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QUEST MEANS BUSINESS
Interview with Jose Manuel Barroso; Russian Oligarchs Fight It Out in British Court; Interview with Greek Vice President Theodores Pagalos; Interview with President of Iceland
Aired October 10, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: Tonight the European Commission President Barroso, on this program, on his plans to rescue Europe.
It is the battle of the billions. The Russian oligarchs in an English court.
And be my guest. The president of Iceland invites tourists to tea.
I'm Richard Quest. I mean business.
A comprehensive plan to save the Eurozone. Europe's leaders are pleading sweeping solutions to fix Europe's debt crisis. The work is underway as we speak. With a deadline set for exactly three weeks from now, there are multiple ideas that are on the drawing board, some of them may go no further, others will be folded into other plans. It seems everybody, it seems, has a plan. Join me in the library and you will see what I mean.
Let's start first of all with a European Union summit that has been pushed back by a week. The summit has been pushed back by President Von Rumpuy because he says he wants time to put together a comprehensive strategy. Apparently further elements are needed to make sure that everybody is on board. So, the summit, or the council meeting that was meant to be held by heads of government and heads of state level, will now be delayed until October 23.
That is actually a good sign. It gives all the leaders time to discuss the various plans, particularly this one, the Merkel and Sarkozy plan. They said yesterday, in Berlin, that they were on the same wavelength and that they'll have a deal by the end of the month. Now, few concrete proposals, in fact, that is being charitable. There were no concrete proposals of what their plan is. But President Sarkozy did say it would be there, and it would include recapitalizing the banks.
Not a moment before time. Dexia has been broken up, the French- Belgian and Luxemburg bank. The Belgians are taking over the retail arm for several billion. The French will take over another bit. And more importantly, they will-the French and the Belgians and the Luxemburg governments will guarantee $100 billion, plus, worth of debt from Dexia.
So, plans galore, one person who also has his own plan, is the European Commission president, Jose Manuel Barroso. He is confident that his plan, along with all the others, will reach agreement amongst the 27 members of the European Union, and especially the 17 members of the Eurozone, the Euro Group.
This morning, in Brussels, I spoke to President Barroso. And I started with the Merkel-Sarkozy plan. What did he know about that?
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: Look, first of all it is important that France and Germany agree, because they are the two biggest economies of the Eurozone. So, I just welcome the fact that they are working to agree.
But, in fact, we are the discussing these issues, all our member states, the 27 member states of the European Union. And we have put forth, also, some ideas about the way to address the current situation. And I think we need a comprehensive response, that addresses at the same time the problem of Greece, a decisive response to Greece. Secondly, to avoid contagion in the sovereigns, to avoid contagion in banks, to restore conditions for growth and also to enforce discipline, budgetary discipline, and fifth, the issues of economic governance in the Eurozone.
This is our plan. And I think this plan is shared and will be shared by France, Germany, and all the other members of the Euro area and the European Union.
QUEST: To those who would say, does that-it's a little late, in the day. The Americans have a phrase, a day late and a dollar short. Would you agree that that sort of plan should have come forward sooner?
BARROSO: Look, I will answer, better late, than never. I, to be very frank with you, I would prefer some of those decisions to have taken place before, that's true. And, in fact, we are urging governments to take those decisions. It is also true that governments and parliaments are slower than markets. But I think, we have to understand that in the European Union we have 27 democratic states. And we need to have on board the parliaments of those countries. So, I think you will come with a comprehensive answer, that you will have all the guarantees to work.
QUEST: With respect, why should anyone believe that the union can come forward with that comprehensive plan now, when they have singularly failed to do so, so far, and have witnessed the situation get worse?
BARROSO: Look, precisely because now there is a much greater awareness of the need to act, because it was important also to have the necessary consensus among the countries involved. Some of them in a very different position, let's be frank, we are not like one country, like the United States of America. We are many countries, some of them in very different fiscal positions. So we need bring the countries together. And I think now we are coming to a position where this will come, and also the fact that we want to go to (UNINTELLIGIBLE) the European Union showing that we are indeed able to take those decisions and give also a very good contribution to the global response to the economic situation.
QUEST: Now, you can hear more of President Barroso's views on what he believes the future of the European Union should look like in the Eurozone. That is on "MARKETPLACE EUROPE". Our new program-(DESK BELL CHIMES)-later this week, on Thursday, at 19:45 London time.
