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QUEST MEANS BUSINESS
Interview With Jean-Claude Trichet; Russia to Host 2018 World Cup; Forecast for Business Travel
Aired December 2, 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, HOST, QUEST MEANS BUSINESS: Tonight the president of the ECB tells this program tensions in the market means we have to keep providing cheap money.
JEAN-CLAUDE TRICHET, ECB PRESIDENT: All advanced economy have big challenges in the present time after the worse crisis in our advanced economy since World War II.
QUEST: Jean-Claude Trichet tells this program the crisis will continue until countries prove they are serious. And our other big story a World Cup victory.
The games haven't started, but Russia and Qatar have already won. I'm Richard Quest. An hour with you as I mean business.
Good evening. This is no time to head for the exit. Europe's central bank announced today its continuing to give major support to Europe's neediest bank. Support that in many cases like Greece and Ireland have been the very life blood of banks shut out of the commercial markets.
Banks will be able to continue drawing on emergency lifeline funds until well into 2011. Instead of being cut off cold. And the ECB will help governments borrow money to keep them paying the bills.
It'll be in the market buying bonds on the open market which will help drive down a painfully high price of government sovereign debt. Moving on, more the markets want a decisive action today.
Simply bailing out struggling nations one by one is no longer as Ireland proved. The head of the ECB president Jean-Claude Trichet says the measures are extraordinary but they're tempering.
(BEGIN VIDEO CLIP)
TRICHET: Overall the current monetarily policy stance remains accommodated, the stance, the provision of liquidity and the allotment notes will be adjusted as appropriate. Taking into the account the fact that all the non (inaudible) of measures taken during the period of acute final show market tensions by a construction temporary in nature.
(END VIDEO CLIP)
QUEST: The turn has shifted remarkably in the past few weeks until recently policy makers have been hinting it was time to wean the banks of their emergency funds and roll back some of the extraordinary interventions that's taken place.
That now seems to have changed. I asked president Trichet what happened to the exit strategy.
(BEGIN VIDEO CLIP)
TRICHET: Well, you're absolutely right. We have decided to continue to practice full allotment at fixed rates, not only for the one-week operation, the main refinancing operation, or for the one month, but also for the three months. And these are non-standard measures that we have judged appropriate in the present circumstances, for being sure that we can transmit correctly our monetarily policy stance. So, all our non-standard measures are commensurate to this, I would say, impairment of the transmission of monetarily policy. We have judged that this was today the right decision.
QUEST: Which clearly suggests-- well, not -- it says bluntly the mechanisms are still -- that the market are still not normal, and the ability of monetarily policy to drag Europe back into good growth is still not there?
TRICHET: No, I wouldn't say that. I would say only that the monetary policy stance that we have, one percent interest rates, is in our opinion appropriate and would permit us to continue to have a very solid anchoring of inflation expectations.
But it's true that we see tensions on markets, and we judge that it is necessary to have this level of non-standard measures. We, you remember in the past, we had a one year non-standard measure, a six-month non-standard measure.
We exited from that, but at the present moment we consider appropriate to go on with this three-month full allotment fixed rate, which is commensurate to what we see for a good transmission of our monetary policy.
We do not, we do not --
QUEST: Now, you do -- go ahead, go ahead please.
TRICHET: No, I only wanted to say that we are not injecting liquidity in the euro area in a manner that would not be commensurate to the monetary policy stance that we have. We have also this program of purchase of security, and we withdraw all the liquidity that we are injecting when we pursue that program. I said that it was an ongoing program, and I had said that also I have to say to the European parliament.
QUEST: Now you talk about -- you call it the SMP (ph). In my language, it's bonds purchases or security purchases that our viewers will understand. When you said two days ago that you had all the tools at your disposal, you were telegraphing to the markets and to the world bond purchases would continue?
TRICHET: Well, I said explicitly that it was an ongoing program, this security purchase. And again, with the same goal. The goal is to permit restoring as good as possible a transmission mechanism for our monetary policy stance, which again we judge appropriate.
We have the standard measures, the non-standard measures. Standard measures are there to permit to be up to our responsibility, which is price stability. By the way, our track record is, if I may, Richard, a good one, because we have delivered 1.97 (ph) percent of inflation as a yearly average over the past 12 years.
TRICHET: It's better than what any central bank had done before over the last 50 years. So I mention that (inaudible). It is our mandate.
QUEST: Right, but why has the market -- why has the financial world not accepted the stability following Greece's bailout and Ireland's bailout? It has a got a huge facility at its disposal, the Europeans, and the Eurozone, and yet we still see tensions?
