakfast.
And I began by asking Carles Casajuana from Spain, given the deep cuts in the Spanish economy, if the World Cup win would energize the nation.
CARLES CASAJUANA, SPANISH AMBASSADOR TO THE UK: This is a stimulus package in itself. We are sure that this will raise the morale in the country, that this will boost -- this generates the kind of enthusiasm we need. We are sure that this will increase the -- the affection of Spanish branding, Spanish brands in the world and Spanish exports. We know that this is a world event and it has an enormous impact on the economy. Some economists say that it could have an impact of about (INAUDIBLE) points of the GNP even more.
QUEST: That's good news.
CASAJUANA: That's very good news. We need it.
QUEST: You need it.
CASAJUANA: We all need it.
QUEST: Is there a risk that it might have a bad effect on -- in the Netherlands?
PIM WALDECK, DUTCH AMBASSADOR TO THE UK: No. I think the -- the result will be the same. Also, I reckon 0.1 percent extra in the GDP. And the extra money geared by the whole -- by the whole tournament has been enormous.
QUEST: Let's talk about Europe generally at this point, because Europe, at the moment, is very much locked into this battle over what happens next in the economy of this great project, the Eurozone, the -- the growth versus austerity, as more and more countries are going down the path of austerity.
Is this a good time for Europe?
WALDECK: I think that what one sometimes forgets is that since the crisis came, Europe has done a lot to get its act together, to face the crisis. And people are very -- how shall I say it -- they -- they are very -- they have no patience and they want to see immediate results. But, for instance, in the European Union, if you talk about the European Union, we have to -- to gather around with 27 countries to decide what we have to do. And if you look back, that has been done in quite a -- a reasonable short time.
CASAJUANA: I think my impression is that sometimes people underestimate the determination of the European leaders to move on, to con -- strengthen the European corporation. Of course, it's not easy because as -- as the ambassador said, we are 27. We have to agree. But the -- the -- where there's a will, there's a way. And...
QUEST: But didn't it...
CASAJUANA: -- and there's a strong determination by -- by most all European leaders.
QUEST: They're doing a pretty shocking job, the leaders. Yes, you know, I mean I'm reminded of Churchill talking about the United States, they do the right thing after all other options have been exhausted or been tried. If we look back at the way the crisis -- yes, we got to the right result, but only after we'd always been brought to the brink of calamity.
WALDECK: Yes, but there also has been the fact in the -- in the history of the European Union, you don't...
QUEST: It's not about -- but just saying that...
QUEST: -- I mean that's a pretty damning indictment of the European Union...
WALDECK: No. No, no, no, no, no, no.
CASAJUANA: All countries were -- the world economy was in -- on the brink of the abyss before and while some countries were bolder -- the United States were that bold in -- in reacting; some European economies, too -- it took the (INAUDIBLE) a bit longer to the European Union. But stronger, we have -- we need to bring to...
QUEST: No, Ambassador. Maybe we need to be bolder.
CASAJUANA: Well, yes. But we need to be bold 27 member states together. And that's -- that's perhaps difficult.
WALDECK: And it is not only Europe that -- that has to be bolder, it's all the other players in the world economy have to be bold, as well. It's a -- it's a -- Europe normally grows in -- in crisis. It's very strange, but it does. Don't forget that in the early '80s, the European adventure was almost dead. And then out of the blue came a (INAUDIBLE) Mr. Delore (ph) and he took us out of the -- out of the mud and he brought Europe again forward.
I have the impression that at some time, they will grow something out of this -- this -- this crisis which is good for the common good in Europe.
QUEST: Were you surprised that you got a -- your team got as far as it did?
WALDECK: Yes. I started to believe in the whole thing when we beat Brazil.
QUEST: Ambassador, were you surprised you won?
CASAJUANA: I was not. No, I was not surprised. We expected our team to perform well. But you cannot count winning the World Cup.
QUEST: And, finally, economically, since it's the Economic World Cup, if we are sitting here this time next year, will you expect things to be looking much better, do you think?
CASAJUANA: Yes. I'm sure the -- the Spanish economy will do -- will be doing much better in one year's time.
QUEST: And you, Ambassador?
WALDECK: Yes. We -- we will pick out -- pick up our troubles and get on our bike and pedal.
(END VIDEO TAPE)
QUEST: The ambassadors of Spain and the Netherlands. And needless to say, we served them a Spanish omelet for breakfast.
Now, President Zuma has been talking in South Africa, saying that the World Cup has shown that -- what the country can do, and also that the country can expect greater investment and commercial benefits as -- as a result of it all.
