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BP to Try New Way to Stop Oil Spill; Economic Crisis in Spain

Aired May 31, 2010 - 14:00:00   ET


MAX FOSTER, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Top hats, top kill, junk shot, next the containment cap. BP fights on against America's worst-ever oil spill.

Paying the price of austerity Spain looks into the political abyss as it tries to sort out its economy.

And in search of the sweetest returns, would buy an investment that pays dividends in chocolate?

I'm Max Foster in for Richard Quest, this is QUEST MEANS BUSINESS.

Good evening.

Forty-two days after the crisis began BP is vowing to start again. It's rushing to try a new way of containing or at least slowing the leak from its ruptured oil well in the Gulf of Mexico. But amid the furious planning on the Gulf Coast there is fury and there's despair, and an undeniable fear that even BP's next maneuver might not do the job.

You are looking at live pictures of the leak, a kilometer and a half under the sea. It is still dumping up to 19,000 barrels a day into the delicate marine environment. The Obama administration is calling it the biggest environmental disaster America has ever faced. BP is preparing to make another attempt to contain the leak. It will place a custom built cap over the broken pipe, first shearing it off to make a clean edge. Several previous attempts at closing off the gusher have, of course, failed.

Now the boss at BP is apologized again for the spill and what he called the massive disruption to the U.S. Gulf Coast. Tony Hayward says he knows BP will be battling to contain the oil for some time to come.


TONY HAYWARD, CEO, BP: The ultimate solution relies now on the relief well. There is no doubt that the ultimate solution is the relief well, which is in August. So, we have to be in the mindset of containment, in the sub-sea, containment on the surface, and defending the shoreline in a very aggressive way over the next couple of months.


FOSTER: So, it seems BP has given up on plugging the leak after failing to stop it by the procedure called top kill, the company's plan to cap the leak has never before succeeded, at least not as yet. To make matters worse, Tuesday is the start of the hurricane season, would you believe? Adding the danger of natural disasters to the man-made environmental catastrophe. Hala Gorani is in Louisiana. She joins me now.

You can see (ph) from that speech (ph), Hala, they must be just almost giving up hope, right?

HALA GORANI, CNN INT'L. CORRESPONDENT: Well, they are saying it is only to get worse. And importantly they're saying we're not against offshore oil drilling and that is understandable. Because about half of the local economy here depends on offshore oil drilling. We spoke to shrimpers and fishermen, and in fact, even a woman in charge of a commercial shrimping company. And she says, look, I wanted to give this business, I wanted to hand it down to my grandchildren, and I'm afraid that's not going to happen.

Now, you said it, BP is trying a new method. It wants to cap the leak. This is only a temporary measure. And here's the other worry, not that it won't contain the leak, but by sawing off a section of that riser pipe it will actually make it worse for a number of weeks before they are able to drill a reserve well, and that might happen in August at the very earliest.

Right now we're on a beach in Grand Isle, Louisiana. It is completely empty save for, well, it seems like a local family had decided to brave the elements and spend the day out at the beach. But what we're seeing here is the Louisiana National Guard digging a trench and filling it with bags filled with sand and water, hoping that when the tide is higher or if a hurricane hits, or if there is severe weather, that somehow this is going to stop the oil from actually washing up ashore. But when you see the size of the bags and the potential size of any waves, if there is severe weather, you wonder how that is going to work, Max.

FOSTER: OK, Hala, thank you so much for that.

We're going to cross to the U.N. Security Council, now, in New York, because the Turkish foreign minister is speaking on the Israeli situation.


AHMET DAVUTOGLU, TURKISH FOREIGN MINISTER: -to banditry and piracy. It is murder conducted by a state. It has no excuses, no justification, whatsoever. A nation state that follows this track has lost its legitimacy as a respectful member of the international community. The multi-nation, civilian flotilla, composed of a few ships and a total of around 600 people, from 32 countries, carrying humanitarian aide to the impoverished Gaza, was unlawfully ambushed early today.

The sole aim of this civilian mission was to provide much needed relief to the children of occupied Gaza, who have been under illegal and inhuman Israeli blockade for years. The ships were hardly a threat to the state of Israeli, or any other state, for that matter. Humanitarian aide was on its way to children who have been stripped of their opportunities to live as children and enjoy all the basic amenities that your and our children take for granted. These children do not know where their next meal is coming from. They either have no shelter or live in extremely deprived conditions. They receive no education. They have no future where the can contribute to a peaceful and stable Palestine and region.

