Return to Transcripts main page
QUEST MEANS BUSINESS
Greek Election Aftermath; US Market Rallies, Fizzles; Tale of Two Markets in Europe; Bond Yields Rise; Spiking Borrowing Costs Raise Fears of Full Bailout for Spain; Euro, Pound Down
Aired June 18, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: There's no time to hang around. Greece races to form that coalition.
They're calling it the "We Must Do" summit. The G20's meeting in Mexico.
And Spain's pounding. Its debt costs are jumping.
I'm Richard Quest live in Athens where, of course, I mean business.
Good evening. Live from Athens, where New Democracy's election success of last night is looking far more uncertain in the cold light of day. Antonis Samaras has been given three days to form a new Greek government, and he spent day one meeting with rival party leaders.
He's already losing potential allies. The second-place party, Syriza, says it will not be joining any New Democracy coalition. Samaras also says the Independent Greeks will not join his government. The leader of PASOK said a deal must be reached within 24 hours.
(BEGIN VIDEO CLIP)
EVANGELOS VENIZELOS, LEADER, PASOK (through translator): The most critical for us is this moment, is to achieve as wide as possible cooperation and should happen at the latest tomorrow evening.
Also, it's obvious that even for those who should choose the position of opposition, there's a national duty of responsibility and cooperation so that the country gets the best possible result both internally and especially during this negotiation role.
(END VIDEO CLIP)
QUEST: And the positive reaction that had been sought from the global financial community seems to have already evaporated. Markets tumbled in Spain and in Italy, off nearly three percent, as you can see, and rates on long-term debt also rose in both of those markets.
At the G20 summit in Mexico, the German chancellor Angela Merkel said there can be no "loosening," in her words, of the reform steps, and the Greek government must stick to its commitments. Chancellor Merkel said there's no reason -- excuse me -- to discuss a new aid package for Greece.
The last man to be elected Greek prime minister and the man who negotiated that first package says Europe still faces problems whatever happens next in Athens. George Papandreou was prime minister when both Greek bailouts were agreed. He told CNN's John Defterios earlier that those bailout conditions focus too much on austerity.
GEORGE PAPANDREOU, FORMER PRIME MINISTER OF GREECE: We needed at this point much more stimulus and growth. I believe that we do need that European-wide. But there's a third element, which nobody had -- really took into account. And that is the deep sense of uncertainty.
For the last two, two and a half years, what is most corrosive in the Greek society, but also in the Greek economy, is the sense of lack of certainty. We may be in or out of the euro --
JOHN DEFTERIOS, CNN INTERNATIONAL CORRESPONDENT: So, what you're suggesting here is that perhaps the European Union's taken too hard of a line and that the Germans in particular should provide more leeway, stretch out the budget deficit targets, not ask for further pension cuts, not ask for further salary cuts? Let's be specific here.
PAPANDREOU: I think -- I think you're right. What we need now is to see that we have -- some space to have a slower adjustment of the deficit, that may need more money, so that we can focus on the real reforms.
The real reforms will cut the deficit in the mid term and in the long term. Brookings Institute, for example, says that if we're as transparent and we create the civil services which has fought graft and has fought waste, we could gain as much as 8 percent of GDP. That would be great. We wouldn't need a program. And --
DEFTERIOS: Very quickly, because we have to wrap here because of time, do you really believe that Greeks can be trusted to deliver on the reforms that have been promised? Ever since the Greeks have joined the euro, it's been almost ten years, and the reforms never happened. Germany and the rest of the European Union saying, can you please deliver on your promises?
PAPANDREOU: I disagree with that, and I think there's been two easy stereotyping of Greeks. If you look at the OECD report, the last two months before, it evaluates all the industrialized countries as to the reforms they have made the last three years. Greece is number one -- not number two -- number one in reforms.
We need time, we need understanding, and I would add to this that whatever Greece does, if we don't look at the wider European problem, the question of a banking union, the question of an economic union, the question of fighting together the issue of unemployment, the question of possible euro bonds, of investment, and particularly in green growth to make our economies competitive.
No matter what Greece does, the euro will still have problems, and I think we're seeing that. So, I think the ball is now -- the Greeks have made a decision, and I think it's a wise decision -- to have this kind of - - this government, which will be a pro-European government. Now the ball is in the European court.
QUEST: That's the former Greek prime minister. I'm joined now by George Papaconstantinou, who served as the finance minister in the government of Mr. Papandreou and, indeed, negotiated -- or was part of the negotiation of the various agreements, correct?
