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QUEST MEANS BUSINESS

EU-China Trade War Threat; US Stocks Drop as Jobs Growth Softens; Latvia to Join Eurozone; Restoring Greece's Reputation; European Markets Down; Dollar Flat Against Euro; Lufthansa Looks Ahead

Aired June 5, 2013 - 14:00   ET

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


NINA DOS SANTOS, HOST: China hits the bottle in response to its solar panel dispute with Europe and says that it will now investigate wine exports.

We also meet the eurozone's latest member: Latvia.

And Lufthansa's chief executive tells Richard why he's angry about delays to Berlin's ill-fated Brandenburg Airport.

Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.

Good evening. European wine has become a major target in the worsening trade dispute between the EU and China. Beijing says that it suspects the EU is dumping exports of cheap wine and unfairly undercutting its Chinese competitors. As such, it's launching an investigation into what it calls, quote, "unfair trade tactics."

Well, that's pretty much what the EU is already accusing China of when it comes to solar panels. The European Commission has slapped on a tax of almost 12 percent of the Chinese-made energy cells used in the solar industry.

And the French president, Francois Hollande, is now calling for EU members to show solidarity. The European Commission is insisting, though, that it has done nothing wrong.

Well, China's actually a major opportunity for Europe's wine exporters. Let me just show you exactly how big this market is. Well, China actually imported, as you can see here, roughly around about 250 million liters -- that's right, 250 million liters -- of European wine in 2012. That's worth nearly about $1 billion.

Well, France has actually the most to lose here, as you can see, from any of these wine tariffs. This is because it's the source of more than half of those European wine imports. We're talking about a staggering 140 million liters of French wine being sold last year.

France was one of the countries that actually stopped supporting the solar panel tax that seems to have triggered this action, so ironically.

So, on the subject, I spoke to Allan Sichel. He's the managing director of Maison Sichel wine merchants in Bordeaux. He's also the chairman of the Bordeaux Wine Trade Association. I asked him if the French wine industry and the Chinese solar panel issue are merely two sides of the same coin.

(BEGIN VIDEOTAPE)

ALLAN SICHEL, MANAGING DIRECTOR, MAISON SICHEL: I think it's a complete misunderstanding. There has been, in the terms of the reform de la pacque, help -- European help that has been granted to the European agricultural sector. There has been some restructuring, but that has not in any way contributed to selling wines below cost or at the cheaper price.

DOS SANTOS: If we take a look at the French wine industry, worth around about 4.5 billion euros, that's about 10 percent of French GDP, it's around about $6 billion in total. That's a big part of the French industry. And it's also an emotional subject, wine, as well. Do you think that's why the Chinese have gone for this point?

SICHEL: Sure, they've gone for this point because it is a very important sector for France and for Europe. China is a very big destination for European wines and for French wines and Bordeaux wines in particular. And of course, the prospects of developing trade with China with French Wines and Bordeaux wines are still huge. The -- and so it is a very sensitive subject.

DOS SANTOS: Do you think that all of this is going to blow over? Because if you look at, for instance, the issue with the solar panels, the tariffs have been reduced, down from 47 percent to 11.8. That indicates a certain room for negotiation. Is this just saber-rattling on China's behalf?

SICHEL: No, I don't think we should take the subject too lightly. We have to give it the consideration it deserves. And the consequences could be very serious. There is, I believe, room for explanation, for negotiation. And we certainly intend to endeavor that way over the next few weeks, before any major decision is actually taken on the parts of the Chinese authorities.

DOS SANTOS: Now, you're talking about this with regards to wine, but isn't the reality that the landscape of wine is just one battlefield that the Chinese have chosen here? The reality is is that we're talking about a trade war that is hijacking certain sectors of European industry. What would be your message to the EU, given the fact that they've sparked this war, if you like?

SICHEL: We can't -- I know nothing about the solar panel business, and I'm not going to comment on where -- on the decision about taxing imports of Chinese solar panels. What I'm saying is that Europe needs China and China needs Europe.

What we need to do is rather than putting up barriers, tariffs, and protection, we want to develop trade in a balanced way so that -- in the benefit of both parties.

(END VIDEOTAPE)

DOS SANTOS: So, obviously, France in difficult position here because it's a big wine-producing country. Ironic to see there that France is one of those nations that actually supported the EU's action on solar panels, as I was saying before.

Well, the EU trade commissioner, Karel de Gucht, made the first move in this dispute by imposing tariffs on those Chinese solar panels, and that was despite opposition from various EU countries and trade groups like, for instance, Germany. He told this very program just on Tuesday that it was his prerogative to stand up for EU interests.

(BEGIN VIDEOCLIP)

KAREL DE GUCHT, TRADE COMMISSIONER, EUROPEAN UNION: I don't see why it should result in a trade war, and I'm certainly not looking for a trade war. I'm looking for solutions.

