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QUEST MEANS BUSINESS

UK Double-Dip Deepens; Europe Survival Plan; European Stocks Bounce Back; Climb Off the Summit; Concerns Over Impact on China If Eurozone Breaks Up; Pandora Raises Outlook; Euro at Lowest Level Since July 2010; Cousteau-Linked Fund Launched on NYSE; Egypt Votes

Aired May 24, 2012 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MAX FOSTER, HOST: The double-dip deepens. The UK economy is in a bigger hole than we thought.

From Facebook flop to pop. The CEO of Pandora lifts the lid on what it takes to make a tech IPO a hit.

And restarting its engine. Yahoo launches a new way to search the web.

I'm Max Foster, this is QUEST MEANS BUSINESS.

Well, the double-dip gets deeper. The UK's recession is worse than we thought after revised numbers showed an even steeper-falling GDP. The British economy shrank 0.3 percent in the first three months of this year. The initial reading had been slightly better, showing a 0.2 percent decline.

Either way, the data confirmed a double-dip recession, and with the eurozone still struggling, production is down, too. Manufacturing is also flat.

If things weren't bad enough, we got some pretty dire numbers from Europe, too. Sarah Hewin is at the -- is the senior economist at Standard Chartered. She joins us from their offices in London. Thanks so much for joining us.

Apart from the UK news, we have this German confidence data, which was a bit of a blow as well, wasn't it?

SARAH HEWIN, SENIOR ECONOMIST, STANDARD CHARTERED: Yes, it was. What's interesting is that the general business confidence indicator, the Ifo index, has been showing a very strong reading so far this year. That was up until today, and it's seen in direct contrast to weakness that we've seen elsewhere in the euro area economy. And also some weaker German surveys.

But today's number showed quite a sharp decline in business confidence, and it suggests that the problems in the periphery are starting to feed through to the core euro area economies and, in particular, Germany.

FOSTER: Is the UK a concern? Because it's an indication of how the eurozone crisis is moving out of the eurozone.

HEWIN: Yes, the UK has its own set of problems, of course, but those aren't helped by the issues that are developing in the euro area. In the UK, we have tight fiscal policy, we have credit constraints even though bank rate is still very low.

And on top of that, confidence, I think, is suffering as a result of what's happening on the continent.

FOSTER: So, do you expect the European economy to start contracting properly, now?

HEWIN: We think that we'll see a contraction in the second quarter of this year. That's been part of our forecast for some time. And the survey data that we'll release today certainly suggests that that is likely to happen.

A lot depends on how things develop over the next month or so, but it's not just down to confidence and what happens in Greece. There are underlying issues, as well. Governments cutting back on spending, it's difficult to get credit within the euro area economy. And those factors are weighing on growth.

FOSTER: Give us a sense from the city about this political debate over growth versus austerity. How worrying is that for you, there?

HEWIN: They're a little bit contradiction in terms, I think that's the issue. It's not clear that the measures that are being proposed -- project finance, investing in infrastructure -- it's not clear that those sorts of proposals are going to do anything more than raise growth at the margin.

The issues for the euro area economy are structural, deep-seated reforms are needed. In time, those will deliver stronger growth, but that's not likely to happen in the course of the next year.

FOSTER: And you're expecting this contraction in the size of the economy. How long do you expect that to continue? When will things start looking up, do you think?

HEWIN: I think it does depend to a certain extent on what happens in Greece. If we see the Greek situation turning around after the election, then we still think we'll see a contraction in the economy, but it'll be less than 1 percent.

If Greece exits, and if that exit causes severe contagion, then the downturn in the euro area economy is likely to be somewhat worse, and it could be a lot worse, akin to the Lehman's crisis, if we see a wave of euro exits.

FOSTER: Sarah Hewin, thank you very much, indeed.

Mario Draghi says the European project will not survive without a courageous leap in political imagination. The ECB president says the EU is at a critical moment in its history. Those comments came after Wednesday night's informal summit in Brussels.

Francois Hollande made a pitch for collective euro bonds and more measures to boost growth, while German chancellor Angela Merkel said Greece would not be allowed to dodge its obligations to the rest of Europe.

(BEGIN VIDEO CLIP)

ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): We want Greece to stay in the euro, but we insist that Greece sticks to commitments that it has agreed to, that the memorandum of understanding is fulfilled.

We have offered to do everything to make it possible for structural funds to help Greece return to growth as a positive message. But Greece has to fulfill its commitments.