Mr. President, the ships carry amenities and facilities such as playgrounds that would remind the children of their childhoods. They carry very basic needs like cancer medication, and milk powder to enhance child growth and health in the absence of milk proper. The international community has been a witness this humanitarian tragedy for years failing to act.

And today, this is where we are. Today we have observed true live coverage an act of barbarism, where provision of humanitarian aid has been punished through aggression in high seas, 72 miles from international seas. Today many humanitarian aid workers go back in body bags and Israel has blood on its hands.

This is not off the coast of Somalia, or in the archipelagoes of the Far East, where piracy is still a phenomenon. This is the Mediterranean where such acts are not the norm. This is where we need common sense. This is where civilization has emerged and flourished and where the Abrahamic religions took root. These are religions that preach peace and teach us to extend out hands when others are in need.

The use of force was not only inappropriate, but also disproportionate. International law dictates that even in wartime, civilians are not to be attacked or harmed. The doctrine of self defense, does not in any way justify the actions taken by the Israeli forces. High seas freedoms constitute one of the most basic rights under international law of the sea, including customary international law. Freedom of navigation is one of the oldest forms of international norms dating back centuries. No vessel can be stopped or boarded without the consent of the captain, or the flag state. The law permitting such action in exceptional cases is clearly stated.

Furthermore, any suspected violation of law on the part of the vessel, and its crew, on the high seas does not absolve the intervening state of its duties and responsibilities under applicable international law. To treat humanitarian aide delivery as a hostile act and to treat the aid workers as combatants is a reflection of a dangerous state of mind, with detrimental effects to regional and global peace. Therefore the Israeli actions cannot be deemed legal or legitimate. Any attempt to legitimize the attack is futile.

Mr. President, this unacceptable action was perpetrated by those who in the past had taken advantage of ships carrying refugees and those escaping one of the worst tragedies of the last century. They should be more aware than most of the importance of humanitarian assistance of the dangers and inhumanity of ghettos as the one we currently witness in occupied Gaza.

I am proud to be representing a nation that in the past has helped those in need and escaping extermination. After the act of aggression I have heard official statements claiming that civilians on the ships were members of a radical Islamist group. It saddens me to see that officials of a state stoop so low as to lie and struggle to create pretext that would legitimize their illegal actions.

However, the flotilla consists of citizens of 32 countries, all of them civilians representing many faiths, Christianity, Islam, Judaism and people from all creeds and backgrounds. It represents the conscience of the international community. It is a model of the United Nations. Therefore, this was an attack on the United Nations and its values. The international system has suffered a sharp blow and now it is our responsibility to rectify this and prove that common sense and respect to international law prevails. We must be able to show that use of force is not an option unless clearly stated in law. We must uphold our commitments and punish those who are in contradiction. The system must be set right, otherwise the trust of the people in the system, in their leaders, in us, will be demolished. No state is above the law. Israel must be prepared to face the consequences and be held accountable for its crimes.

Under the conditions any single chance that existed regarding peace and stability in the region has suffered a serious setback. The processes in place have been suffocated by this one single act. It seems as though Israel has gone the extra mile in order to negate any positive develops and hope for the future. They have become advocates of aggression and use of force. In view of all of this today, I call on the people of Israel to express their dismay regarding this wrongdoing. They must not allow another blatant action to once again present Israel an aggressor. They must take steps to reinstate their status as a credible partner and responsible member of the international community.

Turkey would like to see that Security Council strong reacts and adopts a presidential statement today strongly condemning this Israel act of aggression. Demanding an urgent inquiry into the incident, and calling for the punishment of all responsible authorities and persons. I call on this council to step up and to do what is expected of it.

We hereby expect for the following to be included in the decision. Israel must apologize to the international community and to the families of those who have been killed and wounded in the attack.

And urgent inquiry must be undertaken. Appropriate international legal action must immediately taken against the authorities responsible for and perpetrators of this aggression.

A severe sense of disappointment and warning must be issued by the United Nations. Israel must be urged to abide by international law and basic human rights.