GEORGE PAPACONSTANTINOU, FORMER GREEK FINANCE MINISTER: Correct. And Greece didn't sign the first agreement.
QUEST: Right. So, let's start with the election result. When do you expect a government will be formed, and will it include PASOK?
PAPACONSTANTINOU: We need a government, and we need a government now, so I am hopeful that by tomorrow, we'll have one. As you know, negotiations are underway.
I very much hope that there will bee a three-party government. New Democracy has won the elections. They are with others -- they are the main partner in the government, but with ourselves, PASOK, and with the moderate left as junior partners.
QUEST: Is that a strong government that can take this country forward for more than just a few months until further elections may have to be called?
PAPACONSTANTINOU: That will depend on whether it is ready to make bold decisions. That's what makes a government powerful or not. It's not the --
QUEST: And by bold decisions, you mean the first big bold decision is going back to Brussels and asking for some form of relief on the negotiation of the agreement you signed?
PAPACONSTANTINOU: No, the first bold decision is to do that while at the same time implementing the actual agreement that we have. Because you can renegotiate parts of the agreement, such as getting a longer period to reduce the deficit, because the recession is much deeper than we thought, but at the same time, move boldly with the structural reforms that this country needs.
QUEST: Isn't that really -- since we're a business program, we can talk in those terms -- isn't that really the problem of what's happened here, that the structural reforms, the privatizations, all the major things that need to be done are woefully behind schedule?
PAPACONSTANTINOU: Well, what should matter is that, while one can argue that some are behind schedule, at the same time, in the last two years, we've done all the structural reforms that were overdue in the last 20 years. So, yes, some are behind schedule. At the same time, we've been radically transforming Greek government.
QUEST: We need to just talk about this in a wider context, because the rest of Europe's watching. But they can't be comfortable, can they? Because what happens in Greece will have an effect in Spain, and we are still seeing those rates in Spain at 6 and 7 percent.
PAPACONSTANTINOU: And the other way around, if anyone thinks that by sorting out Greece and putting the program back on track and perhaps given even some concessions that will solve the problems with the rest of Europe, they are badly mistaken.
If Europe does not make the next steps towards banking union, towards some mutualization of debt, together with the fiscal rules that are necessary to keep the northern countries happy, then we won't be able to solve Greece's problems or that of any other country.
QUEST: You have sat down and negotiated these terms with the Europeans. They do not agree on many of the measures necessary. Which bit of this collapse don't they understand?
PAPACONSTANTINOU: I think that they do not understand that a country which has gone through such austerity and were in recession for reasons which are not entirely our own problem but were caused from the outside, a country that is in the fifth year of recession, needs some breathing space. It needs some more time.
Because otherwise, you're in a vicious circle. You're not managing. You have to -- to do additional cuts, because your revenues are not there, and your revenues are not there because your recession is deeper than you think.
QUEST: Thank you very much for joining us.
PAPACONSTANTINOU: Thank you.
QUEST: I appreciate it for giving us time during these difficult and very busy days for you. We appreciate it. Many thanks, indeed.
Now, when we come back after this short break, the honeymoon is over. On Wall Street and in Europe, the post-Greece election rally has fizzled out. We've got the numbers from both sides of the Atlantic. QUEST MEANS BUSINESS, we are live --
QUEST: -- in Athens.
QUEST: The people of Greece have spoken, and they have moved markets around the world. Early rallies across Europe and the US fizzled out. Jim Boulden has the European numbers from London. Let's start off in New York. CNN's Felicia Taylor has the latest on the Dow.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Yes, Richard. Basically what happened is things fizzled out, frankly, after people sort of realized what this Greek election really meant, and that is that there's still a lot of uncertainty out there.
But frankly, all eyes now are on Spain, and that, as I've been saying, is kind of the bigger elephant in the room literally, because its economy is that much larger. But also because there are rising bad loans in Spain.
The amount that's going to be required to recapitalized its banks is still in question. A number of banks did quite poorly today, down about 3 to 4 percent. So, that's where the concern really lies now with regards to the eurozone.
But again, as far as the US markets are concerned, what the focus will be this week is the Federal Reserve meeting, which takes place on Tuesday and Wednesday. Traders are counting on, betting on, wanting to see that Operation Twist will be extended by the Federal Reserve from an announcement on Wednesday. Richard?
QUEST: And yet, I look at that number on the Dow, Felicia, and I see 12,700, and that is starting to head towards 13,000. So, not withstanding what's happening here, there is an optimism, surely, that either the Fed will do what is necessary, or the ECB will do what is required.
