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QUEST MEANS BUSINESS

Al Qaeda Claims Credit For Christmas Day Terror Attempt

Aired December 28, 2009 - 14:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: A new threat to airline safety. What it means for you and for the airline industry.

An end-of-the-year push, stock markets climbing, will they keep their year-long highs.

And a year of big bonus chaos, and groveling apologies, the banks sink 10 percent. We need to know what is next.

I'm Richard Quest. The start of a week, but I mean business.

Good evening, tonight airline security in the spotlight. It follows the attempted terrorist attack on a U.S. plane to Detroit. The U.S. now admits there were flaws in air security that allowed the passenger not only to board, but also to board with explosives.

So, passengers around the globe facing tougher measures and experts warning that tighter security could depress business travel demand. All this on an industry that has been wracked and ruined by high costs, recession and security risks.

We need to put this in perspective. Exactly what has been happening over the last couple of days and the sort of measures that have been in place? It all came about after Christmas Day, night. When the American authorities, the TSA, basically required extra screening regulations. Now, the TSA said that what it was very keen on was the patting down of passengers, they wanted baggage to -hand baggage to be opened, they wanted a lot more in-depth, at the gate, what is known as the last point of departure, searches, before passengers were allowed on the plane.

So far, so good. That was part of the restrictions. But the directive which, has been widely leaked on the Internet, from the TSA, went further than that. There were lots of measures onboard the aircraft. For instance, it required that people be remained seated in their seats for the last and final hour; blankets, and no personal items in your lap, during that last hour. Things like the air show, that sort of display where you see where you are. That was not to be put on anymore. All these things. Anything that would give any idea of where the aircraft was, over the United States. All those things have changed.

So those are the airport regulations; the measures on board. But of course, in the last few hours, in the last few hours, some of those have been eased off. Not before damage was done to airline stocks. Delta down 3; Continental down, AMR, not surprisingly perhaps, and US Airways also down very sharply. Stocks that have been very badly damaged. So, with all these new restrictions, the affects have been, of course, the West bound passengers to the United States to be badly delayed.

Allan Chernoff, now, is in Detroit to bring us up to date.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SR. CORRESPONDENT (On camera): Security here at Detroit Metro Airport is particularly tight in the aftermath of the Christmas Day attempted bombing. We're told that there are undercover agents on the premises, as well as specialists in behavior observation, trying to prevent any further incidents here.

Passengers have been arriving well in advance of their flight. Many we have spoken with, here more than three hours in advance of their domestic flight, partly in anticipation of that tight security. But many passengers say they are more than happy to deal with that extra precaution.

UNIDENTIFIED FEMALE: I am feeling OK, actually. I'm not too concerned, you know. Because they are taking precautions and especially like, with the guy with the food poisoning, I mean, you know that was -they took that seriously, even though it happened to be nothing.

CHERNOFF: You are good with that?

UNIDENTIFIED FEMALE: Yes, yes, I'd rather be safe than, you know, that they take the extra precautions.

CHERNOFF: Indeed, yesterday's false alarm shows how security personnel and airline crews are very much on edge. It was the same flight, Northwest 253, from Amsterdam to Detroit, and a man with a same description as the Christmas Day bomber, a Nigerian man in his twenties, he was in the bathroom for much of the flight; would not return to his seat when the flight attendants requested that he do so. As a result the pilot called in law enforcement, they met the plane when it arrived here in Detroit, but it all turned out to be a false alarm. The man had food poisoning. Allan Chernoff, CNN, at Detroit Metro Airport.

(END VIDEOTAPE)

QUEST: So, now the search is on to find a more effective way of basically searching and scanning passengers before they board aircraft. Whole body scanners can detect the type of explosives the Nigerian man allegedly had on his body. There are only 40 of those machines at U.S. airports. U.S. Joe Lieberman is chairman of the Homeland Security Committee, plans to investigate why so few there are. He says privacy concerns are minimal compared to what could have happened on Christmas Day.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (I), CONNECTICUT: Our Homeland Security Committee is going to hold a hearing in January on two questions that come off of this case. The first is why are we not using full body imaging scanners more. These are different than the magnetometers we all go through. They basically look at an outline of your body and can pick up anything that you have on you, particularly hidden stuff, like these explosives.

(END VIDEO CLIP)

QUEST: Now so far so good, but privacy advocates are calling the body scanners a virtual strip search, because quite frankly, they leave very little to the imagination. As CNN's Brian Todd explains to us tonight.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: Already used on more than a million passengers abroad, these special X-rays can catch all kinds of contraband.

PETER KANT, RAPISCAN SYSTEMS: Regular weapons, guns, knives, box cutters and the like, but also unusual types of weapons, explosives, liquid explosives, gels.

