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QUEST MEANS BUSINESS
Colombia's Jose Antonio Ocampo Set to Withdraw from World Bank Race; China's Growth Rate Slows; Google's Three-Tier Class System; Facebook's New Friend
Aired April 13, 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: And then there were two. Rumors abound that one of the candidates is about to exit the race to lead the World Bank.
On target but below par. China's growth data is disappointing.
A case of divide and conquer. Google's stock split splits opinion.
The end of the week, I'm Richard Quest and, of course, I still mean business.
Good evening. Tonight, the race to lead the World Bank may be narrowing. The former Colombian finance minister Jose Antonio Ocampo is said to be about to withdraw his bid for the presidency, according to the Reuters News Agency, which is quoting unnamed sources.
Now, CNN's trying to confirm that report. If true, well, what was three will become two. The two suitors for the job are Nigeria's Ngozi Okonjo-Iweala and the US nominee, Jim Yong Kim. In the past few hours, Mr. Kim has won the backing of the Russian federation. A final vote on the World Bank is expected on Monday.
If you join me over at the super screen, I will show you how the voting numbers in relationship tot he two candidates, how it actually plays out. And you have to bear in mind, the new president will be chosen by the World Bank's executive board of directors. There are 25 of them.
Eight countries can appoint their own directors. The United States has one, the UK does, Germany, France, Japan, China, Russia, and Saudi Arabia. Not surprisingly, they are the countries that put most of the money into the World Bank.
Then the rest of the world has 17 directors that it shares between them in various regional groupings. So, for example, the Ocampo -- the Ocampo region includes Brazil and the Dominican Republic and the like.
The voting rights, as you would expect, are not equal, either. So, the United States has -- well, it is 16 percent of the votes. Japan has 9 percent, Europe has 29 percent, Russia 3 or 4, and the rest of the world has 43 percent.
So, that's the way the number stack up. But think of it this way. If you actually end up with the United States, Japan, Europe, and Russia, if you end up with that slice of the cake -- my drawing is not particularly good -- the number you get to is -- let me get rid of that -- 57 percent.
So, even though the United States only has 16 percent in its own right, with everybody else onboard, it wins the day. Jim Boulden is with me now. Is Ocampo gone tonight?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: It sounds like he is because it's been said for a number of days that the emerging markets wanted one candidate. Originally, of course, they put up the two candidates, the Nigerian finance minister and Mr. Ocampo from Colombia.
But after -- they're all going around the world and they're talking to world leaders and they're talking in a lot of capitals, and it seems like everyone's now coalescing who don't want Mr. Kim from the US to back Mrs. Okonjo from Nigeria.
Now, that would then be very interesting because as you pointed out, a great many people -- a great many countries would be backing her and not backing the US candidate.
QUEST: Does it matter, Jim?
BOULDEN: Well --
QUEST: Does it matter?
BOULDEN: I tell you who it matters in the end. It's who Europe decides. Because we know that the US has had every director of the World Bank since it began. Europe gets every leader of the IMF. And as long as that large block, somewhere between 29 and 30 percent of Europe, backs the US, then all of this is a formality.
QUEST: Right. And as I showed the numbers there, if you add up -- even if most of Europe goes along with it, 16 percent, 29 percent, 9 percent for Japan, home and dried.
BOULDEN: What I think is so interesting, though, this time, we've always known all these years that you and I have covered the World Bank and IMF, it's always going to be an American at the World Bank, it's always going to be European at the IMF. I think the next time, it's going to be more interesting, because these countries have said enough is enough.
QUEST: So, one senior source that I spoke to tonight could -- involved in this whole issue said to me, even if they -- it still goes to the United States, it's important that the process has started of changing things for the future.
QUEST: So, there may be no transparency, there may be no meritocracy in this case --
QUEST: But the process of change has begun. Are you hearing the same views?
BOULDEN: My -- the thing that worries me the most, though, of course, is the US Congress, of course, is the one who pays most of the bills, or many, many dollars of the bills, they will have to be convinced next time around, whoever is in charge of the US Congress, that they would have to allow a Brazilian, a Nigerian, a European to be in charge of the World Bank. It's a long process to get to there.
QUEST: Monday, we'll find out. You're not going to put money on this one?
BOULDEN: I put money on the horse racing this weekend. I think that's as much as I'm willing to do.
QUEST: Jim, have a good weekend.
China is coming down to Earth. Not with a bang. GDP growth is slowing down and, after the break, we look at China and the hard landing or soft and gentle as she goes. QUEST MEANS BUSINESS. Good evening.