TAYLOR: That's absolutely the point. This coordinated intervention is also something that the markets are counting on. They are betting that the -- the ECB and other European central banks will come to the forefront and offer up some stimulus and keep things going.
The worst thing that could happen is that they don't step up and help out Spain, because obviously, that one really is too big to fail.
QUEST: Felicia Taylor, who is in New York with the market that is open and doing business. The markets that closed that had a strong rally at least in Athens, where the market was up quite sharply, more than 3 percent. Elsewhere in Europe, it was by no means such a pretty picture. Jim Boulden is in London for us tonight.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: That's right, Richard. Really, it was a tale of two markets here in Europe. You see the FTSE up about a fifth, XETRA DAX up around a third, Paris down about two-thirds, pretty much a normal day.
But it's the secondary markets that we need to look at. Italy down 2.85 percent, the banks in Italy taking shares down sharply lower. Spain down nearly 3 percent. Bankia, for instance, down 9 percent.
As Richard said, though, Athens had a very good day, up more than 3.5 percent. And if you look at it over the month, you'll see we had all the turmoil leading up to the election, and just the last couple of days, the markets have done very well in Athens.
But it's the bond markets that everyone is looking at. If you look at Italy, now, up over 6 percent. This is much higher than Italy was paying for its ten-year bonds just a few weeks ago.
And then you look at Spain, and this is the takeaway from the markets on Monday. Spanish ten-year bond yield up more than 7 percent, this is a euro era record, Spain now having to pay more than 7 percent to sell its bonds into the markets. This is where many people are focusing on now that Greece has got the election out of the way. Richard?
QUEST: Jim Boulden with the markets. You might almost have thought we planned it this way. With the Spanish bonds over 7 percent, the crisis spotlight does now turn to Madrid and raising fears how on Earth Spain will manage to fund its debt requirement let alone its banking requirement as well. CNN's Al Goodman is in Madrid for us tonight.
Al, two areas that we need to briefly look at with you. Firstly, what is the effect of Greece's vote? Does it take the pressure off? And I think I know the answer is no. But in any event, how long can Spain live with 7 percent?
AL GOODMAN, CNN MADRID BUREAU CHIEF: Hi, Richard. Well, if you go back just a few hours to this morning, it seemed like Spain had that necessary breathing room, especially to put in the rescue for its beleaguered banks, that deal that was announced a week ago.
But we don't know the figures yet. Let's listen to an analyst from a leading business school giving us the mood at the start of the trading day this Monday.
(BEGIN VIDEO CLIP)
DAVID BACH, IE BUSINESS SCHOOL: For Spain, obviously, this is a very good result. It does reduce the likelihood of -- at least of a chaotic Greek exit of the eurozone. And it refocuses the debate on how to get the balance right between fiscal consolidation and growth. That, of course, is what the Spanish government is most concerned about right now.
(END VIDEO CLIP)
GOODMAN: But that didn't last very long. You had the market go down, you had the bond yields go up, and pretty soon, you had the Treasury Minister speaking in the Senate screaming for some aid from Europe, saying that the European Central Bank needed to get in there.
So, it's anybody's bet right now. But clearly Spain, which thought that they had a little bit of time, they have a lot less time right now. Richard?
QUEST: Al Goodman, who is in Madrid and will be following that for us in the hours ahead. Al, we thank you for that.
As you can see here in Athens tonight, we've been timing it almost to the minute. At 20 past 9:00 it seems to us is when they beautifully turn on the lights of the mountain and the Acropolis and we can actually see it in all its glory. And in many ways, those pictures -- and it becomes more beautiful as the night arrives.
So, with that in mind and since we are in Athens tonight, let's have our Currency Conundrum, which of course comes from Greece. Before the modern drachma was introduced in 1832, what was Greece's currency called? Was it A, the Chelona? B, the Apollo? Or C, the Phoenix? The answer for you later in the program.
The -- those are -- that's the Conundrum, now the rates. The Greek election does nothing to help the euro. It's currently down by more than 1 percent trading at under $1.26. Sterling is off against the dollar by around a third of a percent. You can see the Japanese currency. Those are the rates --
QUEST: -- this is the break.
QUEST: As New Democracy leaders Antonis Samaras works to assemble a pro-Europe coalition, if possible, the country he's hoping to lead has been without an elected government for 221 days.