(END VIDEO CLIP)

FOSTER: Well, European stock markets bounced back on the whole from Wednesday's steep losses. The biggest gainer in London, though, was a safe haven stock, Randgold, up at 8 percent. The only major index to fall was, you guessed it, Greece. In Athens -- the Athens composite down 4.5 percent, hitting a new 22-year low.

Now, the chairman of JPMorgan Chase International says the more summits Europe has, the less credible it seems. Jacob Frenkel told Nina Dos Santos that European leaders were running out of time.

(BEGIN VIDEOTAPE)

JACOB FRENKEL, CHAIRMAN, JPMORGAN CHASE INTERNATIONAL: If you are not having credibility, then the horizon that you have and the tolerance that the market will have with you is very limited.

If, on the other hand, you adopt a very credible trajectory of policy, markets may give you the time to implement it. But you really need to be credible on the policy side.

And frankly, the -- as you mentioned, there are so many summits that took place. You ask yourself, why do I need so many summits to solve such a well-defined question? And if we have more summits, the credibility of these summits will be diminished. We need to have actions.

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: So, more talk just created even more uncertainty, I suppose. So, when we talk about their effect on the markets, as you were saying, it seems as though the markets are sort of almost front-running the issue to a certain extent in the extent of they're ahead of the curve, whereas the politicians are behind.

FRENKEL: Well, for a long period, the markets were behind the curve. Please remember that during quite a few years, before the eruption of the last manifestation of the crisis, sovereign debt was traded in the market with very low spreads from German debt.

In other words, the markets said, if you are a sovereign, then you if you are Greece or Spain or Portugal or Germany, it almost doesn't matter. You can borrow because you are a sovereign.

Well, good -- we have bad news. A sovereign is not a sovereign, and today, the spreads are very different across countries. Spain has a large spread, Germany has the lowest long-term rates, Greece has a huge spread, France has less of a spread.

In other words, the market recognizes that not all sovereigns are alike. And this was a reality check, which means in order to succeed in the euro system, and in order to have the conditions that will bring about a pan-European bond, you really need to create the conditions where the risk of sovereigns, the true risks, are more similar across the zone than they are now.

DOS SANTOS: Is JPMorgan Chase, as any international company perhaps responsibly would, just preparing themselves in case we do see a eurozone exit?

FRENKEL: Yes, JPMorgan Chase, like any other responsible company, is always anticipating and preparing for a wide range of alternatives, some with very low probability, some with higher probability.

So, the fact that all over the world, we are preparing for an earthquake does not mean that we expect an earthquake. When we prepare for a storm, does not mean that we expect a storm. But we need to be prepared and cognizant about what are the exposures that we have to alternative scenarios, and we are doing it, of course, like any other responsible institution.

(END VIDEOTAPE)

FOSTER: Well, Europeans aren't the only ones worrying about the impact of a possible Greek exit. China does a staggering amount of trade with the eurozone, which is China's number one trading partner, and as Eunice Yoon reports, there are increasing concerns about how a eurozone breakup would affect Chinese exports.

(BEGIN VIDEOTAPE)

EUNICE YOON, CNN INTERNATIONAL CORRESPONDENT (voice-over): With little light at the end of the tunnel back home, European companies are marching into China, with close designers like Hugo Boss excited about the potential buyers in this country.

CLAUS-DIETRICH LAHRS, CEO, HUGO BOSS: We appreciate Chinese customers, seeing our stars visiting, our stars buying across the globe. And I'm more than convinced that this is going to be even more important for us in the very near future.

YOON (on camera): China is one of the most important markets for Hugo Boss outside of Europe. The company hopes its fashion label is going to catch on with Chinese consumers while Europeans tighten their belts.

YOON (voice-over): Compared to Europe, China's economy is in good shape. More of its people and the country's coffers are flush with cash, one reason European leaders have called on Beijing to help ease the debt crisis of China's largest trading partner.

DAVIDE CUCINO, PRESIDENT, EU CHAMBER OF COMMERCE: A Europe which is not stable from the economic and political point of view, is a problem for China.

YOON: To prove it's not turning its back on the eurozone, China has bought European bonds, investing in projects in struggling nations, like Greece, and signaled it could contribute to possible bailout funds.

The country has also been diversifying more of its trillions of dollars in foreign exchange reserves into the euro. (INAUDIBLE)

CUCINO: This is exactly the reason China and some other countries already have in the portfolio a certain amount of euros. So, to drop -- to completely drop off the euro, the complete failure of the euro will not be of help for anybody.