But on the other hand, I also want to protect our industry, because I would not like to be confronted with a situation within a couple of years' time, even less, that there is no solar industry in Europe anymore, that we don't have the technology that is state of the are anymore, that we cannot invest in research and development any more. That's what I want to avoid, and that's also my task. That's what I -- that's what I'm there for.

(END VIDEO CLIP)

DOS SANTOS: Any hopes of avoiding a negative response from the Chinese were dashed within hours of the EU's announcement. A government spokesman said that the Commission had been unfair.

(BEGIN VIDEO CLIP)

HONG LEI, SPOKESMAN, CHINESE MINISTRY OF FOREIGN AFFAIRS (through translator): The Chinese government and the sectors concerned with utmost sincerity and Herculean effort, have been committed to solving the problem through dialogue and consultation. We are firmly opposed to the EU's decision of imposing unfair provisional duties on solar panels imported from China.

(END VIDEO CLIP)

DOS SANTOS: Well, the Chinese certainly have plenty to lose in this game as well. These new tariffs on solar panels will actually apply to around about $27.5 billion worth of imports per year. This is according to the European Commission's own figures.

And China now has around about 80 percent of the entire EU solar panel market, according to the European Commission, which is why everybody's so concerned about it.

Now, let's move along and talk about the Untied States and the stock market rally that at one point seemed never-ending. The Dow has now actually dropped below 15,000 for the first time in a month. Maribel Aber standing by to tell us all from the New York Stock Exchange. What happened to the rally, Maribel?

MARIBEL ABER, CNNMONEY.COM CORRESPONDENT: Hi, Nina. Well, as you said, here stocks are lower. This is for the third time, actually, in four sessions. We've been bobbing back and forth. Now, we're above 15,000, but we were below that.

It's really feeling like the momentum has shifted to the downside. We got some mixed economic data weighing on the market, including a disappointing reading on private sector jobs. I want to break that down. Data from payroll processing firm ADP show that only 135,000 private sector jobs were created in May. So, that includes a loss of 6,000 manufacturing jobs.

And that pretty much lines up with the ISM report earlier in the week showing a contraction in manufacturing in May. And Moody's economist Mark Zandi, who also oversees ADP reporting, really blames tax increases and forced government spending cuts for the softer job market this spring.

And Nina, this is really a good example of the change in momentum. Just a couple of weeks ago -- right? -- investors would have seen the weak economic news as a sign that the Fed would continue with stimulus program and bought into the market. That's not -- clearly not happening today. Instead, what we're seeing is a more traditional reaction to the economic weakness.

And a belief that it might just be time for investors to take a step back, just for a little while, after this impressive run that you just talked about that we've been seeing for five months of the year.

DOS SANTOS: Yes, that's right Maribel. Well, given the ADP jobs figures show a slightly different picture from what a lot of people were expecting, has that changed the expectations to the big monthly jobless report that's coming out at the end of the week?

ABER: Well, economists certainly don't have high hopes for Friday's report, and especially when you factor in that private sector, that's really supposed to be the bright spot, right? Making up for the weakness in government hiring.

Historically, the ADP report is usually a good indicator of the government's private sector job growth and is generally not to far off from government data. Let's take a look at this chart here.

You can see, if we pull that up, there are two lines on this chart. Well, they pretty much are close together, showing that correlation. On average, I'll just let you know, it's just off by about 42,000 jobs a month over the last year.

So based on that, current estimates for Friday may even look a little high. Economists surveyed by CNN Money, well, they're forecasting about 158,000 total jobs to be created in May, which would be down from April, with the unemployment rate holding pretty steady at 7.5 percent. But Nina, not a very promising preview of what lies ahead.

DOS SANTOS: OK, Maribel Aber at the New York Stock Exchange -- or actually in New York, I should say, at CNN's offices. Thanks ever so much for joining us and putting the perspective on that.

Up next, Greece's foreign minister sees a brighter future for the next generation. He explains to me how Greece can tackle youth unemployment of more than 60 percent.

And an unacceptable delay. Lufthansa's chief executive is literally furious at Berlin's airport fiasco.

(BEGIN VIDEO CLIP)

CHRISTOPH FRANZ, CEO, LUFTHANSA: We are angry about it, that's clear. We are all angry, all airlines. We wish to move to the new airport as fast as possible. We built a hangar. The hangar is built. It's ready. It's empty.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

DOS SANTOS: Welcome back. The eurozone is expanding. Latvia, a nation of 2 million people, are set to become the 18th euro member as of January.

Well, the European Commission gave the country a glowing endorsement to join the single currency bloc and, as Jim Boulden now reports, despite the costly bailouts and the chronic recessions out there, some countries, it seems, still want into the club.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Poland hasn't done it yet. Neither has Lithuania. But Latvia's government is champing at the bit to join the eurozone and take the euro as its currency. It has now met all the membership requirements, says Brussels.

OLLI REHN, EU COMMISSIONER: Latvia's experience shows that a country can successfully overcome macroeconomic imbalances. Latvia is now focused to be the fastest-growing economy in the European Union this year.

