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QUEST MEANS BUSINESS

Kenya Mall Siege; BlackBerry Takeover Bid; Nigerian President at NYSE; Politics and Economics at the UN General Assembly; Angela Merkel Wins Third Term; Merkel Approval Rating Across Europe

Aired September 23, 2013 - 16:00   ET

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


(NEW YORK STOCK EXCHANGE CLOSING BELL)

RICHARD QUEST, HOST: The bells are ringing, the books are closing, we're in the final moments of trade on Wall Street, and that's the Nigerian president about to ring and closing trading for today, Monday, September the 23rd.

On our program, BlackBerry plucked off the bush. It sells for less than $5 billion.

Apple sales are surprisingly juicy, 9 million in its opening weekend.

And the airline industry group IATA tells regulators stop your sour grapes.

The start of a new week, I'm Richard Quest, and of course, I mean business.

Good evening. Tonight, BlackBerry is on the verge of being sold. We'll get to our full business coverage and agenda in a moment, but of course, we need to turn to events in Nairobi to begin, where the siege at a shopping mall is still going on.

Kenyan authorities are confident that they can end the standoff with Islamic militants at a Nairobi shopping mall. They believe they can do that tonight. Authorities say they have cornered the surviving gunmen and there's little chance of escape for them.

The militants are linked to al-Shabaab. They laid siege to the Westgate Mall on Saturday. It's believed at least 62 people have been killed. Smoke's been rising from the building, there's been sporadic gunfire all day. Emergency teams and our reporter Zain Verjee had to take cover.

(BEGIN VIDEO CLIP)

(GUNFIRE)

(END VIDEO CLIP)

QUEST: Now, the Red Cross says 65 people are still missing and they remain unaccounted for. Let's go live to Nairobi. Arwa Damon is near the Westgate Mall for us tonight. They say that tonight will be the night that they will be able to bring this to a conclusion, if not resolution. But we've heard that before.

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, we most certainly have, and it is eerily calm around here right now. We're at a community center that is just around the corner from where the Westgate Mall itself is located.

Now, according to a senior Kenyan government official, there are still a number of gunmen that remain holed up inside, although Kenyan forces are, in fact, located on every single floor of the building itself. We are hearing that they will resume operations to try to fully clear out those remaining gunmen in the morning.

The fate of the hostages, whatever remaining hostages there may be, does at this point remain unknown. The last we heard was from the Kenyan authorities, and that was around 24 hours ago. And the Red Cross is also saying that they have cataloged around 65 people that are either missing or unaccounted for.

Here at this location, there has been a triage center that was set up, there are a number of volunteer teams that are in place trying to get access to the building to remove bodies that they believe may still be located there. This country, naturally, still reeling from the horrors that began a few days ago, Richard.

QUEST: And on this question, reports that have come out over the past few hours, some of the gunmen or some of the terrorists may have escaped with those who are thought to be hostages. Do we have any idea the numbers involved who perpetrated this?

DAMON: Well, the Kenyan authorities are saying that they believe the gunmen to be numbering between 10 to 15 individuals. They are saying at this stage that they are all male. There was some speculation that there could possibly be some women who were among them.

When it comes to the number of hostages, initially the Kenyan authorities were saying that there were 30 people believed to be held captive by the gunmen. That number, then they said, went down to 10, and again, as I was saying, we haven't had an update in the last 24 hours.

They are saying that they did manage to kill and wound some of the attackers, but we're not clear on exactly how many do remain holed up in the building. And naturally, everyone who we're talking to is saying that they want to see this over as quickly --

QUEST: All right.

DAMON: -- as possible. The country has really come together following this attack. We've really had a sense of community. But there's also a lot of mourning that is taking place and a lot of questions at this point that do remain unanswered.

QUEST: Arwa Damon, who is in Nairobi for us tonight. Arwa, please, we're ready to speak to you whenever there's more to report.

In a few moments from now, we'll be speaking live to the Nigerian president, Goodluck Jonathan. You just saw him ring the closing bell on Wall Street. He's on his way down to the trading floor now. When he gets there, just probably before or after in a few moments, we will be talking to him.

So, to our business agenda and BlackBerry may have a buyer. Now, the struggling SmartPhone maker has agreed to a tentative offer from the consortium led by Fairfax Financial. The deal -- that's the number you need to look at, $4.7 billion. Bearing in mind that BlackBerry has quite a dose of cash in the bank, so that obviously represents a large scale of that, too.

Now, in doing so, it would return $9 a share to the current shareholders, which is a premium on the closing price. The Fairfax chief exec, Prem Watsa, now he stood down -- he stood down from the board of BlackBerry when the deal -- they were already owned, by the way.

Fairfax already owned 10 percent of BlackBerry. And Prem stood down when he knew that the company was going to be come up for sale, for obvious reasons, straightforward conflict of interest.

