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QUEST MEANS BUSINESS
EU Summit; Cascade Effect; Bail-In Agreement; Youth Unemployment; Bank Bail-In Reaction in Spain; Markets Up; Europe's Lost Generation; Dollar Up; Royal Finances; Mandela Critical but Stable
Aired June 27, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: So the write-down is on the wall. Europe strikes a deal that will bail in the banks.
Say no showdown over Snowden. The US president says the NSA whistleblower won't get special treatment.
And a royal bonus. The queen gets a pay rise.
I'm Richard Quest, live from CNN New York, where I mean business.
Good evening. The next time a bank fails in Europe, investors and the wealthy will pick up the bill first and not the ordinary taxpayer. That's the agreement in principle after marathon talks ended with two significant agreements on banking union and on the EU's budget.
The hours went on late -- 7 hours of leaders' talks in Brussels. There had been 18 hours of disagreements last week. The headline is that the Cyprus haircut model -- the Cyprus haircut model, which was once thought to be a one-off, the final one where banks were bailed in and investors were bailed in, seems now likely to become the norm.
In Russia last week, the German chancellor said the new banking rule should involve several layers of responsibility.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): After the financial crisis, we said it shouldn't always be the taxpayer, no matter whether it's the German or some other taxpayer, stands in for them. But whenever a bank is in dire straits, and then we'll work towards that like the G20.
But we're never going to get a situation where the bank is too big to fail, because you're too big, you can foist upon any taxpayer in the world the liability to bail us out. So we need a cascade of responsibility.
(END VIDEO CLIP)
QUEST: That cascade of responsibility and how it works in the event of a bank failure, this is all subject to approval and wouldn't come into force until 2018. And anyway, it has to be the single supervisor put in place first.
But initially, shareholders are the first group of people to bare the brunt of any losses. Bondholders form the second layer of responsibility. They pick up the slack once the shareholder's equity is exhausted.
Finally, if there are still losses to cover, people with large deposits pay the rest, those over the uninsured deposit levels. Those, for example, over 100,000 euros, small companies. They will lead the bail-in pecking order in most cases.
Those with deposits of less than $130,000 -- of course, the 100,000 euro limit, 80,000 pounds -- they are under the deposit guarantee scheme, the DEGSs. And the DEGSs post-Cyprus are now regarded as being absolutely sacrosanct. You don't touch ordinary depositors' money.
Nina Dos Santos is in Brussels for us tonight, watching the events. A long, late night, Nina, but they did a deal, which is interesting because it brought together all aspects of banking -- of the banking issues.
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: Yes, indeed, Richard. And it's being viewed, really, as an important step forward. A lot of people very happy with themselves, especially among the EU finance ministers, who wrapped up their meetings at 1:30 in the morning in Brussels yesterday evening to try and get this deal hammered out after failed discussions that took place on Friday before that.
So, I suppose what you're hearing here from the leaders in Brussels are going to have to review these proposals form the finance ministers as part of their two-day summit tomorrow, is that it is a step in the right direction.
At least the theory is that if we're faced with a situation like Cyprus, they won't be having to cobble together the spoke plan, which caused so much outrage, didn't it? Cyprus, at least upon the first draft when they tried to bail in smaller creditors who had less than $130,000 or $180,000 in the bank.
So, presumably, investors will know where they stand, even if they're going to be the first person to call upon when, of course, the begging bowl gets put around.
But there are still a few questions that remain unanswered surrounding the potential of this banking union. Obviously, can the ECB, does it have the manpower and the expertise, Richard, to really do the supervisory role?
And also, will powerful European countries, like Germany, have the power to force some smaller EU members to close banks that are failing. Those are still questions that eventually still remain unanswered.
QUEST: If you look, now, at the stages, they've got their banking resolution in place. They've got their direct recapitalization via the ESM principles in place. That was agreed last week.
They're still some way off a single supervisor, and I suppose, when does this deal -- when do we get the final look, if you like at the whole of a single banking system for Europe?
DOS SANTOS: Well, that's the trillion-dollar question, probably even more than that at this point. Given the amounts of money that has been thrown as solving the eurozone problem, which inherently many people here will tell you has to do with the weakness in the banking system.
We still have huge weaknesses and financial issues in the Spanish banking system, and a lot of these questions haven't yet been answered. Also, the balance of powers, as I say, Richard, between which countries that are important and bit pay masters here in Europe, and what they'll have to say and how much power they'll have to shut banks in places like, for instance, Spain, but just aren't working.