TRICHET: Well, again, I think that it is, you know, something which is regularly observed. When you embark into a tough program, you have to demonstrate progressively that you're implementing it, and that is a process which is, again, ongoing.
We will see what happens. All relies very much upon the responsibility of the authorities concerned. The governments that have the responsibility of, I would say, redressing the situation, and those who are surveying them, the college (ph) of governments, the euro group as we say in our jargon, that are the other governments.
(END VIDEO CLIP)
QUEST: President Jean-Claude Trichet, and we'll hear more from him on the wider issues of European reforms later in the program. The news that the ECB had extended its facility emergency loan program did bring relief, and also the fact that the bond purchases were taking place, the S&P. We will explain that in a minute. These are the numbers for the closing (inaudible). Stocks gained for a second day.
They closed on a two-week high boosted by US home sales. So there's a general bonhomie in the market. Car stocks got also a bit of a lift as well. The best gains in London, perhaps you would expect that with so many strong financial (inaudible).
Now take a look at the euro today. When we were here you and I chatting it was about 130 and change. Now were at 132 give or take. So there has been a very slow - initially after President Trichet was speaking it fell back but it did recover and that's where the European stands as the moment.
Because there has been some encouraging economic news particularly out of Germany on industrial production. This is the number that you really need to look at. Ten year bond yields.
Well Greece is no longer nudging 12 percent. The interesting one of course is Ireland back down to 8.5. Spain has come down quite nicely from 5.25 to 5.3 up 508. So the pressure on yields is down and that is the bench mark if you like the German bond and everything is measured as against 2.8 to the differential.
So you get an idea. President Trichet's speech was very heavy on the jargon. Loss of phrases were used.
JIM BOULDEN, CNN CORRESPONDENT: Absolutely.
QUEST: Jim Boulden, by the way.
BOULDEN: Yes you had - the one I love is that they have what they call standard measures to operate. So ECB should be standard things in order to price stability which is only the reason that it exist.
So during normal years this is what they did for eight years this is what they did. Then this whole thing blew up and now they're doing non- standard measures. And these is - this is when he talks about doing non- standard measures for an hour in his press conference.
He's talking about what you just went through there.
QUEST: Bernanke tends to talk about non-traditional methods of monetarily policy. Is that the same thing?
BOULDEN: Well that's QE and things like that but this is not QE.
QUEST: No. No but what I mean but this is non-standard is not setting interest rates.
BOULDEN: And it things that, I guess you could say these things that politicians have forced these banks to get involved in because of the market crisis and the markets have forced them to get involved in these things because of what's happen.
But they never dreamed they would be doing these things.
QUEST: OK. Now then the next one, I thought he was talking about the Scottish National Politics.
BOULDEN: I thought he said SNP as well.
QUEST: I kept thinking he was talking about the SNP. I said why is the president of ECP talking about the Scottish Nationals? But he wasn't.
BOULDEN: SMP. Which is the use - that's the term euphemism really for bond buying and this is what he was talking about market.
QUEST: Securities Market Program Purchases.
BOULDEN: Purchases. So this is. I listen for an hour I never heard him use the word bond once.
QUEST: No, no.
BOULDEN: I'm not sure if he did at all.
QUEST: But if you listen in our interview he did actually say because I - well he did - he danced it but eventually had to say bonds because of.
BOULDEN: The thing about Trichet is that he can't say things that go off message. And he's got a very important message to give. So he's not refusing to answer your questions. He's not being evasive at all. But he is using the terminology that fits what he's trying to tell the markets.
QUEST: If I give you as much money as you want in ECB terms what's that called?
BOULDEN: Full allotment.
QUEST: And unlimited?
BOULDEN: Hold on, hold on. Unlimited liquidity measures.
QUEST: Absolutely. What does it mean?
BOULDEN: It means basically that in a normal circumstance banks would go to there used to be there be an auction. Not everybody would get what they want. You don't go to auction and come back with everything there.
This way you go to the bank with an emergency and they give you what you need in order to give you your full allotment of what you need.
QUEST: What I get 100? Do you get a lot?
BOULDEN: Because you're not going to get any (inaudible) where are you going to go to a Greek bank?
QUEST: In a word, in a word is it necessary for them to use this jargon? Why didn't he speak plain English?
BOULDEN: Well he doesn't want to go off message. I think that's the most important thing. If he starts using other jargon - if he uses loose jargon informal talk because people kept saying to me to him when's your exit strategy, when's your exit strategy?