BOULDEN: Imagine joining this, and in fact having to pay to help rebuild the likes of Greece, Ireland, Spain, and Portugal. Each eurozone member has to contribute money to the bailout fund and has to follow all the new rules imposed on euro countries since the financial crisis began in 2008, while losing the independence of a central bank.

In return, the idea is these countries get economic discipline that politicians shouldn't be able to fiddle with.

BOULDEN (on camera): Of the areas from the former Soviet bloc, currently Estonia and Slovakia have the euro. Now, Latvia is now set to join on January 1st. The rest have deferred for now. Some might wait until the end of the decade.

So, give credit to Latvia. It's forging ahead now, even though a recent poll shows just 38 percent of Latvians support joining the club.

BOULDEN (voice-over): It's an unusual club. There are plenty of people inside the tent who want out, while for instance, another former Soviet bloc country, Albania, not even a member of the EU yet, still plans to scrap its currency and join the eurozone one day, as the prime minister recently assured me.

SALI BERISHA, PRIME MINISTER OF ALBANIA: Euro is all to be recovered or to disappear. I believe it will be recovered.

BOULDEN (on camera): OK. So, you're confident?

BERISHA: Yes.

BOULDEN (voice-over): Under the rules, all countries that join the EU since 2004 have to eventually take the euro once meeting the criteria. Things like a budget deficit below 3 percent. Ironically, few eurozone countries could meet that target today.

Now, Latvia still has a few hurdles to get over before it can scrap the lats and bring on the euro. But after the battering the eurozone has taken, it's hard to see this 17 keeping Latvia out of a club desperate for fresh blood.

Jim Boulden, CNN, London.

(END VIDEOTAPE)

DOS SANTOS: Now, I want to show you something interesting. Thankfully, Jim Boulden knows exactly where Latvia is. It's the country of the northeastern region of Europe on the Baltic Sea. It isn't here, I'm afraid.

We do have to apologize for a slight technical error with the geographical maps. I believe that that currently has regal Latvia in southern western -- or eastern China, I should say. But as you can see, it's up there at the top of the Baltic Sea where it belongs.

Now, speaking of Latvia, we're looking forward to speaking to the Latvian prime minister, Valdis Dombrovskis. He's a firm supporter of the euro, as you'd expect, even though the latest opinion polls have been showing that the public in Latvia slightly skeptical about the future under the single currency. The full interview airs on this very program tomorrow evening. Do not miss that.

Well, Greece's foreign minister says that this is the moment when his country's reputation can be restored. Dimitris Avramopoulos says that the country's next priority is to deliver growth, especially for the younger generation. I spoke to the minister earlier today here in London ahead of a meeting with William Hague that he was having and I asked him for his take on the health of Greece's economy.

(BEGIN VIDEOTAPE)

DIMITRIS AVAMOPOULOS, GREEK FOREIGN MINISTER: It's on the track again. After one year, we can say that we have put the Greek economy first on the track again. We have taken on a set of measures.

It is true to say that Greek people have gone through many, many sacrifices, but we have started delivering. All commitments undertaken by the Greek government one year ago are in course of being accomplished.

We have started restructuring our administration, which was one of the main sources of the economic crisis in Greece. We have reduced our deficit, our primary budget for the first time, we have a surplus.

And we move ahead. We encourage investments to come to Greece. We created a more friendly and hospitable investments environment. We hate bureaucracy. Dramatic changes, deep reforms and structural reforms that will change in some years from now the image of Greece and the function of the system.

DOS SANTOS: Nevertheless, would you say that, obviously, what's happened in Greece over the last three years and other countries' reaction towards the crisis in Greece has strained Greece's relation with its EU neighbors?

AVRAMOPOULOS: First of all, as for as other countries are concerned, I must tell you that there are no similarities between the economic crisis in Greece and in other countries in southern Europe, but also in central Europe.

We know where the system suffers. That's why I told you before that we have decided to change everything in Greece. The crisis provided us with, first of all, with a clear image of the reality, and it has put us in front of our responsibilities so that we proceed through all these deep structural reforms. Because our administration was the weak link in our economy as well.

DOS SANTOS: And the legacy of all that cutting in the public sector is now unemployment standing at nearly a quarter of the population --

AVRAMOPOULOS: That's true.

DOS SANTOS: Over 60 percent for the young people in Greece.

AVRAMOPOULOS: It's true.

DOS SANTOS: Where is this leading this country?

AVRAMOPOULOS: And Nina, I can tell you, it concerns us very much. Because we must bring back Greece on the track of growth. This is the answer. In order to produce more new jobs, and this is one of the main priorities of the Greek presidency as from January 1st of next year. So, this is our big priority.

I believe that by the end of the year, because we have a long way to run until the end of the first phase in getting out of the crisis, we shall send the first strong messages that the more auspicious and optimistic landscape has been created in Greece, especially for young people. This is our priority, and we believe that we are going to deliver.