TODD: The images will look like this, outlines of the body, not in detail, but weapons and other items do show up. This technology has been very controversial. I went through a so-called back scatter machine. I was advised that if I didn't want my private areas shown, I should put a metal plate in my pants.

I stepped just in front of the machine, turn around, in just a few seconds the monitor displays my humble contours. Now in this test, I'm playing the role of a would-be terrorist. I try to hide a plastic lipstick container in my vest pocket, busted. I sneak a sports drink bottle, busted again. How about wires in a sealed sandwich bag, hidden in my sock. On the monitor they show up on my ankle.

But the machines have limitations. When I pour water into a sealed sandwich bag, place it inside my beltline, and in a sock, you can barely see it. But one company behind this technology says trained screeners would detect it, and the Transportation Security Administration says they have other methods to detect liquids. When this came out, privacy advocates called it a virtual strip search. And they are not much more satisfied with the new technology.

MARC ROTENBERG, ELECTRONIC PRIVACY INFORMATION CENTER: Essentially, they are putting a digital fig leaf on the image, this protects the image from what the operator will see, but the machine itself can still record all the detail and store that information for use at a later point.

TODD: A TSA official tells CNN there won't be any hard drives to store the images. And says no one will have access to pictures without the so-called fig leaf on them. From one passenger tested on the older machines?

UNIDENTIFIED MALE: I've been through it over in Europe and I didn't mind.

TODD: In Phoenix, a TSA official tells us the machine will be only used if more than a metal detector is required. And passengers will then get a choice between those machines and pat downs. Brian Todd, CNN, Washington.

QUEST: Now, of course, the business traveler amongst us, and the regular ones, on board planes. We are asking your views, @RichardQuest, uh, Quest@CNN.com. Those are the ways. What do you think in this balancing act between privacy and security. A couple that have just come in the Twitter line.

Gerald Price, "For me security is much more important than personal privacy. Use that scanner!"

And MysteryFan: "Security should be the top priority. I would not object use of scanners, as long as it does not show body parts details. The problem, MysteryFan, as you saw in Brian Todd's report, is that it does show just about anything -anyway, it is all about whether or not security comes over privacy. Just as the airline industry was on the cusp of some sort of recovery, some experts are warning tighter security measures could deal it another heavy blow.

Robert Mann is the president of R.W. Mann, an airline consulting company. He joins me now via broadband, from Port Washington, in New York.

Robert, many thanks for joining us. We saw the market was down in airlines stocks. We know that there were going to lose billions last year at net. So, Robert, I'm wondering, is this another shoe to fall and to befall the airline industry?

ROBERT MANN, R.W. MANN & COMPANY: Well, I think in my 30 years in the business there has always been something. I think today's fall actually is more likely related to the rise in oil prices, but I'm sure there is some component of investors concerned about the impact security measures may have.

QUEST: The one thing that surprised me is the new measures that we introduced on Christmas Day, and they are already being relaxed to some extent, they were very much considered measures and there wasn't anything like the panicked response that we saw four years ago with the liquid and gels.

MANN: Well, I wouldn't necessarily agree in the sense that I think the responses were predictable. In the sense that in the say way that after the Richard Reid incident we all had to take off our shoes, but the responses here are essentially take everything away from our laps and to take away any objects that could be used in the last moments of flight.

The question, though, is what the issue of the last hour of flight or the first hour of flight, would we rather have these issues occur in the middle of the Atlantic or over Detroit and a parking lot?

QUEST: That is a very, very good point.

Back to the airlines themselves. The airlines have spent a lot of the last six months recapitalizing themselves, spending money -raising money I should say, clearing up their balance sheets. They are in a better position to weather this sort of crisis, aren't they?

MANN: They are. The industry has, I would say, past the cusp of greatest concern and they are in the process of restructuring for what is hoped to be a, you know, relatively strong resurgence in 2010, at least in the U.S., internationally I think it may take another year.

QUEST: As you look at the major carriers within the U.S., do you see that they stand to loose out, in terms of passenger traffic to overseas carriers. I mean, traditionally give a higher level of service, and perhaps are more likely to be slower, or at least restore some of the amenities once this crisis abates.

MANN: Well, the U.S. flag carriers are behind many of the foreign carriers in terms of the hard aspect of the product, the in-flight seating configurations and whatnot, and have been, frankly, for the last decade. They are starting to come up even on some of their new aircraft, but frankly, they just aren't delivering enough new aircraft to make that a meaningful change. There is also the issue of software, where frankly, the foreign flight crew simply do a better job.