QUEST: All right. OK. Youth unemployment is the single biggest issue, of course, that they're facing on a daily basis. They're -- there was a summit a couple of weeks ago in Italy, there's another meeting taking place. Is it all just talk and hot air?
DOS SANTOS: Well, you just asked me before about whether or not we'll see some kind of framework in place to solve the banking crisis, perhaps before the banking crisis has even evaporated and we're on the next wave the economic cycle, Richard.
What we've really seen with the issue of unemployment, youth unemployment in particular, is there's a sense that this hasn't been put high up enough on the agenda throughout successive EU summits over the last three years.
It's currently number three in the four-point plan that these EU leaders have to try and tackle the ills in the eurozone. I spoke with the commissioner responsible for the labor market, and here's what he told me about concretely what we could see hammered out today.
LASZLO ANDOR, EU COMISSIONER FOR EMPLOYMENT: Well, what is feasible and urgently has to be implemented is the youth guarantee, which would put in practice the best example we have in the EU to give jobs or apprenticeships or learning opportunity to young people.
It comes from Austria an Finland, where it has been working in the recent years, and it ensures that young people would not be unemployed longer than four months. They would get some good quality opportunity by the support of the public employment services.
DOS SANTOS: Do you think this region needs a more Germanic approach to the jobs market? More apprenticeships, say? Take away the stigma of not going to university, instead have more vocational training?
ANDOR: On some issues, definitely Germany but also Austria offer good models. In vocational training, the so-called dual training model, is a very good one.
The role of the social partners, the employers and the employees organizations, in terms of developing the employment policy, the investment strategies into skills and human capital, this is also something which other countries can, if not copy, but learn from.
DOS SANTOS: So, Richard, youth unemployment is another issue that the EU leaders are hoping to throw a little bit of money at. Whether the problem goes away or not, we'll have to see.
QUEST: Nina Dos Santos on Brussels this evening. Staying with the question of bailing in and youth unemployment and the whole question of the appalling economic situation in certain periphery countries, Spanish business wants to know what it's like to pay for a bailout.
Several Spanish banks needed billions from the taxpayer when they got into trouble last year. Many Spaniards are now paying the price through painful austerity. Our correspondent Al Goodman went to see what difference the bail-in agreement will make.
AL GOODMAN, CNN MADRID BUREAU CHIEF: The billions of dollars in European funds used to bail out some troubled Spanish banks last year is still very much on everyone's mind. So, the latest decision in Brussels setting out the rules for potential future bank bailouts was also closely followed here. We caught up with one shop owner to see what he thought.
INIGO PUENTE, SHOP OWNER: I'm Inigo Puente, and I've had this clothing store in Madrid for the last five years, together with my two other partners.
GOODMAN: What is this going to do in terms of affecting you, this decision in Brussels? Do you feel more protected as a business man, as an individual?
PUENTE: As a businessman, I don't know, really, because there's a lot of turmoil and uncertainty. But as an individual, I do, because deposits under 100,000 euros are theoretically protected, so --
GOODMAN: It's an attempt to maybe protect the smaller people. Do you like that philosophy?
PUENTE: I don't necessarily agree with the logic behind that decision, but I do think that the bigger investors probably have access to professional help, so they're probably able to plan better and spread their risk better than the small depositor.
From the business perspective, we need to have consumption back up again, and that's really what's going to change things.
GOODMAN: And you need access to credit.
PUENTE: Yes, well, access to credit, and I think consumers need access to credit. It's not just for businesses, but for consumers as well. They have to buy durable goods, and that will start the chain back again.
GOODMAN: Thanks very much.
Al Goodman, CNN, Madrid.
QUEST: European markets made gains today, and the gains were bolstered by the progress made at the EU summit on banking union. The FTSE was boosted when it turned out the UK's economy did not enter a double-dip recession in Q1 after all. And in the US --
QUEST: -- the markets open and doing business. It's just a quarter past 2:00 in the afternoon, and another strong day, back over 15,000 for the big board after a few volatile weeks.
Interesting remarks by Bill Dudley, the president of the New York Fed, who says an early rise in rates is out of synch with the thinking at the central bank, and of course, reiterated the point that the market will -- that rates -- tapering will only take place when economic recovery is established.
After the break, we think Edward Snowden is still in Moscow. We know Jim Boulden is there. He's looking for the leaker's likely hiding places. QUEST MEANS BUSINESS after the break, good evening.