YOON: However, concerns here are growing that Greece could be headed for a eurozone exit. Shipments to Europe are already down, and manufacturers fear the uncertainty in Europe can spread here, when China is battling its own slowdown.

Hugo Boss, though, is still confident in this market. The German brand plans to nearly double the number of stores here in the next three years.

LAHRS: Certainly right now there are a couple of things happening: change of government, change of certain economic dynamics around the globe, and I think this is a temporary situation.

YOON: A temporary situation many hope will turn, if leaders here and in Europe stay focused.

Eunice Yoon, CNN, Beijing.

(END VIDEOTAPE)

FOSTER: And it is the fact that China might be affected by the eurozone is one of the factors weighing on US stocks on Wall Street right now. We'll have a more in-depth summary later, but at the moment, you can see, down half a percent, the Dow, 12,443.

Next, internet radio is a hit on Wall Street. Pandora media's CEO will tell us why investors have the company on their playlists.

(COMMERCIAL BREAK)

FOSTER: Shares in internet radio service Pandora are steaming ahead in New York. Right now, they're up by more than 13 percent, which is an 11-week high, and investors are picking up on Pandora's optimism.

After the closing bell on Wednesday, it raised its full-year revenue outlook and said its net loss would narrow. Pandora is a major force in US online radio, with more than 50 million active listeners a month. Those users played 1.6 billion hours of music and comedy last month, and it's largely a mobile phenomenon, with 70 percent of access coming from mobile phones and tablets.

Well, Joe Kennedy is the president and CEO of Pandora Media, and he joins me now from San Francisco. Thanks for joining us, Joe. Just explain --

(CROSSTALK)

JOE KENNEDY, PRESIDENT AND CEO, PANDORA MEDIA: Great to be with you, Max.

FOSTER: -- how you advertise on your service.

KENNEDY: Well, advertisers can choose either visual advertising -- users interact with Pandora about seven times an hour, and so we serve visual ads on each of those interactions. And then, we also offer a small number of audio ads, about once every 20 minutes. So, advertisers have those two different mechanisms of speaking with their consumers.

FOSTER: And they're very difficult to escape from, these adverts, aren't they? Which is the beauty of the platform, which is why advertisers like it.

KENNEDY: Well, I think there's a number of reasons why advertisers like the platform. Certainly we offer extraordinary reach, tens of millions of users on the desktop, tens of millions of users on mobile, great targeting.

But we are able to offer advertisers the opportunity to speak with their target customers on whatever connected device those customers are using.

FOSTER: And it's interesting that audio has become a popular service in the modern internet age, when a lot of people were suggesting that video would take over from audio. But what's been your experience of people take-up of audio over the last couple of years, for example.

KENNEDY: It's really an extraordinary take-up. We now have over 150 million registered users in the US and, as you mentioned, over 50 million active just in the last 30 days. We now represent just about 6 percent of all radio listening in this country.

Radio plays a very unique roll in people's lives. It's the -- it's what they listen to when they're driving, when they're working in the office, working out in the gym, cooking, partying. So, I think there's always a place for radio.

And what Pandora is really about is defining what radio can be in the internet-connected world, and that's really all about the power of personalization.

FOSTER: Well, try to explain it, because you've actually -- radio has become a bigger market in recent years. Why have more people come into the market? Why are more people experiencing radio?

KENNEDY: Well, I think radio serves us uniquely well when it comes to music. Again, we listen to music when we're doing lots of other things, so radio, it's a very low-effort way to connect with music that we love.

And then, there's this unique aspect of music that I think we actually enjoy music more when we don't know what song is coming next, we don't know what chord change is coming next.

And so, there's that element of serendipity and discovery that really makes for a great music listening experience, and we think radio at its very best, Pandora personalized radio, provides that kind of magic mix of serendipity and discovery.

FOSTER: You, like Facebook, are down on your IPO price, but you're coming back more quickly. What -- describe the environment for tech IPOs right now. I mean, Facebook is what we've been talking about. We've got another example in you. How are they being priced and how are share prices actually managing to settle right now?

KENNEDY: Really, we're growing so fast and have so much great stuff on our platter, I don't -- I'm not the right person to give general market commentary. We continue to see just an extraordinary long-term opportunity to redefine radio, and we're kind of heads down going 100 miles per hour chasing that opportunity, and I think making very good progress.