But look what he warned earlier this year when they -- he said talking about BlackBerry, his shareholder's letter, he said, "The company got complacent, perhaps overconfident, and did not respond quickly enough to Apple and Android."

Now, that might seem like a blinding statement of the obvious, which of course begs the question, if they are in such a terrible state, why on Earth would Fairfax want to buy them? The first question for Paul La Monica, the assistant managing editor at CNN Money. When we spoke last week, Paul, they just made these job losses. Now, we see what's happening.

PAUL LA MONICA, CNN MONEY ASSISTANT MANAGING EDITOR: Yes, and I think you raised a great point: why would Prem Watsa want to buy the entire company? And I think what's going on here is that maybe this is an opening salvo, a message, that they're -- he wants to maybe start a bidding war, maybe have China's Lenovo, for example, or someone else come in and try and have a higher offer, because obviously, if that happens, he and Fairfax win out.

QUEST: All right. Here's the question. Listen. Here is the BlackBerry. It has just 3 percent or so of market share -- at the moment. What on Earth does taking it private allow them to do?

LA MONICA: Absolutely nothing. It's the same case that you have with Dell, which is in the process of going private. It's not going to change any of the fundamentals, which are pretty abysmal right now.

QUEST: Right. But if you look at the statement from Fairfax, they talk about wanting to do commercial enterprise and secure solutions for customers. So, are we looking at a BlackBerry that might morph not from a mainstream prosumer division, but to very specialized niche. People who want higher degrees of security.

LA MONICA: I think that's a certain aspect that might be something that they would follow through. I think another potential road for maybe salvation is to focus just on the software, give up the whole notion of them being a hardware company that can compete with Apple, Samsung, and the combined Microsoft-Nokia. Because that's just not going to happen. They're a distant fourth right now.

QUEST: So, what do you make of today's announcement?

LA MONICA: I do think that Watsa, who a lot of people talk about as being the Warren Buffett of Canada., it's a little bit of a savvy move on his part, because there's not that much downside. If he takes them private, he gets them at $9 a share, which is a little bit higher than where --

QUEST: There's also the $2 billion in the bank.

LA MONICA: There's the $2 billion in the bank, there are various scenarios where there are termination fees. If BlackBerry were to find another suitor, because there is language in the statement that allows them to look for other bidders, and obviously, if there's another bidder, Fairfax owns 10 percent of the company, so they would love to have another bidder to come in and out-buy them for $9.

QUEST: I'm going to be unfair, as you the same question I asked you last week. Is BlackBerry toast?

LA MONICA: I hate to say it, I do think that's the case. A lot of Wall Street analysts are worried that the subscriber count is steadily on its way to zero. Unless they really do refocus on software, it's looking bleak.

QUEST: I'm just furious. I love my BlackBerry.

LA MONICA: We all used to.

QUEST: I -- well, no, I still do. As an e-mail client, I -- there is none better. Anyway --

LA MONICA: That's -- it's debatable. I think a lot of people have their iPhones and Android devices to use e-mail as well, and it's just -- e-mail's not the only thing. Thank you very much.

QUEST: Many thanks, indeed.

(RINGS BELL)

QUEST: Oh! I'm ringing the bell.

(RINGS BELL)

QUEST: We just saw him ring the closing bell at the New York Stock Exchange a moment ago. We're live with the Nigerian president, Goodluck Jonathan, when we come back. QUEST MEANS BUSINESS, the start of a new week. Good evening.

(COMMERCIAL BREAK)

QUEST: Nigeria's president, Goodluck Jonathan, has had a busy day in New York ahead of the United Nations General Assembly. The leader of Africa's most populous country met President Barack Obama earlier. And a few moments ago, he rang the closing bell at the New York Stock Exchange.

Now, to the New York Stock Exchange we go. Zain Asher is with the president on the floor of the Exchange and joins us now. Good evening.

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hi, Richard. Yes, absolutely, I'm joined by President Goodluck Jonathan of Nigeria, who has just rung the closing bell. Mr. President, thank you so much for joining CNN to talk to us today.

GOODLUCK JONATHAN, PRESIDENT OF NIGERIA: Thank you.

ASHER: So, one quick question for you. Obviously, all eyes are on Kenya right now, with those deadly attacks in Nairobi by al-Shabaab. Nigeria's dealing with its own form of extremism with Boko Haram. What are you doing to keep Nigerians safe? And what impact is the instability having on the Nigerian economy.

JONATHAN: Thank you, first off, for organizers of the New York Stock Exchange for giving us the privilege to close the market today by the -- ringing the bell.

In terms of the issues you raise, we always insist that terror attacks anywhere on the globe is a terror attack on all of us, and all leaders of the world must join hands to fight terror all over the world.

In terms of Nigeria, where I do not know what it takes, I have a conscience to do what it takes to make sure that we bring it under legal control, or eliminated completely. Before this time, we never experienced issues of terror. We had security challenges, but terror is very alien to Nigeria and most of the African countries. We never had the infrastructure to deal with terror.