The countries concerned must be allowed to retrieve their deceased and wounded immediately. The ships must be expressly released and allowed to deliver the humanitarian assistance to its destination.

The families of the deceased, wounded, NGOs and shipping companies concerned must be compensated to the full extent.

The blockade of Gaza must be ended immediately and all humanitarian assistance must be allowed in. Gaza must be made an example by swiftly developing it to make it a region of peace. The international community must be invited to contribute.

Mr. President, this is a black in the history of humanity, by the distance between terrorists and states has been blurred. Anyone that stands in the way of reestablishing dignity, and respect of the international world order will have to have to answer to world public opinion. It is incumbent upon us to show that all states are bound by international law and human values. Turkey is prepared to shoulder its responsibility in this regard. I am sure that this is our common goal.

In ending, I salute all humanitarian workers, who endeavor to provide relief. They are the people in the frontlines. I present my condolences to the families of those who gave their lives in this pursuit, whatever their background, their religion or ethnicity. I share their grief.

According to our Abrahamic tradition and my own belief, killing one human being is killing humanity as a whole. Yesterday humanity drowned in the international waters off the Mediterranean. Thank you.


FOSTER: That was the Turkish response at the United Nations, then, for the Israeli raid on a ship convoy. The foreign minister certainly made some very strong comments during his commentary there.

He said the ships were unlawfully ambushed by Israel. The sole aim of that mission, of those ships, was humanitarian aid. So, the ships were hardly a threat to Israel or any other state. He went on to say this was an act of barbarism on behalf of Israel. Israel has blood on its hands, this is according to the Turkish foreign minister.

And the attack was an attack on the United Nations and its values. Turkey wants an inquiry as soon as possible. It wants the ships to be released. He finished by saying this is a black day in the history of humanity.

We are, of course, expecting a comment or so from Israel, which we will be bringing you as soon as we get back. QUEST MEANS BUSINESS continues after this break.


FOSTER: Europe's stock markets seem to brush off Spain's downgrade this morning, avoiding a meltdown of Greek proportions is the big issue for Spain, right now, of course, and getting the finances right. Now, the prime minister, Zapatero, is loosing a lot of popularity off the back of all of this. Weekend polls showed the government would loose an election to the conservatives, if one was held now.

Now there has been a credit rating downgrade on the country, which has been worrying investors across Europe, and indeed, across the world. The latest blow Fitch, on Friday, cutting ratings on Spanish government bonds from AAA to AA plus. And says moves to cut the deficit may slow Spain's growth. To efforts to actually deal with the situation could actually making them worse.

Let's talk about the Spanish banking mergers, as well, another big issue. There is a rash to reform Spain's unstable banking sector. Twelve of 45 savings banks are in merger talks to pool their financial strength. And savings banks were heavily exposed to retail-state collapses as well.

The IBEX is down 22 percent this year. Spanish stocks hit by uncertainty around all of this. And the fell by 0.7 percent today, so dreadful, dreadful period for the stock markets, for the Spanish stock markets and for those around the world that are affected by this.

Let's bring in Fernando Fernandez. He is an economist at the IE Business School in Madrid.

Thank you so much for joining us. Let's just talk about the impact on the politicians of all of this. Because the politicians are trying to deal with the economy but every effort they make seems to be a backlash to them?

FERNANDO FERNANDEZ, ECONOMICS PROFESSOR, IE BUSINESS SCHOOL: Usually the reaction in the markets reflects the fact that the politicians have not been able to come up with a credible program, an economic program that has the support of a large majority of the parliament. If the government shows itself to be alone in the vote, on Wednesday, when the fiscal package was adopted, and that in itself, meant that the government was felt to be incapable of joining behind them sufficient political power to deal-to bring about the necessary structural reforms with the necessary strength and the necessary difficult decisions then it needed to be taken in the situation. This is the weak point in Spanish politics.

FOSTER: Yes, going into this, of course, the prime minister politically wasn't particularly strong anyway, as a result of the last election. But this is making him even weaker. So there is-would you say there is a power vacuum in Spain, which will in turn cause problems for dealing with the economy?