FOSTER: But you have to provide hard and fast numbers, which is what you're doing. Is that the secret to the share price coming back up, do you think, because you're offering something solid to people who are struggling to price things right now?

KENNEDY: Right. I think people want to understand our progress. I think with Pandora, I think people understand the tremendous long-term opportunity to redefine radio.

And it's important to check in each quarter in terms of our progress versus the long-term strategies that we've articulated, and I think clearly people can see the progress that we're making and that reinforces the conviction that we're on track to be the entity that redefines radio.

FOSTER: OK, Joe Kennedy from Pandora. Thank you very much, indeed, for joining us.

KENNEDY: Thanks, Max.

FOSTER: Now, a Currency Conundrum for you, that time of the show. Why are there ridges on the edges of many country's coins? Decoration, A? B, as a measure of authenticity? C, to maintain the coin's value? We'll tell you the answer later in the show.

Today's currency numbers for you. The euro is falling around a fifth of one percent. It's now at its lowest level against the US dollar since July 2010. One euro buys just over $1.25, and the pound and and the Swiss franc are also slipping against the greenback.

(COMMERCIAL BREAK)

FOSTER: Environmentalist and social entrepreneur Philippe Cousteau today launched a fund that he says will provide both profit and philanthropy. The grandson of famous explorer Jacques Cousteau says it's the only exchange-traded fund with an absolute return in sustainable investment mandate.

Philippe Cousteau is also one of CNN's special correspondents, and he joins me now from our bureau in New York. Thank you so much for joining us, Philippe. Just explain the thinking behind this, first of all. Your interests are well-known, but why are you going into the heart of capitalism and trying to sell something where it's not all about profit?

PHILIPPE COUSTEAU, CO-FOUNDER, GLOBAL ECHO FOUNDATION: Well, Max, the idea came to me about three years ago, and it's been that long we've been working on it, the idea of how we can innovate financial markets and create a financial instrument that could both drive positive return to investors but also drive some philanthropic dollars to help solve some of the world's problems.

And that took us about three years to put together, and that's what we launched this morning, the Global Eco Fund, or GIVE on the New York Stock Exchange, exchange-traded fund.

FOSTER: So, talk about the philanthropic side, first of all. Where's the money going?

COUSTEAU: So, what happens is the management fee, and all of these different types of funds have a management fee, a third of that management fee is going to go into a charitable foundation called the Global Echo Foundation, which I'm the chairman and co-founder.

And those funds every year will go towards supporting three different things: environmental conservation, something that's near and dear to my heart, but also to build social sustainability, so we're going to invest in women and girls, and micro enterprise issues around the world. Those are our three main categories of investment.

FOSTER: How do you go into the market and sell this right now, though, when everyone is struggling to make much money right now, how are you managing to sell your product as a form of a profitable enterprise, when actually some of it isn't going into people's pockets?

COUSTEAU: Well, we launched this morning, and the fund is activating exactly -- or working the way it's supposed to. It's a conservative return that's designed to be a core allocation in any investment strategy that someone might have.

So again, the fund is designed to make money for the investors. It's the management fee, a peace of the management fee, so what would normally go to the traders and to the lawyers, et cetera, they're all giving up a piece of their pie to go into this foundation.

We're not taking any more dollars necessarily out of the pockets of investors. The goal is to provide a sustainable investment vehicle, which more and more is all about long-term risk -- mitigating risk with a positive environmental, social, and governance strategy, but then also having this component of sustainable philanthropy. So, it's a very unique model. It's the first of its kind.

FOSTER: How easy was it to negotiate that cut in the management fee?

COUSTEAU: It took a little while, but we all agree that it's a wonderful story and that it's a wonderful mission, and we know that the public already today is responding to that mission, understanding that they can, in a way, have their cake and eat it, too.

And of course, this is tradable. If you have access to the New York Stock Exchange, you have access to this fund. The ticker symbol's GIVE. Anybody can participate. It's a way to have your cake and eat it, too, in our opinion. Being able to have access to a sophisticated, sustainable investment strategy, but also sophisticated philanthropic strategy all in one.

FOSTER: Philippe Cousteau, thank you very much.

Now next, they're lining up for a landmark election. We're heading to Cairo, where voters are shaping a new era for Egypt.

(COMMERCIAL BREAK)

FOSTER: Welcome back, I'm Max Foster, these are the main news headlines this hour.

