Reuters Insider - Davos Today: Friday 2016

Telesat

23/01/2016 02:29

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                 Good morning, everyone. Friday, January the 22nd. This is Davos Today, brought 
to you by Reuters and the World Economic Forum. On today's agenda, it's a busy 
one, a timely address from Mario Draghi, the ECB Chief, a special address from 
the US Secretary State John Kerry, and an insight session with actor Kevin 
Spacey. Our guest host today, Angel Gurria, OECD Secretary General, very good to
have you back, back by popular demand. So it's a busy day. We've got lots and 
lots to talk about, plenty of guests. Let me first though bring you this 
morning's headlines. Ahead of his Davos address, John Kerry insists Syria peace 
talks will go ahead this month. But with just days to go, rival camps are 
bickering about who should be invited to take part. South Korea's President 
calls five-party talks excluding North Korea to discuss Pyongyang's nuclear 
program. Deutsche Bank's shares down nearly 10% Thursday after the bank warned 
of a record loss for 2015. And Asian markets put in a strong-ish showing after a
hint of more monetary easing from the ECB and a boost to crude. Alright. Let me 
properly introduce our guest host for this morning's show. 

He's a veteran player in international affairs, not to mention a wit to 
reconnoiter, an all-around character. Excellent to see you again, thank you very
much indeed. Good morning, very early morning. It is indeed. Alright. We have 
lots and lots to talk about. I'm going to kick it off with something I've 
already mentioned which is Mario Draghi. He spoke again yesterday. The markets 
liked what he said. It smacks of this "we'll do whatever it takes" speech from a
few years back, wasn't quite that obvious. But has he done the right thing? 
Absolutely. 

But this is about the recovery of growth. It's not about the stock market. It's 
not about Shanghai. It's not about these crazy isolations of up 6% one day, down
6% the next day. It's about the fundamentals on which we absolutely focus. 
You've not doubt spoken to a number of policymakers here in Davos. Are they 
getting tired of all this talk of equity markets? Are they saying to you look, 
we need to focus on the fundamentals here. We've got to stop fretting so much 
about the equity markets and the markets in general? Well I think it is 
fundamental that they stick to the fundamentals and that is—there's a lot of 
distraction with this stock market story. I mean who remembers about August of 
last year in the stock market gyrations in the Chinese market? Well, it's now 
like a footnote. And then things went on and, again, the question of focusing 
– we've run out of monetary policy almost. 

Mr. Draghi is kind of firing both guns. But the central bankers deserve a 
statue, a medal, whatever. But it's now the policymakers in the Treasuries, in 
the Ministers of Economy and the Ministers of Energy and the Ministers of 
Innovation, et cetera. Those are the ones we have to take— On the central 
bankers, you recall the OECD was calling for the Fed to raise for quite awhile. 
The Fed then didn't. In light of what's happened since, do you take that back a 
little bit? 

I mean there's been some question there. It was so again distracting. It was 
0.25%. It was no lift-off. Lift-off was the wrong word because it was going to 
go gradually slowly, kind of almost sideways, slightly tilting upwards. And this
is what is going to happen? This is what has happened? It signals a 
normalization. But I think everybody's taking into consideration the fact that 
things around the US are kind of slow. And therefore, that will be a 
consideration for future policy decisions. We're going to be talking with the 
Finance Minister of Colombia in just a second. Emerging markets are clearly 
worried. Brazil is clearly a worry. The capital outflow's clearly a worry. We'll
ask him about this in a second, but how worried are you? Well, that's a big 
change in the story. I mean Colombia is a success story. It's a good story. But 
the problem of overall emerging markets is that they were the engine of growth 
for the last 10 years and now they are part of the problem because some of them 
are absolutely in the repair shop, take the case of Brazil – very negative 
last year, still negative this year, so two years of recession. And that 
obviously is taking away some of this steam, some of this momentum. Russia is 
also in recession. And the others are kind of slow. China in particular, at 
about half the rate of growth that it used to have a few years ago. Perfect 
timing. We have Mauricio Cardenas, Finance Minister of Colombia, joining us in 
the studio. Very good to have you back. Thank you very much indeed. Minister, 
how do you do? Secretary. Look, we've got—clearly, there are worries over a 
number of the emerging markets. Let's start with oil, we haven't mentioned oil 
yet. I think Colombia's, it's cost you what? COP20 trillion or thereabouts, the 
fall in the oil price. We talked about it last year. It's even worse this year. 

How are you coping with that? Well on the fiscal side, we're adjusting. We just 
have to cut expenditures to make sure we meet our fiscal deficit target. That's 
something that is fixed in our economic landscape. And on the current account of
the balance of payment, which is another consequence of the decline in oil 
prices, we have to make sure that we do everything necessary to reduce it. The 
decline in oil prices has increased our deficit and basically we have to expand 
other exports or cut imports. Okay. I was saying before you arrived that the 
case of Colombia is a good story, regardless of these vagaries of the price of 
oil. How is it that you have navigated more successfully than the others? What 
made the difference? What made it happen? 

Well, I think the world needs good stories to tell. There's liquidity. There is 
cash. And investors are looking for opportunities. So differentiating yourself 
is fundamental. Here, what we have done is adopt very strict macroeconomic 
principles – low inflation, low fiscal deficit, low public debt. That is 
something that investors like. And on top of that, we're dealing with Colombia's
most pressing issue which is five decades of conflict. 

The peace negotiations. The peace negotiations. And we've very optimistic about 
this year, being able to settle that and to come to an agreement. And that of 
course will be an upside for investors. Okay on that, clearly the tax reforms 
are a big deal in your country right now as well. With the Liberals unhappy and 
talk of them leaving the government, how distracted is the government by that 
issue, and how will that impact other projects like the one we just discussed? 
Well, the fiscal consolidation is a must, and that's something we're going to do
anyway. We need to adjust to a new reality which is that we have less fiscal 
revenues coming from the oil sector and we have to offset that either with 
additional taxes or with lower expenditures. We have managed to deal with that 
situation in a pragmatic way by basically cutting expenditures and raising 
taxation. 

