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QUEST MEANS BUSINESS
Ukraine PM Makes No Apology; US Stocks Tumble; European Stocks Down; Carney Cans Forward Guidance; Global Unemployment; Jack Lew on Iran; Iranian President Addresses World Economic Forum; President of Israel on Iran; Syrian Refugee Crisis; World Bank President on Syrian Refugee Crisis and Income Inequality
Aired January 23, 2014 - 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: Taking a tumble down the slopes, the Dow is off more than 1 percent on earnings. It is Thursday, it's January the 23rd.
Tonight, no apology. Ukraine's prime minister backs the treatment of protesters in Kiev.
Iran's president makes his case here in Davos. Israel's president gives me his reaction.
And a crisis of enormous proportions. Tonight on this program, the World Bank president on how to handle the Syrian refugee crisis.
I'm Richard Quest, live at the World Economic Forum, where I mean business.
Good evening. Tonight, Ukraine's prime minister is offering no apology for police actions in Kiev the day after violent clashes with protesters left four people dead. Instead, speaking to me here in Davos, Mykola Azarov said officers acted within the law.
These are live pictures tonight from Kiev. Anti-government demonstrators remained in the capital. Talks between opposition leaders continue. You can see the protesters there on the streets, but so far tonight, none of the fires and none of the violence of the past 24 hours.
Ukrainians have braved the bitter cold since Sunday, when they flooded the streets. They were furious about new anti-protest legislation. Demonstrations quickly escalated to the violence. Police fired plastic bullets. Protesters fought back with rocks and Molotov cocktails.
We'll be live with the latest from Kiev with our correspondent Diana Magnay. She's standing by in the Ukrainian capital, and we'll be with her in a moment or two. First, though, the prime minister of the Ukraine, Mykola Azarov, here in Davos, with scenes of chaos in Kiev, I asked him how he'll end the violence.
MYKOLA AZAROV, PRIME MINISTER OF UKRAINE (through translator): Well, first of all, both the president and the government are ready to hold negotiations, and we are ready to solve all the disputable issues at the round table of negotiations.
Today, I had a very constructive meeting with the secretary-general of the Council of Europe, Mr. Jagland, and he said a very good sort, and we agree on these absolutely. The politics should be made not on the streets, but in the parliament.
We call upon our police for this, and first of all, we call to stop all those violent actions, to stop capturing buildings, to stop attacking law enforcement officers.
QUEST: Let me read you one report. It comes from my correspondent in Kiev. A 17-year-old Ukrainian claims taking pictures of the protest, police detained him, broke his leg, stabbed him in the leg, removed his clothes, and badly beat him. Now faces multi years in prison because of the new anti-protest laws. Are you prepared to deal with that side of the equation?
AZAROV (through translator): The law enforcement officers were given instructions and orders to act within the legislation and not to use any kind of weapon. They do not have firearms with them.
And those reactions which they have to take when someone is trying, for example, to capture government buildings and institutions, all those measures are not just analogical to those used in all the European states, and we know very well how it was happening in the Great Britain when there were mass riots in this country, how this was in France, how this was just recently in Germany.
And that is why all those laws which were adopted, they do correspond to the European norms. They foresee responsibility for unlawful actions, for violence, when trying to overthrow the government, and we should be looking objectively at all those things.
QUEST: The Russian government is suggesting the situation is getting out of control. Is it?
AZAROV (through translator): Well, what we can see now tells us that the opposition is trying to cover itself with those militants, with those radicals and is trying to make them -- this measure of impact upon the current resources. They want to put forward ultimatums to us.
It is definitely very difficult to control that part of the territory of Kiev which was captured by the extremists and militants. It is difficult to control what is going on in Kiev. But in general in the country, the situation is under control.
QUEST: Diana -- now, that's the prime minister of Ukraine making no apology for the treatment of the protesters. Diana Magnay is live in Kiev tonight. Diana, the prime minister substantially saying violence on both sides, but that the negotiations and a compromise is possible. Is that how they see it from the protesters' point of view?
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Well, I think they'll have to see it to believe it, Richard. Mr. Yanukovych, even when he signed the deal with Russia, said that there was still a possibility of signing an association agreement with the EU. They've said all the way along they're open to negotiations but haven't given any indication that they'll meet the opposition's demands even halfway.
So, we're not through talks which -- we're now still going through talks, which have gone on for hours now. They're ongoing negotiations between the opposition and Mr. Yanukovych. We don't know what's come out of them. But I don't think people down there on the square behind me hold out very much hope for a good resolution.
QUEST: And I think I know the answer or how you're going to deal with this question, but the prime minister budged no ground whatsoever to my question on the brutality or the alleged brutality of the police towards the protesters. His basic answer was, they gave as good as they got.
MAGNAY: That's right. And it seemed that he decided to refer -- to choose to refer only to the clashes. And let's be honest, it is very clear from the pictures we've seen, from what I witnessed, violence was -- did result from both sides, the protesters just as much as the police.
But the question you referred to, the boy that I was talking to, was in police custody when he was severely beaten. And there is also another video that is circulating on YouTube, Richard, which shows another man who was stripped naked and beaten by police and then humiliated with police taking photographs of him.
