Following is the transcript of an exclusive CNBC interview with Egyptian Investor, Naguib Sawiris, and CNBC's Hadley Gamble and Nancy Hungerford live on CNBC's Capital Connection.
HG: Now, let's get to our top guest at this hour. He's invested in everything from gold and real estate to telecoms, Egyptian billionaire Naguib Sawiris joins us at the desk. Welcome.
NS: Hi Hadley, how are you?
HG: I'm well, thank you. Let's get right to it. When you talk about investment at a time that's-, well, as President Putin calls "chaotic", you once told me that revolutions can be very good for business. As an investor, how do you price in this kind of geopolitical risk?
NS: In my-, in my situation, I mean, gold is, for me, it's like a safe haven, you know? I mean, gold is always the material that people tend to acquire when there are crises around, you know? So, we strive by crisis, you know, and for someone who wants to have a balanced portfolio, or-, or, like, is thinking about wealth maintenance, not just speculating, I think it's wise to have a part of your net worth in gold, you know. And I've elected to go in to mining, because I have some-, previously, in my previous careers, I have management and operational skills that I can use now in a new field like that, and therefore, my average of acquiring the gold is lower, because I'm actually looking at it at the price of all-inclusive cost of getting the gold out of the mines, you know. So, I am a large investor in two companies, one in Africa, one in Australia, and I feel very comfortable, you know, when there are crises around [laughter].
HG: Talk to me a little bit about the Trump effect here. Because there's been a lot of talk that President Trump has been good for markets. What's your take?
NS: I think it's been good that he's not being inactive. I mean, I'm-, I'm not one of the people who is opposing the strike, because if you watch someone killing his own people, and gassing them down, and you say, it's not-, or you say it's a red line, and then do nothing, like President Obama, then all that you do is give a green light to people to go and do stuff like that. But the problem is not just that. The problem is that everybody is wrong in Syria. I mean, the Turkish go in, and slaughter the Kurdish people, because they say they are terrorists. The Iranians, with Hezbollah, go and interfere and fight the locals, you know, or fight Isis, which is right, in a way, you know. And then the United States wants to fight Isis, too. So, everybody is fighting everybody there, except the people, the Syrian people. I mean, they are sitting there, being slammed by everybody, back and forth, you know, between a corrupt and unfair leader that is gassing them, between a foreign occupation by Russia, Iran and Hezbollah, and then strikes that, okay, are trying to help them, but you never know if the strike really-, just really helps them, or-, because there is many talk, also, that these strikes were symbolic, you know. I think-, okay, symbolic or not, I think it's important to tell the people, like, you can't go and support a dictator that is gassing his people, and get away with it. So, I am-, all in all, I am for this strike, you know, but I also think that this-, that Iran is getting away with this interference in our region, and nobody is doing anything about it. I mean, they just get away with everything. And Turkey-, also, Turkey can go in and out all the time, when they want, you know, and we have to restart discussing, you know, international law. I mean, you can't just go in to countries, hit and run, and go back, and we have now three foreign forces, and now you have the US there, they have Russia there, they have Hezbollah there, you have the Turkish there. I mean, it just-, it's a big mess, you know. And, I don't see an end to that, you know, and we've been in to this mess for too long.
NH: Naguib, this is Nancy here, in Singapore. You mention all the various players here working the situation in Syria. When it comes to Russia and Iran, specifically, are you worried about them retaliating, and what that could mean for an escalation coming from the United States?
NS: You can't retaliate when you're-, when you have no reason to be there to start with. I mean, what's their legitimacy in being there? So, I mean, it's not like that is-, and if they want to retaliate, how will they retaliate? They want to start a new war? You know, I mean, I doubt-, it's all blah, blah, blah. Even the strike, you know, it was not a grandiose military strike. It was just a symbolic strike to tell them, "Okay, enough is enough, you can't gas your people." So, I'm not worried about retaliation, unless everybody wants to go more crazier than they already are, you know, so-,
NH: Do you think President Putin is playing a dangerous game here, because we're already seeing relations between Russia and the west at a low, and still today, he's warning of potential global chaos.
NS: I think President Putin wanted to revive the old duality in the world politics, you know, and whether we like it or not, whether he did it the right way or not, but he-, he is definitely now a-, a new superpower that has-, needs to be reckoned with, you know? But I think, long-term, for the sake of the world economy, for the sake of better lives for everybody, I think he will need to come to his-, to reason up, and I think he has always done that. He always goes out there, demonstrating a certain power and effect, and in the end, he somehow finds a way to continue. So, I'm-, I'm not really worried, you know. He just wanted to-, I mean, at one time, they asked Lavrov what is the plan, he said, "Read our history." So [laughter] that's what they want to go back to. The Cold War. So, that's very clear now.
