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QUEST MEANS BUSINESS
Travel Chaos Across Europe; Interview With Stanley Fischer; Future Cities: Abu Dhabi to Recreate Guggenheim, Louvre
Aired December 20, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: It's a case of flights grounded, trains delayed, motorists stuck. Travel chaos across Europe.
Tonight, Stanley Fischer, governor of the Israeli Central Bank tells me the U.S. was right to embark on QE2.
And in our "Future Cities" series, Abu Dhabi's ambitious plans to recreate the Louvre and the Guggenheim Museums.
I'm Richard Quest. We have a very busy hour ahead, because I mean business.
Tonight, if you are traveling in Europe, you already know to be prepared for the very worst. Across the Continent, Christmas travel plans are in chaos as the pain of arctic weather conditions is hitting trains, planes, and automobiles.
Let's start with trains. There are major delays at Eurostar's terminals in Paris and in London. Trains that link mainland Europe with the U.K. are operating in emergency timetable for the rest of the week. If you are thinking of going on Eurostar-don't unless it is absolutely necessary. The lines for passengers, as you can see from this video, are around the block.
It is air travel that is the hardest hit. The Association of European Airlines say 10,000 flights have been canceled across Europe, between Friday and midday today; 800,000, nearly 1 million passengers. Now 30 percent of flights at Charles De Gaulle, in Paris, canceled.
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And 300 flights scrapped at Frankfurt.
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And London Heathrow running only a third of regular flights until Wednesday. The southern runway remains closed.
Road travel, too, is seriously affected. The breakdown company, the RAC, says Monday looks like its busiest day of the year, as motorists are struggling to get cars off the drives. In Northern France, authorities are pulling trucks and busses off icy roads.
It all gives you a taste of the poor situation that is out there at the moment.
Now, why-as we continue to underestimate the affects on the traveling public, tonight we'll be tracking four flights throughout the show. All scheduled to take off in the coming hours. We are going to be tracking them using technology on-of course, the iPad. We are going to be looking at technology through "Flight Track" and we'll be looking at four flights. KLN 1617, from Amsterdam to Istanbul; ANA 202, from London Heathrow to Tokyo's Narita; TAM 8071 from Frankfurt to San Paolo; and Lufthansa from Frankfurt to Moscow, are all scheduled-all scheduled to take off around about now. Or at least push back round now. We'll update you on their progress as the program goes on.
Let's catch up, though, with the situation that exists at the moment. Atika Shubert joins us now live from Heathrow Airport.
It is blisteringly cold, Atika, I know that much for you. But tell me, is there any cheerful news for passengers out of London's airport tonight?
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Well, if I had to say there is one bit of good news out of all this, if you are coming to or from the airport, the Heathrow Express is now free for all the passengers coming back and forth. But that maybe because they are trying to get all the people who have come to the terminals here to go back to their hotels or to friends and relatives. Because they are basically saying there are too many people here at the airport with canceled flights, hoping to get on their flights, and they are just not going to get them. So they are saying, don't come to the airport if you don't have a confirmed flight.
It is, as you can imagine, very tense inside some of the terminals. Some people are very angry and a lot of tears when I was there. People are afraid that they are not going to make it home in time for Christmas. And unfortunately British Airways has said all the short haul flights have been cancelled. The domestic flights have been cancelled. But some of those long-haul flights, like you mentioned, have been going ahead. One of the runways here is open. And we have seen a number of those long-haul flights going. So for those passengers in long haul, there might be a ray of sunshine there.
QUEST: Atika Shubert, who is at Heathrow Airport this evening with that update.
Now, as Atika was saying, the airport operating, BAA, is asking anyone flying, from Heathrow, not to turn up until your flight is confirmed that it is going to be leaving. Putting it into perspective, Heathrow and its operator BAA, is now under serious criticism for the fact that the airport has been brought to a standstill by the atrocious weather conditions. The chief executive of BAA, Colin Matthews, spoke to me from a noisy airport and he explained why the world's busiest, international airport had ground to a halt.
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COLIN MATTHEWS, CEO, BAA: Well, firstly, we have go thousands and thousands of disrupted passengers today whose Christmas plans are being spoiled. And we are truly, truly sorry about that. It is our responsibility to look after the passengers in the terminals. We are determined to do that. But in order to do that, we have to make sure that passengers don't come to the terminals unless they have a flight that is departing. And that wasn't the situation earlier on today, so we've had too many passengers at Terminal One and Terminal Three, and we had to say very strongly to passengers, do not come into those terminals.
