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QUEST MEANS BUSINESS
Cyprus Reaches Bailout Agreement; Berezovsky to Be Autopsied
Aired March 25, 2013 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, CNN HOST: Cyprus is saved. Now it`s time to pay, though. The E.U. pushes through a controversial bailout. Michael Dell`s in takeover trouble as rivals go for a piece of his own company. And better watch those in-flight meals, because the new airline pricing model it`s pay as you weigh.
Hello, I`m Nina dos Santos in for Richard Quest and this is QUEST MEANS BUSINESS.
DOS SANTOS: Good evening. Well, the president of Cyprus is making a statement right now, let`s take Greek television. He`s talking about the bailout agreement that his country has reached with the European Union.
NICOS ANASTASIADES, PRESIDENT OF CYPRUS (through translator): Choices are not easy and the environment (inaudible) but (inaudible) negotiations and with a sense of responsibility we (inaudible) a result that the issues, the prospects of the country, the agreement that we reached, it`s painful but under the circumstances, the best (inaudible) achieve.
Therefore, avoids the bankruptcy of Cyprus and also the results on the society. And we will (inaudible) -- we saved the banking system and avoid the (inaudible) collapse of (inaudible) bank and we ensure the survival of the Bank of Cyprus and the matter with the part of the popular bank with this Bank of Cyprus, then there will, as a result, will be one bank that will be able to deal with the economy.
I wouldn`t even like to think who will (inaudible) without this agreement throughout these times, I was going through (inaudible) agony and your thoughts were with me. And we all wanted to avoid this obstacle. I feel that we all felt together it was a political movement, that it was a battle that we still managed to get on our feet and start again fresh.
We leave behind us all this uncertainty that we`ve been through in the last few months and we`re looking to the future with optimism. For tomorrow is a new period for Cyprus and the next few days we`re going to start implementing those difficult decisions in this situation that we`ve found ourselves, that we`re not any (inaudible).
We have to make difficult, painful and brave decisions in order to save the country. The central bank with the acts that were voted, they`re going to implement the legal changes. And I have to inform you about a new measure which will become looser and in the future.
We`re going to make sure we do everything to return back to calm and I`m asking everyone to be patient and decisive, to work together in order to kickstart our country again. The ECB ensures a liquidity of the banking system we must gain back 10 billion euros, which produce (inaudible) our part in this, the (inaudible) citizens and our economy.
Dear friends, of these difficult times, all of us stayed in society. We have to support our fellow citizens with a need. We have to stand on our feet in order to overcome the vicious cycle of the recession. (Inaudible) has to take (inaudible) particular measures in order to stamp out the side of those who (inaudible) painful consequences.
And in the beginning, that will affect directly all the welfare funds and eventually we`re going to concentrate our policies in -- our policies in order to welcome investments and create more jobs.
Fellow citizens, all these days when we had voices asking for the country to move out of Europe, regardless of the bitterness and the disappointment that we felt from the position of some of partners, I really don`t think that to distance ourselves from the European family will serve us right.
I can feel the anger that you feel from the responsibilities of those who led us to this situation, from the next few days, the cabinet is going to give orders to the prosecution services to look into this matter.
We felt, dear friends, for today and for tomorrow, for our children and our grandchildren and tomorrow we all together, we`re going to try to overcome this.
Our country went through the worst possible but (inaudible) attitude of our people, they`re going to overcome this and then we`re going to move on and we`re going to (inaudible) the crisis as an opportunity in order to build a future into -- in good (inaudible).
Dear friends, I will have missed out if I didn`t thank daily my colleagues, both those who`s in front of me in Brussels and those who are still working nonstop here in Cyprus in order to save our economy. At the same time, I can`t -- I must thank all the political leadership of the country who support me throughout this period of time.
Courage, strength and (inaudible) we stand on our feet and we succeed and we feel proud again because we are people with -- we will never give up whatever hardship we have to face. Good night and thank you very much.
(END VIDEO CLIP)
DOS SANTOS: So that is the president of Cyprus there, Nicos Anastasiades there, giving a statement on Greek Cypriot television. Let me run you some of the things that he`s said.
He said that the central bank will indeed be implementing capital controls as a temporary measure.
And he`s also talked about the country not asking for this, saying, "We are thrust into this. We wanted to avoid this. But that is the best way for Cyprus going forward. From tomorrow," he said, quote-unquote, "we have a new period for Cyprus. We will have to implement these measures over the next few days. And it`ll be difficult and painful decisions for us."
Let`s go over to our correspondent, Ivan Watson, who joins us now live from Nicosia, which is the Cypriot capital.
You`ve been there for a couple of days, Ivan. How is all this going down? Obviously two banks, very badly affected. But the small person on the street perhaps will escape unharmed.
