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QUEST MEANS BUSINESS
Sovereignty at Stake; World At Work; Decision Day for Greece; Bailout Talks in Brussels; Oil Prices Rising; Trading Tensions With Iran; Future Cities: Hong Kong's Glaring Problem
Aired February 20, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: More money means more control. There's a warning to Greece as Europe rushes to avert disaster.
A preemptive strike. Iran stops selling oil to the UK and France before they stop buying it.
And pay rises at Foxconn that failed to impress investors.
I'm Richard Quest. We start a new week together, and I mean business.
Good evening. After all the riots and the resignations, the missed targets, and those miscommunications, tonight Greece finally goes cap in hand to its European partners to save its financial future.
As we speak, eurozone finance ministers are deciding if Greece has done enough, whether it's a case of the austerity or the commitments or, indeed, the plans put forward to secure that second bailout, worth $170 billion.
Greeks' finance minister, Evangelos Venizelos, says he's optimistic there'll be an agreement. He also says a deal with private creditors, the so-called PSI, is ready to go. According to Reuters, there are separate talks in place with banks encouraging them to take even bigger write-downs.
And while all this was going on, the Dutch finance minister has what some were suggesting a new bailout could be delayed until after Greece's next election. Jan Kees De Jager says European and IMF troika should have a permanent base in Athens.
Jim Boulden joins me, now, to put all this into context. Let's take - - there's a lot happening at the moment, so we need to take it step by step by step. Start, first of all, with the talks in Brussels and what any sticking points would be.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: I think that the finance ministers have said that Greece has done enough for now to get the second ball rolling, so --
QUEST: That's the austerity --
QUEST: -- that's the cuts in the minimum wage --
QUEST: -- that's the lost of jobs, that's the extra $300 million, that's the commitments that have been signed.
BOULDEN: So, everything that worked up until today, it seems that Greece has come OK with all of that. The question now is, who pays what to Greece and how? You've got questions over how much the IMF is going to give in.
The whole goal of this was, of course, to get Geek debt down to 120 percent of GDP by 2020. And that seems just totally unrealistic, and so, there seems to be a sticking point on, is this enough in order to meet the IMF's goal of 120 percent? Sounds technical, but that's where the discussions are going on.
And then, as you said, we had this idea from Reuters that some of the banks are being asked to do a bit more and to get more banks on side.
So, it's not a rubber stamp in Brussels by any means tonight.
QUEST: OK. So, we have the government, that are deciding how to divvy up their share, and whether the ECB will take losses -- well, they won't take loses.
BOULDEN: Take one, too, now.
QUEST: They will be bail -- the ECB will be made whole by someone at the ESFS. So, we have the government, and then we have the PSI, and we've got the question with the PSI, still, of whether these collective action clauses will have to be used.
QUEST: Do we know anything about that?
BOULDEN: Well, they're going to have to be used, because you're not going to get a hundred percent anyway. They need to get something close to a hundred percent. So, I've always had the feeling that if you get about 60, 70, 80 percent, and then the rest will have to come along. And then, that will trigger what's considered to be a credit event.
But the credit event is actually built into the markets. I don't think people are worried about that as much as they were just even a few months ago. It's more about we know that by Greece getting a 50 percent haircut, 70 percent haircut, it's a default. Let's use that term anyway.
QUEST: OK, so, we've got the governments, we've got the PSI, and -- but we still -- and we've got this idea that's just being mooted of a permanent -- troika, a permanent facility.
BOULDEN: Sort of opening on office in Athens and keeping everybody there, sort of Big Brother overseeing some -- No, this is how the IMF --
QUEST: Is this what's going to happen?
BOULDEN: This is how the IMF operates anyway --
BOULDEN: -- if you get money from the IMF, you have to stick to their -- very tight schedule and their very tight rules, and so --
BOULDEN: -- it's -- it looks --
QUEST: Are we closer now, tonight, to this thing being done?
QUEST: Come on!
BOULDEN: For a quarter. For a quarter of a year, yes. You will probably see Greece getting the money in time for March 20th to put off -- to push down the road, to kick the can, I think you like to say, to yet another event, where we'll be talking about this in the summer, and we'll be talking about this in the autumn, and we'll be talking about this in the winter.
QUEST: I think it's one of your countrymen's phrases, that.
BOULDEN: We'll talk about this some more when they kick it down the can further.
QUEST: Well, you mean kick the can --
BOULDEN: Kick the can down --
QUEST: -- down further. It's been a long day.
OK, so, they are -- Sweden is not part of the eurozone. Even so, one of the most respected members of finance ministers in Europe is Sweden's finance minister, Anders Borg, and he says Greece's problems may no longer be standing in the way of Europe's recovery.