FERNANDEZ: Well, a power vacuum is too strong term. I wouldn't use exactly that term. What I do think is that the government has proven to be on its own unable to produce the necessary reforms. And it would certainly be very wise on their side to search for large political support by bringing into their reform package some parties in the opposition. Hopefully, the largest opposition party, the Party de Popular, or certainly a least the nationalist parties, the Basques and the Catalonians. Because otherwise, the thing it is not only that the government has to produce the necessary legislation, he has also to be able to implement the legislation and sustain enough political will in what will be certainly difficult times, in political terms, in Spain. And in order to do that the government does not seem to be perceived as strong enough to opt for what is necessary.

FOSTER: So, the very likely outcome would be that this government isn't going to last until the end of the term. They're not going to get their budget through either. So what does that mean? Could Spain be without a government in the next few weeks, few months?

FERNANDEZ: Well, it is very-I don't think it will be without a government in any sense, because first of all there is elections, what we call our terminal (ph) elections, regional elections coming up in October and November. The government will probably sustain itself and it will still be there for that moment. It will be the result of those elections that in political terms will determine the outcome. But even if the government is weak I think there is a consensus among the-well, there is a general feeling among the political, and the economic, and the business world in Spain that the measures that need to be taken need a very large political support.

And it is very good for the government to be able to start serious negotiations on a concrete program to bring about that necessary majority. Because as you probably know Spain needs to produce a meaningful labor market reform; it has financial reform that has significant political implications because it deals with this 50 percent of the financial system that is somehow semi-public, at the savings banks, which are in close political relations with the regional governments. It is able to produce growth so if it has to come up to the closest thing to stabilization program that you can think of.


FERNANDEZ: This is clearly not a strong enough government.

FOSTER: Mr. Fernandez, thank you so much for that. We'll be back with you as we follow this story, which is a political story now as much as an economic one.

Now, Las Vegas is moving with the times. It wants its citizens to get on board. Join us for best (UNINTELLIGIBLE) the future in just a moment.


FOSTER: Now visitors to Vegas are being offered a dream ticket and the odds look a lot more promising, than any other lottery. The home of gambling is putting its money on the transit system that is designed to drive the city into the future. For our "Future Cities" series, Richard Quest investigates.


UNIDENTIFIED FEMALE: That congestion on that northbound 15 is making its way up from Tropicana-.

UNIDENTIFIED MALE: Still sluggish through the area and it is still a slow merge to go from 95 south-

RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: 7:00 a.m. and rush hour in Las Vegas.

UNIDENTIFIED MALE: Traffic Operations Center. Kemmer 103?

QUEST: At the Regional Transportation Commission engineers are monitoring more than 100 traffic cameras, making sure the morning commute keeps moving. Not long ago this was America's fastest growing city and the population boom was best seen on its roadways. For 25 years Las Vegas saw an increase of 112 per day, every single day.

RON SMITH, VICE PRESIDENT FOR RESEARCH, UNLV: Car culture is spread out, in and out of places, malls and so forth.

QUEST: UNLV Vice President For Research Ron Smith has studied the growth of Las Vegas.

SMITH: Las Vegas, if you look at it historically, was highly criticized for being unplanned. And you know, it is correct, we were unplanned. There was no real thinking.

JACOB SNOW, REGIONAL TRANSPORTATION COMMISSION: We've just kind of been adding, and building and adding on that; and we've-it's been a real challenge to keep up with all those automobiles. We added a lot of new freeways and we added a lot of new roadways.

QUEST: As head of the Transportation Commission, Jacob Snow is charged with the not-so-easy task of improving public transit in Las Vegas.

SNOW: We can't compete with every trip the automobile can make. And we don't strategically we don't want to make that type of a mistake.

The idea of transit here is new to a lot of folks. And so we've had to make incremental progress in what we've offered the community.

QUEST: Incremental until now, today, Snow is a passenger in what he sees as the future of public transit in his city. Launched at the end of March, a fleet of diesel-electric hybrid vehicles, complete with new stations, and dedicated lanes for travel. Snow says you can call it a street car, you can even call it light rail-without the rail. But whatever you do, don't call it a bus.

Well, we built this whole system as if it were a train emulation system. Stations, platforms, ticket vending machines. You know, it is not your grandfather's bus stop. The dedicated lanes is really the dedicated running way. It is like the track without the expense of a track, without the electrification and everything else.