IVAN WATSON, CNN CONTRIBUTOR: Well, certainly if you have savings of below 100,000 euros in a bank, the deal with the European central bank and the European Union has promised that those savings will be insured and protected. It`s anybody with more than that. The big question is, is how badly will they be hurt.
The two largest banks on the island, Laiki Bank and the Bank of Cyprus, we`ve just learned that they`re not going to reopen till at least Thursday. It`s been 10 days since Cypriots have been able to go to their banks and access them beyond going to ATM machines, which have been restricted to only really handing out 100 euros at a time.
So it`s a long period that people have not been able to conduct business as usual.
As far as the mood here, the atmosphere, well, believe it or not, today was supposed to be a patriotic holiday. Instead, Nina, the atmosphere was quite gloomy.
(BEGIN VIDEO CLIP)
WATSON (voice-over): It was Independence Day in Cyprus today, not for Cyprus itself, but for the republic`s big spiritual brother, Greece. On the morning after failing Cypriot banks received a last-minute bailout from Europe, Monday`s holiday was not a happy one.
WATSON: This is supposed to be a celebration of Hellenic pride. Instead, many Cypriots are traumatized by what some have described as one of the worst weeks of their lives.
WATSON (voice-over): There is anger at the tough terms of the billion-dollar bailout. "Cyprus, they are selling you," these young men chant. Cypriots have watched and worried as the economic crisis forced banks to stay closed for more than a week. The island republic`s economy has hovered on the brink of utter collapse.
UNIDENTIFIED FEMALE: I was 6 years old when there was a war here in Cyprus in 1974. And things remind me of how things were back then. The insecurity of people.
WATSON (voice-over): Mario and Stella Dishrutiotis (ph) fear they just lost a big chunk of their savings in a single night.
UNIDENTIFIED MALE: Last night, the tide was to keep our country alive, not to go bankrupt. And I think we succeeded on that. And I hope that in the future we (inaudible). But everybody lost a lot of money overnight. It has happened in the state. I don`t -- I can`t imagine what will happen.
WATSON (voice-over): The bailout deal effectively ends Cyprus` days as an attractive haven for foreigners. It basically calls for the closure of Laiki, one of the country`s biggest and oldest banks and calls for higher taxes and an investigation into allegations of money laundering. Everybody, including the Cypriot top diplomat, knows times are about to get a lot harder.
IOANNIS KASOULIDES, FOREIGN MINISTER OF CYPRUS: I cannot say that we rejoice about the agreement. But if this is the only possible way, then I want to assure you that the Cypriots are a very resilient. And we will restart our economy. We will rebuild again.
WATSON: Do you feel humiliated by the European Union right now?
KASOULIDES: We feel -- well, we feel that we have not been treated with dignity as we ought to have been treated.
WATSON (voice-over): At an independent state church service, worshipers tried to keep a stiff upper lip. They finished prayers with a full-throated performance of the national anthem, a show of patriotism during a time of deep fear and worry.
(END VIDEO CLIP)
WATSON: And, Nina, Cypriots know full well that they`re entering a period where they`re going to have to tighten their belts. But they`re also increasingly calls to prosecute whoever it led the economy and certainly the banks into this crisis in the first place.
And as we just heard from the Cypriot president, he followed up on those calls, which have also been made by the archbishop of Cyprus himself. And the president said that information will be passed on to the prosecutor`s office to begin that very process, Nina.
DOS SANTOS: Yes, that`s an interesting turn to the story, isn`t it? Ivan Watson in Nicosia for us this hour, thanks very much for bringing us the latest there.
Well, the Cypriots get to grips with their new future, we take a look at the costs of their country and the E.U. as well as beyond its borders. That`s when we come back (inaudible).
DOS SANTOS: Welcome back. Cyprus` future in the Eurozone, it seems, is safe for now, though. Those with large deposits in the nation`s two biggest banks, though, are not because the deal struck with the troika in the early hours of this very morning does protect small savers. It transforms the banking sector but it also forces the biggest depositors to pay a pretty heavy price.
Let`s have a look at the mechanics of exactly what was put on the table. What you heard the Cypriot president just talking about moments ago at the top of this very show, so the country`s two main banks will be restructured.
We`re talking about the popular bank of Cyprus, locally known here as the Laiki Bank. That is to be broken up immediately. And its bad assets would be wound down in a so-called bad bank. The viable ones will be transferred to this one above, which is the Bank of Cyprus. Both of those banks are the ones that Ivan Watson was telling us will remain closed until Thursday.