News of the combined plans with some positive economic data from Germany and France made it a good day for Europe's major markets. The DAX finished up some 3 percent. That was on the back of industrial production figures that really were very impressive. German exports rose 3.5 percent in August. French industrials were also up. Factory output increased by 1.5 percent last month. The CAC 40 up, as a whole finished up 2 percent.
What we saw across the Euro bourses was really very simple. On the one hand you had good economic numbers, so that push the cyclicals and the industrials, and on the other hand you had the banks up because now people believe there may be a plan.
(DESK BELL CHIMES)
By Stan, in the works.
(DESK BELL CHIMES)
And look at that. Well, over 11,000. Up 2.37 percent, a gain of 263 for the Dow Jones in New York, also, largely because there is some good economic news out. The euro has had a healthy boost. It is up 2 percent against the dollar. Clearly the market believes Europe's leaders mean business this time with their comprehensive plans to save the single currency. One euro buys you around $1.36.
JIM BOULDEN, CNN BUSINESS CORRESPONDENT: Who would have though it?
QUEST: Comprehensive plan, Jim?
QUEST: Comprehensive, comprehensive, comprehensive.
BOULDEN: But as Mr. Barroso said, better late than never. I think what we saw, and we talked about this last Friday, didn't we? That everybody in Europe seems to be now beginning to sing from the same hymn sheet, as they say. And the markets are reflecting that. Also, we saw oil prices rise strongly today as well. Just as an example of people thinking maybe everything go too negative, when everything went too negative, back in September and the beginning of October, now we are seeing the spin the other way.
QUEST: By that 2.8 percent rise in Brent crude.
QUEST: That was-is because we saw those industrial production numbers, export numbers, in Germany.
BOULDEN: You get that kind of example, but also the oil prices fell really heavily when everyone said we are going into global recession. We are going to go into global recession. China can't save us. Europe is going to go and the U.S. is going to go, so everyone got really negative and shorted euro, and shorted oil. And now, all of a sudden the oil price starts to jump, even though the dollar is weakening.
QUEST: Merkel and Sarkozy said that they agree.
QUEST: Everything we agree. We agree on everything, Sarkozy said. We know they clearly don't agree on everything.
QUEST: So this three weeks that they have given themselves, Jim, do you buy it?
BOULDEN: I do buy it for one very important reason. It is that obviously they haven't agreed to everything, and that's OK. Give them three more weeks to hammer out the details. And don't tell us the details right away. But the markets are cheering the fact that they say there is a deadline. But, my goodness, if don't hit that deadline, if we don't have a comprehensive plan by G20, early November-
QUEST: Hang on, hang on. But Barroso said there, in the interview. That comprehensive plan has to deal with Greece, it has to deal with recapitalizing the sovs (ph).
QUEST: Or ring fence a contagion of the sovereigns.
QUEST: It has to deal with the banks.
BOULDEN: The banks, yes.
QUEST: It has to deal with economic governance, and it has to deal with all of these issues in fell swoop.
BOULDEN: But what we have to hear, mostly-we'll hear some things in the next couple of days. Is Greece getting the next tranche, blah, blah, blah? But then we'll hear about what haircut the banks will take with Greece. And as long as there is a recapitalization plan in place, the banks should be able to absorb that.
QUEST: They are preparing for default?
BOULDEN: Yes. Yes, as we said on Friday, they are.
QUEST: Are they? This idea of preparing for contagion.
BOULDEN: Yes, yes.
QUEST: They are preparing for?
BOULDEN: A massive restructuring of Greek debt because they are going to say-I think they are going to say Greece has done what it can do up to now. But the economy moved against them, the currency moved against them, the recession moved against them, and so Greece has done what it can, now we are going to have to give a bit more to Greece in this second bailout.
QUEST: All right. Thank you.
BOULDEN: We'll see.
QUEST: Thank you.
In a moment, Poland's civic platform wins a second term in power. And the country's deputy treasury minister will give us the party's thoughts on joining the euro, and selling off the public assets, in a moment.
QUEST: For the first time since the fall of Communism a Polish prime minister has won a second term in a row. Taking a pro-business and a pro- European approach, (UNINTELLIGIBLE) Civil Platform won around 39 percent of the vote in Sunday's election.
In the shadow of a global slowdown, Poland's stand out economic success undoubtedly played a part in the victory. Poland was the only EU member state to avoid a recession during the financial crisis. The economy is expected to grow by 4 percent this year, according to Eurostat, one of the fastest rates in Europe.
So to balance the books, though, now is the prime ministers challenge; to trim the budget deficit. At 7.8 percent of GDP it is more than double the Maastricht EU limit. Just as well, Poland is neither part of the euro or ERM (ph) 2.