QUEST: European leaders at the EU summit are trying to tackle youth unemployment. The Union says almost a quarter of people under the age of 25 are out of work across the region. Among them was a 24-year-old graduate of one of Paris's top universities who was growing desperate to find a job. CNN's Jim Bittermann shows us why her story has a happy ending.
MARIE GUIMBERT, JOB SEEKER: Month after month, you're maybe less confident, wondering why and maybe asking yourself, what did I do wrong? Do I have a problem?
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Marie Guimbert has had a problem, but it certainly wasn't her fault. At 24, she's done more than most to enter the job market.
She studied hard, earned a bachelor's degree from one of the best business schools in Canada, a master's in finance and strategy from one of the top universities in France, which included study in Brazil, she speaks four languages, and yet, for months after graduation, she could not find anyone who would hire her, even though she sent her resumes and CVs everywhere.
BITTERMANN (on camera): How many of those did you send out?
GUIMBERT: Maybe like 100, maybe?
BITTERMANN (voice-over): Since she's still living at home, her parents started to get concerned and involved.
GUIMBERT: I think they were supportive, but they were also worried. We were not really talking about the job matter, because my mom is asking me, "Did you send a lot of CVs today?" And I get angry, and I'm like, "No, I don't want to talk about it."
I think sometimes it can feel -- I can feel anxious. At first, I was thinking my situation was very conventional. My other friends found a job. So, I think sometimes it's unfair, but recruiters get so many CVs, like Shubert (ph) and England. For example, there would be a job offer, and you can see how many people send their CVs. Sometimes it goes up to, I don't know, 300.
BITTERMANN: Still, despite the odds, despite the tough competition and weak economy, earlier this month, life suddenly changed for Marie Guimbert. After four months of sending out resumes and interviews and tests and job fairs, Marie finally got a break. A company offered to hire her to manage retail store outlets.
GUIMBERT: I was so thrilled, I couldn't -- I called my mom, I called my dad, yay! I got a job offer. And then I told my friends. I was pretty excited.
BITTERMANN: And so, Marie's story has a happy ending, but it's not the same for hundreds of thousands of other young people in France.
GUIMBERT: It's incredible, because I looked for a job for four months, I guess. I've seen people who have been looking for a year or more than six months at least. Yes, I feel really happy.
BITTERMANN: Jim Bittermann, CNN, Paris.
QUEST: Happy endings are even harder to come by in Italy, where youth unemployment is creeping towards a staggering 40 percent. On Friday, we'll introduce you to an Italian couple of students who want to try their luck. They're following the advice, and they're going to Germany. It's part of the Europe's Lost Generation, showing the personal struggles of young people looking for work.
7:00 PM, same time tomorrow night, 7:00 PM London, 8:00 in Europe, it'll be 2:00 in the afternoon here in New York.
Tonight's Currency Conundrum, PayPal is looking to expand its services to accommodate spending in unusual location. Is it underwater, in space, or in the Earth's core? Where is PayPal wanting you -- or making money easier to spend?
QUEST: These are the rates. The dollar is up against the pound and the yen, it's down against the euro. Now the break.
QUEST: Queen Elizabeth II is getting a $3 million pay rise. The Crown Estate, which manages the portfolio of property for the queen, posted a record profit. Now, under a deal that was put together some years ago, the queen, who's been on the throne 60-odd years, will receive an income of about $60 million next year.
Our royal correspondent is Max Foster, he joins me now from London. Max, there is much to talk about here, but it is quite extraordinary, isn't it? A deal which initially, when they used to have the old civil list, they went to this new one of the sovereign grand, and everybody thought the queen might be a bit -- losing out in the purse. Not a bit of it.
QUEST: Tell us more.
MAX FOSTER, CNN ROYAL CORRESPONDENT: No. Basically the queen is one of the richest women in the world, of course. Her official duties and several of her residences are payed for by the British taxpayer, though, not her own money, which also picks up some of the costs for other members of the royal family.
This is how the money's paid. She gets a proportion of the income from something know as the Crown Estate. It's a land portfolio, some of it inherited from earlier kings and queens, which now includes an enormous range of properties from offshore wind farm to some real estate.
For example, it owns almost every property on Regent Street, one of London's premium shopping streets. Also Regents Park. Now, property values have been booming, so that means the queen's income is rising, too.
But handing the queen a pay rise is very controversial. Here we have demonstrators, public sector workers, angry about the fact that their pay's being frozen or even being cut, their jobs being cut as well. The anti- monarchy group Republic called for the queen to reject her funding increase whilst most of the other people in Britain are actually facing cuts.