In further growth that we've seen, it's difficult to say, well, we're going to put all these millions of dollars, tens of millions of dollars into one corridor and we're not going to expect that corridor to change. We've seen a lot of change here, a lot of dynamic and very rapid growth and the fact that this is on rubber tires. What it lacks in sex appeal, we make up for it in flexibility and we think it's a pretty - we think it's a very attractive vehicle anyway.

QUEST (voice-over): This is Vegas after all and with more than four years of planning, Snow says, his team wasn't about to give one of the entertainment capitals of the world just another transit line.

SNOW: Well, this is Las Vegas so what we provide has to have - it has to look nice. It has to even have a little bit of glitch.

QUEST: Well, the neon signs may draw people to the stations. It will take more to get them on the vehicles.

SNOW: If we can make it faster, then people can get a place - get to a place with their cars then we can be really successful if we could save people time. Traditionally, the focus in American transit has been on saving people money and going after that market. And that is only going to have limited success. We need to save people time.

QUEST: The line is expected to serve millions of tourists, but for Jacob Snow, the success of the project will be in the opinions of the people, those who actually live here.

SNOW: Forty percent of the cars that are in the strip, in the afternoon peak hour are people that are getting off work going home. There are a lot of us who live here and we want to be able to feel good about mobility. We want to be able to feel good about our community.

We commute to work. We don't live near a casino. Most of us, most of our lives, we don't go into casinos. This is our home and we have regular lives and we want to feel like we're regular people and projects like this I think will help us accomplish that.

QUEST: A potential sign that this notoriously transient city may finally be ready to embrace a new mode of transportation.


FOSTER: Welcome back. I'm Max Foster in London, more "Quest Means Business" in just a moment, but first let's check on the main news headlines this hour.


FOSTER (voice-over): Israel's prime minister says, he regrets the loss of lives during the storming of an aid flotilla in the Mediterranean, but calls it justifiable self defense. Israeli commanders raided six ships in international waters today to prevent them from breaking the blockade of Gaza.

Israel says, activists on this ship attacked the commanders so they have been fired, killing at least nine people, 15 other activists were arrested and taken to an Israeli prison.

MARK REGEV, ISRAELI SPOKESMAN: We wanted a peaceful interception. We wanted to tow these boats to the Port in Ashdod and then to distribute the aid directly to the people of Gaza through the crossings.

They obviously wanted violence. They wanted their headline. They wanted their time on CNN and through violence, they have achieved their aim. Unfortunately, our boarding party, which was given specific instructions, police operation maximum restraint was met with deadly violence, and they're responsible for the violence that has occurred. They are directly responsible for the deaths that have occurred.


FOSTER: Well, Palestinian leaders called this a massacre. This thing shows Israel's disregard for innocent life and international law. The Arab legal who disputes Israel's claim that organizers of the flotilla have ties to al Qaeda.


AMRE MOUSSA, ARAB LEAGUE SECRETARY-GENERAL: Israel is using al Qaeda to frighten people and (inaudible) et cetera, et cetera. What kind (ph) and where in Gaza? Those are all things that we are used to that's why we don't believe the Israeli propaganda or whatever they (inaudible). Those are ships full of bread, full of food, full of medicine and no weapons. The Israelis claim that they have weapons so let us see what kind of weapons do they have.

FOSTER (voice-over): Turkey is calling Monday's deadly Israeli raid a bloody stain on the history of humanity. U.N. Secretary General Ban Ki- moon condemned the matter and said Israel must explain. The U.N. Security Council convened in a special session to discuss the matter and a number of nations including Italy, France, Greece and Sweden summons their Israeli ambassadors.

It's been six weeks now and BP still can't stop a ruptured undersea pipe from spewing thousands of barrels of oil a day into the Gulf of Mexico. BP is now shearing the oil line ahead of the rupture. The company hopes to fit a custom-built cap over the new cut to finally stop the leak.

Flooding and landslides unleashed by tropical storm "Agatha" had killed more than 100 people in Central America. Guatemala has been hit hardest with 83 deaths there. Rivers are still swelled across the region making relief and rescue operations more difficult. "Agatha" was the first named storm for the Pacific hurricane season. The Atlantic season starts on Tuesday.