But now we are confronted with it and we are dealing capacity, and I can assure you that we'll soon bring it to a reasonable control that will no longer be a major issue. Why is it now? We have been able to control in some three states, out of the entire six states, and even within those three streets, they are persons from the fringes of the state.

So, it does not really affect investment, and we encourage all people who are interested in Nigeria to come and invest.

ASHER: Another question for you, Mr. President. I know that you met with President Obama today. One thing that I find interesting is that Nigeria is Africa's second-largest economy, one in every six Africans is, in fact, Nigerian.

However, in the trips that President Obama has made to Africa, he has not gone to Nigeria. I know a lot of Nigerians feel slighted by that. What are you doing to improve the relationship between the United States and Nigeria?

JONATHAN: There's no problem about the relationship between the United States of America and Nigeria, no. Obama didn't visit Nigeria because of any strain in terms of diplomatic relationships between Nigeria and America, no, not at all.

But we continue to engage America, we continue to discuss with America. In fact, when I wasn't even an elect-president, I visited President Obama, and of course, I was probably the first elect- president that was given an audience by the American system to have a discussion with the president. So, the relationship is quite robust.

But relationship between America and Nigeria is beyond the interest of America and Nigeria. Because Nigeria at the level of West Africa and at the level of Africa, it's a major player, sort of like America is the number one country in the world.

And Nigeria and America coming together, we help to grow the economy, peace and security, not just for Nigeria and America, but for the rest of Africa. So, that relationship is very, very precious to both countries and the continent of Africa.

ASHER: Another question I have for you that is on a lot of people's minds is this issue of crude oil theft. At least 150,000 barrels of oil a day get stolen. A lot of it is exported. How are you working with the international community to curb that problem?

JONATHAN: In fact, the figures vary from source to source, and some - -

ASHER: People are saying at least 150,000 barrels of oil.

JONATHAN: It is much, much less than that, but the area we suffer most in terms of some criminal vandalism of our five lands. And when that is done, there is always a shortage of production. So, it's not when we have a shortage of production that is as a result of crude oil theft.

But tragically, that is another area where we are building infrastructure in terms of electronic devices and of course, physical combat to make sure that we bring it to a reasonable control. Yes, it's a problem for us now, but we are controlling it, we are working on it.

ASHER: OK, Mr. Jonathan, thank you so much for joining us. We appreciate it.

JONATHAN: You are welcome.

ASHER: OK, take care. Richard, back to you.

QUEST: Thank you very much, joining us from the New York Stock Exchange, the president of Nigeria.

Now, Mr. Jonathan is in New York, of course, for the UN General Assembly, and what we're seeing at the moment, of course, is leaders arriving in New York as well as the issues of what's happening in Kenya, the terrorism questions, or Syria and the questions of chemical weapons. They will have much on their minds on economic issues.

Come and have a look at the time table and why this is so significant at the moment. First start off, this month, on September the 23rd, we have the crucial UN General Assembly beginning. It starts pretty much today. There are speeches galore. And that's what brings everybody into the hothouse of the environment of New York.

But then, on October the 1st, we have a US government shutdown deadline, and Congress will be debating whether or not the US government should -- or how they will fund the government for the time being.

Factor into all of these equations the fact that we really don't know the date when tapering will begin from the Federal Reserve, and we now have a reelected and emboldened Angela Merkel in Germany, and you start to see politics, strategy, and economics are all coming together.

Mohamed El-Erian is the chief exec of PIMCO, joins me now from Newport. Of that potpourri, Mohamed, of all those events that I've just put on your agenda, which do you find most interesting or important?

MOHAMED EL-ERIAN, CEO, PIMCO: Well, they're all interesting, Richard, and I would add another one, that we lack a global coordinator, if you like, to make sure that the various parts of the world come together constructively.

I think the key issue today is whether Congress will once again manufacture a problem or whether they're going to be able to overcome what are very petty differences and agree to continue the government functioning from here.

QUEST: But we -- OK, let's just deal with that US one first of all. If they close down the government, it has an economic effect to be sure, but the bounce back is just as fast, and there's really no evidence that a shutdown does any long-lasting to the economy.

EL-ERIAN: Yes, if the economy were healthy to begin with. So, the last thing the economy needs right now is a temporary shut-down, because that will take 0.2, 0.3 percent out of GDP if it lasts for a couple of weeks. We don't need that. If it lasts longer, it takes off even more.

But remember, the indirect effect. You've got companies with lots of cash unwilling to invest. They're worried about the outlook. You have a Federal Reserve that is pursuing policies with an imperfect tool --

QUEST: Right.

EL-ERIAN: -- because Congress can't get its act together. And you've got the US standing in the global economy. So, the last thing the US needs --

QUEST: Right.