In financial terms, South Africa has been a winner in terms of the tournament.
On the line now, the South African high commissioner in London is Dr. Zola Skweyiya.
he joins me.
Dr. Zola, good after -- good evening to you.
Congratulations in the sense that South Africa now stands to reap serious commercial benefits, doesn't it?
ZOLA SKWEYIYA, SOUTH AFRICAN COMMISSIONER TO THE UNITED KINGDOM: Yes, good evening.
Well, South Africa will definitely end up continuing to build basically on what has been achieved by this World Cup. It has given our country very good publicity and it has united to a very much extent all South Africans irrespective of creed, religion, and, more important, of race. All of us are very proud that we, as a country, have been able to provide such an -- such a show for the rest of the world.
QUEST: But what...
SKWEYIYA: But more economically, actually, it will assist us -- it will assist us, to a certain extent, of creating new jobs and ensuring that we'll have a better infrastructure, not only the stadium, which everybody is talking about, but also the -- the roads, streets and almost everything.
But, also, it has shown that if united, the South Africans are capable of achieving anything that we take up on and be able to provide for the rest of the world.
QUEST: How do you try...
QUEST: Well, let -- let me just interrupt you.
Forgive me, Ambassador, but how do you translate this trophy into hard commerce, in -- investment, SDIC (ph), all these other benefits?
SKWEYIYA: Well, first of all, I think it has already done some of those benefits that we're -- we were looking for. And despite the fact that we didn't go far, we knew that we wouldn't go far in terms of the football itself, we did -- we added to many things (INAUDIBLE). But also we intend to continue in the same (INAUDIBLE) to deal on what has been achieved permanently. We want to ensure that (INAUDIBLE) quite a (INAUDIBLE) budget has already been passed by economists (INAUDIBLE) and all the economies (INAUDIBLE) said that we should continue to build better roads, to improve our agriculture, but more importantly, to improve the education and skills of the young people of South Africa.
We have also created a lot of ingress amongst our youth who we hope will be continuing to invest more on, we will be able to continue and to do whatever is possible -- and government is already doing that presently, this weekend. Government is busy discussing how do we do (INAUDIBLE) South African (INAUDIBLE) from what has been achieved and in order to ensure that we reach all our people despite the fact that we have so much poverty in this country. We want to use this as an instrument to eradicate (INAUDIBLE) and that poverty.
And we feel very strongly you can only eradicate it by...
QUEST: Well, South Africa...
SKWEYIYA: -- ensuring that we -- we create jobs...
SKWEYIYA: -- for our people.
QUEST: Ambassador there, we must leave it.
Ambassador -- the ambassador to the U.K. joining me there.
And hopefully, Ambassador, when you're back in post -- in London, you will become and sit next to my -- next to me here and we can have a -- a full chat on that.
The phone line perhaps wasn't as clear as it might have been.
Spain's footballers and thousands of fans have been flying home from South Africa. And pretty soon, millions more in Europe are setting off on vacations.
Where are you going and what shape are the airlines in this summer, in a moment?
QUEST: Evidence is mounting that the airline industry is out of intensive care. Baa, which runs Heathrow and other key airports in the U.K., says the number of passengers it handles fell in June due to industrial action by British Airways. There was a silver lining. Air freight, which gives us a barometer of world trade, jumped 21.7 percent.
Last week, Lufthansa said it carried nearly 2 percent more passengers in the first half. And there were strong numbers in June from other carriers. Ryanair said passenger numbers were up 15 percent year on year.
KLM France says that it was a 4.7 percent increase.
And EasyJet saw a 9.4 percent.
You have to bear in mind quite often with the EasyJets and the Ryanairs, you've got to look (INAUDIBLE) because of new -- new routes that have been introduced.
As the summer vacation season keeps airports busy, I asked Chris Loughlin, the chief exec of the Internet travel company, Travelzoo, what kind of holidays people are looking for.
CHRIS LOUGHLIN, CEO, TRAVELZOO: I think that last year was -- there was a large swing last year to the package, because the euro was very expensive. Now the euro is -- is a little bit cheaper, particularly from the U.K. So -- so we are seeing some self-packaging.
Last year, also, you didn't see many hoteliers in Continental Europe come out with great deals for the -- for their own markets. So they sort of went quiet and decided not to do anything. Now you're seeing deals. That's driving -- driving some incremental demand, as well.