FOSTER: Let's come back now to the story of the Israeli attack on the flotilla bringing aids to Gaza. The level of depravation in Gaza suffering is self matter dispute between Israel and outside organizations. Last year, the United Nations estimated 80 percent of Gaza rely on some form of humanitarian aids and it says, 40 percent of the work force in the territory is unemployed.

The U.N. says Israel refuses to allow a whole range of items be imported from books and paper to blankets, clothes and light bulbs. Construction materials are also restricted. Hampering efforts to rebuild the territory after the December 2008 war.

But Israel paints a different picture. According to the Foreign Ministry around 15,000 tons of aid are allowed into Gaza each week, which he says is enough for the size of the population and they are no food shortages.

They also says, it's relaxing its ban on building materials. Reportedly, they are allowing 97 truckloads into Gaza last week. Despite intercepting the flotilla, Israel has promised to deliver its aid cargo to Gaza.

Well, Israel tightened its blockade on Gaza in 2007 when Hamas took power. It controls around two-thirds of Gaza's land border. Egypt controls the rest, and they are just six tightly controlled border crossing with Rafa but far the busiest.

I'm joined live from Jerusalem by Cecilia Goin. She is the spokesperson for the International Committee of the Red Cross.

Thank you very much indeed for joining us. From your point of view, what sort of pressure is there on aid getting into Gaza? How much aid are Gaza's getting? How much do they need?

CECILIA GOIN, INTERNATIONAL COMMITTEE OF THE RED CROSS: First of all, I would like to explain that the people from Gaza are still suffering from consequences for three years of closure. That means the severe restrictions of goods and severe restrictions of movements.

So it will not be possible for the people from Gaza to live a normal life unless these restrictions are lifted and the closure is ended. For example, one of the main problems today in Gaza is that their daily power cuts and daily power fluctuations, which has devastating consequences in several services such as, for example, electricity in the primary health care of hospitals. They're apparently working with generators and there is a shortage of fuel for the generators.

FOSTER: Have you already sensed of what might have been on these ships and whether that will be harshly (inaudible) there?

GOIN: We don't - we don't have the information what is - what is the - what they have. What we do is we monitor the situation in Gaza and we just check with the people they need in terms of help or sanitation of water.

FOSTER: Are you concerned that this incident will affect the flow of aid into Gaza?

GOIN: We can't speculate right now on that. So we are already worried about the situation from Gaza (inaudible) because there's a stock out of drugs and disposable materials and the spare parts of medical equipment is very difficult to bring in Gaza due to the restrictions imposed by Israeli authorities.

FOSTER: Israel says that there is no food shortage there. They do get enough food and actually the level of aid is enough to sustain a basic level of life at least. Do you agree with that or is there too little getting through for that level of life?

GOIN: Well, it's well-known that there is a (tunnel) economy right now (inaudible) so there is plenty - there is food in the supermarkets, but there are no money for people to buy. I mean, the situation, the unemployment and the poverty are quite high and the (inaudible) concern about that as well.

FOSTER: OK, and could you just give us a broader sense of how much aid gets into Gaza and how much it actually needs?

GOIN: Well, the aid here in Gaza is in the health sector particularly, there is a stock out of drugs and disposable materials, but there is also one thing that we need to take into consideration that there's not enough coordination between the Ministry of Health in Gaza and the Ministry of Health in Ramallah (ph) to be able to bring in proper amount of drugs for the hospital. So the hospital will be able to distribute these medicines to their patients.

FOSTER: OK, Cecilia Goin of the International Committee of the Red Cross. Thank you very much indeed for joining us on that.

You'll stay with CNN for more coverage of the attack on that flotilla on "World One" in around 20 minutes. CNN's Ben Wedeman will be reporting live from the Port of Ashdod in Israel and Fionnualla will have the very latest reaction from around the world. That's "World One" at 2000, London time.

Now, read all about it, but only if you have your credit card handy. Up next, the British newspapers have been trying to change the face of online news. This "Quest Means Business."


FOSTER: We thought that the emergence of the internet would mean free news forever, we could well be wrong. At least, Murdoch hopes you will be. News Corp is aiming to turn the whole assumption on its heads and make free online news, actually a thing of the past.