On the issue of the costs of peace negotiations, yes there may be a cost, but 
there is also a positive economic dividend associated with faster economic 
growth, with the fact that there'll be more foreign investment. And I think the 
two— There's also social dividends, environmental dividends, and other 
dividends. Peace in Colombia is good for the world, it's not just for us. Peace 
in Colombia means more effectiveness in the fight against drug trafficking, 
better preservation of the environment. It's very good for all the strategies 
against climate change. Will you meet the deadline? It's March. I think it's 
going to be soon. I don't want to say specific date, but this is moving forward.
This week, there was an important agreement, component of the negotiations 
related to how the FARC are going to surrender their arms. The UN Security 
Council is going to help in that regard. So I think there are good reasons to be
optimistic. 

Central bank starting raising rates I believe back in September. Are we going to
get another one? Do we need another one? Well, our inflation rate is above the 
target. We have a 2% to 4% target and the current inflation rate is 6.7%. So I 
don't think the markets will be surprised by another hike. Are you affected by 
the problems of your neighbors, trading partners in the region – South 
America, the Andean? Absolutely because we have—the most pressing issue today 
in Colombia is the current account deficit, and that is a result of the decline 
in oil prices. Our currency has depreciated. We have a flexible exchange rate. 

But exports have not picked up as fast as one would like. And one of the reasons
is that our regional markets – Venezuela, Ecuador – are not doing well. So 
we are dealing with that as well. We have that shock in addition to the oil 
price. A quick final question, very timely as you're both here, Colombia is 
talking of course to the OECD about joining the OECD. How are those talks going?
I don't know what you could say right now, but how are the accession talks 
going? How quickly can this happen? Steady progress as far as we see it. They're
in direct contact with all the committees that have to express independently and
individually their opinion about the fact that they're satisfied about the 
policy framework and about the practice of the policy framework. So that's 
moving along. I think there's going to be a lot of things to worry all of 2016. 

And we believe that 2017 is a time when the political decisions will be taken 
for accession. How high on your priority list is this? Very high. I think it's 
the top item in our international economy policy. And we're very happy with the 
process. We like to see the OECD not as the club of the rich countries, but the 
club of the good practices. So conforming to those practices is something that 
we really want. He's so smart you know. It's a pleasure to see you again, 
Minister. Thank you very much indeed, appreciate it. Now, Chile is in the 
process of changing its growth and budget forecasts. Finance Minister Rodrigo 
Valdes says developing countries just quickly to deal with the prolonged 
economic slowdown. Reality is that we are having headwinds are new for the 
region, at least in comparison to the last 10 years. It's a different shock from
2009. When you have a V-shaped shock, you can do many things in the short run, 
not to adjust too much, go against the wind, and you will grow up. Here, it's 
sort of a gradual shock that comes in and commodity prices in particular, it's 
important that we adjust to this new reality. The worse thing that you can do is
to think this is not happening. UK Prime Minister David Cameron is a man on a 
mission. He's been touring the whole city, drumming up support for his 
negotiations to keep Britain in the EU. But he was clear, no deal at any price. 
If there's a good deal on the table, I will take it and that's what will happen.
But I do want to be very clear, if there isn't the right deal, I'm not in a 
hurry. I can hold my referendum at any time up until the end of 2017. Just as I 
said, it would be a historic, mortal error for EU to have let Greece leave the 
Eurozone. In the current situation, to see the UK leave Europe would be a 
tragedy. I do believe that we need the United Kingdom to stay in the European 
Union. The United Kingdom is outward looking, is straight-oriented, is 
growth-oriented, and we do not have enough of that storyline, of that tradition,
of that culture within the European Union. Well, one man who thinks Britain 
should stay in is David Miliband, former UK foreign secretary. He spoke to our 
Editor-in-Chief Steve Adler earlier. The dangers I think of being, becoming 
clearer for the British public, the American trade representatives said, "Look, 
there's no chance of negotiating bilateral trade deals." On the other hand, the 
refugee crisis provides a very challenging backdrop for the referendum campaign 
so I would still say it's a risk rather than a likelihood that British people 
will vote. Look, British people have a lot of common sense and frankly, any 
common sense understanding of the situation would say it costs British people 
GBP1 per person per week to stay in the European Union more or less - GBP1.40 I 
think per person per week. And for the benefits we get, they more than outweigh 
the cost. Mr. Gurria, is it going to happen? Brexit is not going to happen, 
Grexit is not going to happen. The European Union is going to stay, probably get
bigger because it is the largest trading bloc in the world and more and more 
people in more and countries want to join it. The question of whether they'll 
join the Euro or not, I would say, is not the fundamental issue. Eventually, 
there will be a move towards a consolidating, more countries into the currency 
but maybe you're not going to see a number of them rushing into that. The 
question is, is there going to be a deal? Of course there's going to be a deal. 
They say February is going to be very critical - I hope - because it's not a 
question of waiting until the end of 2017. Right. The sooner we get rid of that 
uncertainty, the better. This is hanging, this is a real issue. This is one of 
the real fundamental issues hanging over the fate of at least of Europe and of 
course it does have a systemic impact. So, let's be done with it and move it to 
the side and get on with the fundamentals. So you don't even want to talk about 
the "If it happens" story? Okay, okay. No, not at all. I'm not considering that 
it's going to happen. I think there's a lot of common sense in the British 
people, I mean, I've lived there twice and my children have dual Mexican and 
British citizens, they pay taxes. So, I have a stake in here and the whole 
question is, this is too important to be urgent and this is too important to be 
rushed. There are going to be you know, give and take negotiations but it's 
going to happen. There's too much at stake. Just heard that - a second, complete
change of attack here but I want to get your views on it. 

Christine Lagarde has just said she is going to go for a second term at the IMF.
Welcome. Let's get your immediate reaction to that. Welcome, welcome. She's a 
trusted wonderful colleague, she's done a great job - Does a lot with you guys 
at the OECD? Yeah, we have all the time. You know, every day we have something 
that we're doing in common. She is- she was described several times as 
formidable, she is. So, this is very welcome and I hope that the member 
countries come through and again, get that done. You know, I've just been rented
my - renewal of my own mandate so once that's still, you can thank me even long 
term, you can start planning for the next few years so that's very good news 
indeed. Excellent. All right. 