There's half an hour left for voters to have their say in the first round of Egypt's presidential election in Cairo. Results are expected to come in over the weekend. If none of the 11 running candidates secures a majority, there will be a second run-off vote.

Two days of negotiations on Iran's nuclear program have just wrapped up in Baghdad without a breakthrough. EU foreign policy chief Catherine Ashton told reporters significant differences remain between Iran and the six world powers represented at the meeting. Another round of negotiations is set for next month in Moscow.

European leaders have pledged their support to keep Greece in the eurozone, but only if it sticks to its austerity commitments. During an informal summit on Wednesday, German chancellor Angela Merkel also stood her ground against the idea of issuing euro bonds to spread the debt burden.

A former Manhattan store owner is in custody and being questioned in connection with the disappearance of a six-year-old boy back in 1979. Pedro Hernandez is claiming he strangled Etan Patz, according to a law enforcement source. Before his disappearance, Patz told his parents he was planning to stop at the store for a soda.

The head of the Vatican Bank has resigned after the board of directors passed unanimous vote of no confidence in his leadership. The statement from the Vatican said Ettore Gotti Tedeschi had failed to carry out matters of primary importance.

Egyptian citizens are deciding their future in a first round of presidential elections. The vote is a major achievement for those who worked to topple autocrat Hosni Mubarak's near 30-year rule. Hala Gorani joins us now live from Cairo with an update. And in terms of turnout, what can you tell us, Hala?

HALA GORANI, CNN INTERNATIONAL CORRESPONDENT: Well, we understand from the election commission here in Egypt that just a few hours ago, turnout was estimated -- and it's important to underline that it was estimated -- at 40 percent, 4-0 percent.

Some of the predictions a little bit earlier in this process were higher, so if it indeed does stay under 50 percent, it could be for some, at least, a disappointment.

That said, 40 percent of 50 million eligible voters is more than 20 million people, so it's still millions of people who went to the polls today. Many of those we spoke to told me that they were happy that they were taking part for the first time in their lives and in the history of their country in this free and fair presidential election.

Although some expressed disappointment that the candidate they would have wanted was not among the front-runners. But then again, that is democracy, some people will tell you.

One of the best ways to know what is going on in the mind of ordinary Egyptians is just to go out on the street, sometimes to go on the water to talk to people who are directly impacted by whether or not tourism is an issue, or the lack of tourism, I should say, in Egypt. Since the revolution began in January, February of 2011, this sector has suffered greatly.

I spoke to a felucca pilot. I had, in fact, took a little ride with him on the Nile just a few hours ago, and here's a portion of my conversation with him.

(BEGIN VIDEO CLIP)

GORANI (voice-over): Badawi Ragwan (ph) pilots a felucca on the Nile. He says his business is down 85 percent since the revolution.

"I was doing five, six trips a day. Sundays, I would work 24 hours. Now I can get one customer one day and nothing the next."

"Egypt is a 5,000-year-old civilization," he says. "Tourism can get sick, but it will never die."

(END VIDEO CLIP)

GORANI: So our hopeful felucca captain there on the Nile. It was empty. Usually at this time of year, you'd see many more boats with tourists going up and down the Nile here in Cairo. We saw one lonely, as you saw there, a little fishing vessel.

And the economy is a big issue, Max, in this election, of course. You have very high unemployment. You have key sectors like tourism very negatively impacted by the lack of foreign visitors to this country.

So people were casting their ballots have big, glossy political philosophy questions on their minds sometimes when it comes, for instance, to the role of Islam in politics, but mainly it's the day-to-day concerns, the security on the streets. It's jobs for them and their children that tops their lists of considerations as they cast their ballots, Max.

MAX FOSTER, CNN HOST: Hala Gorani in Cairo, thank you very much indeed, with you, of course, through the weekend as we get those results in.

Now Yahoo was once the king of the search engine. Now it's making a new push to get back its crown. We'll look at its new Axis search browser next.

(COMMERCIAL BREAK)

FOSTER: (Inaudible) today, the "Currency Conundrum." Earlier we asked you why there are ridges on the edges of many countries' coins, and the answer is, C, when coins were originally gold and silver, people would often shave off the coins' edges to make a profit, thus decreasing the coins' value. Ridges were introduced to deter this illegal practice and still exist today on many countries' coins out of tradition.

We're out to the cutting edge now, and dotcom pioneer Yahoo is pushing back into the search engine business with its own new browser.