The Interior Ministry has said that they are sorry on behalf of those officers who were involved in that incident and that they are investigating it. So, there are further allegations of abuse within police ranks, and the government is well aware of it, even if the prime minister refused to be drawn on it with you, Richard.
QUEST: Diana Magnay in Kiev, live tonight where it's just after 11:00 tonight.
Now, when we come back, we'll turn to our regular diet of the markets, and oh, my dear, you might almost have been up a Swiss mountain, because what goes up comes down, and the market took a tumble. To the markets after the break. QUEST MEANS BUSINESS, live in Davos.
QUEST: Stocks are slipping and sliding. Nokia and Facebook are down heavily. In New York, Alison Kosik is at the New York Stock Exchange. What on Earth went wrong?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Richard, you know, today you can pin the sell-off on a couple of things. For one, a report out of China that showed a much weaker than expected reading on manufacturing.
And China matters to Wall Street because it's one of the US's biggest trading partners, so if China's not doing well, it affects the US. And it's worrying the market as well, because it's a potential for it to lead to pressure on loans that China has outstanding.
Also weighing on Wall Street today, those fourth quarter earnings. Those corporate report cards, they're a bit underwhelming. Investors are asking if the higher stock prices that we've been seeing are warranted, considering what kind of money the companies are bringing in.
So, you know what? Investors are thinking twice and they're selling. Wall Street, quite frankly, wants to see better, especially on how much revenue these companies are bringing in. Richard?
QUEST: Alison, thank you. Interesting to look at that graph. The market opened down and never looked back.
The Europe markets, eurozone PMI, Purchasing Managers Index, is up at 53.2. Why do you care about that number? I'll tell you. It's the strongest growth since 2011, but it is by far from universal, France lagging behind 48.5.
Onto the markets and how they trade. Oh, dear. Not only was New York down, but London was off, the Xetra DAX was off, Paris was off, maybe on the back of that PMI number, 1 percent. And the IBEX down in Madrid as well.
Now, according to reports tonight, not even a year after it was launched, and the Bank of England governor, Mark Carney, is tearing up, or at least revising his forward guidance on interest rates.
There are reports that say Governor Carney will not focus unnecessarily on one indicator. In this case, it is the 7 percent unemployment indicator. UK unemployment is falling faster than expected, and Governor Carney has told the BBC that the UK economy is in a different place from where it was last summer.
We're joined now by the OECD secretary-general Angel Gurria. Good to see you, sir, as always.
ANGEL GURRIA, SECRETARY-GENERAL, OECD: Hello, there.
QUEST: Now, firstly, would you be surprised if the BOE jettisons its forward guidance within six months of having just brought it in?
GURRIA: I don't think they'll jettison anything. I think what happens is forward guidance is one of the best things that has happened with the Fed and with the Bank of England and Draghi picked it up. It means you have more information about what's going to happen. It doesn't keep us --
QUEST: Right, but if you've got forward guidance, the thing about forward guidance is that it's not a hard and fast target. It's forward guidance. So as the circumstances change, to quote, famously, Kings, what do you do when the circumstances change? I change my mind.
GURRIA: Yes. Well, of course, it is a wise man to change your mind depending on changing circumstances. However, the forward guidance is a way to suggest how it's going to go and some semblance of the policy that is going to happen so what you do is you don't necessarily commit --
GURRIA: -- to a certain course of action, but you suggest the direction in which it's going to go. It just helps the market.
QUEST: Should we be looking at changes in the US, where unemployment is now coming down faster? The UK, where it's coming down faster? The basket case is still the eurozone? My words, not yours.
GURRIA: We know that in the US we went to approximately 6.5 percent, et cetera. Already tapering has started. An announcement has been made, $10 billion less. So, we know the way in which it's going to go, and that is because the US is growing. In the UK, growth is less so.
GURRIA: So a less compelling case. In Europe --
GURRIA: -- are only coming out of the recession --
GURRIA: Only very modest growth, so you keep it for longer.
QUEST: What's your biggest concern now on the international economic stage? Is it inequality? Is it growth? Is it unemployment?
GURRIA: I think one is a result of the other. We have very little growth, and that is -- that has created unemployment, and unemployment is breeding inequality. So you --
QUEST: How do you break that circle? Where do you break that circle?
GURRIA: We have exhausted the monetary policy room. We've exhausted the fiscal policy room. You go structural. You go for old-fashioned education, innovation, competition --
QUEST: They're longterm. That's not going to get unemployment down - -
QUEST: That's not going to get unemployment down in Europe.
GURRIA: Ah, yes, but you know what did Mao say? That a journey of a thousand miles starts with one step. If it's going to take long, you'd better start early. So start now.
QUEST: Well, I think if we quoted Mao and Kings in the same interview, it's probably time to say Secretary-General, thank you very much, indeed.
GURRIA: Thank you very much.
QUEST: Good to see you, sir, as always.
GURRIA: Yes, OK.
QUEST: Now, we're going to talk about unemployment because Spanish unemployment has climbed above 26 percent. There are around 5.9 million jobless people in Spain. The actual number of people out of work fell by 8,500 on the previous quarter.