What we have been doing today, with the airlines, is working on a new process, whereby given that we know we're going to have less capacity at Heathrow for the coming days. We decide, in advance, a conservative plan, so that if we say an aircraft is going we have a very, very high probability of it going. Everyone wants to get every aircraft away, but if the result of that optimistic give it a go, is that people end up in our terminals with nowhere to go. Then that just ends in miserable disruption. So we have to reduce the number of people coming to each terminal. That is why we have taken the drastic step just this afternoon, and saying no more passengers in Terminal One and Three.
QUEST: Right, Tim Clark, of Emirates Airline, the chief exec of Emirates, says that you are limiting the number of planes allowing to land from the Gulf Region, so that their larger planes don't create even more influx of passengers to Heathrow, and to your airports.
MATTHEWS: We have a very, very fair process. We have given priority to those flights which were diverted, therefore passengers are neither in their point of origin, nor in their point of destination. We have a fair process. I know, of course, every airline wants to do their best, to give their own passengers a particular advantage. Of course, they do. We have to work to make sure the process is fair. Passengers benefit when airlines and the airport collaborate and that is precisely what we're doing. We've been doing that effectively today, in producing the new mechanism, to make sure we have a realistic schedule, that we can deliver.
QUEST: OK, how do you answer the accusation-and let's get straight to the heart of this, Colin, people around the world say Britain only has one really truly, major global airport, and it closed down in snow that other airports have survived and are working in.
MATTHEWS: Well, after we have got every passenger and every bag in the place where they want to be, we will crawl all over this to understand every lesson that we can possibly learn. We will learn lessons from anywhere, in order to find ways to do better in the future.
There are some specifics about Heathrow. This is the only airport where we have 200 stands with every single one, with an aircraft parked on top of it, such that when it snowed, we have to take, pretty much by hand, 30 tons of snow on the stands, out, before we can open up the airport.
I think we'll find Heathrow has some unique characteristics, no other airport is as busy, is as loaded as we are, as Heathrow. But we will learn every lesson we possibly can from every source in order to improve in the future. We will crawl all over it. In the short-term, though, we must get passengers and bags where they want to be.
QUEST: We'll just let that plane roar past.
Finally, Colin, the scenario that you are experiencing-I mean, I understand, no chief exec wants to look at and basically see the jewel in their crown, looking like a shambles tonight. But can you be confident that if we get more snow in the U.K., later in the week, as is forecast, you are ready?
MATTHEWS: Well, if we experience, this year or in future years week after week of sub-zero temperatures, which hasn't been the case as long as I can remember. We all need to have different processes and different facilities than w do today. Just like the secretary of state, was expressing on television yesterday. So, if the climate has genuinely changed, we will have to have different procedures in order to cope with snow.
QUEST: And that-
MATTHEWS: Our short-term priority is to get every passenger where they need to be.
QUEST: That is the chief executive of BAA. That is Colin Matthews.
Now, let's talk a little bit more about exactly that point. The shift in weather that might require airports to think about doing things a little bit differently. Join me over at the wall if you will. Now if you look at the maps and the graphics of airports. I'll put Heathrow up. This is Heathrow. It has roughly 12 and a half, square kilometers. It has two runways, north and south, left and right, 27 left and right. And that is the airport that has been so badly hit at the moment.
The other major airport for London is Gatwick, south of London, with its one major runway, about 7 square kilometers and those are London's two big airports. And what is going to have to happen now, is the transport minister has said they will be looking carefully to see whether these two airports and the climate conditions does mean that there will have to be a major rethink on the spend of snow clearance.
PHILIP HAMMOND, U.K. TRANSPORT SECRETARY: We recognize that the cost, both economic and social, of this level of disruption can be very great. Winters such as this years' and last, have been rare in modern Britain. But we need to consider whether we are now seeing a step change in our weather, that might justify investment and equipment, and technologies to reduce the impacts of severe temperature and heavy snowfall.
I will be assessing advice on the subject from the government's chief scientific advisor, Professor Sir John Beddington (ph). And we will work with transport operators to examine the business case in each sector, for increased investment for winter resilience, where that makes sense, recognizing always that spending more on winter preparedness inevitably means there will be less to spend on other priorities.
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QUEST: So the outlook for the U.K. airports is perhaps a review of what needs to be spent, but that would also have to happen in other places, for example, Frankfurt's airport, which has three runways, a vast 18 to 20 square kilometers.