The minister met with his counterpart at an Ecofin tomorrow, and I spoke to him half an hour ago and asked him if he believed tonight Greece is a done deal.
ANDERS BORG, SWEDISH FINANCE MINISTER: Well, I think there are some further steps that need to be taken before a complete deal will be finalized. For example, there is an important vote in the Greek parliament later on this week.
But there's also progress made, as I understand it, on some parts of this deal, for example, when it comes to the private sector involvement. So, it might be that we will see some clear sings of progress this evening.
QUEST: The fact that it's so torturous and still so uncertain, I wonder, where does this end? It's been -- it's becoming a drama and a saga of Herculean proportions.
BORG: Well, it has been an ongoing story, now, since late 2009, so it's been with us. But to a larger and larger degree, I don't think that the Greek problems are standing in the way of an overall stabilization.
It's quite clear that the Greek problem will remain with the Greeks for quite some time, but on the other hand, I think there is some signs of stabilization, and pessimism in Europe is giving way to some signs of at least --
BORG: -- that we're heading in the right direction.
QUEST: The view is also, even if this deal is done, they will have to come back for a third bailout. The sustainability levels are simply not good enough, even under these conditions. Is that your understanding, too?
BORG: Well, hopefully finalization of a deal on the PSI issue will -- would remove the issue of further debt restructuring from the agenda. But obviously, the problem will not go away, because there are -- obviously the Greeks are heading towards their election, and there are some quite important political obstacles before we could see the situation stabilizing.
QUEST: The other big question is this idea of a permanent troika or a permanent presence in Greece to monitor debt, serving to monitor payments. Now, I know you're not in the eurozone, but if they do go down that road, that is a quantum leap, isn't it, in terms of European supervision of a domestic economy?
BORG: It would be a step forward if we could have a special account where tight implementation will be a requisite of further payments from the program. The word "permanent" here is quite difficult. I cannot understand how we could have a permanent troika representation in Athens.
But permanent in the meaning when the program is ongoing seems more reasonable. But eventually the Greeks would be out of this and, therefore, also returning to normal for the circumstances.
QUEST: We are now seeing real evidence, aren't we, of fiscal compact, whether it's the letter from Olli Rehn to the Belgians, whether it's the suggestion of a permanent troika during the program in Greece? Do you think European governments are ready for the full implications of a fiscal compact?
BORG: I think we're starting to see the implications, and yes, I do believe we have to move in that direction. There has been too much problems with the governance structure of the euro area over the last two years.
On the other had, for all of us representing the national governments and the national parliaments, there has to be a balance struck here, and in many countries, not the least countries like Sweden, but those of many of the core European countries, this is -- the sovereignty issue is of utmost importance to our parliaments.
QUEST: That's Anders Borg, the finance minister of Sweden, and you get a flavor there of the sort of difficulties they will have even as they move further forward with the fiscal compact. We will bring you any news and results from Brussels on the Greek question as and when we get it.
Other stories tonight for you, as tensions rise over Iran's nuclear program, crude prices are rising with them, and we'll look at how a tit- for-tat trade battle is now spilling well and truly into the oil markets. QUEST MEANS BUSINESS. Good evening.
QUEST: Oil prices are now hovering. They are around a 9.5-month high. This is what happens with Brent crude, $119, $120 between friends, up around a fifth of a percent from Friday's settling price.
And the rise comes about why has this happened? Well, you'll be aware. Iran, which is the world's fourth-largest producer, said it will stop oil experts to French and British companies.
Now, de facto it is a preemptive strike ahead of a European-wide import ban on Iranian oil that's due to start in July, because effectively, there's not -- no purchases or very limited purchases of Iranian oil by those countries. But it's the message that goes out from that decision.
The US Energy Administration says Iranian oil accounted for just four percent if you look at the numbers. For France, it's 4 percent of French imports in the first half of last year, and less than 1 percent for the UK. So, negligible real-term effect.
If you look at Italy and Spain, it'll have a bigger gap to fill when the ban kicks in. Iranian oil makes up 13 percent of their imports for Spain and 13 percent of Italy between January and June of last year.
Iran's oil is not really at the center of this dispute. You'll be aware, of course, that what is really behind it is Iran's nuclear program, and our CNN Senior International Correspondent Matthew Chance joins us now. Evening, Matthew.
So, Iran says it's not going to supply oil to people who weren't going to buy it in the first place and who, in July, can't buy it anyway. In the realms of useless gestures --
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's a symbolic gesture, and I think it shows that Iran is sending the message very clearly that, despite the sanctions that the international community - - in this case, the European Union -- are putting against it, there's no intention whatsoever of bending, and will continue with its nuclear ambitions, even though there are concerns about the idea that Iran may be building a nuclear weapon.