Anyone with savings of less than $130,000 in the bank will be safe. Those with more than that can actually expect to pay a large levy. At present we don`t exactly know how big that levy could be. The plan is meant to get Cyprus back on the road to sustainable growth. And the European Commission president, Jose Manuel Barroso, says that it`s too soon to know when that will happen for Cyprus.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: I will not commit now to precise targets. It`s true that this is a goal, the goal that was reached by the Eurogroup. But let`s be frank: in this exceptional, extremely difficult circumstances Cyprus is now living, it is quite risky to make any kind of forecast including in a macroeconomic scenario in the medium to long term.
(END VIDEO CLIP)
DOS SANTOS: So that`s Jose Manuel Barroso of the European Commission.
Let`s have a look at how the stock markets fared.
Well, European shares actually opened higher on the back of a deal being struck, though as you can see the positive reaction was rather short- lived for some of these markets falling into the red substantially if you take a look at the CAC 40 over there in the euros.
And we saw banking stocks as well falling in particular after the Eurogroup head, Jeroen Dijsselbloem, said that Cyprus` bailout represents his quote-unquote "a template for future bailouts." Ouch, that really could rock investors` confidence because of concerns about viability of banking systems in places like Spain and Italy.
Well, on Wall Street, the Dow is also in the red, as you can see here, down around about half of 1 percent at the moment or 73 to 74 points. That was after hitting a new record high earlier in today`s` trading session. It rose to just under 14,574 points. That was shortly after the open. But as you can see, well, the feel-good factor has worn off, because it`s now trading at 14,432 for the moment.
So ordinary Cypriots are facing years of austerity to come, including tax rises, reforms and a program of privatization. We know how that went for Greece. Let`s put some questions to the chief investment officer of ABN AMRO, Didier Duret, who, as you can see, is in our London studio today.
Thank you very much for coming on QUEST MEANS BUSINESS, Didier.
If you get your crystal ball out and you take the -- give it a bit of a rub, and you take a look at 2-3 years from now, where will Cyprus be, because that is what the president has had to sell to these people, a brighter future eventually, even if the immediate pain is substantial.
DIDIER DURET, CIO, ABN AMRO: Well, as you say, there is an extraordinary transition to go through for the country, to go from a system which was unbalanced in many ways, where the banking system was of a size to assist them. That is more balanced between the various sectors of the economy.
So many roads are probably to be explored, the tourism but also the service sector. That has to be developed. There will be probably some help from the European Union. And that`s certainly hardship. But it means that there is probably a recession coming out in the coming years (inaudible) --
DOS SANTOS: But if we take a look at the recession that has affected some other countries, the initial recipients of the bailout programs, like Greece which, arguably, many Cypriots are saying that`s where our ills stem from. They`re still in a recession 5-6 years on.
DURET: Yes. (Inaudible) --
DOS SANTOS: (Inaudible) Cyprus has to await?
DURET: Strangely enough, the size of Cyprus, which is very small, can also be an advantage in the future, because it means that it can attract also the improvement that is seen on the other part of the European Union and one side that will so on the global level. So from that aspect here, we cannot say that it is as difficult as it was for Greece, for instance.
DOS SANTOS: But it does set a very dangerous precedent. So on the one hand, not only are we talking about not just haircuts for private investors, bondholders (inaudible) sophisticated investors, we`re talking about a raid on people`s savings who just put their money in a normal deposit account.
That will undermine confidence of the consumer and on the other hand, well, you`re in (inaudible) from the Eurogroup saying that this could be a precedent for future bailouts.
DURET: But I don`t think that the interpretation of Mr. Barroso can be interpreted, you know, under the letter, because it simply means that we have found a solution, you know, the process was not easy but we have found a solution for the principle of the deposit insurance is preserved as far as we understand from (inaudible).
DOS SANTOS: But only just, because they had to (inaudible) the original offers from the unitroika (ph). That was particularly damaging, wasn`t it, from a PR point of view?
DURET: Yes, we can, you know, appreciate that as the trial narrows during the process. But I think the important thing for me, it is -- it is really putting a sting to go in the direction of the banking union. Should we have heard banking union beforehand we will have probably managed the Cyprus situation in a less clumsy way.
DOS SANTOS: Excellent point. That`s one that keeps coming back time after time. Ironic that they`ve struck the banking union deal more or less at the same time as obviously they took the initial deal on Cyprus. Didier Duret, thank you very much for coming on there, the CIO of ABN AMRO in our London studio this evening.
Well, speaking of which, a "Currency Conundrum" for you now out there. If you`re still holding on to Cypriot pound banknotes, how long do you have left to exchange them for the (inaudible) euro? Well, is it A, three weeks; B, nine months; or C, four years? We`ll tell you the answer later on on this show.