He never used the term exit strategy.
QUEST: We'll have no loose jargon on this program. You keep your loose jargon elsewhere. Jim Boulden many thanks with you.
We looked at what the ECB has planned out to stabilize the block. Now a look at the after the break the Federal Reserve another central bank and the role basically government plays in these crisis.
QUEST: So central banks on both sides of the Atlantic have exceptionally active and in many ways they have been at the forefront of the rescue packages. We now the European Central Bank with its lending facility has been extended moves forward.
It is the backbone if you like for lending to banks from in distressed countries. We also know that the Federal Reserve in the United States figures that we saw yesterday that you heard about on this program showed a three trillion dollars' worth of unusual lending to institutions from all around the world.
So if the ECB is the lender of resort to European banks it appears that the Federal Reserve is the lender of last resort to the world. We need to talk about this particularly the role of central banks and what it actually means.
Joining me is Robert Kimmitt, Chairman of the Deloitte Center for Cross Border Investment, Former Deputy Secretary of the US Treasury and Ambassador to Germany in the 90s. Ambassador many thanks.
ROBERT KIMMITT, DELOUTTE CENTER FOR CORSS BORDER INVESTMENT, FORMER DEPUTY SECRETARY OF TREASURY: Thank you Richard nice to be with you.
QUEST: The ECB is doing what it can. The Fed is doing what it can. Are they really the best game in town these central banks? They don't have to answer in same way that the politicians do.
KIMMITT: Well I think we have three things going in parallel. Number one we have central banks working closely with one another. Secondly, we have finance ministries working closer with one another and third we have the operations of the market place which judges how those two groups are doing.
QUEST: But as a former Deputy Secretary of Treasury the environment that we are now in is unique and so unique if which can't be technically but you know what I mean. It's so unusual that I'm wondering the capacity of these organizations to get on top of it.
KIMMITT: I think we have very high quality people in the central banks and in the finance ministries. When I think of people like Jean- Claude Trichet, Ben Bernanke, when I think of people like the Italian Central Bank, Governor of the German Central Bank governor, these are people with considerable experience.
Many of them had been on the policy side, now they're on the monetary side. And so I think it's a high quality group. I think we got the right people focusing on the right issues.
QUEST: But we're not ahead of the curve yet?
KIMMITT: We're not and I think that they need to continue their efforts. They also need to communicate effectively not just with one another but with government officials and with the markets.
I thought the most interesting thing of your interview with Mr. Trichet was the last set of comments that showed how closely they are watching whether governments are going to be able to implement the programs they've put in place.
QUEST: Well let's talk about that. In the United States you have the Presidential Commission on which is the deficit commission for once of a better phrase which looks like it'll come up with some great proposal but go nowhere.
We got (inaudible) measures in Europe. It's a credibility that's at stake here not the ability to actually do it.
KIMMITT: I think credibility is very important both in markets and politics. I'm actually al little bit more upbeat than you that were going to see some fiscal discipline in the United States because that was the message of the November 2nd elections.
People expect responsible government and one of the things the government needs to do is put its fiscal house in order. Whether they pick up the specific proposals the deficit commission which was to have reported yesterday has not yet reported.
I think it's not as important as the fact that they number focus is going to be on spending discipline.
QUEST: Why do you have confidence? I mean (inaudible) did talk about this that it's time to do the deal that denial is no longer available. But the history suggest it won't happen.
KIMMITT: I think in the near term the clear results of the election on November 2nd said that the American people who were told by governments to put their houses in order and did now expect government to put its house in order.
Discretionary spending I think will be controlled in the US entitlements which are also a part of what Alan Simpson talked about will be much tougher.
QUEST: Ambassador you were Ambassador from in Germany in the 90s. Wikileaks, how damaging, never mind whether it was classified and illegal or whatever. But as a diplomat, as a CEO how damaging is it when there are these leaks?
KIMMITT: I think it is very damaging. The toughest thing in diplomacy is to get people to speak to you directly. The very term diplomatic suggest indirection. So if we want people to speak to us directly we need have confidentiality.
Otherwise, people are either not going to talk to you or they're not going to record it. One is bad for policy; the other is bad for history.
QUEST: Did you ever send cables when you were Ambassador, that frankly if I had it in my hand now was about to read it on air you'd blush.
KIMMITT: Probably so, but it was my best judgment and the judgment of my professional staff of what policy makers in Washington needed to know to conduct effective diplomacy.
QUEST: Ambassador many thanks indeed for joining us today.
KIMMITT: Thank you Richard.
