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At Least Nine Dead in Turkey Train Crash; Yemen Rivals Agree to Ceasefire in Strategic Port City; Alleged Russian Spy Maria Butina Pleads

December 14, 2018

xfdls QUEST-MEANS-BUSINESS-01

<Show: QUEST MEANS BUSINESS>

<Date: December 13, 2018>

<Time: 16:00:00>

<Tran: 121301cb.k27>

<Type: SHOW>

<Head: At Least Nine Dead in Turkey Train Crash; Yemen Rivals Agree to

Ceasefire in Strategic Port City; Alleged Russian Spy Maria Butina Pleads

Guilty; Apple to Spend $1 Billion on a New Campus in Austin, Texas; Police

in France Say Strasbourg Shooting Suspect has Been “Neutralized”; U.K.

Parliament to Vote on Brexit Deal in January; U.S. Market Gains Fizzle,

Trump Pressures Fed on Rates; GE Rallies, Launching “Internet of Things”

Company; Virgin Galactic Completes Successful Space Flight. Aired 3-4p ET

<Sect: News; International - Part 1>

<Byline: Richard Quest, Ben Wedeman, Clare Sebastian>

<Guest: Steve Adler, Karan Bilimoria, John Longworth

<High: At least nine dead in Turkey train crash. Yemen rivals agree to

ceasefire in strategic port city. Alleged Russian spy Maria Butina pleads

guilty. Apple to spend $1 billion on a new campus in Austin, Texas. Police

in France say Strasbourg shooting suspect has been “neutralized”. U.K.

parliament to vote on Brexit deal in January. U.S. market gains fizzle,

Trump pressures Fed on rates. GE rallies, launching “internet of things”

company. Virgin Galactic completes successful space flight.>

<Spec: Turkey; Yemen; Maria Butina; Apple; Austin; Strasbourg; Brexit;

Stock Markets; GE; Virgin Galactic>

<Time: 15:00>

<End: 16:00>

RICHARD QUEST, ANCHOR, QUEST MEANS BUSINESS: We’re in the last hour of trade on Wall Street, be twixt between and not sure. But look at the graph, even the gains when they were there were choppy. That’s the word for today, choppy because up and down, up and down. We’re up 26 as we go into the last 60 minutes. Interesting to see how that will continue.

Look at the Dow 30 and you see the good defensives are there. P&G, McDonald’s, all the usuals. We’ll analyze why and how as we go through the next hour, because this is what’s been driving the day. The State of the Union is uncertain. EU leaders are gathering and the continent is at a crossroads. We’ll analyze specific countries and their problems. From Japanese giants to Canadian diplomats, there’s no hiding from the Huawei scandal fallout. And Texas hold ’em. Apple is betting on a billion dollars from the lone star state. We’ll talk about that in the hour, because we’re live in the world’s financial capital. We’re in New York City where it’s Thursday, December the 13th. I’m Richard Quest. I mean business.

Good evening. There are growth forecasts being cut, there are protests in the street, and one member is leaving altogether and that’s just the start of the European Union’s problems and difficulties. The British Prime Minister is about to leave today’s summit of leaders taking place in Brussels, but it’s important to note that while she is there, she’s facing leaders who have all of their own agendas and their own individual problems. Join me over at the super screen and you’ll see exactly what I mean.

This is an overview of all the problems. Everything from Brexit to Ireland to rule of law in Hungary and government confidence in Poland. But if you narrow down on the big ones, if you like, well, first of all, the big issues at the moment, U.K. and Brexit. The U.K. is bearing the greatest weight of Brexit even though the Irish are heavily involved as well.

And Theresa May is appealing for help. Here she is at today’s -- this is today’s council meeting. But the warning from the British is don’t expect an immediate breakthrough. And just remember that deadline, Parliament is to vote by January, the 21st. The Irish Prime Minister, the Taoiseach says Brexit is hurting Europe, but he says it’s up to Europe, it’s up to the U.K. in all of this to find the solution.