QUEST: Finally, Robert, there's never a good time to have a security scare. That much I think we can all agree on. But if you did have to have one, is now better than it would have been earlier in the year?

MANN: I think occurring at a time when the majority of travel is leisure customers probably has the smallest impact on business travel revenue, which is really critical for network airlines. And we'll have to see how quickly these sorts of new security measures are either moderated or relaxed and whether or not they have a lasting impact on business travel. That would be the real concern of the industry.

QUEST: Robert, we need to leave it there for the second, because I have some breaking news I need to report. Many thanks, Robert Mann, president of R.W. Mann, good of you to join us on this.

This is the breaking news, which I'm going to read straight from the CNN News Desk.

Al Qaeda, in the Arabian Peninsula, has claimed responsibility for the attempted Christmas Day terrorist attack on an inbound international flight. Saying, and here it is, this is perhaps the crucial bit, saying it was in retaliation for alleged U.S. strikes on Yemeni soil.

So, that Yemen connection, that allegedly Mutallab had been to Yemen, after leaving Dubai, London and going via Yemen, before going to Nigeria, suggests there may be something in this.

I'll read it one more time, just for those of you who are just joining us.

Al Qaeda in the Arabian Peninsula has claimed responsibility for the attempted Christmas Day terrorist attack on an inbound international flight. Saying in it was in retaliation for U.S. strikes on Yemeni soil.

When we have more on that we will bring it to you. Fionnuala Sweeney is at the CNN News Desk.

(NEWS BREAK)

QUEST: When this program returns we revisit the financial roller coaster of the past year with Ralph Silver. The highs, the lows, and the bankers who lost bonuses along the way.

(COMMERCIAL BREAK)

QUEST: The markets in New York are open and they are doing business. Alison Kosik is in New York. Joins us now.

Alison, we are very much hoping that the year might end up on a much more positive note than it certainly started.

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Yes, I mean, sure that is what we all want right, Richard. And a lot of it is going to depend on consumer spending. The retail is definitely in focus today. We are getting the first hard figures on holiday sales today, Richard.

They are out from MasterCard spending polls. And they show that retail sales were up 3.6 percent from the beginning of November through last Thursday. That is comparing with a 2.3 percent drop from last year. And if you go ahead and adjust it for an extra shopping day, between Thanksgiving and Christmas, the actual number was closer to a 1 percent gain.

Still, the report is showing that retailers managed to avoid a repeat of last year's disaster, even amid tight credit and double-digit unemployment. And as a result we are seeing solid gains for the big retail stocks. Shares of Macy's and Amazon.com are both gaining more than 1 percent. But retailers are going to have more challenges going forward Richard. And they are likely to have trouble luring shoppers back into the stores in January with inventory lean, after the holiday season.

Also, keep in mind, a market note for you, that movements in the markets this week are going to be a little exaggerated because of very light volume that we are having. Many investors, they are on vacation, others are focused on the upcoming New Year. But overall it has been a really good year for stocks with all three major averages opening at their highest levels of 2009 Richard. We'll see if that can continue into 2010. Back to you.

QUEST: Don't touch any buttons and do any damage before the end of the year. Many Thanks to you, Alison Kosik.

KOSIK: Won't do it.

QUEST: Joining me from New York.

KOSIK: Sure.

QUEST: Now the European markets. London, of course, was closed because of the Boxing Day bank holiday, Boxing Day was on Saturday, so of course, that comes over onto the Monday afterwards. That is the normal way in which this is done.

Shares tracked further, along with metal and oil prices. You have heard, of course, that oil prices were higher. Without London, things did look a little bit different. But these were the few major markets. Let's start over here, with the Xetra DAX, over in Frankfurt, where banks were in demand, carmakers like Volkswagen were up 1 percent, BMW, was up, Eon (ph) was up. The markets by and large, a solid session, nothing terribly exciting, except in one regard. Quest, you buried the lead, as they would say. We are over 6,000 on the Xetra DAX. So 6,000 is a position that will be considered a psychologically important barrier and we are over it at the moment.

Let's come over this way, let's put a fun and games into there. Let's have a look at the Zurich SMI, ringing the changes into the New Year, as it is nearly here. The Zurich SMI is up to 6591; Credit Suisse was up 1.2, Luxury Goods Brands were also higher.

And finally, the Paris CAC currant, interestingly, 4,000 could be an interesting level to see if it could reach that between now and the New Year. Tomorrow -on tomorrow's program I will update you on exactly where all the markets stand in relation to their year-end beginning and closes.

We must turn back, though, to these development about the announcement of responsibility for the Christmas Day attack. A branch of Al Qaeda in Yemen says it was behind the thwarted attack. Editor Octavia Nasr joins me now, on the line, from the U.S.