Now, another change of tact but we ask, are US markets pricing in a Clinton win 
in the presidential election? New York University economist Nouriel Roubini says
any other scenario would really add to jitters. Suppose that instead we are 
likely into where the fall trend and Sanders is the candidate for the Democrats 
and suppose Trump is the candidate of the Republicans, honestly, I don't know 
which one will be worse for the United States. It's a really tough call. And 
then markets are going to really be rattled by that. We're not yet there. I 
would say that among the reasons why the markets are nervous so far, you know, 
Trump is not still considered as a serious candidate and even if he were to 
become candidate for the Republicans, most likely, he will lose to Hillary 
Clinton. Well, there can't be many Washington insiders who know more about how 
all this is playing out but my next guest, former House Majority Leader Eric 
Cantor, welcome, to the Reuters set here in Davos. Let me ask you first, you're 
backing Jeb Bush for this? Absolutely. He's - despite what is it - a hundred 
million that's been spent - he's way behind - why are you sticking with him? 

Well, first of all, I think we got to take into consideration where we are in 
this election cycle. I mean, we are in the primary process and as everyone will 
say, the polls indicate primary voters don't make up their mind until the very 
end. We are at that point now. We've got less than two weeks until the first 
vote is cast in Iowa and so we'll see. I think there's a lot of difference 
between going in, identifying your voters, pulling them out to the polls on the 
night of the Iowa Caucus or the day of the New Hampshire primary, then a 
national poll. Do you think he's going to get the nomination - Donald Trump? No,
I do not. You do not. When is it going to turn and why is it going to turn? And 
how quickly is it going to turn? I think we're going to see a turn pretty 
quickly. I don't think that Donald Trump is going to win the Iowa Caucus. I 
think that that will be a tremendous setback to an individual who says nothing 
but the fact that he will win. So I think you know, this will all play out in 
very short time. Where is the US economy today and what needs to be done with it
going forward? Because you know, it's considered that this is kind of the bright
side of the world economy today. Well, I can tell you that there are a lot of 
folks at home who don't feel that there is a lot of bright spot right in their 
economy. I know, relatively speaking, when you're looking at the industrialized 
world, our economy looks rather rosy compared to some. 

The fact is, we are at a growth rate that's significantly below the historic 
growth rate that we have experienced over the last 70 or 80 years, which is well
above 3%. We're now talking about growth rates, little over 2%. That has real 
consequences to people, that has real consequences to working middle-class 
American families who are not seeing any wage increases and this is why I think 
you're seeing underlying, some of the anger in our election cycle. The rest of 
the world is doing so sluggishly, it's difficult just for the United States 
itself, you know, to be outgrowing itself vis-a-vis the historical numbers. 
There's no question that we are in a global economy and if the demand abroad is 
not as strong as it should be, it will have an impact. But as you know, the 
exports from the US is less of a percentage in terms of our whole economy than 
maybe some other economies here in Europe. But we still have a consumer 
demand-driven economy. People are still reticent at home. There's not a lot of 
confidence in the economy and frankly, there's not a lot of fate in the 
government in the executions. You're a job-creating machine; 14 million jobs you
know, in the last few years when jobs were being destroyed all over the place. 
There's no question, relatively speaking. But if you look at history and you 
look at where our growth rate was, we're not there. And so, and we have just 
begun to see the business start-ups now exceed the businesses that have failed 
but for several years, we are seeing the opposite of that. Yeah, our Reuters 
Breakingviews columnists have made a couple of predictions. I want to throw a 
couple of them at you, specifically related to the US. One of them is the next 
president in the White House is going to be dealing with the recession and the 
other is the Fed's going to be forced to cut rates again this year, what do you 
think? Well, you know, I think there's been a lot of concern as far as the Fed 
is headed because there's a real divergence. I mean, in terms of the outward 
signals being given by the Fed versus Mr. Draghi and the other central banks 
around the world. And I think that, that hasn't happened in quite some time. But
I also feel that there is such a downward pressure on growth that it's going to 
be very difficult to see that the Fed follows through on the kind of interest 
rate hikes that it is prognosticating. 

Do you - I spent a lot of my time speaking to Mr. Gurria about tax. You know, 
the OECD of course, -- the BEPS piece et cetera, et cetera. Do you see anything 
substantial being passed by Congress this year? And I guess tax reform is at the
top of my question. Well, you know, listen, this has been years and years of 
discussion in Washington. In fact, there hasn't been an overhaul of US tax 
systems since 1986 and in a comprehensive way. You know, Speaker Paul Ryan has 
indicated he would like to see that. We have the Minority Leader, excuse me, the
incoming Minority Leader, I say in the Senate, Chuck Schumer, who says he wants 
to see it. The fact is, I think the two parties are not going to get together 
this year. I think that will have to wait until a new administration comes. 

Now, one of the things that is affecting world growth and of course the US is 
the fact that trade is growing at only about 2% whereas it should be growing at 
double the rate of the world economy - that's 6%, 7%. The US has been leading 
some regional negotiations, the TPP, the TTIP - there seems to however to be a 
lot of reticence in Congress vis-a-vis these trade agreements. And they are kind
of the only game in town because otherwise, the trade is not moving at all. 
Look, that's one of my worries about the rhetoric and the dialogue going on and 
the political discussion in our country right now - is the lasting impact on 
trade. If you saw the President in his State of the Union address, he mentioned 
the TPP agreement negotiations and there really was not a lot of applause on 
either side. And I'm worried about the rhetoric on my side of the aisle and the 
Republicans. And frankly, their Democratic Party has shifted away from trade. 

And to come full circle, just to finish up with - you have said, I believe, that
one of the biggest casualties of a Trump Administration would be trade? Right. 
Look at his rhetoric. I mean, he wants a slap of 45% tariff on all goods coming 
in from China - that is a tax increase in effect for working middle-class 
Americans. I think that we are in a dangerous sort of time with that kind of 
rhetoric. If we, as I believe, should be in a very pro-free and fair trade 
atmosphere, we are in a global economy and I think it's very important that we 
get back on track there and I'm worried about the rhetoric. 