Now, the royal family needs the money, it says, to catch up with a backlog of repairs. Buckingham Palace, Windsor Castle, historic buildings, large buildings, and very expensive to look after. And there's a backlog there.
At Kensington Palace, Apartment 1A is currently being renovated for the Duke and Duchess of Cambridge. It's a big home, a big project, so far costing around $1.5 million, due for completion in the autumn. It won't be done in time for the new royal baby, unfortunately, so some question about where the baby will live after it's born.
So, adding travel and other expenses into the equation for the year up to March, the total cost of the monarchy to the UK taxpayer came into $47 million, Richard.
QUEST: Ah, now, Max, this is a fascinating subject. If you add it up for every man, woman, and child in Britain, it probably works out something like 30, 40 pence a week. They do the sum every year, maybe even slightly less. But this money doesn't go into her back pocket, does it?
FOSTER: No, and it's all her official duties and all her official residences. So, all of those -- there are several palaces, as you know. And also, those big state banquets, all her travel, also if she sends Prince Charles to an event instead of her, or Prince Harry going off, for example, around the world for the Jubilee last year, it's all of those costs.
But there's always sort of an odd cost, which is a huge amount of money. So, Prince Andrew, for example, going to Saudi Arabia this year, nearly $100,000 for the trip. It was scheduled, it always causes controversy.
QUEST: Max, are you ready for the baby?
QUEST: I suppose that's right.
FOSTER: Sooner rather than later.
QUEST: What's the date? What's -- the 13th, isn't it, or -- ?
FOSTER: Mid -- mid-March is the only thing the duchess has said so far, but there is a rumor out to say going around London --
QUEST: In March?
FOSTER: -- it could be next week, but I don't know what that's based on. But that's -- that's based on the fact that Diana wasn't entirely truthful, apparently, about her due date.
QUEST: Right. Well, we'll leave that there. I think when you and I start talking about that, it's definitely time --
QUEST: -- to move on. You can join me and discuss further -- not the royal baby. Well, if you want to talk about the royal baby, we can talk about the royal baby. Talk about whatever you like. I've got my computer next to me here.
I'm going to log myself in, @RichardQuest, and we'll continue our discussion one on one as we continue through the program. I do assure you, we'll be covering that royal baby from the moment -- well, you get the idea.
When we come back in a moment, we think Edward Snowden is still in Moscow. Jim Boulden is definitely there. We'll be with him after the break. QUEST MEANS BUSINESS, good evening.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
Nelson Mandela's health is said to have improved marginally. The former South African president remains in hospital in Pretoria, where he's been since June the 8th. The current president, Jacob Zuma, says he remains critical, but his condition is now stable. President Zuma has canceled a scheduled trip to Mozambique.
In South Africa is Isha Sesay in Soweto, where the Mandela family lived for many years. She joins me now. Good evening.
ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: Good evening, Richard. Yes, we are in Soweto. We are just steps away from the old Mandela house just over my right shoulder. That's the house that Nelson Mandela lived in from about 1946 to 1962.
And today, it has become the focal point here in Soweto, a place so central to the struggle against white minority rule, at around 5:00 local time, just over three and a half hours ago, members o the ANC Youth League gathered here outside the old Mandela home.
And really, it is a gathering in which people are here to celebrate the ailing leader, who lies in that hospital in Pretoria, and to say prayers to him. There has been much singing throughout their time outside the house. And they've been singing, Richard, these old songs from the apartheid days, these struggle songs. They've been singing songs in praise of Nelson Mandela.
But also, there's also this resignation that his condition is not good, and they really are preparing themselves for the worst, Richard.
QUEST: Isha Sesay, before we leave you, over the next few hours, are we expecting any further developments from the current president, Jacob Zuma? Are we expecting him to say any more?
I mean, I know that's very much the classic, how long is a piece of string, but we seem to be getting these occasional comments from the president -- from the current president as and when sort of he's doing an interview.
SESAY: Yes, there is no rhyme or reason, if you will, to when the statements will come out. We got a statement -- a last official statement was on Tuesday, we got one today, which was referenced, and President Zuma himself said that he was showing signs of improvement. He was stabilizing, to be precise.
We don't know whether we'll get any more. The Office of the Presidency and the spokesman, Mac Maharaj, has made it very clear, Richard, that he will not comment on specifics about the former leader's health due to patient-doctor confidentiality. We just await any news as and when it comes in and, of course, we'll bring it to you here on CNN.