Octavia, can you hear me?

OCTAVIA NASR, SR. EDITOR, MIDDLE EAST AFFAIRS: Yes, Richard, I can.

And it is a statement that was posted on the radical Islamist sites that we monitor on a regular basis. It does claim responsibility. It says Al Qaeda in the Arabian Peninsula was behind this attack. They hailed the man as a brother, whose heroic action, they say were successful. They did hail him as someone who was able to pass through security with the explosives. They also say that these are new kinds of explosives that they were trying to test and they tested successfully, the statement says.

This is a statement that was issue on Saturday, it says. We only saw it today. It posted just a few minutes ago. And it does indicate, as you suggest, that this is an Al Qaeda group in Yemen and Saudi Arabia. They have been working very closely of late. The same explosives were used in August in a failed assassination attempt in Saudi Arabia. It was also a man that came from Yemen to carry out that attack. So, this story is developing quite interestingly. And this claim of responsibility, although it doesn't carry a name, in particular, it does carry the name of Al Qaeda in the Arabian Peninsula, totally taking credit for the attacks and promising even more, Richard.

QUEST: Octavia, let's put this in language that maybe this program understands, though, being a business program. You know, we talk about Al Qaeda, but Al Qaeda is not some sort of corporate organization is it? You know, with the head of this and the head of that. It is an amorphous group, with different bits and different parts, and different divisions, if you like. So, I'm wondering where would something like Al Qaeda in the Arabian Peninsula fit in to that structure?

NASR: You are absolutely right, Richard. Al Qaeda is nowadays is more like a franchise. It is not centralized anymore, like it used to be, prior to 9/11 2001, or shortly after that. It is now localized. So you have for example, Al Qaeda in the Arabian Peninsula, that involves Saudi Arabia and Yemen. You have Al Qaeda in the Arabian Maghreb, that involves North Africa. You have Al Qaeda in Libya. And Al Qaeda in Iraq. And basically, you have Al Qaeda proper, which is believed to be in Afghanistan and Pakistan, and they work closely with Taliban.

And each one of these groups, for us, for people who monitor these groups and monitor terrorism on a regular basis, we look for signs. We have ways to identify them, to vet them, and to understand what they are doing and what their claims mean.

In this case, this is, it seems, that this is an attack in what they are saying is a direct response to the U.S. involvement in the region and basically they are saying as long as Americans still force (ph) their leaders, in their presence, in the Arabian Peninsula their attacks are not going to end, Richard.

QUEST: I need to let you get on with your newsgathering duties, Octavia, but before I do, perhaps the most tricky part of this is, this admission or claim of responsibility, we are giving credence to this, and credibility to this, is that right?

NASR: We are, but just because we monitor these sites on a regular basis, we know when to give credence and when not to. In this case, we had lots of indications, really, pointing us to the direction of the Al Qaeda in the Arabian Peninsula, Saudi Arabia, Yemen, Dubai, we have lots of elements that were pointing in that direction already. And when the announcement came that there is a claim, or a statement, we guesses that this was going to be a claim of responsibility.

This group, in particular, Al Qaeda in the Arabian Peninsula, has a very short turn around time when they attempted to assassinate a royal in Saudi Arabia. They claimed responsibility right afterwards and gave details of the attack. They did the same thing in this case. So, we have no reason not to believe it.

But as always, CNN cannot authenticate these claims, because they are posted on the Internet. And they are not attached to a person, they don't have an audio attached to them, or a video attached to them. It is just a statement posted on the Internet. But it comes from a site that we usually monitor that carries messages from Al Qaeda, and statements and videos, Richard.

QUEST: Octavia, many thanks. Octavia is our senior editor Middle Eastern Affairs and putting a lot of perspective into that development. The major development of the afternoon.

I'll be back with more in just a moment. This is CNN.

(COMMERCIAL BREAK)

QUEST: Welcome back. Speculation over Apple's latest gadget is pushing shares higher. Right now they are up about 1.5 percent and on course for a new record. Over the year, the tech giant share price has more than doubled. Stocks hit a record on Thursday, closing just above $209. Now, (UINTELLIGIBLE). If you bought at the beginning of the year, you are doing very nicely by the end. The ride is being fueled by the buzz on its latest blockbuster.

People in the know, say the new device is shaped like a tablet. Think a bigger version of the I-Pod Touch. Gadget blogs are dubbing it the I-Slate, after Apple registered some web space with that name. California- based computer company is keep stum, for the moment. Love to - is that a technical phrase? But an announcement could come as late as January. And frankly, if you got in, in February and you got out now, I suspect you can buy your Apples and pears yourself.