And you mentioned consumption has been driving growth so far. How about 
investment? This investment is the seed of tomorrow's growth. There's no 
question that the lack of confidence on the part of businesses both large and 
small is reflective in the question about where investment is going in the US. 
Investment all the way from the government in terms of innovation, research, and
development, to private capital being put to work and it's very, very hard as we
have seen for private capital and companies to invest and produce growth and I 
think that's part of the reason - I'm at Moelis & Company now - we're seeing the
M&A market that we've seen. Eric, it's been a pleasure having you on. Thank you 
very much indeed for joining us. Thanks a lot. Eric Cantor with us on the set 
this morning. Right, let's get a quick 

rundown of today's agenda at the World Economic Forum. Reuters Rosanna Philpott 
has a look at what's in store for us. Big names, big talking points in Davos on 
Friday. US Secretary of State John Kerry flies in to tell us why the Iran 
nuclear deal is a good thing. That's after a very different take from Benjamin 
Netanyahu on Thursday. Amid terror attacks and the migrant crisis, International
Rescue Committee President David Miliband and EU Foreign Policy Chief Federica 
Mogherini discuss how Europe can protect itself without betraying its values. 
Similar worries for US Defense Secretary Ash Carter. He's running two sessions 
on global security with Afghan President Ashraf Ghani among the panelists. 

European Central Bank President Mario Draghi here too. He'll give us his take on
the Eurozone's economic prospect in 2016. And Davos man turns his mind to gender
parity after one report suggests that it wouldn't be achieved for a 118 years. 
Canadian Prime Minister Justin Trudeau, Facebook Chief Sheryl Sandberg, and 
Melinda Gates on that panel. And an element of showbiz intrigue - actor and 
theater director Kevin Spacey has quite cryptically signed up to share his ideas
and insights after entertaining guests with a surprise singing performance on 
Wednesday night. Watch this space. Right. 

Steve Pagliuca is Managing Director of Bain Capital. He joins us on the set. 
Very good to see you again. It's great to be here. We just had Eric Cantor and 
talking politics so let's kick it off with politics, get that out of the way. 
Trump getting the nomination? Unclear. You know, there's a lot of anger in the 
United States. I think people are really reacting to the fact that we haven't 
gotten much done between the divided Congress in the last eight years and so you
see kind of anger on both sides - the left and the right and right now people 
are focusing on extreme candidates. What is it - what is the chance of something
like that do to a business like yours and the type of deals that you're looking 
at? Well, the great news, what I love about private equity is we can take a long
term focus so, we don't jump out the window. The stock market is going up and 
down, we're looking at 5- to 7-year to sometimes 10-year growth of companies and
how to transform our growth companies. We've kind of founded that principle back
30 years ago and we stuck to that. One of the questions we had when Mr. Cantor 
was investment, investment, investment, is that flowing? 

I mean, investment overall is growing very sluggishly, it's below the flows of 
the pre-crisis level. What is happening? What do we have to do to detonate that?
Well, first of all, the reason it's slow is a little bit of stock market 
overvaluation and you see it in a correction right now - the S&P is selling you 
know, about 50% on average what it used to be. So that's the really good 
dynamic. So, you'll see investment when you see value. The basic problem with 
investment is there's been a slowing of global growth. Now I don't think it's as
bad as it's made out to be. I just came back from China. China's really 
converting to a services economy and that's happening very rapidly. High-tech is
growing there, it's still bustling. So even if China grows 6%, 7%, that's good 
for the global economy. And oil prices, I think people are not factoring through
that the dramatic reduction, $70 a barrel from 18 months ago, that ratchets 
through the whole global economy. But Steve, everybody is worried about the fact
that there's a lot of activity going on in the mergers and acquisitions but that
there's not really going on in terms of new net investment adding to the, well, 
to the wealth and to the stock of productive capacity. Well, I'm hoping that 
this oil dividend, as it hits through, people are paying off debt right now; the
banks are very solid in the US. Real estate has been stable in the US. I'm 
hoping as this oil dividend comes through, we'll start to see more fundamental 
demand and then people invest in front of that demand. You - I mean, correct me 
if I'm wrong, but your area is TMT, right? That's a specialty of yours? TMT and 
healthcare. How much opportunity - you just mentioned China but how much 
opportunity, how many active deals are we going to see, the likes of Bain 
Capital do in not just in China but other emerging markets? Well, we have just 
completed a Pan-Asian fund, a $3 billion Pan-Asian fund, we've been very 
successful there. And you know, everybody has money, we've been very 
well-received in the emerging markets because we bring executive talent, 
management to solving skills to help build these companies. Yeah. Have you 
started investing that money? 

That $3 billion and have you decided where you're going to put that? We've 
actually just finished raising it. We finished the second fund and we're looking
at several opportunities right now. And we're Pan-Asian so we're investing in 
Japan, we're investing in India. India has been a bright spot last year. Some of
the reforms that Modi has put in is kicking in and I think you're going to see a
lot of technology there as well. Aren't you bothered by the fact that in so many
places, there's a very big bid in favor of debt rather than equity? First of 
all, the price of debt being so low, and second, you can even deduct the 
interest payments whereas you probably need you know, double-digit yields on 
your investment, on your equity. Well, we just see that as part of the financing
mix and I've been doing this for 30 years and you know, way back, we've had 
periods of 5% equity and 95% debt. So actually, we're right now right in the 
sweet spot, it's kind of running 25%, 75%, somewhere in there and the interest 
rates are very low so you have more money to invest in companies. So it's 
actually a very robust environment for private equity. That the environment is 
good, you say. Very good for private equity because you're paying less in 
interest, more in investing, more in growth. Final question. We talked - 
obviously we've talked a lot about Brexit, what is, in terms of private equity 
and how a potential Brexit might affect asset-buying in the UK, what have you in
your meetings talked about? Well, I think in the last 10 years, we've become 
very sophisticated. First of all, we look at every deal in a microeconomic 
basis. 

