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QUEST MEANS BUSINESS
Exclusive Interview with Chilean President Sebastian Pinera; Fed Chair Defends QE3; Rally on Wall Street; Mega Mining Merger; Major EADS Shareholder Casts Doubt on Merger With BAE Systems; Strong Session for European Markets; European Unemployment; Athens Troika Anger; Dollar Loses Ground; HP Makes Second Attempt on Tablet Market
Aired October 1, 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: It's a warning from Chile: QE3 is not enough. Tonight, my exclusive interview with President Sebastian Pinera.
(BEGIN VIDEO CLIP)
SEBASTIAN PINERA, PRESIDENT OF CHILE: You will never solve the American problems just by printing money. You need to do much more than that, which is not being done yet.
(END VIDEO CLIP)
QUEST: Also, X marks the spot. Glencore moves one step closer to buried treasure.
And snatching victory from the jaws of deficit. What the eurozone leaders could learn from the winning Ryder Cup team.
I'm Richard Quest. Of course, I mean business.
Good evening. The president of Chile says there are no economic miracles, and the United States will never solve its problems by printing more money.
In his first year in office, the flawless rescue of 33 Chilean miners gave Sebastian Pinera a popularity boost. He was a hero in his country. Now, as Chile's economy's assailed by forces beyond its borders, that feel- good factor has well and truly worn off.
I recently returned from Santiago, and when I was there, President Pinera told me about the obstacles on Chile's path to becoming a developed nation. This is our exclusive interview.
QUEST: Chile's economy remains at risk from problems in the eurozone, the fiscal cliff in the United States, and the slowdown in China. Like all such free-trade economies, here they are worried. In La Moneda Palace, the president warns other countries to stick to strict fiscal policies and free trade.
PINERA: The world is going through a very difficult period. Europe in recession, the US with a very weak recovery, Asia with a very strong slowdown, and the same thing is happening in many Latin American countries.
And in the middle of this crisis, Chile is still growing with a lot of strength, creating jobs, increasing investments, increasing exports, and keeping our structural balance in shape. So, we are going through this tempest with the -- with a very strong north and with a very good faith.
QUEST: What needs to be done? What do you want to see happen?
PINERA: Well in -- first of all, in Europe, they have to make up their mind because they are -- there's a discussion here. Countries with deficit don't want to pay the bill, and they want to get more loans, and countries with superiority, they don't want to help the countries with problems, and they just want them to tighten their belts.
Both things would -- have to happen at the same time. Countries like Spain, Italy, and Greece, they have to tighten their belts. But other countries, like Germany, will have to help them in that process. And that is not happening yet.
QUEST: If we turn to the United States, we have quantitative easing, printing of money now in the US, and I know the finance minister in Brazil is very concerned about that from the currency point of view. You must also be concerned about the effect of all this -- of inflows to your own country that eventually could destabilize the economy.
PINERA: Yes, we are concerned, because you can print money, and maybe you can solve the short-term problems. But you will never solve the American problems just by printing money. You need to do much more than that, which is not being done yet.
You need to take account of the fiscal deficit, which cannot go like that -- more. And the same thing with the external debts. And that will require, of course, some adjustments. And nobody wants adjustments. People want miracles. But in economics, you don't have miracles. You just have good policy and hard work.
QUEST: Are you encouraged by the policies that you are not seeing from both the Europeans and the Americans, or really, do you sit here thinking, more, more please?
PINERA: We are not encouraged, because I think that we have lost the last three years. Since the crisis that started in 88 -- 98 or 99, really we have not been able to tackle the real costs of the crisis. It has not been done in Europe, it has not been done in the US. We are talking too much and doing too little.
QUEST: On this question of the US, one of -- I know it's all -- no politician from one country to another every likes to comment on an election and who might win, and I suspect you're not going to do that for me now.
PINERA: You're right.
QUEST: I'm not surprised. But as a businessman who's gone into politics, and we see Mr. Romney, a businessman who's gone into politics, assuming, just for the purposes of this question, he were to succeed, what advice would you give? What can businessmen and what can the business community bring to the political agenda, do you think?
PINERA: Business is a useful tool in politics, but it's not enough. You need much more than to be a good businessman to be a good politician. So my advice would be to take advantage of all the tools that you have learned in the business world.
But in politics, you have to convince people. You cannot order people. In politics, you have to motivate people. In politics, you have to create alliances. So, I would say that the US needs a very strong, bipartisan alliance to take care of many problems that are accumulating since so long, and they have to be tackled now before it gets too late.
QUEST: More from President Pinera later in the program. We'll hear about the economy of his own country, and why the pillars of democracy are no longer enough to support growth.
Let's stay with the president's views on QE3. And almost, by coincidence, the US Federal Reserve chairman Ben Bernanke has been today defending that money printing that Pinera insists is not a solution.
The chairman of the Fed was speaking in Indianapolis and said the securities purchases and other tools -- policies will continue. Securities purchases will continue until the outlook for the US job market proves the sustainability substantially.
The Dow Jones industrials has kicked off Q4, day one of Q4, with some solid gains. Bernanke's comments didn't really have much of an effect, or at least doesn't seem to be, because the Dow was already quiet sharply up.
Alison is at the New York Stock Exchange for us this evening. A random Monday -- well, it's not a random Monday. It's the first Monday in October, which is the first day of the final quarter, so it's not random, forgive me. But that can't be enough reason for 100 points on the Dow, or is it?
ALISON KOSIK, CNN CORRESPONDENT: No, no, no, no. Not just because it's a special Monday with all those firsts. No, not at all. You know what it has to do with, Richard? A strong manufacturing report surprised Wall Street to the up side.
We found out that in September, the ISM Manufacturing Index moved from contraction right into expansion mode. So, you're seeing this upside surprise coming as relief to investors, at least for today, with the Dow up 130 points.
It seems that the US is bucking the trend. You see how China's doing, you see how Europe's doing, but the US is coming out stronger, at least in September. Richard?
QUEST: Alison, just circling back to what President Pinera was saying on the program a minute ago, warning that QE3 is not sort of like the be- all and end-all answer. In the United States, there are economists and others besides Romney's who do also believe that QE3 is a mistake, isn't it?
KOSIK: Oh, sure. It's got its critics. Some people are just having a problem connecting the dots. How is QE3 going to translate into more jobs, because that is really the weak spot in this economy, and that's what this economy needs to really operate on full throttle, and it's just not doing it because the jobs market is languishing.
And many are saying, OK, interest rates are already low, mortgage rates are at historic lows, how is this going to spur consumers to take out more loans? How is this going to get businesses to take out more loans?
Many say, you know what the problem is? The problem is a confidence problem, and you're not seeing that confidence problem because of all the debt issues in Europe and because of the impending fiscal cliff and because of the political uncertainty. And all of that has nothing -- nothing -- to do with QE3, Richard.
QUEST: I cannot believe, Ms. Kosik, I said circling back. Talk about jargon of the new revolution. Many thanks, indeed. Alison Kosik, who's with us in New York. Circling back, indeed. We'll have none of that on QUEST MEANS BUSINESS.
Coming up next, two huge corporate deals seemingly heading in two different directions. Xstrata gives the green light to Glencore. EADS-BAE are in a holding pattern. Negotiating the merger minefield is next. It's QUEST MEANS BUSINESS. Good evening to you.
QUEST: Four companies, two massive deals, and billions of dollars, along with all kinds of stumbling blocks in between. There is good news for the deal between Xstrata and Glencore. The future is much less certain for EADS and BAE on their particular merger.
Join me in the library and you'll see what I mean. They are the mega mergers that everyone is talking about at the moment, and if we start with Glencore-Xstrata, or Glenstrata, we might say, the board has approved -- the board of Xstrata has approved the new offer from Glencore. The chief executive says the deal is still compelling, and now, of course, it will be sent to shareholders.
Glencore's chief exec Ivan Glasenberg would be the new company head. The combined behemoth is around -- this is a commodities giant. There is no getting away from it. $80 billion. So, that's a significant one.
Now, if you come across on the mega merger side, it's a very different story for BAE Systems and EADS. The merger of the two is well and truly stuck in the deep weeds of M&A activity.
One of the major shareholders in EADS says the deal needs a re-think. Lagardere had described it as unsatisfactory in its current form, and it owns 7.5 percent of EADS.
But here's the funny thing. Lagardere's chief executive is also the chairman of EADS. Go square that circle, if you like. EADS's chairman is against the deal because he's also -- I don't quite follow it myself either. It's a rum business.
And if you add -- if you start adding up all the numbers, you start to realize this one could be in serious trouble. In an article, though, in this morning's "Financial Times," BAE's Ian King, EADS's Tom Enders, has urged political approval of the deal.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: I don't know if either of them are going to happen, to be honest with you.
QUEST: What? Which one?
BOULDEN: I'm not sure.
QUEST: Which one? Glencore and Xstrata?
BOULDEN: I think --
QUEST: Come on -- no, come on. No, no, come on. This one's done. That one's done.
BOULDEN: It's done in the sense that --
QUEST: This one's done.
BOULDEN: -- we finally have the right for the Xstrata shareholders to vote on this one, but they've been very unhappy from the beginning, since February, when the deal first announced. And they've been fighting and fighting and fighting to get a little bit more, a little bit more, a little bit more. Now, they finally have something to vote on, but we still don't have anyone to vote it on yet.
QUEST: All right. And the scale of the Glencore-Xstrata has -- it's quite vast.
BOULDEN: Yes. Yes. I mean, it's all over South America, it's all over South Africa, it's in Australia, and Canada. It's huge. Glencore's a fascinating company, as we know. It's a commodities broker or trader, so it does a lot of deals with a lot of companies around the world.
QUEST: All right, Jim, this is the one that's really got everybody talking about at the moment, though, hasn't it? BAE Systems and EADS.
BOULDEN: It's because you have a golden share in the UK government, you have ownership of the French government and ownership in the German government. You have various companies that have a lot of say in this. You have the US Department -- Defense Department has a lot of say in this. Even the Saudi Arabian government can have a say in this, it is so unbelievably complicated.
QUEST: They knew that, though, when they started this.
QUEST: So, they clearly knew the French and the Germans weren't going to roll over and play dead.
BOULDEN: Except --
QUEST: They -- no, no. They knew the Brits would have it, and they knew there'd be a problem with the US. So what -- so -- I'm stumbling for words, here.
BOULDEN: The only reason I can think this is going to happen is because they need to cut jobs in order to save money in the sense that we know the Defense Department and other places are cutting back in long-term defense draw down.
And therefore, you want to have a big player to go against Boeing. If Europe can actually get its act together and get a big player like this together at the right price, then they think they can have someone who can go up against Boeing for civil and for defense.
QUEST: We were just talking, finally -- circling -- circling --
BOULDEN: Circling back.
QUEST: What was it? Circling back!
QUEST: More jargon tonight on the program.
BOULDEN: I think we should take this offline, Richard, I really --
QUEST: Oh, please! How about looping in?
BOULDEN: Oh, I think --
QUEST: In fact, what we could really do, Jim, we could reach out --
BOULDEN: We should reach out to the viewers and ask them -- and loop them in, and then see whether we should circle around before we dial back.
QUEST: Jim, thank you very much. Right, now, quickly. If you've got one of your own favorites, @RichardQuest for your own favorite bit of jargon that you absolutely loathe when it talks about the nonsense -- the managing-speak circling in nonsense, looping in, reaching out. Let's reach out to the markets.
QUEST: BAE Systems and EADS, Xstrata, all finished the day higher on a strong session for European markets. Gains of 1 percent or higher across the board. Investors in Europe were encouraged by the absence of skeletons lurking from the closet in Spain's banking stress tests.
Europe's unemployment situation simply refuses to improve. Today's numbers confirmed the jobless rate across both the eurozone and Europe as a -- the whole lot remains at a record high. If you join me at the super screen, you'll see exactly what is going on at the moment.
OK. So, let's begin with Europe, the overall picture for the eurozone. And in Europe, you have the 27 members of the European Union with an unemployment rate of 10.5 percent. The eurozone itself, 11.4 percent -- 11.4 percent. That rate has increased in 20 of the 27 countries, if you put it together.
Youth unemployment is particularly important. Let's -- oops -- I do beg your pardon -- if you start looking at some of the countries. Let's take Spain, for example. If you start with Spain, you see youth unemployment is 52.9 percent on a general unemployment of 25. One in four people are out of work, one in two of the youth are out of a job.
The situation in Greece is just as bad. June -- look at those numbers. Youth unemployment, 55.4. That is the worst situation in Europe. And other countries are faring pretty dismally, too. Even France, where the race is unchanged and the gap between the north and the south is spreading.
To only get an idea of where things may be slightly and marginally better, look at Germany, 5.5 percent. I say slightly and marginally better. Obviously, the macro number is considerably better, but it is still unchanged.
So, even the German job creating machine has now slowed down. But 5.4 percent compared to 24.4 percent, and you get an idea of what's happening. Austria and Netherlands are also essentially amongst the lowest range.
Now, Greece has set new economic targets for its -- for 2013 as it's released its draft budget. There were demonstrations in Athens against the EU, IMF, and ECB troika as inspectors arrived for budget talks with the Greek government.
Greece plans to cut its deficit to just over 4 percent in 2013, compared to a forecast 6.6 percent this year. Speaking in Madrid, the European Commission vice president Olli Rehn says cuts would be needed elsewhere, too.
(BEGIN VIDEO CLIP)
OLLI REHN, VICE PRESIDENT, EUROPEAN COMMISSION: The fiscal consolidation underway needs to continue with determination. In Spain, as in many other parts of Europe, this unfortunately implies hard choices, but those choices will only get harder if they are postponed.
(END VIDEO CLIP)
QUEST: The situation in Greece. Now, to tonight's Currency Conundrum. In 2008, the Chilean mint produced thousands of 50 peso coins with a spelling mistake. But what was the mistake? Was it in the word "Chile"? In the Chilean president's name? In the number 50? Where was the mistake in the Chilean currency's minting problems? The answer later in the program.
On the first day of Q4, the dollar lost ground against the euro, despite that US manufacturing data. Virtually unchanged against the yen. These are the rates --
QUEST: This is the break.
QUEST: Company used to be called Hewlett-Packard. Now, it's HP, and it's making a second attempt to crack the tablet computer market. Its Touchpad launch last year was such a flop, it was killed off fast at just a month or so, and they had to recall large numbers of them.
Since then, the chief exec Meg Whitman has taken the reins at HP and trying again in a different market. She told Poppy Harlow the Elite Pad just isn't an iPad clone, it's strictly business.
MEG WHITMAN, CEO, HP: Today, we're launching the first tablet that's uniquely designed for businesses of all sizes, and it's called the Elite Pad. You're right, it runs Windows 8. And only HP really, I think, has done the work to understand business.
So, we talked to employees, we talked to the CIOs, the chief information officers, who are responsible for securing the IT environment at businesses of all sizes, and we came up with a device that I think is great.
POPPY HARLOW, CNN CORRESPONDENT: Microsoft is about to hit the market with Surface, its own tablet, running Windows 8. How do you feel about Microsoft competing in the hardware space?
WHITMAN: Well, in my many years in technology, I've gotten very used to what I call "coopetition."
WHITMAN: Sometimes you compete, sometimes you cooperate. And Microsoft is a great partner of ours. I'm really proud of this device. I think it is perfectly suited for the enterprise. The Surface, as I understand it, is more just for consumers. This is uniquely designed for businesses of all sizes. So, I'm excited about it. We'll see what happens in the marketplace.
HARLOW: It seems to me as though you have to have a SmartPhone in the market now to compete on the consumer front. You've said it yourself, so many people will only compute in other countries on their SmartPhones. So, you've said HP has to be in that space.
HARLOW: Meg, when are we going to see an HP SmartPhone?
WHITMAN: Well, you're right. In the end, I believe HP has to have an entrant all the way from the work station that engineers and architects would use to desktops to laptops to tablets all the way to the SmartPhone.
But what we're trying to figure out right now is how do we do something that is unique to HP that isn't a "me too" product that uniquely takes advantage of our strength in business, our sales and marketing capability. So, we don't have anything to announce, but we are trying to think through how do we enter that market in a way that is uniquely HP and provides a different product for customers?
HARLOW: Let's turn to politics, Meg. It's a realm where you're well- versed. Republican presidential nominee Mitt Romney, you're a friend of his, you worked for him way back in the day at Bain and Company, you've donated to his campaign. Meg, why do you think that he is the right candidate -- the right man to run this country right now?
WHITMAN: Well, my view is the number one issue facing the country is jobs and the economy. We have -- the unemployment rate is too high, the business environment is very tough. You ask almost any business person in America, the economy is not where it should be.
And I think Mitt's experience in the private sector, his experience as the governor of Massachusetts, his experience turning around the Olympics perfectly positions him to put in place the policies that will have the economy come roaring back.
So, I think he's the right guy for the job, given his background and the policies that he's laid out to get jobs revved up in the United States again.
HARLOW: At the same time, you've seen leading this company out of the worst financial crisis we've seen in decades that sometimes you have to lay people off and sometimes you have to lay a lot of them off. That's the reality of the private sector, isn't it, Meg?
WHITMAN: It's the reality of business. Anyone who's ever been in business knows that you have to adjust to what's happening in the marketplace. You have to adjust what's happening to your customers. That's the reality of business in America.
And I think Mitt understands that. I think the -- the American people understand that what we need is a set of policies in place to get the economy going again so people have good jobs so they can spend money so businesses, then, do better so they can hire more people. We've got to get that wheel of fortune going again in America, and I think it's going to help all Americans if we can do that.
QUEST: Meg Whitman talking about the US political process. And join us this week for live coverage of the first debate of the 2012 presidential election in the United States.
The focus is on US domestic policy and it will be live Thursday, 1:00 in the morning in London. It's part of CNN's extensive America's Choice coverage that will lead up to the US election. The network that has the most resources to bring you the best coverage because, of course, this is CNN.
Where fortune's improving for the world's airlines, a profit forecast on the rise in the Americas, that's how one Mexican carrier is leading the way, in a moment.
RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Syrian state media report that armed forces have inflicted, in their words, "heavy losses upon terrorists in Aleppo today." Rebels say they've launched a new offensive to seize the city's military airport. Activists say at least 127 people have been killed nationwide on Monday.
The United Nations Syria's foreign minister announced that Western and regional powers are funding, arming and training what he described as terrorist groups in his country. Walid al Muallem also told the U.N. General Assembly the Syrian regime still believes in a political solution to the conflict.
The official search for answers is now underway in South Africa with an inquiry into the police killing of 34 miners and 10 other deaths in August. The Marikana commission was appointed by President Jacob Zuma. The panel is expected to take four months to conduct its investigation.
The Taliban say they are behind a suicide bombing in Afghanistan and that killed at least 14 people and wounded nearly 60 more. Three NATO soldiers and four Afghan police are said to be amongst the dead. They were on foot patrol in a crowded part of Khost when the suicide bomber detonated explosives that were packed in a motorcycle.
The U.S. says Iran's currency has plunged because of international pressure about its suspected nuclear weapons program. The rial fell against the dollar today. It's lost more than a quarter of its value in the past week.
QUEST: The world's airlines are raising their outlook for the year despite weakness in Europe. The industry body IATA forecast profits of $4.1 billion this year. That's about a third up from estimates. It's still half of what they made last year, and it's still extremely (inaudible) number precarious despite the shortfall. IATA is still saying that things are extremely risk, but there are improvements in places.
(BEGIN VIDEO CLIP)
TONY TYLER, IATA DIRECTOR GENERAL: North American airlines have shown the greatest improvement in prospects since our last forecast, and we now see they're making $1.9 billion profits this year, $500 million more than we predicted in June.
This has been driven largely by a trimming of capacity, which has given them the highest load factors and improved yields. Notably, North America and Latin America are the only two regions where we're expected to see profits rise in 2012 over 2011 levels.
(END VIDEO CLIP)
QUEST: Now for a case in point, to Tony Tyler's message, let's look at the Mexico low-cost carrier Interjet, a regional carrier. It was launched in 2003 with three planes, and now it's a fleet of 35 Airbus 320 aircraft, expanding into the U.S. and Latin America. In New York is Miguel Aleman. He's the chief exec of the company; he joins me now.
Sir, I read about you're airline and you obviously know Tony Tyler's comments and you obviously see what's happening in the market. So what I - - squaring the circle of an industry buffeted by high oil prices, where do you see the biggest risk now?
MIGUEL ALEMAN, CEO, INTERJET: Well, obviously, exactly as the price and the oil rising and also in the several (ph) competitions around the world today. We are seeing a lot of joint ventures between different companies. So you have to get to that size, to that moment where you can be able to compete and to joint venture with some other countries, some other airlines.
QUEST: Now the interesting thing about your airline is that you've taken seats out of the aircraft. You've put meals and snacks onto the aircraft. And you're offering, if you like, a higher quality of service. So how are you making money or making it pay when everybody else is cutting costs?
ALEMAN: Well, that's very important question because we are doing a very, very important effort in the operational costs. It's more than a low-cost airline. We call it a cost-efficient airline and that's where we are working very, very hard so we can maintain the very good prices.
QUEST: What are you doing, though? I mean, you know, I've studied aviation for some time and there's only -- you all buy the same planes and you all pay roughly the same price and your fuel is roughly the same cost and you have to land at the same airports. So where do you grow your profit in the future?
ALEMAN: Well, we are hoping to have the volume around -- a big volume we can manage low prices. And that's where we would like to go, to manage a very big volume so we can manage the very low prices.
QUEST: Thank you very much for joining us. Look forward to following the fortunes of your aircraft -- of your company, 35 aircraft. No doubt there's more on the way. Many thanks indeed.
Next, we are back in Santiago with the president.
QUEST: Coming up after the break, more from our exclusive interview with President Pinera of Chile. The changes he wants to make in his remaining year in office and how Chile still looks to the rest of the world (inaudible).
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to tonight's "Currency Conundrum," I asked you to name the spelling mistake on the 50 peso coin issued in 2008, and the answer was the word Chile was spelled with two letter I's and no letter L.
How do you do that on your own currency? And this is the best bit: it was nearly a year before anyone spotted the typographical blunder. The coins are still in service; they haven't been taken out of circulation and they are extremely collectible.
(END VIDEO CLIP)
QUEST: As Europe grapples with its austerity in the country of Chile, it's announced it will increase its public spending in 2013. In its latest budget, the government's proposed a 9 percent increase in education spending next year.
In the second part of our exclusive interview, President Sebastian Pinera told me education is one of the pillars that will transform Chile from a developing to a developed country.
(BEGIN VIDEO CLIP)
SEBASTIAN PINERA, PRESIDENT OF CHILE: Well, our mission is to transform Chile into developed -- a developed country and to defeat poverty before the end of (inaudible). And we hope that we will be the first -- hopefully not the only one -- in be able to achieve that.
How to do that? Well, we are really -- we have realized that we have to be integrated to the world. We have to compete with the world. And that's why we have to trade agreements with U.S., with Europe, with China, with India, with Japan, with Korea, you name it.
QUEST: And as you now move towards things like the digital and the knowledge-based economy, I know you take a great interest in, for example, Startup Chile, which I went to visit yesterday, and I've been following closely.
What is it about Startup Chile? Because the critics say it throws money away and doesn't necessarily give any long-term benefit. Or is that just shortsightedness?
PINERA: It is shortsightedness. I think that being able to import and bring to Chile people that have good ideas, entrepreneurship capacity, to be here and start a business here, they -- what they will learn and what they will teach to our people is very, very valuable because (inaudible), before we thought that we all (inaudible) was enough to have a stable economy, to have a stable democracy and to have a modern government.
That's not enough. We have to build new pillars of the government. Education, science and technology, innovation and entrepreneurship and more equality. And we are fully committed in building those four new pillars in Chile.
QUEST: A couple of years ago after the heroics of the mining and the rescue, you were the hero. And as the political grind goes on, you see your approval ratings go down and you see troubles and you see protests. What do we make of that?
PINERA: In the mining experience, it was very simple. We said -- and I know when I came back and I joined the wives and others, the daughters, I told them, we look for them as if they were our own sons. We'll do whatever is necessary. And we did.
QUEST: Was that a defining moment in Chile? For the rest of the world?
PINERA: It was, because the -- it was a moment of faith, commitment and action.
QUEST: As you look at your contribution to Chile of what you brought from the business environment and what you've put into the political environment, what would you hope people say?
PINERA: For the last 20 years I have allocated all of my time, my efforts and my (inaudible) balance to improve the quality of life of the Chilean people. And I called the people are realizing that a country like Chile is able to achieve goals that were perceived as impossible only a few years ago.
(END VIDEO CLIP)
QUEST: President Sebastian Pinera talking to me in Santiago.
Stay in the region and Venezuela goes to the polls on Sunday where it'll choose a new president. Over the weekend, two candidates held competing rallies, President Hugo Chavez, who's led Venezuela since 1999 is facing his strongest challenge in years. Despite the threat the Socialist leader has predicted a sweeping victory.
He's up against Henrique Capriles, the center left candidate cruised to victory in February's opposition primary. Both men condemned the killing of two local opposition activists. Capriles' Justice First party says they were gunned down at a blockade.
Wedged in the side of a mountain, President Chavez has created a model Socialist city. Exactly the opposite in many ways from what we've seen in Chile as we've just reported a moment ago. They see -- in Venezuela, they see it as an example by offering free housing and medical care. The critics say he's buying up loyalty and votes. Paula Newton in Venezuela now took a look around Caribia City.
(BEGIN VIDEO CLIP)
PAULA NEWTON, CNN CORRESPONDENT (voice-over): We're on the road to Hugo Chavez's city of dreams, literally carved into the side of a mountain. He claims it's a Socialist utopia, built from scratch.
Ciudad Caribia, Chavez's Socialist city, is taking shape just a half hour's drive from the capital, Caracas. There are stacks and stacks of cubed apartments, a church, gardens. The sights and sounds of community are everywhere. Venezuelans eager to show off their new home.
FLOR RAMIREZ, RESIDENT: (Speaking foreign language).
NEWTON (voice-over): She shows us her new living room, her new kitchen with laundry and all those bedrooms. And she tells us something we hear over and over again here.
RAMIREZ: (Speaking foreign language).
NEWTON (voice-over): "It's free," she says, "thanks to the president. It's all free."
And they say compared to where they used to live in the working class slums, all of this is like a dream.
"I really like it here," this resident tells us, "because the house we had was horrible. It was falling down."
In the medical clinic, we find a Cuban-trained doctor. And again --
NEWTON: All the medical care here is free?
UNIDENTIFIED FEMALE: Gratis. Yes.
NEWTON: Government? Chavez's government pays for everything?
Now these communities may be wedged inside of mountains on land that no one wanted, but you'd be hard-pressed to convince people here who were in the barrios that this is worse than where they came from.
And I want you to follow me now into here, and you can see, we're now walking into the elementary school. And we have kids in here who are excited to be learning. They have supplies. They have a new school. And they have a new community to grow up in.
NEWTON (voice-over): As the teachers tell us, this isn't a question of this school being better or worse, this is a community project, a model for Venezuela.
"We owe all this to the president," she says. "It's his project. We're doing this with his help."
NEWTON: The red hard hats, the red shirts, there can be little doubt that this is a Chavez initiative, with true revolutionary zeal, he says he is bringing free housing to the homeless and to the poor. For that, he has been rewarded and expects to be rewarded once more at the polls.
NEWTON (voice-over): There are accusations now that Chavez is buying votes and loyalty, easing his way into reelection in the fall by fashioning himself as Venezuela's very own Robin Hood.
ORLANDO OCHOA, ECONOMIST: In the case of Venezuela, the economy itself handles oil well and then for these tributes, and of course, there are electoral intentions with that.
NEWTON (voice-over): And there is nothing subtle about this place or its intent.
"Only Chavez's government. I think it would be difficult to believe that another government would do something like this."
NEWTON (voice-over): These residents are Chavista (ph) loyalists and their political views seem as fixed as the mountain where Caribia now stands -- Paula Newton, CNN, Caribia City, Venezuela.
(END VIDEO CLIP)
QUEST: To the forecast now and certainly I know from my travels over the weekend in southern Spain, some pretty appalling weather, some storms overhead. And Jennifer Delgado's at the World Weather Center, who probably knows -- well, I jolly well hope she knows a jolly sight more about what's happening than I suffered.
JENNIFER DELGADO, AMS METEOROLOGIST: Absolutely, Richard. We have some photos out of Spain as well to show some of the damage that was left behind. Yes, we had a strong storm system that also moved through and spawned a tornado. But as we're showing on the radar right now, things are a lot quieter.
You can still see some light rain trying to spread into areas, including western France as well as into Belgium, the Netherlands and of course some storms moving through parts of central England. But overall, weather conditions are a lot quieter than over the weekend as Richard said. He was in Spain and Spain, you're finally getting a break from the rain as well as the windy conditions.
But it was a rough weekend indeed. We're still getting images of some of the damage left behind. Richard, this shows you some of the crops that were destroyed, and we did hear of course that this was a deadly situation. Well, all this flooding, and it comes after a severe drought. This led to a lot of flash flooding.
Here's another photo coming out of Lorca, and look at the train tracks there, just basically disrupted. Travel was disrupted because all the debris, some of this actually washing away some of the tracks.
So as I said, weather is going to be a lot quieter out there. We will continue to see a few scattered showers and rain out there, mainly east of the Adriatic Sea, over towards eastern Europe. It's going to be pretty nice and warm there. We'll show you some of those temperatures. But we're talking mainly upper 20s as well as into the 30s and of course some light shower activity returns to parts of the U.K.
Now for delays, say if you're flying out on Tuesday, it's not going to be bad at all. We're going to see a lot of green for areas including London, Paris, Dublin, Brussels, could see a little bit of some wind delays in the afternoon on Tuesday for Dublin. But overall, we're talking a much quieter weather pattern than what we're experiencing here through parts of the southeast. So the U.S., look what's happening.
We do have a tornado watch in place for Atlanta and that includes Alabama, anywhere you're seeing in red. You can start to see some of these stronger storms trying to develop. We just really are tapping into all that moisture in the Gulf of Mexico. And that is leading to flooding problems.
We'll continue to see this as we go through tomorrow, as the storm system moves up towards the northeast. It's going to be bringing some heavy rainfall for areas in those major airports like New York, Philadelphia, Washington, D.C. And that means for a messy commute. And then behind that, some cooler air settles back in.
So, Richard, you saw the photos coming out of Spain. It certainly indeed was a messy one, but happy to report things are quieter now. It looks like it's going to stay that way for the next couple days, however, you will be dealing with a few showers. But nothing like what you saw earlier last week. It was a mess over there.
QUEST: Indeed it was, and it's still a bit damp and (inaudible). But never mind. We thank you, Jennifer Delgado.
DELGADO: You're welcome.
QUEST: Well, it is (inaudible) sort of (inaudible).
Coming up, the European comeback against all odds. Nope, this is nothing to do with the ECB and bond buying. It's everything to do with golf. How teamwork fixed the debt crisis. If they'd only follow the same rules as the Ryder Cup.
QUEST: Europe is in desperate need of a miraculous turnaround. And at this weekend's Ryder Cup, that's exactly what it got. Europe defied the odds to beat United States and tonight we think European politicians can take more than just advice on their swing from the golfing pros. I think you all know how much I loathe the game of golf. I've never liked it. It's ridiculous nonsense.
But you can't help ignore what happened at Ryder and the Eurozone crisis. So we can learn all sorts of lessons.
First of all, never give up. We all know Europe's been up against it, and it was the same in Chicago this weekend. Europe was down 10-6 going into the final day. And rather than collapse, they came roaring back to victory. So Eurozone leaders, don't give up on Greece or Italy or Spain or whatever else might be in the country du jour. You have to work together.
That the Ryder Cup team had a Spanish captain and other team members from around the continent. There were no crisis summits, no diplomatic spats, only teamwork. And they weren't even getting prize money. So as has been said by Mario Draghi and Mr. Barroso, stop falling apart, and disagreeing, only just agreed on something.
Next, work under pressure. We know how European summits leave it till the last minute. On Sunday, Rory McIlroy almost showed up late for his final match. He needed a police escort to get him there on time. He still came out on victory.
And finally, when things really getting down to the wire, trust the Germans. At the end of the day, with the German Martin Kaymer, who won the match and retained the cup, trust the Germans, which is why we have Diana Magnay in Berlin.
DIANA MAGNAY, CNN CORRESPONDENT: Germany's stepping in to save Europe's skin on the golfing green, just as it tends to do on the financial front -- 27-year-old German player Martin Kaymer, putting his bad form of the last few months behind him for a tremendous final putt in his singles match against Steve Stricker.
He said he'd spoken to German golfing legend Bernhard Langer the day before to ask him how to improve his form. And Langer's always been a kind of mentor to him.
Langer famously lost Europe the Ryder Cup -- lost the Ryder Cup for Europe back in 1991 on the final green, and Kaymer says, in those final few seconds, he thought to himself, I can't let this happen again, showing true German efficiency when it mattered most.
MARTIN KEYMER, GERMAN GOLFER: Graeme had the same experience as me two years ago. And I didn't know how much pressure he must have felt until I get to 16 today and Jose Maria told me we need your point. And I don't really care how you do it. Just deliver.
But I like those, you know, that was very straightforward. That's the way we Germans are. And fortunately, I could -- I could handle it and, yes, I made the last putt.
MAGNAY: But the miracle of Medina's not really being celebrated all that much in the German press, as golf is not really a huge sport here and it's also being overshadowed by the -- some big matches of the German Bundesliga over the weekend and the Berlin marathon here on Sunday.
But now with two golfing legends to their name, Langer and Kaymer maybe golf will start to get a bit more recognition in this country, too -- Diana Magnay, CNN, Berlin.
(END VIDEO CLIP)
QUEST: Have a "Profitable Moment" after the break.
QUEST: Tonight's "Profitable Moment:" we were privileged to bring you the exclusive interview tonight with Chile's President Sebastian Pinera. And he has some grave concerns over the more quantitative easing, the QE in the United States, QE3.
Brazil's finance minister Montega has similar worries. Both countries are caught between that rock and a hard place, thanks to Ben Bernanke. One, of course, has even called it a currency war. Of course, they benefit from stronger U.S. growth. We all do.
But as the Fed pumps more money into the economy, it adds more ammunition to the currency war the interest rate differential, that could torpedo Latin America's progress.
I just returned from Chile. I was struck by how self-deprecating people were about the country's economy, ah, shucks, we're just little Chile.
But that self-effacing attitude belies how important the economy's become, a key player behind the scenes, strong fiscal policies. Remember, now every country's president has a Harvard doctorate in economics. A dilemma that Mr. Pinera faces, and one why we should listen to him very closely indeed.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The headlines at this hour: Syrian state media report that armed forces have inflicted, in their words, "heavy losses upon terrorists in Aleppo today." Rebels say they've launched a new offensive to seize the city's military airport. Activists say at least 127 people have been killed nationwide on Monday.
The United Nations Syria's foreign minister announced Western and regional powers are funding, arming and training what he described as terrorist groups in his country. Walid al Muallem also told the U.N. General Assembly the Syrian regime still believes in a political solution to the conflict.
An official search is underway for answers in South Africa at an inquiry into the police killing of 34 miners and 10 other deaths in August. It's the Marikana commission appointed by President Jacob Zuma. It will take approximately four months for its investigation.
The Taliban says they are behind a suicide bombing in Afghanistan killing at least 14 people, wounding 60 more. Three NATO soldiers and four Afghan police are said to be amongst the dead. They were on foot patrol in a crowded part of Khost when the suicide bomber detonated explosives that were packed into a motorcycle.
You are up to date with the news headlines at this hour. Now to New York, live and "AMANPOUR."