Now, Frankfurt, tonight, is also badly affected. Not as badly as the U.K. airports. But everybody, constantly-by the way Frankfurt would not tell me how much they spend on snow clearance. Everybody talks about the granddaddy of them all, and it is Chicago O'Hare Airport. This is Chicago's map. It has seven runways, a massive 7,000 acres, 30 square kilometers, and what Chicago told me tonight, is that they spend $20 million, they are budgeted this year, $20 million on snow resilience-that doesn't include lots on snow clearance, and it is on snow equipment. In just a couple of weeks ago, Chicago also fell over, as a result of the snow.
He is worthy of respect, but he commands at the top of the financial community.
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When we return, we will speak to Stanley Fischer, the governor of the Bank of Israel, about how he steered his country, during the global financial crisis.
QUEST: Well, welcome back.
Israel was one of the few countries that emerged from the global financial crisis with its economy pretty much intact. And much of this is being put down to the governor of the Bank of Israel. Stanley Fischer, who once taught Ben Bernanke, himself, was praised for guiding the Israeli economy in the aftermath of the credit crisis.
Mr. Fischer was just announced the "Globes" magazine "Business Person of the Year". And as you'll hear from him in just a moment about what perhaps he thinks is the Israeli economy's greatest strength.
When he was given the award of business personality of the year, businessman of the year, the Fed chief, his former student, was effusive in praise.
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BEN BERNANKE, CHAIRMAN, U.S. FEDERAL RESERVE BOARD: Stan provided ideas and assistance when needed, and at the same time, he was willing to step back and allow his students to pursue their ideas in a spirit of free inquiry.
Stan launched a remarkable number of prominent economists on their careers, he certainly influenced my world view in fundamental ways.
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QUEST: Ben Bernanke, the chairman of the Fed, praising the work of Stanley Fischer.
It had to be a straight forward and simple question. How had Israel's economy managed to avoid the worst of the recession?
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STANLEY FISCHER, GOVERNOR, CENTRAL BANK OF ISRAEL: Well, two things. The first is we started in good shape. We had a big crisis in the beginning of this decade, the government got its finances in shape, between 2003 and 2008. Our banking system was very strong. We have a surplus in the balance of payments when we started. Households are not very indebted. We didn't have a housing boom. So we started strongly.
In addition we in the Bank of Israel, we saw this crisis coming. You know it was clear from-towards the end of 2007, it is going to be a global recession. And all of a sudden we found our currency appreciating like crazy, 20 percent. We weren't going to go into recession with a 20 percent appreciation of the shekel. So we started buying foreign exchange. That gave us an exchange rate which is reasonable, which enabled our exporters to continue exporting.
And secondly, we cut interest rates very sharply, here, and our fiscal policy was responsible. So, that was a pretty good combination.
QUEST: Were you greatly helped by the fact that your banking sector wasn't stuffed to the gills with toxic assets. And actually, although, you may have had a financial crisis, you didn't have a banking crisis.
FISCHER: Oh that was absolutely essential, Richard. And we-if you look around the world, you'll see the countries that got into severe trouble are those that had banking crisis. And those that came out of it very quickly, are those that didn't have banking crisis, and we didn't.
QUEST: You have continued with this policy of buying dollars to push down the value of the-the shekel. Now, I know finance ministers and central bank governors, almost, invariably refuse to comment on the rate of exchange. But you are, you are quite happy to comment on it sometimes.
FISCHER: Well, I have said, even before I became governor of the central bank of a small country, but no small country can neglect the exchange rate. It is a key variable, for the success of the economy. And we judge it appropriateness in large part by what happens to the balance of payments. That stayed reasonably steady, but we have a appreciated. And we do intervene now, when we think the right is getting out of line with what our calculations say the market should put it at.
QUEST: And which is what?
FISCHER: Well, that is-that varies from time to time.
QUEST: I suppose the question-the question I'm hedging around is, do you anticipate further intervention?
FISCHER: We leave open the possibility of further intervention in both directions. Trends change in the exchange markets. One day the United States will start to grow again, and people will rediscover the virtues of the dollar. And things could go the other way. Or something else could happen. So we will not foreswear intervention in either direction.
Let's see, who is what? This must be German. This is Polish. This is Greek. And this is a German-speaking country. I'm not sure which.
FISCHER: This is Russian.
QUEST: And then, of course, we've got the?
FISCHER: German hyper inflation. This is not actually the most rapid in history, but it is the most well-known, and most well-described. And here is domestic product, from my place where I went to high school, which is in Zimbabwe, which has the highest number I've ever seen on a banknote, which is 100 trillion dollars. And then they stopped.