Poland is pushing ahead with privatization plans. Before the election the country's deputy treasury minister and privatization secretary told me a philosophical approach to privatization was involved.
KRZYSZTOF WALENCZAK, DEPUTY TREASURY MINISTER, POLAND: It is very important to remember that privatization serves as a stepping stone to build an ultimate model of capitalism. A particularly relevant theme in post-Communist countries; 20 years of transformation show that each country elects to build a different model of free markets, ranging from oligarch economy in Russia, to what we are trying-what we believe we are trying to successfully build in Poland, which is an economy centered around free markets, uh, capital markets, rather.
QUEST: Do you worry that the pace of privatization and the method of privatization, and you are the minister, or responsible in some senses for the privatization.
QUEST: You have to be on your guard against crony corrupt capitalism in this regard. In the sort of selling off state enterprises for people's private enrichment.
WALENCZAK: Generally, yes. Although the method that we select for- for privatization, is centered around capital markets, which by definition is transparent, by definition is very open for everyone to participate. But that said, privatization is a political process. And one must be-one must apply very high standards of transparency to avoid any, any situations that might be uneconomical.
QUEST: As I was reading a bit, before meeting you, the one thing that comes up again and again, in terms of the privatization process, is-and you admitted it-it's too slow, it is sometimes too complicated, and sometimes it isn't actually happening. Privatiz-you know, I suppose, you have got to go on and actually do it?
WALENCZAK: That's right. It is a very difficult process. It is much more difficult than any other economic transaction. And whether we like it or not privatization is a very long political process, at the end of which you might, or might not have, an economic event. And that is a lesson we have learned in Poland. That is a lesson that every other government attempting to embark on privatization better take into consideration. It requires great political determination of top decision makers in the country to have a successful program.
QUEST: If you were advising, would you advise the minister to even think of joining the Eurozone, at this moment? With the mess that it's in?
WALENCZAK: Oh, at this moment, the volatility of such scale that it prevents any economic transaction, any capital markets transaction, much less adoption of a currency. Ultimately, however, joining the European continent, the European Union, is all about unification, economic unification, and euro adoption. The accession treaty is such that adopting euro is not a matter-
QUEST: You still want to join?
WALENCZAK: It is not a matter of if.
QUEST: You still want to join?
WALENCZAK: I think for countries like Poland, developing countries, playing a catch up game with Western economies, joining euro is a good option. It is a good option for business. It is just a question of when. It is important to join at a time when there is some degree of stability in the market, which luckily for Poland, is at least three or four years ahead.
QUEST: Now that is the Polish privatization minister and deputy treasury minister talking to me earlier.
It is a case of two clashing egos, backed by billions of dollars. No, you couldn't make it up. Two of Russia's most powerful oligarchs have been slugging out a legal battle in London's courts. Roman Abramovich, the owner of Chelsea Football Club, is being sued by fellow oil tycoon, Boris Berezovsky. He accused Abramovich of forcing him to sell shares in the oil firm Sibneft. Our Senior International Correspondent Matthew Chance was outside the courtroom.
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): He is one of the world's richest men, mired in a multi-billion dollar court battle. Roman Abramovich is saying nothing.
(On camera): Mr. Abramovich, why do you think your former friend is doing this to you? So to you think the British legal system will protect your wealth from this kind of legal action?
(voice over): The billionaire soccer club owner is facing huge financial claims from a rival Russian tycoon who says he was betrayed. Boris Berezovsky says he helped Abramovich build his business empire and wants more than $5 billion from the man he says he once treated as his own son.
BORIS BEREZOVSKY, RUSSIAN OLIGARCH: (Speaking Russian)
CHANCE (on camera): Do you think you are going to win this litigation?
BEREZOVSKY: Well, this is why I go to court.
CHANCE: The case here at the high court focuses on the lawless post- Soviet 1990s in Russia, when Berezovsky was a key power broker and Abramovich an emerging player in the oil industry. Technically it is about whether or not the two had a verbal contract, but why it is fascinating is that it is casting unprecedented light on the murky world of Russian business.
(voice over): Sibneft was the name of the oil company Berezovsky says he helped Abramovich create out of state assets, in exchange for shares. But when Berezovsky fell out of favor he says he was forced to sell those shares to Abramovich for a fraction of their value. Abramovich, who eventually sold Sibneft for nearly $12 billion, denies any such deal. Saying he paid Berezovsky $1.2 billion, not for shares but for political protection when he was a Kremlin insider.