Much of the anticipation for Apple's new device is fueled by the success of I-Phone. Not everyone, though, is a fan of this. Atika Shubert, now on where the I-Phone is losing ground, and to whom.

(BEGIN VIDEOTAPE)

ATIKA SHUBERT, CNN INT'L. CORRESPONDENT (On camera): Welcome to Indonesia's gray market in mobile phones. This is a pretty typical mall. Kind of an electronics bizarre with stalls everywhere selling the latest in mobile phones at cut-rate prices. And it is pretty clear who the market winner is. BlackBerry, they beat the I-Phone hands down. In fact, telecommunications research groups believe that there are five times as many BlackBerries sold as I-Phones.

(voice over): This seller tells us it is because the BlackBerry caters to everyone from the top to the bottom, in between. And there is a greater variety of prices, he says.

(On camera): One reason is price. A BlackBerry is far cheaper than the I-Phone. In fact, the BlackBerry sells here for about $500. And I- Phone sells for about $900. It is especially cheaper if you buy one that has been smuggled in, tax free. In fact, a research group believes that most of the BlackBerries bought in Indonesia are bought at the gray market.

(voice over): All of my friends have BlackBerries, that is why I'm buying one," this customer tells us.

(On camera): Indonesia's Internet structure is also still quite patchy. It is expensive and not very reliable to get a broadband connection. But getting a mobile phone that is web enabled, is easy and cheap. And also, Indonesians love to chat and sent text messages. So they will like Blackberry's keyboard so they can quickly send messages out.

And there's only room to grow in this market. Research groups estimate that by next year, about half of Indonesia's 240 million strong population will have a mobile phone. Atika Shubert, CNN, Jakarta.

QUEST: So now to return to our breaking story. A branch of Al Qaeda in Yemen says it was behind the thwarted terror attack on the U.S. plane. Mohammed Jamjoom joins me now live from CNN Dubai.

And when we look at this -- well, you tell me, Mohammed. What -- when you look at this admission of responsibility, what do you make of it?

JAMJOOM: Richard, not surprised at all. I mean people have been speculating for a while that Yemeni Al Qaeda was involved in this. We've not yet been able to confirm with the Yemeni government that the suspect actually was in Yemen, although the suspect apparently told U.S. authorities he had gotten the weapon from there.

But Al Qaeda in Yemen is a huge problem. And Al Qaeda in Yemen, as is called Al Qaeda in the Arabian Peninsula, has vowed since the past year to be -- to carry out attacks against the U.S., against regional neighbors. They're very strong there. In the past year you have Saudi Al Qaeda, and Yemeni Al Qaeda merge. And its been -- its become such a concern for the U.S. In fact that you've seen people like General David Patreas and John McCain go and visit Yemen in the last several months in order to try to see what the government is doing to combat Al Qaeda there.

The U.S. is also offering up hundreds of millions of dollars in aid to the Yemenis. And many have speculated that in the past two weeks when the Yemeni government conducted air raids against militants and militant camps and Al Qaeda operatives in the -- that -- that actually the U.S. was involved in this. They have sent in drones. Now the U.S. has never admitted to this. But many thought they were.

So now Al Qaeda in Yemen is saying, "We are -- we are going back. We are taking -- we are taking responsibility for this attack. And basically this is a retribution for the attacks the Americans carried out against us."

Richard?

QUEST: The extent of the alleged attacks of the Americans, and -- and the duration of American involvement in Yemen goes back some way. So I -- I'm wondering, what do you think has caused this particular catalyst?

JAMJOOM: Well right now basically Yemen -- I mean I have spoken to a lot of Yemeni analysts in the past few weeks. People are really concerned about that country. There's been a lot of concern about Yemen for many years now. It's a very poor country in a very rich neighborhood. It's a very dangerous place. The borders are very porous. Militants are -- are attracted there. Its become a hub not only for Al Qaeda, but other militants.

And right now in Yemen you have three things going on that are very dangerous. You have -- in the south, you have a separatist movement. You also have Al Qaeda. And in the north on the border with Saudi Arabia you have the Shiite rebellion that's going on. That's been going on for several years, but has intensified in the past several months.

Everybody in the region and the U.S. are very concerned that this violence is going to spill over. And because of that, they're trying to take extra precaution, and they're trying to do more to make sure the Yemeni government is able to take the fight to these groups and prevail.

Richard?

QUEST: But -- but the interesting thing about this, Mohammed (ph), is that they have -- they -- or they would seemingly have been able to develop or adapt a new form of explosive weapon and succeed in doing the unthinkable, which is getting somebody on a plane who had all -- with a weapon -- who had already been through normal security procedures.