The workforce itself shrank last year, leading the jobless rate to rise. And even in the places where unemployment is falling, there is skepticism about the jobs recovery.
On last night's program, the chairman of JPMorgan International told me the numbers in the US were not all they would seem to be.
(BEGIN VIDEO CLIP)
JACOB FRENKEL, JPMORGAN CHASE INTERNATIONAL: The question is, do we celebrate? Well, let's look into the numbers. The fact is that the number of jobs that were actually created is much smaller than what the economy needed.
(END VIDEO CLIP)
QUEST: Jacob Frenkel. Getting a job is particularly hard if you're aged between 15 and 24. Global youth unemployment rate, 13 percent. In Spain, it's over 50 percent.
The ILO, International Labor Organization, is trying to address this. The ILO's director-general is Guy Ryder. From the secretary-general of the OECD to the director-general of the ILO. Do you agree with most of what he said?
GUY RYDER, DIRECTOR-GENERAL, ILO: I never disagree with what he said. But there are a few things I think we need to think about. You talk about the jobs recovery. Globally, there is no jobs recovery. Five million more people unemployed last year. If we carry on the same course we're on, there's going to be more unemployed in the future.
QUEST: Well, here --
RYDER: So careful about that word "jobs recovery."
QUEST: Here in Davos, they've been talking highfalutin talking. Today, various panels and leaders have been talking about plans and prospects for a jobs recovery. Do you buy any of it?
RYDER: Well, I think, as I've said, the course we're on is going to lead to further unemployment, not less. What I do actually see underneath the highfalutin talk that you've detected is a real concern about youth unemployment and a real commitment from business people to do something about that. That's good.
QUEST: I'm tying people down quite sharply this week. No highfalutin talk. Tell me in one, two, three, four, what is it you want them to do?
RYDER: The companies? Well, I think they've got to commit to take people on. They've got to commit to engaging themselves. Apprenticeships, apprenticeship schemes. But working with government as well. The oldest public-private partnership in the world is apprenticeships. We need to rediscover their beauty and their effectiveness.
QUEST: But Guy -- but companies don't willingly not employ people if there's the work for them to do. So there's just not that necessity when productivity at the moment to take on more staff. You see that, surely, at this point in the recovery.
RYDER: Well, I think that the discussion here in Davos is actually it makes good business sense. Do they have to make a bit of extra effort? Do they have to anticipate hiring decisions?
QUEST: You -- that's the one thing --
RYDER: They think that people need work.
QUEST: No, that's the one thing you don't do in this recovery, anticipate and take people on, because then your wage bill goes up and you lose further competitiveness, Guy. You know this.
RYDER: There's lots of money in the bank. There's lots of money in the corporate bank. Profits have never been higher. They're not being invested where they need to be invested. I think people, if they walk the talk, have got money to put into youth jobs. And I think, what I'm hearing here, is they're ready to do it.
RYDER: Now, we have to hold them to it.
QUEST: Now, how are you going to do that? Because that's the core thing. You're telling me that here in Davos, they're giving your commitments, or at least understandings that they're prepared to do this?
RYDER: I'd go as far as commitments.
RYDER: The International Business Council sitting there saying we're going to do it. They want Angel Gurria, they want the ILO involved, and they're ready to come and be measured by it 12 months time. Let's have this conversation 12 months on and see if I'm over optimistic or not.
QUEST: Well, that's one way of getting yourself invited back.
QUEST: Thank you very much, indeed. Keeping yourself in work. Many thanks, indeed, for joining us. The head of the ILO joining me.
Still to come on QUEST MEANS BUSINESS, we've got -- we've gone from director-generals and secretary-generals, we're going up the ladder, I think. We're going to presidents. Israel's president, Shimon Peres, gives me his view on Iran, and the president of the World Bank tells me more help is needed for the refugees at the crisis and the conflict in Syria. QUEST MEANS BUSINESS.
(BEGIN VIDEO CLIP)
JIM YONG KIM, PRESIDENT, WORLD BANK: This is a humanitarian crisis of enormous proportions, and right now, we are not responding effectively.
(END VIDEO CLIP)
QUEST: The US Treasury secretary, Jack Lew, has warned business leaders to be clear-headed about doing business in Iran. Speaking in Davos today, Treasury secretary Lew said "the core architecture of sanctions remains in place, and any significant relief for Iran would only come in return for agreement not to develop a nuclear weapon."
More happenings in Davos. Iran's president Rouhani says his country's ready to take the final step on the nuclear issue. Mr. Rouhani also insisted that Iran has a right to a peaceful nuclear technology. Addressing the WEF, he said he will push for improved ties with the world.
(BEGIN VIDEO CLIP)
HASSAN ROUHANI, PRESIDENT OF IRAN (through translator): Iran's economy has the potential to be among the world's top ten in the next three decades, a goal which I pursued in wider planning of social, economic, as well as domestic and foreign policy.