QUEST: Isha Sesay, who's in Soweto this evening, we are awaiting that from you for more.
President Barack Obama has been speaking about Nelson Mandela, saying his thoughts are with him. The president is in Senegal, the first stop in a 7-day tour of Africa aimed at boosting trade. He visited the Glory Island, the key port of the days of the slave trade.
The surviving suspect of the Boston Marathon bombing has been indicted by a federal grand jury. Dzhokhar Tsarnaev faces 30 counts of the April the 15th attack which left three people dead. We're expecting a news conference in about half an hour.
The wreckage of a small plane carrying the director of Italy's Missoni fashion house has been discovered off the coast of Venezuela. The Missoni family and the Venezuelan authorities have been searching for the plane since it went missing after takeoff in early January. It was carrying Vittorio Missoni, his wife and four other passengers.
QUEST: Barack Obama says he won't be doing any international wheeling and dealing to bring Edward Snowden home. Snowden's wanted over the security leaks in the United States. He's in Moscow's airport -- well, as far as we know.
Snowden's seeking asylum in Ecuador. Meanwhile, Barack Obama, who's on a visit to the West African nation of Senegal said Snowden doesn't deserve any special efforts on the president's part.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have not called President Xi personally or President Putin personally and the reason is because, number one, I shouldn't have to. This is something that routinely is dealt with between law enforcement officials in various countries. And this is not exceptional from a legal perspective.
I'm not going to be scrambling jets to get a 29-year-old hacker.
(END VIDEO CLIP)
QUEST: Jim Boulden joins me now from Sheremetyevo Airport in Moscow. I've never been able to say that airport's name and I still can't.
Jim, you are in the transit lounge; you were there yesterday.
Where did you sleep last night?
JIM BOULDEN, CNN CORRESPONDENT: There's a little hotel here where you can rent rooms by the hour, Richard. And we've been renting a room by the hour and then by the hour. You have to do 4-hour minimums, but anybody who's in transit like we are -- and like Edward Snowden -- could technically stay there if you want to pay the money. And then you head for your plane.
Of course, it's 24 percent in this airport. So the hotel's always open. And a lot of the bars and restaurants are also open, Richard. But Mr. Snowden, haven't seen him. Haven't seen him at Burger King; haven't seen him at TGIFriday's. Haven't seen him at Costa Coffee. Haven't seen him in the duty-free, Richard.
QUEST: All right, Jim. Sheremetyevo Airport is Russia's largest airport in terms of traffic and size. And of course, if we take a look with its six terminals, the Airport Council International (ph) says it's the best airport in Europe, the best airport, says the ACI, for quality of passenger service.
Now the airport itself says (inaudible) its quality and efficiency. It differs somewhat from what many passengers have to say. On the airline website, it says, "I've experienced more than 30 airports of all sizes and ages," says Christian Kerry. "This is by far the worst airport."
"Never again," writes Leigh Edwards, "I will do anything to avoid this airport."
The main complaints seem to be rude staff, overpriced food and not enough places to sit.
So Jim Boulden, you've been there 24 hours, getting on for 36 hours. Where do you stand on the transit facilities of the airport?
BOULDEN: I didn't think it was actually that bad, Richard. I mean, this morning we went (inaudible) half-mile walk through E and Terminal D, down to where the Havana flight was leaving to see if Mr. Snowden would be on that flight.
And then you see a lot of the -- a lot of facilities for people. But last night, because we were here overnight, and there wasn't much to do, we took a tour of Terminal E, where I'm standing now. Take a listen.
BOULDEN: Is Edward Snowden here in the transit lounge of Moscow airport? Well, I haven't seen him and there have been a lot of reporters here over the last couple days. They haven't seen him, either.
He could be in a VIP lounge or a diplomatic lounge if he's here. But if he does come out into the main transit lounge, which is quite quiet at the moment, he could always use Burger King and get a taste of home.
This is Terminal E, the focus of this espionage story. This is one of the many huge terminals here in the Moscow airport and it's massive for all the transit passengers. I'm going to walk it to see exactly how long it is.
It's taken about three minutes to walk in this terminal. And one of the benefits of a 24-hour terminal is that many of the little bars and restaurants are open. That means that if Edward Snowden needed a drink or a sandwich, he could, in theory, come and get one.