Now more than ever, the people and the economy, so they say, need solid, clear leadership. Are they going to get it? Nicolas Vernicos is the president of the International Chamber of Commerce Hellas and also a ship owner and in the business of shipping, which is one of the traditional industries that we hear about and talk about in Greece. So --
NICOLAS VERNICOS, PRESIDENT, ICC-HELLAS: The number one industry.
QUEST: The number one industry.
VERNICOS: Not only in Greece, but we are number one all over the world.
QUEST: So, what are you expecting from a coalition? Will it -- will they form a grand coalition of all parties, or is it just going to be New Democracy or PASOK on their own?
VERNICOS: I'm expecting from this coalition to show to the laboratory that is Greece what people and European countries and the world have to do in order to fight debt. The Greek problem is a global problem.
QUEST: It's a global problem, but the Greek government has to be formed. Who will form it?
VERNICOS: New Democracy will form it.
QUEST: With PASOK?
VERNICOS: With PASOK and maybe with the moderate left. And this is going to be something new. The Greek people are going to be educated to lead with coalition governments, something which we don't know. For 40 years, we always had one party government, and this is our problem.
QUEST: OK. You -- a coalition, but will it be a strong coalition? Is it something that the business community, your ship owners, your other members at the International Chamber, that they can live with?
VERNICOS: It is better than nothing. It's not perfect, but we were near the Niagara Falls, ready to collapse. At least now, we hope that our boat is not going to sink and we are going to survive.
QUEST: How -- what sort of shape are your members in in Hellos -- the Greek members? How bad a trading environment?
VERNICOS: Very bad. The Greek people and the Greek business world is in a desperate condition. Why? Because the therapy which was imposed on Greece failed.
QUEST: All right. So, the austerity failed. But even if they get relief, even if they get something more from Brussels, that won't -- there will still be austerity here. You know that, sir.
VERNICOS: I know. And austerity is not going to give work to people. And this is the problem, not of Greece, of our global Western society. Never in the past, austerity saved the problem. Only work saves the problem.
QUEST: So, what do you want from Brussels?
VERNICOS: What we want from Brussels is to be educated by the laboratory which is Greece and not repeat the same therapy to other countries which are in debt. Because the people of Greece suffer, but the police will suffer to show to the rest of the world, and especially Europe, that all they have imposed to us, austerity is not working.
QUEST: Do you believe fundamentally -- and this is really what this comes down to -- that Greece can ever become a competitive country against, say, for example, Germany, Poland, any of the big industrial northern European countries?
VERNICOS: It's impossible for the southern of European -- southern Europe, Greeks, Italians, Spanish -- to work the same way, like the Germans work.
QUEST: Then isn't that the failing of the union that's going to have to be addressed through some form of monetary transfers for the foreseeable future?
VERNICOS: How do you handle the situation in America? How can American people work in Detroit and in Florida? They are two different worlds. But you have one minister of finance. Our problem is that we have 25 ministers of finance.
QUEST: All right. So, are you telling me tonight that you will happily accept a transfer of sovereignty from Greece -- more sovereignty to Brussels, just as much as Berlin, Vienna, all the other countries would have to submit to Brussels?
VERNICOS: As a European Greek who fights for a strong Europe, I believe that only one minister of finance will save Europe and it will continue to be a major player.
QUEST: Even if he's the -- or she is a German?
VERNICOS: Of course. And don't forget that we Greeks think that next week that we are going to play soccer with Germans. We are going to if not beat them it will make a nick.
QUEST: Good to see you, sir.
VERNICOS: Thank you.
QUEST: Thank you for joining us on QUEST MEANS BUSINESS --
VERNICOS: Thank you.
QUEST: -- tonight. So, a robust discussion, which really did get to the very heart of how it will be.
We will be in Mexico at the G20 summit in just a moment, where we'll hear what the head of the ILO has to say about Europe's job crisis. QUEST MEANS BUSINESS, and we are live for you tonight in Athens. Good evening.
QUEST: Hello, I'm Richard Quest live from Athens. More QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first.
The voting is over, the political wrangling is well and truly underway. New Democracy leader Antonis Samaras has three days -- a mandate -- to form a government in Greece after his party won Sunday's election. The far left that came second says it won't take part, but the third party, the Socialist Party, says it's hoping for a national unity government.
The German chancellor Angela Merkel says there'll be no leeway for Greece on the terms of its bailout. At the G20 in Mexico, Mrs. Merkel called on Greece's new government to fulfill its EU commitments. The Greek election and the eurozone financial crisis are high on the summit's agenda, along with the violence in Syria.