(END VIDEO CLIP)
QUEST: Israel's prime minister Benjamin Netanyahu says Rouhani's speech was "the latest Iranian show of deception," in his words. Mr. Netanyahu questioned Iran's refusal to destroy its advanced centrifuges and ballistic missiles if it is not seeking a nuclear weapon.
Israel's president, Shimon Peres, says Iran his no motivation to reach an agreement on its nuclear weapons program. I asked President Peres what he thought about a lack of agreement on Iran's nuclear activities.
SHIMON PERES, PRESIDENT OF ISRAEL: The president Rouhani spoke very movingly about Syria, about the killing, the death. But who's he kidding? The main killer today in Syria is Hezbollah. Who is supporting Hezbollah? Who is financing Hezbollah? Who is sending them arms? He. He has to answer. It's a very serious business.
And he says he doesn't want a nuclear bomb. Why build nuclear missiles if you don't put in them a nuclear bomb? There is no use for it.
The about peace. He was asked about peace. He wants peace with all. Then Mr. Klaus Schwab asked him, oh, you mean even with countries that you don't have relations with? So, he smiled. Which means he doesn't want peace with all.
And then, he avoided saying anything. Don't riddle the world. They didn't stand up to support the peace negotiations between us and the Palestinians.
QUEST: Do you fear that the other nations who have done this deal, the United States included, are just being led astray? They're being pulled along by a game by the Iranians? That's what really it comes down to, from Israel's point of view?
PERES: No, I think they have difficulties, too. But I think that President Obama is serious about it, because he knows the outcome if they don't stop at that moment. It may turn in the Middle East in a nuclear weapon. It's enough complicated to nuclearize it.
QUEST: When I met you in Tel Aviv in December, you said when I asked you would you meet President Rouhani, you said why not?
QUEST: Does that stand?
PERES: Yes. I think -- look, the Iranians are not our enemies historically, not actually. We don't have a joint border. I don't see any reason why we should have a conflict. The problem with Rouhani is his position, not his declarations. But if he will really do what he said, why not?
QUEST: The president of Israel, Shimon Peres.
Now, the president of the World Bank says more money is needed to help address the refugee crisis in Syria. President Jim Yong Kim says he can lead the push for more aid and is willing to lead the push for more aid for a crisis that's spilled far beyond Syria's borders.
The UN says at least 2 million Syrians have fled to neighboring countries, including Lebanon, Turkey, Jordan, Iraq, and Egypt. They've been the biggest recipients. At least half of the Syrian refugees there are children. Earlier this week, CNN's Atika Shubert witnessed the impact of the crisis in Jordan.
(BEGIN VIDEO CLIP)
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT (voice-over): Nothing prepares you for this: one jagged line into the horizon. Refugees from Syria, walking to safety towards Jordan.
SHUBERT (on camera): This is just such an incredible scene, hundreds of people coming across the desert, here, walking for 20 kilometers more just to get to this border post. I can see, they're just utterly exhausted by the effort.
The astonishing thing is how many of these people coming across are kids and how many of them are mothers on their own. This woman with four children coming across, walking for miles and miles. I don't even know how she does it.
(END VIDEO CLIP)
QUEST: President Jim Yong Kim and the World Bank have extensive experience dealing with these crises. He told me, if no one else is prepared to lead in this way, he is certainly prepared to take the lead. So, I asked the president what he saw in this situation.
KIM: In Lebanon, now a quarter of the population are refugees. And so, just to put a fine point on it, it would be as if twice the population of Canada came into the United States in two-year period. Any country in the world would have difficult doing this.
It's -- they're going to lose $7.5 billion in terms of GDP growth. The number of unemployed people in Lebanon -- Lebanese -- has doubled. This is a humanitarian crisis of enormous proportions, and right now, we are not responding effectively.
QUEST: What do you need? I mean, besides money.
KIM: We need money, but we need a concerted effort and a plan for dealing with the refugee situation, both in Lebanon and Jordan.
QUEST: But why is there not a plan by this stage? This war's been going quite some time now, and there's no peace in sight, and the refugees are going nowhere seemingly anytime soon. There's been plenty of time to put a plan together.
KIM: Yes. We suggested one.
KIM: We did a report on what's going on in Lebanon and we suggested one. But I think, sill, there are many political difficulties in sort of deciding who's going to step up, who's going to provide the funds.
We have given all the money we can under the rules of the World Bank, and we now need others to step up. Because there's enough going on that if there were financial support, we think we could make it work.
QUEST: Are you prepared to lead on this?
KIM: Sure. We'd be happy to lead. We've been doing everything we can in terms of our financial resources. If it takes somebody putting everyone together, we'd be happy to do it.
QUEST: Inequality in all its manifestations is on the agenda here. Now, that's good for you.
KIM: It's great. Very basically, 2.5 billion people in the world don't have access to financial services. This is a bank account, this is an electronic bank account, for example. Not having the ability to save is a huge problem.
Access to energy, 80 percent of the people in Africa don't have access to energy. You cannot participate in the global market if you don't have access to reliable energy.
And the other two things are pretty straightforward: invest in people, health, education, social protection. We have a report coming out today that says that 25 percent of growth is because of improvements in health. Those are no-brainers.
