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Spanish Royal Scandal; Leadership Crises; Outlook for Europe; Markets Slump Across Europe and US from Disappointing Economic Reports; Nuclear Tensions; North Korea Blocks South Korean Workers Access to Joint Industrial Park; Euro, Pound Up; Berlin Bomb Scare

Aired April 3, 2013 - 14:00   ET


RICHARD QUEST, HOST: It's a case of the princess and the public purse. Spain's royal family is plunged into a corruption crisis tonight.

The last symbol of cooperation cut off. North Korea blocked South access to its joint industrial park.

And we tell you about the unexploded World War II bomb which disrupted the morning rush hour in Berlin.

I'm Richard Quest. We have an hour together. And as always, I mean business.

Good evening. We begin tonight with the tale of the Spanish princess, Cristina, who stands accused of colluding in corruption while her country is in crisis. The princess is the daughter of Spain's King Juan Carlos, and she must appear in a court later this month. She's facing preliminary charges and investigation relating to her husband's alleged misuse of millions of euros of public money.

Now, the princess is the first direct member of the royal family to face any kind of criminal charges since the country's return to democracy in the 1970s. Spaniards are struggling with austerity measures, the country is mired deep in recession, and the charges are a serious blow to the royal family.

Our correspondent in Madrid is Al Goodman and joins me now. Al, we'll take this slowly and carefully. It's an investigating magistrate, a judge, who wants to ask her questions. How close does that take her to sort of facing allegations?

AL GOODMAN, CNN MADRID BUREAU CHIEF: It will depend on what the judge finds out, but in this 18-page court document that puts the preliminary charges on her, the judge says that a year ago, he didn't see any reason to bring her as a suspect, but now things have changed as he's investigated more.

He's heard from her husband, the king's son-in-law, and he is -- has these preliminary charges, and he's heard from the son-in-law's former business associate. That's the crux of this alleged corruption scandal around this non-profit institute. They got all that government money. Where did it go? That's what the judge wants to know, and he wants to know what the princess knew.

So, right now, she's a suspect. She's not been formally charged. The next step could either be drop the charges or indictment leading to trial. Richard?

QUEST: The -- it's all related to this not-for-profit organization, which -- where there is alleged to be misuse of funds. And as I understand it in very broad-brush terms, Al, she may have known more about what was going on in this organization than had been led to believe.

GOODMAN: That's it, because her husband has been saying that she was -- sort of around this organization but not directly involved with it. But the husband's former business associate, who's trying to -- who's mounting his own defense, has been reportedly putting some e-mails that happened during these years to the judge, which more deeply implicate her, and that's what the judge wants to find out, Richard.

QUEST: How -- this is almost a facile question, but how embarrassing is this for the royal family? Bearing in mind, the king is seen as the father of democracy, standing up in parliament all those years ago when he was bringing democracy back.

Now, he's being criticized for shooting elephants or something on a safari, and the royal family's now -- and now this.

GOODMAN: Well, this is a significant -- I've talked to a lot of people here, and you're reading in the press, you've got some columnists calling for the princess to ask her father to get out the royal line of succession. She's seventh in line.

But before we had the son-in-law, who's had these preliminary charges, and that was a scandal enough, and the royal household moved him and the princess off to the side. But this is first time a member of the blood family has actually faced these charges.

So, on top of the son-in-law, on top of the king's ill-timed, according to many, hunting trip to elephants in the midst of the economic crisis, that's why he was criticized for that mainly, now you've got the princess in these preliminary charges.

So, this is a scandal that doesn't seem to get better for the royal family, and that's hard for the country, Richard, because the king, the royal family, the part of the institution of the family, and the king sort of a great business agent to bring in business and investment into Spain, he's got contacts all over the world. This is hard for the image of Spain and the family in particular, Richard.

QUEST: Al Goodman who is in Madrid for us tonight. And as we say goodnight to Al, I'll just remind you of the numbers from the European Commission, from Eurostat yesterday, showed Spanish unemployment at around 25, 26 percent and youth unemployment at 55 percent, the highest in -- second highest in the union.

That puts it into context as to why such a scandal around the royal family is considered to be so significant. But it's not just in Spain. Across the continent tonight --


QUEST: -- there are leadership challenges, and at the center of them all, money. Join me over in the library tonight.

Let's start with the new Cypriot finance minister, Harris Georgiades, sworn in today after the resignation of Sarris yesterday. Now, he had been -- the previous one had -- previous finance minister had been criticized for his handling of the crisis, even though he negotiated the deal with the Troika. The president said the new short-term pain of the bailout terms will help Cyprus in the long run.


NICOS ANASTASIADES, PRESIDENT OF CYPRUS (through translator): Taking into account the difficult conditions that the country is going through, I have no doubt that together with the other ministers, will follow a course based on the program we have outlined. The implementation of the program may have been suspended at the moment, but luckily only for a short period.

But without a doubt, the difficult days ahead demand a collective effort for fiscal discipline and for all the measures that will help our economy moving forward.


QUEST: That's the situation in Cyprus. Let me update you on Portugal, where the opposition's called for a vote of no confidence. It is a symbolic ruling. The coalition easily has enough seats to defeat the motion, but the opposition wants the bailout terms to be renegotiated.

The prime minister says even having a vote of no confidence at this moment, he basically says it's very dangerous.


PEDRO PASSOS COELHO, PRIME MINISTER OF PORTUGAL (through translator): This is a radical behavior, which can bring instability to the Portuguese people and fears and doubts to our external partners as well as investors.


QUEST: So, we've done Cyprus, Portugal. Well, last night, we told you at the start of our program about the problems in France, where now the president is denying that he protected the former budget minister, Jerome Cahuzac.

"Le Canard" newspaper says that Hollande knew in December that Cahuzac had that Swiss bank account. Now he admits having it. He says he committed an unforgivable mistake, and the president has describe it as unpardonable.


FRANCOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): He tricked the highest authorities in the country, the head of the state, the government, parliament and, through it all, the French people.

It's a grave and unforgivable error. It's an outrage to the republic, not least because the alleged facts are themselves intolerable. To have an undeclared account overseas? All possible light will be shed on this matter. What's happened is a shock, as this is a grave failing of republican morals.


QUEST: You get an idea now of the issues facing Europe tonight. Suma Chakrabarti is the president of the European Bank for Reconstruction and Development.

Now, the bank was set up after the fall of the Berlin Wall and offers funding to help developing economies in Europe make the transition to free market economies. He told me the crisis in Cyprus will affect the Cypriot economy, but is unlikely to affect the rest of Europe.


SUMA CHAKRABARTI, PRESIDENT, EBRD: I actually think Cyprus is a very much special case and can be contained as such. I think undoubtedly Cyprus is going to be hit very badly in terms of its economic output. That's going to fall now for several years, probably. And so, that's not good.

But Cyprus isn't a very large economy. In terms of its trading impact on our countries of operation in our region, it's not great through the economics.

The issue really is through the medium term, is there a contagion from Cyprus in the way bailout plans are put together in our region? That's the big issue. And again, I think Cyprus can be seen as a special case.

QUEST: It can be seen as a special case until there's another case. Until there's a precedent.


QUEST: That's a problem.

CHAKRABARTI: That's always a problem, and the precedent that people talk about are twofold. One is capital controls have been imposed in a eurozone country for the first time. Is that going to happen elsewhere? Secondly, a haircut was imposed on large depositors. Is that going to happen elsewhere where there are large depositors in weak banking systems?

QUEST: If we take a look at the EBRD, because a private -- you lend to the private sector.


QUEST: It's an anomalous animal at best. And you look at the eurozone crisis, how worried are you that we're still not -- yes, I know things have been put in place --


QUEST: -- but we're not ahead of the curve.

CHAKRABARTI: I think the biggest and most interesting thing that's happening in the regions we serve, Eastern Europe in particular, is that they no longer look to Western Europe as their only model.

The European Union has been a major motor for many of them. And for good reason, actually, both in democracy and economics. But they are looking elsewhere for new investors, and so they should. And so EBRD should help them, actually.

They look to investors from India, from China, from Japan, and North America. And Turkey, as well, becoming an increasingly regional investor. And I think that's a good thing, actually, to diversify your portfolio in these times.


QUEST: And you'll hear more from Mr. Chakrabarti on which country might or might not, in his case, be the next candidate to be beaten up by the markets in the eurozone.

Concerns about the US economy sent stocks into a downward spiral. Look at the numbers while I tell you last month, private sector hiring grew at the weakest pace since October, according to AEGP. In Europe, we had the markets down 1 percent in London.

You just -- oh, look at that! That's New York kicking in. And I want to show you this again and again, right the way across. Look at Frankfurt and I'm sure you're going to see a similar sort of -- the Xetra DAX, similar sort of thing -- oopsy-daisy! There she goes. And we'll do it with the Paris CAC 40 to prove I'm not just making it up. Down we go.

And the reason, of course, if we go to New York, you will see the numbers for the Dow Jones Industrials, which are off 100 points or so at the moment. The Dow, as investors taking worries and fears because the -- whether the question of economic growth losing momentum and a slowdown in job creation.

Alison, I don't want to steal your thunder, but that is the gist, isn't it? People are now saying not happy.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Right. Because now we're getting more fundamentals of the economy, the US economy, and they're pointing to not -- we're not seeing the bells and whistles that give reason for these record highs that we're seeing day after day after day on the Dow, and now the S&P 500.

You're looking at the Dow, down about 98 points. It was down as much as 118, so it's come back just a little bit. Part of it is what you said, disappointment related to this report from ADP on private sector jobs. That's the sort of appetizer to the big -- the big government jobs report that accounts for public and private sector jobs that's coming out on Friday.

But also another thing is pushing stocks lower, that weaker-than- expected reading on growth in the service sector. ISM non-manufacturing, that index came out showing that it is actually at -- it's at its lowest pace, its weakest pace in seven months, that this was back in March.

And this is a big deal because the service sector, the positions in the service sector, Richard, they account for a huge majority of US jobs. So the big worry here on Wall Street is if this is any indication, then everybody's kind of bracing for what may come out on Friday. Richard?

QUEST: OK. We're -- Friday is obviously going to be a very important day. I wonder, Alison, we've not seen the full effect of furloughs and sequester because of the necessary warning period. Is there a fear that there is more on the jobs front, there's more slowdown to come as -- still as a result of the sequester? It's all gone very quiet on that front.

KOSIK: It has been, hasn't it? Haven't heard much. But yes, it hasn't really gotten into full swing, and that is a worry, even though it is on the back burner, it is a worry. Because it wouldn't only be jobs. It would -- you'd sort of see that ripple effect.

You'd see it in consumer sentiment, you'd see it in consumer spending. That could then possibly go back to housing and pull that momentum away from housing. So sure, those spending cuts could really have a huge effect once they really get going. That is always a worry, Richard.

QUEST: We'll have the jobs report, we've got a busy week ahead of us, and Alison's in New York to watch this. The Dow is just off 99 points at the moment.

After the break, turned back at the factory gate. North Korea bars the South from an industrial symbol of friendship. Now, this is significant. It's probably one of the biggest geopolitical risks in the world at the moment.



QUEST: Now, some news to bring you straight to CNN. As tensions with North Korea are on the rise, the United States has announced it's to send land-based missile defense system to Guam. This island lies some 3,000 kilometers southeast of Pyongyang.

But obviously, as there's more and more tensions as to whether or not there are ballistic missiles and how far they would reach, then the US is following through on its military commitments.

Pyongyang is blocking South Korea from entering a jointly-run industrial complex. Now, join me over in the super screen, and you'll see what I mean. Well, this is a bit -- the North and the South. But this, of course, is Kaesong, which is just over the border in the North.

The arrow here shows the crossing. Now here, hundreds if not thousands of South Korean workers come across every day, work, and then come back again. You get an idea, there's the border, and there's the main highway between the two. It's a -- when it was set up, it was symbol of cooperation between the North and the South.

Today workers were allowed to leave but not enter. It's now -- this has become part of the simmering nuclear tensions between Pyongyang and its perceived enemies, the North and the South. As our correspondent Kyung Lah reports, workers and business owners in the complex here, they have found their lives -- their working and their personal lives -- upside down.


KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT (voice-over): Just south of the DMZ and North Korea's capital Pyongyang, the road to the one place the two Koreas work together. But not today. South Korean vehicles pulled out one-by-one, nearly 400 of them, workers turned away.

Where they wanted to go? Kaesong Industrial Complex, an unusual place on North Korean territory. Here, 123 South Korean manufacturing companies employ 50,000 North Korean workers, pumping out hundreds of millions of dollars in products, an island of peace between Cold War nations.

But like the angry threats stemming from Pyongyang this week, the North's president, Kim Jong-un, struck again. South Koreans could leave, but not come into Kaesong. Beyond the dark green gate, the border of North Korea, about 800 South Koreans remained on the other side.

LAH (on camera): You think those workers will eventually come out?

LAH (voice-over): "Of course they will," says this Kaesong worker who was turned away at the gates. "I'm confident they'll come out." The anxious wait begins.

LAH (on camera): These are the last few cars that we've seen coming out of Kaesong, a second wave of workers. We were expecting many more, but so far, these are the only vehicles we've seen.

LAH (voice-over): A small trickle of cars emerging every hour, while the South Korean government pledged to protect its citizens still inside.

The manager at a Kaesong plant came out late in the day, telling reporters his colleagues refused to leave, worried the North Koreans would not let them back in to keep their companies running.

"It's very serious," he says, "not just that the factories will stop running, but that there won't be any food for the workers." He added the stores were running out of supplies already. "But countries need to negotiate," he says.

The day ends with hundreds of South Koreans still behind the North Korean curtain, with an unpredictable tomorrow.

Kyung Lah, CNN, Paju, near the North Korean border.


QUEST: Now, tonight's business Ethics Conundrum. You saw on last night's program, these are based on real-life examples given by bankers at the UK's Chartered Institute. So tonight's Conundrum.


QUEST: Imagine you're a top fund manager. You're going to appoint a colleague to your company's board. On the day of the meeting, they admit they'd never graduated from university, they lied on their resume. Do you A, proceed as planned? B, ask them to resign? C, sack them on the spot?

So, you're about to appoint a colleague to your company's board, do you proceed as planned, do you ask them not to go -- resign, or you sack them on the spot?

On the market, the currency markets, the euro and the pound are up against the dollar.


QUEST: Those are the rates, this is the break.


QUEST: Today we discovered that for the past 70 years, German rail commuters have unwittingly, to say the least, been traveling past an unexploded World War II bomb. Now, the device was found near to the tracks on the way into Berlin's main railway station, the Hauptbahnhof.

CNN's Diana Magnay reports from near the Hauptbahnhof, the operation to make the area safe caused a great deal of destruction.


DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: This is the 100- kilogram Russian aerial bomb that a team of three bomb disposal experts have been working on just for 20 to 25 minutes to diffuse it, to unscrew the fuse and make it safe.

And here is the actual fuse. If it had gone off, we've been told by the team, and this is one of the team members --

UNIDENTIFIED MALE: Don't touch it.

MAGNAY: I shouldn't touch it. It could have created a lot of damage, a crater about three meters deep, three to four meters wide, right in the heart of Berlin. We'll come and show you where it happened.

This bomb was found two meters away from this railway line, and just down there is Berlin's main central railway station, the Hauptbahnhof. So, this was a bomb directly in the heart of Berlin, which lay for 70 years almost, just two meters away from a regularly-used train track.

The bomb was discovered just before 4:00 PM on Tuesday afternoon by a team of bomb disposal experts who'd been hired by Deutsche Bahn, the German railway operator, to survey the site.

And that is very normal when you conduct building operations in this city because of the huge amount of bombing that Berlin sustained during World War II. There are still thousands of unexploded ordnance in this city.

So, all morning, before the diffusing process took place, the police have been evacuating 839 people in total, they said, from the buildings around this area. It gives you a sense that even 70 years after the end of World War II, from time to time, that war still has a very real physical impact on the lives of people in this city.

Diana Magna, CNN, Berlin.


QUEST: Now, later in the program, we're going to be talking about the first mobile phone call. It's the 40th anniversary of cellular phones. That first call was made today.

What was your -- do you remember your first mobile phone call? I certainly remember making mine. It must have been 1984. Anyway, @RichardQuest. If you've got an interesting story to tell, pop it on there, and we'll have a dialogue and a chat about that. What was your first mobile phone call and do you remember it? And if it's not clean, don't bother.

Now, when we come back, Ireland and Greece, Portugal, Cyprus. So, who's next? Which domino will fall in the eurozone bailout battle? QUEST MEANS BUSINESS.



QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.

North Korea has suddenly shut off the South's access to a joint industrial park. It's Pyongyang's latest move after weeks of harsh and threatening rhetoric. The complex provides the North with an important source of hard currency, so it's not clear how long the closure will last.

An insurgent attack on a government complex in southwestern Afghanistan has killed at least 44 people, most of them are civilians. Militants launched the attack by blowing up a vehicle packed with explosives. A nine-hour gun battle with Afghan security officers then followed.

The death of a Palestinian prisoner in Israeli custody is sparking outrage in the Palestinian territories. Clashes broke out in the inmate's West Bank hometown of Hebron between demonstrators and Israeli security forces, and there are fears there could be more tomorrow when the funeral takes place.

A massive fire in Chechnya has engulfed the tallest skyscraper in the Grozny city complex. Russia's state-run RIA Novosti news agency cites the police source as saying all floors but the ground level are in flames. There's no word on what caused the blaze, and so far, we have no reports of any injuries and casualties.

Spain's Princess Cristina, the daughter of King Juan Carlos, will face preliminary charges in a corruption scandal involving her husband. He has been under investigation for allegedly stealing public money that was intended for his charity. The palace in Madrid says they are surprised by the action.


QUEST: The IMF has agreed its part of the bailout fund for Cyprus, a $1.3 billion loan as part of the total deal. The fund and the commission say there are, in their words, "significant challenges" ahead for Cyprus. Some suggest the economy could contract by 8 percent this year and 4 percent next.

Now other Eurozone countries are denying they are likely to follow in its footsteps. There's only one issue: who's next? And we're going to show you what risk factors the market is looking for.

So join me at the superscreen. And as we do this, bear in mind there's an element of speculation in all of this, nothing is a given. And we are most certainly not forecasting who is next. But these are the issues that they will look at.

First of all, an oversized banking sector which was key to Cypriot problems. So if that's the case, which country do we look at on the banks? It is Malta and it is Slovenia. Malta's banking sector is worth eight times GDP. Malta says it is misleading to compare it to Cyprus. But the IMF says Maltese banks have low sensitivity to the crisis.

So those are the two on banking crises. Now the next big issue that everyone's looking at, of course, is political climate. The credibility, the ability of a government to withstand pressure and take the necessary hard measures. When we talk about that, on the political question, it really is, of course, Italy.

Still doesn't have a government; ratings agency disapprove of what's happening. And most seriously perhaps of all for Italy, the -- it's been downgraded and stocks are down 61/2 percent. Put that in context, year-to- date, the FTSE is up nearly 9 percent. So Italy's going down; everyone else is going up. The political risks means people are worried.

And then you have the third risk, the third issue you look at. Downward market trends, GDP, stock markets and the like. On that issue, there is only one that you really look at, and it is the country of Slovenia, where the GDP is going to fall by 2 percent.

And although the central bank governor says there's no need for aid, people are seriously questioning. Remember, when it comes to the issues, Slovenia comes up on economics and it comes up on banks. Everyone is talking about Slovenia. And yet the head of the EBRD told me tonight that he doesn't see Slovenia as a must-be for a bailout.


CHAKRABARTI: In many ways, Eastern Europe has ridden out the crisis better than Western Europe in terms of growth rates. But Slovenia, Hungary, places like that, have been in recession. And I expect this year some of them will be in recession, too, probably those two countries. But some of the others will get some growth.

The key question for me, Richard, is whether these countries are going to actually now adopt policies and are going to get support from foreign investors to get back onto faster growth.

QUEST: And the evidence is that they're making changes -- maybe not fast enough -- but there's no evidence of a cultural change or, indeed, a systemic change yet.

CHAKRABARTI: I think for many years, if you look back 20 years, if we take a long view, there was a cultural and systemic change. Then the financial crisis hit. And I think what has happened since then, in many countries, is a sort of innate conservativism crept back in, so economic nationalism, political populism, which has made the culture of change slow down.

And that is having something we in EBRD have got to help push back up the agenda.


QUEST: The EBRD president.

Stephen Pope is the managing partner of Spotlight Ideas and joins me now.

Slovenia. Everyone says it -- no, I mean, you know, we're being -- we're not saying it's going to happen. But let's call a spade a shovel. Everyone's talking about Slovenia.

STEPHEN POPE, MANAGING PARTNER, SPOTLIGHT IDEAS: That's right. It seems to be the next potential domino that could go over. It's a small economy in terms of the Eurozone. It won't shake the foundations of the whole monetary structure.

However, it's just another episode, where you have a large banking system relative to the GDP. You have an economy that is not as diversified as many of the other heavyweights in the Eurozone. And once you start having officials in high places saying we don't need a bailout, well, we've been down that road before.

QUEST: We're at the point we've been down that road before and would they be -- look, I am not sitting here saying Slovenia's about to go down. But I am saying if there is a risk, would the market not appreciate or to - - the dealing with it ahead, getting ahead of the curve, particularly if it's a banking issue?

POPE: Yes, well, I think the whole history of the Eurozone of the last three years has shown the markets desperately want somebody in a high position to come out and be honest and be ahead of the curve by saying there are issues, and these are what they are and this is how we think we can deal with them and contain it.

But we always seem to go through this process of patching something up and then six months later we have another situation of rescuing that same economy.

QUEST: As a market watcher and an economist, Stephen, which countries are you looking at besides Slovenia?

POPE: Well, I think you have to take not just metrics like the banking sector, relative to GDP. You've got to think about the diversity of the economy. But firstly, I think you do have to look at Malta. That's been a beneficiary --


POPE: -- that's been a beneficiary of money coming out from Cyprus. But it's a small economy again.

Portugal, they survived (inaudible) no confidence today. That is unsettling the desire to carry on with the austerity there. We could revisit Portugal very easily.

QUEST: And Spain's banking system has got its $100 billion. The economy's believed to be OK.

Is it still being talked of in the market that Spain or Italy could be in a program? I've seen some suggest that Spain could be by the end of the year.

POPE: Yes, certainly. I don't think Spain's ever really addressed the fundamental issue of how the whole economy is working. They went cap in hand and took money for the banking system. But when you start looking at the fact we are still seeing 25 percent-plus unemployment, over 50 percent in youth, therefore, losing that generation that will be the fuel for next year's GDP, it's struggling.

QUEST: So my last question -- and this sort of takes account of what some of you may be thinking at home as we're having this discussion, is it indecent of us to be sitting here talking and pondering and looking at the ruins over who's next for a bailout with all the awfulness that that implies?

POPE: No. There is nothing indecent about anybody who is engaged in the financial markets questioning the integrity of --


QUEST: Ah, because it's become a self-fulfilling prophecy. You know this. People say we talk about it; the markets attack, you know.

POPE: No, the markets are the arbiter of truth. The value of an asset is what the market says it is, not what a politician chooses to claim it might be. So the markets are not being indecent or unjust by examining these things. They're actually performing a public service because that way we try and keep our elected politicians honest and accountable.

QUEST: Thank you.

POPE: thank you.

QUEST: Tomorrow on this program, the World Bank president, Jim Yong Kim, talks to me about his poverty initiative. And obviously we'll be dealing with these big issues of global economics. The president of the World Bank on QUEST MEANS BUSINESS. Like you'd expect to have these people on this program.

Coming up in a moment, the cell phone celebrates 40 years of flat batteries and poor reception. We'll ring in the changes. It's QUEST MEANS BUSINESS. Good evening to you tonight.




QUEST: In tough times, airlines are doing whatever it takes to sell seats. And with that in mind, one Thai carrier is less -- in fact, it wants more or more if you are less. And if you are of a nervous disposition, do a virtual gaze at this moment.

These pictures were featured in a calendar by the Thai budget Nok Air -- I say, racy stuff. They certainly got the publicity in return. Now they are models posing for the calendar. They're not actual Nok Air stewardesses -- flight attendants -- unlike the Ryanair ones, of course, which used real flight attendants.

The chief exec of Nok Air said the capitalizing was a social media success, proving that glamour still goes hand in hand with the airline industry.


PATEE SARASIN, CEO, NOK AIR: In terms of acceptability, in terms of a little bit of sexiness, so sex appeal, comes with all airlines. I think in terms of the international (inaudible) Ryanair or Southwest, whatever is the (inaudible) been there, done that.

But since because it's in Thailand today, that's why it's causing a lot of commotion. And we only produced this -- these calendars just for our customers. We only produced 3,000 calendars. But somehow or another it's -- the news has been spread all over the world.

QUEST: (Inaudible). Now we have transformed the studio, welcome to the cabin. I am joined three crew members who are demonstrating the crucial role fashion now plays in the airline business.

This is the real -- never mind those bikinis and scantily clad. This is the real Nok Air uniform. It's a bright yellow. It's simple -- it's a simple ensemble, I'm told.

And it is extremely practical to wear -- it maybe a little bit rough on the -- on the -- Virgin Atlantic with its telltale and hallmark red, with the scarf, now they've never shied away from using their flight attendants to really demonstrate the grace and elegance and fun of the airline and that color, that red goes with the name indeed.

Each of its planes has a scarlet lady upon it, and Richard Branson will forgive me if I (inaudible) short for posing with models and flight attendants. This is timeless and it's elegant. It's the epitome of the Asian grace. It is Singapore Airlines' uniform for the Singapore girl.

It was created, interestingly enough, in 1972, as a symbol for the carrier. It's, of course, the sarong; it's designed to symbolize the elegance and, of course, it's part -- a crucial part of the global marketing strategy.

To all the airlines who provided them, a big thank you indeed. And of course, thanks to Universal Display Mannequins for providing us help as well. We couldn't get the real ones.

Now Pan Am epitomized the '60s glamor. The American carrier disappeared into bankruptcy more than 20 years ago. But it lives on, thanks to the TV series of the same name and films such as "Catch Me if You Can." I was joined by the former flight attendant -- stewardess -- Christel Vane. She's a former Pan Am stewardess and told me how her career compared to others.


CHRISTEL VANE, FORMER PAN AM STEWARDESS: I just think Pan Am was much, much more glamorous, actually. But it had to be practically on the aircraft. We had to change. You know, we took the jacket off and we had these little sort of smock things. I flew for 28 years. It was far more glamorous. It was a definite culture. It was -- it was wonderful. I lived in New York. I flew around the world.

QUEST: Pan Am?

VANE: Pan Am, absolutely. And it was the airline.

QUEST: What did you feel like when you put the uniform on?

VANE: I didn't feel glamorous. I didn't even always think it was a glamorous job. That comes afterwards, when you realize that it was.

QUEST: Really?

VANE: Yes, yes. I didn't walk around thinking this is glamorous. It was exciting. It was an adventure. We could travel. We met people.

QUEST: And that uniform, that --

VANE: The uniform was glamorous because it was fitting. It was light blue and they chose people -- we had to be a certain weight. We had -- you know, we were all fairly good looking.

The uniform was glamorous. And when I see it now, you know, the new - - in the (inaudible) "Pan Am" program, I thought, wow, yes, that looked terrific.


UNIDENTIFIED FEMALE: I'm a Pan Am stewardess.

UNIDENTIFIED FEMALE: Are you wearing your girdle?



QUEST: So the "Pan Am" program has brought some of that back?

VANE: The serial.

QUEST: The serial has brought some of that back?

VANE: When I watched it, yes. I thought, oh, yes. I could identify.

QUEST: What? What were you identifying?

VANE: How it felt. How it felt to be on that aircraft, to talk to the other girls. We were such a team. We were a real family. We all really got along very, very well.

QUEST: I remember of course in the old Pan Am days, on certain routes, you had different uniforms for hot weather and cold weather.

VANE: Yes, we did. We had to dress it one time, which was lucky. Because when you get -- because the thing with our uniforms, at the very beginning, I think maybe for the first two years, it was a tight-fitting skirt. So --

QUEST: Something like this.

VANE: Well, yes. But we had to wear what they called in the '60s, it was called a girdle. It was kind of an elastic thing that pulled you in so that you didn't look too shapely, you know.

QUEST: Really?

VANE: Yes, because you were actually running up and down the aisle with a tray in each hand. You know, we didn't have a trolley. So you -- people were watching you and it wasn't too good to be too sexy, I think. We had to look classy.

QUEST: You wore a girdle?

VANE: I wore a girdle.

QUEST: This -- they tell me, Singapore Airlines tell me they do not make -- their flight attendants are not wearing girdles.

VANE: No, of course not. (Inaudible). This was the early '60s. You wouldn't wear a girdle today.



QUEST: Yes. While we are taking our trip down Memory Lane, take a look at this, The Brick. Now I had one of these. In fact, I covered my first story using one of these. It was about John Lennon's Rolls-Royce for sale at an auction. It was in the 1980s.

The first mobile phone call was made 40 years ago today, happy birthday! Jim Boulden looks back.


JIM BOULDEN, CNN CORRESPONDENT (voice-over): It was nicknamed "The Brick," Motorola's prototype cellular phone, used to make what is regarded as the first public mobile phone call on April 3rd, 1973.

UNIDENTIFIED MALE: Those who think getting a car phone is not for them, whatever the reason, haven't kept up with the booming industry of cellular radio telephones.


BOULDEN (voice-over): But a business was not yet sparked. For the next 10 years or so, these first-generation portable phones were used for development. And once Motorola launched the phones in the early 1980s, they had not lost their size or weight of a brick, or their antenna. So you would have stuck out while walking the streets of, say, New York or London, if one of these was stuck to your ear.

BOULDEN: In fact, these phones were such a novelty that Motorola on the back, behind the battery, put instructions on how to make a phone call.

BOULDEN (voice-over): It states, enter the phone number, press send and put the unit to your ear.

In the mid-1980s, Finland's Nokia entered the market and then launched GSM phones. GSM handsets could be used across multiple markets and could send data along with voice.

Then the antenna shrunk along with the battery and ringtones, texting, all became part of our shared experience. By the millennium, we had faster 3G phones and mobiles entered emerging markets, bypassing fixed lines altogether. Handsets were not only made in Asia but sold by companies from Taiwan, China and, of course, South Korea.

UNIDENTIFIED MALE: Get that picture within picture up.

BOULDEN (voice-over): Steve Jobs and Apple enters the market and everyone had to have a smartphone, video, social gaming, cameras, apps and more apps. And now 4G rolling out, wireless networks that gave us content on steroids.

BOULDEN: So where will these devices take us in the next 40 years? By some estimates, there are now 7 billion wireless devices. It could be that by 2053, everything everywhere will be connected wirelessly -- Jim Boulden, CNN, London.


QUEST: Happy birthday to the cellular phone. When we come back, we turn our attention to supping whisky after the break.





QUEST (voice-over): The "Ethics Conundrum," you're about to appoint your company's board and one of the members admits lying about their resume. The answer is, ask them to resign. It's a question that's used to show the importance of fairness. Sacking isn't necessary, but you should block their request to join the board and ask them to step down. It's a similar question with Scott Thompson at Yahoo!


QUEST: The value is up and the volume is down. Scotch whisky exports were worth nearly $6.5 billion last year, 87 percent more than a decade ago.

Scotch whisky sales are indeed overall on the slide globally because of a slump in Europe. Now the winner by sales is Johnnie Walker. The whisky is number one in Asia, the America, Middle East and Africa. Global sales, of course, grew by 7.5 percent last year.