QUEST: Now we will turn our attention to exactly that topic. It's the question of Wikileaks. Not from a governments point of view but Ali and I in Q&A after the break we'll go head to head on the very question of how that affects the commercial world.
Should we be afraid? Q&A and the quiz Q&A after that break.
ALI VELSHI, CNN ANCHOR: And so do I. We're here together in the CNN newsroom around the world. Hello Richard?
QUEST: Hello Ali anything you can do I can do better. Each Thursday Ali I discuss the hot topics in business, in travel, in innovation importantly nothings off limits. Today, forget Wikileaks were Wiki corporate secrets.
VELSHI: That's right Richard. Wikileaks is hinting that it has another document dump coming early next year but this time they say it'll be confidential communication at a large US bank.
So it made us wonder would spilling secrets about a bank about business be good or bad for business. Richard I went first last time so age before beauty you go first now.
QUEST: Absolutely. Hair before those follicle challenged we will go for 60 seconds and now. So first flush you think it's a really go idea let everybody out into the open, transparency, openness, secrecy. Get the illegal stuff out.
And then all of a sudden you remember whistleblowers. Don't forget Proctor & Gamble in the 1940s, General Motors and Volkswagen, Hewlett- Packard spying on its very own Board of Directors.
Even SAP and Oracle. Four point three billion dollars will have been paid by US companies last year in whistleblowers. Sounds good so far but how you like your secret to be published somewhere?
Never mind if it's not illegal but just confidential, private, embarrassing, commercially sensitive. The truth of the matter is that secrecy and confidentiality is very good when is yours but of course when it's somebody else's let it all hang out. (inaudible) well and truly plumed.
VELSHI: Alright but were talking about banks. There's no love for them Richard. Let me start. Sixty seconds from right now. Wikileaks solely to publicize confidential and secret information on governments and business.
Pretty much to embarrass them with it as you said, the website controversial founder Julian Assange says he's going after a big US Bank next. Saying that exposing bad behavior among corporation will help ethical ones thrive.
Now I admit I'm a little curious as to what Wikileaks might have that will in Assange's word take down a bank or two. US Banks are already up to their ears in scandal, bad risk management, gross incompetence, faulty disclosure paperwork.
What more can Wikileaks possibly reveal that big banks pay their executives more now than they did before the US government bailed them out? Richard you can't embarrass somebody who has no shame.
So unless Wikileaks has something very special it maybe promising more than it can deliver. If Wikileaks wanted to expose information relevant to the public that would be one thing but Assange comes across as a man with a grudge and his goal to take down a bank or two hardly strikes me as serving the public good.
QUEST: And once again Ali you've managed to miss the point. The point is not whether it's in the public good but whether or not it should be released. We'll argue about that in the future.
VELSHI: I guess that means it's time for the quiz and the voice. Hello voice.
VOICE: Gentlemen, it's time to put that expensive TV Anchor dental work to the test. Here is question number one. Time Magazine calls the Wikileaks release of sensitive governments the top leak of all time. What do they say is number two?
Watergate, Valerie Claim as CIA agent, the Crystals War plan or D. Twilight Move Details?
VELSHI: On the board early. Thank you.
VOICE: You may remember the Watergate whistleblower deep throat revealed himself in 2005. He turns out to be former FBI agent Mark Felt. Question two are you ready?
VOICE: Julian Assange is the public face of Wikileaks. What name did he use when he started computer hacking at the tender age of 16? Was it A. Freedom Fighter, B. Mendax, C. Moros, or D. Nemesis? Ali.
VELSHI: I'm taking a guess at this but given his general take on the world I would say D. Nemesis.
VOICE: And you'd be wrong. Richard Quest.
QUEST: I would say, I would say Mendax.
VELSHI: What is a Mendax?
VOICE: Mendax, contrary to popular belief, Mendax is not a personal hygiene product for males. In fact, Mendax is taken from the Latin splendid Mendax or nobly untruthful.
VELSHI: Can you fess up and say you had no idea of that Quest.
QUEST: Absolutely none what so ever.
VOICE: Alright next. Final question gentleman, it's one of the closest guarded corporate secrets of all time, what is the code name of Coca-Cola Classic secret formula? Is it A. Merchandise 7X, B. Coke Plan X, C. Red Gold, or D. Formula Number 3?
VELSHI: I should get this right.
VOICE: Richard quest for the win.
QUEST: I'm going formula number 3.
VELSHI: Good work Coke's hometown. We can't be letting Quest win on that one. I'm going to call it Coke Plan X B.