DOS SANTOS: So, how exactly are you going to do that? Because at the moment, there don't seem to be many companies investing in Greece. You need to stimulate the --

AVRAMOPOULOS: Absolutely.

DOS SANTOS: -- private sector --

AVRAMOPOULOS: Absolutely.

DOS SANTOS: -- to mop up these people.

AVRAMOPOULOS: You know, Nina, one of the big problems of Greece in the past that was my hint before had to do with the bureaucratic obstacles. Now, the decisions made. Before, it was the red tape. Now it is the red carpet.

Everything has changed in Greece. A new faster track low has passed from the parliament. As I said before, we created a friendly and hospitable environment for business. We traveled all around the world.

We've been from Far East to United States to England to Europe, everywhere. We invite everybody to invest in Greece. And this is the moment everything is changing there, and the answer is very, very positive.

(END VIDEOTAPE)

DOS SANTOS: So, that's the Greek foreign minister speaking to me in London earlier today.

Well, the European stock markets have fallen to six-week lows in tandem with the situation that we see in the United States. This is the picture when eventually these markets closed. As you can see, arrows pointing down across the region, and some losses pretty pronounced, especially on the FTSE 100, which is heavily skewed towards the commodities producers as well as the financials.

And speaking of which, from mining to retail to banks, well, no sector, it seems, was spared in the losses today. Investors are, of course, anxious about the outlook going forward. They also think, as Maribel Aber was telling us from New York before, that the Federal Reserve may soon plan to scale back on its monetary stimulus and bond-buying plans.

Time now for a Currency Conundrum for you out there. When the Latvians embrace the euro, they'll be saying good-bye to the Latvian lats. So, what is the image that is used for the watermark on this particular currency? Is it A, a folk maid? B, a political figure? Or C, a member of royalty? We'll have the answer for you later on in the program.

Well, the dollar's currently flat against the euro. It's down against the pound and the Japanese yen. We'll be back with more after this short break.

(COMMERCIAL BREAK)

DOS SANTOS: All this week, Richard has been talking to the airline industry CEOs at the IATA Conference, which is currently underway in Cape Town, South Africa. Tonight, it's the turn of the German carrier's chief. We're talking about the head of Lufthansa.

(BEGIN VIDEOTAPE)

RICHARD QUEST, CNN INTERNATIONAL: Today, the weather has cleared. The sun is shining, and we can see the magnificent mountains outside Cape Town. I'm not that far from the Cape of Good Hope in that direction.

Good Hope. A suitable metaphor for the world's airlines. We've already heard this week from the American carriers and the Asian airlines. Now, it's time to look to Europe.

No airline is more in transition than Lufthansa of Germany, with its new point-to-point non-hub German wings and a massive reorganization designed to improve profitability. I spoke to the chief executive, Christoph Franz. I needed to know how the strategy was panning out.

FRANZ: The airline is a premium airline. We'll stay a premium airline, and we will have to with many, many measures in the framework of our program improve the bottom line in order to be able to grow.

We have to invest huge amounts of money into a rollover and a growing fleet and maintain our leadership in Europe, because I feel that consolidation in Europe is going on, and we want to be one of the drivers of this process. But as a junior partner, you're not driving.

QUEST: Expanding into Africa. If we look at Lufthansa and the group and what you see as the potential for expanding -- I know, for example, you use the 380 down to Johannesburg and you expanded in many ways like that. But where would you like to grow the airline towards Africa?

FRANZ: Basically, we grow on the growth lines of Africa. So, for example, in South Africa, which is a growth market. But we also tap into new destinations, for example, destinations which are important for the oil and energy sector.

Lufthansa has opened since 2009 five additional destinations growing from 13 to 18 destinations, now, with a Lufthansa brand. And in total with the group, particularly with an offer of Brussels Airlines, we're offering already 38 destinations in Africa.

QUEST: Let's talk about Brandenburg, the airport. I don't wish to --

FRANZ: A nice topic.

(LAUGHTER)

QUEST: It's -- you know, I don't wish to dwell on private family grief, but it's a mess, and it's not getting much better. Is that fair?

FRANZ: You're right. It is a mess, but it is not surprising, because when you look at the reasons -- we're talking about fire protection measures in the airport -- this is not something you fix in three days. So, we are clearly encouraging the airport company to do it right now, and it doesn't matter whether now it is a month early or a month later, but do it the second time right.

QUEST: When you think of that, Christoph, does it make you irritated, angry, or do you just want to say what were they doing? How did this happen? And what does it -- what feeling and emotion does it bring inside you?

FRANZ: Obviously, we are angry about it. That's clear. We are all angry, all airlines. We wish to move to a -- the new airport as fast as possible. We built a hangar. The hangar is built. It's ready. It's empty. It's empty since more than a year, now, and we have to wait for another one or two years until we can use that hangar, and we really waste and spoil our money in this place.

At the same time, what I think is really an issue is that this is hampering, also, the reputation of Germany, good engineering. This kind of project should open in time, et cetera. And that is maybe something which gives a little human aspect for Germany.