QUEST: And the favorite places, not just for the U.K., but the favorite places across Europe where people are going surprised us, because what -- the thing I see that people are talking a lot more about, Montenegro, Croatia, Delamin Coast (ph), all around that area.
LOUGHLIN: I mean these are all great places. But the answer is Spain, Spain, Spain.
QUEST: Oh, come on.
LOUGHLIN: It does -- it doesn't...
QUEST: Come on.
LOUGHLIN: -- change. This is the favorite place for the...
QUEST: But that's because Spain's got the capacity and therefore it can afford -- is -- is cutting the prices.
LOUGHLIN: They've got -- they -- absolutely. But this -- you've run that survey every single year, it's Spain, Spain, Spain. And, you know, I wish -- I wish it was different, but it's not.
(END VIDEO TAPE)
QUEST: The CEO of Travelzoo on where we are going or the trends of holidays this year.
Guillermo is at the CNN World Weather Center.
Have you got any thoughts for your summer vacation?
GUILLERMO ARDUINO, CNN METEOROLOGIST: I am going go to be working. I'm not taking any time. I was in Europe in January and February, in March, and I'm going to Europe in December again.
QUEST: Hang on. Hang on. You were in January in...
QUEST: You were in Europe in January, February, March and again in December.
QUEST: That's a lot of vacation there.
ARDUINO: Come on. And also, as your guest was saying, Spain, Spain, Spain. Out of the four trips, three are in Spain. There you go.
QUEST: Well, there we are. Look, miserable weather. I can tell you without even looking at your chart, we've got overcast skies...
QUEST: -- the potential of deep rain in the U.K.
What about the rest of Europe?
ARDUINO: Well, but it's going to change. It's not going to stay like that. It's going to be coming and going, as you see. Actually, the north is the only area where we do not have nice weather. It is hot in here. All Germany now has warnings, parts of Poland here, especially the west, with warnings for the rest of today. These are the highs that we have seen. But tomorrow, parts of Germany are getting better in terms of the heat.
Now, this high continues to rule in here and the rain showers are cooling down a little bit parts of Germany and so we're seeing France and the U.K.
But it's not that bad. It is going to be rainy again probably on Thursday and probably tomorrow again in London. But it's not terrible.
The thunderstorms are going to be especially in Germany in -- into the Netherlands and Belgium. And I was looking at the combination -- the heat and also the thunderstorms that are induced by the heat. So that's what we're going to see.
So I look at the radar now and it will be clearing for tonight for England and then on Thursday we'll get some more rain showers, probably tomorrow a little bit more. And then that's it coming and going, it's not miserable, though. And no problems at airports. All the greens indicate that despite some clouds and some rain showers, things are going to be fine. No delays induced by weather.
Copenhagen with some more rain showers. You know, this same area here. These areas into Scandinavia, too. Germany now is seeing the passing of the front of things are going to cool down a little bit in the west.
Look at the contrast. London 21 for tomorrow, the high; while in Bucharest, we're expecting 31. Watch out Hungary, actually, for tomorrow, because it's going to be extremely hot. Madrid, I was looking at some video coming from Spain. Madrid there, Plancesa (ph) and Granvillea and Place Cologne (ph), there were many people out there. The weather is great.
We're looking at this, also, Richard. We have a cyclone that is cooking up to be a -- a big one, now moving to the Philippines. North of Manila in Lusan (ph) is where we will have landfall, probably in a typhoon status you see 24 to 48 hours from now. The winds keep going up in speed.
And also, we see more rain in China. It is the time of the year when we see a lot of rain. Look at Yuanglin (ph) here. So if you're going to China anywhere from Hong Kong, because Hong Kong is in the path of that cyclone, again, like in five -- four or five days from now. So if you're going to Hong Kong or even north of that into Japan, the Korean Peninsula, Taiwan, rain all over nonstop -- back to you.
QUEST: Guillermo Arduino, who, with all that vacation, has occasionally been known to do a day's work somewhere in between.
ARDUINO: Oh, yes.
QUEST: Me, jealous?
ARDUINO: Oh, come on.
QUEST: Surely not.
ARDUINO: You travel. You're a big (INAUDIBLE), as well.
QUEST: Well, all right, Guillermo.
See you tomorrow.
ARDUINO: See you.
QUEST: All right. We'll have more on that weather tomorrow if he turns up from vacation.
Some breaking news just to bring you. You'll be aware, of course, the moratorium on deep sea drilling was overturned by the U.S. courts pending new regulations. Apparently, the Obama administration will bring out their new regulations for a moratorium on deep sea drilling. It's expected at 4:00 p.m. Eastern, which is in, oh, just a couple of minutes from now.