(BEGIN VIDEO CLIP)

LEO VARADKAR, IRISH PRIME MINISTER: I think there’s one thing that’s undeniable. All these difficulties that Europe now faces, not just Ireland but all of Europe, we now face these difficulties because of a decision that the U.K. made to leave the European Union and that is the source of all these problems. We respect the decision that they have made, but it does mean that there’s a special obligation on them now to come up with the solutions.

(END VIDEO CLIP)

QUEST: From Britain to France, where months of protests are boiling over. The government may be calling for a halt. The police are focused as well on a manhunt for a Strasbourg gunman -- all of which creates difficulties for Emmanuel Macron. And in fact, it’s noticeable that when Theresa May did her tour of Europe the other day, she didn’t go to Paris, specifically because the difficulty is already faced by the President.

And then you go to Europe’s largest economy, it’s a leadership issue in Germany. Angela Merkel, the Chancellor, is handing over the party reins to Annegret Kramp-Karrenbauer known as AKK. Now, she will be tasked with the job of holding the whole party together, but it’s more serious than that because Angela Merkel isn’t seeking a new term or re-election as Chancellor, which begs the question, will AKK have the strength to take that particular role?

And then you get to again one of Europe’s largest economies, this time it’s a budget issue in Italy, where Italy is avoiding barely, barely avoiding E.U. sanctions and in the last 48 hours has agreed to lower the proposed deficit, now 2.04% of GDP, under the mass stripped 3%. The issue here of course is whether they can actually keep that money or they can actually keep to that promise. If all of that wasn’t enough, you’ve got the ECB today announcing it’s turning off the monetary spigot.

[15:05:00 ]

QUEST: QE is coming to an end. The ECB is also cutting forecasts. Mario Draghi who by the way, himself, leaves office in October of next year is warning of really very dark economic times ahead and the uncertainty.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: Overall, atmosphere has become one characterized by increased general uncertainty, which takes the shape now and then of different phenomena. I think this is at least considered by the government council one of the reasons, if not the main reason for this weaker data.

(END VIDEO CLIP)

QUEST: Now, those are some of the problems. I want you to get your phones or devices or whatever it is you happen to communicate with, quill pen if it will do the trick, go to cnn.com/join. We’re asking you which European country is in the most trouble. Is it the United Kingdom? Is it France or Germany? cnn.com/join and you’ll see the results building up on the screen.

All of these are the issues. They are serious, they are deep, and most important, they are not easy to solve, which is why we’ve got Fareed Zakaria. Good to see you -- who studies all of these things. When you look at the map, it’s a mess. Not the map, I mean the situations they face.

FAREED ZAKARIA, HOST, CNN: It is a mess and if you think one year ago, people were thinking of Europe as being the leader of the world, the western world. Macron defied the populist, Merkel was the leader that Donald Trump was unable to be, now you have a situation -- Merkel is a lame duck, Macron is deeply challenged, the British government is on the verge of collapse, Italy is on the verge of defaulting and perhaps by some accounts even quitting the Eurozone. No, it’s a mess.

QUEST: What’s gone wrong? Because the procedures put in place after 2008 and 2009, the six pack, the four pack, all of those deficit procedures, it was supposed to avoid many of these problems.

ZAKARIA: The fundamental problem still remains that Europe is still too wedded to an idea of austerity that is essentially a German idea, which cannot work in slow times. It cannot work in times of stagnancy. If you look a country like Italy, it has many structural problems. But if the Italian lira were to be able to be depreciated by 25%, it still has a powerful manufacturing sector in Northern Italy that would roar back. It can’t do that. It doesn’t have control over its own currency.

QUEST: But arguably it shouldn’t do that because that is a beggar thy neighbor policy. If they do that, they are only doing it at everybody else’s expense.

ZAKARIA: Precisely, but this is why the whole construct of the Eurozone, and I don’t say the European Union, where you have one monetary policy for the entire zone, but different fiscal policies has always been difficult. But that gets us back into the old Eurozone debate.

There’s something else going on here, Richard, which is in almost every one of these countries, what you are witnessing is deep discontent amongst a rural, less educated population that feels that the two great forces propelling these economies forward, globalization and the technological revolution, do nothing for them.