VOICE: Also wrong. Quest?
QUEST: Merchandise 7X.
VOICE: Is correct. Merchandise 7X. By the way the failed new Coke Formula was called Merchandise 7X-100. Well the secrets out Quest you're the winner. Until next time gentlemen goodbye.
VELSHI: Well that'll do it for this week again. But remember we're here each week Thursday's on QUEST MEANS BUSINESS, 1900 GMT.
QUEST: And in the CNN newsroom at 2pm eastern. We need your topics coming to our blogs. Its CNN.com/QMB and CNN.com/Ali. What do you want us to talk about next week?
VELSHI: See you, Richard.
QUEST: See you. Ah, just sheer unadulterated luck this week.
And when we come back, there'll be more from the man in charge of Europe's money. Hopefully, it's more than just luck for Jean-Claude Trichet, who tells me we need a quantum leap in the way Europe's governed, in a moment.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN and on this network, the news always comes first.
Dreams have come true for Russia and Qatar, as they're awarded the rights to host FIFA's World Cup in 2018 and 2022. FIFA's president made the announcement Zurich, Switzerland a few hours ago.
Sepp Blatter confirmed that the ruling body's desire to grow the sport around the world played a big part in the executive committee's choices.
Officials have lowered the death toll to 22 in a wildfire that engulfed parts of Northern Israel. Earlier reports said up to 40 has been killed. The fire is raging through the Carmel Forest region near Haifa. There's no word on how the blaze started.
Uncertainty in Ivory Coast over the winner of the presidential runoff. The electoral commission earlier declared the former prime minister, Alassane Ouattara the winner over the incumbent president. But the Constitutional Council must ratify the winner. It says the earlier results were invalid.
NASA scientists have discovered and announced that changes how they search for extraterrestrial life. They found a bacteria in a California lake that can live in what we think of as toxic conditions -- microorganisms that thrive in arsenic. NASA officials say that expands our known parameters for life and, in turn, expanding the search for life beyond -- beyond our own planet.
Support for Europe's indebted nations comes at a price, cutting costs and spending responsibility. In other words, austerity.
In the second part of our interview with the president of the ECB, I put it to Jean-Claude Trichet that this, because of austerity across the Eurozone and beyond in Europe, is going to be a long, hard winter.
TRICHET: Yes. We have challenges.
But do you think that Japan has no challenges?
Do you think that the U.S. Has no challenges?
Do you think that the country in which you are yourself has no challenges?
All advanced economies have big challenges in the present time, after the worst crisis in our advanced economies since World War II. And we all have to work hard to -- to -- to say just one word, of the real economy in Europe, let me say that I could make public today the fact that we were a little bit more optimistic on the real economic growth now than we were three months ago, as regards...
TRICHET: -- the European economies. We -- we -- we have an ongoing recovery which is -- this is no time for complacency. But all, I would say, what happens since we went back in black figures is a little bit better...
TRICHET: -- quarter after quarter.
QUEST: All right...
TRICHET: We will see.
TRICHET: No time for complacency.
QUEST: But let us, then, finish with a -- with a thought then.
What will it take for European institutions to get ahead of the crisis?
Because the perception at the moment is that the crisis is leading the way.
TRICHET: Well, again, I make no judgment myself on this observation. All that I can say is that we are, ourselves, as, I would say, seriously as possible up to our own responsibility, which are very important, because we are anchoring stability in the euro area.
We have an issue which is a very important one in the executive branches constituency, if I may. I take it that they are -- when the challenges are there...
TRICHET: -- taking the measures, our message for them is very, very clear -- and, again, I think that the communication of the Europeans in general, with the external observers, is a little bit complicated because our decision-making processes, apart from those of the central bank, which are fixed and clear...
QUEST: OK, are they too...
TRICHET: -- but (INAUDIBLE)...
QUEST: -- are they too...
TRICHET: -- this is...
QUEST: Are they too complicated?
Does it need to be simplified -- greater political and fiscal union, Mr. President?
TRICHET: We have called ourselves for a quantum leap in terms of governance of the fiscal policies, on the one hand, and of the macro policies, on the other hand -- all economic policies. And this is a work in progress. We are shipping messages to the governments, to the parliament, to the commission, that we have to realize this quantum leap. It is necessary.
But in the past, you know, there was deny and neglect. At the time, the Stability and Growth Pact was qualified as stupid and major countries were trying to weaken it.
We -- I am myself on record on behalf of the governing council...
TRICHET: -- who have expressed grave concerns in 2005. We are learning the hard way. And I'm confident that there will be that big improvement, which is necessary.