In a moment, Spain has relished the World Cup victory. The Spanish are celebrating and we'll show you how and what effect it might have on the nation's economy, in a moment.
QUEST: You know you're a -- you know the old adage, if you can't get your hand on the real thing, make your own instead. It's a hero's welcome in Madrid for Spain's victorious World Cup team. Spain's goal keeper emerged from the plane holding aloft the real World Cup.
Hey, we didn't do too badly.
Well, anyway, the red and gold fiestas are continuing. The entire team is being honored at this moment with a victory parade through the Spanish capital.
Earlier in the program, the Spanish ambassador told me that Spain's World Cup win will be like a stimulus package for the country.
From Madrid, our correspondent, Al Goodman, says the impact is already being felt.
AL GOODMAN, CNN CORRESPONDENT (voice-over): The World Cup has given the Spanish economy a boost just when it needed it the most. The country is in a deep economic downturn, with 20 percent unemployment, the highest in the Eurozone. But the World Cup fever got Spaniards to start spending again.
You see Spanish flags hanging from balconies, from store windows, from cars. Flag sales are up as a result of the World Cup. One of the leading flag makers in Madrid says his sales are up six fold during the World Cup.
Shirt sales are booming for La Roja. That's the red color of the team. This is the official one from Adidas. It sells for about 70 euros. Media reports say about a million of these have been sold all across Spain. That's far more than when Spain won the European championships two years ago.
But it's not just the official ones. There are others, less official ones, if you will -- 30 euros here. And on this rack, 20 euros. All of these sales a big boost for the vendors.
PABLO VERCUILLA, STORE MANAGER: We have had a 200 percent increase in sales, especially in football products. This has been very good, even though it might be just one month of extra sales around the World Cup. It helps to improve the situation we had before. It is most welcome.
GOODMAN: Many bars and restaurants say the World Cup has been good for business, especially on the days when Spain played its games as people crowded into these establishments to watch on television. Some economists say the overall effect of the World Cup might amount to a quarter of a point of growth for Spain. And many businesses say at times like this, every little bit helps.
Al Goodman, CNN, Madrid.
(END VIDEO TAPE)
QUEST: Al Goodman there, still got a -- well, there we are.
Here on the program, we've always been hearing from you and you've been sending us your photos from the World Cup. So, here we go. Let's get to some of them.
This is Chumba (ph) and Debra (ph). They're both married to South Africans. There's little room for mixed loyalties. Chumba is from the Netherlands.
Moving along, it's been an important World Cup for little Boko (ph). It's his first, as you can obviously tell. I have a nasty feeling that little Boko is going to regret that picture in the years to come. And he's been learning it all from Cameroon.
Nigeria didn't exactly have a World Cup to remember. The president said his team did so badly, he wouldn't let them play again. But Nigerian Ralee Adibayo (ph) still smiling here in the center. Adibayo managed to find some friends and fans from Argentina.
Argen Jennie (ph) from Germany made it all the way to South Africa and her team won the playoff for the third place on Saturday.
Everyone says South Africa has been an excellent host for the World Cup. The Hamanas (ph) family here says that they are very proud of their country.
We have thoroughly enjoyed your pictures of you enjoying the World Cup, email@example.com. If you send me one or two good ones, we might just have room for the hangovers later in the week.
I'll have a Profitable Moment for you, after the break.
QUEST: Tonight's Profitable Moment.
Like any after party hangover, the detritus is all around us from our Economic World Cup.
Now, I had hoped that we would discover some deep, dark secret connection between countries' economies and their performance in the World Cup. And it seemed to be working really well -- Greece, England, Italy, France, all countries in economic struggle -- trouble. They struggled to advance and then were kicked out of the contest.
But I can hear you already point out, Richard, it doesn't work out. Spain, the winner, blew that theory out of the water. Its weak economy but strong footballing skills.
In the end, if nothing else, our Economic World Cup allows us to explore economies we sometimes overlook -- Ghana, Uruguay, Paraguay, even North Korea. We pointed up the strengths, such as Chile's recovery from the earthquake and the strong agriculture in Ghana.
All in all, the Economic World Cup has reminded me there's much more to the global economy than the Dow, the dollar and the doldrums.
And that's QUEST MEANS BUSINESS.
I'm Richard Quest.
Whatever you're up to in the hours ahead -- where's me bell? -- I hope it's profitable.
"WORLD ONE" is next.