QUEST: How do you convince these people that it's in their enlightened self-interest to do what is right? And bearing in mind, it'll come at their cost.
KIM: Yes. Well, to have people like Larry Summers and Bill Gates sitting on a panel saying the smartest investment you can make is in health care. People are now understanding that education is going to determine the competitive abilities of a country into the future.
But still, many finance ministers are looking at the short term. They're looking at it as an expense. We've got to help them fundamentally change that view. And as they fall behind, they're going to get it.
QUEST: Can you do it?
KIM: You know, there are countries that already are doing it that are great examples. Turkey's having political difficulties right now, but their investments in health care back in the early 2000s are paying back multiple-fold. Thailand's investments in health care are paying back.
Even though they're going to go through ups and downs politically, they are realizing that these investments literally pay you back.
QUEST: That's the president of the World Bank talking to me on the question of inequality.
Still to come on the program, from Ukraine's prime minister, what started the dispute with the opposition in the first place? It was all over the decision to sign an agreement with Russia, not the EU. But why did they take that decision? You'll hear his explanation on the program.
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. Ukraine's prime minister says his police officers acted within the law when dealing with protestors. It's one day since four people were killed in violent clashes in the country. Speaking to me in Davos, Mykola Azarov said the streets are no place for negotiations.
MYKOLA AZAROV, UKRAINIAN PRIME MINISTER, VIA TRANSLATOR: The politics should be made not on the streets but in the Parliament. We (inaudible) our police with these and first of all called to stop all those violent actions, to stop capturing buildings, to stop attacking law enforcement officers.
QUEST: Iran's president Hassan Rouhani says his country's ready to take the final step on the nuclear issue. Speaking at the World Economic Forum here in Davos, President Rouhani insisted Iran had a right to peaceful nuclear technology and call the current U.S. sanctions against Iran illegal. Edward Snowden says returning to the U.S. is not possible because he's not covered under the whistleblower protections. The former NSA employee was responding to a U.S. Justice Department official who told CNN the government would be willing to discuss Snowden's return to the U.S. if he pleads guilty first. The Attorney General Eric Holder says a plea deal is possible if he admits breaking the law. Justin Bieber faces several charges in Florida including drunk driving and resisting arrest. Earlier the pop star left the correctional facility in Miami Beach after posting bond, but the police said they caught up with him after he was spotted racing in a residential area.
QUEST: So the underlying causes of the Ukraine crisis. The prime minister of the country says agreeing to IMF conditions would have sent his country into financial crisis. The decision to seek assistance from Russia and instead of a trade deal with the U.E. -- E.U. -- set the country into political chaos instead. The Ukrainian economy is feeling the ramifications , the currency at its lowest level in more than four years. I asked the prime minister if he had allowed himself to be bought by the Kremlin.
AZAROV, VIA TRANSLATOR: Why hadn't the IMF granted a loan toward the same sum -- $15 billion?
QUEST: Because you wouldn't agree to the conditionality.
AZAROV, VIA TRANSLATOR: And these conditions would mean even worsening of the economic situation in the state. Like that is in Greece and other countries. Greece cannot get out of crisis for six years, so should we have implemented the conflict of measures suggested by the International Monetary Fund that we would have faced a terrible economic crisis in the country.
QUEST: You are advocating exactly the arguments that were put forward against -- in the case of Greece or within the European Union -- anti- austerity measures.
AZAROV, VIA TRANSLATOR: No, we're just saying that let us make conclusions from the experience of Greece. Six years the country has been in the recession, and for six years it was getting a great amount of assistance from the European Union, great amount of assistance. This cannot (inaudible) be compared to the assistance we are talking about in the case of Ukraine.
QUEST: Whether you like it or not, you are now in Russia's pocket. And further away from the European Union than you have been. You must accept that, surely.
AZAROV, VIA TRANSLATOR: Well, I disagree with you completely. Well, the agreement which were -- the decision we was taking is just tactical decision, and that strategically we continue with the course to sign the agreement with the European Union. This is a fact, and the Europeans know about it. And here I would like to ask you -- you are known to be one of the greatest economic commentators. When a country absolutely clearly sees the perspective of bankruptcy, what are the decisions that should be taken? And the only decision possible was taken by us. And we will go out of this crisis. We are getting out of it. Because in the world market, gold markets are in U.E. now. The instability in the country definitely impeding with our intentions and we need to liquidate this political instability by the economic prospectus which is (inaudible) good.
QUEST: Now, the (inaudible) in Ukraine has clearly dented its economic prospects according to the EBRD -- European Bank for Reconstruction and Development -- which has cut the growth forecast for the country. The EBRD president, Sir Suma Chakrabarti is with me now. I'm sort of guessing that a cut in economic growth is the least of their problems at the moment.
SIR SUMA CHAKRABARTI, PRESIDENT, EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT: Well it's the result of not really following through on the reforms. They've need reforms for a long time. The dilemma that there faced in the last few months has been in a way caused by being unable to take those reforms.
QUEST: Fundamentally, to answer the question the prime minister put to me -- should they have gone for austerity or should they have gone -- through the IMF -- or should they have gone the route they took?