Can this company take share? Can it be transformed? Can we grow it? Can we get 
fundamental demand going for the products? Then you do the overlay and Brexit 
obviously is a risk. So that would slow investment if people think there is a 
risk, we'll have a choppy period, you know, less sales. Now, the thinking is 
that that won't happen. It's a little bit you know, like the saying, in the US 
there's some anger but then it subsides. UK is one nation, it'll be part of the 
Europe. There's anger but this - it's a rosy spot in the world economy. 
Absolutely, absolutely. And we've been very successful there. 

We're in the payment space there at Worldpay. We bought it at about four to five
years ago, which is the date of public. So, we've had a very, very good track 
record there and again, I think Brexit fears are probably overblown. Steve, 
thank you so much for coming in. Steve Pagliuca from Bain Capital. Great to see 
you again. Thanks a lot. Great to be here, thank you. Right. Ahead of his Davos 
address, John Kerry insists Syria peace talks will go ahead this month. We are 
going to take a look at that in just a moment. I'm going to finish up though 
with our guest host this morning because Mr. Gurria, we're going to have to let 
you go pretty soon. You know, trying to work out, we're trying to work out every
year a sense of the mood and et cetera, et cetera here in Davos, there's this 
feeling - most of the CEOs I've spoken to have said, "Look, we got to watch out.
Things are looking a little bit precarious right now." They focus very much on I
guess, what's going on in the equity markets, a little bit on the short term, 
what's your general feeling based on fundamentals? The fundamentals, as I said, 
are a source of concern. 

Investment is not growing, trade is growing at 2%. Again, it should be growing 
at 7%. Credit is not flowing and the emerging market economies are slowing down.
So, all these other four legs of the growth, chair of the growth engine, the 
four cylinders of the growth engine, it's obviously European engine because it's
only got four cylinders and therefore, the question is, it's not - it's 
something right there, it feels like it's broken. it's not happening. It's very 
asymmetric now. So, we got to get it together. 

The G20 has to come in, the G7 has to come in but fundamentally, each one of the
policy makers in their own, within their own boundaries, have to look at the 
medium and the long term, not be too distracted about the vagaries of the stock 
market and go for more competition, go for more innovation, go for skills, go 
again for the things, for the trust elements that will detonate the investment 
and finish the work of the regulatory, the capitalization process of the banking
system so that the banks not only will survive but also will continue to lend. 
This is what they're all about. Obviously, one of the things we haven't talked 
about is climate change. 

We can't talk about everything but we got the deal of course in Paris. You have 
said, and I think this is a quote from you, "Implementation of the polluter 
pay's principle is woefully lacking," what's the solution? Oh here, the deal in 
Paris was a great deal. IKt was as far as we could go. It was probably better 
than we expected that we could go. There are all these national commitments to 
reduce emissions but it's also an opportunity for new investment, for new 
businesses, for innovation because in order to comply with the commitments that 
we all made there, you're going to need certain things to happen and without 
that having an impact on the growth of the economy but rather turn that into an 
opportunity again for investment, for innovation, for jobs. 

And I'm going to do a final question on migration - something else that I 
haven't talked about. Some would say what we're seeing in Europe and the way 
it's being coordinated and dealt with is hard to watch. How hard is it to watch 
for you? What have you heard here in Davos that makes you feel a little bit more
optimistic now? Listen, the headlines are bad, are tragic, are different, are 
difficult but in the end, this is an integration, integration, integration 
issue, okay. It's going to be about how we save landing for these people, how 
they integrate through language, how they integrate into the job markets, how 
they are up-skilled or re-skilled, or how the skills they bring from home are 
accepted or adopted into the job market of their host countries. And also, 
remember, where aging societies in Europe, this can complement. And it was going
well, except the numbers are now overwhelming these systems. 

So in the end, it's just that the down payment for this investment- it's an 
investment. It's going to pay off. The down payment for this investment is going
to be higher because of the numbers. But in the end, it's going to be net 
positive. Angel Gurria, thank you so very much for being our guest host this 
year. Thank you. You should be hosting this show next year, I think. Well, it 
probably pays better. Don't- thank you very much indeed. Angel Gurria from the 
OECD. Right, we've got plenty ahead this morning. Bill Browder- we're going to 
be talking to him of course, from Hermitage. We're going to be talking to Jeroen
Dijsselbloem from the Eurogroup as well. Before that though, let me quickly run 
you through the headlines again. Rival camps bickering about who should be 
invited to take part in Syria peace talks this month, but John Kerry says 
there's no fundamental delay. 

South Korea's President calls for five-party talks, excluding North Korea to 
discuss Pyongyang's nuclear program. Deutsche Bank shares down nearly 10% 
Thursday after warning of a record loss for 2015. And Asian markets put in a 
strong sharing after a hint of more monetary easing from the ECG and a boost for
crude. Right, the murder of former Russian spy, Litvinenko, in London in 2006 
was probably authorized by Russian President Vladimir Putin. That was the 
finding of an inquiry on Wednesday. I'm sure my next guest is very interested in
those findings. Bill Browder, CEO of Hermitage Capital. Very good to see you 
again. Good to see you. Look, I- let me start with that. You've long-argued the 
Russian state was involved in the death of your lawyer, Sergei Magnitsky. I 
assume you have no cripple with these findings yesterday? Well, I mean, we've 
know for 10 years that the Russian state was involved in this thing. In fact, 
they're not even hiding the fact that they do this stuff. They passed a law in 
Russia in 2003 authorizing the assassination of people they've deemed to be 
"enemies of the state". And so the Russian state was involved. You don't have a 
nuclear terrorist operation without the approval at the highest level, and 
that's the conclusion they came to. 

