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Obama Accepts McChrystal's Resignation; Interview With BP Exec Bob Dudley

Aired June 23, 2010 - 14:00:00   ET


MAX FOSTER, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Controversy has brought a sudden change of command for the U.S. war in Afghanistan. U.S. President Barack Obama has relieved U.S. General Stanley McChrystal of command. Mr. Obama made the decision in the wake of McChrystal's politically explosive comments in a "Rolling Stone" magazine article.

After a series of quick White House meetings it was announced the McChrystal would be replaced by Gen. David Petraeus, current head of U.S. Central Command.

President Obama announced the decision just moments ago, at the White House


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Today I accepted General Stanley McChrystal's resignation as commander of the International Security Assistance Force in Afghanistan. I did so with considerable regret. But also with certainty that it is the right thing for our mission in Afghanistan, for our military, and for our country. I'm also pleased to nominate General David Petraeus to take command in Afghanistan, which will allow us to maintain the momentum and leadership that we need to succeed.


FOSTER: While President Obama noted the McChrystal's comments in the "Rolling Stone" article critical of him and his administration, saying they did not meet the standard that should be set by a commanding general.


OBAMA: This war is bigger than any one man, or woman, whether a private, a general, or a president. As difficult as it is to loose General McChrystal, I believe that it is the right decision for our national security. The conduct represented in the recently published article, does not meet the standard that should be set by a commanding general. It undermines the civilian control of the military that is at the core of our democratic system.


FOSTER: We will, of course, be getting continued reaction on this breaking news story, here on CNN, but for now we turn to the business news. You are watching QUEST MEANS BUSINESS.

And the man who said he wanted his life back may be on the way to getting his wish. The chief executive of BP, Tony Hayward, has asked one of his top lieutenants to take over the response to the Gulf oil disaster. Bob Dudley, BP's American managing director, will be the face of BP as it tries to clear up the mess in the Gulf of Mexico from now on. In one key respect he will be a contrast from the gaff-prone British boss, Dudley is a native of the U.S. Gulf State of Mississippi.

So, a move in terms of PR, there, perhaps as well, and he'll be dealing with politically sensitive issues and that is nothing new to him. For five years he was head of BP's operations in Russia, in a joint venture, TNK/BP. He worked for nearly 20 years for the U.S. oil company, Amoco, which was taken over by BP back in 1998. Now, the clean up operation, relations with the U.S. government and evaluating the damage to the environment, all of these are now part of Bob Dudley's brief. As that will be under Dudley's gaze, this day 65 of the disaster and thousands of gallons of oil are still gushing into the Gulf. That is a priority here, as well.

Earlier, CNN's John Roberts actually spoke to Bob Dudley about the clean up team, and his role in that operation.


BOB DUDLEY, BP GULFCOAST RESTORATION: We had a temporary organization set up across the Gulf Coast. We are going to make that permanent. We are going to work it so that we push more and more of BP's resources through the unified command structure with the Coast Guard, in New Orleans. We're just going to make sure that the transfer of the claims process, that Ken Feinberg, as an independent leader of that, occurs smoothly. In the meantime, we are going to continue to write the checks, pay the claims and make sure that we are there for a long time, many years, not only after the well is stopped but the clean up. And this is the first step in that.

ROBERTS: You know, over the last 65 days there have some famous gaffs made by BP executives. There was Tony Hayward saying that he would like his life back. There was him going yachting over the weekend. Carl-Henric Svanberg, the chairman of the board, said he cares about the, quote, "small people" affected by this. Some people are getting a sense that BP is tone deaf to what is going on there in the Gulf. Has it been?

DUDLEY: Well, I know both of those men are, one, deeply disturbed by what's happened in the Gulf. And, fully committed to making sure that BP meets all of its commitments, not only now, but for years to come. They may have said the wrong things. The chairman's native language is not English, and he meant small businesses, and that has been taken and run with. But they are fully committed to this, as BP's response to what is a tremendous disaster. And I think that response, quite frankly, is unusual. To put aside $20 billion, to make sure those claims are paid for years to come and restore the Gulf. So this is the right thing to do, for us.