It is an astonishing admission in a case where the usually hidden corrupt workings of post-Soviet Russia are getting a rare public airing. Matthew Chance, CNN, London.
QUEST: When we come back we will stay with matters Russian, this time we will actually go to the capital. A visit to a divided Moscow, why the Russian capital may be pricing out its own people.
(BEGIN VIDEO CLIP)
QUEST: After the break I'm in Moscow for "Future Cities". Bridging the wealth gap with a new generation of oligarchs. That's next.
QUEST: A moment or two ago, we told you about two Russian oligarchs fighting it out in a London courtroom over the billions they say the owe each other. Well, Messrs. Abramovich and Berezovsky represent a key chapter in the making of tonight's "Future Cities".
The men made their money in Moscow, in the early 1990s. The Soviet Union had just collapsed. Great wealth was being divided between a select few. And as you see here, the rest, had to make do, and had to make money however they could. Twenty years on, Moscow has transformed itself into a modern, fashionable city. With one glaring similarity from those older times. A giant, an ever growing wealth gap that seems to exist. On this week's "Future Cities", let me take you to a divided Moscow.
QUEST (voice over): A city of bright lights, bleak weather, cold hard cash. Two decades after the fall of communism and 79 billionaires call Moscow home. More than any other city in the world. And there is a new generation getting ready to join their ranks. Kyra Fastinina (ph) is the daughter of a former dairy tycoon. She is just 19 and already five years into her fashion career.
UNIDENTIFIED FEMALE: Look at this skirt. It is really pretty, it's really long. You can wear it with a sweater or a shirt.
QUEST: Kyra says she always wanted to be a fashion designer. That is not unusual for a teenage girl. But few have fathers prepared to invest millions into make them a brand.
I'm really excited that all Moscow is becoming more and more fashion forward and that there are so many young aspiring designers. I really hope to make my country proud when I grow up.
QUEST: While Kyra was growing up in Moscow, her country's vast wealth was being auctioned off. The rapid privatization of state business spawned a class of oligarchs. And gave rise to wealth on a unforeseen scale. So today, the Russian capital has the shops and the nightlife to match.
At this club, Soho Rooms, reserving a table for the evening will set you back at least a $1,000.
(On camera): The shear wealth in Moscow means there is not shortage of places like this for the wealthy to do serious damage to their credit card. Which, of course, always assume that they are not paying in cash.
(Voice over): Not surprisingly the critics say this culture of wealth has created a divided city. Last year the top 10 percent of Muscovites earned 35 times more than the bottom 10 percent.
(On camera): It is the cost of the ordinary things in life that makes living in Moscow so difficult. A cup of coffee, for instance, from this cafe, it cost $5. And it is not even a latte.
And the Metro in Moscow has doubled in price, in the last six years.
It's the price of housing that has got people really concerned in Moscow. Take this block where flats are for sale. We called the number to find out how much. A three-roomed apartment, not bedrooms, just three rooms, costs $800,000.
ANDREI KOSTIN, CHAIRMAN, VTB BANK: The land around Moscow and the most expensive in the world, I agree with this. So I think any person who has 200 feet of flat in Moscow, could be considered as the dollar millionaire, because that is the price of the house in Moscow.
QUEST: The casualty in all of this, the middle class. Average income in Moscow last year was 1,100 a month. That is barely enough to cover the rent.
If having a job can't guarantee a comfortable life, where does that leave the city's unemployed and truly poor? Elena Takasha's (ph) group works to protect Moscow's historic center for its residents. Elena showed us this building, which is a few hundred yards from the Kremlin. It was cleared for renovation several years ago. Rebuilding has yet to begin, so now, five people live in this three room apartment.
UNIDENTIFIED MALE (translation onscreen): I haven't worked in three years, somehow I survive. My friends come, I'm not sure how I get by more or less, I don't really know how.
UNIDENTIFIED FEMALE (translation onscreen): Every month people living in that apartment changes, some may be evicted, others just leave. There are a lot of apartments like this in Moscow.
QUEST: Moscow is still seen as a city of opportunity. Every month thousands of migrant workers flock here. Many never find what they are looking for. This civic assistance center is one of the few places where the city's needy can go to get free legal and medical support. Demand is high, government support is minimal, and raising money from the private sector difficult.
TATIANA ZADIRAKO, UNITED WAY OF RUSSIA: The people in Moscow, in the majority of cases, they do not understand why the donor needs to pay to cover their administrative expense. The donors, very often they think that we as employees and staff of (UNINTELLIGIBLE), we need to be the volunteers, heart-driven, but I have my family. I have three kids, and I have one grandchild. It means that I have the same life as the majority of people.