(END VIDEO TAPE)
QUEST: The president of the European Central Bank, President Jean- Claude Trichet, talking to me earlier.
Now, does the situation in Europe threaten the stability and sustainability of Europe's entire economic system?
It is, of course, an issue that many commentators are discussing -- is the euro doomed?
There's a rousing article that I've posted that you will want to want to read. The author says that meshing of the economies at a very different levels of competitiveness was, at its core, setting the stage for today's situation. Facebook.com/cnnquest is where you can read it. It's an article from "Time" magazine, which I've posted for you. It's a fascinating account, because it really does go to the heart of everything that we're talking about with people like, let's say, Christine Lagarde, Jean-Claude Trichet and between you and me on this program.
Become a friend. Poke the producer and we will all find out what's happening on the program.
An historic day for Russia. It's given the opportunity to host the 2018 World Cup -- a first for any country in Eastern Europe.
We're in Moscow, in a moment.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: FIFA World Cup -- the 2018 FIFA World Cup, ladies and gentlemen, will be organized in Russia.
(END VIDEO CLIP)
QUEST: The moment Russia found out it was hosting the 2018 World Cup. Russia wasn't the only winner. Qatar was chosen to host the competition in 2022. It's uncharted territory for FIFA, football's governing body, which made the decisions.
It will be the first time that the World Cup has been held in Eastern Europe and the Middle East, the Gulf -- two new markets, two emerging economies.
From the Russian point of view, it was the news they had obviously hoped for. The World Cup heading there for the first time in the tournament's history. And the Russian reaction on the streets of Moscow, of course, was jubilant, although, I suspect, with the sort of temperatures they were experiencing, it's probably a little bit difficult to get too jubilant in the middle of the night.
Matthew Chance is in Moscow now.
It's quarter to 11:00 at night -- Matthew, extremities of yours must have been freezing when the announcement was made. But the celebration must be going on late into the night.
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: I expect they are, in bars and nightclubs and houses across the city and across the country as they learn this news. But the -- as you rightly mentioned, the celebrations outside were very limited, indeed. It was about minus 20 degrees Centigrade this evening in Moscow as that news that Moscow, that Russia had been given the 2018 World Cup championships. And so we saw these people lighting these balloons, flying them into the night sky over Moscow then rapidly retreating indoors -- Richard.
QUEST: OK, let's -- some quick fire, rapid questions, Matthew, assuming your brain and -- and the body has warmed up.
The first one, how much infrastructure does Russia have to actually build to host the games?
CHANCE: Absolutely lots of it, stacks of it, I mean billions of dollars worth of it. It's got 13 cities that it's going to put these -- put these -- the World Cup in. It's going to build stadia. But it's not just about stadiums. It's about trains. It's about, you know, public transport, airplanes. It's about, you know, telecommunications -- billions of dollars.
QUEST: And has the government got the money from oil, gas and commodity revenues?
Is it committed to spending it?
CHANCE: yes, it is. This has got the full public backing of -- of the government. It's got -- you know, they've got hundreds of billions of dollars in the reserve fund just for things like this. And, of course, it's a national priority. They've already earmarked tens of billions of dollars for modernization. The good thing about the World Cup, from the Russian point of view, is it gives it a very strict time frame and a deadline, 2018, for the bulk of it to be completed.
QUEST: Does alpha male Putin come off a strong man for not having gone to Zurich?
He can arrive as the conquering emperor rather than as a supplicant?
CHANCE: I think he's -- he comes as, I think it's been said, almost presidential, because he stayed away. He said he wanted to remain away from it, he didn't want to put pressure on FIFA executives. Everyone was thinking, well, perhaps he got some intel that it meant that Russia wasn't going to win, either his intel was wrong or he was just playing it cool because he's carried it off very well. And now he says he's going to Zurich and he's going to congratulate the FIFA committee members in person this evening, as soon as he arrives in the city.
QUEST: Matthew, you've earned yourself a schnatzel (ph) or two tonight to warm up after being outside when the results came out.
Matthew Chance, who is in Moscow for us tonight.
Qatar hosts 2022 World Cup in a decision that took many by surprise. It beat the competition from Australia, Japan, South Korea and the United States.
Sara Sidner sent us this report immediately after the announcement was made.
Sara is in Doha.