How should the UK and West though respond now to, what, to this generally but to
the- specifically, to these findings? Well, let's talk about how they shouldn't 
responds, which is to do nothing. So at- And that's how you imagine they will 
respond? Well, that's how they responded. Right. So the official response is 
that Prime Minister Cameron is going to bring it up with Vladimir Putin and that
the Minister for Europe is going to talk to the Ambassador about it. And they've
frozen the assets of the two people accused of murder. That is not a response 
that's going to- and they're giggling at the Kremlin right now at this- at how 
tough the UK is on this issue. We've talked about this before but Mr. Putin's 
main trouble is really brewing at home with the economy. But let's face it, his 
approval ratings remain stubbornly high and they're getting better. Why wouldn't
you believe the numbers in too? If so, why is it looking like this? Well, first 
of all, the numbers are a bit suspect. If you live in a brutal authoritarian 
regime and a stranger calls you up on the phone and says, do you support the 
President or not, what's your answer going to be? I mean, I'm more surprised 
that the 12% of the people who say they don't support Putin in this operation. 
But having said that what Putin- he's very smart. He's gone out and said: "I'm 
worried about the economy. 

My people are grumbling. How do we take their minds off domestic issues? Let's 
start a war." They start a war with Ukraine. It causes more economic issues. 
They now bomb their way to the negotiating table using Syria. I had Mikhail 
Khodorkovsky in- for a Newsmaker in London at Reuters just a few weeks ago. And 
of course we spoke the future, about Russia post Mr. Putin, changing the system,
that system is one person, et cetera, et cetera. I didn't sense a huge amount of
optimism that this is going to happen any time soon. Well, I don't think anyone 
really knows what's going on. I mean, so you've got a very dire situation in 
Russia. Oil prices below $30, you've got the Ruble in the RUB80s- and by the 
way, the Ruble was RUB29 a couple of years ago. So you've had a collapse of the 
Ruble, you've had a collapse of oil- the average person in Russia is suffering 
economically greatly. And we're in uncharted territories- uncharted for us to be
able to analyze it- no, uncharted for Putin to figure out how it's all going to 
work. It could end up with one- like in Tunisia, one fruit-seller said the whole
thing- or it could last for 20 years. Nobody knows. A very specific question: 
the Russian- you probably suspect I'm going to ask this. 

The Russian Prosecutor General Chaika alleging that you orchestrated the 
fabrication of corruption allegations against his son. He said it's because they
were investigating wrongdoing by you. Right. Where do we stand on this? What is 
your response to this now? Well, first of all, the allegations against him that 
his referring to were done by a famous and very noble young man named Alexei 
Navalny who put together a 45-minute movie showing the General Prosecutor's 
family in partnership with the most vicious mafia group in the country, owning 
hotels and apartments and villas, and so on and so forth. It was a beautiful 
movie. Every- four million people watched it. I watched it. I was wondering 
what's the General Prosecutor's response is going to be. And then by 10 days 
later, he came out with this seven-page letter in the main business newspaper of
Moscow, and his response was I was responsible, I was working together with the 
US government to destabilize Russia, and I'm guilty of every crime under the 
sun. Right. It was the words of a man unhinge. Are you getting used to this sort
of allegations? Are you more getting increasingly worried about your security? I
mean, you've been worried about your security for a while now, but where do you 
think- what's your thinking on that? Well, I'm more concerned about my security 
today than I was two days ago because of the British response to Litvinenko 
murder. And basically, the British response to the murder was to do nothing. And
if you do nothing, it basically gives Putin a carte blanche to basically go out 
and kill more people in the UK. 

And what I don't want to have- there should be consequences for these people who
are scared about doing the same thing again. Bill, great to have you on the set.
Thank you very much. Thank you. Bill Browder from Hermitage. I'm going to leave 
you here, because I'm told we've got Helen Clark, the Administrator of UNDP, on 
the set. And there you are. Let me run around. Very nice to see you again. 
Thanks. The first thing I'm going to do- and in my notes- I made a note to 
myself, I said: "Look, don't bother asking about the UN secretary general job 
because Helen Clark is not going to say anything about it." So, I'm right, 
right? More or less. Okay. But let me ask you this though, do you have the 
qualities it takes to be a UN Secretary General? Do you think when the member 
countries look at Helen Clark, do they think you've got it? Well, you're asking 
the right question, because shouldn't the first question be for the leader of 
the organization that is the world's premier multilateral organization, what is 
the skill set? Yeah. And that I think is for member states to judge. But we are 
in a world that isn't unraveling in many ways. It's a world where the United 
Nations can make a big contribution across the peace and security, development, 
human rights many, many spheres. So the issue is: who has the sort of skills to 
take this on now? Yeah, and you think you do? Well, I haven't opined on this at 
all, but that- look, member states have to discuss it and I think it should be 
very much focused on what are the skill sets and needs of the organization. 
Let's talk about UNDP and your priorities for 2016. I mean, this has been a 
tough year for development in many parts of the world- or 2015 was, I should 
say. What are your priorities now? 