Speaking of currencies all the currency markets (inaudible) the euro and the pound are both sharply down against the U.S. dollar when it comes to the Japanese yen, well, the situation we`ve seen in the past many times before, it is trading up against the greenback.
DOS SANTOS: Hello and welcome back. The body of Boris Berezovsky is undergoing a post-mortem examination in the U.K.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): The Russian exile was found dead by an employee at his home in Southern England on Saturday morning. Police say that there`s no evidence of, quote, "third-party involvement in his death." Berezovsky had been living in Britain since he fell out with the Russian president, Vladimir Putin.
Our Phil Black reports on the rise and fall of this oligarch.
(BEGIN VIDEO CLIP)
PHIL BLACK, CNN CORRESPONDENT (voice-over): Boris Berezovsky in the 1990s described him as frantically energetic, driven and ambitious, not your average mathematician. He became one of the country`s hated oligarchs, that small number of ruthless businessmen who quickly built enormous personal wealth, snapping up state resources cheaply as Russia chaotically embraced capitalism.
He also charmed, pestered and lobbied his way into the Kremlin, becoming an influential political player. And as President Boris Yeltsin`s health declined, Berezovsky was said to have played a role in helping to install Vladimir Putin as his successor. This was Berezovsky speaking to CNN in January 2000, just days after Putin took over.
BORIS BEREZOVSKY, RUSSIAN OLIGARCH: I think that Putin will continue the way which President Yeltsin established Russia.
BLACK (voice-over): He was wrong. Putin quickly cut all the pushy oligarchs out of Russian politics.
Six months later, Berezovsky told CNN Vladimir Putin was creating a dictatorship. That year, Berezovsky was investigated for corporate crimes, which he denied. And he fled Russia never to return.
Berezovsky`s death after 12 years in exile has not softened many Russians` opinion of him.
This woman says, "He betrayed Russia and wrecked many things for the country during its hardest times."
Damian Kudriavtsev used to work for Berezovsky and remained a family friend. He was one of the first to learn of his death.
DAMIAN KUDRIAVTSEV, FRIEND OF BEREZOVSKY: Selfish, but positive. He was very difficult, but a good friend. He tried to be a good friend and good man. Sometimes he didn`t succeed.
BLACK (voice-over): Despite those flaws and failures, Kudriavtsev says he`s proud to have witness Berezovsky`s efforts to change Russia.
KUDRIAVTSEV: No, business wasn`t important to him. He related to the money, to the business as resources to make changes.
BLACK (voice-over): Kudriavtsev says his friend was unhappy and he was in financial trouble. But he wouldn`t have harmed himself. And he says Boris Berezovsky had always hoped to someday return to Russia -- Phil Black, CNN, Moscow.
(END VIDEO CLIP)
DOS SANTOS: Coming up next on QUEST MEANS BUSINESS, more reaction to that Cypriot bailout. Our next guest says that Europe wasn`t afraid to let Cyprus go.
DOS SANTOS: Hello and welcome back. I`m Nina dos Santos. These are the headlines this hour.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Cyprus` president says his country`s bailout deal is painful, but the best option under the circumstances. Speaking in the last half hour, Nicos Anastasiades says that it`s time to leave behind the uncertainty of the last few months and now look towards the future with optimism.
The E.U. agreed to a $13 billion dollar bailout over the course of the weekend, which will shrink the island`s banking sector significantly and tax big depositors.
In a matter of hours, Italy`s Supreme Court has expected to decide whether Amanda Knox will face another trial in the murder of her roommate, Meredith Kercher. Prosecutors argued for a retrial on Monday. Knox was originally convicted of the offense in 2009, but that verdict was subsequently overturned about a year and a half ago.
The United Nations is temporarily moving out about half of its 100- member staff out of the Syrian capital, Damascus. The decision came after mortar shells fell around the hotel housing U.N. staff in the Syrian capital. Well, most of the staff members are being moved to locations in either Beirut or otherwise Cairo.
Results of a post-mortem examination on the body of the Russian oligarch Boris Berezovsky are expected to be released sometime today. He was found dead in his mansion in west of London In Berkshire (ph) on Saturday. But police say at this stage they don`t have any evidence that, quote, "a third party was involved."
A Boeing 787 Dreamliner is in the air on a test flight which it`s hoped will be another step towards returning the plane to service. The entire fleet was grounded following problems with the plane`s battery. The plane`s expected to land in around about half an hour from now.
(END VIDEO CLIP)
DOS SANTOS: Cyprus is facing a new grim reality of shrunken banks and shocked depositors. However, the president of the Eurogroup still believes that those painful reforms will eventually put Cyprus and its economy on a firmer footing than before.
(BEGIN VIDEO CLIP)
JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: The agreement on and decisive implementation of the program will enable Cyprus to return to a stable and normally functioning economic and financial environment as soon as possible. This is very much in the interest of the Cypriot people.