If you’re not in an urban center, if you’re not connected, if you don’t have capital, if you don’t have education, you’re lost in today’s world. And it’s the same stuff happening in America, it’s the same thing happening in France, the gilet jaune protest comes from that part of the country; in Belgium the government just fell. Again, the protests come from that part of the country. In Italy, the discontent is the same. As you know, in Brexit, the vote against Brexit -- I mean, the vote for Brexit is largely rural. What do you do with these people? That’s the problem.

QUEST: Over here, Poland and Hungary, where you have not just a populist movement on economic grounds like Brexit, but you have a right-wing authoritarian desire by electorates.

ZAKARIA: So in those countries, what you’re seeing is those people have taken over the government. And so if you listen to the Polish government, if you listen to the Hungarian Prime Minister, what he says is I’m speaking for the real Hungary, for the real Poland, which is to say the -- you know, the rural parts of the country, not these metropolitan elites. Everywhere you have mentioned except Germany actually, what you are seeing is a revolt against metropolitan overeducated elites who have run the economies in this view for themselves.

QUEST: How serious is this? The E.U. has always been EC and the EEC before it, has always been a group of squabbling countries. But do you get the feeling this is a litmus test or a watershed?

ZAKARIA: I think that it is, it’s serious, and here’s why. The technical discussion of monetary and fiscal policy that the E.U. has had forever and they always muddled through, frankly.

[15:10:05]

ZAKARIA: What is different this time is you are uniting left wing and right wing populism in an attack on the very structures of government, on the institutions. Look at Italy, the left and right have joined together. Look at what is happening in France. If you look at polls, the left-wing populists and the right-wing populists, both support the gilet jaune movement.

QUEST: Do you agree with the “Quest Means Business” viewer, always wise to go along with what the QMB viewer says. Look at this, which E.U. country is in the most trouble? 64% say the U.K., 18% say France, 16% Italy, only 3% say Germany even with the leadership problem. Do you agree with that?

ZAKARIA: Certainly true, the lowest is absolutely right, Germany is in the least trouble. Germany still has astonishingly low unemployment, they’re running surpluses. I’d say number one, don’t rule out Italy. Italy has not solved its basic problem. It has a very bad banking sector and Italy is too big to fail.

QUEST: We’re very glad you came to help us understand all of this. Thank you very much, Fareed.

ZAKARIA: Pleasure.

QUEST: Thank you. Now, according to those of you voting, most of you think that Britain is in the most trouble, which brings us to the Brexit question. If you missed this vote go to cnn.com/join. This time really it’s very simple. How much help -- how far should the E.U. leaders give help or sucker or change to Theresa May? None? Some? Or as much as she needs to get the vote through Parliament? The confidence vote that she won on Wednesday from her party meant she was still able to attend today’s summit as Prime Minister. She’s wrapping up the visit. It was aimed at getting what she called reassurances from the E.U. about the controversial backstop widely criticized during the debate in the agreement.

It doesn’t appear the E.U. leaders want to budge. France’s Emmanuel Macron said first they wanted more clarity from Mrs. May.

(BEGIN VIDEO CLIP)

EMMANUEL MACRON, PRESIDENT, FRANCE (Through a translator): We cannot reopen a legal agreement. We cannot renegotiate what has been negotiated for many months. We can have a political discussion in this context, and it is up to Theresa May to tell us what is the political solution to have a majority on this agreement.

(END VIDEO CLIP)

QUEST: John Longworth is the co-chair of the Leave Means Leave campaign advocating for pretty much a no-deal Brexit if that is necessary, joins me live from London. John Longworth, it is an unholy mess, everybody says that. What do you now want Theresa May to come back with to put to Parliament for that meaningful vote?

JOHN LONGWORTH, CO-CHAIR, LEAVE MEANS LEAVE: I’ll answer that question, but just let me correct your previous interview slightly. The U.K. has a population that’s 90% urban. This is not a rural issue in the U.K. at all. And it’s not the U.K. that’s in trouble, it’s the European Union that’s in big trouble. They have all the issues that you’ve already raised, whereas the U.K. economy is actually growing quite nicely.

