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QUEST MEANS BUSINESS
Day Two Of Paris Air Show Belongs To Boeing; French Finance Minister Says His Country Will Not Stand For Another Year Of Austerity; Brazil`s President Says Her Country Is Dedicated To Social Change
Aired June 18, 2013 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JIM CLANCY, CNN CORRESPONDENT: This is CNN. I`m Jim Clancy and here are your headlines.
(BEGIN VIDEO CLIP)
CLANCY (voice-over): The Taliban opening a new political office, as they call it, in Doha, Qatar. The militant group says the office is meant to be a launching pad for talks, negotiations with Afghanistan as well as other nations. The U.S. is planning to hold its first formal talks with the Taliban in the coming days.
Now that development comes as Afghanistan takes charge of its own security. NATO formally handed security duties to Afghan forces in a ceremony earlier today. The alliance says its troops will no longer take the lead in combat operations there.
The G8 leaders have concluded a two-day summit in Northern Ireland. They called for peace talks to be held as soon as possible to resolve the Syrian civil war. The leaders also agreed to new measures to crack down on tax avoidance and evasion.
More silent protests in Istanbul`s Taksim Square today. These people are following the example of the Standing Man, who remained like this for hours in the square Monday night. Turkish Prime Minister Recep Tayyip Erdogan is quotes as claiming victory over the anti-government demons.
Brazil`s president is trying to reassure protesters there. She says her government is committed to change. Dilma Rousseff spoke a day after demonstrators swept across the country. People are upset over a number of issues, including corruption and government spending on high-profile events. More protests are expected in the coming hours.
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CLANCY: Those are your headlines up to the minute. I`m Jim Clancy at the CNN Center.
QUEST MEANS BUSINESS with the one and only Richard Quest straight ahead, live from Paris.
RICHARD QUEST, CNN HOST: The engines are roaring and so is the trade. Tonight on this program, Boeing`s chief executive tells me they`re beating the competition hands down.
Also tonight, from Brazil, thousands of protests against spending on the World Cup. The president says she`s listening.
And the G8 cracks down on money launderers, illegal tax evaders and corporate tax avoiders.
It`s all in tonight`s program, live from Paris. I`m Richard Quest and I mean business.
QUEST: And a good evening to you. It`s Tuesday and it is a glorious spring, almost summer night here in the French capital, what a difference 24 hours makes, a stunning, spectacular day, not only in the heart of the capital, but also at the Paris Air Show, where day two belonged to Boeing.
And the Boeing Dreamliner. Boeing hasn`t built a brand new Dreamliner and it`s lined up billions of dollars in advance orders. All of this taking place on its rival`s home soil. So the plane is the 787-10, a double stretch version of the existing Dreamliner. Orders were $30 billion already agreed.
This is an artist`s impression of the plane. Boeing says it will be the most efficient jetliner in history. The first delivery, though, won`t take place until 2018.
Now if you look at the total commitments and orders for the new plane, it`s about 116 planes, 112 go to the Dreamliner 787-10. That is worth around, at list price, is $30 billion. Compare and contrast that with Airbus` orders today, and Airbus got a thumping big order from easyJet, buying 135 Neo A320. But here`s the point: bear this in mind, all planes are not equal when it comes to making money.
Boeing`s selling bigger planes, makes more money than Airbus. So even though Airbus may have sold more planes today, it`s probably a fair guess that Boeing actually has made more cash and will make more profit. That`s the way it goes so far.
As to the way Boeing now looks at the world, Boeing`s executive, Jim McNerney, is sanguine about the 787 problems and sees them as a learning lesson and one that, when put together with the new 787-10, will put Boeing back on top.
JIM MCNERNEY, PRESIDENT/CEO, BOEING: This is the third variation, the third derivative of the 787. So the plan was always to have the base model and then that`s the -8. Then -9, which is longer range, more passengers, and then the one we announced today, the -10, is more passengers yet, shorter range, for more regional applications.
QUEST: The customers told you what?
MCNERNEY: Well, they told us that there is a lot of value in this airplane. I mean, this will carry up to 325-330 passengers. It will carry it very efficiently. We have just added a -- basically a plug to the fuselage, tweaked the engines.
QUEST: You would not expect too many -- and I put the too many in inverted commas -- difficulties in creating this; in other words, you`re not looking at a problem plane in the future?
MCNERNEY: Well, I understand why you`re asking that question, because obviously the 787 ground-breaking airplane (inaudible) some difficulties in development. But we`re now --we`re now in a position to harvest the benefits of these matured technologies.
QUEST: As Boeing rebalances itself between defense and commercial aviation, where would you be comfortable?
MCNERNEY: Right now we`re in a position where sovereign entities around the world are buying less defense and space stuff, led by the United States, of course. And so we can absorb that. Unfortunately, the commercial side of the business is growing. And so the ideas to remain at critical mass in both never go beneath that.