JAMJOOM: Well that's right. And you bring up a very interesting point about this. And I believe you spoke with this just a little while ago with Octavia (ph) and Asser (ph) as well. I mean Al Qaeda is claiming they have a new type of weapon. They've claimed this in the last several months as well.

There was an attack that happened against Saudi Arabia's anti terror chief (ph). I believe it was last August -- where they were able to get an explosive device past supposedly metal detectors and airports and get to -- basically in a room with the anti terror chief (ph). The man set the explosive off -- killed himself. Almost killed the prince. And -- and people wondered how was he able to do that.

Now this happened again. And in the statement that came out from Al Qaeda in the Arabian Peninsula, they're hailing the use and the invention of this new weapon. And so a lot of speculation about that. But yes, they are able to apparently come up with these new weapons, and people are going to be confounded by this. How is this happening, and how can they get this under control?

Richard?

QUEST: Wasn't this to a large extent the unspoken nightmare scenario? I mean you obviously deal with, you know -- I -- I deal with the airlines on one level -- on the commercial level and on the -- the travel level. You deal with security experts at a much higher level. And what they always seem to be saying is, "Look. Yes, we know this could happen." Well, guess what guys? It's happened. Isn't that really the case there now (ph)?

JAMJOOM: Oh absolutely. I mean people are -- are shocked by this. I mean they -- they were shocked when the -- when the attack that I had mentioned a few minutes ago -- when that happened in August when there was an operative that was able to get into Saudi Arabia, get into a room with a senior prince with the anti terror chief, and kill themselves, and almost kill that person.

And now they're even more shocked by this. And people are wondering how can all this be emanating from such a poor country like Yemen? I mean it -- it's going to put a lot of pressure on the Yemeni government in order to get this under control. But the experts and the analysts that I speak with say, "Look, there's not a lot more that the U.S. can do that they're not already doing."

And they're providing intelligence. They are also getting intelligence through Yemenis by the way from the Saudis. They're getting it from other regional neighbors. They're getting money. They're getting aid. And yet this problem persists. And it seems like it's going to persist.

I mean I've had several people in the past few weeks tell me they don't think that Yemen is collapsing. They think it's completely collapsed. I mean -- and they don't know how that country is going to keep itself together, and how the government is going to be able to keep these problems under control.

QUEST: You see when we talk about Yemen, we -- we do perhaps give more credibility to a country, and a structure of government, and a structure of authority than perhaps anybody rightly should give in that regard. Because if I understand what you're saying correctly, to describe Yemen as a failing or failed state is perhaps par forward (ph) and on the understatement (ph).

JAMJOOM: Oh, absolutely. I mean, as I mentioned, several people have told me in the past few weeks they believe that that state has completely collapsed, and there's not much that can be done in order to bring it back. That its -- its already gone beyond the brink. And the challenge now is if the U.S. is helping Yemen, what more can they do? You have this war on terror that's going on in Yemen. You have the Yemeni government coming out in the past few weeks and announcing, "Hey we're going to go after Al Qaeda in a big way."

There are these air strikes that have happened in which over 60 militants have been killed -- or at least those are the estimates given by the -- Yemen's government. The U.S. has said, "We're not involved in this. We're helping with intel. We're helping with money that we're giving to the Yemenis and their fight against terror. But we're not out in front on this."

A lot of people are speculating that the U.S. is out in front on this. And yet if this is happening -- and yet Al Qaeda is able to retaliate in this kind of a way, people are really scared. What does this mean for the future? What more is going to happen?

Richard?

QUEST: Mohammed, many thanks indeed. Lovely to have your interpretation on Quest Means Business tonight. Thank you very much for that.

Let's turn our attention, and get more on this. (Inaudible) international correspondent, Nick Robertson joins me now. Nick, so you know, you and I were talking earlier. And Yemen had been on the horizon. Are you surprised at the turn of events this afternoon?

ROBERTSON: No, I'm not surprised that there's a statement like this. I mean clearly Al Qaeda is taking hits in its -- in its operations in Afghanistan.

We've seen their -- their capabilities over the past few years diminish remarkably in Iraq. They need to boost their morale. They need to boost the morale of their supporters around the -- around the world. And they need to -- they need to recruit more young men to come and join their fight. So the fact that they would sort of jump on this Christmas day attempted bombing of this aircraft, it comes as no surprise.

What's going to be difficult to figure out is is it genuine? Can they genuine -- was this young man genuinely working if you will for them? They claim that they had tested this bomb before. That they knew they could get it on an aircraft.