ROBERTS: And what about you, Mr. Dudley, you are there in Houston. You are an American, it puts an American face on BP's handling of this disaster. You have not, to the best of my knowledge, made any kind of gaff in the way that Tony Hayward and Svanberg have, will you be able to better handle this from a PR perspective for the company?

DUDLEY: Well, my concern, John, is not the PR aspect of it. Communicate, make sure people know what we're doing, see that the tremendous amount of resources and response we have. My job, mainly, is to listen very, very closely to the governors, people along the Gulf Coast, and in Washington, and to make sure that we respond as quickly as we can to people like Thad Allen. Make sure we get the resources there. Stop the well, and we'll clean it up. This is a long effort, make sure that we meet the financial obligations.

ROBERTS: You collected, over a 24-hour period, the other day, 26,000 barrels of oil from the Condor well. That would represent a new high. On a percentage basis of what is coming out of the well, do you have any idea of how much you are capturing now?

DUDLEY: Well, no one knows what that well is actually producing and flowing right now. We have the estimates now, the government estimates, between 35,000 and higher, to 60,000. We don't know. We know we are capturing a significant amount of the oil, though, and we want to keep doing that. And get it in place to keep doing that until we drill these penetrations of the relief wells in August.


FOSTER: Bob Dudley, there, the new man in charge of the BP oil spill effort, containment effort.

Now, Russia's president is meeting some of its high-tech heroes today. Dmitry Medvedev is in Silicon Valley, and fashioning plans to create something similar back home. We'll see how he's getting on, in jut a moment.


FOSTER: Some breaking business news for you, the Federal Reserve has just announced that it is keeping its key interest rate on hold. That is a rate of between zero and 0.25 percent. Let's see what reaction we have had on Wall Street to that. It has only just come through, as I say. It is down, as I understand it. Can we just see that? Yes, it is down, 0.14 percent. So, maybe it (UNINTELLIGIBLE) interpretation, but maybe it hasn't fed through properly.

Now, the signs of weakness in the U.S. housing market reverberated through European stock exchanges a little earlier on. That report gave and extra downward shove to indices across the region, which were already having a pretty difficult day. At the close, markets in London, Frankfurt and Paris, were all down, by more than 1 percent.

Now, Russia likes the look of Silicon Valley, it seems. President Dmitry Medvedev spent Wednesday touring the high-tech hub in California. Russia's economy is heavily dependent on oil and other natural resources. But Mr. Medvedev wants that to change. He met California Governor Arnold Schwarzenegger on Tuesday to talk about developing innovation and high technology in Russia. Today he was expected to meet leading figures in the tech world, including Steve Jobs of Apple, and Evan Williams and Biz Stone, who founded Twitter. Later on Mr. Medvedev will head for Washington and talks with President Obama before the two travel to Canada for the G8 and the G20 summit. As CNN Senior International Correspondent Matthew Chance reports the Russian president has been nursing his cyber vision for some time now.


MATTHEW CHANCE, CNN SR. INT'L. CORRESPONDENT (on camera): Well, as the Russian president tours Silicon Valley, in California, it is these old potato fields on the outskirts of Moscow, where Russia's technological ambitions are focused. Because this is Skolkovo, where Dmitry Medvedev wants to build Russia's own technological innovative business park to move the country's economy away from its dependence on raw materials and towards attracting more high-tech investment, especially from the big players in the United States.

As you can see, it is not finished yet. It has only been under construction for a few months. But there is one aspect of it which has opened up. You can see it over there, that building, it is the Skolkovo Business School, it's focused, it says, on entrepreneurship. And the hope is, in the future, it will be an integral part of this government backed, Russian-government backed, technological initiative.

Joining me on one of the rooftops of this pretty impressive building is Dmitry Repin, he is a professor of entrepreneurship at the Skolkovo Business School.

Professor, first of all, Russia, with all of its vast natural resources, how important is it to this country to focus on high-tech industries in order to modernize.

DMITRY REPIN, MOSCOW SCHOOL OF MANAGEMENT: It is very important because having just the natural resources is certainly not the way to really build an efficient and competitive economy. And this innovation process, how we try to modernize the economy, is important first of all in terms of productivity, overall, of the economy. And also it certainly should go back to the natural resources economy, because also we want to increase the productivity and efficiency and the ecological impact within the mining and oil industry.