QUEST: 19-year-old Kyra Fastinina (ph) never saw a Communist Moscow, where shortages were rife, and a small elite lived in luxury. The irony is she is now part of a post-Soviet Moscow where the same seems to apply. And for most, the future looks very uncertain.
QUEST: QUEST MEANS BUSINESS, we'll have more "Future Cities" next week from Moscow. I'll be back after the break.
(DESK BELL CHIMES)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS in a moment.
This is CNN. And on this network, the news always comes first.
Egyptian Christians are mourning the victims of this weekend's clashes. At least 25 people were killed as protesters fought army troops. Another 272 people were wounded. Hundreds of Coptic Christians rallied on Monday outside a hospital, chanting, "The army has its tanks, but we have our prayers."
Libya's revolutionary fighters say they're in the final phase of their assault on the hometown of the former leader, Moammar Gadhafi. The new regime says its forces have gained more ground in the month-long battle for Sirte, with Gadhafi loyalists trapped in the city center. Dozens of troops have been killed since Friday, when the latest offensive began.
Two Americans have won this year's Nobel Prize for economics. Thomas Sargent and Christopher Sims were given the award for their research on how government policies can affect a nation's economy. When asked how he might invest his share of the $1.5 million prize, Sims said he plans to keep it in cash for now.
Europe's leaders are pledging sweeping solutions to fix Europe's debt crisis. The French president, Nicholas Sarkozy, has told President Barack Obama, by telephone, that France and Germany have agreed to find a plan to solve the debt crisis before the G20 in Cannes in early November. So, lots of plans on the table.
The Greek vice president, Theodores Pagalos, said today the idea of Greece taking a further haircut on sovereign debt has not been discussed inside the government, even though it's widely believed that's part of most plans.
CNN's Jim Bittermann spoke to Pagalos in Paris.
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Mr. Pagalos, Greece is facing a situation where it's running out of money and the IMF who says stricter reform measures must be taken.
What's your reaction to that?
THEODORES PAGALOS, GREEK VICE PRESIDENT: I hope that the conclusion will be positive and we will be able to use the eight billion euros provided for the financing of the Greek deficits to the end of the year.
BITTERMANN: Is Greece prepared to take stricter measures?
PAGALOS: We are going to take more active and we are going to have a more active policy on some fields, like tax evasion, like farther cutting, you know, of the spending of the public sector which is deemed non- necessary.
And this will help to decrease the size of the deficit of the public sector, from 7 percent to something below 4 percent.
BITTERMANN: Europeans are saying there's a limit to how much more they're going to be able to help Greece.
PAGALOS: Yes. We don't ask for farther help or farther launch (ph), if you want, because nobody has ever given us any help and I would not ever be direct (ph) to repeat it. We just get loans, which are going to be repaid.
BITTERMANN: What's it like on the streets of Greece these days?
How difficult is it for the government to stand up to the growing demonstrations?
PAGALOS: We have problems. We have to take measures that will be very, how to say, serious and reserve ourselves from any useless violence. But the state is there and the state controls the situation and we shall continue to do so.
BITTERMANN: You said Europeans are racist in their attitude toward Greece.
Do you feel there's discrimination against Greece?
PAGALOS: Not other Europeans. I said that the racists are those who are old and said in -- in public that Southern Europeans are lazy, because the climate is so good, they want to stay in the sun and spend the money of the northern people.
This isn't true. It is not true.
BITTERMANN: But do you feel there's an attitude against you...
PAGALOS: But I don't feel it...
BITTERMANN: -- a discriminatory attitude against Greece?
PAGALOS: -- I don't feel it's an attitude. It is in your press. If you look at your press, you see articles like that, pictures like that. And I have to answer to them. I don't resent them. I can't -- I understand that stupid people can exist in every country. They exist in my country. They exist in other countries, as well. And religious people exist in every country.
BITTERMANN: Can you ever see Greece leaving the euro?
PAGALOS: No. This is impossible. That's -- it cannot happen.
PAGALOS: It's -- you know, it's not possible. It's something like flying. I cannot fly. I don't know if you can, but I can't fly. Greece cannot do the Europe. Nobody can kick somebody out of the euro. We have to live and we have to survive together.
(END VIDEO TAPE)
QUEST: In a moment, step aside, Silicon Valley, the sands are shifting once again in the tech world. Now, the success story is in the Middle East. We'll tell you exactly where, after the break.