HG: Absolutely. Naguib, when you talk about geopolitical risk, and you talk about the potential for a doctrine, you know, a Trump doctrine, for example, do you think that President Trump has gotten it right, at least with regards to his foreign policy so far? I mean, we've seen this tit for tat with China, over trade, we've seen what's happening with North Korea, which seems to have led to some progress there. What's your take?
NS: No, I think in North Korea, I think there's progress and all of that. I think also, especially in North Korea, as you remember, last time we had an interview, my advice was, you need to talk to these people. Don't try to aggravate, and don't try to corner them, because they have-, like me, it's-, they have a nature like me. You know. If you try to corner me, I'll never sit to the table. I'll just take the pain, and I won't talk to you, and I will continue fighting, you know. So, the best way is to try to talk first. If it fails, you can always resort to, but-, but this child game, who calls who first, this is a childish game, when you have lives, when you have South Korea that is just half an hour away from their missiles, you know? You can't go and say, "I'm going to bomb you, I'm going to wipe you out, I'm going to do this." This doesn't work, you know. But what works is, you pick up the phone, you talk to people, they come down to the table, and then they reason, find-, if you don't reason, you can always go back to war, you know.
HG: Naguib, we're going to leave it there for just a moment. Nancy?
NH: Thanks for that, Hadley.
HG: I'm joined again with Naguib Sawiris. Naguib, I want to get your take on this, because, as I said, there are a lot of questions over his leadership style, but there was no doubt that he was incredibly good at what he did.
NS: It's not just incredibly good. He's created a monster trend in advertising. He's created a success story that is very difficult to replicate. So, it's going to be a big challenge for someone to fill in his chair. He is a workaholic, you know. He used to quote his subsidiaries, every single person. He knows all his numbers, he knows all his companies. This is not the kind of guy you can replace and think the next CEO will do a good job. So, I think this is a very sad event, you know, and I think it's important for-, somehow, to-, to still take his guidance on who should take over. He's the one who built it, you know, so, just to give it to a new person like that is going to be very dangerous. And I know him as a man of efficiency, and a successful man, so I hope that his legacy doesn't fall by this disruption.
HG: Is that potentially what's going to happen? I mean, could you see that business really falling apart without his leadership?
NS: It's always very difficult to manage a business that was built on-, on the thinking, on the management style, of one person, you know. So, if it's abrupt, like that, that's a danger, you know. Because, I mean, if you get a civil servant to run it, or some bureaucrat, you know, that's-, you're in-, I know that from my previous life [laughter]. Um-,
NH: Naguib, Nancy here, in Singapore again. It was interesting, in the statement that Martin Sorrell talked about the future of WPP being more important than a matter of life and death. As a founder, can you relate to that? Or does that still sound a bit extreme to you?
NS: No, no, that's exactly-, I actually resisted selling my telecom empire because of that. It's like your baby. When you give it away, it's-, imagine you want to give your child to someone. Who are you going to give it to? So, I think it's-, it's genuine, you know. I mean, I know him personally, so I'm-, I'm not really thrilled by this news, you know.
NH: And also, I'm wondering about this issue of disruption that the industry is facing. Martin Sorrell has talked to CNBC about the challenges coming from both Facebook and Google, when it comes to their own ad business. Do you think, in light of the data challenges, though, that Facebook has faced, do you think their role in advertising could change?
NS: You know, there is a big problem in the advertising world today. There is a monopolization, and there is no regulation. There is a lack of regulator, and there is a monopoly. Facebook is a monopoly, YouTube is a monopoly, Google is, and all their affiliates are a monopoly, and consumers don't have choices. And these monopolies, they dictate now, to a certain extent, the revenues of these advertising agencies, you know. And in absence of competition, in absence of regulation, this is a very dangerous situation for all advertising companies, you know. So, you need to know how to deal with that, and I am-, I think it's the biggest challenge for the next boss on the helm of such a big empire, you know.
HG: Naguib, thank you. We will have much more coming up with you just ahead of the break. And after this, forget Silicon Valley. Up next, find out why big techs are making big moves to dominate a whole new cloud market in the Middle East. We'll be right back, stay with us.
HG: Thanks, Nancy. So, we're back here with Naguib Sawiris, the Executive Chairman of Orascom. Naguib, I want to get your take on investment opportunities in Egypt specifically, because we've seen a lot of progress made by President el-Sisi, but still, investors have been quite cautious.