CHANCE: And this high-tech business park, that we can see is being built all around us here, is that done to achieve that objective? Is it going to make Russia much more high-tech?

REPIN: It is a new and unprecedented project like this business school that we are at, so I think if we really don't make mistakes that often are made when we embark on some big projects in Russia, then the result if very valuable. Certainly, it is a promising project. But again, there are many mistakes that can be made and we certainly hope to avoid them. That is why we tried to gain the best practices and experiences from the States, and from other places.

CHANCE: Is there a danger, you were just hinting about that, is there a danger then that this project could become just another bureaucratic Russian institution that doesn't really achieve much?

REPIN: There is always a danger, but in this particular case, businessmen are in charge of the project. So that is, again, similar to this school, where it was built by businessmen putting the money together and putting the resources together. If the business focus is maintained, in this new technical focused (ph) project, then, I think the chances are much higher.

CHANCE: Thank you very much.

Well, there you have it from potato fields to Russia's new Silicon Valley. The big question, of course, is will this be as fertile and productive as its counterpart in the United States? Matthew Chance, CNN, in Skolkovo, Russia.


FOSTER: We're going to take you to some live pictures coming to us from Christies' auction house in London, right now, because just want to remind you that there are people with plenty of money left in the world. A Picasso has just gone on sale there, it fetched 31 million pounds. That is something like $40 million. A Monet is coming up. And that is expected to fetch even more. We are going to bring you the latest on what could turn out to be one of the biggest sales ever.


FOSTER: Welcome back.

I'm Max Foster in London.

More QUEST MEANS BUSINESS in just a moment.

But first, let's check the main news headlines this hour.

The U.S. has made a change at the top in its military effort in Afghanistan. After a series of quick White House meetings, U.S. General Stanley McChrystal has been relieved of his command. He's being replaced as the top U.S. officer in Afghanistan by General David Petraeus, the current head of U.S. Central Command.

US President Barack Obama announced his decision just a short time ago in the wake of McChrystal's politically explosive comments in a "Rolling Stone" magazine article.

Police in Jamaica say alleged drug kingpin, Christopher "Dudus" Coke has been arrested outside Kingston. American authorities want Coke extradited to the U.S. to face multiple drug and firearms charges. A failed attempt to arrest him last month resulted in four days of gun battles that left dozens of people dead.

Over 600 people are missing as a result of the heavy rains and heavy floods hitting Northeastern Brazil. At least 42 people were killed and tens of thousands have been left homeless. The Brazilian government has pledged more than $150 million to aid victims in reconstruction in the area.

And the Fed has maintained its key interest rate at 0 to 0.25 percent.

Alison Kosik joins us now from New York with more on that.

Expected, I guess, but have you had some commentary on this, as well?

ALISON KOSIK, CNN CORRESPONDENT: Yes, you're right about that, Max. I mean the fact that the Fed left its key interest rate right where it is, at .25 percent, not a huge surprise. This is actually exactly what investors were expecting. But they wanted to look a little deeper, as you said, in the policy statement.

And I've got it right here. And, actually, I'm going to read from it and give you some of the -- some of the color that came out of the meeting.

The Fed said that: "The economic recovery is proceeding and that the labor market is improving gradually, that household spending is increasing, but remains constrained by high unemployment, modest income growth and lower housing wealth." They also said that, "the housing starts remain at a depressed level and that financial conditions have become less supportive of economic growth, on balance, largely reflecting developments abroad."

And that, of course, is referring to the European debt issues, the worry that those -- those problems will spread here, to the United States.

Overall, once again, expected that the -- the federal funds rate staying right where is it.

I mean what the Fed is trying to do, it's trying to encourage spending. So by keeping these rates low, it encourages borrowing.

But the problem is, is that we're also getting some of these economic reports like on housing and job growth. Those are kind of going in reverse for some -- you know, in -- in some way, shape and form here. I mean we think about new home sales numbers we got today. They've plunged more than 30 percent. That is -- that is a record, actually, of -- of a slowing pace. That is a little -- is a little, you know, distressing, I guess, for the market at this point. And also the jobs numbers. That, of course, is still a drag on the market. So that is why we -- we are keeping -- we are seeing the Fed keeping this rate at historically low levels -- Max.