QUEST: So you`re not going to give me a number you`re comfortable with 37 (inaudible)?
MCNERNEY: No, I think it will end up being more 65-35 along the way.
QUEST: The perception of Boeing these days is what? And you`ve have a bruising year. That -- both sides have had bruising years (inaudible). But the perception of Boeing now is what?
MCNERNEY: The perception is innovative company, bent on the bleeding edge a little bit because of the innovation. And we went through some reputational things as the 787 was developed. But now that we`re coming out the back end, we have an entirely new suite of technologies available to our company that our competition has to a lesser degree.
QUEST: The 747-8, it`s not selling as you would like.
MCNERNEY: I think the plane is a good one. It`s designed to keep the A380 honest and to address that very large airplane market segment. It`s done a good job. There`s been a lot more orders on the 47-8 over the last four or five years than its competitors. So it`s doing OK.
QUEST: The IMF said just last week that it`s really worried about the U.S. economy, bearing in mind the sequester and bearing in mind what`s happening in Washington. As a leading U.S. CEO, do you share that concern now about the inability of Washington?
MCNERNEY: I don`t think our economy is reaching its full potential. On the other hand, I`m not worried about it in the sense of it going backwards, reentering a recessionary environment. I think the U.S. economy is strong enough to withstand the inability of Washington to get its act together.
QUEST: We`re literally saying that the economy survives in spite of, not because of.
MCNERNEY: Well, I think that phrases it very concisely and being a -- being a U.S. citizen that participates in the economy, I might not say it as directly as you did, but yes.
QUEST: Blunt and to the point as always with (inaudible) Jim McNerney, the chief exec and chairman of Boeing on QUEST MEANS BUSINESS.
The stock market is higher and all of that happening on a week, in fact, on a day when the Fed starts beating. And we`re going to have some Fed results, which all, of course, (inaudible) guidance for when quantitative easing and the exit strategies underway.
Alison Kosik is in New York.
Alison, why is the market higher when we know there is this uncertainty?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, today, as was yesterday, you`re looking at investors, Richard, who are optimistic, optimism over the Fed, that the Fed may say that it will not be cutting back on the amount of stimulus that it`s pouring into the financial system.
You know, it definitely is different every single day. I mean, you`ve looked at the Dow; there have been these really dramatic moves that it`s been making, these big swings, triple-digit moves almost every day so far this month. And it`s because of the Fed --
QUEST: (Inaudible). I know the story. I know the story.
KOSIK: Yes, you do. But today, you`re asking why it`s higher because there optimism that the Fed will not pull back.
QUEST: No, I beg your pardon. I was actually -- I wasn`t referring to you at that particular moment.
QUEST: Oh, dear, oh, dear. Oh, I was talking to somebody over here.
But we can still talk about it anyway, good Lord. Just shows you what happens on live television.
The story I was referring to that I will talk about and I will tell you the story is the idea that the president wants -- not wants rid of Ben Bernanke, but that the president actually now says -- I mean, he`s basically said Bernanke`s gone at the end of the next term, correct?
KOSIK: Exactly. So what you`re referring to are these comments in a PBS interview with Charlie Rose on Monday. And what President Obama told Rose was that Bernanke has already stayed a lot longer than he wanted or he was supposed to. And when he was asked if he would reappoint the Fed chief, Obama said he`s been an outstanding partner in helping the U.S. economy recover.
Obama said Bernanke has helped the country rebound much more strongly compared to European nations. And much of the president`s comments, interestingly enough, they were in the past tense. So to me that suggests that this may be the end of the road for Bernanke.
Now the Fed chief is not the first person as you know to stick around longer than he`d planned. Former Treasury Secretary Tim Geithner reportedly wanted out for years, but he stuck around to help navigate the Obama administration through the recession.
So it`s interesting to see the terminology that Obama is using and it will be interesting to see how much longer Bernanke stays on, Richard.
QUEST: I give it -- I doubt he`ll stay till the end and I guess you and I will be talking many more times about who is next. There are over 140 points and Alison Kosik, to whom I was talking to, but not talking to, if you see what I mean, when I`m talking to, you get the idea, Alison. Good to see you in New York.
I think it must be the sun. I think it`s the sun in Paris after a long winter in Britain having got to me, see the sun it`s a miracle. And never mind.
When we come back after the break, QUEST MEANS BUSINESS in the French capital, we`re going to go to Brazil where there have been some very serious demonstrations and they`re all much greater than a 9-cent hike in a bus fare. We`ll explain in a moment, QUEST MEANS BUSINESS, good evening.