CHAKRABARTI: I strongly believe that Ukraine really required structural reforms in a number of areas.
CHAKRABARTI: So let me say -- outline some of them. For example, its corruption levels have always been an issue. So, the way the tax authority has behaved, the (inaudible) behaved, where the commercial courts don't really work properly in Ukraine, this is despite the legislation being in place. The problem Ukraine has always had is implementation of that legislation.
QUEST: And they go for a loan from Russia -- that doesn't make it better.
CHAKRABARTI: My view is there's not a question of going -- facing one way or the other, it's actually a question of facing up to responsibilities of any government, which is to actually follow through on promises it made to itself and to its citizens in terms of its own reform program.
QUEST: Here at Davos everybody's talking about the big issues of inequality, transparency, governance, particularly inequality.
QUEST: Now, you're -- in the areas that you are working in -- in the countries you work in -- you have more experience than most, don't you?
QUEST: What needs to be done to bridge this inequality gap?
CHAKRABARTI: Well, fundamentally, the thing that is really worrying me about inequality is it is strongly linked with youth unemployment these days. And youth unemployment needs (tacking) -- now there's a long-term stock that everyone talks about. Of course we will believe that -- education skills. But in the short-term, got to do something about this.
QUEST: You heard me talk though earlier in the program to the head of the ILO -- right here. You know, I've heard panels -- there was a symposium here today about it.
QUEST: But it's talk.
CHAKRABARTI: Well it's got to go beyond just the long-term solutions. The problem is immediate. And growth will actually slow down unless we deal with unemployment. They're linked. So it seems to me we've got to take the opportunities where we have them to actually -
QUEST: Do what though?
CHAKRABARTI: -- to do more infrastructure investment in particular.
QUEST: Do you really think infrastructure investment -- I mean, you're basically -
QUEST: -- saying shovel projects. Shovel-ready projects.
CHAKRABARTI: There are a huge number of infrastructure projects that simply have not been done in the last few years. So take the Balkans, an area we know well. Lots of infrastructure (projects / problems) across the board. Finally the Balkans -- their prime minister is getting together in London and the EBRD officers to actually agree -- a bunch of infrastructure projects that they can do together.
QUEST: Can you fund them?
CHAKRABARTI: Yes we can.
QUEST: Can you raise the money?
CHAKRABARTI: We've got the capital.
QUEST: You've got it already?
CHAKRABARTI: We have it already. We're actually in a very good position to fund them. We've got the ready projects, and Russia too -- huge infrastructure PPPs coming out.
QUEST: Good to see you, sir.
CHAKRABARTI: Good to see you again, Richard.
QUEST: (Inaudible) joining us here in Davos. Talking as we continue. Next, we're playing hide and seek in the mountains. But when delegates of Davos are almost nowhere to be found. Well, we found some of them, but they were few and far between. "Quest Means Business."
QUEST: Now, results (inaudible) this hour. Microsoft made more money than expected in the last three months of the year. New profit -- it's a very large number -- it's $6 and 1/2 billion dollars from Microsoft. There's still not word yet on the next CEO who will take over from Steve Ballmer after he retires later this year. So, lots of money for Microsoft and no word on a CEO. Not everyone is excited about what Davos has to offer. Some are even claiming to be a little bit bored by all the business talk that's going on. Without a sense of crisis, Howard Lutnick of the Global Financial Services Company Cantor jointed me earlier. Now, Howard is always a lively chap, especially when you have to get him to talk about what's going on.
HOWARD LUTNICK, CHAIRMAN AND CEO, CANTOR FITZGERALD: Just imagine coming -- every year we've had the financial crisis and the regulation crisis. Now everybody's just talking about business.
QUEST: Right, but that's what it should be like, surely. Does Davos work for you in those scenarios or are you too busy looking over your shoulder to see who's better to talk to?
LUTNICK: (LAUGHTER). Well, you end up just networking, talking, talking about growth, talking about your business.
QUEST: But you shouldn't -- you should be talking about the big issues of the day -- growth, inequality improvement, what the digital divide -- those issues. That's what you should be talking about.
LUTNICK: Well, I think -- I come for three days. I spend one day with my clients, one day about the economy -- the global economy and tomorrow I'm going to spend learning or thinking about how to be a better person, or learning or doing something interesting. Last year I spent the day learning about quantum physics.
QUEST: What will you learn this year? Have you decided yet?
LUTNICK: Not yet.
QUEST: OK, tell me about on the economy. The U.S. is growing 3 percent - -
QUEST: That's good. You must be happy.
LUTNICK: It's solid -- it's solid, solid, solid.
QUEST: Oh, come on -- give me a bit of enthusiasm.
LUTNICK: It's just -- because there's no enthusiasm -- OK, I'll be enthusiastic of its boredom.
QUEST: Really, it's that bad?
LUTNICK: Yes, look -- we have -- look -- they talk about tapering -
QUEST: Yes, yes.