FOSTER: And you noted some other key economics figures out today.

Tell us about them and what impact they had.

KOSIK: Exactly. As I mentioned before, we got the -- that new home sales plummeted by more than 30 percent. Once again, this is a slowing pace. And this could be because of that tax credit that the government put out, making it -- giving sort of an incentive to people to buy homes. That expired in April. So we did see this demand for housing dry up.

And what happens here now is that we can see a ripple effect throughout the economy here in the U.S. when we don't see new homes being built, we don't see new jobs being created, like new jobs in construction.

Of course, that leads to less taxes being collected by the government and then that impact hits retailers, lumber companies, manufacturers. And you sort of see this ripple effect, this domino effect throughout the whole economy.

The big worry is if housing continues to drag the economy down, it could take the rest of the economy with it -- Max.

FOSTER: Alison, thank you so much for joining us from New York.

KOSIK: Sure.

FOSTER: People concerned about a downturn there.

But on Tuesday, a judge blocked the U.S. president's temporary ban on deepwater drilling in the Gulf. But despite the setback, the administration insists a moratorium on drilling is needed and is appropriate. The White House is planning to appeal the ruling even though some people in Louisiana are pleading with the U.S. president not to.

Chris Lawrence has the deal now from New Orleans, where a lot of jobs are on the line.


LAWRENCE (voice-over): The last ships are sailing for small businesses that supply the oil rigs.

UNIDENTIFIED MALE: I'm taking off.

LAWRENCE: Some of these companies thought they had months before they ran out of work.

VELMA MOCK, OPPOSES MORATORIUM: But it all happened pretty much in a couple of weeks. And now, you know, we're dead in the water.

LAWRENCE: Then a judge overturned a six-month moratorium after just four weeks.

(on camera): What was your first reaction?

MOCK: I was ecstatic. I was very happy. But it didn't last long.

LAWRENCE (voice-over): Because right after the ruling, the federal government indicated it plans to appeal, which means no deepwater drilling until it plays out in court.

As oil companies consider moving rigs to South America or Africa, Governor Bobby Jindal asked the Obama administration...

GOV. BOBBY JINDAL (R), LOUISIANA: Don't appeal this ruling. Don't prolong the uncertainty. Give them a final answer.

LAWRENCE: Environmentalists were not happy with the judge's ruling.

AARON VILES, GULF RESTORATION NETWORK: It's hard for us to understand, as we look at the Gulf of Mexico and see the oil washing into Barataria Bay and, you know, disturbing the pelicans on their nests and coming into Pensacola and disturbing the -- the tourism that's so critical for that region, why we couldn't have a time out.

LAWRENCE: They say government oversight is still too weak to start drilling again.

VILES: The inspection process isn't really worth the paper it's printed on because it's been exposed that the paper was printed on by the oil industry.

LAWRENCE: So what now?

MOCK: Personally, I feel like it's going to stay tied up in legalities. He's going to appeal, they're going to, hopefully, block it again and then there will be another appeal.

LAWRENCE: If so, others in the industry say some oil rigs are bound to leave the Gulf.

UNIDENTIFIED MALE: Absolutely. The industry is going to see that there's no end in sight and it's time to cut your losses.

LAWRENCE: In explaining his decision, the judge used the rationale, "Are all airplanes a danger because one was?"

Well, the government obviously disagreed. In addition to filing that appeal, the secretary of the Interior says in just a few days, he will order a new moratorium, providing additional evidence as to why that ban on drilling is needed.

Chris Lawrence, CNN, New Orleans.


FOSTER: Downturn?

What downturn?

Blockbusters art auctions are back, it seems. And this time, we're talking serious money.


FOSTER: And end to the days of lavish expenditure -- budgets will be shrunk and savings may -- that may be the story when it comes to government spending, but somebody forgot to tell the art market. We're living in an age of austerity, but you wouldn't know it from what's going on in the market right now.