The campaign of the Egyptian presidential candidate Ahmed Shafik has accused the Muslim Brotherhood, Mohamed Morsi, of trying to hijack the election. Morsi declared victory in the runoff even though ballots are still being counted. Meanwhile, the country's military rulers have granted themselves sweeping new budgetary and legislative powers.
A Syrian opposition group says civilians are trapped in several cities that have come under siege. Video posted online appears to show the latest shelling in Homs in Syria. We're also hearing reports of dozens of people who've been killed this Monday in Douma.
Saudi state media is reporting that Salman bin Abdul-Aziz has been named the kingdom's next crown prince and heir to the throne. Seen here in the tan-colored robes standing next to Saudi King Abdullah to the left (Inaudible) Crown Prince Nayef.
QUEST: Good evening. We're live in Athens tonight as the world watches Greece and the machinations of putting together a government. They do still also at the G-20 in Mexico as politicians here in Athens try to form that new government, the president of the European Commission said time was of the essence.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, EUROPEAN COMMISSION PRESIDENT: It is now crucial that a stable and cohesive Greek government be formed quickly. The new government needs to get to work quickly to implement the economic reforms which are needed to bring Greece back on its feet again.
(END VIDEO CLIP)
QUEST: The head of the European Council, Herman van Rompuy, said it would take longer to fix Europe's wider economic problems.
(BEGIN VIDEO CLIP)
HERMAN VAN ROMPUY, EUROPEAN COUNCIL PRESIDENT: This crisis, this crisis in the Eurozone will take time to solve. There are no quick fixes nor silver bullets. But we will do all it takes to see it through.
Of course, firefighting is not enough. At the same time, it is crucial to demonstrate a clear and credible sense of direction. Our own public, the markets and our partners, must feel that we know our destination and our road to get there.
(END VIDEO CLIP)
QUEST: Watching events ever so closely, the U.S. President Barack Obama who says the prospects are positive after Sunday's elections, Dan Lothian is at the G-20 summit in Los Cabos in Mexico. Dan joins me now.
Is that just wishful thinking by President Obama, that, frankly, Greece and Europe may have got their act together?
DAN LOTHIAN, CNN CORRESPONDENT: Well, look, I think there is a sense of cautious optimism, yes, relief that some of the pressure has been taken out of this crisis. But nonetheless, there is that realization that there is a lot of work that still needs to be done. And the hope here is that everyone can get on the same page as to what that solution will be.
A lot of concern that if this situation, the Eurozone crisis, is not stabilized, it could continue to put downward pressure on the overall global economy and specifically for the U.S. economy, Europe obviously a top trading partner of the U.S., so the concern that Europeans not being able to buy U.S. goods, it could hamper, further hamper the U.S. economy.
But nonetheless, a sense of relief, and President Obama, who thanked the voters in Greece, said that this was a positive step.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think the election in Greece yesterday indicates a positive prospect for not only them forming a government, but also them working constructively with their international partners in order that they can continue on the path of reform and do so in a way that also offers the prospects for the Greek people to succeed and prosper.
(END VIDEO CLIP)
LOTHIAN: Obama said that the U.S. would continue to work with its European partners to contribute to economic growth that he hopes will certainly lift that region out of this crisis, Richard.
QUEST: Dan, here's a tough one for you: privately, within the U.S. delegation, did they actually think the G-20 is worth the cost of the airline ticket anymore?
LOTHIAN: You know, that is a very good question, and it's certainly one that a lot of people have been asking. And I think the way that I can answer it is that there are a lot of discussions that have been taking place long before the G-20 began, either through meetings over the phone or meetings other officials, U.S. officials, visiting with their counterparts.
But what officials believe is important about this summit is that you have these world leaders sitting down, face to face. And there's a certain amount of progress that they believe can be had from this face-to-face contact. But that does not do away with a lot of the questions that you come into a summit like this, it costs a whole lot of money, and no one is expecting any real resolution to come out of it.
QUEST: Briefly, Dan, isn't that the problem, that with the world teetering perhaps once again on the brink of recession, the best they can do is have a talking shop?
LOTHIAN: And that's what some people would say, that that really is all they can do at this point, and to come away from here, not with any quick fix, but with a -- with the same vision as to how to go forward, how to fix this problem long-term. It is a criticism and will continue to be a criticism of this kind of meeting. But you know, one thing I can point out is that in addition to the focus on the Eurozone, there are also these one- on-one meetings that are taking place.