QUEST: China is coming in to land, and growth in the World's second- largest economy is at its slowest for almost three years. The hard landing that economists had feared may not actually happen. Instead, the soft, gentle landing, much sought-after and desired, may be the way forward.
Look at the way GDP is moving. If you take a look at 2011, look at that. A very nice, gentle slowdown in some, from 9.7 percent in Q1 of last year, slowly coming down.
This is largely as a result of Central Bank policy to increase reserve percentage requirements, ratios, along with a variety of the other tightening mechanisms, which have been designed to bring the economy down.
Now remember, the Chinese government is seeking or said it expects growth of 7.5 percent. So, at the moment, at 8.1, it's still higher than that. And if you look at the reasons -- of issue, consumption spending is still 76 percent of growth. March industrial production was up nearly 12 percent.
But this is the interesting bit. The banks are lending more than 1 trillion yuan. Now, all of these numbers are higher than expected, which then, of course, raises the question about this 8.1 percent and what happens in the future.
The numbers are comfortably in line with most predictions for growth. I asked Madhur Jha, the global economist at HSBC, if this shows China was heading for a soft landing.
MADHUR JHA, GLOBAL ECONOMIST, HSBC: It's very much in line with expectations, at least we expect it to be around 8 percent, and that's where it's come out to be.
And it just does signify that all the expectations of overheating might have been slightly overdone and this is really going in the right direction. Growth is still holding up, but it's moderating to a more sustainable level.
QUEST: Right. Now, if this is rearview mirror stuff, we need to know the forecast, don't we, for the next quarter to see whether this 8.1 continues to fall or holds steady. What's your feeling?
JHA: We're expecting the growth to be above 8 percent, so we're looking for something like 8.3 percent for Q2. And that will be, really, a reflection of the fact that the authorities have started to unwind some of the monetary tightening they did last year.
So, you've already seen them cut the reserve requirement ratio by 50 basis points, and they're likely to do more over the coming months. So, just a reflection that things are -- monetary policy is being loosened, now, as opposed to being tightened last year.
QUEST: Does China need to do more, either on the fiscal or the monetary front, to ensure that this downward slowdown doesn't accelerate?
JHA: Yes, absolutely, it does need to do more. We do expect it to do more, both on the monetary policy side and the fiscal policy side. The beauty is that actually it's -- they have room to do more, unlike countries in the Western world, they actually have room to do more.
So, yes, we expect them to do more on the fiscal side, provide more tax-free base, especially for corporates, or the households as well. And on the monetary policy side, we expect them not only to ease the reserve requirement ratios from banks, but also to cut the interest rate by around 25 basis points by June.
QUEST: So much talk about China, so much panic and so much worry. What's your gut feeling.
JHA: We think that actually what we're seeing right now is desirable, it's something that should come about. It makes the growth in China more sustainable, remove the possibility of there being an overheating and a major crash later on.
So, I think this is something that we should welcome. We are going to see growth sustain at about 8.5 percent levels for this year and next year. We're not looking for a hard landing. So, overall, we think that the slowdown is welcome and has been engineered, to some extent, by the authorities.
QUEST: The woes ans trials and tribulations of the Chinese economy. Stocks in the US are faltering on that news. Patricia Wu --
QUEST: -- is at the New York Stock Exchange and joins me, now. How's the market looking?
PATRICIA WU, CNN CORRESPONDENT: Hi, there, Richard. Well, the major averages have just not been able to pick up any steam today. Investors are heading into this weekend with some concerns about the global economic picture, particularly that growth that you were just talking about in China.
And in the past month or so, the talk here at the NYSE has been less about eurozone concern and more about that potential softness in China, whether it's --
QUEST: What's the fear?
WU: -- a hard or soft landing.
QUEST: What -- what is the fear --
QUEST: What is the fundamental fear? If China is slowing down and everybody was worried that it was growing too fast -- I start to think of Goldilocks, the Goldilocks scenario, not too hot, not too cold. What is it they want on Wall Street?
WU: Yes, exactly. I guess you can call it a knee-jerk reaction, like what we saw over the Wednesday and Thursday, that huge run up that we had, 181 points yesterday on the Dow? What was that really about? So then today, you're seeing a little bit of caution.
QUEST: JPMorgan --
WU: Not kicking some profits.
QUEST: JPMorgan, the first big bank to report results, a fascinating story, isn't it?
WU: Absolutely. Both of the banks, they topped estimates in the first quarter. But their shares are both down about, let's see, a little more than 2 percent right now.
So, JPMorgan says that it made almost $5.5 billion in the first quarter. That's down from a year ago but still beat the estimates, and the results mainly driven by the retail and banking divisions. More homeowners were refinancing their home loans, deposits for consumers and businesses increased.