QUEST: The French economy is in trouble. That much we know. It`s in recession, unemployment`s over 10.5 percent. The tax proposals of the Hollande government have not fared well in the courts and people are seriously concerned about what is happening. The French president`s poll ratings are at a spectacular low.
All this as the G8 is calling for measures on tax transparency, trade and measures to increase and to boost growth.
But the French finance minister says that Europe can do even more. Pierre Moscovici told me that France cannot and will not stand for another year of austerity following on from the two that it`s already suffered. And he said that as far as the French government`s concerned, there has to be more emphasis on growth.
PIERRE MOSCOVICI, FRENCH FINANCE MINISTER: We call for a global and shared effort to sustain growth because when I look not only at the French economy but at the Eurozone economy, the French economy is not in great shape, although it is still the 5th (ph) larger in the world, although we`re here in the Beauvais (ph) and see that we have a very competitive industry for aircraft and around that and other sites.
But what I say today is that it`s not possible for the Eurozone to live more than the two years we`re in with a recession.
This is why we`ve got to launch cooperative policies between us in order to sustain growth, meaning in those countries like us, who have to make effort, do that, but that they also have time in order to consolidate the public finances and other countries who have done these efforts before, well, they can ask for more demand from their citizens in order to help, for example, our exports.
QUEST: I know it`s not an either/or, and if you talk to anybody, they`ll say, well, it doesn`t have to be one to the exclusion of the other. But it is efficiently, effectively turning into that, isn`t it? Because getting that balance between austerity and growth right is proving elusive.
MOSCOVICI: It`s not possible to speak in France about austerity and not in favor of any kind of austerity. What does austerity means? Austerity means when you go too far in your fiscal consolidation. We don`t want that. We want to reduce our deficits because it`s necessary. We are a serious country.
But at the same time, we refuse to break the poor growth we have. On the contrary, we think it`s time to relaunch at a national and European level our growth. And we sustain growth. We want stronger growth.
And it is of the interest of our countries here, of Europe as a whole, and also of our partners all over the world to have a strong Europe because we still are the first power in the world but we are also the only zone in the world with such a poor growth.
QUEST: Two more questions, Minister, if you`ll indulge me, which I think is probably the single biggest issue facing this continent at the moment, and that is youth unemployment. The phrase, "the lost generation," you know about this of course in this country as well as it`s far worse in other parts.
So, Minister, how can we tell this generation under 24 that they`re not lost and that there is still reason to have hope into this whole project?
MOSCOVICI: It`s not acceptable that their generation considers itself as a waste, as a problem. Youth is always a solution and youth must have a future. This is why the next European Council on the 27th and 28th of June must consent on the fight against youth unemployment.
I had a meeting with the Italian, the Spanish, the German minister of as well finance and labor, three days ago in Rome. And we said, for example, that there is a fund of 6 billion euros --
QUEST: Not spent. It`s not spent.
MOSCOVICI: It`s not spent. It has to be spent. And it has even to be spent in advance. You know, you also need to sustain the small and medium firms which can hire young people and there I call for the European investment bank who has huge resources in order to mobilize these resources for the youngsters.
QUEST: Finally, with this in mind -- and I look at what the U.S. and what President Obama has done and what Ben Bernanke says and how they adapted monetary policy on the basis of a forecast of unemployment. And I know the ECB can`t do that. I know that.
But do you wish there was a greater sense of crisis in leaders in Europe about this?
MOSCOVICI: All of us, we`ve got to have a better governance of the Eurozone. This is why the President Hollande called for a new political union with -- because without the political will, we cannot succeed. Again, it is not acceptable that the first economy in the world is in recession while the U.S. and emerging countries are now not in a boom but in a stronger growth. So we must be in the trade.
And there is the need for political will. There is a need for political unity. There is a will, a need for stronger governance. And this is why France advocates for.
QUEST: That`s the French finance minister, Pierre Moscovici. Of course, the French aren`t the only ones seeking growth. Even the Germans now agree that it`s all about the balance between growth and consolidation. Angela Merkel, the German chancellor, told me that before the G8.
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): We have to pursue structural reforms. We have to agree what is actually conducive to growth. Competitiveness is conducive to growth. And in this very difficult situation, we will need to initiate special programs, specially geared, for example, to youth unemployment. We have set aside a number of euros in the coming budget on this.
QUEST: So the relationship between Germany and France has been strained at best. And France is now feeling the effects of recession, higher unemployment while, of course, its German neighbor has half of that.
Jim Bittermann, our senior international correspondent, is with me.
Jim, just how serious are the problems? We know the economy, but for Hollande?
JIM BITTERMANN, CNN SR. INTL. CORRESPONDENT: Well, he`s got a stack of problems on his desk. I mean, the unemployment, of course, is the number one problem in this country. And his deteriorating ratings and in terms of public opinion.