What are they talking about? Where did they test it? Did they test it in the mountains or the desert? Or are they referring to that attack on the Saudi deputy interior minister back in August when a man wearing what appears to be a similar type of explosive set up with the same type of explosive -- PETN. Manage to get right next to the deputy interior minister -- the son of the interior minister in fact -- a Saudi prince -- and blow himself up. So is that what they're referring to? Is that where some of this credibility comes from.

The -- it's going to take terrorism experts, and -- and security officials around the world a little while to analyze what's been said here, and try and figure out how credible it is. But it is classic Al Qaeda though here, Richard. It's classic Al Qaeda taking something, and trying to use it to their advantage. Turning people against the United States, against Saudi Arabia, against Egypt, and against the Yemeni government.

QUEST: You see the interesting thing about this is that -- and I've heard you talk about this in recent days. The -- the modus operandi of this particular attack is different from the what has become clear -- the traditional Al Qaeda attack, which is large scale. And I -- I suppose one would pardon the phrase of their own version of shock and awe.

Now there is shock and awe in what happened here. But it's not quite the same thing. This was a single bomber in a single attack.

ROBERTSON: And this seems to be Al Qaeda trying to get below the radar. They're an organic organization that learns from their mistakes. They play the long game (ph). They don't give up (ph) on ideas. The whole aircraft blowing up over the Atlantic or the Pacific. Or now trying to do -- blow -- blow them up over the United States -- is sort of a long running goal for them.

Way -- the way they have changed it as you rightly say is to moderate it so you don't have, you know, ten plotters who were picked up in London planning to bomb seven aircraft with liquid explosives in 2006. Or back in 95 it was even more aircraft flying over the Pacific Ocean. They're refining it.

And it does seem in this particular case that one individual with a carefully concealed new type of explosive device that he was told how to initiate. But it seems he didn't initiate it very well, because according to the experts if it had gone off properly it could have blown a hole in the aircraft. That -- that -- that they do have -- that they do have a working mechanism here. And -- and getting it through under the radar with one person seems to be the way they're going right now, Richard.

QUEST: Now let's just pause for a second to talk about that -- that explosive device -- PETN. Because I understand, Nick, and I don't think I'm giving any secrets away. You've been looking into that, and we're going to see some reports from you later in -- in the day.

What have your -- what have you discovered about this? Because as I understand it, it's a First World War explosive that's highly unstable, and -- and has been sort of now become the weapon of choice.

ROBERTSON: You know, Richard, I think we're all going to be a little bit better educated about PETN over -- over the coming weeks and days. And I had my education earlier today. You know we've -- we've read in text books how it's unstable.

Well, guess what? I -- I watched an expert today put -- put a small few grains of it on a hard metal surface, and bang it again, and again, and again, and again with a hammer until it finally banged. His point being that you can wear this about your person, and you can bump into people, and you're not suddenly going to go off. That to detonate this particular explosive is you need to have a charge.

The other thing that we -- that we learned today in this -- in this case study if you will was just how much of a -- how much of a small amount can do a lot of damage. We looked at a -- an amount of this explosive that would fit into the -- just the top of my pen here. And that was enough to blow the hole in the side of an aircraft.

So -- so again, the learning here is it only takes small amounts. And we know that the -- the alleged bomber in this particular case had much, much more than what was fit -- what can fit in the top of my pen. And where he had it concealed as well. A -- a sort of place he's very unlikely to be searched.

QUEST: Nick Robertson, our senior international correspondent. Many thanks for joining us. And in the hours ahead you'll see Nick's report with the PETN, and the explosive force of a relatively small amount of that particular explosive.

We will have more Quest Means Business in just a moment.

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QUEST: (Inaudible) at the back. The Biz Clinic is now in session. And stops the world over (inaudible) stage a strong recovery in 2009. Many fair gains will be harder to come by in the next 12 months. Have we seen the end of the rollicking good times?

Our Asia Business Editor, Eunice Yoon, spoke to the experts about the global investment outlook on this week's Biz Clinic.

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YOON: Investment banker, Robert Rooks (ph), is mulling over a key financial decision. The avid art collector is at this auction in Hong Kong hoping to buy something to add to his portfolio.

ROOKS (ph): (Inaudible), wine, these types of things are really good long term investments. And if you look around you here where we are, I mean, some of these sorts of things are very good for financial investment for the future.

YOON: Now that 2009 is over, investors are thinking hard about their financial future. So what trends should you be tracking in 2010? First off expect interest rates to remain low.

(UNKNOWN MALE): It's this interest rate environment where people are getting no return on their cash, no return on their bank accounts. It means they're going to continue to look for yield.

YOON: Fund managers predict many people will hunt for higher yields in the faster growing emerging market.