(LAUGHTER)

FRANZ: But at the same time, we wish that this would open very soon.

(END VIDEOTAPE)

DOS SANTOS: Well, Richard will have another update from the IATA Conference in Cape Town tomorrow. That's when he'll be speaking to the CEO of Cathay Pacific.

Still to come on tonight's show, though, making their voices heard. The protesters in Turkey have had their say. Now, we hear from the other side of the story. The supporters of the prime minister who consider themselves to be the silent majority.

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(COMMERCIAL BREAK)

DOS SANTOS: Welcome back. I'm Nina dos Santos. These are the headlines this hour.

(BEGIN VIDEO CLIP)

DOS SANTOS (voice-over): The Syrian government says that it's taken back the strategic city of Qusayr. Regime forces backed by Hezbollah militants from Lebanon had engaged in bloody battle with the rebels in that particular city. The rebels are now acknowledging the defeat, but they say the war is not over yet.

People gather on high ground to watch significant flooding in historic cities and towns across central Europe. Troops are being deployed in Germany to help; 19,000 people have been evacuated in the Czech Republic. And more heavy rain is forecast for this region.

The mayor of Philadelphia says that 13 people were injured when a building collapsed in a busy part of the city. The structure collapsed on top of a thrift store and a sidewalk. Emergency workers are searching for anyone who may still be trapped within the rubble. The fire commissioner said that the demolition of a building had been going on at that particular site.

U.S. President Barack Obama has officially named the country's ambassador to the United Nations, Susan Rice, to become the new national security adviser. Rice, who will be replacing Tom Donilon, was criticized for her handling of the attack on the U.S. consulate in Benghazi last year. Samantha Powell will be Rice's replacement at the United Nations.

Greece's foreign minister says that he's concerned about the continuing protests (inaudible) Turkey. Huge crowds rallied against the government in Ankara earlier today. Riots (inaudible) tear gas at protesters to disperse them.

Speaking to me on QUEST MEANS BUSINESS, the Greek foreign minister, Dimitris Avramopoulos says that stability was in all parties' interests.

(BEGIN VIDEO CLIP)

DIMITRIS AVRAMOPOULOS, GREEK FOREIGN MINISTER: It is obvious that we are all concerned, that, as I said before, this is our wish, a stable and democratic Turkey, to the benefit of everybody and of Turkey itself.

(END VIDEO CLIP)

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DOS SANTOS: Police in Turkey have now arrested 25 people for tweeting about the ongoing protests. They are reportedly accused of using social media such as, for instance, Twitter, to spread false information across the country.

Let's bring in our correspondent in Istanbul, Ivan Watson, who's on the scene (inaudible) near Taksim Square, I believe.

What's it like over there, Ivan? What's the atmosphere?

IVAN WATSON, CNN CONTRIBUTOR: Well, Nina, this place after the riot police abandoned it on Saturday, was a place for spontaneous rallies against the Turkish prime minister and the Turkish riot police. But I'd say in the last 36 hours, the atmosphere has evolved dramatically. And it feels much more like a festival, like a commune. You could even call it the Republic of Taksim.

There is an eclectic mix that reflects how complicated Turkey is. You've got representatives of the staunchly secular (inaudible) groups. You've got Muslim anti-capitalists here, Communists, anarchists, gay/lesbian/bisexual/transgender.

And of course most of the -- and fireworks going off -- as (inaudible) concerts and drum circles and even group yoga out in the park. I mean, it's really like a countercultural festival out here. It's very, very joyous, I would say.

In Ankara, where there were protests today and yesterday, and the police opened up the space for demonstrators, that space closed this evening as our own Nick Paton Walsh, CNN's correspondent there saw water cannons used against the demonstrators and they were dispersed after just 45 minutes.

Now the scene, if you can imagine, just a few kilometers from here in the same city, Istanbul, is very, very different.

(BEGIN VIDEOTAPE)

WATSON (voice-over): Ali Vatansever takes careful aim and shoots. The champion archer is training on a new archery range that was inaugurated barely a week ago by the prime minister of Turkey, Recep Tayyip Erdogan.

ALI VATANSEVER, ARCHER (through translator): The prime minister is a perfect person. He has reconquered out hearts. We are proud and we thank the prime minister for this place.

WATSON (voice-over): The new archery range was built in Kasimpasa, the proudly working class neighborhood in Istanbul that the Turkish prime minister still calls home. The mood here: very different from nearby Taksim Square, where thousands of demonstrators have been calling for the prime minister to resign.

WATSON: The neighborhood where Recep Tayyip Erdogan grew up is located barely a mile away from the protests in Taksim Square. And while in some districts of Istanbul, residents have been banging pots and pans at night in protest against their prime minister, here locals proudly fly the flag of his ruling political party.

WATSON (voice-over): This neighborhood is a bastion of support for Erdogan and his ruling Justice and Development Party, or Ak Parti.