Where I think that it`s really hurting this country -- and people are beginning to be aware of this, I think, at the governmental level, is this brain drain that`s going on. There`s so many young people that are leaving this country, taking their talents with them, the free education they got in France. And they take off to London and those countries.
QUEST: (Inaudible) Air Force One is just landing in Berlin. President Obama going to Germany. Will give a speech at the Brandenburg Gate.
The relationship between Merkel and Obama is strong, possibly stronger than Hollande -- and you`re nodding already -- Hollande and Obama.
BITTERMANN: I think that (inaudible) much better relationship from the beginning, because (inaudible) to be the American French president and that sort of thing. Hollande has kept his distance. And the Americans have been wary of Hollande as well. I think they get along fine.
But it`s not to the detriment of the relations between the two countries. But nonetheless, it`s not as warm as it might have been under (inaudible).
QUEST: OK. So as we -- if we push this forward, we`ve now got the French being truculent on the cultural exception -- I`m sure there`s a French way of saying that, that they would put it -- we`ve got Hollande and Merkel`s relationship, let`s say, how would you describe that relationship? It`s clearly not tight.
BITTERMANN: It`s not tight.
BITTERMANN: No, it`s -- and it`s kind of distant. The one thing that Hollande`s got going for his is the prime minister, Ayrault, who speaks perfect German and he`s been able to smooth over some differences because of that fact. (Inaudible) that fact. QUEST: Nicolas Sarkozy, he of yesteryear, I have heard it said that he basically has got the scenario; he`d like to have won. But there`s an element, to use the German, of schadenfreude now. That`s got Hollande`s downright discomfort.
And he`s just waiting in the wings?
BITTERMANN: I think so. I mean, you know, everybody -- he sort of blushes and says, no, I`m not going to run. Everybody thinks he`s going to run again and he`s preparing the way. The fact is, he`s come up in the approval ratings far higher than he was in -- while he was president.
And there`s -- it`s been on several polls that indicate that people think that he would have done better with the economy than Hollande has. So there`s seems to be some public confidence building behind him. But the question -- he`s got some party problems, too. The right party, the UNP, is really a mess in terms of the competition between the top dogs.
QUEST: Always lovely to be here. Thank you for inviting us in and allowing us to squat on your balcony.
Splendid of you. Jim Bittermann from Paris.
Now before we take a break, let me just recap.
President Barack Obama has now landed in Berlin. Air Force One touched down a short while ago. The president was arriving from Northern Ireland, where he attended the G8. Whilst he is in Berlin, not only will he, of course, have those meetings with Chancellor Merkel, he will give a speech at the Brandenburg Gate. That is the set piece, if you like, of the trip to Germany.
This, incidentally, was a speech denied to him when he was Candidate Obama. Then Merkel said that will be unfair. Everybody would want to come and speak at the Brandenburg Gate. But a couple of years later, she is the one who invited him to make this speech.
One would love to be a fly on the wall to hear her views on the operation PRISM computer program. Ms. Merkel`s already said she`ll be seeking transparency; in other words, what on Earth were you up to? When she meets the U.S. president, those are my words.
Jim Boulden is in Berlin. He will be with us shortly to interpret this visit by the U.S. president. While we wait for President Obama to get off the plane, a "Currency Conundrum" for you.
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QUEST (voice-over): The U.S. Treasury has just announced a change to the design of the dollar. The question: what did they change? The shade of green on the bills, the Treasury Secretary`s signature, the size of the picture? (Inaudible) program. Now to the rates.
The yen and the pound are both falling a bit to the greenback. In euros, (inaudible). Those are the rates. This is the break.
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QUEST: QUEST MEANS BUSINESS live from Paris. Over the last week or so, we have been on the road to Brazil and during our coverage, we`ve pointed out the serious demonstrations. Now Brazil`s president says her government is committed to social change. All this as the protests are the worst seen in some two decades.
The protests began over a minor hike in bus fares, at 9 cents a ride. Now, of course, it`s turned into something much more serious.
Shasta Darlington is our correspondent and tonight, she`s in Brazil`s economic capital, Sao Paulo.
SHASTA DARLINGTON, CNN CORRESPONDENT: Brazil is bracing for even more protests today here in Sao Paulo, just one day after some 200,000 people took to the streets across the country in protests against a hike in bus fares, but much more. This is a movement that has snowballed. People are demanding more accountability from the government.
They`re denouncing government corruption. They say they spend too much in taxes and get too little in return. Now today President Vilma Rousseff spoke out for the first time. She appeared on national television. And she praised the peaceful aspect of last night`s marches.
She said isolated acts of violence should and will be condemned. But she said that these protests were a sign of the strength of democracy and which she said is a stronger and bigger middle class demanding a higher standard of living.