QUEST: President Obama is running out of time to sell his $447 billion job creation bill. The Senate looks set to take a key vote on the measure tomorrow evening, though in its current form, it's unlikely to pass the Republican-controlled House of Representatives.
As well as the stimulus, the president is hoping entrepreneurs will play a role in making new jobs in a country that he says is losing its competitive edge. Some people say well, the president says, perhaps it has gone soft.
One country where there's no question about entrepreneurialism and the spirit is Israel, with innovation and new businesses booming there. It's gained the nickname "the start-up nation.
Now, Erel Margalit is an Israeli investor and founder of Jerusalem Venture Partners, JVP.
He joins me now from New York.
If you were advising, Erel, if you were advising how to get entrepreneurialism back into the game -- because that's really what it's about, isn't it?
That's what people are all looking for.
How would you do it?
EREL MARGALIT, FOUNDER, JERUSALEM VENTURE PARTNERS: I think it is. You know, Israel is known as the start-up nation. And as a start-up nation, you know, we built, over the last 18 years, the second biggest hub of technology anywhere in the world. And a lot of it, you know, with Steve Jobs' legacy being discussed right now, comes with creativity, comes with perseverance, comes with the amount of imagination that people need to have.
And we did this at a time where strife was around us. And I think that doing things against the odds, going against the grain, is part of what we Israelis bring to the table...
QUEST: All right.
MARGALIT: -- in a big way.
QUEST: All right. Now, I've read that book, "Start-Up Nation." And it does talk in great detail about the adversity, the war culture, the -- the whole idea of national service, counter-culture, all these sort of issues are dealt with.
But are they relevant to a country like the United States, which has the highest GDP per capita, just about, in the world?
Surely there are more fundamental issues that has to be addressed.
MARGALIT: Well, I think it's a matter of attitude. And I think that the world is changing and people need to come to the new environment. You know, Israel, in the first stage, was building the technology infrastructure for the world. It was taking defense technologies and making it as civilian applications with fiber optics, with wireless. and now, perhaps with the Jobs' legacy that maybe needs to come into America, as well, now the individual is in the center. Now we need creativity. Now we need the artist to meet the engineer, to meet the storyteller, to meet the biologist into creating...
QUEST: But, OK...
MARGALIT: -- some new...
QUEST: -- but who's...
MARGALIT: -- concepts that...
QUEST: -- but...
MARGALIT: -- the world needs.
QUEST: All right. But whose responsibility is it to effect it?
I mean, you know, entrepreneurialism, I suppose people would say, is something you're born with.
Is it the government's duty to actually -- to -- to be the seed corn for that?
MARGALIT: Well, I think the government needs to play a role. I think regions in the country need to play a role. But I think that right now, there needs to be a stimulus. The technology economy in the United States and in Israel is one of the biggest competitive advantages that we have today. And the kind of entrepreneurship that we have here needs to be reinvigorated with new concepts. But now...
QUEST: Oh, it's easy...
MARGALIT: -- when the...
QUEST: -- easy to say...
MARGALIT: -- individual is in the center...
QUEST: Easy to say, difficult to execute. That's my point to you.
MARGALIT: Yeah, but, you know, we've executed this, perhaps, in the - - in the difficult -- most difficult time, when the world around us was not so easy. And I think that imagination, I think that innovation needs to come to the political realm, as well, because right now, we need leadership to bring social entrepreneurs and business entrepreneurs together if anything is going to move forward.
We've seen this in Israel in the summer, when a few young kids set up their tent...
QUEST: All right.
MARGALIT: -- in the middle of the square and millions of people came down to the streets.
And we need to see the kind of...
MARGALIT: -- social responsibility, social economy, together with the innovation, just like you have in Israel. You need a new chapter...
QUEST: All right...
MARGALIT: -- for innovation. And Steve Jobs is giving us the legacy.
QUEST: A final question.
Can you have that social entrepreneurship when you have such huge disparities of wealth?
And, let's take, for example, the Buffett Rule of taxation, where you have those at the top end paying less tax than those at the bottom?
MARGALIT: I think it's a great question. I think it's time. The people are going out to the streets in London and in Tel Aviv and in Jerusalem and here in New York, because they are saying one thing -- there needs to be a new social contract that's being written...
QUEST: All right...
MARGALIT: -- between the government, between business and between the social entrepreneurs. And I think that the Buffett initiative is an example to look at. And I think the initiative of some French business entrepreneurs that went and said to Sarkozy, we want to pay more taxes now, because we have responsibility.