(END VIDEO CLIP)
DOS SANTOS: Christopher Pissarides is a Cypriot Nobel prizewinning economist, and he`s also a professor at the London School of Economics. Earlier today he told me that the reason Europe is playing quite so tough is because it realized that Cyprus is not too big to fail.
(BEGIN VIDEO CLIP)
CHRISTOPHER PISSARIDES, PROFESSOR OF ECONOMICS, LSE: It was the best deal that the country was offered. But if you think of it as a deal that was given to one country in the Eurozone because of the problems that Cyprus had, I think it`s terrible. It`s terrible for the organization of the Eurozone. It`s terrible for the Cyprus economy.
And the idea that the Eurozone is a country of equal partners that are helping each other with these deals is (inaudible). This deal is going to hurt the Cyprus economy. It didn`t have to get to this point. And it`s going to worry very much all the others in the Eurozone who might have problems in the future, especially the smaller economies, like (inaudible) Malta and even the ones that have (inaudible) --
PISSARIDES: -- (inaudible) like Ireland, Slovenia. (Inaudible) be very worried (inaudible).
DOS SANTOS: Well, of course, there`s this hideous irony, isn`t there, that we`re seeing the second smallest nation within the Eurozone being used, if you like, as the example here, four years since the crisis started.
PISSARIDES: Well, it`s a problem like when you say that it`s the second smallest, but (inaudible) identifying what`s the problem with this nation, because if you look at this nation in every other respect, you know, it`s got a well-functioning economy. It`s got a (inaudible) not bad. It`s manageable. It`s been growing very fast (inaudible) last two years.
But it has these two big banks that invested very heavily in Greek bonds. They got hit by the Greek bonds. The government couldn`t rescue them, but that`s the idea of belonging to a banking union or a currency union for the moment.
You know, you`ve got your partners and you see what solution you can reach. But the partners obviously realized that this is not the (inaudible) in the sense that, you know, if we destroy this economy, it`s not going to have any spillovers, any bad effects in the rest of the Eurozone. So let`s try this one out.
The problem, though, is that -- is that what you do affects your reputation as a union. And it affects the way other people think about in the future, you know, what can we expect from this union of countries in this currency union.
And this is what we are seeing today, as the day is progressing, you know, we are seeing other countries coming up with rather worrying statements; we are seeing comments that are not very favorable to the union.
But as far as watching around and if you see (inaudible) Cyprus today and seeing people out, I have never seen this town in the condition it is today, absolutely no one is saying, oh, you know, maybe it will help us reconstruct our economy and start growing again; whereas in previous rescue attempts with the other countries, you did see a sizable fraction of the population saying, you know, maybe this is good; maybe this is going to be good for our economy. But not on this occasion.
(END VIDEO CLIP)
Nicolas Petrovic is the CEO of Eurostar. He says that the bailout plan for Cyprus is a good step, but a long-term plan is needed to stabilize the Eurozone from here on. Well, Eurostar`s operating profit doubled last year to a total of $67 million. Petrovic says that that`s partly due to an increase in business travel.
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NICOLAS PETROVIC, CEO, EUROSTAR: Well, the crisis had an effect on our business travel, especially between the middle of 2011, middle of 2012, where we really saw the financial services retreating because they were cutting costs.
But actually after the Olympics on the back end of 2012 and the start of 2013, the business travel has been picking up a bit. So it`s much, much better. So hopefully, the Cyprus situation is (inaudible) the Eurozone crisis.
DOS SANTOS: Do you think it might?
PETROVIC: I don`t know. Who knows? I hope not. I think the (inaudible) out of the way because of (inaudible) ECB standing behind the euro. That was, I think, their watershed moment. And actually we could see that in our numbers.
DOS SANTOS: As a CEO, operating across two or three different countries, one in -- two inside the Eurozone, if not more, and crucial ones, and one that is outside the Eurozone, what would be your message to politicians in Brussels to try and restore confidence here?
PETROVIC: Well, I think I`m like any business in Europe at the moment. It`s all about confidence and being able to see beyond next week or next month to have a stable environment. And there`s been some progress, I have to say, but still it`s not enough. And a lot of the economies are led by consumers.
The U.K., France, Belgium, Germany, (inaudible), even the consumers, they need to have a stable environment, especially about the money and the euro is critical to that.
DOS SANTOS: How does the euro and the exchange rate at the moment affect you?
PETROVIC: Well, there`s been some changes last year. The pound went up. Now it`s going down, so of course it changes the earnings. (Inaudible) doesn`t change too much the patterns. What we see that if the pounds go very high, then we have more traffic of U.K. holiday natures going (inaudible) --
DOS SANTOS: (Inaudible) that?