HASAN DOKUMACI, AK PARTI OFFICIAL: We trust this government, Ak Parti, and Mr. Tayyip Erdogan. We trust too much.

WATSON (voice-over): Erdogan has repeatedly dismissed the street protests that have spread across the country, (inaudible) the work of a small groups of troublemakers. On Monday, he reminded Turks that in the last national election, his party won 50 percent of the vote.

RECEP TAYYIP ERDOGAN, PRIME MINISTER OF TURKEY (through translator): Currently we are having difficulty in keeping at least the 50 percent of this country at home. And we are telling them to be patient and not to get trapped in these games.

WATSON (voice-over): Political scientist Cengiz Aktar interprets this statement as a threat.

CENGIZ AKTAR, POLITICAL SCIENCE PROFESSOR: If you put 2,000 (ph) in the streets, I can put 10 times more than that. I mean, this is a very irresponsible way of tackling the crisis because that means, you know, a kind of civil war between the people. I mean, is it the way you solve a crisis? I'm afraid not.

WATSON (voice-over): In Kasimpasa, members of Erdogan's 50 percent said they would take to the streets to defend their prime minister if they were asked.

HASSAN DURAL, DRIVER (through translator): Hopefully, it wouldn't come to that point. The prime minister's gathered millions of supporters with a single word. But those who love this country don't want turmoil.

CENGIZHAN SAFI, ISTANBUL RESIDENT (through translator): We don't take the protesters seriously, because they are the minority. We are already the owners of this country.

WATSON (voice-over): Ominous words from Erdogan's supporters, Turks who are convinced they are a majority that, for now, remains silent.

(END VIDEOTAPE)

WATSON: Now, Nina, the Turkish prime minister famously referred to the demonstrators in Taksim Square as capulcu. That means basically riff- raff. And we've seen a lot of people here with T-shirt, branding the name, capulcu, riff-raff. And people adopting that name for their Twitter and Facebook handles as well.

The -- two of the biggest groupings of labor unions have announced a joint strike this week against what they've described as the fascism of the ruling party.

However, the deputy premier of Turkey, Bulent Arinc, did meet with some of the organizers of the Taksim protest today, as clearly there are efforts being made by the Turkish government to ratchet down some of the tension, this taking place while the Turkish prime minister himself is away on an official visit in North Africa, Nina.

DOS SANTOS: Ivan Watson on the scene in Istanbul, where there's obviously a very, very different atmosphere to this time Friday evening, thanks for bringing us that.

Now straight ahead here on QUEST MEANS BUSINESS, checking into the new territories, Best Western expands into Myanmar and beyond in a search for untapped markets.

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DOS SANTOS: The American hotel chain Best Western is expanding into new frontiers and launching its own brand in Myanmar. This is the country that's also known as Burma. The chain is taking over an existing hotel in the country's largest city, Yangon. Yesterday I spoke with the CEO about these frontier expansion plans.

(BEGIN VIDEO CLIP)

RON POHL, SVP BRAND MANAGEMENT, BEST WESTERN INTERNATIONAL: It has certainly been a challenge and that's why, again, from our office in Thailand, we began to develop relationships nearly 10 years ago. And it's -- we're finally starting to see the fruits of those efforts in that country and in Malaysia, in Bangladesh and even in Saudi Arabia.

So it's a long-term plan that is finally coming to fruition.

DOS SANTOS: What's really interesting is so now you're present in nine out of the 10 Asian (ph) countries out there in the region.

But you're also betting really big on other frontier markets, notably Iraq and also Haiti.

Where does this frontier strategy come from?

POHL: You know, the North American market, we have over 4,000 hotels worldwide. So as you look at where the greatest opportunities for development, it's natural that we look to Asia and the Middle East, into India and even into Brazil.

So that -- those are the untapped markets that we're able to put the Best Western name out there. It's a trusted brand and develop some great hotels and some great resort and downtown locations.

DOS SANTOS: It's a trusted brand, but these countries are countries that the average tourist doesn't yet trust, Iraq, Haiti -- these are places that have had terrible, terrible natural and manmade disasters.

Who exactly are you hoping to attract in somewhere like Iraq, for instance?

POHL: Well, there's a lot of travel that occurs within that part of the world. They're not destination resorts as much as of yet. But we know over the long term, they truly will be. This is more of a corporate market that is waiting to have more travelers within those cities and countries.

DOS SANTOS: We've been in the midst of this very prolonged road to recovery. And it's inching painfully closer towards a recovery, especially where I am in Europe.

How do view the economic landscape going forward with so many properties you have manage around the world?

POHL: There are a lot of hotels, you know, around the world. But there's a lot of areas to develop, if you think of the size of China as example. And we have 38 hotels open there today. We'll double that number over the next two years.

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DOS SANTOS: Well, Best Western is not the only multinational company making its presence felt in Asia, and particularly in Myanmar. Global brands see a huge potential in this country that's fast emerging from years of political and economic isolation.