LUTNICK: They're going to stop buying $85 billion a month in bonds -
LUTNICK: -- then (inaudible) $75 billion. Then they're going to buy $65 billion. And when they get to zero, you know what we will have? We'll have the easiest monetary policy in the history of the United States of America, except for the nonsense of buying your own bonds. So, we have zero interest rates, we're going to keep having zero interest rates, we have a slow-growing economy because Europe may well go into recession or at least it's going to be zero and that's going to hold us back and that's just -- nothing you can do about it.
QUEST: Howard Lutnick, always good to have him join us on the program. Now, here's a little statistic -- you may have heard it. The number of women in Davos appears to be melting faster than the Alpine snow -- 15 percent of attendees this year are female. That's down 2 percentage points. It's a woeful statistic by any definition. Michael Andrew is known to be the chairman of KPMG International. He joins me now. You may be the chairman, but you did bring a woman so to speak.
MICHAEL ANDREW, CHAIRMAN, KPMG INTERNATIONAL: All of us hopefully brought women, Richard. This is a wonderful opportunity I think to expose them to the agenda.
QUEST: Well, why do you think there are fewer women at Davos this year? And it really -- this year -- is it just one of those things. (Klaus) was very sharp about it. He says you've got the big decision-makers, you've got the big names but still -
ANDREW: It's symptomatic of (inaudible) problem. The reality is when you look at the statistic at the moment, we're not making any progress in terms of gender diversity and gender parity. Despite the business case -- we can argue there are women on boards, women in executive positions -- before men, where he's seen quote "as (drop)."
QUEST: Why is this though -- you were on an agenda panel here today, you've looked into this. Why do you think it is -- is it the glass ceiling again?
ANDREW: It's not being executed down the organization. Every CEO I talked to talks about the importance of (toning) the top, but it's just not happening. They are at middle management levels. They're not being considered for positions and very stereotypes are being put forward. I think we're not introducing enough flexible work practices.
QUEST: Is this because fundamentally the positions you're talking about there, they are the -- if you like -- the childbearing years when women take off and come out of the workplace to have children, and that's when they lose out going back into the workplace -- regardless of what the law might be.
ANDREW: And that's the critical phase. That's why employers have to be flexible -- that (inaudible) take a long-term view. So I had a lot of questions on the panel yesterday about the fact oh, I'm a lawyer -- I can't possibly work on big transactions. Well the (inaudible) is you can. You could talk to your clients, if you have multiple teams, if you use technology.
QUEST: You're big in -- I'll start that again -- you're big in social media this year. We were all big in social media,.
ANDREW: Not as big as you as you, Richard. You're number eight on the social media index.
QUEST: OK, so what -- see -- what does that mean?
ANDREW: It means that the world is basically watching Davos from afar, and tweeting back, and your incoming cause a debate is really ignited and is scattered right around the world.
QUEST: And yet, I can't help wondering what's the value -- (inaudible) quality debate, that is value. What is the value of the social media -- a contribution? I see it here at Davos, I'm tweeting as much as anybody -- @richardquest, by the way, @richardquest. We'll have that up before the end of the program if the producer in New York is listening, let's get those numbers up a bit more. And, but what is the -- what's the value of it do you think?
ANDREW: Well, you're aspiring to actually tap into what community opinion is actually saying, and people are participating. They're not just receiving, but actually seem to react on these types of issues.
QUEST: Do you think there's a difference between paying lip service -- i.e.., having your assistant or your PR department tweet and Facebook on your behalf and the authenticity of somebody like myself who it comes from my own thumbs?
ANDREW: Well, people hate spin. They want genuine, straightforward opinion. And the very fact that they see you (inaudible) stretching the argument, it provokes people. And that's a very positive thing. I mean we these days monitor social media to really try and get what is happening in any key issue -- crisis management, you know, new trends -- you're picking up straightaway within 48 hours as to what the public is really saying about your -- what your communication (study)'s about.
QUEST: Preferably it'll be one of your women employees that will find it.
ANDREW: I got plenty of that.
QUEST: Many thanks indeed for joining us.
ANDREW: Thanks, Richard.
QUEST: Thank you very much. Michael Andrew joining me, the chairperson of KPMG. Now, Jenny Harrison promised me snow and, Jenny, I'm delighted -- well, look -- let's have a look -- I don't wish to get too excited. Jenny, I'm going to get gingerly out here.