QUEST: And then you have your own bank.
FISCHER: This 10,000 became 10.
QUEST: Does every central banker live in the fear of a hyper inflationary environment. Hence you are all messianic about price stability and keeping-
FISCHER: Well, we have all read the history, some of us have lived through those periods. They are incredibly socially disruptive. And extremely unpopular and relatively easy to get sucked into, so, yes, I don't know if we have nightmares about them, but it is always in the back of one's mind.
QUEST: Let's talk about the so-called currency wars now underway, at the moment. You have specific reasons why you have embarked on that. But frankly, Governor, you are fighting a currency war, aren't you? In the sense that you are trying to prevent the appreciation of your currency against the dollar?
FISCHER: Well, we are trying to keep the value of the exchange rate close to what we regard as a medium-term equilibrium. And that at the moment involves worrying about our level against the dollar, and other currencies. So if you want to describe it dramatically, yes, we are in a currency war. It is one of the more pleasant wars to be in, if that is the case, because you are fighting against success in a certain sense. But it is a problem we have to deal with.
QUEST: Stanley Fischer, the governor of the Bank of Israel. And we'll be hearing more from the governor later in the program. And why he believes the U.S. did the right thing in bringing in another round of quantitative easing.
We are following several flights tonight. I want to show you the departure board. This is from something called, "Flight Board". And look at this. This is the program that will show you, from "Flight Board", London Heathrow Airport, and look at all the red. These are all canceled flights. And on and on and on and on, it goes, delayed flights, some flights by several hours. There are still some as showing as being scheduled. We'll keep you up to date on how they progress.
In a moment from cultural desert to museum Mecca, "Future Cities" is next.
QUEST: Welcome back. Now, I've been investigating the next big museum Mecca, to take place in the world as we search and continue to seek out culture. And it is our "Future Cities" in the desert. The capital of the UAE is getting an entire island dedicated to the cultural assets of the future. You know the superstar architect names making it happen as Lord Norman Foster and Frank Gehry are among the names who are building.
Critics wonder if the UAE's next big thing is motivated not by great art to actually build these museums, but the art of the deal. Tonight, on "Future Cities" I'm taking you to Abu Dhabi's future museum central. We'll see how the UAE is making itself a capital future city.
QUEST (voice over): Abu Dhabi has big aspirations, wealth, opulence, ambition, but it doesn't have any museums. So, here they have decided to build not one, but three international museums on a grand scale, on a single site. The Guggenheim, the Louvre, and the Sheikh Zayed National Museum, all to be built here on Saadiyat Island, at a rumored cost of $27 billion.
STUART MAGEE, EXEC. DIR. FOR DELIVERY, TDIC: We are currently standing in front of what is going to be the Guggenheim Abu Dhabi Museum. It is on schedule and on track to open by 2014.
MICHAEL WHITE, ABU DHABI URBAN PLANNING COUNCIL: Saadiyat Island is going to be a showcase and it is going to be an international showcase for arts and culture in Abu Dhabi.
QUEST: The pile driving has now begun, 1,500 piles are now being driven deep into the bedrock, to construct the Guggenheim Abu Dhabi. Within four years there will be a museum here there will be the Louvre Abu Dhabi over there, and way over will be the Sheikh Zayed National Museum. And all of this will be Abu Dhabi's Museum Central.
MUBARAK HAMAD AL MUHAIRI, MANAGING DIRECTOR, TDIC: We look as this as one of our bridges to the future. It is our younger generations, it is our students here, it is the next generation who we want to be part of the world, citizens of the world. Why the Arab students cannot see a masterpiece? Abu Dhabi is going to show masterpieces here.
QUEST: So many museums being built so quickly, in the middle of the desert. It raises the real question. Why does Abu Dhabi need so much all at once?
MUHAIRI: We are not doing this for a luxury, as a luxury. We look as it as a necessity. I think this is the best news for the local artist. Those museums, like the Guggenheim, or the Louvre Abu Dhabi, they are all researching and studying how can we start? What shall we show here? How can we encourage artists, local artists?
KHALID MEZAINA, ARTIST: If you look closely, you can see, like the camel, or two camels here?
QUEST: Khalid Mizaina is an Emirati artist.
MEZAINA: I always loved to see the Guggenheim, the Louvre, and around the world, and other museums (UNINTELLIGIBLE) other museums have it. And back home it is great an opportunity. And hopefully this will mean that it would also nurture the local talent, the Emirati talent as well.
QUEST: The new cultural district has been designed by world-renowned architects. When completed, Lord Norman Foster, Jean Nouvel and Frank Gehry will all have left their mark on the skyline of Abu Dhabi.
MAGEE: Frank Gehry has a unique way of working. He likes to combine functionality and build form and he works with physical models. And I think on this project, to date, we have built more than 100 models.
QUEST: This is the largest scale model built so far, of the Guggenheim Abu Dhabi. Ah, but even this doesn't do it justice.
When it is completed, this building will be so vast you will be able to fit the Guggenheim New York, right into the lobby.
UNIDENTIFIED MALE: The blue cones that are in the model started as an idea to cool the public spaces. And so I just made a tepee shape, because a tepee takes the air out. There is no museum experience in existence like it.
QUEST: The critics say Saadiyat Island's social district is nothing more than vanity gone wild -- exactly the sort of project that's blown up with the financial crisis.
But here in Abu Dhabi, they believe it's crucial to have these sorts of cultural institutions for the future, to enhance the heritage.
How many hotels?
UNIDENTIFIED MALE: Nine hotels.
QUEST: (on camera): Why do you need nine hotels?
UNIDENTIFIED MALE: We have a world class beach.
QUEST (voice-over): They say they've learned from what's happened down the road in Dubai, where the property bubble burst in 2009 and nearly took the Emirate bankrupt.
UNIDENTIFIED MALE: We are different. We have our own pace. We have our own plans. And we know that we need to plan well and we need to prioritize and react. The financial crisis touched everybody. Abu Dhabi invested in the oil wells and it was invested smartly.
QUEST: Along with the museums, there have been art events -- part of raising the profile of the arts scene in this young city.
UNIDENTIFIED MALE: I'm using (INAUDIBLE) arts fair to launch my grand (INAUDIBLE). People have appreciated like the stuff I do and -- and when they realize that I'm an Iraqi and, you know, that I'm using traditional stuff in a more contemporary way, it's -- it's being well received and people are actually supportive.
QUEST: The people behind Saadiyat's cultural district have a big job to do.
UNIDENTIFIED FEMALE: We're going to a museum tonight.
QUEST: They want to inspire the Emiratis to be not just an art loving public, but curators, patrons, collectors of art and more.
(on camera): If Saadiyat's cultural district is to be a success, it needs to more than just bring in famous pretty pictures. It needs to actually stimulate debate. Only by doing that here in Abu Dhabi would it actually create an art culture in the region.
(voice-over): Should Saadiyat Island's cultural district become a fixture on the international arts scene, then it will give this city an artistic legacy stretching well into the future.
Richard Quest, CNN, Abu Dhabi.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN and here, the news always comes first.
And our big story and your big story, heavy snow has put a damper on holiday travel plans for millions of people, as frustration and now desperation, which is growing at airports and train stations across the continent of Europe. Runways at London Heathrow are open again, but the airport's operator says cancellations and delays could stretch past Christmas. Several more centimeters of snow is forecast for the next 48 hours. We'll get a forecast for you before the top of the hour.
Staying in Britain, where police say they have arrested a dozen terror suspects in a series of raids in three cities. Those arrested range in age from 17 to 28. Scotland Yard isn't saying what they think the target might have been, but they say they've moved now to ensure public safety.
In Belarus, the just reelected president, Alexander Lukashenko, says police have arrested more than 600 protesters who rallied in Minsk following the announcement of his victory. Mr. Lukashenko says Belarus will put an end to what he called "brainless democracy." State media reports he won almost 80 percent of the vote, but independent election observers say the vote count was suspicious.
Two top Iraqi politicians say parliament plans to vote on a new government on Tuesday. The announcement of the list of cabinet members had been expected later Monday. It was delayed, apparently, because of disagreements over the distribution of ministries. Iraq has been without a government since March.
Now, to our top story again and the winter weather that is belting Europe at the moment. The region's airports are crowded with frustrated passengers. Some travelers simply may not make it home for Christmas.
And there is more snow forecast, especially in the southern part of the U.K.
Andrew McCallum is head of communications at Gatwick Airport.
Andrew joins me now live on the phone.
Andrew, if there is more snow tonight, what -- well, you tell me, what are you hearing on what's going to be the effect?
ANDREW MCCALLUM, DIRECTOR OF COMMUNICATIONS, GATWICK AIRPORT: Well, we're expecting somewhere in the region of two to 10 centimeters of snow over the next few hours, Richard. But we are prepared and ready again with a team of 150 to clear the runway and keep Gatwick open as best we possibly can. We've been open now since the afternoon on Saturday and we've seen about 80,000 passengers travel through on Saturday, saw it on Sunday and also today.