Now, the investment banking division did have some weakness, and the bank said it put more than $2 billion aside for mortgage-related litigation costs. But CEO Jamie Diamond said he's pleased with the results and that the company continues to strengthen its balance sheet. Richard?
QUEST: Patricia, many thanks, indeed. Have a good weekend. Patricia Wu joining us from --
WU: Sure. You, too.
QUEST: -- New York. Google's founders want to split the stock for more control. It's a case of the ABCs Google style.
Now the currency check. The dollar is showing some strong gains. It's up four-fifths of a percent against the euro, two thirds of a percent against the pound. These are the rates.
QUEST: One of the big talking points in New York and on the global exchanges has been the shares of Google. Today, they fell more than 3 percent on NASDAQ. A 60 percent rise in profits fell flat as Google unveiled a new share structure.
This is the way the price is trading at them moment, down four percent, down 25 dollars. But they obviously are very expensive shares at $625.
When it comes to corporate governance, if you think things are complicated, wait until you see what Google is about to do. Google already has an A share and a B share, and has now decided it's going to add in a C share. There will be three classes of investors in Google shares. What is the difference in broad brush strokes, and how will it effect them?
Let's start with Google A. Maggie Lake is Google A for the moment. These are the original shares, Maggie, aren't they?
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: They are, Richard. And this is much like you'd expect, what we're used to seeing. One vote per share, and it's the share that if you hold Google right now, you're owning, and it's the one that trades under the ticker symbol G-O-O-G, GOOG. So, this is a sort of standard share.
QUEST: Google A, a standard, buy it on the market, hold it, invest in it. Google B shares, which were created some years ago before the IPO, Maggie explains on that one.
LAKE: No, that's right. These are the sort of -- you want to think of them as the super voting shares, or the ones that the founders hold. You get ten votes for every one of these shares, and that, in effect, gives the founders, along with the chairman Eric Schmidt control over the company.
LAKE: It's very hard to surmount that. They control the voting blocks. That's why they're called super shares, the B shares.
LAKE: You and I can't have those, Richard.
QUEST: Right. You and I can't have them. Now, the Google A and the Google B is very similar to, say, the News Corp, the Murdoch empire. It's quite common where a group of people want to keep firm control. But then, Google has announced Google C. At this point, I'm exhausted. Maggie Lake, what's Google C all about?
LAKE: The -- and this is where it gets really complicated. And you're right, Richard, that sort of class B super voting share exists, very common, by the way, for tech firms who want to keep that internet start up feel, want to keep creative control over the company. A lot of them are doing it, Facebook will be doing it. So that is common.
This is where it's a little bit unprecedented and people are confused. This is the C share, non-voting. You have no say whatsoever in the company if you own this. This is what Google's doing. So, in the split today, if you own a Google share, it'll split, and you will now have the A share still and a C share with no voting power.
LAKE: So, in essence, it sort of waters down your say in the company. That's what corporate governance experts don't like about this.
QUEST: Right. So, why are they doing it, Maggie? Well, we know it's because when they want to buy things in the future, they can use their C shares to buy them without being diluted to the B's or the A's. Does it make sense?
LAKE: That's right. And that's what was happening. When they were issuing, say, new stock to employees, which is what you have to do to maintain talent, those shares outstanding, it was slowly ebbing away the control they had. It wasn't anywhere near ceding it, but they could see what was coming. So, they created the C share.
The issue here, Richard, is sort of interesting is, the corporate governance people don't like it because you have no vote, and they did it to have an alternative currency. So, now when you're an employee, if you join Google, you may get these C shares.
If they go to buy a company and they use stock, they may use this. So, it's -- the aim is to sort of create an alternative currency for them to use without diluting the shares. Corporate governance experts don't like it because of the voting.
But I talked to a money manager who said it's not so much the voting power that they would worry about, because listen, frankly, a lot of fund managers, they don't vote, they don't get involved in proxy fights over control of the company anyway.
QUEST: All right.
LAKE: They're not active -- most of us are not activist shareholders. That -- what they're worried about is the liquidity. These C shares are going to trade under another ticker symbol.
How much liquidity they have and what price they trade at, that's what money managers are little worried about. That is very murky and we're not clear. Do they trade at a par with the existing shares, at a little bit of the discount, which might be attractive?
If there's no liquidity, who wants to buy a share where there's no voting power? If there's no liquidity, that's what's going to be a little bit of trouble, and that's what people would stay away from. That's going to be the real question as to whether these are successful as an alternate currency.
QUEST: Maggie Lake, Google C. We thank you. CBA, the ABCs. Now you understand what Google are all about.