But I think that it's about education. It's about...
QUEST: All right...
MARGALIT: -- welfare. It's about -- it's about health care. But it's also about the innovation, the entrepreneurship that can move things forward, with new ideas and new concepts...
MARGALIT: -- like Israel brought forward. It's about time...
MARGALIT: -- that the world adopts it.
QUEST: We get the point.
Erel, many thanks, indeed, for joining us from New York.
A lively discussion there on the question of entrepreneurship.
More lively stuff from tonight's Tweets from the Top, where they come from two influential people who are new to our list. They're most certainly not new to social media.
First up is the author, Malcolm Gladwell. Now, he wrote the book, of course, "Outliers." And he questions the very issue: "Is the goal of the Nobel Peace Prize Committee to reward progress of an individual or to encourage the progress of society?"
I'm not sure we have the answer to that one.
Dan Alpert is the managing partner of Westwood Capital. And on the U.S. jobs numbers -- this is an interesting one -- "The huge jump in part- time jobs for economic reasons is not just for new temp jobs, but for more falling back to temp jobs."
The fascinating part about that is where you are is where you stand.
And the Tweets from the Top on this program, follow me on Twitter. Join me as we travel the world together. The address is Twitter.com/richardquest.
Now, when we come back in a moment, well, I'm not inviting you to tea, but an Icelandic invitation right from the very top. Iceland's president explains how a special power lunch could power his country's tourism.
QUEST: Pancakes with Iceland's president and fresh vegetables from his wife's greenhouse -- huh. I'm not sure which I'd prefer most. It's an invitation normally reserved for world leaders and heads of state.
Now, as part of an initiative to get some much needed tourism money, it's extended to you, too.
(BEGIN VIDEO CLIP, COURTESY INSPIRED BY ICELAND)
OLAFUR RAGNAR GRIMSSON, PRESIDENT OF ICELAND: My name is Olafur Ragnar Grimsson and I live here at the presidential residence with the my wife, Dorrit. And like other Icelanders, we are going to invite you to visit our home. And we will give you delicious pancakes with cream and sugar, a traditional Icelandic delicacy. And because Dorrit favors very much health and good nutrition, you will also get extraordinary products from our greenhouses. Then we will show you the landscape and the bird life and the extraordinary light you can witness in Iceland.
(END VIDEO CLIP)
QUEST: President Grimsson there in his video message.
It's not the first time Iceland has tried this. Last year, it offered the personal service over the summer months. And that brought in an extra $213 million to the economy.
I had a chance to speak to President Grimsson earlier today.
He was in Frankfurt and he joined me on the line and told me Iceland's picturesque winters are the main focus of this year's campaign.
GRIMSSON: It is a national effort in Iceland to enhance people's awareness of how splendid the winter, the October, November and the other winter months, can be in Iceland.
So families all over Iceland are going to invite people to come into their homes and receive a traditional Icelandic delicacies, as well as very healthy products from our greenhouses in order to make people aware that Iceland in winter is really a fascinating place.
QUEST: Now, what will you be -- what will you be offering people if they come up to your home?
GRIMSSON: Well, we will -- first of all, I want to offer them traditional Icelandic pancakes with cream and jam and sugar. But my wife, Dorrit, is insisting we also give them healthy products from the greenhouses, cucumbers, tomatoes, peppers and many other delicacies that we produce all year round.
And then we will show them the extraordinary bird life and the incredible view, the sunset and all this splendor that the winter light in Iceland can -- can bring about.
GRIMSSON: And if it is clear skies, we hope probably to -- to demonstrate the Northern Lights.
QUEST: Now if we take a look at how Iceland is doing, obviously, there are some problems in your dispute with the United Kingdom and Denmark. But if we look at the economics, how is the country recovering from what was a very deep and severe recession?
GRIMSSON: Well, the country, as I told you about a year-and-a-half ago, one predicted that it would recover earlier and more effectively than anybody have expected. That has, in fact, come about. For example, this year and last year were our best tourism years ever. Economic growth is coming back in many sectors in our economy -- the energy sector, the high tech sector, the IT sector, as well as the fishing sector are, paradoxically, doing much better than they were before.
So now, in this present time of crisis in Europe, Iceland is in a pretty good shape.
QUEST: As you look at the European situation from your vantage point further up north, what do you make of it all, Mr. President?
GRIMSSON: Well, first of all, we were wise enough to allow these private banks to fail. We didn't try to pump an enormous amount of public money, the people's money, into those banks. And we were also able to adjust our currency to the situation that we faced after the economic collapse.