Andrew Stevens reports from Yangon.

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ANDREW STEVENS, CNN CONTRIBUTOR: It's been called the final frontier, the last big Asian country to connect to the global economy, resource rich with a population of 60 million-plus and a need for just about everything.

In two short years, Myanmar has gone from international pariah status to potentially one of the hottest markets in the world. And virtually every major consumer brand is now making or has made inroads here.

STEVENS (voice-over): And they don't get any bigger than Coke, one of the first multinationals to be awarded an investment license in Myanmar.

CEO Muhtar Kent was in Yangon Tuesday to launch Coke's first bottling plant here after an absence of almost 60 years, the first step in a $200 million five-year project. The last time Coke reentered a country on this scale was post-war Iraq.

MUHTAR KENT, CEO, COCA-COLA: This is a market of 60-plus million consumers, just embarking on a journey to join the world community, if you like. In a way, the same excitement as we had when the Berlin wall came down.

STEVENS: But with great opportunities often come great challenges. And a challenge in Myanmar is infrastructure, both transport and particularly power or the lack of power. I'm right in the heart of Yangon, the commercial capital of the country. But in shops like this, all along this street, they have their own little generator just to supplement the power so the lights stay on and the drinks stay cold.

KENT: I think we continue to innovate with solar-powered coolers, with ice coolers. And the important thing to understand is that things change very rapidly in this area. There's no question that infrastructure is challenging. Roads are challenging. But that is the same -- many of these same challenges exist in other countries where we do business like India, like Bangladesh, other countries in Eurasia.

STEVENS: In a country where most of the business is currently controlled by former military or cronies of military, how difficult was it for you to find the right partner?

KENT: We had a pretty big list to look at and we were very diligent. And we're very happy with our partners, both for the Pina (ph) Group that we have partnered with, both for the short term, medium term and long term.

STEVENS: Do you think now, then, the time has come for the U.S. to completely scrap sanctions to Myanmar? Or at the moment they are eased, suspended?

KENT: I think this is a process and I think we need to respect the process at hand. And I think, given where things were, vis-a-vis the Western attitudes towards Myanmar, Myanmar's attitudes towards the West three, four, five years ago, look at the progress. I'm very hopeful about the continued progress into the future. I'm very excited and hopeful.

STEVENS (voice-over): And for companies like Coke they are indeed hoping that the writing is now on the wall -- Andrew Stevens, CNN, Yangon, Myanmar.

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DOS SANTOS: Let's head a little bit closer back toward Europe, where, of course, the dire weather continues in central and eastern parts of this region. Jenny Harrison is standing by to tell us all at the CNN International Weather Center.

So the floods continue, do they, Jenny?

JENNY HARRISON, CNN METEOROLOGIST: They really do, unfortunately, Nina. There's sort of a little bit of brightness in amongst all of that awful scenes that we've been seeing in the last couple of days. This, of course, is the area we're talking about, a huge, vast swath (ph) of Europe that really has seen the torrential rain and, of course, this widespread flooding.

Now there are a number of rivers that have still to crest. They flow in different directions. The Danube, this flowing through southeast Europe. We've got the Alba River flowing through Germany, comes out to the North Sea and the same as well for the Rhine.

So this is really what some of the problems are, it's because they're different directions of the rivers actually flowing, of course, where they're going to crest. So for example, we have got the Danube. Now in Vienna, very close to cresting this is. But it's looking as if it could actually crest above those levels in 2002, but so far it is actually held off pretty well in terms of flooding the area. They've got some pretty good flood barriers in place.

And when we head out towards Prague and then on into Germany, Dresden, Meissen (ph), in and around there, it looks as if this is going to crest a little bit later. So later Wednesday, on into Thursday. And again we're looking at some very high levels as well.

So this is an area where we're going to continue to watch. And then of course what'll happen is that the river will continue to flow northwards. And so it could well see more flooding. The river will continue to crest as it follows its progress out towards the North Sea. So north Germany will continue to see these levels rise as we continue through the next few days.

And just worth mentioning as well, that around this area, Dresden and Meissen (ph), it's thought these levels could peak at about 9 meters. The average height of the river is actually just at 2 meter.

Now what you can see is that in the last few hours, we've had some pretty good clear conditions across central and western Europe as well. But what we have had across more eastern areas is quite a few showers and thunderstorms that have been flowing up in the afternoon heating.

And as we go through the end of the week, we will still see some more rain across the east. It's continuing to work its way further eastwards. But still we can't rule out those rather strong thunderstorms. And in fact, there's some warnings in place as we continue into Thursday morning, quite big swaths (ph) of Europe, you can see here.

We could see more strong winds, heavy rain and also some pretty large hail. So not out of the woods yet, not by any means. And this just shows you the rain. It's expected to come down in the next 48 hours. So again, it's across these central and eastern areas, not the amount of rain that we've been seeing, but certainly not those just really good, clear, dry conditions.