QUEST: People talk about -- people, analysts, the market, you and I - - talk about if they do close off the Strait of Hormuz and they do what they say in terms of cutting off production, then we're seeing $200 a barrel-plus of oil. What -- when -- do you still, from the people you are talking to, is that still the belief, that Iran has that sort of power to have that sort of effect?
CHANCE: Clearly the oil price has risen as a result of this cutoff to the British and French companies. What one consideration oil traders are looking at is instability in the Middle East.
CHANCE: Obviously, instability regarding the future of Iran and its possible conflict with the west, no one's seriously thinking that Iran would be able to physically cut off the Straits of Hormuz. But it will cause disruption, potentially, if it goes into conflict.
QUEST: And it's all about the nuclear plant, and we've seen, of course, President Ahmadinejad with the demonstrations, the yellow cake, we've seen what's been happening in Tehran, and there is still a large credibility gap, is there not?
CHANCE: There is. And this is a make-or-break moment for Iran right now. We've got UN nuclear inspectors in the country, they want definitive answers to some of the questions about the nature of Iran's nuclear program.
If they get them, we could open the way to negotiations. If they don't, it could set the course of -- the tone of relations between Iran and the West in the future.
QUEST: And I was reading during the week that these sanctions are starting to bite in Iran, but not sufficient to actually force a trade -- a change in policy.
CHANCE: Well, not at the moment. The sanctions are biting. Ordinary Iranians are finding it very difficult to buy basic supplies. The Iranians are finding it difficult to sell their oil.
CHANCE: The cost of doing business is very high, now, with Iran. You've got to lease tankers, that's an additional premium. You've got to get insurance on them. It's very difficult and it's an expensive option to do business with Iran, now, and that's the thing that's really starting to bite.
QUEST: In a word, has the situation as a result of what we've seen today deteriorated?
QUEST: That was a word. Thank you. At least you're well-informed now.
Next on QUEST MEANS BUSINESS, the city that never sleeps? Not through want of trying. When we return, Hong Kong residents say they've had enough of a glaring city skyline --
QUEST: -- in the middle of the night.
QUEST: Now, you don't need me to tell you the bright lights of Hong Kong are a tourist delight. Just look at them. When those lights shine at night, the tourists come out to see. But if you live there, well, the lights are driving you mad.
In the fight for advertising space and tourist attention, there's no let up in the array of blinding neon signs that go throughout the night. They are hoardings and they're glaring skyscrapers. They may look beautiful when you see them like this.
Close up and personal, they're ruining people's lives, and the people living in the spotlight, they say they want a Future City which knows when to turn out the lights. And a warning, as you might expect, our report contains flash photography.
QUEST (voice-over): There are lights, bigger lights, and then, there's Hong Kong. The world's big cities are for culture, convenience, and a cosmopolitan way of life. Living in a city, especially like this, can be anything but easy.
Property prices are some of the highest in the world. The city's battle with air pollution is well-known. With so much development, there's also the noise pollution.
Now, an entirely different problem. It's trying to live in a city of lights -- lots of lights.
QUEST (on camera): Bustling with business in the heart of Mongkok, night becomes day when the lights get switched on. This is about as bad as it gets. And remember, there are people living up there, trying to sleep. If they can.
QUEST (voice-over): Wesley Wai couldn't take it and had to move. But not before he produced a video, a combination of still photos that dramatically showed the effect of living here. He called the video "The Lucifer Effect."
"I had insomnia," he says, "and if my blinds were open, I didn't have to turn on my lights." He says the blinking went well into the night, as late as 4:00 in the morning.
QUEST (on camera): The problem is, as the television picture keeps changing, the light reflects onto the building opposite. It's like living in an amusement arcade.
QUEST (voice-over): You might ask ,why would anyone choose to live on a street like this? But soaring property prices, Wesley says it's all he could afford.
Professor Henry Chung has been studying light pollution for more than a decade and says not only is excessive light a real nuisance, it's a waste of energy.
QUEST (on camera): So, what would you do? Would you switch them all off?
HENRY CHUNG, CITY UNIVERISYT OF HONG KONG: It's a good idea, but of course, we have to strike a balance. That's why, I think the government has to do something, legislation try to control the maximum brightness produced by all these lights and track the brightness around the area. Then you see the best way to control light pollution.
QUEST (voice-over): While there's been debate, there's currently no regulations in place to curb light pollution.
QUEST (on camera): It eventually starts to hurt the eyes, doesn't it?