PETROVIC: Oh, yes. And (inaudible). When the pound went down a lot after 2008, we had -- we played on that to bring much more tourists into London. It worked very well.
DOS SANTOS: Well, speaking of something that attracted people in their thousands to London, it was of course the combination of the Olympic Games and the Jubilee.
Now the weather wasn`t particularly clement. But it must have helped your business.
PETROVIC: Oh, it was fantastic. I think for two things, first it brought to London a lot of people who would have never come to London before.
And the second thing, it was such a great advertisement for London that we are starting to see now people (inaudible) outside of Europe starting to book to come to London and so when they come to London, we try to get them to Paris as well and to make them a -- do a grand tour of Europe.
DOS SANTOS: Because what some people might not realize is that you actually became a stand-alone company a couple of years ago. And you posted your first profit as a stand-alone company in 2011. And since then it`s doubled. What`s the trajectory looking like for this year?
PETROVIC: We very much hope to improve those results even further. There`s still (inaudible) uncertainty of the markets, you know, the U.K. with the economy picture (inaudible). In France it`s the same. So but still I`m very confident we are trying to grow year on year. And definitely want to grow the bottom line.
(END VIDEO CLIP)
DOS SANTOS: Larry Summers says that there`s a shadow hanging over Europe at the moment. Richard sat down with the former U.S. Treasury secretary earlier today, and he said that the United States is certainly a safer place to be right now.
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LARRY SUMMERS, FORMER U.S. TREASURY SECRETARY: I don`t think that quite the same shadow hangs over the United States as hangs over Europe. I mean, you have a situation in Europe today where Argentina borrows money on better terms than Greece.
DOS SANTOS (voice-over): As you can see that interview in full tomorrow night on QUEST MEANS BUSINESS.
(END VIDEO CLIP)
DOS SANTOS: When we come back, we`ll have the latest in the battle for control of Dell as two new bidders square up against the company`s own founder.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Time now for the answer to today`s "Currency Conundrum," we asked you how long Cypriots have to exchange their old Cypriot pound notes for euros. Well, the answer is B, they have four years.
The deadline is until the end of 2017, although there`s bad news because if you have any Cypriot pound coins lying around, well, I`m afraid tough luck; the deadline to exchange those has been in past. In fact, it was in 2009.
(END VIDEO CLIP)
DOS SANTOS: Three rival bidders are currently engaged in a tug-of-war over the computer maker Dell. First on the scene was the company`s founder and CEO, Michael Dell himself there. He`s hoping to take the entire company private.
Well, the private equity group Blackstone has also made a bid for Dell as well, valuing its shares at a higher price than Michael Dell`s own offer.
And putting in an even higher bid is this man. He`s the billionaire investor, Carl Icahn. So all sizing up for a very nice tug-of-war indeed, perhaps even a little bit of a double whammy.
Let`s go over to Felicia Taylor, who joins us now live from CNN New York.
So, Felicia, this is getting really, really interesting. How`s it likely to pan out?
FELICIA TAYLOR, CNN CORRESPONDENT: Well, that`s a very good question because at stake here is whether or not the company goes private or if it stays publicly traded. And what is in the best interest of shareholders?
Obviously when you`re valuing a company at either $13.65 a share, which is Michael Dell`s bid versus Blackstone`s bid of $14.25 a share versus Icahn`s bid of $15 a share, the answer is obvious. I mean, you take the highest bid you can.
So but the question is, you know, with both Blackstone and Icahn, the company would continue to be publicly traded. With Michael Dell, the company would go private. And that means that there`s less transparency involved.
So, you know, one has to wonder what is actually the best interest of shareholders moving forward? And the question also would become, you know, what happens to Michael Dell? He started this company when he was just 19 years old with $1,000 in his pocket. And it`s grown to be this behemoth. At least one analyst out there thinks that there is definitely a higher valuation and that there is value to this company moving forward. Take a listen.
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CARR LANPHIER, MORNINGSTAR: Dell`s hardware business is still a very substantial portion of its sales. And that is deteriorating quite quickly.
On the other side, Dell has acquired over $15 billion of companies in the last five years. And so it`s been able to kind of construe all of these together, you know, and really grow that. It could be a much higher margin business.
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TAYLOR: You`ve got $15 billion to spend on making acquisitions, that`s quite a healthy balance sheet. So the company does have value out there. It`s been a laggard; no question about it. The stock, however, is up about 3 percent in today`s trade.
So clearly people out there like the idea that there`s a little bit of a tug-of-war. This is what we call the go-shop period, and it`s very unusual to see three players out there vying for the likes of Dell.