President Obama meeting face-to-face with German Chancellor Merkel, also with the Russian President Putin. And so a lot of other issues, foreign policy matters, national security matters that they can also discuss on the sidelines here.
QUEST: Dan Lothian, who is in Los Cabos for us tonight and a true diplomat in the true spirit of the G-20, Dan, we thank you for that. And incidentally, I do know for a fact that one of the other issues they'll be talking about is tourism, which is crucial.
Now the head of the International Labor Organization says Europe has received a wakeup call that austerity is not the only answer. Juan Somavia is due to retire from his post in a few weeks' time. Earlier from Los Cabos, I asked him, when he looked at the unemployment numbers in Greece, where it said youth unemployment is up to 50 percent, did it not make him angry?
(BEGIN VIDEO CLIP)
JUAN SOMAVIA, DIRECTOR-GENERAL, ILO: Look, I think that the world is realizing that an austerity-only solution in the Eurozone is not enough. We have an economic crisis, a jobs crisis, a social crisis, a political crisis, and you can't deal with that exclusively with the financial perspective.
So we need to go to a real economy, you know, that the ILO speaks on the experience of the real economy when employers, workers and governments. Investment, small enterprises, get the resources from the financial sector to the investment. That's the issue. Governments don't have money today, so we need to go through the investment process and we have policies to do that.
QUEST: You've seen -- you keep saying this, sir, and now it seems as if the growth prospects are on the agenda. But it also seems as if there's a long way, a big gap between the promise and the reality.
SOMAVIA: Look, the European Central Bank is giving also all the necessary money to banks at 1 percent. Certainly, part of that can go to investment and small enterprise. And now everybody's risk-averse. The banks don't want to lend.
The small enterprises are uncertain because we're in a crisis. You can have a public policy that is oriented to what's guaranteeing part of that depth towards the future. So you don't have to spend now, but you get the economic process going. Decisions like that and others, it's a question of having a bit of innovation and not just the same old trite policies that are the ones that led us to the crisis.
QUEST: As we look at the global jobs situation, those in poverty, those at minimum wage, those that are frankly working in appalling conditions, what do you think has been your biggest achievement, in a way, in raising an issue at the agenda?
SOMAVIA: I think that the key thing is for the world to realize, and that has been my job at the ILO the years I've been there, is to say, look, we have to think about people, you know, those that actually make the enterprises work and produce the profits, because without the workers, you don't have a profitable enterprise.
And I think that that's essential today, you know, if we don't care about the vulnerable people, what is happening is that there's a progressive disconnect of people with the governance system, with politics, with government, with -- certainly with the financial sector today, and they're saying, well, what about us? And particularly the young.
So if we want to do something about the disconnect, we certainly have to concentrate on the areas of youth employment, of creation of jobs through small enterprises, getting the flow of finance going, the things that I've been saying. But, you know, we've spoken about this two years ago. And I told you two years ago, it's about growth and also fiscal consolidation. So it's not new.
QUEST: All right.
SOMAVIA: I think that today there is much more understanding that this is what you have to do.
QUEST: But as you leave office and look to the future, the ground, the landscape could not in many ways, sir, be more bleak.
SOMAVIA: Richard, I think what's happening is we are -- we're coming to an end of a cycle of growth and globalization. You know, the policies have failed. We wouldn't be in the mess we are unless that had happened.
So the cycle is coming down. You never have a ready-made cycle to follow it immediately afterwards. So we're moving into a period of uncertainty. But the period of uncertainty is also a period of opportunity and creativity.
(END VIDEO CLIP)
QUEST: That is Juan Somavia, the head of the ILO, and even after he - - I won't say retires, because he told me he's certainly not giving up and going off, we'll be talking to him again in the future. As QUEST MEANS BUSINESS from Athens continues in a moment, we will hear the business reaction to the Greek elections. QUEST MEANS BUSINESS, good evening from Athens.
(BEGIN VIDEO CLIP)
QUEST (voice-over): It is time for the answer to today's three-year- old "Currency Conundrum." We asked before the modern Greek drachma was introduced in 1832, what was the Greek currency called? The chelona, the apollo or the phoenix?
The answer is the phoenix. It was introduced when Greece left the Ottoman Empire. Of course you knew that. The currency was short-lived. It was replaced by the drachma after just five years.
(END VIDEO CLIP)
QUEST: Here in Athens, the politicians go on talking about doing business while those who simply can get on with it. Chief executives gathering in Mexico for the B-20, the business version of G-20, have mixed views about the Greek election. Here's what some of them had to say today.