It's called Axis, and you can download it now for your computer iPhone or iPad. But let's take a look at it, because this is the type of search page you're probably used to. I've done a quick search for QUEST MEANS BUSINESS, and you get these rows of text and you have to leave this page, click through to see the actual result.

Now Yahoo says with Axis, it has redesigned searching from the ground up. Let's take a look.

Now to do the same search for QUEST MEANS BUSINESS, you have -- what you get is this, windows of actual web pages that we can already see. If you click on there -- there we are -- you can see those pages turning up. These are the results from the search. So you don't get the lines of text.

And if you were click onto one there, you should get the full page coming up there. So there's the QUEST MEANS BUSINESS Facebook page. It came up pretty quickly. And if you're not happy with that page, you can go on to the next result simply by clicking onto there. So you can go through the results that way.

Shashi Seth is the senior vice president of Yahoo's Connections unit, and he joins me now from Yahoo's headquarters in Sunnyvale, California.

Thank you for joining us. First of all, explain why you've gone for this very visual form of search instead of the lists that we're used to.

SHASHI SETH, SVP, YAHOO! CONNECTIONS: You know, we started looking at our users and how they use search on mobile devices and realized that the limited amount of screen space that they have and the amount of rich interaction that the phones allow today gives us this opportunity to reimagine and reinvent search all over again.

And so we really started with a canvas of building a great search product for mobile devices first and then backpedaled into building it for laptops and desktops as well. And what this does is it really gets people closer to the promise of answers, not links, and that's a mantra that Yahoo is aiming for in the new search landscape.

FOSTER: So when you search for something like QUEST MEANS BUSINESS, you immediately get the results in small form. You don't just see text from a search engine. So you think that's a big benefit?

SETH: Exactly. I think we as human beings are very clued into visual clues, and we don't often need to even read everything. We can look at something and we can immediately recognize if this is a professional site, not a professional site or the kind of stuff that I was looking for because I'd been there before.

And that just -- those clues themselves are good enough for people to make a decision as to where to go.

FOSTER: Shashi Seth, we'll see how it goes. Thank you very much indeed for joining us. Yahoo's back in the search business.

Well, the latest negotiations on Iran's nuclear program have just ended without any real progress. We're going to go to Hala now with more from Cairo. Hala?

GORANI: Hello, Max, thank you very much. We have an exclusive interview right now on CNN. Saeed Jalili is the chief Iranian negotiator in the these nuclear talks.

We heard from the E.U. foreign policy chief Catherine Ashton a little bit earlier, saying significant differences remain, but Saeed Jalili also addressing reporters later stressed the right of Iran to have peaceful nuclear power. He joins me now live from Baghdad.

Dr. Jalili, thank you for being with us. First off, I want to ask you this question. Why did Iran at this stage outright reject the proposal by the P5+1 in Baghdad?

SAEED JALILI, SECRETARY, IRAN'S SUPREME NATIONAL SECURITY COUNCIL (through translator): In the name of God, the compassion of the merciful (inaudible), the 5+1 raised a suggestion and in respond we also have some suggestions. And in two days we exchanged viewpoints about either side and had the viewpoints of either side regarding those issues and suggestions.

And it showed that both sides are serious in order to move forward in the talks.

GORANI: What would it take, Saeed Jalili, to break the deadlock at this point?

JALILI (through translator): What we believe that as we have always said, the thing which could break this deadlock is the attitude and the strategy of cooperation. I have always said that the strategy of pressure would make the strategy of talks to come to the end. The time for pressure and the strategy of pressure is over, but we have still time for the strategy of talks and cooperation and it could bring a bright horizon.

GORANI: Now you want the P5+1 to give you assurances that they will ease sanctions against your country in order to take this a step forward, is that correct?

JALILI (through translator): What we said is something we have always repeated in our talks, that if we are intended in order to have talks for cooperation, the atmosphere of cooperation and attitudes should be cooperative, in cooperation oriented.

Those attitudes which somehow show the hostility towards Iranians and hostile attitudes could be in this favor of those countries which are following these kind of attitudes. We have always advised and recommended that to the extent that these hostile measures have been bequeathed (ph) to pave the way for further cooperation.

Well, on the other side, one of the major issues is that the rights which has been stated in NPT for all the member states (ph) should be also recognizing and confirmed for Iran's as well, not only Iran's but all other member states, because of that we're saying that Islamic Republic of Iran as an important country which is the member of state of NPT and is opposing seriously the weapon of mass destruction, we are seriously in favor of fighting the weapon of mass destruction.