NS: I don't think they need to be cautious anymore. I mean, our biggest challenge was the dollarization, you know. The reserves now are topped at $40 billion. We don't have any dollar problems today, I mean, investors are getting the money in and out, dividends are being paid, the dollar is stable at a very beneficial rate. So, I think all the worries of the past are gone, they are improving on bureaucracy, and actually, you know, we own an investment bank and an asset management company called Beltone, we are seeing so much deal flows right now, so the market is really bubbling, you know, and there is a lot of action going on, and we hear a lot of demand on Egyptian assets right now that are actually-, so there's a big movement in Egypt now, and the investment areas are open, you know, mostly in real estate, infrastructure, agriculture, energy services, you know. So, I think Egypt is on the verge of a new era right now, you know-
HG: But the average Egyptian is still under pressure, aren't they, certainly with the devaluation of the pound-,
HG: And they do question the leadership of President el-Sisi.
NS: This is something that many governments have faced, to -, to deal with, you know? The lower brackets always don't have the patience to wait for 10 or 20 years until their life improves, you know? So, there should be social programmes. We have them in place, we have also budgets for them, but being-, they are being very slow to implement, you know? And that-, that is something that the government needs to upgrade its skills, you know.
NH: Naguib, it's Nancy here again-,
NS: Yes. Yes, Nancy.
NH: Naguib, just at the top of the show, we talked about the fact that you're not overly concerned when it comes to retaliation coming from Russia, but Putin's posturing hasn't been very good for assets in the country. Look what's happening to RUSAL today. When you consider the sell-off we've seen in some of these markets, would you be looking at Russia now as an investment opportunity anywhere?
NS: No, I actually am always very cautious to look at Russia. It's because, I mean, you know, I-, I have learned my lesson. One should always try and invest in democratic regimes, you know, because when you are not investing in a democratic regime, you are under the mercy of the ruler, you know? So, whatever you are investing in, you know, he can take a political decision that will impact your investment. So, whether there is a crisis now, whether there is a war, whether it is in Syria or not, I am just not really a big fan of-, of areas where I don't control my destiny, you know.
NH: Naguib, why, then, did you, in some ways, make that democratic exception for North Korea? Looking back, do you regret that investment decision?
NS: No. No, no. It was actually done for the good, you know. I did this there, because I said that the people are innocent, the people are good, they deserve a chance to have a communication between themselves, you know. I believe that bringing in to-, communication in to the PRK is-, is a way to give people-, empower them, empower them to speak up loudly, to be free, to talk to their relatives, you know. And I always think you should punish regimes, but not the people of the regime. So, I did it with a good heart, and-, and from an investment perspective, you know, also there is a lot of sense in that, because the day North Korea and South Korea will unite, or will come to an agreement, my asset there will be worth billions, you know. So, it was a win-win situation, you know. But I agree with you, I mean, we're all looking forward to the two Koreas coming together, to a better environment, to more democracy, and so on, so the exception was made, it's that I felt I could do good there, you know. And even with my advice to people to talk, you know, like, for the west and Korea to talk together, instead of just bullying, and tweeting, and sending rockets back and forth, you know, I think I put some sense in to the matter, you know, from my perspective [laughter].
HG: Now, Naguib, clearly that was a long-term play, in North Korea, for you-,
HG: When you look at what's happening globally, a lot of conversation about, you know, are we entering a new Cold War era? A lot of conversation over whether or not President Trump is really the man to get it done, when it comes to talking to China, talking to North Korea, and really working something out with Vladimir Putin, in particular, if that's even possible, or necessary. Would you say, today, Obama versus Trump, who got it right, when it came to foreign policy?
NS: Oh, definitely President Trump, you know. I mean, I think what we're seeing today is the product of Obama's rule. I mean, all this power of Russia (? 07.56) during Obama-, Obama's inaction, you know? And leaving a red line, and then not acting on it, and looking-, watching something, and supporting the Muslim Brotherhood in the Middle East, you know, and knowing that they're a front of a terror organization. Inactivity in many areas. Remember, you know, President Clinton, when he went to Yugoslavia, and saved, you know, the Muslim community from the Serbs, and so on, he was more active, you know, and-, you know, I'm not saying you should police the world, but you can't just let evil thrive and say, "It's none of my business." So, I believe that President Trump now is on the right track here. My advice for him is to tweet less, depend more on his people, make joint decisions with his advisors, work with the western world, like he did in Syria, this time. This unilateral, cowboy mentality, doesn't get well in our area, and doesn't get well with his allies, you know.
HG: Naguib Sawiris, thanks so much. We're going to have to leave it there. That wraps up this edition of Capital Connection, I'm Hadley Gamble in Abu Dhabi.
For more information contact Jonathan Millman, EMEA Communications Executive: Jonathan.Millman@cnbc.com
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