(BEGIN VIDEO CLIP)
FULVIO CONTI, CEO, ENEL: This is dramatic good news for all of us. If we can quench the fire by maintaining Greek country and their citizens into Europe, not only we will make sense of the 60 years that we've been working towards a united Europe, the Europe of citizens, but this will also avoid the repercussion on other countries like Spain or Italy, like Ireland or Portugal, so that we will not need to create a Eurozone type A and a Eurozone type B, you know what I mean. That's good news, again.
DAVID COTE, CEO, HONEYWELL: So I don't think the voters have really indicated exactly what it is they want from their leadership, and as a result of that, we could still end up in this period of stasis where just nothing happens.
The greater you prolong that uncertainty, the worse it is for everybody, because it's not a linear effect; it ends up being an exponential effect. So I'm more concerned about it than if they'd actually made a decision one way or the other. Then everybody would know how to deal with it.
(END VIDEO CLIP)
QUEST: Now uncertainty seems to be the prevailing feeling here in Greece. John Defterios is with me.
John, 24hours on, I need you now to help me pull the strands together of where we stand and where we go.
DEFTERIOS: Well, there's some interesting indications coming out tonight after a kind of failed start from Mr. Tsipras in the afternoon. He met with the head of Syriza. Not surprisingly, he's not going to join the coalition, but he went to the independent Greece and other kind of splinter group here, not joining the coalition.
But the discussions with Mr. Venizelos, despite the remarks that you and I were covering earlier, that he's angry at Syriza for not joining the coalition, the indications are now from New Democracy that that's looking positive.
A meeting just broke up behind you at the parliament with the democratic left, and they said there's grounds to move forward. So it looks like the old guard of Greek politics can come together here and try to put this coalition together.
QUEST: If they do put the coalition together, is it a coalition of the weak?
DEFTERIOS: It's fair to say -- and what I think we have here, Richard, we take the big step back, this is the battle of the parties that have been controlling Greek politics for 40 years versus the upcomers here. This is the last push for New Democracy and PASOK to try to say we can reform.
We've been promising reforms since we've been in the euro; we couldn't deliver. Now can they deliver with Syriza having almost 30 percent of the vote and a young, very restive population? That's the challenge.
QUEST: And tonight Ms. Merkel's saying in Mexico no renegotiation. And we're talking about the nomenclature, aren't we? We're talking about the edges of it, because the Europeans are going to have to alter the terms. You heard Papaconstantinou on this program say they need breathing space.
DEFTERIOS: Yes, they need breathing space. They want to have breathing space with the deficit reduction, 165 percent of GDP was state debt. It's not survivable. It's probably going to have to come down. That's what most people are thinking right now.
But what are the terms that the Greeks are offering? We constantly hear the Greeks saying we need some breathing room. What are the Greeks putting on the table for real lasting reforms to turn this into a growth opportunity, the southern rim (ph) of the Mediterranean, financial services, trade, quality tourism? That's what the Germans are asking for.
Let's be really candid. Both want to see something out of this. They don't want to just be handing more money.
QUEST: John, good (inaudible) --
QUEST: John Defterios in Athens with me tonight.
Now the weather forecast, I don't need Jennifer Delgado to tell me that Athens was hot. It will be hot tomorrow. And it'll probably be hot for a few more days.
QUEST: I do need you, Jennifer, to bring us up to date elsewhere.
JENNIFER DELGADO, AMS METEOROLOGIST: That's right. You know what? You need the hot weather as well as the sunshine out there because you've had such bad weather over the last couple weeks through parts of London of course.
But as I show you on the wider view right now, across the area of Europe, it's western Europe we're looking at some showers out there as well as some thunderstorms. And you can kind of see where the boundary is.
Well, that's going to be the fuel for where we're going to have storms as we go through today, really through midweek. We have a low setting up right to the southern part of Spain and then of course another low is going to moving in just to the west of the U.K. probably just in time for Richard to head on back towards part of England.
Now on the wider view, for areas in central Europe, we do have a problem spot there. We have this area of low pressure. And in fact, it's bringing some showers and thunderstorms. This is spreading into parts of Poland. I want to point this out to you because Euro 2012 is going on. And that means for the match between Italy and Ireland, there's a good chance you could see some showers out there.
Could that disrupt playing? There's a possibility. The winds from the southeast about 15 to 20 kilometers per hour, temperature right around 27 degrees. It's going to be a little bit warm out there and of course with that rain around it's going to make it feel certainly a bit more humid out there.