This is not enough, however, to quell these protests tonight. We`ll see if we get more of the peaceful kind of marches that we saw in Sao Paulo or if they take a more violent turn like the protests that we saw last night in Rio de Janeiro when protesters were throwing Molotov cocktails and burning cars -- Shasta Darlington, CNN, Sao Paulo.
(END VIDEO CLIP)
QUEST: QUEST MEANS BUSINESS continues after a very short break. President Obama has landed in Berlin. He`s due to leave Air Force One shortly. We will be there when he does.
QUEST: Hello, I`m Richard Quest. There`s more QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
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QUEST (voice-over): Afghanistan is now officially in charge of its own security. The Afghan President Hamid Karzai took the reins from NATO in a handover ceremony earlier Tuesday. NATO says the transition means its troops are shifting from a leading role to one of support during combat operations.
Iraqi police say at least 31 people are dead after a double suicide bombing at a Shiite mosque in Baghdad. Dozens of others are hurt. They say the two bombers shot and killed several guards before entering the mosque and detonating explosives.
Leaders of the G8 industrialized countries have wrapped up their two- day summit in Northern Ireland. They called for peace talks to be held as soon as possible to resolve the Syrian civil war. The leaders also agreed to new measures to crack down on tax avoidance and evasion.
More protests are scheduled in the coming hours in Brazil. Thousands of people demonstrated around the country on Monday, angry over government spending and perceived corruption in poor`s public services. President Dilma Rousseff said earlier today the government is listening.
The French international footballers Franck Ribery and Karim Benzema have appeared in court. They are charged with paying for sex with an underage prostitute. The men, who play for Bayern Munich and Real Madrid respectively have strenuously denied any wrongdoing. However, if convicted, the crime carries a three-year jail term and a $60,000 fine.
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QUEST: Good evening from Paris where we have, of course, been at the Paris Air Show and we`ll have more of that in a moment. But President Barack Obama has just landed at one of the other major cities -- capitals of Europe, some would say the economic and political capital of the continent now, at least the realpolitik as the French might put it.
He`s in Berlin where he is to hold meetings with Chancellor Merkel. It`s an official visit which will also include a -- and we now see President Obama leaving Air Force One. As he makes this visit to Berlin, he will be very keen to reinforce the relationship, the working relationship that exists between Chancellor Merkel and himself.
And the interesting thing here, his whole family`s with him. So that`s also interesting to note. But the two leaders, Merkel and Obama, they share a common bond, if you like, and it`s one of directness and frankness.
Whether it was on austerity or on Syria or whether it`s been on any of the myriad of issues between the two countries, they`ve never had any problem in simply saying this is where I stand. I see your position, but I don`t necessarily agree with it.
Jim Boulden is with me at CNN in Berlin.
Jim, the nature of these talks will be what?
BOULDEN: Well, Richard, I think they`ll be quite cordial because of course Mr. Obama has been here before, when he was Candidate Obama, and of course he would have seen Chancellor Merkel at the G8 in Northern Ireland just earlier today and yesterday.
And he`s here for one day. As you said earlier in the show, that Ms. Merkel is very much expected to bring up this snooping campaign called PRISM that has been revealed by "The Guardian" newspaper. And she`s going to want to know more about what it is all about, because Europe, of course, sees data protection and privacy as very much as a human right.
And so they want to know whether or not the U.S. has been snooping on European citizens. But I think once you move beyond that, you also have the fact that Mr. Obama will be making what they`re calling a major speech at the Brandenburg Gate.
When he does that, it`ll be reminiscent I think of speeches done by President Kennedy nearly 50 years ago here in Berlin and also 26 years ago when Ronald Reagan spoke and told Mr. Gorbachev to, quote, "Tear down this wall."
And so Mr. Obama coming; he did speak as Candidate Obama in 2008, but he wasn`t allowed to speak at the gates. But now of course, Ms. Merkel is the one who has an election. So President Obama will also be seeing the opposition leader during his visits and the ceremonial president of Germany.
And, Richard, I know you said it was a gorgeous day in Paris. It is absolutely a gorgeous evening here in Berlin, much better weather than what Mr. Obama saw in Northern Ireland. So he comes here, I think, in good spirit and he comes here on a beautiful evening. And then tomorrow he has a very full day before he takes off back to Washington, Richard.
QUEST: It`s an interesting visit because it`s symbolic without purpose, but the symbolism, Jim, is the purpose in itself, which of course I`m not sure that made a whole lot of sense, but you and I (inaudible), we all know what we mean by that.
Just the -- just being there is significant.
BOULDEN: Yes, especially we`re only a few months away from the German elections. So it is very significant. You know, we were fishing around to find out exactly why he`s coming here. And we`re going to find out more about what the speech is about.