We've got big new global agendas, but they remain words on paper, unless people 
start to implement them. And of course the main action always lies with 
governments. But UNDP works along side governments across the developing 
countries world. So for us, it's the agenda 2030, and the SEGs- how do we get 
all this mainstream to international agendas. Taking the Paris agreement on 
climate change, doing the same thing with that, getting it into the national 
agendas. And then of course, we're very preoccupied by the countries in profound
crisis, and the development response to that- in Syria, in the neighborhood, and
in other countries that are struggling with conflict. Yeah, what about- what 
about private participation, private money, the private sector? Are you- you 
come to places like Davos I imagine and you speak to policymakers, you speak to 
government, but I imagine you speak a lot to the private sector. Are you hearing
good sounds, positive sounds? Well, in a way the growth story has been out in 
the developing countries and emerging markets. And that's a positive thing. That
is where the next wave of consumers is going to be. So I certainly encourage 
people to faith for Africa. It's got long-term growth development prospects. 
Asia, all things considered, continues to do pretty well. For the private 
sector, I think they should look at the outcome of the biggest ever conference 
on development financing and see what a prominent role private participant was 
given at that. On migration and refugees, you've clearly- you've written a lot 
about this. I was reading a piece yesterday- the projects indicate that you 
wrote- you say the path, as you've just said, begins with the SEGs, that the 
current approach is a very much a band aid approach- nothing permanent. And that
political and economic change is what's needed here really. Well, take across 
this like the Syria one and say relief only ain't going to do it because still 
19 million people live in Syria. Many of them live in areas which are not being 
conflicted at this very minute, but people want jobs, they want the kids in 
school, they want the water on, they want basic things- Another part of this is 
we need to get over this- and I think you've said this, this cliche perception 
of a refugee, or of a migrant. Absolutely. And see them as a potential. Well, 
coming from New Zealand, a country built by migration, like the United States 
and a number of other nations, we absorb waves of people to the benefit of our 
country. And there's no question that if you look at the demographics of Europe,
it needs to be thinking about how I adjust to growing inflows of people from 
other parts of the world. Helen Clark, I'm really sorry but I got to cut this 
short. Thank you so much for coming in. Thank you. Hopefully, when we interview 
you next year, we'll be interviewing you in a new robe. Who knows? We'll see. 
Thank you very much. Thank you. Make sure you come onto our show though if you 
are a- right, when we think about the biggest challenges facing Europe today, 
the refugee crisis, of course it's the top of the list. We've just been 
discussing that. Not surprising then that the topic dominated the future of 
Europe session yesterday. One thing all participants agreed on it's going to 
need a lot more Europe to solve. We see today that in the first three weeks of 
this year the majority of 5,000 people crossing the sea from Turkey into Greece.
Last year, it was only 1,600 in the full months of January. Now, 35,000 in the 
first three weeks of this year, and this is winter. 

So when spring comes, and the numbers will quadruple, it will go up 
considerably. We cannot, as a European Union, at least for the Netherlands, and 
for Germany, for others, we cannot cope with the numbers any longer. So the 
measurement- But if we want to have a Europe of solidarity, where the burdens 
and responsibilities will be shared amongst all of us, then we have to agree 
that we need to work together. We have to share the burden, all of us together. 
Mr. Tsipras said it's a disgrace for Europe if it were to become a fortress. So 
the pressure that is exerted on this external front this has to be reduced. And 
that will cost Europeans much more than we thought. Serbia finds itself on the 
frontlines of Europe's migrant crisis. Prime Minister Aleksandar Vucic says he's
loyal to Chancellor Merkel, but warned me earlier that he'll act in her 
open-door policy changes. We'll have to change something if Germany and Austria 
will change their politics on migrant influx. And what we are asking from the 
European Union is a clear and comprehensive solution. Otherwise, I'm very much 
afraid that we will face even bigger problems from the beginning of spring this 
year. You say Germany has not yet closed its doors. But the signal seemed to be 
very strong that they will do that. Is that the sense you're getting from people
you're speaking to here in Davos? These are kind of desires of many people, but 
I can tell you that we are very faithful, we are very loyal to European values, 
and we are very loyal to - I don't care, I can say that too - Angela Merkel's 
attitude because she dealt with that problem from the beginning. It's easy for 
all the others to criticize her every single day and to say this is not good- 
that is not good, but what did you do, and what did you deliver on? And we'll be
waiting for general decision and for comprehensive European decision, and we'll 
act in accordance with those decisions. Serbia's Prime Minister speaking with me
yesterday. Now, while the rest of the world frets about China's economy, the 
World Bank is still sanguine. I spoke to its President Jim Yong Kim. 

The second largest economy in the world is fundamentally shifting its gross 
model. So it's going to be bumpy. But we think that the path is one that they 
told us they were going on. World Bank President- now, Greece kick start at 
2016, and we haven't spoken a lot about Greece. With the European charm 
offensive to seek support for its reform agenda in a bid to trigger talks on 
debt relief for Athens. One man at the heart of that negotiation: Dutch Finance 
Minister and Eurogroup President, Jeroen Dijsselbloem, joins me now. Very nice 
to see you again, thanks for coming on to the show. Thanks. Let's kick it off 
with Greece. We haven't really talked a lot about Greece. It's submitted its 
pension plan reform at the start of January. Did the numbers add up for you? 
Let's first celebrate the fact that we haven't talked about Greece so much. Is 
that a good thing? That's a good thing- Is that a good thing? That is a very 
good thing. That's very good thing. They've put forward a serious pension plan. 
What the key issue there is whether it's sustainable in the long term. It looks 
quite good but there are some fiscal gaps, so the figures don't fully add up. 
They're talking now to the institutions, to the Commission, and the IMF to see 
where changes are needed. You know Eurozone ministers are going to hold debt 
relief talks once Greece gets approval for these reforms. You've been pretty 
bearish, I think, on the reforms and their approval up until now. Are you still 
bearish about that? 

Where do you stand on that? I think there's just a logic order that we have to 
deal with. We need the pension reform first. That will have fiscal effects in 
the short term and the long term. Once we know that and that's all solid, we can
do the numbers on debt. What we're going to do is, in the long term, debt 
management to see where the peaks are, where the Greeks might get into trouble, 
and then we need to decide whether we fix that now or simply have sort of an 
agreement if they're running to trouble, where those peaks will occur, we will 
help them by grace periods or lengthening of maturities, etc. So, those are the 
talks that will- that's the order it needs to be done. You mentioned the IMF. 

IMF involvement, obviously, a big deal. Athens was reluctant. Germany was very 
keen for it. Were you keen for it as well? For? The IMF involvement. It's very 
important. A lot of member states in the Eurogroup have said we need the IMF on 
board. It's not just about their financial contribution; it's about their 
expertise. They're pretty tough on the figures. They always really want to make 
sure that it's sustainable in the long term. And that is a strong value. 
Clearly, one of the big talking points here and we've talked about it a lot of 
course, the Brexit, unraveling of the project, etc, etc. Do you push all that to
the side whilst you deal with your day job? Do you have to push all that to the 
side in your mind? 