We're talking about pay to read from late June, there were new look site for the "Times" and the "Sunday Times," which belong to News Corp. The cost is nearly $1.50 per day or nearly $3 per week. The homepage they will be free to view.

Now, it's meant to be a calculated of risk of course, it is a business. "Times" expects the new strategy will cost the 90 percent of readership, but thinks it's worth it for the fees generated by the other 10 percent and the "Times" says continuing to charge nothing would be disastrous, not just for it, but also for the whole industry.

The "Sunday Times" and "Times" brands lost nearly $130 million in the 12 months to June 2009 so that's the economic background to all of this. Well, who else is considering this and getting into the game?

Well, the "Financial Times" is the only other British newspaper to charge. News Corp also owns the "Wall Street Journal," which charges and News Corp says, the "Sun" and the "News of the World" will begin charging later this year.

Now, Claire Enders is founder and CEO of Enders Analysis, a media and telecom research company. She joins me now. One of the leading experts and analysts in this field.

What's you (inaudible) of the move? But first of all, why is he leading?

CLAIRE ENDERS, COMMUNICATIONS ANALYST: He's leading because he's barely making money out of newspapers and on some titles, he's losing absolute buckets. I mean, the "Times" and the "Sunday Times" together lost $87 million recently in the last financial year.

The "Sun" and "News of the World" are not particularly profitable and an aggregate - the whole activity is barely profitable. So this is a multibillion dollar activity for News Corp. They own six of the biggest titles in two countries. Therefore, this is a stake in the ground to try to recognize that the business model of the internet is not appropriate for pay for journalism.

FOSTER: And he's doing this in a sense for the whole industry. This whole industry wants to make money so they're looking to him to make money. (Inaudible) his competitors right on this?

ENDERS: Absolutely, I mean, if it were possible to convert 10 percent of the three million (inaudible) that some of the sites are getting in the U.K. that would be fantastic.

FOSTER: That's enough is it?

ENDERS: Absolutely, it would make up for the loss of the advertising income on the sites because obviously internet advertising is the key - it's the key support mechanism at the time - at this time and as a result, if you lose a lot of your traffic, you know, your income from internet advertising will go down precipitously.

So we reckon that they need to get 120,000 pairs in the U.K. on the basis of committed readership every week to sort of make up the lost money. But more importantly, what he's trying to do is to convey to the entire world that the pay for business model is the future of good quality journalism.

FOSTER: I'm going to put you on the spot because you made your name by predicting big moves of the industry successfully, mainly, if you cannot get this 10 percent of paying people in order to make the business model work as you say?

ENDERS: I think it's a big risk. I think that actually the conversion rate could be a lot lower. The conversion that we've seen typically has been three to four percent max and that's for every pay model you can imagine across every industry you can think of. So it's a big risk.

He already has 125,000 subscribers to the "Times" on the print edition so it maybe that he's fishing for the wrong kinds of people and the amount of commitment that he's hoping for will not materialize. So it's a big risk, but on the other hand, there is no down side to it either because the income that is being generated by the websites today is small and it's declining.

And so there's nothing to lose in trying to make this work and obviously in taking the time to do it and constructing web sites that people will want to pay for. There is very little evidence that people will pay for a general newspaper in a month.

FOSTER: Yes, because as it's just - the "Wall Street Journal" and the "FT" had done this very successfully and the skepticism that could be done in a general news market, but why is - there is demand and there are other financial news services. So, why they're doing successfully when there's a suspicion that the general news weren't?

ENDERS: It depends on what you call successful. The "FT" has been charging for over a decade and has over - about 130,000 subscribers. That's not a whole lot in the scheme of things for one of the global media that is most important to business people. The "Wall Street Journal" has just over 1 million subs. Again, they have been charging for a long time. That's not a huge success either.

This is a world leading publication as well with very specialized information and analysis. I mean, actually, the models that are out there are not doing well at all. This is why it's so important for Mr. Murdoch to make a difference with this and to use the bulk that he has in the market with four, you know, very big titles in the U.K. selling 30 percent of daily circulation.

I mean, this is a massive impact on the market and so he's going to try to make it work, but you know, it's going to be very, very tough. But as I said, the downside is minimal.

FOSTER: OK, Claire. Thank you very much. "Quest Means Business" returns after a short break.