Therefore we believe that we should be granted the rights in order -- our rights in order to implement and utilize the peaceful nuclear energy including enrichment.

GORANI: What did you find unacceptable in the P5+1's proposal in Baghdad over the last two days? What was unacceptable as far as Iran is concerned right now?

JALILI (through translator): Well, principally we are saying that according to the explanation we provided, the coin (ph) which could do the issue of cooperation within the framework of recognizing Iran's right, these issues could be considered as the issue of cooperation and talks, one, respecting Iran's right and avoiding these kind -- I mean, the kind of hostile attitudes against Iranians.

We think that what we could see in some of the attitudes, which is -- which have been conducted against Iranians as a matter of fact the price are being paid by the people of the United States and some European people.

Islamic Republic of Iran is a country which enjoys huge and great capacities in providing security and stability in the region and also provided energy in a global scale. And with no doubt the capacity of the Islamic Republic of Iran could be enjoyed in favor of the international and global peace and stability.

Those who are exerting pressures with their illogical attitudes and actions, if they want to exert pressure against Iranians, truth of the matter is that they are losing these opportunities (inaudible) global levels. And it is not something in favor of their own people.

GORANI: Now the nations you met with, the P5+1, the Western nations, their main concern is Iran is developing this nuclear technology, enriching uranium at 20 percent because the aim is to develop nuclear weaponry. What would it take for Iran to develop nuclear technology at a lower grade in order to reassure these Western nations? Is there anything that would break that particular deadlock or not?

JALILI (through translator): You raise a very good question. You know that what we have -- what we have -- what we raised two years ago regarding providing the fuel for 20 percent enrichment uranium was for Tehran research reactor. And you know that a million of patients (ph) of Iranians are using and benefiting from the products of these Tehran's research reactor.

Two years ago, we asked for providing of the fuel for this reactor, and we asked for it according to the rights of the member states of the NPT and IAEA. We wrote a letter to the agency and requested and asked the fuel from the IAEA. We asked them to provide the fuel and we were ready to pay.

But unfortunately, some certain countries, the stop, the provision providing that these fuel to the Islamic Republic of Iran, the fuel which is used solely and only for peaceful purposes. And the result of these reactor, these producing isotopes and medical things for the people and the patient in Iran. Well, following that, we have had no way but to produce the fuel ourselves.

Therefore, because the fuel was 20 percent enriched uranium, we needed 20 percent enrichment of uranium. Therefore, when we started 20 percent enrichment, it was only for peaceful purposes for something which is used for isotopes and medical isotopes for 1 million patients.

Those countries which opposed and were -- did not cooperate in order to provide the fuel to Iran, they should respond to their people. Why they did now allow the providing of the fuel to Iran is, of course, it was an opportunity for us because based upon -- because of -- based upon our capacities, we created this opportunity in order to manufacture and provide the fuel ourselves.

Islamic Republic of Iran is a nation which is opposing strongly weapon of mass destruction, is -- Iran is in favor of disarmament and is wishing and seeking a world free of any mass destruction and nuclear weapons.

Therefore, these 20 percent enrichment is used only for producing and manufacturing the medical isotopes which is used for the sick people. And now we are benefiting the capacities which we have created ourselves.

GORANI: So is the answer to that question that Iran will continue to enrich uranium at 20 percent level?

JALILI (through translator): What we raised is that our need to provide 20 percent enrichment fuel is completely a peaceful one. It is something which is used for medical isotopes and we need this fuel, because a million of Iranians -- patients, Iranian patients are using and benefiting these isotopes and medicine.

And we are very happy that this capacity has been created now while some countries rejected to provide this fuel to Iranians.

For your information, I will say that whatever we -- in order to produce 20 percent enrichment, is being done under the supervision of the IAEA inspectors and is within the framework of NPT regulation and NPT recognize that as the right of Islamic Republic of Iran and all member states which want to use peaceful nuclear energy and technology, of course we have said that. This issue --

GORANI: Last question --

JALILI (through translator): -- of 20 percent enrichment could be the issue of cooperation. In our talks we said that the reactor -- Tehran's research reactor and the issue of providing the medical isotopes and activities of these types could be issues of cooperation between both sides.

GORANI: All right. Last question, I want to look forward to the meeting in Moscow 17th of June, a little less than a month from now. How hopeful are you that the next round of talks will bring the two sides closer together, closer to an agreement?