QUEST: The -- obviously, no airport can cope with vast amounts of snow falling
But is it your feeling here that these were exceptional circumstances or could better things have been done?
MCCALLUM: Well, Gatwick, as I say, we reopened within four-and-a-half hours and have been so since Saturday afternoon. We at Gatwick saw about 10 centimeters of snow fall within about two hours. That's quite a lot of snow. And we estimate we shifted around 40,000 tons from our airfield. This follows an incident a couple of weeks ago where we had about a fifth and a half of snow, which was also very extreme weather.
But I guess last year, we also saw some very snowy conditions, both in December and January. Back then, we thought it was a 1 in 20 occurrence. This year has proved that's probably not the case .
So that's why we've committed to invest an additional eight million pounds operating our snow fleet, in fact, doubling the number of vehicles we have, giving us the biggest snow fleet of any airport in the U.K. and one that is actually comparable to Oslo's snow fleet.
So that will help us keep Gatwick open year on year.
QUEST: Talking of Oslo, I see looking at a flight board, which I've got here on my desk, it's actually the flights to Norway that have been canceled tonight, to -- well, to -- to (INAUDIBLE) area, Bergen, Stavanger, Copenhagen have all been canceled.
What's -- what's the rhyme and reason for which flights get canceled, do you think, Andrew?
MCCALLUM: Well, part of it is always that the disruption that we've seen with the snow over the past few days in the U.K. But as you said, Richard, we're now seeing those snowy conditions hitting parts of Northern Europe. So holiday travel plans are also being disrupted.
QUEST: And when we hear the transport minister, Philip Hammond, saying that -- you know, that he's asking the chief scientific officer to - - to look into this. We heard the BAA chief exec saying he -- there is a cloud change taking place and this is something that needs to be dealt with, is that your feeling, too, Andrew, that -- that, actually, we do -- well, in the U.K. we need to rethink the way in we -- the spend, the whole climate issue?
MCCALLUM: Well, under new ownership at Gatwick, that's exactly what we've done, Richard. That's why we're investing this additional eight million pounds. We'll triple the number of large snow plows that we'll have to 14, which will enable us to clear the runway even more effectively in future years. It's something we need to adapt to because it's important that we keep Gatwick open for the holidays and particularly our passengers.
QUEST: Andrew, many thanks, indeed.
Andrew McCallum joining me there from Gatwick Airport.
And we'll talk more about that, obviously, in the days ahead.
We do understand and we do appreciate that wherever you're watching us in Europe, whether it's in Munich Airport or in Frankfurt, down in Milan, right across to Moscow, that it's your flight, not the flights from some other airports, that you care about. And we'll try and keep you informed with as much airport information.
When we return, we rejoin Stanley Fischer, the governor of the Bank of England. And we go from the Israeli economy to the macro economy -- why he thinks Ben Bernanke was right for QE2.
QUEST: Now, you'll be aware, of course, that we're following four flights that were due to push back when we went on air. KLM to Istanbul, AA to Narita, the Tam to Sao Paolo and Lufthansa to Moscow. All were due to push back. So far, some of the Web sites say that they're still going according to schedule. Well, that's blatantly not the case. But we can now tell you that the KLM flight that we are following, according to the flight board, is now running two hours late.
It gives you an idea of the sort of situation that people are facing across the continent tonight.
To our economic agenda, quantitative easing, QE, is a term we've heard with increasing frequency over the past year and with little wonder. When interest rates can't go any lower, the central bank's only option is to simulate the economy by printing money and printing reserves.
One of this year's most important market events was the U.S. Fed's decision to inject another $600 billion into the American economy.
Stanley Fischer is the Israeli Central Bank governor and was a spectator not only as a policy-maker, but as Ben Bernanke's former mentor.
In the second part of my interview, I asked Governor Fischer whether he was ever in any doubt that quantitative easing, which he himself also did in Israel, would work.
STANLEY FISCHER, GOVERNOR, BANK OF ISRAEL: We didn't know how well it would work. Directionally it was clear that it would work. And I think one of the things we've learned in this crisis is that having the short- term interest rate at 0 is not an implacable obstacle to further expansionary monetary policy.
In the textbooks of the 1980s, we used to say the interest rate gets to 0 and monetary policy loses its effectiveness. Now we say the short- term interest rate gets to 0 and then you have to seek other methods of undertaking a monetary expansion.
So we understand it better. There are now quantitative estimates of how this works. And I believe now that the 0 lower bound on the short-term interest rate is certainly not a help, but it's not an im -- not as big an obstacle as I used to think.
QUEST: The race is on to protect your currency against what is perceived to be a -- a policy of -- a cheap dollar by the U.S. or a cheaper dollar policy by the U.S.
FISCHER: This is how it's perceived by many countries. That's not what's happening. The U.S. has not much room on fiscal policy and it's growing too slowly by its lights, by the lights of the world. And it has to do something. And the something that remains that it can do is an expansionary monetary policy.
Well, the interest rate on short-term money is 0. The only way to get an expansionary monetary policy is to move other interest rates, longer- term interest rates. So it's buying longer-term assets.
QUEST: The decision to go to QE2 was the right decision?
FISCHER: Yes. I mean I -- I don't know whether the amount was right, but the -- the decision was right.
QUEST: It was $600 billion.
It should have been more?
FISCHER: I am no -- I'm not getting into that. I usually don't say anything about anybody else's monetary policy. So I've said more than I should, probably.
QUEST: Oh, sure. I have -- we're going to go onto other countries before we're finished here...
QUEST: -- before we finish here.
Has the ECB done a good job, do you think?
They've done a very -- they've gone for a very different mechanism, haven't they, for an -- I mean unlimited full allocation of -- of funds available.
QUEST: The central bank, has it got it -- has its credibility remained intact, do you think?
FISCHER: Well, no central bank that's under such attack can, in the short run be on -- be unhurt, be unaffected. But I -- I think the -- the ECB -- and I'm sure I'm expressing views, again. This is dangerous. The ECB has done a phenomenal job in extremely difficult circumstances. Making monetary policy for one country is difficult. Making it for 16, now 17 next week -- next month -- is almost impossible.
QUEST: Was too much money or has too much money been leant to too many banks by the central banks, essentially, whether it's Europe, the U.K., the U.S., maybe even Israel. You have plowed money into the banks, who have then been able to lend it out or to hoard it or to -- to make greater money. They're borrowing from you cheap and they're keeping it.
FISCHER: Well, some of them need to recapitalize and there's always a question whether you should have put them through a reorganize or allowed them to remain alive. That -- that's a separate issue.
In our country, they are not keeping the money, they're lending it. Everywhere where the banking system is sound, the money is going into the banks and it's being lent.
Where the banks have a big problem, it's not being relent. And that's what irritates the public. But we have to find ways of keeping the banking system working.
QUEST: That was really it, isn't it?
FISCHER: Yes, I mean -- you know, afterwards, you can say, when you're -- when you're in a very deep crisis, well, you overdid the treatment. That's there's one thing that one prefers to hear rather than you under did the treatment and the patient had a near death experience as a result.
QUEST: If you take the totality of the crisis that started with the subprime in 2007, how much more do you think we've got to go with this before we can ease off and say it's over?
FISCHER: Well, it's the -- the -- the remarkable thing is that the -- the Europe -- that Asia is growing -- growing so well. The -- and increasingly so. So the trend that was predicted at the beginning, which was the decoupling of Asia from the West, seems now to be in process. It didn't happen at the beginning. They got into big trouble with exports, like everybody lese.
But now they're coming out. So the issue is what happens in the West. And I -- we will -- we will come out of this. How rapidly, I don't know. The power balance in the global economy is changing.
It's going to be a very, a very interesting and historically important period. My great teacher, Charles Kindleberger, used to say the world -- the world economy doesn't work without a hegemony, somebody who makes the rules. The U.S. did that for a long time. Those rules were fundamentally beneficial, benevolent.
The system that was set up after World War II worked pretty well. We didn't get the -- nobody quite got the exchange rate issue solved, but it's a very hard issue to solve. But the trading arrangements that developed are remarkable. We have very open trade in the world. And that was a great success.
Where we're going to go with that if nobody quite takes responsibility for the system, it's very difficult to know. Protectionism is the most natural thing to -- to think about. Comparative advantage is a very complicated theory not -- not intuitive at all. And to maintain the open world trading system is going to be a challenge as the leadership of the world economy shifts.
(END VIDEO TAPE)
QUEST: The governor of the Bank of Israel, not -- I think I called him the Bank of England a moment or two ago.
Anyway, a physical Stanley Fischer at the Bank of Israel talking to me in his office in Jerusalem last week, and thoughtful, indeed.