Or when you hear the George Soros's of the world or others, who people are 
listening to, say, look, this is the beginning of the end potentially? What do 
you think? I don't know. I think that the beginning of the end predictions are 
in fashion. I mean I've been in the job for three years now. I've not heard any 
different from the same kind of people, saying it's the end of the Euro, it's 
the end of the Greeks, it's the end of etc. So, let's be realistic. There are 
problems to solve. We're in the process of doing that with Greece. We're in the 
process of doing that with asylum crisis where the numbers need to be brought 
down and need to be managed. You talk about the asylum crisis numbers now. You 
think that problem is being dealt with well at the moment? Not good enough, 
certainly not. We've not- we don't have the outside borders under control. We 
don't have the quantities and the quality of the people that are coming in under
control. That's needs to be brought under control, preferably by the EU 28 
because otherwise- you see what's happening country after country will take its 
own measure. So let's do that. 

And the same basically goes for Brexit. I think that the key issues that David 
Cameron's put on the table are fair issues. The UK is not alone on those issues.
The Dutch and the Fins and others also pushing a more an efficient EU, more 
internal market, more competitiveness. So, let's have a good agreement on that. 
Well, you talk about a good agreement. Very specifically, the people you are 
talking to here, the people making the decisions on behalf of these countries, 
are they going to give David Cameron what he wants? I think it can be done. You 
know the key issue is labor migrants and their rights to benefits. Also, that is
a discussion that's taking place in different countries. And I think it's a fair
point to say that migrants need to pay into the system first before taking out. 
I think that's a fair point. Let's see how we can do it in a way that is 
valuable for more than just the EU, also for other countries. I've got five 
seconds. 

I asked Mr. Gurria, Christine Lagarde, during the show, has said she's going for
a second term at the IMF. I got his reaction. What's your reaction? Great. 
That's good. Let's get that done. That's it. That was three seconds. Thank you 
very much indeed for joining us. Jeroen Dijsselbloem, from the Eurogroup, 
joining us on the show. Now, the refugee crisis dominating talks here in Davos. 
So, should Europe open its doors? That's the question we put to delegates in the
Congress Center. I think, yes, absolutely, Europe should be opening its doors to
refugees. I think Europe has a humanitarian duty to- and a legal obligation to 
help refugees. So in the long run, it's absolutely a good thing. Europe has a 
problem with demographics that this will help out with. 

But in the meantime, there're a lot of transition issues. I just came out of the
talk by the Turkish Prime Minister. And he was very incredibly human in his 
approach, and I think that's the way we should look at it. We have to show 
solidarity. But at the same time, we have to go all the way to roots, and I 
think that's exactly what I heard Mr. Schaeuble, for example, said. So, the 
capability of identifying those migrants at the point of origin or at least at 
the point of entering Europe is essential. Right. 

Bill Swing is Director General at the International Organization for Migration. 
He joins me in the studio. Bill, great to have you with us. Thank you. Do you 
think governments can stick together and develop symbiotic strategies to fortify
themselves against crises like this and to deal with these sorts of crises in a 
coordinated fashion? Well, that has to be the hope, doesn't it? Because right 
now, we're approaching it in short term fashion, focused primarily on one 
element – security. And this is a very complex issue for which we need to be 
unified and that we do not have it presently. I think we're in a middle of a 
perfect storm – more people underway than ever before, more people forced to 
migrate, more anti-migrant sentiment, less confidence of people in their 
governments to manage this situation. And we have to move beyond that. And that-
have we ever had that perfect storm? 

I mean when you think back to the World War II refugee crisis- No, and I'll tell
you why. In my long life, I cannot remember any time when we've had so many 
simultaneous, complex, protracted crises from the western bulge of Africa to the
Himalayas with very few stable spots in between. And there is – and more 
importantly – there're currently no viable political processes or active 
negotiations - except, let's hope for Syria – that would give us any hope of a
short to medium term solution in any of these. What about the role of private 
corporations, private sponsorship on resettlements, for example? What do you 
think of that? Well, we think, in our organization, that private sector is one 
of our best friends and one of our major partners. Why? 

Because they have the jobs, they know where the skill gaps are, they can help 
governments integrate these people because integration means learning the 
language and getting a job, and becoming part of society and then become tax 
payers, contributors. So, in the long term, you're going to benefit. In fact, 
the new World Bank-IMF Study in October basically says that migrant, friendly 
countries are likely to do better economically than those who are not migrant 
friendly. Have you- I mean who have you spoken to in Davos especially on this 
point at a policymaker level? Well, I've been talking to- I've been in the 
panels. I've been to the IGWEL meetings. I've been talking to prime ministers 
and foreign ministers, and others who- all of whom are seized with the issue and
are trying to come together around it. But you feel any optimism when you talk 
to them here or do you leave Davos thinking that we really got nowhere and this 
is going to go on pretty badly for a while? Look, I think we have to, we have to
remain somewhat optimistic here because let's- here's for example, there could 
be a silver-lining on the European cloud right now. For example, maybe Europe, 
at last, will be able to achieve that very elusive objective of a common long 
term migration and asylum policy. Maybe they can be- have strength in their 
relationship with Turkey which is very important right now. Perhaps, they can do
something about the Syrian crisis through the negotiations. And perhaps, at long
last, maybe all of the 28 European Union countries can become formally refugee 
resettlement countries with respectable national annual quotas. Thank you very 
much indeed for coming in and talking with us today, Bill Swing. Thank you. 
Thanks. 

I'm going to leave you there and head out to the balcony because, of course, 
there are a lot of journalists here as always a very important part of this 
show, every year, is to talk with these to really try and gauge what it is 
they're thinking. The party there – I'm going to, of course – and what is 
they're fighting about, yes. I guess their smiles say it all, right? I noticed 
the party. Lally, great to see you again. Great to see you. Very, very nice to 
see you. Thank you. And Michael Oreskes, NPR Senior Vice President of News and 
Editorial Director. Of course, Lally from the Washington Post. Right. How do we 
start this? Best part so far is where I'm going to start. We've had a very 
serious show so let's start with that. The Google party, probably. Okay. Why, 
why was it so good? 

Well, a lot of stars. Okay. Most of whom I couldn't recognize but everybody else
was fainting with excitement. You would have known them. Oh I don't know. I 
think best party was coming up Lally's Lunch today. Oh I have my invite here. Oh