We have very low unemployment by comparison with the rest of Europe. In fact the highest level of employment ever in our history, and wages are rising. So the U.K. is in a good position for the very reason that we’re actually deciding to leave the European Union, which is a basket case.

In terms of the U.K. and what we want the Prime Minister to do, we want the Prime Minister to do something that’s very highly unlikely she’s able to do, which is come back and have a renegotiated position on the withdrawal agreement. We have a problem in the U.K. that the Prime Minister, the Chancellor of Exchequer and the establishment who are remainers have actually negotiated a deal that they like.

QUEST: John --

LONGWORTH: But it’s a deal that’s actually a quisling deal which is a betrayal of the U.K.

QUEST: All right, John, when push comes to shove, if nothing else other than this deal is on the table with the backstop and all the problems, are you in favor of a no-deal Brexit?

LONGWORTH: Yes, absolutely. A no-deal Brexit will be the very best outcome for the U.K. apart from a free trade arrangement agreed before we leave.

QUEST: Your members in your previous existence or previous incarnation with the Chamber of Commerce, your very members used to say if we had a no- deal Brexit, our companies would be in trouble, just in time would be in trouble, uncertainty would be in trouble. How do you reconcile with that position you’re now taking?

LONGWORTH: That’s absolutely wrong actually. The fight -- the last survey the British Chamber of Commerce did, which actually the survey they did six weeks before the referendum, showed that the only category of company who wanted not to leave the European Union were those companies that solely trade with E.U.

[15:15:08]

LONGWORTH: Those companies that trade with the rest of the world or are domestic, which is 92% of our economy, wanted to leave. And actually leaving on WTO terms, which is the majority of our trade at the moment, would enable us to make trade deals around the world, cut tariffs, cut the cost of living, boost the economy, and all of those good things.

QUEST: The question of a second referendum or people’s vote, whatever we want to call it, please don’t tell me again about you can’t keep running elections or referenda is at the best of three. I mean, I heard the Prime Minister in the Commons. But let me put it to you another way. When the British people voted, they voted for an ideal. They voted for an idea. Now they know what it actually looks like.

In the same way that you don’t buy a house without knowing what it looks like and how you’re going to go through it, even though you generally want to buy a house, what’s wrong with them and saying this is now the deal, do you still want it?

LONGWORTH: Well, it would destroy faith in the institutions and democracy in the U.K. that’s what’s wrong with it. We don’t fear another referendum because we would win it again. But the fact of the matter is, the original vote said very clearly, and the Prime Minister said very clearly, it was the final decision. There was going to be no further deals, there is going to be no further referendums. The thing on the ballot paper said do you want to remain in the E.U. or do you want to leave? It did not say do you want a deal, it said leave. And that’s what 17.4 million people, the biggest plebiscite ever in the U.K. voted for. That’s why it’s wrong to have a referendum because it would destroy democracy in the U.K.

QUEST: John, we’ll talk to you again, please, in the future if this continues. You may be surprised our poll of how much help should the E.U. give Theresa May, you’ll not be surprised that 66% said none at all. Maybe you’re not surprised. Good to see you, John. Thank you.

LONGWORTH: Pleasure.

QUEST: Later in the hour, we’ll put the other point of view, Lord Bilimoria, who probably couldn’t be more diametrically opposed if it was possible. But he found it at Cobra Beer and he is campaigning for a second Brexit referendum and we’ll speak to him later.

Huawei was supposed to be the breakout tech darling of 2018. Now they might lose an important contract in Japan in a diplomatic spat over the arrest of their CFO is getting worse.

Also a giant leap for space tourism. Sir Richard Branson’s Virgin Galactic successfully took human tourists. Well not tourists, astronauts, well, we’ll explain the bus later in the program.

[15:20:00]

QUEST: The fallout for Huawei is getting worse as accusations that it poses security risk for countries reaches a fever pitch. Huawei could lose a major customer in Japan. Softbank says it is considering stripping Huawei hardware from its networks. Softbank instead would use Nokia or Ericsson’s stuff. Now, while a second Canadian is being detained in China, experts fear it could be retaliation for the arrest of Meng Wanzhou, the CFO of Huawei. She is accused of helping her company dodge sanctions on Iran. She currently faces extradition to the United States.