But they`re not here to talk about specific excerpts, specific why. He was invited because he was coming to Europe. And this really is a rather short visit, I would say, for Mr. Obama, being in Northern Ireland for a few days and then Germany, really, for one full day, Richard.
QUEST: Jim, I need -- while we just let the U.S. president drive off, let`s just you and I talk over the G8 communique on tax avoidance, tax evasion. Lots of shoulds in the communique. Companies should give information. Companies should declare whether they paid tax. Companies should not be allowed to do this, that and the other.
How much of the tax declaration to get rid of corporate -- aggressive corporate tax avoidance is simply communique speak that will end in the garbage?
BOULDEN: Well, it`s what Mr. Cameron wanted to be able to say at that summit. So he`s been able to say it, Richard. And what his point is is once the G8 has agreed to this, then they can go to the wider G20 and what`s called the OECD, of course, which is a much larger group of the largest economies in the world.
The idea is, of course, the U.K. can`t do it alone, the U.S. can`t do it alone, Germany can`t do it alone. In order to stop these companies from doing what the governments say they`re doing, which is avoiding tax, not paying their fair share of tax in each country they have to work together.
But let`s not forget, Richard. These companies are not accused of breaks laws, least not yet, anyway. They`re talking about being very, very clever with the way they avoid taxes. So one of the things these governments have to do is share information with each other, which they`re not very good at doing. and possibly changing the laws so these companies can`t do this.
They`re also talking about tax havens. Many of them are actually British overseas territories. So Mr. Cameron is trying to get the British overseas territories to agree.
And they`ve agreed in principle (inaudible) share information transparency about these shell companies who actually own that company that`s registered in the Bahamas or the Cayman Islands, with the Isle of Man, who actually is behind that and who -- where are they paying the taxes.
So if Mr. Cameron`s communique, can actually be translated into actual action down the road, then I think it could be significant.
QUEST: All right. Jim Boulden, who`s in Berlin -- and we`ll watch what`s happening with the president over the next 24 hours, the U.S. president, that is.
When you and I come back after this short break, the chief executive of GE Aviation, he shows me a very big engine that frankly is extremely expensive. QUEST MEANS BUSINESS.
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QUEST (voice-over): The answer to tonight`s "Currency Conundrum," we asked what changed the U.S. Treasury`s announce (ph) to the dollar. The answer is the Treasury Secretary`s signature. Who could forget?
This is what Jack Lew`s signature looked like when he was confirmed as the U.S. Treasury Secretary. And this is what the new signature will look like on the American (inaudible) currency. It`s something President Obama himself insisted upon when he nominated Jack Lew.
OBAMA: I`d never noticed Jack`s signature and when this was highlighted yesterday in the press, I considered rescinding --
OBAMA: -- my offer to appoint him.
Jack assures me that he is going to work to make at least one letter legible in order not to debase our currency.
(END VIDEO CLIP)
QUEST: The new signature will be on banknotes almost immediately.
At the Paris Air Show, it isn`t only the battle between Boeing and Airbus that is significant. There is also, of course, the engine manufacturers, and that includes Pratt and Whitney, Rolls-Royce and GE, General Electric.
The chief executive of GE Aviation has 30,000 engines flying around the skies on various different airlines. And when he showed me some of those engines and some of the new larger ones, like the GNX, he pointed out they were seriously expensive.
DAVID JOYCE, CEO, GE AVIATION: One of the most magnificent features of this engine is how lightweight some of these components are to give you all that power. So if you`ll just look, it`s -- this is a titanium front and this is all composite fan blades.
So these blades are lightweight and very durable. And that aids to the efficiency of the engine, which is really important for the traveler to make sure that fuel efficiency allows us to make this a really economically viable industry.
QUEST: So many of the improvements in aviation have been incremental on the back of new engines. So the Neos, for example, or the 747 Max (ph). It`s all about the engine, not so much the totality of the -- it`s all about the engine rather than the actual airframe.
JOYCE: Well, the airframes do their fair share. I don`t want to take that much credit. But let me show you an example.
Feel this blade. This is a turbine blade. It`s made out of composite ceramic matrix composite. It`s not metal. That is a ceramic matrix composite. That runs in the hottest section of the engine now.
This is so lightweight it`s less than a third, two-thirds of the weight -- a third of the weight of a metal blade just like it. It`s technologies like this that are in these brand new engines that allow very lightweight high temperature capability.
QUEST: How much more do you think you can -- we can get out of these engines? I see every time an airline -- every time one of the manufacturers talks about, you know, we want another 5 percent, another 10 percent out of the engine, what do you believe?
JOYCE: So the engine that we`ll put on the new 777X, which is the brand new 777 that will go in service towards the end of the decade, we`ll put -- that`ll be 10 percent more efficient than the airplane --
QUEST: How can you know that now? You haven`t built it yet.