SARA SIDNER, CNN CORRESPONDENT: The smallest country bidding for the 2022 FIFA World Cup has won the bid. And you can see behind me the excitement that is here in Qatar. We're in the capital, Doha, where more than 1,000 people showed up. And I want to let you see behind me, that a lot of them are still here waving the flags and (INAUDIBLE) what we saw enjoying their lives because they're so proud that their small country has made it and has gotten this bid.
Now, the work begins because Qatar has a lot of building to do. They've got to build more hotels, they have 22 stadiums they need to put up and they all have to be very well planned and thought out. They also have to be air conditioned. So the country says it can come up with a five step plan to have semi-open stadiums with open air, but also that the temperature will stay down because remember, when these World Cup games are played, it's about 50 degrees Celsius, 122 degrees Fahrenheit in this country.
(INAUDIBLE) and they're so excited that Qatar is (INAUDIBLE).
(END VIDEO TAPE)
Sara Sidner, who is currently lying in a darkened room sucking a throat lozenge, having battled the vuvuzelas in Doha.
I'm sure there was something in that, although we managed to get to it a little later, though. Marvelous.
Now, snowstorms in the U.K. have got hundreds of flights grounded. It's not all bad news in the travel sector. One of the chief executives of a top leading corporate travel company next on why businesspeople are back on the road.
QUEST: All right, now, wherever you are in Europe, you don't need me to tell you it all may look very pretty and rather grand. It's heavy snow. It's not just in the U.K., it's across the continent. It has certainly caused travel chaos.
Now, in Britain, Gatwick, the country's second largest airport, south of London, has been closed for a second day, which kept hundreds of passengers stranded. Snowstorms aside, the outlook for the aviation sector is improving.
International corporate travel firm, Hogg Robinson, says in its latest report and results, business travel is on the up and up. There are, though, strings attached. We may be traveling more, but as anybody -- any airline, any hotel will tell you, we are damaged better value.
The chief executive of Hogg Robinson, came -- David Radcliffe, came and -- and said that as businesspeople hit the road again -- well, it's obvious, we want to pay less and we want more.
DAVID RADCLIFFE, CEO, HOGG ROBINSON: Companies are trying desperately to do business. But what they are also making very, very sure that they ask us to do is save them money. So they want to do more, but they want to pay less for it.
So it was ever that in every industry at the moment.
QUEST: So what are they doing?
What are the techniques that they're employing to do that?
RADCLIFFE: Well, the techniques that they're asking us to employ -- because basically they're saying, look, what are the successful companies doing at this and that can be followed?
And there are several things.
Companies are using trains rather than flying...
QUEST: But are they doing that on environmental grounds or economic grounds?
RADCLIFFE: Well, I think it's -- I think it's a mixture, but I think mostly it's a -- it's -- it's economic. I think it -- that if there is some environmental benefit that can be gained, then that -- that's -- that's a bonus.
So they're also making sure that they don't stay in hotels on -- one- nighters. You're finding more and more travelers are going out very early in the morning and coming back late a night. And -- and they are perfectly prepared nowadays to look at their alternative forms of traveling, as well.
But in the end, they're -- they're trying desperately to do business, but just pay less for it.
QUEST: And the downgrading on the plane, business class is now -- is now the new economy?
RADCLIFFE: Well, I'm not so sure you're right. I mean there is a return to the business cabin, particularly on the long haul routes. Long haul, let's face it, if you can lie flat on a bed, you're still going to be able to work the following day.
So there is a -- there is a -- a momentum to come back. But in our case, they want to get the very best deal for it.
QUEST: Entering Europe, anybody traveling business class?
RADCLIFFE: Yes, are still some routes that -- that you are. And I know you're surprised and I know you're a frequent traveler yourself, so let me ask you the question, are you prepared to pay a premium to make sure you get through the airport fast and you get out fast at the other end?
And it -- it's more to do with that than it is actually the services on the plane themselves.
QUEST: So let me just ask you, on -- on this, what is now best thinking in -- from -- for the companies, because you have a wry -- a wide range of companies. Let's just go through some of the things that they're -- the number of hours before you can fly business class.
QUEST: What seems to be a norm?
RADCLIFFE: You -- you're kind of coming into the six to eight hours now. We have got clients who have reduced that to four hours. So if you're going toward the east and into the Mediterranean, for instance, then you can fly business class. But mainly it's about the six to eight hour mark is -- is still the norm.
QUEST: And in terms of hotels, it's three, four and five star hotels?
RADCLIFFE: There is a return to those, but that return is driven more but the fact that in -- in those hotel groups that offer that, they know that they're going to have to get more competitive. So we're seeing better deals for corporations in that type of hotels now. They've lost too much to the two and three stars.