QUEST (voice-over): This is Causeway Bay, a popular shopping district. And don't be mistaken, people are living here, as well. So, how excessive is the light tonight? Professor Chung is armed with his light meter.
QUEST (on camera): Twenty past 8:00 at night. What do you consider to be acceptable out here?
CHUNG: At most, 500 lux.
QUEST: 500 lux?
CHUNG: Yes, at most.
QUEST: At most?
CHUNG: At most.
QUEST: Right, come on.
That's not bad.
CHUNG: Not bad here. Quite good.
QUEST: 40 or -- not bad, all right.
CHUNG: Yes, OK, it's dark.
QUEST: So, they've got 2,600, which effectively is daylight, and if you want to see the culprit --
CHUNG: This is daylight.
QUEST: There it is.
QUEST (voice-over): What's made the situation worse is advertising. To capture someone's attention, you'll bring in the cash. Of course, you don't want to be outshone by the competition.
CHUNG: It's a snowball effect. Say, for example, this shop, OK, uses a strong light. Then, another shop uses a stronger light. Why not just reduce the brightness of the whole area?
QUEST: While the city's glistening skyline's been a draw for tourists for years, now even Hong Kong's chief executive recognizes action needs to be taken.
DONALD TSANG, CHIEF EXECUTIVE, HONG KONG: We realize that we have to do something about it. If you look at the commercial areas, it's pretty bright. I think it becomes offensive, at times, and we are now introducing gratefully our regulation restriction to make sure people do have a quiet night and not be disturbed by too-bright neon lights.
QUEST: The environment bureau has proposed the government switch off decorative lighting by 11:00 PM, educate the public about energy waste, and investigate complaints. That would be a welcome move for Wesley, who doesn't care to be back in the old neighborhood.
He says just standing here gives him anxiety. Stress that could be avoided and the city made more tolerable, more livable, if they'd only turn down the lights.
QUEST: Future Cities, which was in Hong Kong.
Next, the true cost of Greece's bailout. We'll look at why Europe's demands are making cracks in the pillars of Greek society. When we return.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, it's the news that always comes first. News and business news.
Greece's financial future is being decided in Brussels right now as the eurogroup ministers are deciding whether to give Greece that second bailout, worth at least $170 billion. The Greek finance minister says he's optimistic a deal will be agreed. Greece needs the money by this time next month, March the 20th, to avoid a default.
The International Committee of the Red Cross says it is trying to work out a cease-fire between members of the opposition and government forces. A spokesman for the aid group says relief workers need to deliver medical supplies and food to hard-hit areas, including the city of Homs.
Video posted online appears to show a building there engulfed in flames. It's reportedly located in the Baba Amr district, an opposition stronghold. Syrian activists say clashes this Monday have killed 18 people nationwide, most of them in Homs.
Officials with the UN's nuclear watchdog agency are in Tehran today for a second round of talks over Iran's nuclear program. They want more information on the program's possible military dimensions, in their words. Iran says it's producing enriched uranium to fuel civilian power plants.
Yemen is set to hold elections on Tuesday to replace President Ali Abdullah Saleh. The only candidate is the vice president, Abed Rabbo Mansour Hadi, and there are fears that ongoing violence will disrupt the vote. Polling polices and electoral offices have already been subject to attacks recently.
It is half past seven in Europe, half past -- sorry, half past seven in London, half past eight in Europe. And the talking is still going on, as the Eurozone tries to put together the final pieces of a bailout and deciding whether Greece has done enough, pushing for tonight's, for more than $170 billion in value. And the cost of it all is Greece's sovereignty.
So let's look and see exactly what is behind on all of this.
First of all, one of the issues, the Dutch finance minister has suggested that perhaps there should be a permanent troika mission. In other words, not just these regular visits to monitor what Greece is up to, but one of the big problems has been monitoring implementation and monitoring debt servicing. And now, some suggest, a permanent troika is the answer.
(BEGIN VIDEO CLIP)
JAN KEES DE JAGER, DUTCH FINANCE MINISTER: I am myself, I am in favor of a permanent troika in Athens. That's -- that's my personal position, yes, I think permanent. When you look at the derailments in Greece which have occurred several times now, it's probably necessary that this kind -- some kind of permanent presence of the troika in Athens, not every three months, but more on a permanent basis.
(END VIDEO CLIP)
QUEST: That is a huge shift and would certainly enrage the authorities in Greece. Another problem, of course, as we were talking about, servicing the debt, making sure that the main -- the bailout money goes to pay off the bonds. And one avenue for that is an escrow account that would be used purely for debt servicing.
Again, it is effectively saying to the Greek government, we don't trust you to be able to take the money and do with it what is intended, so we are demanding an escrow account.