JOYCE: Yes, we have. The engine -- part of the engine is on test right now as we speak, because it`s going to take us almost seven years to mature the technologies, mature the design and get ready to put folks like you on an airplane to fly it.
QUEST: You`ve taken on the Gillette principle, haven`t you? You know, you sell the razors cheap, and then you sell the blades as a higher cost.
JOYCE: A lot more blades than Gillette does, I might add.
QUEST: What I mean is you sell the engines, but you service them.
JOYCE: We service the engines and sell the engines.
Now my motto is that we make money on the engines and make money on the service. But my customers` model, in many cases, is that we make money on the engines, but we service them for 20-25 years.
And you know, when these things run, they burn up parts. So we overhaul the engines, maybe two-three times during the life of the engine, sometimes four times. And everytime we overhaul the engine, we put new parts in. That gives us additional revenue. So it`s a good business.
QUEST: Final question: do you sometimes feel -- I mean, your engines are what makes the whole thing work.
Do you sometimes feel it`s a bit -- you don`t get the recognition? I want to be heard. It`s all about the airframes. No, it`s the engines. Do you not want to shout it?
JOYCE: No, no, no. I would tell you that we`re very satisfied with our position under the wing. And we`re very satisfied supporting great airplane companies, like Boeing, like Airbus, like Emery (inaudible). They`re terrific companies and if it wasn`t for those airplanes, we couldn`t put engines on them. Of course, if it wasn`t for our engines, they couldn`t put airplanes in the air, either. So it`s a good relationship.
QUEST: That is a classic chicken-and-egg situation if I ever heard it. Which comes first, the engine or the plane? All I know is having met Mr. Joyce and seen his engines, now of course one realizes the importance of that which is under the wing.
From planes to cars in the last hour, it`s been announced that Chrysler has agreed to recall 2.5 million Jeeps. It marks the end of a dispute between Chrysler and the federal regulators in the United States.
The car company said it would not go along with the recall demand, who said the Jeep posed a fire risk if car crashes into the back of them. Chrysler disputed it and would have gone to court over the matter if it had not complied with today`s deadlines.
Every two years we go to Le Bourget for the Paris Air Show. After the break, you`ll meet the man who`s in charge, who`ll tell us why we bother, and whether it`s worth it. QUEST MEANS BUSINESS in Paris.
QUEST: When you`re stuck in the traffic and you can`t get to Le Bourget, many time you wonder why we all bother. It`s the same situation if you`re trying to get to Farnborough on the off year, the two air shows, Farnborough and Paris, biennial; they go one year after the other.
But as for the Paris Air Show, the first one was in 1909 and still we question why we come. What is the purpose, to meet people you already know, to do deals that were already done and to talk over events and transactions that you already know about?
I asked the chief executive of the Paris Air Show why we bother.
EMERIC D`ARCIMOLES, CHAIRMAN/CEO, PARIS AIR SHOW LE BOURGET: Recently an American business man gave me the answer. You know, he said to me, to attend the air show in Paris is the best return on investment for me. I said why? Because when one plane ticket in three days I see the world.
QUEST: They`re meeting clients. They`re networking. That`s what it`s really about, isn`t it?
D`ARCIMOLES: Exactly, because during this air show, we expect to schedule about 4,500 business meetings.
QUEST: Good gracious, that`s huge.
D`ARCIMOLES: Yes, it`s huge. And it -- because how do we know that? Because it`s about the requests we receive through rents (inaudible).
QUEST: What about -- what`s the biggest challenge for you in organizing this?
D`ARCIMOLES: Is to be sure that the hall of exhibitors has the best support to make our jobs. That -- and make their business, too.
QUEST: Oh, now, is that the --
D`ARCIMOLES: Oh, this is a very -- this is Douglass DC-3. That is an historic plane.
QUEST: A DC-3 --
D`ARCIMOLES: You have -- we have also -- have you seen the Lightning from Lockheed?
QUEST: So the -- you say the exhibitors want the best experience. And what to you is the difficulty of doing that here?
D`ARCIMOLES: Yes, to be sure, they are not annoyed with the security about the queue to enter this air show because it`s so successful and you have seen. You know it is very -- you have two entrances. And it`s not enough. Definitely (inaudible) and we struggle with the local authority to change that. And I expect the (inaudible) with the Metro and the --
QUEST: And there`s no way.
D`ARCIMOLES: I can dream.
QUEST: You can dream.
In two years` time, we`ll be back here. What will be the changes from two years` time?
D`ARCIMOLES: For the next two years?
QUEST: Yes, because next year is Farnborough. And then you go backwards and forwards between you and Farnborough.
D`ARCIMOLES: Yes, OK. This year, we focus about the new technology to help the different exhibitors to see where the other one, to have a very quick meeting. And we want to extend this help to all the people at any of these air shows, to say we can download an application on iPhones. And you have (inaudible) the way to see the people you want to see.