Christie's sale if impressionist modern art is underway as we speak. These are live pictures just down the road at Christie's. You could be -- you could see the most valuable art auction ever unfolding. Hundreds of millions of dollars worth of art is on sale down there. A Monet has just gone on the block and all the details actually come through to the Web site. We're just going to refresh it here.

This auction started about half an hour ago and it was billed as one - - one of the most valuable auctions ever.

If we take a look at some of the figures here, we've got a Viulllard for 217,000 pounds. Let's scroll down a bit. We've got a Signac (ph) for a million pounds, up to three million. Look at this, a Pablo Picasso, 34 million pounds. That's something like -- what is that -- $50 million, I think, is the translation just underneath. Let's see if we've got the figures for the Monet that's just come through. It hasn't come through yet, but we know it's come within the estimate, which was between 30,000 and 40,000 pounds. So it's going to be something like 50,000 -- 50 -- sorry, I'm getting my figures wrong here -- 30 and 40 million pounds, something like $50 million. So that's a Monet. It's a classic. People want it. And it's a sign that people still have cash. They're spending it. And they're spending it on art.

Wait until the end of the sale to find out if it is the biggest sale ever, but it's looking pretty good at this point.

We've got a Monet here, haven't we?

There it is. This is the actual painting that's up for sale right now here in London, "Water Lilies," a complete classic if you're talking about impressionist painting, at least.

We're going to cross to the Weather Center now.

An earthquake with a preliminary magnitude of 5.5 has struck Southern Canada, the U.S. Geological Survey has just reported.


FOSTER: Guillermo has the latest for that one.

ARDUINO: I was actually checking it out. They -- they say they felt it even in -- in Toronto, even though it happened in Quebec, near Ottawa.

It is -- it is common to see a couple of these instances, but weaker than what we saw, 5.5 now. But if we go back to 1935, back then, damage occurred with a 6.1.

But as far as I read it, it was all a big scare. That's about it. More coming up in the next show.

Max, do you know that, that Wimbledon is still going on after eight hours of this match?

Can you -- Can you believe that?

FOSTER: Unbelievable. It's normally raining in the first week, right?

Is this what you're intimating?

ARDUINO: No, no I did...

FOSTER: It's amazing sunshine out there.

ARDUINO: What I'm saying is that this match that has been going on for more than eight hours between Isner and can you please tell me the other player?

FOSTER: Yes, no. I mean they must exhausted.

ARDUINO: Exhausting.

FOSTER: And that is the star tournament, as well.

ARDUINO: Yes. Twenty-five degrees right now, with sunshine. Mahut, exactly, a French citizen. Mahut is the other one with Isner from the United States. Eight hours there playing, 25 degrees, sunny skies in Wimbledon. So I'm going to tell you, this year, everybody is going to remember this year, first, because there's no rain and we have a roof. Secondly, because of this extremely long match there. And no problems with the weather -- actually sunny for the next days.

If you are in London right now, if you're a tourist, an attendee at Wimbledon, you must be very happy. And when I was watching the game, because we -- we were -- we are here and we were screaming at every -- every ball. And I was noticing the sunshine and I was happy to see that, not for the players, but -- well, they can take it. You know, with the amounts of money they make, we were talking about like $1.5 million or -- or -- or so, the price. That's because of this high pressure.

At the same time, Max, we have, in Istanbul, some bad weather. We warned our viewers about that. The low pressure center will continue. The bad weather will continue through Thursday here, gradually it's going to move here to the east. That's where the bad and the rough conditions are.

Elsewhere, it's fine, especially in the west and high pressure into France, the same thing. And in Spain, I'm going to tell you that there are no problems in terms of delays at the airports. You see cloudy conditions and the temps -- I'm going to go back to Max for this -- 34 in Madrid, 25 tomorrow in London.


Guillermo, thank you so much for that from the Weather Center.

ARDUINO: You're welcome.

FOSTER: Hot weather in London -- extraordinary stuff.

Now, we have been bringing you the news this hour that General Stanley McChrystal has effectively been dismissed by the U.S. president. We have more on that in just a quarter of an hour on "WORLD ONE" with Fionnuala.

That is it for QUEST MEANS BUSINESS, though.

I'm Max Foster in London.