And one other point. Democracy delayed -- the German finance minister, Schauble, has called for a delay in the Greek elections, and -- which are due to be held in March and April. And in any case, he would like to see a technocrat, either the current prime minister, maintained, or a technocrat continuing to be appointed, very much in the mold of Mario Monti, who is in Italy, of course.
Diana Magnay is with us in Berlin tonight.
The Germans have set out their stall.
Are they going to be playing hard ball in the negotiations?
DIANA MAGNAY, CNN CORRESPONDENT: Of course they're going to be playing hard ball in the negotiations, because they're paying the bulk of the cash.
Wolfgang Schauble said in an interview with one of the German dailies that he had not meant to offend the Greek president, because these suggestions of, variously, a savings commissioner to be sent to Athens, the escrow account and then the idea of the elections actually being delayed themselves. He said, you know, he must have read something wrong into what I said, I did not mean it to be insulting. And you just have to look at the example of Italy to see how will Mario Monti, as a technocrat government, is doing
To think that they might serve its purpose in Greece also.
But there is a very real difference, Richard, of course, between sort of interfering in terms of fiscal sovereignty, which the IMF does when it goes into countries and says, look, this is our money, so we'd like to have some handle on how it's distributed, especially given the experiences of the last two years, when Greece hasn't made good on its promises, and the idea of actually interfering in Greek democracy, per se, and having a foreign government come in -- come along and say we think that the elections should be delayed, we think you should have that kind of government.
That is, of course, a very different issue.
And both issues are extremely sort of offensive to the Greek people and, obviously, to the Greek president. He -- he said earlier in the week that he felt extremely insulted by what Mr. Schauble had been saying, who was he to come along and dictate terms to the Greek people -- Richard.
QUEST: Di, all right, the -- you're in Berlin. The German people aren't too concerned -- and I was in Germany, I was in Berlin myself over the weekend. And in my discussions there and with yourself, the German people are not too concerned about part -- or perhaps a bit of offense to the Greeks, when they're paying the bill.
MAGNAY: Absolutely. Exactly. I mean, you know, if you can't play hard ball when you're the ones bailing them out, then when can you play hard ball?
Mr. Schauble has said over and over and over again, we cannot commit more money to a bottomless pit. I'm asking for nothing more than for the Greeks to actually do what they have promised that they would do.
And that's why they were told to see written agreements from all the political parties that they would actually do what they've said they're going to do.
And what this boils down to is a fundamental lack of trust...
MAGNAY: -- between the Euro Group and -- and Greece. And that is -- that is the problem. That is the backdrop that these negotiations tonight are having to be handled against -- Richard.
QUEST: Diana Magnay, who is in Berlin, in the German capital for us tonight.
Stephen Pope is the founder and managing partner at the research consultancy, Spotlight Ideas.
I always enjoy reading your views every morning when...
QUEST: -- when we get your -- your -- your -- your thoughts.
STEPHEN POPE, MANAGING PARTNER, SPOTLIGHT IDEAS: It's a mess tonight, though, isn't it?
Absolutely right. And just to pick up on that last point, he who pays the piper calls the tune. I'm sorry, the Greeks can be upset and insulted if they wish. If they wish to stay in this club, they have to listen to the terms and conditions paid out by the people that are going to provide the liquidity and finance. And if you don't like it, well, we can't say you know where the door is, because it isn't there. But we've got to make a door for them.
So what's going to happen?
Are they going to get the bailout tonight or not?
POPE: They will get the bailout. So you can switch your green light on, if you'd like, for that.
But, of course, it's going to be an agreement. It's not the right agreement. We should have dealt with this several months ago, in fact, maybe a year or so ago...
QUEST: What do you mean it's not -- oh, no, come on.
What -- what do you mean it's not the right agreement?
POPE: Because you're giving them money when they have no track record of delivering on promises. They have failed to implement constitutional changes. They have failed to collect the appropriate level of taxes. And now they're asking for more, not just the 130 billion euros or so, because there's still an extra tranche of money that's required from the first amount of bailout. There's also deals that have got to be spun with the banks.
And so you're looking more like 170 euros.
QUEST: OK. So, what is the answer, Stephen?
Is it to let them go?
Is it to let them go bankrupt, because that's devastating to the Greek people.
POPE: Whichever way you look at it, you're going to impose austerity, people are going to suffer and they're going to be painfully, you know, out of work and endure hardships...
QUEST: But you...
POPE: -- if they have this austerity.
QUEST: -- you don't believe, if this bailout goes ahead, it will be the last time they'll be back at the trough?
POPE: No. I give it five or six months...
POPE: -- they'll be asking for more.
Because there simply is nothing that's going to happen. This solves the short-term solution of getting out over to March the 20th and then addressing a slew of payment needs for the civil service and the military and so on and so forth.
But what you've got to do is start thinking about what can we try and create to make Greece have some form of competitive edge?
And until we actually rigorously address supply-side conditions, which have not been dot -- dealt with properly so far -- it's going to flounder. And it may as well leave the currency, have an effective 40 percent devaluation and be able to go through two generations of pain but emerge at the other end of it in a better shape than they're ever going to do if it stays in the euro.
QUEST: You stay exactly where you are. And we took a look -- take a look at the markets.
The European markets have shrugged off worries about finance minister and what's going to happen tonight. Green arrows all the way. The Xetra DAX up 1.5 percent. The Paris CAC Courant up 1 percent. The Zurich market. And if we look, in fact, at the Athens market, that has also been up quite sharply in recent months.
Stephen, are they -- are they actually pricing in now the default?
Have they just got used to this idea?
POPE: I think what you're seeing with equities today and through the course of last week is that they're building up the expectation that the deal tonight is going to go ahead in some shape or form.
POPE: But going forward, you're looking around saying that good companies in the European space are making high levels of revenue and profitability by selling outside of the Eurozone's borders.
So they can actually compete well. What you're going to find, though, is anything that's gone into Greece as a sort of catch-up trade, people are going to leave that very quickly.
QUEST: OK. Back to the point I was talking about with Anders Borg earlier...
QUEST: -- in -- in the program. You may -- you may have heard.
Other European countries, though -- will EZ countries, will be worried at what they believe is an attack on sovereignty, because it may be Greece today, but it's the Belgium budget tomorrow, as the "F.T." Columnist made clear. And it could be the Germans next month.
So no one is going to be terribly happy at a greater interference from the European Commission.
POPE: Well, that's absolutely right, because too many countries already -- and we're not just talking about the euro skeptics, we're talking about some of the hard core Eurozone (INAUDIBLE)...
POPE: -- are really getting concerned that they are not going to be able to approve their own budgets in their own parliamentary building before a bureaucrat in Brussels is deciding yes, that's good enough and gives it a tick.
So we really are sacrificing sovereignty right, left and center on this totem pole of European integration. And something has got to give. And it's going to start with Greece and it will get wider and further.
QUEST: Are you sure about that?
POPE: Yes, I am, because if the markets think they've had fun with Greece, they're going to find the next soft target. Portugal will be next.
QUEST: Stephen, good luck here, sitting right there.
We'll either throw your words back at you or we'll tell you you were right.
QUEST: Many thanks, indeed.
When we come back, iPad maker Foxconn has raised wages for workers in China. Shareholders don't seem too impressed, in a moment.
QUEST: Outside Europe, there are worrying signs of fragility in some of Asia's largest economies. Now, Thailand growth GDP shrank at an annual rate of 9 percent in Q4. We don't need to worry -- to accept, obviously, it's a concern, but we do know the reason why there. It's the first contraction since 2009 and it comes as a result of flooding, the terrible flooding, manufacturing and tourism most affected.
Japan's trade deficit hit a record $18.7 billion. Exports fell 9.3 percent. The strong yen has slowed demand. Earthquake and the tsunami increased oil and gas imports from Japan to China fell to 20 percent.
China's central bank eased the reserve requirement to ration debt -- ration down a half a percentage point from February. Now, this, of course, has all had an important enforce on the Chinese economy.
Let's talk more about what's been happening on Asian markets. Shares hit a six month high. Shanghai up .25 percent. Sydney stocks up 1.5 percent. Australian mines were strong, as well.
The PHP Rio more than 2 percent higher.
Two stocks going the other way. Foxconn's two main listed subsidies. Hong Kong listed Foxconn International lost nearly 5 percent. And the Taipei listed Foxconn was also down nearly 2 percent.
It follows steep wage hikes at the makers' mainland Chinese plants. They make iPads. Assembly line workers will get up to 25 percent more in their pay packets. It's the third such increase since 2010 and it comes after Apple initiated a Fair Labor Association audit to working conditions.
Maggie Lake has more.
She's in New York for us.
MAGGIE LAKE, CNN CORRESPONDENT: And, Richard, a wage increase of 25 percent. That's substantial by any standards, although, of course, you're starting from a very low point.
And we did get a statement from Apple regarding the developments that occurred over the weekend. And Apple says, "We care about every worker in our worldwide supply chain. We insist that our suppliers provide safe working conditions, treat workers with dignity and respect wherever Apple products are made."
We also got a statement from Dell, as well. They say they're pleased that Foxconn is taking the step to improve working conditions with a wage increase. "We won't speculate how the reduced over time and higher wages will impact Foxconn's costs."
This is going to be an issue we watch.
Of course, all of this coming after the increased scrutiny on companies like Foxconn, the working conditions there. An expert I spoke to said this is partially because of that, but also, it's coming from within China itself. The workers are fighting back. There are labor shortages. They're much more aware of what their rights are and they're demanding higher wages.
And the government also wants to grow that middle class. So it's part of their mandate, as well.
So all of those factors coming together. They think this is a trend that's going to continue, it's not an isolated incident because of all of the coverage of Foxconn.
Of course, what does that mean for consumers?
If wages are going up -- you already heard Dell saying that it's too soon to comment on what the price is going to be.
Is that going to mean we all pay more for those iPhones, those iPads, our tech gadgets?
People I spoke to said, yes, over time it will, but it's not going to be an immediate jump. It's going to be a little bit more nuanced. Some of those increases in wages are going to be offset by productivity gains.
But that era of dirt cheap Chinese labor seems like it's -- it's starting to fade and -- and -- and the tide is turning there, Richard.
QUEST: All right. The tide is turning -- so, Maggie, do the manufacturers just -- well, I suppose you're starting to run out of, really, cheap places to manufacture, except you can go further into China, maybe, further into the -- into the hinterlands.
But that's the idea, isn't it?
LAKE: Well, exactly. If you want to maintain those profit margins -- and that's probably what's going to happen first. They're trying to ease some of that profit margin and not push through prices to consumers who, in this economy, are reluctant to pay. They're going to try to -- to keep those margins as high as possible.
So it may be that some -- some manufacturers do decide either to go places like Vietnam or Thailand, where they may find cheaper. If not, wages only, Richard, land, other things that are all going up in China.
But they said they -- the experts say that the -- the sort of large scale tech companies, big manufacturers, are not going to be able to just move production like that. They're not going to be able to get those economies of scale, all of those workers that you need, the distribution centers, the logistics that are in place in places like China.
So what you're more likely to see is maybe a shift inland, as you mentioned, in China. But they're probably going to stay in place to feed that growing Asia consumer market, the Chinese middle class that we just talked about a moment ago...
LAKE: -- so the result is, you're going to see those higher prices start to stick somewhere down the -- the food chain.
QUEST: All right. Maggie Lake in New York for us tonight.
Maggie, many thanks
Now, I was in Berlin over the weekend. It's a bit parky (ph), I can tell you that for certain. In fact, it was freezing at times. But I'm ably advised that temperatures are rising across parts of Europe and it's leading to a new round of problems, especially for those people living near places like the Danube Riber -- River. Riber. River, even.
JENNIFER DELGADO, ATS METEOROLOGIST: Right.
QUEST: Jennifer Delgado is at the World Weather Center.
DELGADO: Hi. You're right. And the temperatures are warming up. And that's a good sign, because people say they want a break from the cold weather.
But the problem is, this is leading to melting. And this is leading to problems really up and down the Danube River. And we talked about this a couple of weeks ago. We said about 90 percent of it was covered with floating ice. So shipping was suspended. Certainly, this has a devastating effect on the economies for the 10 countries along this river.
But let's go to some video today and show you what's happening now. We do know that dozens of boats and barges have been crashing into each other as the ice is starting to break up. We do know in some areas, Richard -- get this -- that ice was so thick, it was roughly about a half to three quarter meters deep.
Well, this video coming out of Serbia, Belgrade, you can see the people out there kind of surveying what has been left behind.
Now, as I take you back over, you said you were in Germany over the weekend. And you're right, the weather is better there, a temperature of one degree. Minus three in Munich.
But the temperatures are going to be climbing as we go through the next couple of days. When you have all that snow around, you really want the temperatures to rise very slowly.
But as we go through Tuesday as well as Wednesday, more of this warmer weather is going to be pushing over towards the east. This is going to continue to allow more of the Danube to start to melt. And we're also talking about an avalanche threat, roughly around a three on a scale of one to five, for parts of Switzerland, as those temperatures will be climbing back to normal, as well as above normal.
Now as we go through the next two days, we are going to continue to see a bit more moisture out there. Mainly the heaviest snow is going to be moving through parts of Scandinavia. But we're also going to see some of that snow working into areas, including Poland, Lithuania, as well as into Ukraine and then down toward the south, including parts of Italy, as well as into northern parts of Africa.
And the area of low pressure is going to be bringing some rain across the region.
Now, how is it going to affect you travelers out there?