QUEST: That`s the CEO of the Paris Air Show. We`ll be in Farnborough next year.
Only got two words for Jenny Harrison, (inaudible), beautiful weather today, spring has sprung and summer`s arrived.
JENNY HARRISON, CNN METEOROLOGIST: Very nice indeed, 27 Celsius right now, where you have some lovely sunshine. That`s kind of the last day of it, Richard. You timed your visit very well. Thunderstorms in the forecast as we head into Wednesday`s showers and some rain there as you can see in the last few hours, quite a bit of cloud has been pushing in from the south across much of Western Europe.
This image, look at it, look at the rain that came into Paris. There was some heavy rain on Monday, and in some areas of France 6 centimeter- size hail was actually reported and some rainfall in the last few hours, 39 millimeters into Poitiers, 38 in Bordeaux. So the systems are bringing the rain, of course, as well as some rather cooler air as well.
Meanwhile in Germany, unfortunately, the Elbe continuing to cause problems, some widespread flooding in and around Fischbeck, one of the of the dikes actually broke here. So this was the result of that. But the water continuing to drain out into the North Sea there and of course in the Danube the water is continuing to drain southwards there as well.
Meanwhile, look at this, this is through the middle of the week towards the end of the week, really. We`ve got this dome of high pressure, some very hot, dry weather. One or two thunderstorms, but mostly dry, not so good across the west and the northwest. That`s where that low pressure system is kind of stuck. (Inaudible) much headway because of that high.
This is the temperature forecast for the next couple of days. You can see that really hot air pushing up towards the north. Unfortunately, the colder, cooler, below average temperature, that air is pushing into the northwest. So Berlin, for example, for the next few days, look at this, by Thursday actually 12 degrees above the average.
Similar story in Prague. We`ve got 32 as your high on Thursday. We`ve got 10 degrees above the average for this time of year. And then in Budapest, Hungary, by Friday 34 degrees. So that`s actually 9 degrees above the average. The downside with this, with this heat in place, we will see some scattered thunderstorms.
There are some warnings in place, very widespread across Europe generally. The red areas, you can see there through France, that`s where we could see some large hail, maybe some pretty strong winds. You can see the rain coming in over the next 48 hours.
And as I say another warm day as we go into the next 24 hours. They will cool off across the northwest so 30 in Paris, 27 in London and then it`ll cool off with that low pressure, Richard.
QUEST: Jenny Harrison, zipped along. The weather`s going to turn nasty, but we thank you for that anyway. Luckily, I`m heading home.
Now Skytrax handed out its awards for the best airline and so for in the world and they found a presenter of a travel program to do the honors.
QUEST: The airline of the year, Emirates.
QUEST (voice-over): Third time Emirates has won the award, Emirates also won best Middle East airline, best in-flight entertainment.
(END VIDEO CLIP)
QUEST: I asked the Emirates president about the secret of consistency to win these awards.
TIM CLARK, EMIRATES PRESIDENT: Extremely hard work, basically, with 200 aircraft flying and 18,000 cabin crew. Then there`s all the airport services staff, working on the ground, trying to mold them into a sustained, consistent product delivery. It`s not easy, especially when you`re operating in this far reach of the countries that we do on the planet.
QUEST: Tim Clark, who of course has more than 90 Airbus A380s and has said in the past that he`ll probably buy some more.
There`ll be a "Profitable Moment" from Paris after the break. QUEST MEANS BUSINESS, good evening.
QUEST: Tonight`s "Profitable Moment," a BA A380 at the Paris Air Show and that really is what this is all about, not nearly losing your first class champagne as it does the loops in the sky, but these air shows really are about doing business in one of the most important businesses in the world, tens of billions of dollars and many millions of jobs.
And that`s why people come.
And that`s QUEST MEANS BUSINESS for this Tuesday night. I`m Richard Quest in Paris. Whatever you`re up to in the hours ahead, I hope it`s profitable. I`ll see you back in London tomorrow.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The headlines at the top of the hour: Barack Obama has arrived in Berlin for his first trip to the German capital as U.S. president. He`ll hold talks with Chancellor Merkel and give an open- air speech at the Brandenburg Gate. Mr. Obama`s just left Northern Ireland where G8 leaders wrapped up their two-day summit meeting.
Afghanistan is now officially in charge of its own security. Hamid Karzai as president took the reins from NATO. NATO says the transition means its troops are shifting to one of support during combat operations.
More protests are scheduled in the coming hours in Brazil. Tens of thousands of people demonstrated across the country. The president said earlier today that the Brazilian government is listening to the protests.
(END VIDEO CLIP)
QUEST: Those are the news headlines. Now to New York, "AMANPOUR" is live.