EL-ERIAN: -- is a self-manufactured problem.

QUEST: I -- you and I haven't had a chance to speak since the tapering debacle of last week. Are you as frustrated and peeved with the Fed as other economists are who believe that they'd set everybody up and failed to deliver?

EL-ERIAN: So, I wouldn't used the word "peeved" or "frustrated," I would say surprised and stunned. Because they had an open door, and they - - and they opened the door themselves through communication. So, for them not to have gone through that open door is very surprising.

And I think they're going to have to think twice as to how they use communication. Because remember, a central bank has to convince you to do things. So, credible communication --

QUEST: Right.

EL-ERIAN: -- is absolutely critical.

QUEST: Angela Merkel. She gets back. She almost gets an absolute majority. But what an endorsement of her strong, rigorous approach in dealing with the European debt crisis, at least by the German electorate's point of view.

EL-ERIAN: Oh, absolutely. I mean, 311 votes out of 10, 11 seats out of 630, that's an incredible triumph for her. Also, her message was a very clear one, which is, "I safeguarded Germany and I delivered for you, even though the neighborhood was under pressure."

The problem is, now she's got to find those extra four votes, and that means a lot of coalition debates and discussions and negotiations.

QUEST: Now, if I'm not mistaken, I think today might be either the first -- the last day of summer or the first day of fall, or it's somewhere around about there. So, humor me if you will. Are you optimistic as the leaves start turning, maybe not out in Newport, California, but of the rest of us, as the leaves start turning, should we be optimistic this fall?

EL-ERIAN: I think at best, cautiously optimistic. I would say just cautious right now. There's a lot going on, and the economies and the markets have been artificially bolstered, and there's a question to how long that can last. So, I would be cautious.

And if you really are an optimist by nature, I'd be cautiously optimistic. And if you really want to be optimistic, let's hope that they can keep BlackBerry on the market --

(LAUGHTER)

EL-ERIAN: -- because I need it just like you do, Richard.

QUEST: I'm feeling a campaign starting, but since neither of us are going to put our money where our mouth is, we'll leave it exactly there.

(LAUGHTER)

QUEST: Mohamed, good to see you. Many thanks, indeed.

EL-ERIAN: Thank you.

QUEST: By the way, if you want to tweet me, it's @RichardQuest, @RichardQuest is the tweet address where I'll be able to read my tweets on my BlackBerry.

I think this is one of these stories, frankly, where those of us who have used it -- I won't say we've let conflict of interest go out the window or personal views go out the window, but it does affect everything we do in this sort of thing. One of those stories that hits home, @RichardQuest.

When we come back, you heard us talking about Angela Merkel. We'll talk a little bit more about her policies on austerity. This is QUEST MEANS BUSINESS and you are most welcome.

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: One line of correction to bring to your attention. At the beginning of the program on our coverage of BlackBerry, talking about Prem Watsa of Fairfax, inadvertently on the screen you will have seen that we said he is the former CEO of Fairfax.

He is, of course, the current CEO. He is head of the company. What we were referring to, of course, and fingers got slipped on the keyboards, is that he was on the board. He is no longer, of course, on the board of BlackBerry. He stepped down when the company announced it was looking for different options. So, apologies for that.

Angela Merkel will serve a third term in office after a sweeping victory in Sunday's German elections. We were talking about that a second or two ago with Mohamed El-Erian. The chancellor was reelected, it was one of the strongest mandates in the history of modern Germany, and she vowed to stay the course on Europe.

(BEGIN VIDEO CLIP)

ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): We made very clear today that nothing will change in our Europe policy. We carried out this election campaign according to our convictions, and we will continue this way.

This is, perhaps, the most important message to people. The Europe policy is part of our core values and will always be, and it will be continued in the same spirit.

(END VIDEO CLIP)

QUEST: Now, when it comes to grading how Angela Merkel is handling the debt crisis, Europeans are largely, in many ways, split on it. I want you to look at this, at the super screen. This is a view of how Angela Merkel has handled the crisis -- well, it says that, you can read that for yourself.

But look at the approvals and the disapprovals. Let's start with those countries where the broad majority approve of the handling of the economic crisis. So, obviously, here we have -- well, we have France, we have Germany, and we have the Netherlands, and up at the top, we have Sweden. There, there is a consensus that she has handled the situation well.

But Mrs. Merkel had the worst ratings in the three countries most affected. Look at the disapprovals and you see it's Spain, Portugal, and Italy. Of those, of course, only Portugal is actually in a Troika program at the moment, but the unemployment rate in Spain is over 26, 27 percent, and Italy has had numerous governments.

Putting that together, and bearing in mind the huge majority that she now has, Peter Bofinger is the economic advisor to Angela Merkel and a member of the German Council of Economic Experts. I spoke to him on the line a few moments ago from outside Frankfurt and asked how policy now might shift with this victory.