JALILI (through translator): We have two issues. After Istanbul talks, we entered into talks with seriousness and also with certain ideas. And its proof is that during these two days and between Istanbul talks (ph) and Baghdad talks, we have serious participation. We have -- we raised serious suggestions which we believe could open the horizons and perspective for cooperation.

Today I said among -- to the 5+1 and (inaudible) that if we want to be successful in Moscow, two things should be considered. The first is that we should be serious in talks, talks and issues should be considered and followed seriously. And therefore we believe that practical things and positive things should be prepared for Moscow talks in order to be successful there.

But the second point, which is more important, is that if we expected from Istanbul talks and Baghdad and later from Moscow talks, and we want -- we have adopted a pathway, which gives pathway upon -- in accordance with cooperation and talks, that important and major issues that those measures which are destructive and somehow destroy the confidence of Iranians should be seriously avoided.

We believe that any kind of measures or any kind of statements which could cause the destruction -- the destruction of Iranians' public opinions, ideas and confidence should be avoided. And we believe that certain things should be done in order to gain and obtain the confidence of Iranians so that along this talks we could have a talk which is moving forward.

GORANI: Many thanks to you, Iran's chief nuclear negotiator, Saeed Jalili, joining me live for this exclusive interview from Baghdad. Thank you very much for joining us on CNN.

JALILI (through translator): Thank you very much, ma'am.

GORANI: All right. And there you have it, Max Foster, back to you in London, hearing directly from the chief nuclear negotiator for Iran, who joins us live there from Baghdad, reasserting his country's right to develop nuclear technology for peaceful purposes, also saying that in order for the next round of talks to be successful in Moscow on the 17th of June through the 19th of June that the P5+1, those six nations, the five permanent members of the U.N. Security Council plus Germany, should abandon pressure tactics and also measures that he called, quote, "destructive to Iran and the Iranians." Back to you, Max, for now.

FOSTER: Hala, thank you very much indeed. We'll be back with more QUEST MEANS BUSINESS after this short break.

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FOSTER: Now the private diaries of Britain's longest reigning monarch, Queen Victoria, have been published online. They were launched today to mark the anniversary of her birthday. She made the first entry into her diary at the tender age of 13, and kept it until 10 days before her death at the age of 81.

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FOSTER (voice-over): The Round Tower at Windsor Castle, from the top, some of the best views in England, and inside these ancient walls, shelves of manuscripts and books, first-hand accounts of the Royal Family's rich history. In this section, diaries written by Queen Victoria, monarch of a vast global empire.

FOSTER: Well, let's have a look at three of the journals, and they're fascinating reading. And this is an early one from 1835. And in it, Victoria writes, "Today is my 16th birthday. How very old that sounds." A typical teenager, you could say. This is a later journal and it shows an illustration by Victoria. so she was an illustrator as well.

Victoria there next to her husband, Prince Albert and her half- brother, Prince Charles, there, do note they were dressed in fancy dress there. This is a particularly poignant entry. And what you need to understand about the later journals is that they were rewritten by Beatrice. So Beatrice is writing, but Victoria's words.

Here you see the words "the Lord Chamberlain then acquainted me that my poor uncle the King was no more, and had expired at 12 minutes past 2:00 this morning and consequently that I am Queen."

FOSTER (voice-over): That was the day in 1837 that Victoria acceded to the throne. The diaries were edited by Beatrice, who was Victoria's daughter. At her mother's request, she removed trivia and things that might embarrass other royals. You wonder what these diaries don't tell you.

DAVID RYAN, DIRECTOR OF RECORDS, THE ROYAL HOUSEHOLD: Because of the length of her reign -- she reigned for 63 years -- and because at the time the size of the British empire, the relationships also with continental Europe and with America made her a major figure of that period.

FOSTER: And we're talking here about not just the Commonwealth but the British empire at its biggest.

RYAN: (Inaudible) this includes countries such as India, which she was Empress of India, later in her reign, and obviously Canada, Australia and New Zealand and other parts of the empire which have gone on, of course, to become the Commonwealth.

FOSTER (voice-over): Over four months, castle staff have painstakingly scanned 43,000 pages of journals. And now they've gone online for the world to see. Once private thoughts finally unlocked from the 850-year-old Round Tower of Windsor.

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FOSTER: That takes us to the end of QUEST MEANS BUSINESS for today. I'm Max Foster in London. Thank you very much for watching. "AMANPOUR" is next after the headlines.

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