Now, in a moment, the weather update is extremely important, as we update you on the treacherous travel conditions.
QUEST: Now possibly the most important part of our program tonight, telling you what the weather forecast will be where you are in the hours ahead.
Guillermo Arduino is at the CNN World Weather Center -- it really is a case of never mind what we've had so far and the pretty pictures, what happens next?
GUILLERMO ARDUINO, CNN METEOROLOGIST: It's going to get better. That's the important thing. And I think this is the last straw of this big storm, especially for Britain. If we see the temperatures that we have forecast now, they are all -- the high temperatures they are all above average or -- or below -- not above average, I meant above the freezing point.
So we have now some rain here in the last 12 hours in France. Before we had snow. We may still see snow in France.
I want to show you this picture of Liverpool because it's your hometown and -- and I thought it was pretty cool, from Saturday. But let me tell you one thing while I show you the travel delays in general. Germany got more snow than anybody else and they were dealing with it perfectly.
Most of the problems are not in Germany and they got more snow, so that tells you something, right?
They know how to deal with it and they have huge airports, as well. Germany got more snow and it's still getting more than anybody else. And look, we're expecting more snow in Berlin. And also, the cold will prevail. But the west is getting better now. The west is getting better. Germany is getting some more snow. Look at the winds. That's another problem that I think we need to take into account, that if we have some snow sitting there, it's -- when it blows, you know, it may be a problem.
So we are going to see these temps. It is improving a lot. Look at London at one degree for Tuesday; 4 in Paris. That's the high temperature of the day.
Before I go, I also want to tell our viewers that, in the end, this is coming back. The jet is retreating. And warm conditions will prevail in most Europe or things are going back to normal. The north, the extreme north, continues but it is going to see an improvement.
I have to show you now a map of Iran. There was an earthquake, 6.3, recently. And even though you say 6.3 is not much, as far as we read in here, it was quite shallow and the estimates -- estimates, according to the Geological Center in the United States, is that 10 to 99 people may -- may be fatalities because it is a yellow alert. This is an estimate. And also, the economic loss in between $1 million to $10 million.
So we'll continue to look at this story.
Kerman is an are that has been hit by earthquakes a great deal. So we'll let you know what happens -- Richard.
QUEST: All right, many thanks, indeed, Guillermo, at the World Weather Center.
And we'll obviously hold you -- hold your feet to the fire on that tomorrow.
Now, we want to hear about how you have been affected by the snow. On Facebook, it's quest@CNN.com, Twitter atrichardquest, where you can join that.
And this week, don't forget that we have Q&A with myself and Ali Velshi. And that's where you choose the topic and we answer just how difficult it is and see who wins the battle of the questions, as we unravel your subject. That's coming up. I'll give to the e-mail address. It's CNN/qmb.
And on tomorrow's program, we'll be delving deeper into the workings of the world's central banks. I'll be talking to Andrew Sentance, a member of the Bank of England's monetary policy committee. That's on tomorrow's QUEST MEANS BUSINESS.
We will have a Profitable Moment after the break.
(BEGIN VIDEO CLIP)
PHILIP HAMMOND, U.K. TRANSPORT SECRETARY: We recognize that the costs, both economic and social, of this level of disruption can be very great. Winters such as this year's and last have been rare in modern Britain. But we need to consider whether we are now seeing a step change in our weather that might justify investment in equipment and technologies to reduce the impact of severe temperature and heavy snowfall.
I will be assessing advice on this subject from the government's chief scientific adviser, Professor Sir John Beddington, and we will work with transport operators to examine the business case in each sector for increased investment in winter resilience where that makes sense, recognizing always that spending more on winter preparedness inevitably means there will be less to spend on other priorities.
(END VIDEO CLIP)
QUEST: The message there from the U.K.'s transport minister, who is going to look at the ways forward as to whether or not the science tells us the climate has now changed and more needs to be spent.
These are the flights that we were following for you. They should have pushed back when we started our program tonight -- KLM 1617, Amsterdam to Istanbul. It's delayed for two hours. That's not certainly going on time.
Santa Ana 202, London Heathrow to Narita, yes, it's boarding, we are told. It will be late an hour or two, but it's going tonight.
And Tam from Frankfurt to Sao Paolo. Yes, the 8071 is going. The gate has now closed.
That's the way things are looking. It's very variable depending on where you are traveling.
You can find out, of course. We will keep you fully informed.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest.
Whatever you're up to in the hours ahead, well, I hope you get to your destination and I to hope it's profitable.
"WORLD ONE" starts right now.