But perhaps above all, we were perhaps fortunate to realize that the crisis three years ago was not just an economic and financial crisis, it was also a profound political and social crisis.
So we introduced various measures, also, to deal with the political, the judicial and the social challenges.
QUEST: If I come and visit in December, will you serve me pancakes and not too many of those vegetables?
GRIMSSON: Oh, absolutely. No, absolutely, I will serve you pancakes. Absolutely. I know they're delicious, including the fish and the lamb and everything else.
GRIMSSON: And I will also take you to the -- to the -- I will also take you to the new concert hall, where -- where Bjork, in a few days, is going to have one of her fantastic concerts, so we...
GRIMSSON: -- you know, you will have a great time, I will promise you that.
(END VIDEO TAPE)
QUEST: Something tells me, having met the president's wife, that by the time I get there, there will be more vegetables than pancakes on the agenda. And she's not the sort of woman you want to object to, certainly after we saw her climbing over the barricades earlier in the week with protesters.
There's lots of tropical cyclones around the world at the moment.
Guillermo is at the World Weather Center to bring us up to date -- how bad is it?
GUILLERMO ARDUINO, ATS METEOROLOGIST: Well, there are several. The - - the worst ones, because there are two, are in Mexico, the west coast. You see, I need like troth show to report on this, because we have so many things going on that I don't have enough time to make it all fix in two minutes, 30 seconds.
But watch out, Manzanillo and the western parts of Mexico, because we're going to see storm surge and along with the winds. This is a Category 3 cyclone. Puerto Vallajarta, you know, a big resort in here, we're talking about 250 millimeters or so of precipitation.
And behind this, we have another cyclone that is developing. And it seems that it's going to take the same path. So the western parts of Mexico, that is to say, the Eastern Pacific Ocean is where we have a lot of action.
On top of that, there's another area south of these cyclones that may have the chance for further development into a third cyclone. But on Sunday, we were talking about a 90 percent chance. Now we're down to a 50 percent chance.
In any case, it is happening in there. Usually we see, Richard, that these cyclones move away. That's why you don't see CCNI reporting so much on these cyclones on the western parts of Mexico, because they move away from the country.
In this case, they are all coming into Mexico.
So in two days, we will have a landfall, most definitely, in the vicinity of Puerto Vallajarta, so we'll see that.
And then, Tropical Storm Irwin. We have more time to track it down. But it seems that it's taking the same path.
Now, let's go to the Western Pacific, into the Philippines. We see a tropical depression becoming a storm within 24 hours or so, making landfall to the south of the Philippines.
Remember, the two previous cyclones made landfall here in this bay in Luzon. Now, these are coming to the south and it seems that after that, days from now, it's going to take aim at South China. So it is a different path from what we had seen before.
The island of Sibale here in the middle taking most of the storminess associated with this. And also, we're talking about maybe 500 millimeters, half a meter.
Welcome rains, though, in the United States, especially in Texas. These are the accumulations, very significant. We warned our viewers that we may see bad floods in here, because, first of all, a prolonged drought. And then apart from that, with the intense rain that is coming right now, that is killing the fires.
And then we have another system here that is bringing heavy -- high surf, also, a lot of rain in areas when we need the rain.
But this is going to complicate things into the Northeast in the days to come.
You've been briefed.
I'm Guillermo Arduino -- back to you.
QUEST: Well, we have, indeed.
ARDUINO: Not Europe...
ARDUINO: -- though, but...
QUEST: Well, never mind. We'll do that tomorrow.
All right, there's always another day.
ARDUINO: Thank you.
QUEST: There's always another day. We'll get more weather to -- it's a bit like the markets, always a bit more weather to talk about, a bit like the markets.
Guillermo, many thanks.
We'll have a Profitable Moment after the break.
QUEST: Tonight's Profitable Moment.
The key phrase is comprehensive plan. And these days, it seems everyone has got one. Angela Merkel and Nicolas Sarkozy have theirs and say they're in agreement.
Me thinks they doth protest too much. There are some pretty big areas where they don't agree that we know of.
President Barroso, head of the European Commission, is also putting together his plan, which, frankly, will probably be able to bridge the gaps better across European countries.
Between them all, they should be able to cobble together that holy grail, the comprehensive plan. They've given themselves just three weeks to do it, which should be long enough. But then this is the European Union and once everyone else gets involved, a comprehensive plan could become a comprehensive mess. Let's hope it doesn't.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
The news continues.
This is CNN.