FOSTER: "Quest Means Business" we're going to straight to Guillermo now for an update on the weather. How are you doing, Guillermo?

GUILLERMO ARDUINO: Hey, good to see you this Monday and I'm going to tell you one thing. I think that Britain will see - London let me put it this way. London will see some rain on Tuesday so tomorrow. We're going to see some cloudiness coming into the area, but it's going to be worse in the north.

Now, I have to cover what's going on here toward the east because this section is really bad. We have this low that is going to descend in here, remember, Max, that we have floods here in Poland especially. So this is going to bring bad weather and we'll see some more severe weather especially in these countries.

These are not the only areas of the east where we will see the bad weather because as we move into tomorrow also Moldova here and Croatia will see some bad weather. Watch out because you're going to see heavy rains. Remember that we have the flooding condition in the area especially towards the north and purely large hail.

While the west even though I said that Britain is going to be OK, but towards the north in Scotland and northern island in Arlet are going to see some bad rain. Look, it's quickly - moving very quickly so it will be one of those events that we constantly see in Britain.

Now, watch out for the temperatures especially you're going to see now Spain is going to be much warmer compared to the north. I'll give you those in a second. Paris with some rain showers along with the same system, but it's only rain showers and also we will see winds in those using the east that I was talking about Vienna included. Berlin maybe some rain showers.

OK, look at that, 32 in Madrid while half of it is what we will see in London and Paris, and in these areas, after the storm goes by then the wind switch and that's why you have the difference between Rome in the south and Berlin with a high of 14 degrees and the rain showers, and ahead of the storm here Moldovan and then parts of Ukraine and certainly Turkey is where we have warmer conditions.

Let me see the east med. This is an area that I always like to look at because knowing the summer with the economic downturn in Greece, we have a lot of cheap cruises in the area. But the weather is going to be fine now and remember a couple of weeks ago, it was not that nice. We are going to see some clouds.

An update on what we are talking about, Max, before the Remnants because I must say that Remnants is not (inaudible) anymore here in Central America more than 100 people dead and we anticipated this on the weekend.

We said, you know what, the mountains, the kind of constructions that we have here in the area in Guatemala and in El Salvador along with this significant precipitation, 430 mm on irregular terrain, of course, we are going to get landslides and that's what we got.

Now, the cyclone is long gone. Remnants only into the Caribbean right now and we are looking at this area over here that is going to continue to loop, the possible tropical cyclone. We think that it's going to head towards the northwest and then switch, and this is important, towards India and Pakistan.

It's a long hold forecast that I'm giving you, but if it happens, it would bring a relief especially in Pakistan and Northwest India with those temperatures that are extremely, extremely high. Southeast Asia in the meantime with more rain. Back to you, Max.

FOSTER: Guillermo, thank you so much.

Whatever the weather you (inaudible) is a forecast of the summer strikes at British Airways. Airline cabin crews are back on the picket line tonight in a new 5-day work out. Negotiations on ending the dispute broke down over the weekend. BA says it's open to fresh talks with this unionized cabin crews. The airline hopes to operate more flights in the coming days (inaudible) during the last strike, which is last week. The standoff over pay and (starting) has dragged on now for nearly 16 months.

You're watching "Quest Means Business." After the break, we'll round up the European market numbers for you plus the latest exchange rates. Do stay with us.


FOSTER: In today's closing scores on the markets for you then, the European stocks took a break from last week's sharp up and downs. Partly that was due to the region's biggest market being closed for holiday. No trading here in London today, but the DAX in Frankfurt closed up a little and the Paris CAC 40 was down slightly and a little change in the euro.

(Inaudible) of recent weeks for single currency stands at around $1.23 right now. It's lost around 14 percent against the dollar so far this year so that's the bigger picture for you.

That is "Quest Means Business." Austerity measures this week as Europe cuts too fast, too soon or is it too little too late. We'll hear from some of the most influential voices in business this week on Tuesday. Jim O'Neal, chief economist (inaudible) financial economist, (inaudible) director general of International Labor Organization.

Don't miss "Quest Means Business" tomorrow, 1900 in London, 2000 in Central Europe. We are still hoping to hear from the Israel desk at the Security Council of the U.N. So stay tuned for that.

That is "Quest Means Business." I'm Max Foster in London. "World One" starts right now.