But for areas including Gdansk, we're going to look at the potential as well for a few showers, but less of a chance there. Of course, as we do have that same system moving in across the region, that match begins at 1845.
So what does all this mean for parts of Europe? Well, it's really not that bad. Areas over towards less in the green, that's where it's cooler temperatures are going to be in the teens. You can see for Glasgow, 16; 29 for Berlin; 30 for Vienna and for Athens, as Richard just said, hot, hot, hot.
Now let's talk about what's been happening through parts of the U.S. We've had a bad weather pattern. We've been dealing with some wildfires across parts of Colorado and hopefully we'll be able to pull this video up for you. The fires are still burning out of control and this whole area you're looking at is just to the west of Ft. Collins.
Well, as I take you over to our graphic here, firefighters are having a tough time because this whole area is roughly about 235 square kilometers. That's roughly just a little bit bigger than Washington, D.C. Well, the problem is we do have a low and that's going to bring the potential for that fire to blow over towards the east, and you can see right now firefighters having a tough time.
Look at that, 1,700 and they have also 17 helicopters out there and four air tankers. So Colorado not doing so good right now with the budget battling this fire.
QUEST: Jennifer Delgado, who is with our weather forecast, now, Jennifer, we thank you for that.
Back here in Greece the morning after their collective voice was heard, so we take to the streets of Athens in a moment.
QUEST: If you're going to gauge the reaction to an election, you can only do so much standing on a balcony in the center of Athens. Perhaps far better just to go just a few maybe 20 or 30 kilometers in that direction, over to the port of Paros (ph) and find out exactly what people think of last night.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Picture-postcard perfect, the port of Paros (ph) outside Athens is the sort of place people come to to escape the city for a few hours. Here they are reading about last night.
QUEST: Explain to me what they're saying this morning in the newspapers.
UNIDENTIFIED MALE: (Inaudible) says oof. Win (ph).
QUEST: What did you think about last night's result?
DIMOS SIATRAS, OWNER, TOBACCO STORE: I think it was all right.
QUEST: Can you live with it?
SIATRAS: Well, I'm not sure about. But I have to see what's going to happen.
QUEST (voice-over): Out of the heat and into the dark.
SIATRAS: We turn off the electricity because especially (inaudible) the electricity, we don't have money to pay the electricity.
QUEST (voice-over): The kiosk has taken 25 euros this morning, barely enough to buy a good lunch at the restaurant across the street. Even though Greeks eat lunch late, here they're not expecting a rush, which gives the staff time to digest the results.
UNIDENTIFIED MALE: I think it's good for us. But, yes, we have problem now, more quiet, more people.
QUEST: From Zephyrus (ph) to Jimmy the Fish, another restaurant and seemingly not too many people, although it is still early.
MONTSENIGOS NIKOPAS, ADVISER, JIMMY AND THE FISH: I think that the result last night was about keeping us in the euro.
QUEST: You talk about the gretik (ph).
QUEST: But last night suggests you will stay in the euro.
UNIDENTIFIED MALE: We don't believe. We don't believe the government, won't believe the (inaudible) here, we don't believe (inaudible). We don't believe nothing.
QUEST: Who do you blame?
QUEST: Who do you blame?
NIKOPAS: Of course. Us. Of course, us. Whatever we do, it's very - - it's -- this is the result. It's terrible (ph). You know, it's all of our fault, I think.
QUEST: So 1 o'clock lunchtime, and by any standards, these restaurants in Paros (ph) should be busier either with business lunches or tourists enjoying an afternoon of sun. The fact that they're not speaks volumes. And although the restaurateurs are happy with last night's result, they've put the politicians on notice to deliver on their promises -- Richard Quest, CNN, Port of Paros (ph), Athens.
(END VIDEO CLIP)
QUEST: After the break, our ""Profitable Moment."
QUEST: Tonight's "Profitable Moment," Greece has voted. The market briefly rallied. And by the day's end we really must question how far we have actually come. Everyone says the deal must be done and a government formed. The problem is how, when and at what cost?
There are a new seriousness here about what is happening because the entire financial world doesn't necessarily depend on it, but if they can't solve Greece's problems, then, frankly, they stand almost no chance of solving anything else.
There will be time to deal with Spain, Portugal and even the banks. And the big question tonight is whether the politicians here in Athens and in Mexico for the G-20 will come up with the goods they promised for so long. This weekend, first crucial steps have been taken. I promise you this: if they stumble in the days ahead, I have no doubt it will be an electorate plague on all their houses.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Athens. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you in London tomorrow.