Google's rapid expansion gives it a level of power. It might have taken a bricks and mortar company decades to achieve. This week, the eight-year-old Facebook forked out a billion dollars for Instagram, which itself is a mere 18 months old. We've talked about this on the program.
You'll also know that I said, look, whatever -- whatever merit Instagram has, can it really be worth a billion dollars? David Armano from Edelman Digital thinks otherwise. He joins me. Now, I read your note on this. I'm still -- well, you tell me, David, why a billion is value for 30 million users when you already have nearly a billion users of your own?
DAVID ARMANO, GLOBAL AND INTEGRATION, EDELMAN DIGITAL: Well, Richard, thanks for -- I'm happy to be on your show. I think it's a good question that you're asking. I think there's really two questions, and there's sort of two ways to answer that.
The first that you're asking directly is, is it worth a billion at face value? And I think you can say the answer is, it's probably not. One of the valuations that I've seen was comparing it to the "New York Times." Is Instagram worth as much as a "New York Times?" And I think at face value, probably not.
But the second question, and I think is the critical one is, is it worth a billion dollars to Mark Zuckerberg? And I think the answer there is -- well, we know the answer, yes, it was, obviously. The follow-up question to that is why?
ARMANO: And there's a number of answers to that. It's not just the user base. That is one. Facebook is expected to grow aggressively based on the venture capital money that's behind it. They see growth in Instagram, so that is one of the reasons.
But much like in real estate where it's location, location, location, in technology, it's data, data, data. And he who owns the data, or she who owns the data --
QUEST: All right.
ARMANO: -- will own the web.
QUEST: OK, so, we --
ARMANO: So, with -- go ahead.
QUEST: Well, OK. So, we can see that they want to get into photos, they want to make sure that nobody else gets there first, they've got the paper through which to do it, but now talk to me, David, about the fact --
Let's take the Google story tonight and the Facebook story. Are these technology companies rewriting in many ways our thinking of how corporate governance and how -- and the way in which they run themselves?
ARMANO: I think they're definitely -- I'm not sure about corporate governance, but -- well, we know that with Google to some degree. But I think they're looking at each other as dead-on competitors, and they're really trying to outmaneuver each other.
Again, to go back to the dollars, Google has invested millions in social with Google Plus, and there are no signs of letting up, even though they're not -- they're not building as much of an active user base. Just this past week, they re-released a total redesign. So, they're continuing to invest.
And the belief there is that Facebook knows, and they've known from the beginning, that the web is going social. We see that at play now. There wouldn't be a Facebook if that was not true. But now, both Facebook and Google also know that after social comes mobile.
QUEST: All right.
ARMANO: The social web can only exist if it becomes mobile. And that's what you're starting to see with Instagram as well, so there's definitely a lot going on between Facebook and Google. They're in direct competition.
QUEST: OK. So, quickly, as we come to an end, pulling the strands together, it took traditional bricks and mortar companies decades to get to the strength of these companies that we're seeing now. That's the real revolution underway here, isn't it? That the speed and the power and the financial muscle that they now command.
ARMANO: Absolutely. And I'll give you an example to bring it back to the brick and mortars world. And also, another reason why we're seeing these valuations, a lot of it has to do with marketing and advertising.
No, go back to Google again. Google built their entire empire off of -- much of it off of paid social. So, as a company, basically buy key words from Google and you show up in Google's search results somewhere outside of what's called earned Google search results.
And Facebook, to some degree, has a similar model with targeted advertising. So, this is why data is important. The more Facebook knows about you --
QUEST: All right.
ARMANO: -- the more they can advertise effectively to you. And here's where -- here's where it connects to brick and mortar. That is going to take away from traditional advertising. What Madison Avenue built up over the past 40 or 50 years, the more people use networks like Facebook, the more people use the web --
QUEST: All right.
ARMANO: -- those dollars are shifting over into that world, right? The advertisers that spend money on CNN in broadcast media will shift over into digital --
QUEST: Hey, hey, hey!
ARMANO: -- and beyond networks.
QUEST: Not just yet! They've still got my wages to pay for next month.
QUEST: David, many thanks for joining us.
ARMANO: I had to -- I had to get that in there.
QUEST: Yes, yes, yes, yes. Enough of your heresy tonight! Be gone! Many thanks for joining us and talking about that.
In a moment, while I go have a lie-down -- coming up on QUEST MEANS BUSINESS, we take a look at the final market numbers after a sour week in Europe. And its a hard sell for Poland.
QUEST: Austerity and economic growth. QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, it is the news that will always come first.