(UNKNOWN MALE): The major trend I think you'll see is you'll see money coming out of the U.S. and Europe, and you'll get it moving into China and emerging markets. I think that asset allocation is definitely already taking place, and will continue to take place.

YOON: Brokerage firms, UBS (ph) and Credit Suisse expect the MSCI Asia X (ph) Japan index to hit 600 over the next 12 months. A jump of about 30 percent. Analysts also expect real estate to benefit by as much as 15 percent in cities like Hong Kong. Most believe the U.S. dollar will stay weak.

(UNKNOWN MALE): The U.S. dollar has become the new carry trade. It's like -- it used to be the Yen, you know. Sell the Yen and buy high yielding currencies. Well now it's the dollar.

YOON: When the dollar slumps, gold rallies. It hit mind boggling levels in 2009.

(UNKNOWN MALE): When the gold gets to $2,000 an ounce, I might go and buy a shovel and start digging up the ground myself. I -- I'm not a -- I'm not a big fan of, you know, of gold being the -- you know, the pit and the bull (ph) train, you know, forever. Gold has traditionally been a store of value -- a store against inflation. We don't have inflation right now.

YOON: Some people here think that we might be headed for a double dip recession. While it might look like we're on the road to recovery now, they fear that in 2010 the economy could contract again.

(UNKNOWN MALE): We have not seen a -- a resumption in the general economy. If you look at -- at consumer behavior -- if you look at -- at corporate behavior, you will actually see that credit of these two key components of -- of the whole economy has not been following through.

YOON: Doubts are likely to nag investors especially in the wake of the Dubai debt crisis.

(UNKNOWN MALE): There's going to be uncertainty in 2010. We are not sure what consumers are going to be doing. Are they going to spend without fiscal stimulus -- when they're still losing their jobs, and unemployment is still rising? That's a real challenge.

YOON: A challenge to keep in mind as you venture into the art of investing for the year. Eunice Yoon, CNN, Hong Kong.

(END CLIP)

QUEST: Now I was in Amsterdam over the weekend, and it was extremely cold as I was covering this particular story.

(WEATHER REPORT)

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QUEST: Now some of the tweets that we've been receiving on this question of body scanners, and whether or not you -- we should move to these body scanners that can take the whole body picture. But of course in doing so, privacy questions. You can see various bits (ph) that perhaps you wouldn't want strangers necessarily -- we see.

James Robins, double O (ph), they can see all my bits for all I care. As long as the dastardly thing does what it is supposed to do, and that is keep us safe. That seems to be the tenor of the views, but for example Big Pair (ph) says, "Within a few months stolen private part pictures will surface on the Internet." So it's not quite as clear cut as you might think.

Now whilst Al Qaeda has claimed responsibility for the attempted Christmas day attacks, one thing that is clear -- that machinery like you are about to see demonstrated could perhaps have prevented it from actually being used, or being -- or at least they could have seen what was involved.

Have a look at this demonstration of the new body scanner, and bearing in mind what you have just heard from those views between privacy and security where do you stand?

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HORDANG (ph): Since the incident in Detroit, all passengers going from Amsterdam to the United States have to be physically patted down, even though they might pass a metal detector. Now the airports say they have the solution which is the security scan. It's a scanning device that you actually physically walk into. Once the scan is completed, security personnel can check this screen to see exactly what I am wearing on my body, even though it might not be made out of metal.

Now Schipol (ph) Airport can't wait to put this machine on all its terminals, because they say that possibly it could have prevented an incident like had happened in Detroit. However there's one major catch, and that's privacy. This machine can see through your clothes using radio waves, and that's why the European Union is saying it doesn't comply with privacy regulations. And it should not be put on all European airports as of yet.

For CNN this is Here Hordang (ph) from Schipol Airport in Amsterdam.

(END CLIP)

QUEST: Privacy versus security -- it is the key issue. From Not So Fun (ph) who says, "Better safe than sorry." To Cops Port (ph) who says, "Stick to privacy, because Orwell (ph) is knocking at everybody's door, and no one's listening." Privacy versus security.

I'll have a profitable moment after the break.

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QUEST: So now it's profitable moment. So far the reaction by authorities seems to be measured. Not the panic response after the liquids and gel scare of 2006. Today planes are leaving Britain perhaps two hours late. The delays will get less as more people are employed to perform the new more thorough searches. And already U.S. is giving airlines discretion about how to implement some of the restrictions, for example, when they should remain seated.

This battle to keep us safe in the air is inevitably going to be one step forward, two steps back. After all, balancing the needs of security with actually making sure travel can function properly -- that is going to be the challenge of our times. Privacy versus security -- what's your vote?

And that's Quest Means Business for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I do hope it's profitable. Christiane is after the headlines.

END