And that means that passengers don't have to rely on vending machines to have a drink or a candy bar overnight and duty-free remains open as well. So anybody could get a present or a gift. Again, it's a 24-hour airport which is helpful for people who are transiting through here, not so helpful if you're Edward Snowden and not sure where you're going next.
Well, I don't suspect he's one of these weary travelers. But for those who can afford it, there is this tiny hotel attached to the terminal. And some people thought that Edward Snowden could be staying here.
It's sparse accommodation indeed. But for most travelers who know their next destination, they only have to pay by the hour.
QUEST: Jim Boulden, Jim Boulden, who's in the airport tonight, Jim, no capsule hotel for you tonight. Sleep on the floor and give us a real report tomorrow. Jim Boulden joining us from Moscow.
The Snowden case is already having trade implications. Ecuador's canceled its trade pact with the U.S., saying it doesn't accept pressure from anyone. CNN's Matthew Chance is in Ecuador and shows us why the country's economics and not politics may ultimately decide Snowden's fate.
MATTHEW CHANCE, CNN SR. INTL. CORRESPONDENT: These are absolutely spectacular roses. Tell me something about them.
JUAN PABLO MONTUFAR, DIRECTOR, FIORENTINA FLOWERS: These rose plants are bred --
CHANCE (voice-over): It's Ecuador's most beautiful export. Outside the capital, vast plantations are given over to rose cultivation. It's a major employer here and links this tiny country with the United States.
MONTUFAR: We produce 20 million stems of roses a year. That's on average --
CHANCE: Twenty million?
MONTUFAR: Twenty million. It's on average about anywhere from 55,000 to 80,000 stems that are processed every day in this farm alone.
CHANCE: And how many of those go to the United States as exports?
MONTUFAR: Of those, at any given time, at least 50 percent.
CHANCE: Fifty percent?
MONTUFAR: The United States is by far our biggest business partner.
CHANCE (voice-over): But with the row over U.S. whistleblower Edward Snowden, now focusing on Ecuador, that partnership may soon be under threat. If the country's president, Rafael Correia, outspoken in his opposition to U.S. foreign policy, offers Snowden asylum, analysts say favored status for Ecuador's products could be an early casualty.
CHANCE: With all its anti-U.S. rhetoric, it may well make a great deal of political sense for the country of Ecuador to consider offering Edward Snowden some kind of asylum. But from an economic standpoint, it looks like virtual suicide, a whole range of products, not just these roses or at the moment heavily dependent on markets in the United States.
ROBERTO ASPIAZU, HEAD, ECUADORAN BUSINESS COMMITTEE: Petroleum, bananas, cocoa, coffee, tuna, flowers, tropical fruits, textiles, woods.
CHANCE (voice-over): Business leaders say Ecuador has little to gain from granting Snowden asylum but much to lose.
ASPIAZU: I would say so. It's a risk to give the asylum to Snowden because the United States could consider some economical sanction among the others, commercial sanctions and obviously our commerce with the United States is very important.
CHANCE (voice-over): Back at the rose plantation, the latest harvest destined for the United States is being carefully packaged. In three days, they'll be in florists across America. But if Ecuador welcomes the man Washington accuses of espionage, these perfect stems may soon need to find buyers elsewhere -- Matthew Chance, CNN, Cayambe, Ecuador.
QUEST: QUEST MEANS BUSINESS (inaudible).
(BEGIN VIDEO CLIP)
QUEST (voice-over): Tonight's "Currency Conundrum," I asked you earlier where PayPal is looking to expand. The answer is into space. Our commerce might work in interplanetary society.
(END VIDEO CLIP)
QUEST: Never mind space. On the ground there's nothing like a summer and a summer shower. Not the nasty drizzling gray of London. Here in New York, it's soft, tropical and warm and it's even inside.
QUEST (voice-over): A dark room, a wall of water and your chance to control the weather.
UNIDENTIFIED FEMALE: It's an overwhelming sensory experience.
QUEST (voice-over): This is the Rain Room.
QUEST: Are you surprised at how popular this has become?
KLAUS BIESENBACH, CHIEF CURATOR AT LARGE, MOMA: I am surprised because I think nothing can really rock New York City. But (inaudible).
QUEST: Why does it rock it?
BIESENBACH: It's like a beautiful cube of torrential tropical rain. And it's huge, just soothing. But then you walk in and it magically stops wherever you walk in.
QUEST (voice-over): Magic has very little to do with how this works. Cameras at the top of the installation are tracking our movements and creating a virtual umbrella.