The U.S. is withdrawing an offer of food aid to North Korea over the long-range rocket launch. Washington had warned the aid was conditional and going through with the launch could be the deal-breaker. The rocket broke apart about two minutes after liftoff on Friday and fell into the Yellow Sea.
Syrian activists put their faith in a ceasefire and fall onto the streets on Friday in protests across the country. There were reports of sporadic clashes in the city of Homs and near the Turkish border. International envoy Kofi Annan is demanding Syria pull its forces from the cities and says violence is way down from what it was before the ceasefire began.
Egypt's parliament has barred members of the old regime from running for office. Tens of thousands of people took to the streets of Cairo to protest against the decision of a former spy chief to stand in presidential elections. Omar Suleiman had served as the intelligence chief for the ousted president Hosni Mubarak.
The British prime minister David Cameron says economic sanctions going to Myanmar should be suspended. Mr. Cameron said suspending rather than lifting sanctions is the right answer to encourage further progress in democracy and human rights in Myanmar. He's the first leader to visit (inaudible) to Myanmar on the western major country in 50 years.
Spain is warning Argentina there will be repercussions if it nationalizes the oil and gas company YPS (ph). The Spanish company, Repsol, says it hasn't received any notice that Argentina will take control of its state in YPF (ph) but (inaudible) year-round the plans sent Repsol's shares down around 23/4 of a percent on Friday.
QUEST: European markets have ended the week on a sour note. They were weighed down by concerns that stocks were, as you can see, German DAX down 21/3 percent, but the midtel (ph) in Milan down 31/2 percent. What a horrid week it has been for particularly the Spanish IBEX and Milan down 31/2 percent in Spain.
And that loss on top of a bad week has left market -- (inaudible) the Spanish market down its 13-month low, quite a dramatic (inaudible) 7693, all the way down to (inaudible) in this (inaudible), 7200s levels. Spanish banks borrowed more than ever before -- from the last -- from the ETB last month. The Bank of Spain says gross borrowing skyrocketed to 316 billion euros, more than $400 billion.
Portugal became the first country to ratify the fiscal pact that the E.U. treaty tightening budget discipline. The Portuguese parliament also proved a new firewall, which is the ESM, the European Stability Mechanism.
Poland is a powerhouse of growth compared to the rest of Europe. The economy grew more than 4 percent last year. Jim Boulden spoke to the Polish finance minister and asked if Poland is on track to do quite as well this year.
(BEGIN VIDEO CLIP)
JACEK ROSTOWSKI, POLISH FINANCE MINISTER: Well, I think we generally prefer to be cautious in general, and what we certainly can say is that after the really stellar results, I think, of 4.3 percent growth for the whole of 2011, we're now really very confident that 2.5 percent growth that we're forecasting for 2012 and which is forecast by the commission to be the highest growth in the -- once again in the European Union, that we'll achieve that.
JIM BOULDEN, CNN CORRESPONDENT: Obviously a very export-led economy in that sense. How worried are you about the possible that Spain might kick off this whole euro crisis again? I mean, you must be watching very carefully?
ROSTOWSKI: Well, we're very worried. We've always been worried about the euro crisis, ever since it began two years ago, just as we were worried about the financial crisis when that began in 2008.
But we have been, by far, the fastest growing economy of the European Union, out of all 27. Almost 16 percent cumulative growth in 2008 to 2011, and more than twice as fast as the second growing -- fastest growing economy, which was Slovakia, which only -- which achieved 8 percent. We've managed to grow through this crisis.
We have the secretary-general of the OECD here last week, and he reminded us that not only were we the fastest growing economy in the E.U., but also the fastest growing economy in the OECD over those four years.
BOULDEN: But I notice industrial output slowed in February. Do you think that's a trend for Poland?
ROSTOWSKI: I think I always prefer to be conservative. But on the whole, the GDP for the first half is looking very good. And I think one should never get too excited about one month's figures, whether they're exceptionally good or, in this case, slightly, slightly disappointing.
BOULDEN: It's very clear the Polish zloty has raised in value a lot this year already, one of the fastest growing currencies. Does that concern you and could that impact negatively on the economy? Or do you see that as a sign of strength?
ROSTOWSKI: No, I think that the way the mechanism works is quite well-known, and that is that when the situation in Europe becomes calmer, there's lots of strength in it, because it has a huge capacity to strengthen. When the situation in Europe becomes more fragile, there's lot to weaken. And that strengthens our export performance.
So we're fairly comfortable with both situations.
BOULDEN: Let's talk about austerity. Despite all these very good numbers, you are embarking on austerity. We've seen a few protests earlier in March, raising the retirement age to 67, something many countries are doing. Do -- is it a hard sell in Poland for people to understand why you're embarking on austerity at a time when the economy is growing and grew throughout the recession?
ROSTOWSKI: Strengthening public finances is something that is not only related to raising pension age -- retirement age -- we had a high fiscal deficit in 2010, and we're bringing it down extremely fast over 2011-2012. We're doing that mostly by holding very tight -- holding expenditures down very, very tightly, in spite of the economic growth that we've -- the (inaudible) that we're experiencing.
(END VIDEO CLIP)
QUEST: (Inaudible) Poland, austerity at times of growth. QUEST MEANS BUSINESS and in a moment, it's on the (inaudible) Grand Prix gets the green light. We'll have an exclusive interview with Bernie Ecclestone.
QUEST: Will be business as usual for Formula 1 boss Bernie Ecclestone at next week's Grand Prix in Bahrain. After weeks of speculation, the race organizers have confirmed the race is to go ahead. There's been ongoing civil unrest in Bahrain. Mr. Ecclestone told CNN's Eunice Yoon that has nothing to do with sport.
(BEGIN VIDEO CLIP)
BERNIE ECCLESTONE, CEO, FORMULA 1: We have an event in Bahrain, which has been on the calendar since last October. And the people that are the international supporting authority in that country are the only people that could change anything if they wanted to, because they were the ones that applied for the date. So if they didn't want the race to take place, they would apply for it to be removed.
EUNICE YOON, CNN CORRESPONDENT: There's (inaudible) anger on the ground in Bahrain and the anti-government protests that has been directed towards the Grand Prix. Do you think that that's fair?
ECCLESTONE: I understand the problems in Bahrain are nothing to do with Formula 1. Quite the opposite, we have a lot of support. I mean, there are other issues, I believe, in Bahrain. But it's nothing to do with us. We don't go into a country and interfere with the politics in the country anywhere, wherever we (inaudible).
YOON: Does sport have a responsibility to bear in a country's politics?
ECCLESTONE: No, I think quite the opposite. I don't think sport should be involved in politics. When any sport goes into a country, they respect the laws of the country, whatever they are.
YOON: Is there any concern on your part that the F1 could be perceived as indifferent to the plight of people here or not?
ECCLESTONE: Well, it's nothing to do with Formula 1. I mean, presumably what -- let's put it another way if we can. Assume there was -- we didn't have a race in Bahrain. Would all the problems stop? There would be no more problems in Bahrain?
(END VIDEO CLIP)
QUEST: Bernie Ecclestone talking to Eunice Yoon.
Now you'll be well aware, because we've talked about it on this program, I'm obsessed by the Titanic, the whole story of it is fascinating. Tom Sater's at the CNN World Weather Center.
I don't know why I continue to be fascinated, but it is the centenary this weekend.
TOM SATER, AMS METEOROLOGIST: Yes it is, Richard. I've heard that about you, so you may like this theory and a forecast for those that are superstitious, I mean, it is Friday the 13th, right? Let's take a look at what we talk about as far as icebergs. Obviously, the Balmoral, the memorial cruise, will make it to the historic site for tomorrow.
We have iceberg monitor flights. This is a 5-7 hour flight every other week, and they use this, and they plot the icebergs. I want to show you the current -- this is today's ice chart. Each one of these numbers is an iceberg. It does record its size, its distance, of course, from Newfoundland, and any movement.
Now the site of the Titanic, you know, the maritime's worst disaster, well to the south. This was not really the picture (inaudible) as we know, of course, 100 years ago. There is a theory -- you may have heard about this, maybe not. It is called the supermoon theory. It was an ultra-rare alignment of the sun, the Earth and the moon.
Supermoon, when the moon is full, closest to its monthly approach to Earth, obviously we have high tide; in new moons, we have low tide. Well, the supermoon, three months before that fateful cruise in 1912, may have created some tides that had sent icebergs southward. Here's the theory: take a look at this. We already know about the tides, high tide, low tide and full moon.
But on that day in January, three months before the flight, it is believed the moon was its closest approach to the Earth in over 1,000 years, high tides may have lifted some of the icebergs that actually come down from Greenland, and they come down the Labrador current, and they get jammed up in Newfoundland in the shallow water.
So typically, we have 2,000 a year. But it's very possible with that supermoon, that some of those could have drifted south of that 48 degree north. The next time that we'll have one of those supermoons that close, well, we're going to be old and gray by then, 2257.
Icebergs are not the threat, but of course those on board the Balmoral, and of course, all the vessels that are meeting at the site, we've got thunderstorms that will be moving along an elongated front that I do believe the cruise ship will pass through this.
But it's going to be the winds that are easily going to kick up waves at the site of the Titanic, four meters -- and that may be conservative. So we're going to keep an eye on this, Richard. It may be a pretty rocky day, but all the ceremonies taking place on those cruise ships.
QUEST: Fascinating. You've just fed my obsession a little bit more. Many thanks, Tom.
And that is QUEST MEANS BUSINESS for tonight. Thank you for being with us this week. I appreciate it. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. MARKETPLACE AFRICA is next.
DAVID MCKENZIE, CNN CORRESPONDENT: From N'djamena, Chad, welcome to MARKETPLACE Africa. I'm David McKenzie. In this week's show, we look at how Chad's economy has been badly affected by the crisis in Libya.
Many thousands of Chadians lived in Libya and sent money back to their family here in Chad. But with the onset of the revolution, and NATO's engagement, many of them returned home. Because remittances are a key driver of this economy, the family has been badly affected.
The last place Daoud Mohammed wants to be right now is home. But he has no choice.
DAOUD MOHAMMED, RETURNING MIGRANT (through translator): To survive, I had to be away, though my family was here in Chad, because there's nothing for me to do here. I don't have any skills. I don't have any qualifications and the rainy seasons here don't come often enough, so we can't cultivate.
MCKENZIE: During his first nine years working on construction sites in Libya, he returned to Chad only once -- to get married. Like Mohammed, around 300,000 Chadians made their living in neighboring Libya, along established migratory route.
In Moammar Gadhafi's Libya, Chadians and other Africans were often welcome, filling a key gap at the lower end of the labor market. That is until the revolution.
On February 15th, 2011, Libyans rose up in Benghazi against Gadhafi's autocratic rule. The world focused on the uprising and war in Libya, but from the onset, other Africans were targeted.
MOHAMMED (through translator): I don't know why they attacked me. I'm just a laborer, and I don't care about politics or governments. I just don't know why they did this to me.
MCKENZIE: Mohammed says a group of armed revolutionaries stormed his company compound in Benghazi, accusing some 300 Chadian workers of supporting Gadhafi. He fled with nothing, his life savings stolen. He was evacuated by plane from Egypt.
MOHAMMED (through translator): Now we have to beg for food, and the local community gives us some food and that's how we survive. We have nothing else.
MCKENZIE: Is it unfair that these Chadians were targeted?
QASIM SUFI, COUNTRY CHIEF, IOM: I think it is always unfair, because wars do not do good. I mean, the revolution, of course, was all a peaceful revolution. The revolution that came by -- with fighting, by -- and, of course, innocent people always get harmed. And I think most of Chadians who were there, I mean, were for really gaining some earnings, to make some earnings and support their families back home.
MCKENZIE: The International Organization for Migration negotiated with the Transitional National Council in Libya to get the Chadians and other Africans out in a highly sensitive evacuation operation.
SUFI: We went there, we have 10 people (inaudible) open area, no housing, no water, no sanitation facilities, no food, no medication.
MCKENZIE: They brought more than 90,000 back. The foreigners did play some part in the fighting as mercenaries for Gadhafi during the bloody civil war. The IOM and local leaders say the vast majority of Chadians, like Mohammed, were working to send remittances home.
MOHAMMED (through translator): Libya was always a rich country. They have lots of oil, and therefore there are work opportunities. Whoever goes there, even without an education, will find something to do. Being a laborer or working in agriculture or in construction, there are always opportunities over there.
MCKENZIE: There are few opportunities in Chad. It's one of the poorest countries on Earth. Most Chadians live on less than $2 a day. The money, sent every three months from Libya, is a lifeline. Successive droughts in Chad have hurt its agricultural output, and industry is minimal. Remittances help kickstart an otherwise largely stagnant economy.
Like Libya, Chad has oil. It was supposed to be the savior of this country.
SULTAN AL SADIQ AL BASHIR, LOCAL LEADER (through translator): For 10 years, we've seen no benefit from the oil, nothing at all. People are still poor. People need a lot of things. And the oil, it is not doing anything for the people.
MCKENZIE: Nor does the Chadian government, says groups like Transparency International, which ranks it as one of the most corrupt. Idriss Deby grabbed power in a coup in 1990. Despite some recent reforms, state safety nets are almost nonexistent.
So returning migrants like Tidjani Ali and Abdul Aziz, must fend for themselves. They were strangers before the Libyan revolution, but forged a friendship in a Tripoli prison.
ABDUL AZIZ MUHAMMED, RETURNING MIGRANT (through translator): Six months is not a short time. We spent hour by hour, minute by minute together. That is why we became friends. There are more than 100 of us.
TIDJANI ALI MOHAMMED (through translator): We were put in a big room and it was full of Africans, from Mali, from Senegal, Niger, Nigeria, Chad, too many to count.
MCKENZIE: Aziz says he traded clothes. Ali worked as a skilled plasterer. But that didn't stop his torture.
ALI (through translator): They forced me to confess that I worked with Gadhafi, but since I did not work with Gadhafi, I just kept saying that I didn't. So they kept beating on me. It was constant suffering. They treated me so badly, they beat me all the time and I didn't know if I would die today or tomorrow.
MCKENZIE: But Abdul says that the humiliation they feel now is far worse than the beatings in Libya.
ABDUL (through translator): It's very hard to go out of your country to get money for your family, and then come back without money. At our age, it is shameful to ask for money from our family, and it is shameful when your younger brother asks for money, and you can't give it.
MCKENZIE: The migrant workers of Chad believe they've become a burden on the families they once supported. Thrown out of Libya with few opportunities at home, their fates are now deeply connected to the fate of Chad and this troubled region.
So as Chad tries to reintegrate its migrants from Libya, how can the country pull up its economy and pull people out of poverty? Next we speak to a leading economist to find out.
MCKENZIE: This hotel behind me was financed by Moammar Gadhafi's Libya, a key investor in Chad. But that money has all but dried up, and Chad's economy has been blighted by years of internal and external instability. And this week's "Face Time," we speak to Dr. Ali Abderahman Hagar, an economist who was in the government, but now runs a private business school.
Libya has caused a lot of problems for Chad in recent years, many Chadians worked in Libya, in the oil fields, laborers, even skilled workers. The International Organization of Migration says tens of thousands have come back. What impact has that had on the economy?
DR. ALI ABDERAHMAN HAGAR, FORMER FINANCE MINISTER (through translator): The impact was deep, because we welcomed 100,000 people who contributed to Libya's development, but returned empty-handed. As you already know, it is difficult to feed one person here in Chad. So to feed 100 more without having planned for them is dramatic.
And in Libya, Gadhafi is another issue, but Libya was a place of work for many Chadians. Many studied there, worked there and, frankly speaking, Libyans have also invested much in Chad. There are about 10 projects in finance, banks, hotels, housing. But the war in Libya created an imbalance in some regions.
For example, in the north, we have regions that were already poor. And in such poor regions, more mouths were added to be fed. It's not easy, so I think that this is a big problem. We haven't received enough support from international states. We have, in some way, become victims of the war in Libya, even if few Chadians are in mourning over Gadhafi's death.
MCKENZIE: There are many economic challenges in Chad. This country has one of the poorest populations on Earth, and business is slow to develop. How can Chad move into a developing country more in business terms?
HAGAR (through translator): In economic terms, it is true that we have a lot of challenges, but we are a petroleum country. We are number 10 in the countries that produce petrol. So the question that remains is how will Chad attract investors? I believe it will be through its governance.
A good governance will create the necessary conditions for a better outcome of resources between the Chad population. It is true that we are a poor country, but we also have a big problem with the handling of our resources. And so poverty prevails and many people wonder if this is really a petroleum state and investment becomes a challenge in most departments and infrastructures.
MCKENZIE: It's been 10 years since oil really came online and started flowing in Chad. And people always you speak to, say they haven't seen much of the benefits. Why is that?
HAGAR (through translator): It is true that the population is in a rush to see results. The profit of this petrol. But petrol can't be shared amongst people like a piece of cake. It can only be shared through the creation of infrastructures, through health and education.
In that sense, things have been done, but we can do better. If you look at the population as a whole, poverty is clear. This can't be denied. And that is why there is often a contrast between the revenues and the state of the nation. When you have good governance, it becomes easier, and the population will reap the reward of the petrol.
MCKENZIE: If you look at Chad, the infrastructure hasn't improved a great deal in 10 years, compared to the amount of revenue that's come in. So where is the money, do you think?
HAGAR (through translator): I really think that a great deal of that money has been used in the infrastructures. We have gone from having one university to having 11 universities. We went from 300 roads to about 5,000 now.
There have been about 1,000 new schools that were built, but there has also been a lot of corruption, a lot of corruption, bad governance, whereas you know some ministers are in prison because of this corruption.
Well, so the money goes in the pockets of some people, who sometimes take advantage of the nation's revenue, and they do not care about the lives of the population. But I don't want to go to the extreme and say that nothing has been done. A lot has been done, but at the same time, a lot more could have been done if the system was just.
(END VIDEO CLIP)
MCKENZIE: You can check out all of our stories online. That's it for this week's show, from N'djamena, Chad.