Say, if you're flying into Stockholm, windy conditions. Delays into the overnight, one-and-a-half to two hours. And then for Moscow, some low clouds around. And then for areas, including parts of the U.K., Ireland, oh, we're going to be talking about some windy conditions in the evening, as well as into the overnight, a 30 to 45 minute extra wait -- Richard, you have been warned. Those winds will be picking up, the winds of change, maybe.
QUEST: Jennita -- Jennifer, we thank you for that.
DELGADO: You're welcome.
QUEST: When we come back, a man who knows how to put on a show 10,000 feet in the air. Yes, the aerobatic champion, Mark Jefferies, and his World At Work.
QUEST: The moment when the West began to conquer its own final frontier -- it was 50 years ago today that John Glenn became the first American to orbit the earth. And though he was beaten into the space race by Uri Gagarin, it was still a landmark moment in American history.
(BEGIN VIDEO CLIP FROM FEBRUARY 20, 1962)
UNIDENTIFIED MALE: The red light is on. Eject from the umbilical.
UNIDENTIFIED MALE: God speed, John Glenn.
UNIDENTIFIED MALE: Five, four, three, two, one, zero.
(END VIDEO CLIP)
QUEST: Glenn is old enough to admit that he didn't hear that famous good luck message. The entire orbit took five hours -- less time than it takes to get from London to Dubai.
Glenn said even after a half a century, the whole experience is still fresh in his mind.
(BEGIN VIDEO CLIP)
JOHN GLENN, FIRST AMERICAN TO ORBIT EARTH: I -- I guess I've recalled it quite often over the past 50 years. And that's kept it fresh. But it was such an impressive thing at the time, that it's indelibly imprinted on my memory. And I -- I can recall those days very, very well.
(END VIDEO CLIP)
QUEST: The U.S. space program with the shuttle may have wound down, although the appetite for adventure is still as strong as ever.
And that's why Mark Jefferies does a job so dangerous, even our cameraman could barely stomach it. Jefferies is an award-winning stunt pilot and this is his -- ready -- World At Work.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: (INAUDIBLE).
MARK JEFFERIES, BRITISH AEROBATIC CHAMPION: The job of air display flying is extremely exciting. You get to travel, see new places and bring to an audience flying that they haven't seen before.
I like to demonstrate an airplane going sideways, backward, just tumbling head over heels.
The first memory I have of flight was when my father took me flying. I was seven years old at that time, from Cambridge Airport. He took me in a Tiger Mop (ph).
I looked down and I saw the little houses and they were like LEGO brick houses.
All my stunt flying I've learned from a book and, in the latter times, from experimentation.
I think the key characteristic of an aerobatic pilot is 3D awareness, having the ability to fly by instinct and a good sense of balance comes into it. It's a lot like a horse rider, a horse rider with a sense of balance can just control the animal.
I've got a good sense of balance and can control the airplane.
When I fly, the airplane is an extension of myself. I don't have to think about flying at all. I can fly just through instinct.
And it's that instinct which leads you to try things out.
The golden rule of air show flying is don't allow yourself to become under pressure from an air show organizer, from a time constraint. Don't do anything that you have never practiced.
I don't get scared. The very first time I had flown an airplane upside down is like when I took my first breath underwater with an Aqualung.
It was sort of so do you be doing it?
A lot of people say, isn't it dangerous?
Well, everything is dangerous.
Flying is the passion of my life. This is what I live for. I cannot imagine doing anything else.
(END VIDEO CLIP)
QUEST: I shall spare the blushes of our cameraman, who did a phenomenal job sitting in the -- the side seat of that, except to say that when it was all over, somebody had to clean out the plane.
But anyway, I can honestly promise you, you wouldn't have got me up in that aircraft. Never.
A Profitable Moment is next.
QUEST: Tonight's Profitable Moment.
So the talking continues in Brussels tonight. And no doubt before the evening is over, we will have reported -- and we hope you'll stay here to find out what deal, if any, has been reached.
And behind that deal, there will no doubt be a fundamental principle - - what doesn't kill you makes you stronger. At least that's the cliche.
That may not be true for Greece, even if a new bailout is agreed. But it might be true for Europe, because the solutions in Brussels reveal the true meaning of a stronger, closer fiscal union.
When Schauble of Germany suggests Greece postpone its elections, he becomes persona non grata. And yet now his Dutch counterpart suggests a permanent presence for the troika in Athens.
For those who are in favor of sovereignty, it it is not a pretty picture. Greece sees an affront to its democracy. Europeans say that it is all for the greater good.
So, tonight, Brussels decides Greece's future and, as they do so, well, the rest of Europe and the Eurozone will get used to the new rules of the road.
And that's QUEST MEANS BUSINESS tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.