Paula Newton is in Ottawa. How angry are ordinary Canadians or the Canadian government about these two arrests in China?

PAULA NEWTON, CORRESPONDENT, CNN: They are piqued, but I have to tell you, Richardd, the anger is squarely on the shoulders of Donald Trump and not even so much on the Chinese. I mean, look, it’s rash, it’s impulsive, it’s impetuous on the part of the Chinese, but they are so angry about this executive being arrested by Canada at the behest of the United States, that right now Canadians know that it is Donald Trump who’s getting Canada and putting them squarely in the middle.

The issue here all came to the fore a couple of days ago in an interview when Donald Trump said, yes, this is in fact political because if I can negotiate a trade deal with China, I may intervene in the arrest of the CFO. And that completely went against everything that Canada had said about this and more than that, Richard, it goes against the rule of law in both Canada and the United States.

Listen, at the end of the day, China said this arrest was completely political and Donald Trump proved them right.

QUEST: If that’s the case, what happens? Because it will be a judge in Canada, a Federal judge in Canada that will have to rule on this -- on the extradition. How much of this politicization of the arrest will weigh into a decision?

NEWTON: It will weigh heavily right now. Donald Trump has basically strengthened the hand of Huawei in trying to get this executive to be freed. The Canadian authorities, the Canadian foreign minister, Chrystia Freeland, told us yesterday, look, the Huawei lawyers, the defense lawyers in Canada are perfectly capable now of bringing forward that argument themselves.

She warned Donald Trump that this should not be politicized, although she wouldn’t name him. And then, than that, remember, Richard, as you just pointed out at the end of the day it’s actually not even the judge that gets to rule on the extradition, it is the Attorney General of Canada. I caution everybody, though, these extradition hearings can go on for years. Likely this will be resolved politically, again, before it will be resolved judicially. But in the meantime, Huawei really caught in the middle of it here, as is Canada. The message to allies is do not get caught in this crossfire between U.S. and China on trade if you can at all avoid it.

QUEST: Paula, good to see you, ma’am. Thank you very much. Adding to the mounting tensions between the U.S. and China, “The New York Times” is reporting that Washington believes hackers working for Beijing are behind the massive breach at Marriott. Five hundred million Starwood accounts were hacked since 2014. They stole phone numbers, e-mails, passports and credit cards.

Samuel Burke is in London. All right, Samuel, why would China want to hack the reservations and interests of Marriott Hotels unless they were wanting to make a reservation themselves?

SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT: The same reason that every big tech company is in business. It’s all about the data. There are many experts who believe that if this is true, the way “The New York Times” is reporting it, that this can be traced back to Chinese working for the Ministry of State Security, that that data could be used to figure out information maybe about diplomats, maybe about competitors, get into people’s e-mail accounts and figure out information that could be of great use both to the military in China.

But I think it’s important to note here, Richard, that this again has all become so murky. Just in the way that Paula was painting the picture in Canada of the trade war, getting mixed in with so many other points of international security and marksmanship, that’s the same thing that’s happened as a result of all of this.

QUEST: Okay. I’m sorry, not letting you get off the hook on this one. Those 500 million reservations or details, what does China do with them? I mean they are hotel details. Even if they get a credit card detail, what use is it to them?

[15:25:01]

BURKE: Well, remember, I always say on “Quest Means Business,” you can change your credit card number but can’t change your Social Security number. Sometimes it’s just the little things on these websites like a Marriott where you have your loyalty card, what street did you grow up on? Well, that could get you into another account and if they could get into the e-mail account of a top executive in the United States at a top firm to figure out to figure out proprietary information, that is where it could be key.

QUEST: Right. But, if you’ve got 500 million of them, how do you sift the wheat from the chaff so that you’re getting only 200 or 300, maybe 1,000 of that 500 million that you’re interested in?