BIESENBACH: And it's like a huge gigantic GPS system. You walk in, and wherever the cameras detect you, you're on satellite and the rain stops.
QUEST (voice-over): There is a technique to staying completely dry. You must move very slowly.
QUEST: Let's walk, arms outstretched, stopping the water from falling. I guess there might be a Biblical comparison.
The problem with this is the feeling it could all suddenly go horribly wrong.
QUEST (voice-over): There is a serious artistic point to these hydrogames.
BIESENBACH: (Inaudible) really about ecology and it makes you aware. You have to slow down. You have to be aware. You can't just rush and it's (inaudible) nature.
QUEST: Are you wet yet?
You're walking slowly.
QUEST (voice-over): The Rain Room does tend to bring out one's inner Gene Kelly.
UNIDENTIFIED FEMALE: "I'm singin' in the rain."
QUEST (voice-over): Or even Rihanna.
UNIDENTIFIED FEMALE: "You can stand under my umbrella -- ella -- ella -- eh, eh."
QUEST: The sheer look of amazement and excitement on people's faces is quite extraordinary. They are discovering for a brief moment that they can control the rain.
QUEST: And that's QUEST MEANS BUSINESS for tonight. I've finally managed to get dry. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable. MARKETPLACE EUROPE is next.
QUEST: From the key side in Southampton, this is MARKETPLACE EUROPE. I'm Richard Quest. And this is the Royal Princess, the newest and biggest ship in the Princess Cruises fleet, launched this month by Her Royal Highness the Duchess of Cambridge.
On this program we will take you into the parts of the ship that the passengers rarely see. I'll meet the chief executive, Alan Buckelew, to discuss the crisis in the cruising business.
(BEGIN VIDEO CLIP)
ALAN BUCKELEW, CEO, PRINCESS CRUISES: The industry really can't afford any more incidents because people will, whether we want them to or not, connect the dots and come to a conclusion that cruising isn't safe.
(END VIDEO CLIP)
QUEST: This is the atrium, the heart and the hub of the ship, which can carry 3.5 thousand passengers. When the ship starts cruising, she will join an industry that is fiercely competitive. The passengers, of course, will only see this part of the vessel. They won't see what it takes to make it all happen. That's down below, which is where we sent Isa Soares.
ISA SOARES, CNN CORRESPONDENT (voice-over): Out of the mist, the Royal Princess emerges, not even a spring downpour can hide the size of this vast vessel. No sooner docked, the newest ship in the Princess Cruise line is being readied for its next voyage. There really is no time to lose.
KEITH BACK, GENERAL MANAGER, SCIENT STEVEDORES: On a heavy day, we could be working, say, 200 -- over 200 tons of storage. That would take potentially up until 3, 4 o'clock in the afternoon.
They'll be the frozen goods. There's the fresh goods that are only good for a couple of days, all the vegetables and so on and so on. There's also flowers, supplies for flowers, this kind of thing, for decorating on the ship. There's also the shop stores, because obviously there's lots of shops on the ship.
SOARES (voice-over): Every time a ship like this docks, it brings ashore with it $1 million worth of business. The cruise industry makes up a quarter of Southampton's economy.
PROFESSOR SHENOF: (Inaudible) of about 17,000 jobs coming into the region as a result of the port. That is pretty significant. About 300 ships come every year of the kind that are just behind me. About 1.25 million passengers get on board every year. Those people pass through Southampton. They spend some time in Southampton and some money in Southampton.
SOARES (voice-over): Back on board, it's easy to see everything about this ship is big. They've even named this corridor after Britain's main motorway.
DIRK BRAND, HOTEL GM, ROYAL PRINCESS: So this corridor, which is called the M1, goes from the very back of the ship to the very, very front of the ship. And that's generally the pathway. And the whole -- yes, supply system of the entire ship.
This is essential corridor where we store the items about 200 tons of food and beverage every 10 days. And we have storerooms, fridges with very accurate temperature.
BRAND: You can see we have fish, meat, vegetables. We have about 170,000 pounds of fruit and vegetables every 12 days (inaudible) the ship. So it's about 200 pallets we load every turnaround date.
SOARES (voice-over): From the M1, you can make your way upstairs. Here it's all about the details, cleaning, polishing and tidying. Downstairs, however, the kitchen looks very different.
SOARES: Running a cruise ship this size requires military precision and a lot of storage. Every day this kitchen uses 1.5 thousand pounds of flour to make everything from bread to pasta to the (inaudible).