QUEST: Finally, 2011 -- what do you believe will be the trend for 2011, returning back to life on the road or another retrenchment?
RADCLIFFE: Well, Richard, if I could do that, I could also predict the economy. And I really wish I could do that.
RADCLIFFE: I think there will be a continued -- there will be a continued return, but it will be with all of the caveats around saving money attached to it. But it will continue.
(END VIDEO TAPE)
QUEST: Incidentally, I had asked you @richardquest on our Tweet page, what did you think was a fair level before not -- your -- your company would let you travel business class, @richardquest.
Urban Zetzy (ph) says: "If the company is willing to pay, there should be no limit."
Greg Atkinson (ph): "More than four hours seems fair, but it depends on your schedule at the destination."
Lots of other people. "Six hours in my books," says Kadamerie (ph).
"It has a lot to do with your -- the span of your business -- visit," says James CTTL (ph).
I did hear of one U.S. government department that has a 15 hour limit. I can't confirm that. If it turns -- if it's less -- less than 15 hours, you are in economy.
Maybe the Supreme Court should look at that as cruel and unusual punishment.
Well, @richardquest where you can, of course, have a go at that one.
Guillermo Arduino is at the CNN World Weather Center this evening, where we have much serious stuff to talk about.
How bad is it?
And, more importantly, how long is it going to last?
GUILLERMO ARDUINO, CNN METEOROLOGIST: It's going to last at least into the weekend, probably next week it will continue. A look at the examples. I have Berlin here, Warsaw and Prague. The average low, zero, zero, minus one. And we're seeing the low temperature of the day minus 18, so 18 degrees below average in Poland.
This is the reason. Again, the jet stream. So the jet is a twofold phenomenon. On the one hand, it's like a highway where the storms may sit on and ride along and then they dump, in this case, snow. And the other thing is that they keep the cold air in place without allowing any warm air going into those sections. So that's why it encompasses this time all these countries.
And into the weekend, it's going to get just a little bit better. But we're talking about, still, eight degrees below average, as cold temperatures and here 12 in the southern parts of Sweden and Northern Denmark.
We are going to see an improvement in Britain, though. And the reason is that the winds are going to shift. We have been having the sea effect snow here, with arctic air, which is colder than Atlantic air. And that's the change that we're going to see now.
So the rain and the snow may continue, but it's going to be slightly better because of the nature of the air that we'll be getting.
This has happened in the last 12 hours.
Let's focus on England. You see how it's decreasing the precipitation?
This is all snow. Compared to yesterday, this is much better.
Is it going to be better tomorrow?
Probably. But the problem that we have now is that temps are going to plunge, because you don't have those clouds anymore to keep the temperatures over there. The clouds dissipate and then the heat or whatever warm conditions we have is going to move away and we are left with cold, though, on Friday, we may see some more snow, delays at the airports.
Remember -- remember that the airports are mostly outside the city, where it's colder and the weather is different. But Berlin is boasting probably the highest delays in the area. And needless to say here into Austria and parts of the Czech Republic and Slovenia is where we are going to see more snow. The Baltics and Poland, you see, Richard.
So the west is much -- well, it's still a mess. It is not comfortable at all. But things are getting a little bit better. The cold will prevail.
QUEST: The cold will prevail. The sweaters, long johns and...
ARDUINO: Knickers. Under (INAUDIBLE)...
QUEST: -- thermals...
QUEST: Yes, yes. Leave the thermals where they belong.
Guillermo at the World Weather Center.
ARDUINO: Thank you.
QUEST: I can promise you the thermals will be coming out when we go to Davos in January.
When I come back in just a moment, we need to consider what President Trichet said in our interview tonight. It's a Profitable Moment.
(BEGIN VIDEO CLIP)
TRICHET: All advanced economies have big challenges in the present time, after the worst crisis in our advanced economies since World War II.
(END VIDEO CLIP)
QUEST: Tonight's Profitable Moment.
The direction by the ECB and Jean-Claude Trichet to provide and continue providing unlimited money to banks says it all. The financial world is too fragile, too nervous to stand on its own two feet just yet.
The Europeans will also continue buying bonds to support the market, no matter that economic growth is back. The dangerous are still very real. In our interview with Mr. Trichet, he joined the chorus of those who say the current system needs radical reform. In his words, a quantum leap in the change of governance.
Getting that to happen will not be easy. There are so many vested interests, it seems Europe can only reach consensus in a crisis. And that's a weak end.
And that's QUEST MEANS BUSINESS tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
"WORLD ONE" now.