BURKE: The number might be even more than 500 million. Some cyber security experts we were talking to, if I can just put up on the screen, if you look back, this hack actually happened in 2014, Richard. They say this was one of a major string of attacks. Marriott, U.S. Office of Personnel Management, the U.S. Government, Anthem Health Insurance. We could be talking about way more than 500 million.

You go, you organize it just like the big tech companies do, and then you sift through and you find the ones that are of most value to you. It’s casting the net very wide hoping that you get one, two, maybe a dozen that are of value. Of course the Chinese have always denied anything like this and you have to remember, the Chinese accuse other sides of the same. I talked to Jack Ma once of Alibaba and he talked about the tens of thousands of hacks actually that Alibaba faces each day, so tensions are very high in both sides here.

QUEST: Samuel, thank you for very much. Good to see you, sir. As we continue tonight on “Quest Means Business,” from the Silicon Valley of California to the Silicon Hills of Texas. Austin is being served up by a big bite of new Apple jobs. The city’s mayor will be with me after the break.

Hello, I’m Richard Quest. There’s a lot more “Quest Means Business” in just a moment when I’ll be speaking to the mayor of Austin, Texas. He didn’t get the new Amazon HQ, but he has got one of the biggest rivals, $1 billion worth of Apples ...

[15:30:10]

(COMMERCIAL BREAK)

[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: In a moment when I’ll be speaking to the mayor of Austin, Texas. Now, he didn’t get the new Amazon HQ, but he has got one of the biggest rivals, a billion dollars worth of Apple’s all due to arrive.

And Sir Richard Branson celebrating a new Virgin Galactic tests whiles commiserating about Brexit. You’ll hear him in just a moment. As we continue, this is Cnn, and on this network, the facts always come first.

At least nine people have been killed and dozens injured in a horrible high street train crash in the Turkish capital at the start of rush hour. The train collided head on with a maintenance vehicle at an Ankara station, causing part of a bridge to collapse onto two carriages. Authorities have now launched a criminal investigation.

There’s a potential breakthrough in the Yemen peace talks after more than three years of war, days of negotiations brokered by the U.N. Representatives of Yemen’s internationally recognized government and the Houthi rebels agreed to a ceasefire in the strategic port city of Hodeida. They also agreed on a plan to swap prisoners and to hold another meeting in January.

An accused Russian spy has signed a plea agreement in a Washington court and then pleaded guilty to conspiracy. Maria Butina has also been helping investigators, revealing her efforts to infiltrate conservative U.S. political groups. A Russian foreign ministry spokesman tells Cnn Butina took the plea in other words to survive.

Apple is making headway in its plans to create 20,000 American jobs over the next five years. And Austin, Texas, is the big winner. Austin already has the largest Apple offices outside of Silicon Valley. Now, it’s getting a new billion dollar campus, with a capacity of 15,000 workers.

Apple is going to join Dell and Whole Foods which each have their global headquarters in Austin, and for a good reason. In time, Apple will trump them both and become the city’s largest employer. It’s a lovely place, great food, wonderful people and high academic standards with UT Austin being there.

Austin’s Mayor Steve Adler joins me now. Mr. Mayor, congratulations on getting the Apple jobs. And before we talk about what benefit it will bring to your city, how much do you think they give back or the tax breaks, the sweetness, whatever we call them, how much do you think is going to cost Austin?

MAYOR STEVE ADLER, AUSTIN, TEXAS: You know, it’s not going to cost the city of Austin anything. We’re not giving any incentives associated with this project. Williamson County has taken the lead and apparently they’re giving a tax abatement for about 15 years.

The state has a fund, and I think about $15 million is coming out of that fund, but the city of Austin is just expanding on the prior relationship that we’ve had with Apple.

QUEST: How competitive, as best you know, was it to get this, bearing in mind that Apple already has a sizeable facility in the city?

ADLER: Well, you know, we certainly expect that it was competitive and that Apple looked at lots of different opportunities. But what we offer here in Austin is a great quality of life. It’s a beautiful city, in addition to your list, the music is pretty good in Austin.

We have a real skilled workforce with the university of Texas and an environment -- Apple, I think knows that it shares a real creative spark with the city of Austin and a commitment to do big things. So we’re just - -

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