The Johnnie Walker is the golden child of Diageo and the chief executive told me about how the company makes money out of its brand.



QUEST: These are your main products?


QUEST: The big ones?


QUEST: It's always invidious to ask somebody to choose amongst their children. Choose amongst your children. Which is your favorite? The bit that you look at and it warms the cockles of your balance sheet? The bit that you think the margins are the best, that you just think, we can never ever lose this one?

WALSH: Well, to be one of our children, you'd better have good growth potential and good margins. But it has to be Johnnie Walker. Johnnie Walker is the highest selling spirit brand in the world.

QUEST: The one thing you do see when you look at your brands is just the household nature, from Johnnie Walker, to Smirnoff, to Pimm's, it's quite extraordinary, the depth and range of your brands.

WALSH: And, of course, if we were in another market, you would see such an emporium populated with local brands as well. So in Turkey, you'd see Mey Icki; in Vietnam, you'd see Halico brands. So we have global brands and we have local brands.


QUEST: That's the head of Diageo talking to me earlier after they had results.

Now Jenny Harrison's at the World Weather Center, and Ms. Harrison's tipple, probably a small port and lemon.

JENNY HARRISON, CNN METEOROLOGIST: I don't know. I like a nice sherry, actually, Richard. That's what I like these days.

QUEST: Ah! I was going to go for a sherry.

HARRISON: I like a nice sherry.

Anything to warm you up on these cold winter days. I'm going to call it winter because I know it's spring, but it doesn't feel like it. The official results are out, actually, from the U.K. Met Office. This March, yes, it's the coldest since 1962.

So that makes it the second coldest on record, so since 1910. The average temperature in the U.K. 2.2 degrees Celsius. That means it was colder than December, January or February. So yes, if you felt cold, it's because you probably were.

And look at this. It was actually colder on Wednesday in London than it was on Tuesday. In fact, Brussels, Berlin and Warsaw, it was the same. Warsaw, you didn't even make it above freezing. And 10 Celsius is what it should have been.

So yet again it was another day with the temperature consecutively, of course, below the average. And right now we're at 27 days on the trop with the temperature below the average for London, 26 days in Berlin and that of course is the general picture.

Look at this. This is rather interesting, 2013, look at all the snow; 2012, there was barely any. That's (inaudible) 2013 again, and it shows you 75 percent or in fact 750 percent of mainland Europe we're seeing snow; whereas a year ago, there really wasn't any because, of course, it was much, much milder out. It should be right now.

This pattern will continue five to 10 degrees below the average. It will stay like this as we head into next week. The reason for all of this, we've been, we are still in what is referred as a negative phase of the arctic oscillation. It's when you have very weak winds around the Arctic. It allows that cold air to filter all the way down across far south into central and northern Europe.

This gives you another way of showing you that, all these blue lines below that line is a way of showing us that it is well below the average. And a different sort of situation we've been very heavy rainfall in the southwest of Europe, Spain in particular.

The flooding, though, it is good; we have finally seen some real imprint here on the extreme drought into southwest of Spain. So finally, from what was extreme drought, the barely 8 we're seeing. And there's some more in the forecast. So a bit of an upside to the flooding situation there, Richard.

QUEST: Jenny Harrison, we thank you. A "Profitable Moment' after the break.


QUEST: Imagine working for Pan Am in the Swinging Sixties, the age of the jet airline was taking off. Global travel was a matter of hours and became an exciting reality. It's easy to imagine the feeling of power when Christel put on those white gloves. Well, I can tell you, 500 people applied for her job at the time. Impressive by today's standards.

And to those who say flight attendants are just trolley dollies, glorified waitresses, call them what you will, here's something to think about. Emirates employs 13,000 cabin crew and receives 15,000 applicants a month.

The claim that the glamor of the airline industry is dead, that's up for debate. You can't say this isn't a career that doesn't go anywhere. 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.



QUEST (voice-over): Today's headlines: the Pentagon is to send land- based missile defense systems to Guam as tensions with North Korea escalate. The island lies some 3,000 kilometers southeast of Pyongyang.

The U.S. says North Korea represents a real and clear danger to the United States and its allies.

A brazen insurgent attack on a government complex in southwestern Afghanistan has killed at least 44 people, most of them civilians. Militants launched their attack by blowing up a vehicle packed with explosives. A nine-hour gun battle with Afghan security officers followed.

A massive fire in Chechnya has engulfed the tallest skyscraper in Grozny City complex. Russia's state-run RIA Novosti news agency cites three sources are saying all floors but the ground level are in flames. No word yet on the cause or, indeed, on the casualties.


QUEST: You are up to date with the news headlines. Now to New York and "AMANPOUR" is live.