(BEGIN VIDEOTAPE)

PETER BOFINGER, ECONOMIC ADVISOR TO ANGELA MERKEL (via telephone): There will be continuity. Angela Merkel will remain the most dominant person in German politics.

But besides the continuity, I think there will be also more flexibility, because she has a new partner, she has now the Social Democrats, and that means a lot of difference compared to the previous partner, the liberals, the Free Democratic Party.

Because where the liberals were more obstacles towards more integration, the Social Democrats are much more open for new initiatives that might be necessary to stabilize the euro.

And so, I think they have this combination continuity but also more flexibility, more openness towards integration and to less austerity in Europe. So, I think it's very good news for Europe, but also for global financial markets.

QUEST: And now we have seen this victory -- and a very strong victory it was, too. Because she has several years ahead of her, can we expect this flexibility to be more lenient to those countries requiring more support or more tender loving care, if you like, against austerity?

BOFINGER: Well, I think definitely it will mean less austerity. One must say already now, the approach of the European Commission towards the so-called problem countries has become much more flexible. They gave them more time to fulfill their budgetary commitments.

But I think now together with the Social Democrats also in Berlin, the approach will be less flexibility and it will also mean greater willingness to support these countries with measures that stimulate their economies.

(END VIDEOTAPE)

QUEST: That, of course, is economic advisor to -- or one of the economic advisors to Angela Merkel -- talking to me earlier. After the break, stop interfering in the market.

(RINGS BELL)

QUEST: That's the message from IATA's chief exec as Washington sues US Airways and American Airlines over their merger. Our full interview with Tony Tyler in a moment. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

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.

The Nairobi mall siege remains unresolved at this hour. A short time ago, the Kenyan foreign minister, Amina Mohamed, told CNN the attack, which has killed at least 62 people, has strengthened the country's resolve to fight terrorism across its borders.

BlackBerry has announced plans to become a private company. Its largest shareholder, Fairfax Financial, hopes to acquire the company in a deal that's worth $4.7 billion. The deal comes three days after BlackBerry said it would lay off 4,500 members of its staff.

In Egypt, the Muslim Brotherhood is vowing to appeal against a court ruling that effectively bans the group's activities and freezes its assets. The ruling comes some three months after President Mohamed Morsy was ousted from office. The current interim government accuses the Brotherhood of inciting violence.

Iran will apparently take part in nuclear talks on Thursday. According to the EU's foreign policy chief, Iran's foreign minister has agreed to meet with the group known as the P5-plus-1 during his visit to the United Nations. The group includes the United States, Britain, China, France, Germany and Russia.

U.S. Airways and American Airlines are tonight preparing their fight against a government lawsuit that, of course, is trying to block their merger. The companies will go to court in two months defending the deal that the U.S. Justice Department says will hurt competition. Now, the chief executive of the International Air Transport Association, IATA, the director-general, has lambasted the U.S. authorities for the legal action.

Tony Tyler says the deal should go through.

(BEGIN VIDEO CLIP)

TONY TYLER, CEO, IATA: The thing that's worrying me a lot is the way the governments seem to be trying to re-regulate this industry. And there are worrying signs that governments are thinking that the market isn't enough and that they need to control the industry in a way that they haven't -- they haven't had that thinking for some time. And it's (INAUDIBLE).

QUEST: What's the evidence of that?

TYLER: Well, let's look at the Department of Justice's lawsuit against American Airlines and U.S. Air, for example, in their -- which is - - which, at the moment, threatens to stop their consolidation.

And they're saying things in that and the whole undercurrent there is one that, you know, we can't trust the market to drive this industry in the right direction, we need to control it. We need to regulate it.

QUEST: There's some justification. In that particular case, they're talking about specific fares, aren't they, the anytime fares?

TYLER: Yes.

QUEST: And all sorts of Pacific fares, which they fear will go away if this is allowed to take place. They're basically saying this is a -- this is a consolidation too far.

TYLER: But they're -- they're ignoring the fact that there is competition out there. I mean competition will make sure that fares remain at the, you know, at a competitive level. And they seem to be ignoring, for example, the competitive force with Southwest Airlines, which is a hugely competitive outfit that gives everybody a run for their money.

QUEST: Well, let's say Europe, Ryanair, Aer Lingus, the U.K. Competition Authority's decision to get Ryanair to divest its stake.

Is that the sort of thing you're talking about?

TYLER: Again, this is the sort of thing that regulators need to get out of this industry and let -- let the industry develop according to the normal business imperatives and pressures, I mean, and business will do a job for the market. That's what -- that's how business works.

QUEST: People don't have faith. The customers don't have faith that the airlines won't rob them.

TYLER: Well, we can only show them what a great job we're doing. Look, three billion people are traveling by air every year. They're traveling safely by air every year. They're traveling on fares that actually, in real terms, are well down from where they were 10 years ago. We're seeing innovation coming out. The sort of unbundling that's going on in the industry is actually something that enables people to pay for what they value and not pay for things that they don't value. And people tend to ignore that, when they say, oh, you know, I'm now having to pay for my bag, to check in a bag. All those times you've traveled without checking in a bag, you've had to pay for it, as well.

QUEST: So your message to the regulators?

TYLER: Leave us -- leave us alone. Back off. Let us do the job that we know how to do, which is look after our customers, compete like crazy with each other, because that's the way this industry works, and certainly, you know, I'm not advocating any slackening of the implication of competition laws at all. Clearly, you know, we have to be competitive and we will be.

QUEST: We had this meeting at ICAO in Montreal on carbon emissions. The Europeans have already said, if you don't -- and they already brought out their plan and then they backed off on it, preventing a global trade war.

But now it's up to the industry to put in place their provisions.

TYLER: Well, the industry has spoken. I mean I -- at ICAO, we passed a resolution saying that we wanted a global, market-based measure scheme and we set out the principles for that scheme.

It's now up to governments to take those principles, which are supported, by the way, by the airports, by the air traffic control people, by the manufacturers, by other stakeholders. It's up to them to take those principles and put them together to form a global market-based measure...

QUEST: If they do not...

TYLER: -- and not...

QUEST: -- the Europeans will be back with their plan.

TYLER: Well, the worry is that what Europe seems to want is that before that happens, they want to be able to continue with their regional scheme. And the worry that we have is that there is going to be so distracting for this family, the ICAOs family, we can only happens once every three years, that they won't get around to talking about what really matters, which is the global market-based measures that we all want to see in place from 2020 onwards.

QUEST: Do you fear the European scheme will be back?

TYLER: I fear the European scheme will derail all the politics about. It's a very politically charged distraction, this European scheme. And the politics of that, I fear, could derail the Assembly from doing what it really needs to do, which is market-based measures from 2020 on.

(END VIDEO TAPE)

QUEST: So, IATA's Tony Tyler there.

And as he mentioned, negotiators are gathering at ICAO, the International Civil Aviation Organization. It's the U.N. arm for aviation, basically, ICAO.

The meeting in Montreal begins tomorrow. We're not expecting a deal on curbing airline carbon emissions, but the crucial part about it, of course, is whether or not they will even come close to putting the Europeans back in their box.

A record-breaking weekend for iPhone sales. Now a German court says it shuttered Apple's new fingerprint security system. We'll break it down for you in the demo area in just a moment.

(COMMERCIAL BREAK)

QUEST: Now, on Friday, we told you about the competitions and the race to hack the iPhone 5S fingerprint scanner. One group claims to have done exactly this using everyday means.

The Chaos Computer Club from Germany demonstrated their technique in a video posted online today.

Samuel Burke is in the study with me now to show us how they alleged it.

Now, Apple said that the fingerprint was the new ultra uber secure and everybody wants to break it.

SAMUEL BURKE, CNN CORRESPONDENT:

It...

QUEST: Have they managed it?

BURKE: Well, it appears that the Computer Chaos Club has done it. And they say it's very easy. They've even posted a manual on their Web site. And, in fact, you just had your thumb right there on the glass, so we can start there.

QUEST: No, no, no, no. Wait a minute.

BURKE: They say...

QUEST: So -- so they're already put it online?

BURKE: It's online on their Web site. And they have a little guide. And they say it's very easy. So they say...

QUEST: Right.

BURKE: -- first, you just have to get a thumb print from somewhere, a door knob, a piece of glass. So I saw you just had your thumb there. So I come in with a camera, I take a picture of your thumb nail. Then, with some special toner, some special ink, you print it with one of these onto a piece -- onto a piece of transparent paper. You print the thumb nail exactly, the thumb print. Then you just take glue. It says you can even use household glue. Put it over that thumb print, where we've printed. There's Richard Quest's thumb print. Put glue there. Then you just come on, you go like this...

QUEST: Yes.

BURKE: -- put a piece of transparent paper there. And then you let it stick, stay for a while, go like this. And then you can just go like this onto the phone and you can get into the iPhone.

And they even posted a video on YouTube that shows how you can do it. Very simple, according to them.

And if you take a look at this piece of video right there, Richard, there you go. You see the person putting their thumb. They've done exactly what I just laid out, like the instructions there on their Web site. They go onto the iPhone, put it right there, that piece of plastic. And they're into the iPhone.

It seems very simple on the Web site, but I spoke...

QUEST: Right. Now, hang on, hang on, hang on. Let's take this bit by bit.

So according to that demo, all you need is your thumb print or your fingerprint...

BURKE: Yes.

QUEST: -- a bit of plastic, a toner cartridge...

BURKE: Exactly.

QUEST: -- take a picture, a bit of glue, the right glue...

BURKE: Exactly.

QUEST: And it works. But you were telling me it's not as easy.

BURKE: No, I spoke to some experts today and they say the guy who did this, from the Computer Chaos Club, is one of the best, if not the best in the world, at duplicating thumb prints. He has lots of expertise, lots of experience. And, yes, he laid out some of these materials, but he knows how to do it. and, for instance, when you take the picture of the thumb -- the thumb print, you have to know exactly how to print it on this piece of laminate...

QUEST: But they did it.

BURKE: He did it. He's the best...

QUEST: They did it.

BURKE: -- he's the best...

QUEST: No, come on, if they did it, others can do it.

BURKE: Yes, possibly others could do it. But they say they would have to be experts, that it can't just be done with these in your house.

QUEST: All right...

BURKE: You have to know exactly...

QUEST: All right...

BURKE: -- how to do it.

QUEST: You're being cynical.

BURKE: Well, I'm telling you what the experts told me.

QUEST: All right.

You think it can't be done again?

BURKE: No, I think, it can be done by some experts, but the average person at home, the average Joe, like you and me, we can't do it at home. So it still remains a very secure ---

QUEST: You (INAUDIBLE)...

BURKE: -- way...

QUEST: -- yourself to your average Joe.

BURKE: It still remains a very secure (INAUDIBLE). And on top of that, for some of the key features in this new iPhone -- in the iPhone, IOS 7, you don't -- you can't use the thumb print.

QUEST: All right.

BURKE: You still need a pass code. So it's still a very safe method, Richard.

QUEST: I'll do it.

I'm leaving it there.

But please, clean up.

These youngsters.

Right.

The Dow Jones got a new look today. The index is a closely watched benchmark. Of course, you know that. Now, we told you last month that they were arriving. And so the Dow has bid adieu to three components and welcomed their replacements.

These are the three -- Alcoa went and we had Nike. Nike's index, the only apparel company. More than 3.5 percent increase from the close on the day before it debuted in the Dow.

HP got -- went and in came Goldman Sachs, over a 3 percent increase from the close of announcement on Friday before today.

And Bank of America became Visa. And there, it was nearly 9 percent increase from Friday to today, before the debut.

And the reason, of course, it's entirely justifiable that they rose because fund managers who track the Dow as part of their funds have had to buy the stock. And that's what you would expect.

(WEATHER REPORT)

QUEST: The fight to double the minimum wage in Bangladesh turned violent today. We'll bring you the latest from Dhaka after the break.

Good evening.

(COMMERCIAL BREAK)

QUEST: Police fired rubber bullets and tear gas at thousands of workers in Bangladesh during a protest over pay in the garment industry. The witnesses say they through broken bricks in return. At least 50 people, including some police, were injured.

Now, the police said they fired because some of the workers had been attacking clothing factories on the outskirts of Dhaka. More than 100 factories have been forced to close during three days of protests.

The workers are calling for the monthly minimum wage to be raised to $100. It's currently $38.

Conditions in Bangladesh's garment factories have been under the very closest scrutiny, you will be aware, since the collapse of the Rana Plaza Mall and factory in April. More than 1,100 people were killed when the building caved in.

It was housing several factories that supply clothes to Western retailers. Those retailers have been under pressure to take some responsibility.

In London, CNN's Jim Boulden for us tonight -- good evening.

JIM BOULDEN, CNN CORRESPONDENT: Yes, Richard, let's look at what these Western brands and retailers have done since that factory disaster in April.

Well, within days and under intense pressure, Irish retailer, Primark, agreed to pay compensation to workers and their families affected by the collapse, in terms of three month's pay. Now, Primark has agreed to pay another three months worth. A chea -- it's been a move cheered by NGOs.

But NGOs are not happy that most of the big brands and retailers, whose clothing was being made by the dead and injured workers, have not yet been paid compensation.

Let's move forward to May. Well, many companies did sign up to another big initiative. This is called The Accord on Fire and Building Safety in Bangladesh. Campaigners for years have been pressuring Western companies to sign this bill -- this binding accord to pay for upgrades in factories. You can see many of the names here of companies that paid, including, Tesco and also Kmart, Target, Mango and also Primark have joined up. So this is quite a significant move, because this is a binding accord.

Let's move on to just today. Well, the 88th company has now signed up. This is Britain's River Island. It has joined those other companies you saw in this binding accord. But many other companies have not. And that's notable is -- the notable names include Walmart and The Gap. They have not signed up despite heavy criticism.

Instead, in July, they joined The Alliance for Bangladeshi Worker Safety. Now this is a voluntary group dedicated to intense factory scrutiny. Walmart, for one, has a list on this Web site of factories in Bangladesh it won't work with due to health and safety concerns. But again, this is a voluntary organization that they have all joined.

Now, in September, the International Labour Organization held a summit in Geneva to get more companies to pay compensation. But few companies attended that one -- Richard.

QUEST: Jim Boulden in London with the background and bringing us up to date on that.

Jim, we thank you.

Now, to talk to Guy Ryder, who is the director-general of the International Labour Organization.

He joins me live in the Sweet Suite this evening.

Good evening, Guy.

Good to have you in.

GUY RYDER, DIRECTOR-GENERAL, ILO: Hi. Nice to see you.

QUEST: Thank you for coming in.

Two things to talk about. Obviously, we'll do Bangladesh in just a moment.

RYDER: Yes.

QUEST: But also, you've got a report now that shows the number of children were -- in working in forced labor or in labor, in child labor...

RYDER: Child labor.

QUEST: -- excuse me, child labor, is down by a third.

RYDER: That's right. We've got 168 million, which sounds an awful lot, doesn't it?

But in the year 2000, we were at 246 million. We've come one third of the road to getting rid of child labor.

And the good news is over the last four years, we've made more progress than before. So we're getting it right, but it's not quick enough. There are still 168 million kids at work and the international community simply has to redouble its efforts to get to the end of the job.

QUEST: What now is the stumbling block to getting that number down further?

RYDER: Political will. I mean what's worked is a combination of things.

Education. If there is access to educational opportunities, families will take it.

Social protection. Giving people enough money that they don't have to send their kids to work.

And then simply legislation, enforcement of legislation. And I think the last thing is the global effort. We're going to a global conference on child labor in Brasilia next month. And we can push things forward even further.

Most kids are working in the rural economy, in agriculture. Most of them are unpaid in (INAUDIBLE)...

QUEST: But there's a difference, isn't there, between the child that helps in the farm or the child that is an important part of the family or local farm production and child labor in the -- and in the fields?

RYDER: Yes. There is some work which is basically OK by international labor standards. We call it kids in employment. But child labor is a subset of that and then you've got the worst forms.

QUEST: So let's say Bangladesh, for example, where we've just seen -- are you encouraged or discouraged by the changes that have happened post- Bangladesh, post the collapse of the Mana -- of the Plaza?

RYDER: OK, the Rana Plaza, we're not really talking about child labor, so...

QUEST: No, we aren't.

RYDER: -- (INAUDIBLE) factories...

QUEST: No, no, we're not. No. No.

RYDER: (INAUDIBLE). OK.

QUEST: But I'm moving -- I'm moving swiftly on.

RYDER: You're moving swiftly on.

QUEST: Yes.

RYDER: Look, some good things have happened. Bangladesh has improved its labor legislation to give workers better organizing rights...

QUEST: Are you happy?

RYDER: -- and better -- no, I'm not happy because the job is not done. Today here in New York, we just signed the $24 million project with the Netherlands, with the Brits and with Canada to actually pull the job through to the end, to make the 3,800 factories in the garment sector safe.

QUEST: Next week, I'm on assignment. I'm going to the Ivory Coast. And I'm going to be looking at the chocolate production and the cocoa production in the country, part of the Freedom Project here on CNN.

RYDER: Yes.

QUEST: You'll see that in a few weeks.

What's the one thing I should keep my eyes out for as I'm traveling around looking, because I've -- there are not going to be children sort of hacking things down in the field if they know we're on our way.

Tell me what I should look for.

RYDER: Well, I think you should be looking for the way that communities and the way that authorities are actually treating these issues, not just with child labor, because you won't see it, you're quite right.

But are they getting kids to school?

Are there social protection?

Are there basic welfare provisions beginning to build up in Africa and in the (INAUDIBLE)?

QUEST: The total picture rather than...

RYDER: The total picture.

QUEST: -- just...

RYDER: It's about the integrated approach to getting rid of child labor. The direct interventions to get kids off work where they're into it is one thing, but there's a wider picture. Look for that.

QUEST: It's good to see you.

Thank you for coming in to us to talk today.

When we come back after this commercial break, tonight's Profitable Moment. what have BlackBerry and Microsoft got in common?

(COMMERCIAL BREAK)

QUEST: Tonight's very Unprofitable Moment.

So BlackBerry is to be taken private. And if the deal goes ahead, the sad sorry saga will be taken away from the prying eyes of the market.

How BlackBerry failed can be summed up in the words of the Fairfax chief in his letter to shareholders. He said: "BlackBerry got complacent, perhaps overconfident, and did not respond quickly enough to Apple and Android."

Now what I find fascinating is that Microsoft's chief exec pretty much admitted the same sort of thing. Steve Ballmer said they weren't able to redeploy talent to a new device called the phone. In Microsoft's case, they still had the cash cow of Windows, Word and Outlook to mask the error. BlackBerry had none of the revenue streams and that's why the company is in a disastrous state.

There's a moral here for us all -- whether complacency or arrogance or incompetence, none of us has a right to a viewer or a customer. And if we fail to get it right, well, that's just too bad.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest. Whatever you're up to in the hours ahead, I do hope it's profitable.

Join me back in New York tomorrow.

END