SOARES (voice-over): And that's just the dough. Then there's 600 pounds of butter a day, 250,000 eggs a week. And up on the deck, they get through more than 21,000 towels every week.
UNIDENTIFIED MALE: We have a lot of requests. We have pages of requests which we get in advance from dietary requests over certain allergies, different pillows, private tours of the galley. So we had to start right away on the first day on the right foot.
SOARES (voice-over): All the work, all the hours, it's all hands on deck. This is what it takes to keep this floating city fed, housed and happy.
QUEST: Isa Soares on what makes a cruise ship tick.
After the break, from the deck to the board room, the chief executive of Princess Cruises, it's an industry that's growing so fast and dealing with a reputational crisis.
QUEST: Welcome back to MARKETPLACE EUROPE aboard the Royal Princess. These days every new cruise ship has to be bigger, better, different.
So for example here on Deck 16, we have a glass walkway guaranteed to give passengers a few stomach-churning moments. There have been a few stomach-churning moments for the cruise industry, racked by tales of poor quality and inefficiency. Now the industry's having to fight back.
QUEST (voice-over): Last year was marked by disaster with the sinking of the Concordia cruise ship. And yet it also saw a record 6.2 million Europeans booking a cruise.
A report out this week from the Cruise Lines International Association brought more good news. The cruise industry contributed almost $50 billion to Europe's stuttering economy. That's a 3.1 percent increase on 2011. The U.K. has become the biggest market in Europe, boasting more than 65,000 employees and a value of $3.9 billion. A good time to hear from Princess Cruises' chief executive.
BUCKELEW: I think the safety record of the cruise industry is impeccable. We've had, like every industry, we have incidents periodically. But if you think about 10,000 or so cruises that are sailing each year around the world, 20 million customers cruising each year, the number of incidents where there's any serious damage to a ship is extremely limited.
There just happen to be a couple back to back. And it suggests a pattern. Well, I don't believe there's one, that they exist.
QUEST: Even if no pattern exists, you have to be concerned of a reputational crisis.
BUCKELEW: Absolutely. The industry really can't afford any more incidents because people will, whether we want them to or not, connect the dots and come to a conclusion that cruising isn't safe.
And I think there is a reputational concern that whether accurately or not people that have not cruised, the research that we've looked -- I've seen would suggest people that have never cruised but are interested in cruising have -- are more likely to be affected by what's happened, to have second thoughts about making that decision, because it's a considered decision. People that cruise regularly are less impacted by it.
QUEST: Where are you going to grow this business?
BUCKELEW: We're making a big bet in Japan. We have a ship deployed there now. It's the only international cruise ship -- the only international cruise company with a domestic product for the Japan market. Next year, this year we'll carry about 20,000 passengers. Next year we're ramping that up to 100,000.
QUEST: And you want to make good money?
QUEST: How do you do it?
BUCKELEW: The biggest decision you make is where you deploy the ships. And for a brand, we look at that as a -- how we deploy the fleet, not just -- it's easy to pick a ship and put it in a market where it's going to do extremely well by itself.
When you have 17 ships like Princess, then you have to diversify your deployments such that you don't compete against yourself. And then you're looking at where you think the yields are the -- have the most potential --
QUEST: (Inaudible) the moment I'm guessing that's Asia.
BUCKELEW: Asia is a big opportunity, although it's a relatively small part of our mix. So that's the future. We're investing so that five years from now, we have a big opportunity there. But today, our first year in Japan we'll do as well as if we'd left the ship where it was, which was in Australia.
QUEST: So from your experience, what works and what doesn't? Because anyone can build an amusement arcade or an amusement park on one of these things. What works?
BUCKELEW: I think the first thing is understanding who your customer is and what works for them. We have -- I'll give you some examples.
One of our competitors is putting a skydiving. We trialed that. We actually put it on our private island and see how many of our customers would actually -- at reduced prices -- would actually try it. And it was a failure. So we didn't put that on our ship.
Now I think the brand that's doing that will be successful, because their target audience is different. And so differentiation results in having a different customer ultimately. And that's what we want. We don't want to compete for the same customer if we can.
QUEST: The man at the helm of the company, Alan Buckelew, which begs the question, when he's on board, who's the boss? The CEO or the captain? And that's MARKETPLACE EUROPE for this week. I'm Richard Quest aboard the Royal Princess. Whatever market you're in, I hope it's profitable. I'll see you next week.