Across Western Europe, we've had a break, finally, of course, from the continuing bad weather. And let's just end on something a little more positive, of course, the French Open. We could see some rain here on Thursday, Friday a good day, Saturday as well. As you can see, partly cloudy skies and then generally in Europe, temperatures are good.

So at least, Nina, once the rivers are coming down, for example, in Passau (ph) in Germany, the residents there beginning the awful task of clearing up. But at least the weather conditions are helping with that. But we're still a few days away from that across much of central Europe.

DOS SANTOS: Good to know. Jenny Harrison at the Weather Center, thanks for that update.

Well, after the break on QUEST MEANS BUSINESS, the smoldering remains of wrecked SUVs. The firm which made them is refusing to recall those still on the road and we'll explain why in just a moment's time.

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DOS SANTOS: The American car giant, Chrysler, is refusing to recall millions of vehicles, even though the U.S. government says that the fuel tank design used in some of these SUVs is unsafe. Athena Jones explains.

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ATHENA JONES, CNN CORRESPONDENT (voice-over): In a rare act of defiance, car company giant Chrysler refuses to recall almost 2.7 million vehicles as requested by the National Highway Traffic Safety Administration.

For nearly two decades, some Jeep SUV models have had a tendency to burst into flames after a rear-end collision. The NHTSA is requesting that upgrades to the older models be installed to keep fires from starting.

JOAN CLAYBROOK, FORMER NHTSA ADMINISTER: The definition of a safety defect is if it's a bad design, if it's harmful to people and if it occurs repeatedly. And that's all been the fact here.

JONES (voice-over): The models in question are 1993 to 2004 Jeep Grand Cherokees and 2002 to 2007 Jeep Libertys. The company says it's been working with the government on the fuel tank fire issue since 2010.

Chrysler says their SUVs met the minimum standards for rear-end collisions. But in a June 3rd letter from NHTSA to Chrysler the agency said bluntly, quote, "The existence of a minimum standard does not require NHTSA to ignore deadly problems."

Chrysler responded in a statement, saying, "We believe NHTSA's initial conclusions are based on an incomplete analysis of the underlying data and we are committed to continue working with the agency to resolve this disagreement."

But it's the data that's scaring some consumer advocates.

The Center for Auto Safety says its data shows the risk of fire for a Grand Cherokee in the model years in question is more than 20 times greater than the risk in a comparable Ford Explorer.

PETER VALDES-DAPENA, SR. AUTOMOTIVE WRITER, CNNMONEY: Chrysler contends that their gas tanks on these vehicles were built according to government safety standards available at this time, and basically that there is no problem, that the number of people who've died in rear-end collisions is far lower than safety organizations are alleging and that, at any rate, it's less than the industry average for that type of vehicle built at that time.

JONES (voice-over): Recalls aren't unusual, but this is the first time since 1996 than an automaker has challenged a recall demand from the NHTSA. That case also involved Chrysler and the company prevailed in a two-year federal court battle.

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DOS SANTOS: That's Athena Jones reporting. We'll be back with more after this.

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DOS SANTOS (voice-over): Time now to answer tonight's "Currency Conundrum" for you. Earlier I asked you what image was used on the watermark of the Latvian banknote as they prepare to take up the euro? The answer is A, a folk maid. She's also shown here on the 500 lat note, the Latvian folk maid is a national symbol for moral purity and hard work, and she's expected to reappear on some Latvian-issued euros.

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DOS SANTOS: Let's have a quick look at how the U.S. markets are faring before we say goodbye to you this hour. As you can see, the losses are steeping on the Dow Jones industrial average, down now by nearly 190 points after a disappointing private sector jobs report.

And that's it for QUEST MEANS BUSINESS. I'm Nina dos Santos in London. I'll be back in a second's time with a look at the news headlines.

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DOS SANTOS (voice-over): A huge crowd has rallied against the government in Turkey's capital. Riot police have fired tear gas at protesters to disperse the people there. Earlier today, a group representing the demonstrators demanded the government fire the police chiefs of Ankara and Istanbul over the excessive use of tear gas.

The Syrian government says that it's taken back the strategic city of Qusayr. Regime forces backed by Hezbollah militants from Lebanon had engaged in bloody battle with the rebels in that particular city. The rebels are acknowledging the defeat, but they say the war is not over yet.

A woman has been killed and at least 13 people injured when a building collapsed in the U.S. city of Philadelphia. The structure collapsed on top of a thrift store and a sidewalk in a busy part of the city. Emergency workers are searching for anyone who may still be trapped in the rubble. The fire commissioner says that a demolition had been going on at the site when the incident happened.

U.S. President Barack Obama has chosen the country's ambassador to the United Nations, Susan Rice, to become his new national security adviser. Rice, who will be replacing Tom Donilon, was criticized for her handling of the attack on the U.S. consulate at Benghazi last year. Samantha Powell will be Rice's replacement at the United Nations.

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DOS SANTOS: That's a look at some of the stories that we're watching for you here on CNN. "AMANPOUR" is next.

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