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QUEST MEANS BUSINESS
Breakthrough in Ukraine; Ukraine Negotiations; Ukraine's Crippled Economy; US Stock Markets Choppy; Business Wire About-Turn; Under Armour Speedskating Deal; EU-US Trade Deal
Aired February 21, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: The trading week is over on Wall Street as the world looks to Kiev in hope after a deal is struck. It's Friday, February the 21st.
A breakthrough in Ukraine. Opposition and government leaders believe they have a plan to stop the violence.
Anxious Ukrainians are lining up at the cash machines tonight. What default would mean for Ukraine and the rest of the world.
And the door is open. The EU's trade commissioner tells me Europe is ready for closer ties with Kiev.
I'm Maggie Lake, this is QUEST MEANS BUSINESS.
Good evening. A landmark deal has been struck in Ukraine to end days of fatal violence. Crowds remain in Independence Square. The scene is calm and the fires are out. Protesters are remembering those lost in the clashes between police and demonstrators on the bloodiest day the country has seen in decades.
The deal brings major political reform, reining in President Yanukovych's power by reverting to an earlier version of Ukrainian's constitution. Ukraine's parliament, the Rada, voted Ukraine's interior minister out of office. A new unity government will be formed within ten days. Leaders will be required to hold presidential elections no later than December, as soon as constitutional reform is complete.
And there is also hope that former prime minister Yulia Tymoshenko could be freed from prison after parliament decriminalized the charge she had been jailed for since 2011. The Ukrainian ambassador to the United States (sic) expressed confidence in the deal.
(BEGIN VIDEO CLIP)
YURIY SERGEYEV, UKRAINIAN AMBASSADOR TO THE UNITED NATIONS: The opposition and the government, they tried several times to arrive, to reach any agreement. They failed. Even the resignation of the government did not help to calm the situation. And this deal, which was made with the help of the European Union, with the aid of US and UN, was good, and I believe that it could work.
(END VIDEO CLIP)
LAKE: Nick Paton Walsh is in Kiev tonight. Nick, the ambassador expressing confidence, but really, what matters is the view of the people there in the street. What are you hearing?
NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT: They're not very happy down behind me at all. Vitali Klitschko, one of the main opposition leaders, was, it's fair to say, jeered by a substantial number of people in the crowd, really not the reception, I'm sure, he thought he'd have got after hammering out this deal.
And I'm sure he would have known it wouldn't have been accepted by all of the crowd, and it lacked the one thing everybody's united on, that Viktor Yanukovych, according to the crowd down below me, should leave power.
Now, we're into an unknown period here. We've got some deadlines ahead of us. By late tomorrow, the protesters should disarm themselves or face punishment under the law, according to this deal, and 48 hours from now as well, we should also see them start to clear the public spaces, according to this deal, too.
No sign of that at all. Barricades never looked bigger than they are right now, reinforced, people digging in. Extraordinarily organized and tidy behind me, but also mourning the dead. So, I think a real sense of solidarity.
And one important thing, too. We heard one protester get on the stage and say if Yanukovych doesn't resign by 10:00 tomorrow, let's do something. I think the notion was they might march on a building or take some kind of aggressive pro action against the government here.
Important to see no police around in this area at all. That leaves the question, what are they doing? What are their plans ahead? But this standoff here isn't over yet. There's a deal signed, but I think, really, most people aren't going to consider this crisis over until people start leaving the area behind me.
LAKE: And Nick, what are we looking at in terms of numbers? We saw after the violent loss of life and the fires burning, it seems much calmer. Is there a sense that more people are coming? Is there any indication that anyone's leaving?
WALSH: The numbers are pretty good behind me. The square is pretty full. It was certainly earlier on. Around the streets around it, it's completely empty. There are protesters in a sort of loose kind of civil defense groups, they call themselves, moving around, trying to maintain order.
We're not hearing reports of people coming into the country, although -- sorry, into the capital -- although we have heard suggestions that police restrictions around the capital on the roads are beginning to be lifted. So that could be something for the days ahead.
The question really is, do we start seeing these protesters lessen in numbers in the next 48 hours, or do they stick it out? There are nine months until they might not see Viktor Yanukovych as their president if he decides to stick it out as long as he can under this particular deal.
That is making many protesters you talk to concerned, as nine months in which the security services, despite the fact that his post is weakened under this new constitution, the police, security services could still perhaps go after them. They're worried about that.
The interior minister lost his job today, but there are other people in the security services still there. They were still behind the shooting that happened just yesterday, so this is far from over, Maggie.
LAKE: Much reason to be concerned. Nick, talk to me about the sort of solidarity. We were talking about numbers out there. Clearly we understand that some part of the protest movement is unhappy with this.
Are we hearing any vocal voices for those who say, well, it might not be everything, but at least it's a start? Especially given the fact that the alternative, as has been warned by the Polish minister, was the army coming in and escalation of violence that no one wants to see. Are there groups that do support this?
WALSH: Opposition leader Vitali Klitschko did say look, you're going to play into the government's hands. The government is trying to divide us. That was his key message to the crowd when he got on the stage before they reacted negatively to him being there.
There are people here who are clearly aware of the fact that look, the government has proven its ability to use force. They have got some concessions from them.
But there's another factor here, too. They now, perhaps, feel they're on the front foot, they've managed to get rid of the old constitution. The president is now technically weakened, the parliament more able to call the shots, able to fire cabinet ministers.
That may make them feel that their ultimate goal, removing Yanukovych, is in sight, and they must be concerned that the nine months until there could be the latest period for elections in December under this deal, that's a long way away. A lot can change.
If they leave the square now, their chips, basically, are spent, are over. So, people may be concerned that they need to stick this out until they see their ultimate goal, and we really can't tell how universal that view is. But looking at the square behind me, there are enough people to make it stick. Maggie?
LAKE: Yes, Nick, very good points. And of course, this against a backdrop where there are people who are rushing to take their cash out of ATMs, so there's clearly a great deal of concern still in Kiev. Nick Paton Walsh for us there.
Well, after the deal was reached, one of the mediators, Polish foreign minister Radoslaw Sikorski, was caught on camera speaking to a protest leader. His blunt words show just how serious and delicate he believes the situation in Kiev is.
(BEGIN VIDEO CLIP)
RADOSLAW SIKORSKI, POLISH FOREIGN MINISTER: If you don't support this, you will have martial law, the army, you'll all be dead.
(END VIDEO CLIP)
LAKE: Now, earlier, Mr. Sikorski gave an exclusive interview to our Becky Anderson. She asked him about how he dealt with the protest movement.
SIKORSKI: I did engage with the protesters to convince them of the seriousness of the situation, and my assessment at the time was that if the deal is refused by the opposition, the president has significant forces at his disposal, for example, the interior minister troops, and might use them, and that would mean a serious further loss of life.
But I'm very glad that I persuaded some of those people from the council of the Maidan, and an hour later, they voted 34 to 2 to accept the agreement. And I'm counting on opposition politicians now to convince the protesters in the Maidan that they've won, that they have a good deal.
BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: Mr. Sikorski, Ukraine's economy is on the brink. Who will help pay its bills going forward? What is the financial sweetener in all of this from the West, from Europe and the US, given that there is a possibility going forward that Moscow won't be interested?
SIKORSKI: Yes, Ukraine is in a dire situation, but at the same time, Ukraine actually has an agreement with the International Monetary Fund. It has drawn on the second -- on the first tranche and simply needs to start implementing the jointly-agreed plan that would activate the second tranche, a very substantial second tranche. In other words, Ukraine will get a lot of money as soon as it starts reforming its economy.
LAKE: Even as Ukraine's political situation calms, the country's economy is still on the brink of default. Protests began months ago when President Yanukovych ditched a trade deal with the EU to seek financial help from Russia.
Russia agreed to give its neighbor a $15 billion lifeline, but it has yet to purchase $2 billion of Ukrainian bonds. It's a move Russia has said it was ready to make, but it seems to have gotten cold feet since the violence escalated.
Rating agency Standard & Poor's today lowered Ukraine's rating to CCC. It believes Ukraine will default on its debt in the next 12 months unless major changes occur.
You can literally see the concern over the economy on the streets of Ukraine. Nervous Ukrainians have been lining up at ATM machines withdrawing as much cash as possible. Many in the lines admitted they don't know exactly why they are taking out the funds, but they say there is a general feeling of panic due to the recent violence.
Jeffrey Sachs is director of the Earth Institute at Columbia University, and he joins us tonight in the studio. Jeffrey, thank you so much for being here today. First of all, give me your assessment of what looks like a very fragile deal that's on the table. Do you believe it can hold?
JEFFREY SACHS, DIRECTOR OF EARTH INSTITUTE, COLUMBIA UNIVERSITY: It can hold, but boy is it needed to hold. Obviously, the violence was shocking and could get worse, as the Polish foreign minister said. But this idea of a compromise path seems to be taking hold right now.
I hope that no side overplays this, tries to grab for everything right now, because what's needed is a careful compromise step-by-step. Not every side's going to get what they want.
Ukraine is also a divided country between east and west of Ukraine. It's culturally divided, it's politically divided. Of course, Yanukovych has lost all his support internally because of this brutal breakdown, but it's still true that Russia has important stakes and Ukraine looks to Russia for part of its economy.
We shouldn't see this as an all-or-nothing break, West or East. And if a middle path is taken, then there's a way out of this very deep crisis.
LAKE: Becky just asked a very important question. We've just talked about the economy, what a dire state it's in, a potential run on the bank, the beginnings of which we're seeing, only makes that situation much more difficult.
What does the international community need to do? Clearly, Ukraine needs immediate financial assistance. What should be done?
SACHS: Well, the IMF is the place that one goes for that assistance. Sometimes it comes quickly, sometimes it's long delayed. It's both political and financial. There needs to be some perspective for the IMF to be able to lend to Ukraine at this point, some basic economic parameters in place.
I think Russia's role should not be discounted. As you were saying, Russia also was providing financial assistance. Ukraine and Russia are tightly linked. The idea that somehow this just scoops Ukraine out of the East and deposits it in Europe is not what Europe wants, either, from --
LAKE: I was going to say --
SACHS: -- from the financial burden.
LAKE: All of these countries are strapped dealing with their own domestic problems. The EU, the US, and to some extent, we're not sure Russia wants to entirely own this problem.
SACHS: Nobody wants to own it entirely.
SACHS: And that's why there really should be calm discussion by Europe, the IMF, and Russia.
LAKE: All together.
SACHS: Together with Ukraine --
LAKE: And worryingly --
SACHS: -- to find a way forward.
LAKE: Worryingly, I just spoke to the IMF earlier, and they wouldn't even comment at all. They're not even saying that they're watching, that they're sending a team. They just would not comment at all, which gives pause to the confidence that the international community really has in this deal that's been made.
SACHS: Part of the problem that in the past -- actually, last year was the long delay in finding a financial response to a deepening crisis. And I think it was too long delayed. The IMF does have to act, it has to act with alacrity, it has to act with political sophistication in a highly uncertain economic environment.
Again, though, I think that if Russia is at the table, it's easier, not harder. This is not some great showdown, should not be seen as the great East-West showdown that some people want it to be. Economically, it can't work that way.
LAKE: It can't. And let's hope we move away from that line as well. Jeffrey Sachs, thank you so much for joining us --
SACHS: Good to be with you, thank you.
LAKE: -- tonight with your insight.
Well, Alison Kosik joins us now, live from the New York Stock Exchange. It is time to check in on business. US markets are closed. Alison, what kind of session did we see?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Interesting session. And it seemed like at one point today, Maggie, that traders were watching the US-Canada hockey showdown more than they were stocks. You can tell by the cheering going on on the floor.
But as far as the action goes, a lot of it was more choppy and sideways. A couple of movers that we focus on today, travel website Priceline jumping 2.5 percent after reporting fourth quarter profit growing 31 percent on stronger bookings.
But Groupon had a much tougher day, shares falling more than 21 percent after the online deal promoters topped earnings forecast, but it warned of a loss in the current quarter and weak growth for the rest of the year overall.
So really, not much inspiring investors to get in or out in a big way. Existing home sales were a disappointment today, so not really getting investors to really move with conviction in one direction or another, Maggie.
LAKE: All right, Alison, thank you so much. Well, Business Wire, the service that releases business news to news outlets, says it will no longer sell its newsfeed direct to high-frequency traders. Instead, they'll have to get their information from the same sources as everyone else.
The service is owned by billionaire Warren Buffett, and the move comes after "The Wall Street Journal" allege high-frequency traders have been getting an unfair advantage over their competitors.
Well, what you're about to see takes place in near milliseconds, or thousandths of a second, if you will. "The Journal" cites one example of a company, which is due to release its earnings at 4:00 PM when US markets close.
Business Wire sends out the release 150 milliseconds after 4:00. Over the next 50 milliseconds, $800,000 worth of shares change hands. We have to wait until 200 or 400 milliseconds after 4:00 for news wire services like Bloomberg and Dow Jones to send out the results.
So, "The Journal" says that traders with access to the direct feed from Business Wire took advantage of that gap. Now, the stock doesn't reach its closing price until 700 milliseconds after 4:00, which is plenty of time if you've got sophisticated software to trade for you.
Business Wire says traders had no time advantage when receiving material news from Business Wire. However, it says "The Wall Street Journal" article caused some "misperceptions," and they've terminated the direct feeds.
Well, Under Armour and the US Speedskating will continue their partnership, despite claims that the company's suits hurt the team's performance in Sochi. My conversation with Under Armour CEO when we return.
LAKE: Shares of Under Armour soared Friday after the apparel company announced it salvaged its contract with the US Speedskating Association. Under Armour will provide suits for US skaters for the next two Winter Olympic Games in 2018 and 2022.
The renewal comes on the heels of controversy in Sochi. When US athletes failed to win metals in the sport, many blamed the suits for their poor performances. Questions arose about the impact of vents on the back of the suits.
Under Armour maintained there was nothing wrong with the apparel. Still, the US team failed to deliver even after the athletes chose to switch into older suits. The two have worked out their differences and the partnership will continue for eight more years.
I spoke to Under Armour CEO Kevin Plank, and I asked him why his company extended the deal after the controversy at the Sochi Olympics.
KEVIN PLANK, CEO, UNDER ARMOUR: I think when -- I think our company shares a lot of the characteristics, hopefully, that our great country does as well. And being an American-based company whose aspiration is to be a global brand, we wanted people to know that we believe --
And first of all, we have complete confidence in the suits that we built, in all the suits. And again, whether they wore the Mach 39, the new suit, or whether they wore one of our old suits, we feel like we're giving our athletes a bit of an edge and a competitive advantage.
But when we came back to it, I think you look and you saw a company that, if we are going to get pushed, and we got dragged through the mud a little bit last week, that we're going to come back bigger and stronger. And we've got four years to be right, but it's going to be a fun message in four years, and we're going to have a lot of fun supporting US Speedskating over the next eight years as well.
LAKE: And you're looking to grow your brand internationally.
LAKE: There's tough competition out there. How are you going to do that?
PLANK: Yes. Well, not unlike we did here in America. It was very much an authentic story where we started athlete by athlete across sport. And then, we're taking it market by market. And so, look, we grew from men's apparel to women's apparel to footwear to international to direct consumer, like our five major growth engines.
And we see taking those growth engines of men's apparel, women's apparel, and youth and taking them country by country around the globe. And so, we may have not gotten everywhere yet, but we're a young brand, we're 18 years old. I'm still young, our company's still young, our mentality's still young. And hopefully over the next 20 years, we'll have a chance to impact athletes all over the globe.
LAKE: And I understand you're really bullish about the prospect for women.
LAKE: Why is that, women's wear?
PLANK: Well, we think it's a huge opportunity. And you look in this country, there's just as many females competing as there are men competing, and we see --
LAKE: Fiercely, as well.
PLANK: There's no difference. Go watch the Olympics and you'll see, there's no difference between men and women that are out there, their want, their desire. And so we believe -- our mission is to make all athletes better, which means give them that little bit of an edge.
And sometimes, that edge is the physical, technical difference in whether it's the speedskating suits, whether it's the uniforms, the jerseys, the base layer, whatever we build for them, sometimes it's just the mentality. And that mentality is trust that's built up in drops over long, long periods of time. And we need to be careful to protect that trust, because that is the integrity of our brand.
And that's what gives some little kid, some little boy, some little girl out there that maybe pulls on an Under Armour shirt or puts on an Under Armour shoe and says you know what? I was scared to go out for the team, I was really a little bit intimidated, but I've got something special. I've got Under Armour on, and I believe I can do anything. And that's sort of the -- that's the ethos of what brand is as a whole.
LAKE: And sport, too. Do you -- when you're looking at expanding internationally, and I talked about the competition, you've got some giants out there.
LAKE: Nike, Adidas, Puma, especially when you're talking about internationally. Is there room for all of you, or are you talking about taking market share away?
LAKE: Do you need that sports tie-in? Because there some really long legacy with European football, what we call soccer --
LAKE: -- and some of these brands.
PLANK: Well, first and foremost, we're a growth company. And last quarter, we put up 35 percent growth for the quarter. It was a -- we had our 15th consecutive 20-plus percent growth. We ended up growing 27 percent for the year, versus 25 percent in 2012, versus -- I mean, we are a growth company.
And so, these companies that you mentioned, we are focused on ourselves first and foremost. And while you may look at the size of somebody else's, these are the same competitors that just a few years ago were 20 and 15 times our size. Well, this year, they're about 11 and 8 times our size.
And the way the projection's going for us, they'll be about 8 and 6 times our size in the future. And so, we like the way the trend line's going with our brand. We're not intimidated by anybody. We've got a lot of things and lessons that we'll learn, but we like our odds.
We're committed to technology, we're committed to the athlete. And hopefully, that's what this statement of circling back with US Speedskating is saying. We might have gotten a little dust on us last week, but we're going to come back and show you why we think we're the greatest brand in the world.
LAKE: Still to come on QUEST MEANS BUSINESS, we'll hear from the EU trade commissioner the challenges of doing a huge trade deal with the US.
LAKE: The European Union's trade commissioner is convinced that the US and the EU can hammer out their trillion-dollar trade deal. Current sticking points include bank regulation.
The EU and US are looking to make their financial regulatory systems more compatible. And meat imports: the EU is against importing meat from the US that have been injected with hormones. Earlier, Karel De Gucht told me that this agreement is not a typical trade deal.
KAREL DE GUCHT, EU TRADE COMMISSIONER: This is a very broad agreement, so I wouldn't say -- I wouldn't speak about sticking points or impossibilities, but of course, in such a deal, there are a lot of balances that you have to establish.
On top of that, we have to do that, and that's also a very clear goal of ours. In a way that we do not put into jeopardy our basic regulations in Europe. And the same goes, by the way, for the United States, be it on health, be it on safety -- and that's precisely for Europe, on data protection, for example. So this is a serious piece of work, but we are making really steady progress.
LAKE: It is a serious piece of work, and a very complicated one that's going to require change, and of course, that's hard to do sometimes when you're facing elections. Much has been talked about the fact that we have congressional elections here in November that is complicating trade issues.
But we also have EU elections coming up in May, and some have suggested that perhaps that might prove problematic as well. Do you think a deal is possible against those backdrops?
DE GUCHT: Well, we have elections for the European parliament at the end of May, but the European Commission continues at least until the 1st of November, so we will be able to continue negotiating. That is not precisely going to hinder us, let's say, to further work on the deal.
You have the midterm elections in November in the United States. That could have an impact on this whole discussion on the Trade Promotion Authority, the so-called fast-track. But we have so many -- so much work on the shell of that that we will really -- we won't have free time.
And on the other hand, we want to do the deal as soon as possible, but my problem has been crawling on tank of gas with the core supplies went down considerably in the United States. I think we should do the deal no later than next year, and this seems to me to be politically and physically feasible.
LAKE: Still to come on QUEST MEANS BUSINESS, we'll hear more from the trade commissioner on the EU's role in Ukraine as its neighbor Russia appears to be backing away from its offer of financial help. We'll talk about the complex relationship between these two countries when we come back.
LAKE: Welcome back. I'm Maggie Lake. These are the top news headlines we are following this hour.
After a week of deadly violence, Ukraine's government has struck a deal with protesters in a bid to end the violent clashes. Parliament acted quickly to pave the way for concessions that include reinstating an older constitution that reduces the president's powers. Early elections are also part of the deal.
There's a tense calm in the streets of Caracas, Venezuela, and a call from jailed opposition leader Leopoldo Lopez to his supporters. According to media reports, Lopez is urging protesters to keep demonstrating peacefully. At least five people have been killed since clashes with security forces broke out over a week ago.
Meanwhile, Venezuela has revoked or denied press credentials for CNN journalists in the country after President Nicolas Maduro said he would expel CNN if it did not, quote, "rectify its coverage" of anti-government protests. CNN has repeatedly asked for a meeting with Venezuelan officials. A CNN reporter has been invited to a news conference with Mr. Maduro, which begins in one hour.
A Libyan military aircraft has crashed in Tunisia, killing 11 people onboard. Tunisian state news agency says the crew reported an engine fire just before the plane crashed. The plane was carrying three medical patients, two passengers, and six crew members. It came down around 60 kilometers from the Tunisian capital.
At the White House Friday, US president Barack Obama met with the Tibetan spiritual leaders, the Dalai Lama. The White House says they discussed human rights in China and Tibetan autonomy. China wasn't happy about it. The Chinese foreign ministry warned the meeting could, quote, "severely impair" US-China relations.
Crowds remain in Independence Square in Kiev tonight. The mood is calm as protesters mourn the lives lost in the deadly clashes this week. Ukrainian government and opposition leaders hope the deal signed today will bring a permanent end to the violence. Ukraine's Parliament also passed legislation that could lead to the freeing of jailed opposition leader Yulia Tymoshenko. Nick Paton Walsh has the very latest from Kiev.
NICK PATON WALSH, SENIOR INTERNATIONAL CORRESPONDENT FOR CNN INTERNATIONAL: Fireworks of victory where hours before there'd been fired in rage, a hole where the riot police had been. Twenty-four hours ago this street was the scene of pitched live gunfire battles between police and protesters. Now, absolutely no police around. They've abandoned this position of theirs two hours ago. Just protesters to be seen, empty streets, you can even catch a taxi. A remarkable turn-around, the protesters now the power here. In the morning a deal emerged between the president and the opposition that would weaken Yanukovych's powers and call early elections. But the crowd here, scattered, angry at the dozens of dead, weren't convinced. It took blunt talk from European diplomats to see it through.
POLISH FOREIGN MINISTER: If you don't support this you will have martial law, the army, you'll all be dead.
WALSH: Then it was signed. Within minutes, Parliament here deserted by police voted to reduce the president's powers then they sacked the interior minister. The M.P.s driven around in cars that remind you power means money here. Now have ten days to appoint a new cabinet. Look, though, at what happens when protesters meet the president's people. Under the deal, President Yanukovych is less powerful but still president until early elections by December This old man screams, "We need to kill you!" "That decision to return to the old constitution," he said "cost the lives of 100 people, it makes no sense." And under the deal, the protesters mourning the dead behind their biggest barricades yet, must disarm by Saturday night and begin clearing the area by Sunday. That's not about to happen any time fast. This isn't over yet. Nick Paton Walsh, CNN Kiev.
LAKE: The E.U.'s trade commissioner says there's no contest between the E.U. and Russia over Ukraine. I asked the E.U.'s trade commissioner whether Ukraine can have a closer relationship with the E.U. while being dependent on Russia for energy.
KAREL DE GUCHT, E.U. TRADE COMMISSIONER: For me there's no compass between Russia and the European Union to have quote-unquote "Ukraine." What we offer to Ukraine, it's a very far-reaching, deep, comprehensive free trade agreement whereby Ukraine will be able to sell much more duty free and (inaudible) the European market and it would come closer to our European regulations which would and has (inaudible) selling capacity on the European market. But we have never said that they cannot sell anymore to Russia. I mean, there's no competition about that, and we have tried time and again to explain to Russia that this is not about a competition between us. On the Ukraine it's about leaving Ukraine new chances.
LAKE: And, you know, we are looking at an economy in the Ukraine now that is frankly very close to freefall. Hopefully, the political developments will help combat slightly, but what is in a deal with the E.U. that could help that economy in the short term?
DE GUCHT: It would be very important that we can let's say put into practice the agreement anytime soon. So, right away I would hope after the signator of the deal, and it is quite a lot in for Ukraine because they could sell almost everything they want duty-free and quota-free into the European Union and that will give them proceeds. Let me give you one example - at the time of the end of the Soviet empire, Poland and Ukraine were more or less at the same level of income per (head). And now the income per capita, per head, is in Poland three times higher -- three times higher than it is in Ukraine -- which means that having free access to such an - a big market with a lot of consumers that have that (pursuing) power is essential if you want to redress your economy, modernize your economy and make progress.
LAKE: Now, as we said earlier, the protests began three months ago after President Yanukovych made the decision to ask Russia for financial help rather than sign a trade deal with the E.U. On Thursday, part of that help was suspended when the Ukrainian finance ministry canceled a planned bond sale. Russia had previously said it would lend $15billion of - in total - or buy $15 billion in total of Ukrainian bonds starting with a $2 billion investment. However, it now appears to have gotten cold feet. The Ukraine needs that cash, it's due to repay as much as $13 billion in debt this year. Now there are fears that if Ukraine defaults, Russia could suffer.
Russia and Ukraine are closely entwined with Russia not keen to lose its influence over the former Soviet state. Joining us now is Serhii Plokhii, director of the Harvard University Ukraine Research Institute. Thank you so much for being with us today. I want to talk about default but first I want to ask you something that has come up again and again when we talk to people. They say Ukraine is a divided country. Is that true?
SERHII PLOKHII, UKRAINIAN RESEARCH INSTITUTE, HARVARD UNIVERSITY: Well, regionalism is important for to what has happening today in Ukraine. But this regionalism is also overstated. When you look at people who are demonstrating on Maidan and that was going on for three months now, they represent all parts of Ukraine. Recently the protests, the riots spread all over Ukraine to the south, to the central Ukraine so regionalism is there but it's not regionalism that can help explain what is happening today in Ukraine.
LAKE: Obviously the international community very concerned about the possibility of a default for Ukraine. Where do the developments in the last 24 hours leave Russia?
PLOKHII: Well, Russia certainly is very much interested in not only maintaining close economic ties with Ukraine, but also bringing Ukraine into closer political union. And for a long period of time, the goal was to bring Ukraine into the customs union that Russia, Kazakhstan and Belarus are part of that. But it doesn't look that (is) the latest developments in Ukraine, that goal will be achieved or will be achieved anytime soon, so I would expect that Russia - Russia's interest in Ukraine and preparedness to invest in Ukraine will be - will be hindered by the outcome - the latest outcome - of events in Kiev. On the other hand of course Ukraine gets another shot at this association agreement with European Union and if in the short term it brings certainly a lot of question marks -- what will happen with the debt? - in the long term, this is the deal that Ukraine can't afford not to take.
LAKE: Serhii, as we talk, we are looking at live pictures of an eerily calm Independence Square in Kiev. Many protesters there -
LAKE: -- they are mourning the loss of life of course. We just had (Jeffrey Sax) on who said, 'Listen, no one alone can sort of inherit the financial mess that Ukraine is now" - to put it very indelicately. Will there be - will we need to see all of the parties involved - the E.U., Russia and the U.S. come together and provide financial aid to Ukraine? Is that the only way forward?
PLOKHII: Well, I hope that that actually will happen and that can happen and a lot will depend on what will happen in Ukraine in the next two or three days. They are going to start forming together a government that would be - as they say - the government of professionals, not a political government, the government that would have trust of people and hopefully also the trust of the international partners of Ukraine. Ukraine's trade with European Union was growing in the last three or four years, but, again, Russia remains to be a very important - exceptionally important - trade partner and certainly a very important neighbor in cultural terms, historical terms in -- and any other term.
LAKE: Serhii Plokii from Harvard University. Thank you so much for joining us. And for our viewers who are watching those live pictures -
PLOKHII: Thank you.
LAKE: -- on your screen, you were just looking at protesters carrying a casket through the crowds. Still to come on "Quest Means Business," the World Tourism Council tells Russia to gets its house - or rather its hotels in order if it wants to make the most of Sochi-generated tourist interests.
LAKE: So, did you hear the one about the wolf roaming the halls of a hotel in Sochi? Yes - it turns out it was all just a joke. Here's the wolf supposedly wandering the corridors of one Sochi hotel. U.S. luge team member Kate Hanson (ph) posted it to her Twitter account which has 21,000 followers. It soon went viral and had even CNN fooled. U.S. comedian Jimmy Kimmel - he's the one on the skis - admitted it was a prank when Kate and the wolf appeared with him on his show on Thursday. We should have known. Well, the standard of Russian hotels isn't a laughing matter for the country's tourist trade. The World Travel and Tourism Council is warning that Russia needs to get past some of the negative portrayals of its facilities in order to capitalize on tourists' interests post-Sochi. Earlier I spoke to the president and CEO of the tourism council David Scowsill and asked him what that means.
DAVID SCOWSILL, PRESIDENT AND CEO, WORLD TRAVEL AND TOURISM COUNCIL: Well they've invested something like $50 billion in the Winter Olympics. And of course it's a spectacular event. But by the time people disappear at the end of the Games, people will be asking where that investment has led. And I think the key thing that I'd like to get across to the Russian government here is, it's important to make those kind of levels of investment in the rest of the infrastructure - in the airports, in building new hotels and also the rail and the road infrastructure.
LAKE: In terms of the hotels, there is a certain standard people expect. And we saw a little bit of publicity at the beginning of the Games. Clearly they were pushing against a very hard deadline trying to accommodate the athletes. What do they need to do now when they have a little bit more time to go back to make sure that they're able to attract the right kind of tourists?
SCOWSILL: Yes, I think there are always teething problems when you build new facilities for these kinds of games. But the fact is some 28 million people go to Russia to take vacations now, and that number is growing about 11/12 percent year on year. But what is at shortage at the moment are good hotel properties and more infrastructure around the airports to that encourage that next wave of international customers.
LAKE: And of course we know that travelers don't just want the nice hotel rooms with the nice views. You have to have all that comes with it. You have to have service, you have to be able to have the technology that they can keep up with in their lives. I assume we need to see that sort of investment too. How much kind of money do you need to get that where it needs to be in Russia?
SCOWSILL: Well, it's very difficult. If I can give you an analogy with what happens in China - the Chinese are very good at planning internal 15-year time frames. They can see the growth of the travelers coming through the system, people coming through in the middle classes. So, a city like Beijing for example gets 100 million visitors every year. They know in five years' time that there'll be 200 million visitors, so they're building another airport to absorb that growth. So, it's that long-term planning of infrastructure that's so important for Russia in the future - to keep growing its inbound tourism market.
LAKE: And, David, what's the potential ultimately if they do get it right, if they do make the right kind of investments? What kind of potential are we talking about for tourism?
SCOWSILL: Well, potential is enormous. From an employment perspective, it employs about four (AUDIO GAP) Russians now which is about 16 (ph) percent of the workforce. It accounts for about 16 percent of the economy, and gradually it'll overtake mining - it's already overtaken automotive, manufacturing and some other key industries. So the potential is somewhat limitless but it does leave that level of investment from the government in the infrastructure, and I guess also what's required is the government needs to start to be more and more flexible about removing visa constraints for people to go in and out of Russia. They've done some great things, they've removed visas, for example, between Turkey and Russia, and the numbers in both directions have gone up enormously as a result. So, visas is the other key thing for us to make it much easier for people to visit without a visa in the future.
LAKE: Time now for a check of our weather. Jenny Harrison is at the CNN International Weather Center. And, Jenny, I have to tell you this afternoon someone texted me that there tornado warnings for my neck of the woods which is highly unusual. It seems that extreme weather is still with us in the U.S.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: It really is actually, Maggie. It is fast moving out of the picture it has to be said. So there's some good news there. And actually the fog is lifting as well. This has been a big problem throughout much of this Friday across the Northeast in particular, really reducing visibility. So there've been lots and lots of planes obviously grounded because of that. You can see here we have but one tornado watch still around, but really that - most of this rain and the severe thunderstorms - they've already passed offshore. But, as I say, that fog has really had a knock-on effect. So, all of these airports - you can see - here, look at this - two hours, three hours/15 minutes in New York JFK and also Fort Lauderdale we've got, oh, five minutes (inaudible) don't worry about that. Forty-five minutes in Orlando. So, this is all because of that weather that's been heavy across the Northeast in the last few hours.
And when it came through certainly throughout Thursday, my goodness - look at what it deposited - just about everything apart from some particularly heavy rainfall. There was a wind gust in West Virginia in Charleston, 105 kilometers an hour. Look at this hail 4.5 centimeters in diameter. There were actually 13 tornadoes in total that reported - (inaudible) one there in Detroit and Illinois, and of course heavy snow across the North. So, 36 centimeters of that. So it was all coming down, but those weren't the only reports. Certainly, as I say, there were 13 tornadoes, there were well over 300 strong wind reports and over 50 hail reports as well. So, quite a lot of damage is probably done on the ground certainly with those storms as they came through.
This is showing you the rain obviously but also the snow and the visibility. Now, the interesting thing here - New York has just vastly improved - 14.5 kilometers, so that is good. You'll notice Boston is still .4 kilometers, so this is why we have had these delays throughout the day. All of that is moving very swiftly off the East Coast. It'll be done really in the next couple to three hours. And then throughout the weekend, a little bit of snow and some rain coming across the Midwest and maybe some rain showers just developing along the Gulf Coast states there as you can see. But the warnings will remain in place as we continue through Friday, just until we see the back of those very strong thunderstorms. Very warm too throughout the weekend. Look at these temperatures in Atlanta - 21 on Sunday - that's 70 degrees Fahrenheit. And you can see here in Washington, D.C., 17, the average is 9. However, Minneapolis - not for you I'm afraid - those temperatures well into double, double figures below the average. And actually this is the scene for next week. We've got the temperatures a good 10 to 15 degrees below the average, so make the most of the warm weekend.
The good news across the Northwest of Europe is that the winds have died down. They're still strong at times and so have the rain showers. So, a lot of these warnings have gone. There's about 150 warnings in place right now, some sort of flood warnings, severe or otherwise. You can see they do stay in place in Somerset throughout the next few days, but certainly around the Thames - they really have though gone down - those floodwaters. Here, just some more pictures -- I showed you a couple yesterday. It's just staggering to see the amount of water when it was at its height. This is what it looks like now, and in fact you can see from that man's flower (pit), it looks as if it's actually did the plant some good. But amazing to see that things really have improved
One (inaudible) area of low pressure working its way eastward throughout the weekend, another system is coming in across the northwest, but the big change again this week has been the systems are much further to the north. So, most of that heavy rain and those strong winds are actually not impacting the same areas across the U.K. So, the rain's coming through, heavy across the far north and the west. The winds will be strong but overall it is looking a lot better than it was certainly this time last week. Maggie.
LAKE: And that's what we like to hear. Jenny, thank you so much. Have a terrific weekend.
HARRISON: You too.
LAKE: Still to come on "Quest Means Business," meet the young boy who built a braille printer. And if you thinks it looks like it's make from Lego, it's because it is.
LAKE: Now, we have a great story to bring you - I absolutely love this. A 12-year-old boy has invented a low-cost braille printer made of Lego. Shubham Banerjee, a 7th grade student from California, created the machine using parts from a Mindstorm Lego set.
SHUBHAM BANERJEE, BRAIGO INVENTOR: I programmed all letters A through Z in this to be in braille. Suppose like a 'Y,' the letter 'Y'.
LAKE: The Braigo printer short for braille with Lego retails for $349. Standard braille printers can cost thousands of dollars. Shubham has made the design and software of the Braigo available for free on the internet. Before Shubham Banerjee left for school, I asked him about where he got his inspiration for the printer.
BANERJEE: So, there's this one flyer that appealed to me that said help the - give donations for the blind. And I had no idea about braille back then, and so then I asked my parents - it's just that I didn't know where - how do blind people read? So then they said Google it. So then I did Google it, and I found out all these things about braille and how much these braille printers cost. And so I thought it would be cool to actually combine my - combine my love of Legos with something actually helpful. So I could combine Legos and braille printer to make it a more - more effective and less costly braille printer.
LAKE: And you certainly seem to have achieved that. I'm going to ask you just to tilt down and show it to us again, and while you do that, you could - you could've sold this machine, this idea - and made tons of money off it. Instead, you put the instructions online so everyone could do that. Why?
BANERJEE: Basically I did that because I really want to help the blind people. I feel - I feel - I feel really bad for - I mean I feel really bad for the visually impaired, and I hope to do more actually. I hope - I hope to make more help things helping people that are on (inaudible).
LAKE: Well, it's an extraordinary sentiment for a man of your age. Can you tell me - have you been contacted by Google, by Twitter, by Facebook - anybody yet looking to hire you?
BANERJEE: Yes, I've been called every single day - so many people.
LAKE: (LAUGHTER). Do you have a plan for what you'd like to do in your life?
BANERJEE: When I grow up?
BANERJEE: Three options - what I want to be - a doctor, a scientist or an engineer.
LAKE: Do you have any role models? Who are some people you look up to and think, wow, I'd like to have that job or I'd like to be that person?
BANERJEE: Yes, I - two people - Steve Jobs and Bill Gates. They're really cool.
LAKE: Two people and two rivals. What do you like about them - why are they your heroes?
BANERJEE: They're so - they're so inspirational. They did many things for - many good things and you know, it's just - they're really cool.
LAKE: There's hope for the future, people. We'll be back with "Quest Means Business" after the break.
LAKE: The Federal Reserve has released thousands of pages of documents that go behind the scenes to its response to the darkest days of the financial crisis. It's put out word-for-word transcripts of its meetings in 2008 which show that Fed chairman Ben Bernanke was still not aware the U.S. was in recession at the start of the year. Once the crisis did hit, there was at least still room for some gallows humor on the day after Lehman Brothers collapsed. Bernanke's successor Janet Yellen is quoted as saying, "My contacts report that cutbacks and spending are widespread, especially for discretionary items." "Reservations are no longer necessary at many high-end restaurants. And the Silicon Valley Country Club, with a $250,000 entrance and seven-to-eight-year waiting list, has seen the number of would-be new members shrink to a mere 13."
And that's "Quest Means Business."