QUEST: I wouldn't say it's snow, I would say it's flurries, flurries, Ms. Harrison.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes, I can see something coming down behind you actually. I wasn't sure if it's even blowing off the trees. But I told you it's Thursday night into Friday. That is when you're going to get some snow arriving. So, you've really got to wait until then. But meanwhile, Richard, this is what it looks like in New York right now. This is looking across at Columbus Circle there, Central Park there. Of course the roads are clear. It's been a pretty good day, the skies are darkening now -- it's -7 Celsius as you can see and the winds are still rather cold. But, have a look at this -- you said about stepping gingerly out there, well, have a look at these pictures because unfortunately of course it's been very sunny but very cold so there's a lot of ice around. So all of these people I'm sure many besides came a bit of a (inaudible) you can see in the last few hours, so you also need to take care when you're out and about. Now in terms of what's going on next in the U.S., there's actually quite a bit of unpleasant weather working its way into southern regions of Texas -- some ice and some snow, some rain as well. So the warnings are all posted for the region over the next couple of days. And when it comes to temperatures, it was another bitterly cold morning. Look at this -- first of all, (inaudible) Winnipeg -- 34 Celsius, -23 is the average, -26 in Minneapolis. That cold air will stay in place as we continue through the end of the week as much as 20 degrees below the average all the way into the Southeast. But by Sunday, look at this -- most places coming back up to the average. Staying cold in New York but certainly warming up again in Chicago and also in Atlanta. Then we head to Europe. There's been lots of snow coming through, there's more in the forecast. Rain as well of course in the milder air, but this dividing line is where we're going to see some really heavy amounts across the Southeast. Look at this -- (Belgrade) 18 centimeters, 21 in Bucharest and all that means that it's very nice out there on the ski slopes. So, let's have a look at Switzerland St. Moritz -- some very nice conditions for the next couple of days. More snow in the forecast, just light snow, and in fact really one of the best places to get out there, Richard, is Davos on Saturday. That snow is coming down over the next few days another ten centimeters likely by the end of the weekend. Right now, as you see, you got a flu -- a few flurries, -3, and the forecast for the next few days good snow on Friday, Saturday is actually going to be a very nice day -- sunny skies out there, Richard if you manage to hit the slopes.
QUEST: Oh, with all the years I've been coming here, Jenny, I only want a snow, just a snow ski (inaudible) never been on the slopes. Jenny Harrison, thank you for that at the World Weather Center and we'll let you know tomorrow if your predictions or your forecast -- it's not a prediction, it's a forecast -- is right. I need to update you though on an update from Ukraine. The opposition leader, Arseniy Yatsenyuk, says in his words, there's a high chance of finding a solution to end the bloodshed. Opposition leaders are expected to address protestors in Kiev's main square. The pictures you're looking at the moment are live pictures in Kiev. It's coming up to midnight -- Thursday into Friday -- but still thousands of people are still in the square. Coming up in just after moments -- after the break -- Sweden's prime minister tells me there are trade barriers within Europe. Forget the single markets.
Male: I don't think the single market in itself works the way we have promised.
QUEST: More with Fredrik Reinfeldt after the break. This is "Quest Means Business." Good evening.
QUEST: Sweden's prime minister says there are too many trade barriers within Europe. Speaking to me here in Davos, Fredrik Reinfeldt says more trade would create more jobs throughout the E.U. I asked the prime minister about the painstaking process of setting up banking union.
FREDRIK REINFELDT, SWEDEN PRIME MINISTER: We want a strong banking union but we should remember that it's very much there to support the Euro as a currency and Sweden do not have Euro, so therefore it's very important for us to say, well, we have a very huge -- a very big banking sector in Sweden and we have asked for having actually higher capture requirements than others for instance.
QUEST: One of the topics this year and certainly into next will be some form of reappraisal of the relationship between the European community institutions and the country. David Cameron is seeking that. Where will you stand on these issues?
REINFELDT: We are not asking for a lot of new mechanisms and new structures. We do not believe in a super state that some think should be established. But that on the other hand, we see that we need a stronger Europe in the ways to -- to get this free market that we believe, and that's where we differ sometimes from U.K.
QUEST: Right, but you -- you're saying that you want to get it both ways.
REINFELDT: No, I think that a lot of -
QUEST: Do you want to see a repatriation of any (inaudible) from the (inaudible) of the state?
REINFELDT: No, that's not what we are asking for, and I'm not sure that that actually will fly, because that's a difficult thing to do. We already have the opportunity to say no to different parts. U.K. and Sweden is outside of the Euro, so we're not part of the different structures linked to that for instance.
QUEST: Do you fear like the U.K. fears that the single market might become sidelined or more marginalized as the Eurozone gets closer under its new regimes?
REINFELDT: There is such a risk, but both U.K. and Sweden has been very clear on protecting the ideas of the single market. But just to be very clear, I don't think the single market in itself works the way we have promised. So we still have a lot of trade barriers. Not between different continents but on this continent in Europe between neighboring countries. So it's in theory there, but in practice it's not working the way it should. And I think U.K. and Sweden should stand together to push on to get more free trade (inaudible) than we have.
QUEST: That's the prime minister of Sweden here in Davos. I'll have a "Profitable Moment" after the break.
QUEST: Tonight's "Profitable Moment." On "Quest Means Business" tonight, you really have heard a very good exposition on the economic issues relating from growth to unemployment to inequality to which I will also add poverty. That line between them all is clear. You also heard the solutions in many ways. The head of the ILO -- the International Labor Organization -- he wants to see some reforms. He wants to see apprenticeships, he wants to see more jobs. Meanwhile, Angel Gurria of the OECD, he talks about structural reform, he talks about changes in the workplace, and KPMG's chairman tells us about the women who are finding it difficult to get back into the workplace. What is clear from everything we've heard is there are no short-term solutions to these very long-term problems. But provided they're on the agenda here in Davos -- well, frankly, at least things are starting in the right direction. And that's a very good "Quest Means Business" tonight. I'm Richard Quest in Davos. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable.