BUSINESS-01
Government Controls Aleppo; Trump Considering Imports Tariff; Italy
Prepares for Bank Bailout. Aired 4-4:30p ET - Part 1>
Rachel Crane >
Torme (ph)>
Christmas market attack; the Syrian government says they now have full
control of Aleppo, which would mark a major turning point in the country`s
five-year civil war; The Trump transition team is floating the possibility
of tariffs on foreign imports; Italian lawmakers have approved $21 billion
in emergency funding to help prop up Italy`s ailing banks>
Banking >
[16:00:00]
RICHARD QUEST, CNN HOST (voice-over): (INAUDIBLE) on Wall Street. The Dow Jones is over. And the young gentleman has hit the hammer bringing trading to an end. The Dow has moved further away from the 20,000 mark, down 22 points.
It`s the only two-day losing streak since the U.S. presidential election. We`ll talk about the Dow and the markets in a moment.
Of course our coverage tonight beginning with breaking news from Germany, where the urgent manhunt continues.
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QUEST: A variety of developments in Berlin today, which, of course, is still the scene of that search for the attacker. Now the Berlin Christmas market where 12 people were killed on Monday has reopened and authorities are working to find the suspect that drove the truck into the crowd.
Investigators now believe that the 24-year-old Tunisian, Anis Amri, was driving the vehicle having possibly murdered the driver that was originally driving the vehicle originally from Poland.
An arrest warrant has been issued for Anis Amri. The forensic department of the German authorities found Amri`s fingerprints around in the truck, on both the inside and outside of the door and in the cab.
Police have conducted raids on Thursday at various locations in Berlin, North Rhine Westphalia and Heilboro (ph). No arrests have been made.
Chancellor Merkel spoke earlier when she said we know we are a target for Islamist terrorists.
Now as for who knew what and how long anybody`s known anything about this man, U.S. officials say the suspect was known to U.S. intelligence prior the attack. He was put on the no-fly list of suspected jihadist supporters.
We have got new video, it`s disturbing, of course, it shows the moment the truck drove into the Christmas market. It is brief but you can imagine the awfulness of the situation in what is otherwise a picture perfect Christmas scene.
And the video was captured on a private dashboard camera. So to the Tunisian suspect, whose family members have now been speaking out about his alleged role in the Berlin attack. His brothers are expressing shock and sadness in what has happened.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): No human being wishes for something like this to happen. Anis never told us about his life or who he was as a person. When he left Tunisia, he was a normal person, he drank alcohol and didn`t even pray. He had no religious beliefs. My dad, my brother and I all used to pray and he didn`t. Maybe he got into this when he was in prison, where he met Algerians, Egyptians and Syrians.
UNIDENTIFIED MALE (through translator): He doesn`t represent us or our family. If he is watching now, I just want to say, may God guide you for putting us in this situation. Your father and mother are crying. People left their jobs to come and see us. You have caused so much chaos.
What can I say?
(END VIDEO CLIP)
QUEST: Joining us now tonight, Paul Cruickshank is CNN`s terrorism analyst. So much to digest. Let`s start with what was known about this man. And how -- even though he was -- I want to follow on from what we talked about last night. Paul.
Even though he was known to the authorities, until he actually does something, there is not much that they can do about him other than watch.
PAUL CRUICKSHANK, CNN TERRORISM ANALYST: Well, they certainly had a lot of information about him because there was a police informant within this ISIS recruitment network to which he belonged inside Germany, who was feeding information back to German investigators and security services, information which included the fact that Anis Amri had, on several occasions, talked about wanting to launch an attack.
There was also information that he was trying to get a weapon at a certain point and the other members of this circle had discussed launching a truck, ramming attack on a crowded area in Germany and then filling the truck up with a lot of gasoline and explosives.
All of that very disturbing information that was coming in months ago to German security services. And what they decided to do with all this information is to go after the ringleaders of this network, the five top people, who were proselytizing, trying to indoctrinate these youngsters, either to send them to Iraq and Syria to join ISIS or to launch attacks --
[16:05:00]
CRUICKSHANK: -- in Germany itself. They arrested them. They`ve been charged and now there will be a trial but they didn`t go after some of the footsoldiers, including Amri, who is a violent thug, basically as far as we understand ,based on his trajectory. Someone who is radicalized as well.
And of course we saw the results play out like they did and the warning now, Richard, is that there are others still out there, part of the network, other foot soldiers who might move forward with attacks.
QUEST: I think we can say with almost certainty that there are others out there in that sense. The U.S. knew about him ,not just in some esoteric sense. The U.S. knew about him sufficiently to put him on a no-fly list.
CRUICKSHANK: Basically because the Germans would have alerted them because the Germans had all sorts of information on him and as a matter of course, they share that information with the Americans and with other Western intelligence services. I don`t think there any evidence the Americans had separate independent information on him. But it is interesting that the American judgment is that some members of this network were in touch with ISIS in Syria and Iraq. And of course that would stand to reason, given they were funneling recruits all the way there.
QUEST: Where does this investigation go now?
Because -- and I don`t mean to find him, because eventually they will or they won`t, he will be caught dead or alive at some point -- but to your much graver point, Paul, that I think you will probably agree there are other radicalized independent Islamist terrorists of this nature waiting for a moment to pounce and act.
CRUICKSHANK: Well, here are the numbers. Tens of thousands of people that have become very radicalized in Europe, who are on the radar screen of European security services, and that`s just the ones they know about, Richard, thousands, up to 9,000 now traveling to Syria and Iraq to join groups like ISIS, several thousand, creeping up on 3,000 now who`ve come back to Europe.
And all of that means an attacker comes from anybody at anytime and it is very hard for them to predict who is moving forward and who is not going to. It`s such a huge challenge they have to prioritize; it is basically like doing triage, right?
You make judgment calls every single day about where you put your resources because they`re very finite resources within these security services and sometimes you get it right and sometimes you get it wrong. They got it wrong this time.
QUEST: Paul Cruickshank, who is in London watching with interest, Paul, thank you for that honest assessment of the events to date.
Now the Syrian government says they now have full control of Aleppo. That would mark a major turning point in the country`s five-year civil war. Syrian state-run news is reporting the last convoy carrying rebel groups and their families have left. The evacuation of the bombarded city is now complete.
Muhammad Lila is near Turkey`s border with Syria, joins us now.
I want to take this at a fair pace, Muhammad, because there is a lot of ground to cover.
Firstly, so the rebels have gone, is anyone left in East Aleppo?
Who would still be there, if anybody?
MUHAMMAD LILA, CNN CORRESPONDENT: Well, the idea was to evacuate all of Eastern Aleppo from rebels and civilians. We know the civilians were evacuated some time ago. And the Red Cross told us the only groups really left, the majority of the people left were all rebels and fighters.
But now we have confirmation from the rebels themselves that Eastern Aleppo has been evacuated and is basically empty. The Syrian government knew this would happen, it was choreographed weeks in advance of how this would all take place with the cease-fire agreement. They said they will send in army engineers to go into some of these buildings.
And once that give that all clear, the idea from the Syrian government is to try to repopulate those areas as quickly they can and try to get life back to normal, which, Richard, is almost impossible, given that that part of the city has been bombed almost every day for the last several years.
QUEST: All right, so the significance, as I alluded to in the introduction, of the Syrian government now having control of all of the major population centers, does this mean -- all right, the fighting may move to Idlib province and it may move to a northern and the Kurds may have some issues elsewhere.
But does this mean to all intents and purposes Assad won?
LILA: Well, just -- if you look at the facts on the ground it`s difficult to go that far and say Assad has won because we know, like you said, there will be pockets of violence that --
[16:10:00]
LILA: -- will continue for months if not years. But the reality on the ground as you say is that Assad and his forces now control every major city in Syria.
And Richard, years ago, that was unthinkable. We were talking about Assad maybe falling in three months or six months. The reality is he survived all of this thanks to help from Russia and Iran but, look at how incredible this is, he will now outlast President Obama. Bashar al-Assad will stay in office longer than President Obama.
Well, that`s simply incredible.
QUEST: So let me take you into very deep waters.
At what point does the realpolitik of this become clear in Washington, London, Berlin, Paris and they finally recognize we`re going to have to come to an accommodation with Assad?
It`s not realistic to expect him gone.
LILA: Well, one of the biggest players in the region has been Turkey and there has been a lesson there, I think, in the way that Turkey has approached this. Turkey been backing some of many of the groups in fact that have been fighting Assad.
But they recently came to the table with Russia and Iran and came to an agreement. Now the full details of that agreement we`re not aware of yet but from what we understand, it looks as though Turkey changed their view and said, OK, for the longest time, we have been saying that Assad needs to go.
But now we`re saying maybe he doesn`t need to go. Maybe we just need to focus on having a cease-fire in Syria. And the rebels have been begging for help from the United States and Western countries for such a long time. That help in a meaningful way never came.
And when that help didn`t come, Russia and Iran and, to a lesser extent, Turkey, were able to fill that vacuum. And that`s why those are the main players in Syria right and all of the cease-fire agreements and everything that has been negotiated was done completely absent of the United States and Western Europe.
QUEST: Muhammad, we`re very grateful that you`re there making it as clear as possible to us on the situation. Thank you, sir.
Now as we continue on QUEST MEANS BUSINESS and the breaking news, curbing free trade, it was a cornerstone of Donald Trump`s candidacy. Careful what you wish for. The president-elect looks like he could follow through. There is a possibility of import tariffs that we`ll debate -- ahead.
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QUEST: A warning shot to U.S. trade partners. CNN has learned that the Trump transition team is floating the possibility of tariffs on foreign imports. Sources say one idea of Donald Trump and his advisers they`re debating is a tariff of 10 percent on imported goods. No decisions have reportedly been made but any tariffs would likely be met by stiff opposition from business leaders as well as potentially factions within Trump`s own Republican Party.
Rana is with us.
RANA FOROOHAR, ASST. MANAGING EDITOR, "TIME": Hello, how are you?
QUEST: Good to see you.
(CROSSTALK)
QUEST: I wish I could wish you season`s greetings --
(LAUGHTER)
[16:15:00]
QUEST: -- we`ll have to do it at the end -- but we have tariffs to get to grips with.
If this is general universal tariffs across all imports, with a view to shifting literally the terms of trade, what would you make of it?
FOROOHAR: Well, it would be a sea change, right?
The U.S. has been the ambassador of free trade for the last 40 years.
(CROSSTALK)
QUEST: This would includes allies like the E.U., like Germany, like Japan --
FOROOHAR: Yes, well, it`s interesting. A huge sea change, right, it basically is a line in the sand saying the era of free goods, services, movement of people, everything has changed. The U.S. was the ambassador of that for the last 40 years. That`s really defined the capitalist order. Big, big shift.
QUEST: Now, the reason -- let me be devil`s advocate here, Donald Trump says that would help shift jobs back to the United States. In one very simple way he is right because clearly it would give U.S. manufacturing a chance to get a foothold.
FOROOHAR: I`m going to disagree with that. I can -- let me back up and say there are actual reasons for jobs to come back to America. There are a lot of reasons for that.
Many companies have pulled jobs regionally all over the world for many reasons. To hedge energy prices, to hedge some of the political risks that you`re seeing now in the big supply chains, like in the South China Sea or chaos in Europe because the migrant crisis. That is all legitimate.
But if you think about why manufacturing jobs would come, they come because U.S. workers are more productive. Tariffs do not make U.S. workers more productive -- training, investment, that is what makes them more productive.
(CROSSTALK)
QUEST: They raise the cannot of the import to the point where the domestic product could be competitive?
FOROOHAR: It could be but again, this is at the margins and at the same time it is a signal. What worries me is even a small hike-up in across- the-board tariffs. OK, you can say maybe that only shaves a little bit off GDP growth; it has this effect of making U.S. goods more competitive.
But think about what it signals to the rest of the world at a time when you have nationalism rising. You have got Europe possibly falling apart this year with the Italian debt crisis, with elections of populists in any number of countries.
This is what worries people, that --
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QUEST: No, no, Ms. Foroohar, it doesn`t, it sends a signal that says America means business once again and nobody is going to eat our lunch.
FOROOHAR: You know what I want to see for that signal?
I want to see a fiscal stimulus plan. I want to see some real investment in factories, in roads, in bridges and all of the stuff that we know as people who travel abroad, are falling apart in this country. That`s one of the really great things that the Trump administration has proposed. That`s what we need to see, not a tariff situation or a trade war, God forbid.
QUEST: All right. So we have got Carl Icahn, who`s going to be special adviser on regulatory and going to have a say in who`s going to be the next head of the SEC, isn`t that a bit like letting the poacher choose the gamekeeper?
FOROOHAR: You know, yes, in some ways, yes. And it`s an easy point to make. Mr. Icahn, who I know well, is very opportunistic. But here`s what I think is interesting. I suspect that people think Carl Icahn advising our regulatory issues is going to mean that we`re going to see financial regulation rolled back.
That`s not where his head is. I think you may see Trump getting tough on environmental regulation and on EPA stuff. I think that that is something Icahn would certainly advise on. I don`t think you will see a wholesale rollback of Dodd-Frank or anything like that.
QUEST: Were you planning on having a relaxing holiday season and a gentle new year?
(CROSSTALK)
FOROOHAR: Not at all, it`s a bumpy ride for the next year, I`m buckled in.
QUEST: This is the last time I get to see you this year, so thank you for --
(CROSSTALK)
FOROOHAR: Always a gift to be on your show.
QUEST: -- and it`s a present we thoroughly love having. Thank you very much indeed.
FOROOHAR: Thank you.
QUEST: Now President-Elect Trump has announced the formation of a new office that`ll help keep jobs in the United States, assuming, of course, the tariffs that we`ve just been talking about.
It is called the White House National Trade Council and he has appointed the economist Peter Navarro to lead it. Professor Navarro was a key economic advisor to the president-elect during the campaign. He is a long- time critic of China and he appeared on QUEST MEANS BUSINESS in August when he told us it will not be business as usual for Beijing anymore.
(BEGIN VIDEOTAPE)
PETER NAVARRO, ECONOMIST: If we`re trading with China, and they manipulate their currency; if they engage in illegal export subsidies, if they still our intellectual property, if they run sweatshops and pollution havens, if they engage in the force technology transfer, all this stuff is against the rules of fair trade in the international arena. Donald Trump will act.
(END VIDEO CLIP)
QUEST: Now the Trump team in some ways is a team of rivals when it comes to trade and China policies. Let`s just take a look. Bearing in mind, they`re also a team of extremely wealthy men. Navarro perhaps --
[16:20:00]
QUEST: -- not so wealthy, professor. We`ve already talked about he was an outspoken critic of China. But then you have got the Commerce Secretary, a billionaire, Wilbur Ross, who made a fortune, as you`ll be familiar, in distressed assets. Now he was against TPP. And he does favor restriction. So that puts him in the Navarro camp as well.
Carl Icahn similarly billionaire, goes back to the `70s and the `80s. He is the regulator advisory or the advisory on regulatory and reforms and he`s a great critic of regulation. So those three at the top are absolutely going to pummel ahead with the Trump agenda.
How about Gary Cohn (ph), who is the director of the National Economic Council?
He has called on China to explain policies more clearly. But obviously he comes from Goldman Sachs and is largely, widely going to be far more of an internationalist and consider the effects much more of trade rather than the three on the top.
And secretary of state nominee is Rex Tillerson. another very wealthy man. He could drive a wedge between Beijing and Moscow. Remember, he has known Vladimir Putin well since the 1990s.
And then you have got the ambassador to China, Terry Branstad, the governor. He has a tremendous understanding of China, says Trump`s spokesman. So those are the nominees and they`re going to be part -- they are the team. The Huntsman (ph) Corporation is a chemical manufacturer. It has dozens of locations and billions of dollars of sales in China.
Peter Huntsman is its president and chief executive, joins me now live from San Diego.
So you heard my introduction. You heard the team, Peter, that will be there.
Which route do you think they will take with China?
PETER HUNTSMAN, CEO, HUNTSMAN CORPORATION: Well, Richard, first of all, thank you very much for the opportunity to be on your show here. I hope the route that they take is a 21st century route here. I first visited China in 1978, roughly the trade volumes between the United States and China at that time were about $2 billion per year.
We do that much per day. And as we think about things like NAFTA and even the W-2 agreements, we`re talking about agreements that are decades old. China and the United States does not even have a trade agreement today at all. There`s nothing even to criticize today.
And so I think that at -- first and foremost, we need to bring the relationship up to a 21st century sort of mark.
QUEST: Are you horrified at the prospect of these tariffs that you may have heard us talking about earlier, the prospect that an idea floating around the transition of perhaps general universal import tariff of up to 10 percent?
HUNTSMAN: I`m not a big fan of tariffs. I don`t think at the end of the day that they accomplish a great deal of good. But I would like to see an entire comprehensive package, not just one or two pieces of it that may be leaked for negotiating purposes and so forth.
Again, as you look at this relationship between China and the United States over the last 30 years, it has benefited both nations, created huge employment opportunities on both nations. I think that`s going to continue.
All right, but what is it business leaders like yourself want?
I`m obviously familiar with the views of your brother, who is ambassador to China.
But what do you want, sir, as a businessman?
HUNTSMAN: I would like to have fair trade, not necessarily free trade but fair trade. Take something like intellectual property. Over $300 billion per year worth of intellectual property is stolen or used or misused or misplaced in China.
How about environment issues?
NAFTA, WTO agreements, none of these agreements even begin to address the environmental issues. The competiveness between the two countries and two companies. So I would like there to be some equal playing field on regulatory and to see that we can -- currency manipulation, labor rights and so forth.
Again, 21st century sort of items.
QUEST: But that you`ve just espoused the Trump agenda, are you prepared for the consequences if tariffs, if restrictions, if a more muscular U.S. trade policy is introduced?
Are you prepared for tit for tat from the other side?
HUNTSMAN: Well, I -- look, every administration, whenever they come in, they always talks tough about China. Once you actually get in and the business is set and you start the relationships with people and you start to see how much we have at stake, how much debt China carries, both sides, how much --
[16:25:00]
HUNTSMAN: -- goods and services are on both sides of the Pacific and the opportunity that avails itself. These agreements, there is no doubt that they need to be modernized and brought up to date. But I think at the end of the day, 5-10 years from now, this is going to be a strong relationship going forward.
QUEST: Peter, as I wish you a happy holiday season, I do have one final request. Please, as the administration takes place and moves into office, over the months ahead we`re going to need you, sir, more often to help us understand what`s happening from a business point of view.
So please do come back on QUEST MEANS BUSINESS.
HUNTSMAN: Richard, I`m a huge fan of your program, been watching you for 15 years and thank you very much.
QUEST: Thank you, sir, a very happy season to you and your family.
Now we need people like Peter on the program to give us an insight into what actually is the real business. Never mind the politicians and the pundits. We need people who are actually doing real business.
Dow Jones, look at that, it starts the day down, it gets even lower, we have a bit of a rally but pretty much throughout the course of the day we knew 20,000 would have to wait for another day.
So what I`m seeing here, although the index has moved away from 20,000, the actual loss of 23 points shows that there is still some energy and the number`s still at 19,900. But it`s the first time the Dow has dropped two days in a row since Donald Trump was elected.
You have a look at the European numbers and you see a mixed session across the region. Let us not waste time, too much time because, frankly, everyone is at holiday parties. They`re probably at the Schnapps and the sherry and the mince pies are being served. And I really hesitate to say more than look at the numbers, because frankly it is meaningless just a day or so before Christmas.
Stocks in London providing the only bright spot, flat elsewhere. In Milan, the (INAUDIBLE) edged down. It was banking stocks, shares in Monte Dei Paschi sank more than 7 percent because time has just about run out for the Italian lender. The board is on the brink of going cap in hand to the state.
It`s the world`s oldest operating bank and it`s failed to raise $5 billion in fresh capital. Italian lawmakers have approved $21 billion in emergency funding to help prop up Italy`s ailing banks. But it will not be that simple, as you would expect.
There are E.U. rules that stipulate no bank can be bailed out until creditors take the first hit. It`s the banking directive. Lorenzo Codogno (ph) is the visiting professor at the LSE European Institute. He`s live with me now from London.
Professor, this bank shouldn`t be bailed out, it`s not that big a bank, it`s not structurally significant. The banking directive is clear. They should bail in before they bail out.
LORENZO CODOGNO (PH), LSE EUROPEAN INSTITUTE: Well, you know, the view taken by the Italian government, together with the commission, it looks slightly different. In other words it has been allowed to recapitalize the bank according to one article of the bailing directive that says that if there are concerns about the financial stability of the system, then the government can step in and inject capital into the bank with some partner sharing of investors.
Partner sharing means that probably equity investors will be completely wiped out; the junior bondholders, subordinated bondholders, will have some kind of haircut and their positions will be swapped into equity and probably senior bondholders and depositors will be safe.
QUEST: Right. So if -- how bad -- in a nutshell -- in a couple of choice sentences, $21 billion is waiting to go into the banking system. That will not be enough, probably.
How bad is the system and is 2017 the year it all happens?
CODOGNO (PH): Well, oddly enough, I think that is exactly the other way around. I think that this situation has dragged on for a long while and it should have been addressed long ago.
So there has been a necessary delay and now we`re getting to the point in which the situation is addressed. So it is positive for two reasons. First of all, it provides a backstop, so we know for sure now that the government will step in and basically provide the necessary capital for the bank.
Secondly, I think there were concerns in the market that there would have been some kind of mutualization with other sound banks in Italy. So sharing the losses effectively. And this is not going to happen. So it is good as well.
QUEST: Professor, I wish you a happy holiday season. We`re talking banking on Christmas Eve. There we go, sir, thank you very much indeed -- or the eve before Christmas Eve.
Well, you know what I meant.
The Christmas market in Berlin is the target of the terror attack on Monday. It`s now Thursday and that market has been reopened. There are candles and there are flowers and there are tributes. We`ll be back in Berlin in just a moment to update you on the investigation.