DOS SANTOS: Yes, you usually see just about two, don`t you, Felicia.
If we talk about Michael Dell`s proposal here, he says that he could be more nimble. And that`s something that presumably Dell would really need these days, because the reality is people are going towards tablets. They`re not buying PCs.
Felicia, if you can hear me, the reality is is that Dell needs somebody who can be nimble here, because people are buying tablets, not PCs.
I think we`ve lost Felicia.
I think we`ve lost Felicia Taylor there. Unfortunately, I didn`t get the chance to ask her about Ford`s interesting new adverts. But maybe we`ll get back to her later on in the show.
Let`s go over to Tom Sater now at the CNN International Weather Center for an update for all you business travelers out there.
Tom, how`s it looking?
TOM SATER, AMS METEOROLOGIST: Well, it really depends. If you`re in the Southern Hemisphere, I think you`re going to be fine, Nina. Or parts of Asia, just a few isolated thundershowers.
But really, it`s Europe and the U.S. putting up with just an ongoing winter. It just won`t seem to quit. In fact, it seems like Old Man Winter, for the most part, is getting stronger. It`s like he`s been working out at the gym.
Notice Moscow right now, at -7 degrees; Kiev`s at -12. When you factor in the winds, it feels like -14. Now right now in parts of Moscow, there`s 70 centimeters -- that`s the snow depth. They had a good 24 and about, you know, actually 15 that fell in 24 hours.
The jet stream is well down to the south. So what we have, this is extremely cold, unseasonably cold numbers across much of the area. And even with an east wind, the U.K. is not looking at warming up much.
Now I want to show you this picture. It`s a snowboarder, right? Take a look what we have behind him here. Now remember this image, this iconic building here? I want to show you a Google Earth image. There are parts of Ukraine that in central Ukraine as many as 161 villages and towns are without power; 105 of those villages are actually just cut off.
Here is our building, right? Let me show you a street view. This is a famous old historic cobblestone street. I`m going to turn the image around. We`re going to show it to you, going down the hill, right? Now let me show you an iReporter video. This actually was sent into us.
And look at it, yes, from a TV programming producer, one of the local TV stations here. This they may never see again. As far as many can recall, they`ve never been able to snowboard down the main central historic avenue here in Kiev. Most of the roads in Kiev are getting better.
But, again, it`s those 161 towns and villages that we`re so concerned about that, are without power. Many reporting that the foods and provisions needed on shelves and stores are out. So, again, historic snowfall in Kiev, in fact, 36 centimeters fell just over the weekend on top of the 50 they had on Friday. They`re saying it`s the most historic snowfall since records have been kept.
And it goes back to 1889. We`re still looking at the system; it`s going to continue to move from the Mediterranean. That`s right across areas of Italy, the Adriatic, all of the Balkan countries are going to get hit with some pretty good snowfall. You can see it right here on the 24- hour loop, then that`s 48, that is.
And an ongoing stream of moisture will continue to feed this. This is the time of year, obviously toward the end of March, we start to see the warmer temperatures make their progression northward. That is not happening.
So with that cold air in place and you get a little bit of moisture like this, you`re talking about Zagreb getting another 23. Then we`re looking at the U.S. They`re getting pounded as well. It`s a late, late winter or early spring snow system. Thousands of schools have been closed, 30-40, even near 50 centimeters of snow have fallen, of course, causing travel problems.
At least the D.C. area and New York City at this time seem to be safe. We`re going to be watching this one closely. But just on both sides of the Atlantic, a lot of winter weather still to be had it looks like, at least for the next week as we end out March. Hopefully spring`s around the corner, Nina.
DOS SANTOS: Gosh, I think it`s an odds-on favorite for a white Easter as well --
DOS SANTOS: -- and so we don`t escape it, either. Tom Sater, thanks ever so much for that at the CNN Weather Center.
Let`s have a look at how the markets are faring at the moment. Obviously, in light of the news, but there has been a deal reached, more or less at the 11th hour, on the issue of Cyprus. But obviously it would involve a major restructuring and levies and taxes being imposed on people who own deposits of over $130,000 in two banks on that island.
We`re talking about Laiki Bank, the popular bank of Cyprus and also the Bank of Cyprus itself. So that has concerned people because they view it as potentially a blueprint for future bailouts to come across the Eurozone, mainly in bigger countries like Spain and Italy.
So as you can see, the Dow Jones industrials average is trading in the red at the moment. But I might point out it did actually rise on the back of news of that Cypriot bailout, rising above the level of 14,500. Though, as you can see, it surrendered a number of those gains currently trading at 14,432 for the moment.
Coming up next on QUEST MEANS BUSINESS, we talk to one academic who suggested that airline passengers who weigh more should pay more. You`ll want to stay tuned for that.
DOS SANTOS: Hello and welcome back. Well, one academic says that airlines should make overweight people pay more to fly. The idea has been (inaudible) by a professor in Norway who says that weight and space should be factored into the ticket price, first to cover the cost of extra fuel that each person uses. Well, we`ll hear from him in just a moment`s time, but first let`s give you an idea.
We came up with a hypothetical model of how this might actually work.
On my right-hand side, you can see here, see heptathlete Jessica Ennis, who weighs in at a svelte 57 kilos. And on the other side, we have the Ukrainian heavyweight boxer, Vladimir Klitschko. He weighs in at nearly twice of Jessica Ennis` weight.
But based on the price of a flight from London to New York tomorrow, as you can see here, Jessica Ennis would pay the standard fare, bearing in mind, of course, her weight at 57 kilos. So it would be $1,063.
But just have a look at how much more Klitschko could actually pay for his extra pounds, considering his additional weight, well, it could come in at a whopping $2,000. So that`s a staggering 86 percent more than Jessica Ennis would be paying.
Professor Bharat Bhatta had a few ultimate suggestions. One option could see average weight of passengers paying a base fare. So if you weighed in at an average weight for your body mass index, well, you`d pay the average fare. That to cover costs unrelated to fuel. But with heavier travelers paying a premium on top of that.
And a third idea could be to charge the flat fare for average weight passengers with discounts for lighter fliers. And excess amounts being applied for those above that. I should mention that these weight limits include luggage as well, but particularly controversial, some might think. Professor Bhatta admitted that it`s a difficult topic when I tackled him and said this could be discriminatory. Take a listen.
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BHARAT BHATTA, UNIVERSITY PROFESSOR: I agree. I had also mentioned this effect in my article, that this is under (inaudible) aspect. And this is (inaudible) issue. That`s why we need to (inaudible) issue, whether this is -- this (inaudible) policy is (inaudible), economically, (inaudible).
DOS SANTOS: Why do you think airlines really should be weighing the passenger and their baggage? Isn`t it just a step too far? Isn`t it discriminatory?
BHATTA: Some would say (inaudible) this is discriminatory. But because I am (inaudible) economics, for me it is not discriminatory at all because as you know, weight and space are the major determinants of price, of a price of (inaudible) service. So this is into every type of good and service.
And you know, the space and weight are far more important in air transportation. That`s why I think (inaudible) my preliminary investigation, this (inaudible) should be (inaudible) account this space and weight in (inaudible) in air travel.
DOS SANTOS: Well, there`s no doubt that working through the night can, of course, take its toll. The European Commission vice president Ollie Rehn came out with an unusual way to start a press conference when he announces the Cyprus bailout deal. Take a look at what he said.
"It`s been another hard day`s night. I`m not saying a long and winding road, but it was absolutely essential that an agreement be reached."
Well, we called the vice president`s office, and of course, they confirmed that he does indeed like music. So as such, we`ve been thinking of what other Beatles tracks might have been appropriate during this Eurozone crisis. First of all, you all know this one, "We Can Work It Out." Well, they obviously tried to, didn`t they?
"Taxman" is also another one with a familiar ring. And of course, there was always "You Never Give Me Your Money." Well, I suppose the less said about that, the better.
Well, that`s it for this edition of QUEST MEANS BUSINESS. I`m Nina dos Santos. We`ll have a quick check of the news headlines next.
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DOS SANTOS (voice-over): You`re watching CNN.
Cyprus` president says his country`s bailout deal is painful, but the best option under the current circumstances. Speaking in the last half hour, Nicos Anastasiades says that it`s time to leave behind the uncertainty of the last few months and to look towards the future with optimism.
The E.U. agreed to a $13 billion dollar bailout over the weekend. It`s the bailout that will strengthen the island`s banking sector but tax big depositors.
In a matter of hours, Italy`s Supreme Court has expected to decide whether Amanda Knox will face another trial in the murder of her roommate, Meredith Kercher. Prosecutors argued for a retrial on Monday. Knox was originally convicted of the offense in 2009, but a verdict was overturned a year and a half ago.
The United Nations is temporarily moving about half of its 100-member staff out of Damascus. The decision came after mortar shells fell around a hotel housing U.N. staff in the Syrian capital. Most of the staff members are being moved to locations in Beirut and Cairo.
And results of a post-mortem examination on the body of the Russian oligarch Boris Berezovsky are expected to be released sometime today. He was found dead in his mansion west of London in the shire of Berkshire (ph) on Saturday. Police say at this stage they don`t have any evidence of a third-party involvement.
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DOS SANTOS: That`s a look at some of the headlines that we`re watching for you here on CNN. "AMANPOUR" is next.