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QUEST MEANS BUSINESS

Air Algerie Wreckage Found; Exclusive: Dutch Prime Minister on MH17 Investigation; Victims Arrive in Netherlands; Ukrainian Government Resigns; Freelance Journalist Abducted in Eastern Ukraine; Deaths at Gaza UN Shelter; Erdogan Likens Israel to Hitler

Aired July 24, 2014 - 16:00   ET

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


(NEW YORK STOCK EXCHANGE CLOSING BELL)

MAGGIE LAKE, HOST: US stocks end the day right around the break-even mark as investors balance earnings news with growing geopolitical concerns.

It's Thursday, the 24th of July.

Mali's president says the wreckage of a missing Air Algerie flight has now been found, 116 people were onboard.

The Dutch prime minster's promise to the families of those who died on Flight 17, "I will not rest until the perpetrators are brought to justice."

And the IMF warns further economic sanctions put Russia at risk of recession.

I'm Maggie Lake, this is QUEST MEANS BUSINESS.

Tonight we begin with breaking news coming into CNN. Mali's president says the wreckage of Air Algerie Flight 5017 has been located. That is

according to a report from Reuters. The aircraft, with 116 people onboard was flying from Burkina Faso's capital to Algiers. It fell off the radar

50 minutes after takeoff.

At least 50 French nationals are believed to have been onboard the missing flight. Isa Soares is live from Paris with the very latest. And

Isa, bring us right up to date. What do we know?

ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Hi, Maggie. So, in the last 20 minutes or so, we found from Reuters, we're hearing from Reuters

quoting the Mali president that they have found the wreckage. Mali's president, Ibrahim Boubacar Keita said they have found -- just been

informed, and I'm quoting here, "I've just been informed that the wreckage has been found between Aguelhoc and Kidal." This in the last 20 minutes or

so, Maggie.

Now, earlier today, we heard from the French foreign minster, Laurent Fabius, who is basically saying they had no word at the time of what

exactly had happened. All he knew at the time when he spoke to the press was that the plane left, took off at about 1:00 in the morning on Thursday,

going to Algiers. Pretty much a straight line, a route it does about four times a week, Maggie.

And about 47 minutes after taking off, they lost contact with the plane. Now, in those 47 minutes, Maggie, we've been told that the pilots

said they were going to divert, they were going to take a different route because of the weather.

Now, the weather, apparently, in that region -- and this is the same thing that we're hearing from Burkina Faso, the military -- saying that

there were sandstorms in the area, poor visibility. And sandstorms, apparently, pretty normal at this time of the year in that northern belt of

the Saharan Desert.

So far, though, the French government not saying much more. They have set up centers to help those with family. We know that a lot of the

families of the 51 French nationals who were onboard that flight have been contacted by Air Algerie directly.

I came in today. I can tell you, there were -- I didn't see any families there grieving. Of course, this must be an incredible, incredible

tragedy for these families. And families not just from France. The majority, 51 from France, so it's pretty much spread out from all over the

world.

Now, the French government has also sent two fighter jets to Mali, to that region where they believe it may have gone down. Now we know it did

go down in Mali, and they'll hopefully find some traces and investigate, really, what exactly has happened, Maggie. Really a black week, indeed,

for the aviation industry.

LAKE: It certainly is, Isa. And you mentioned French nationals on there, but this was spread out. There are going to be many nations that

are feeling the pain.

SOARES: Oh, absolutely. And I just want to -- just so I can point out exactly how many countries, how many people, how many souls were on

that flight, Maggie: we had 51 from France, we had from Burkina Faso about 24 people, 8 from Lebanon, Algerians -- 6 Algerians, 5 Canadians, 4

Germans, 2 from Luxembourg, 1 from Mali, 1 Cameroonian, 1 Belgium, 1 Ukrainian, 1 Romanian, 1 Swiss, and 1 Nigerian, and 1 Egyptian.

So, I imagine at the moment they will be contacting those families and bringing them up to date. But from speaking to the French government here,

they know very little of what exactly happened, whether it was weather- related or not, Maggie.

That area of Mali and Gao, it's -- very, very remote, and it's very difficult territorially because Islamists seem to have taken hold of that

area. So, the worst belief earlier on today that perhaps that plane could have been brought down by Islamists, but for now, we seem to be hearing

more along the lines that it probably was weather-related. Either way, both of those sites are not confirmed at this hour, Maggie.

LAKE: That's right, the news just coming in. We don't have a lot of information about the condition of the crash site, what investigators will

find when they get here. That all will be developing in the next few hours. Isa, thank you so much for the update. We will, of course, keep

you updated as soon as we get more details.

Tonight, the Dutch prime minister says the Netherlands will send a large number of experts to eastern Ukraine to bring home the rest of the

victims of the MH17 disaster. Seventy-four more coffins arrived in the Netherlands today, following the first 40 on Wednesday. Speaking

exclusively to CNN, Mark Rutte said he will not rest until those responsible for the shooting of the plane are brought to justice.

(BEGIN VIDEOTAPE)

MARK RUTTE, PRIME MINISTER OF THE NETHERLANDS: As you can understand, we are a nation in mourning. The loss of 194 of my countrymen, in total,

298 in the plane, has been earth-breaking and shattering experience for the whole country.

And it was extremely important yesterday as a nation to come together to stand shoulder-to-shoulder and to try to assess and give a place to

everything which happened since last Thursday.

ANDERSON COOPER, CNN CORRESPONDENT: The beauty of what you did yesterday and today was in stark contrast, obviously, to the horror that we

witnessed in eastern Ukraine, not just in the downing of this plane, but in the treatment of your citizens and citizens from all around the world for

the last several days.

There may be as many as 100 people still left at the crash site. I spoke to an OSCE monitor today who was at the crash site today with some

Malaysians and Australian investigators. He found human remains. It appears no one right now is doing anything systematically to find all the

victims still laying out there and to bring them back one week since the crash. Is this acceptable to you?

RUTTE: No, that is why we will increase our effort to bring home all the victims of this disaster. We will send into the crash site a large

number of people from the Netherlands, experts -- forensic experts, people from the police who will -- are trained to deal with this type of work and

these issues. They will start tomorrow. And we will have in total around 50 people working there from Sunday onwards.

COOPER: Because as of now, your investigators have been stuck in Kiev. They hadn't been given access to the site. So, are you now saying

that tomorrow -- starting tomorrow, you absolutely will have access to the sites?

RUTTE: We have been at the crash site. The last two days we have concentrated our efforts in Kharkiv from where the planes left, flying into

the Netherlands with the first 40 coffins yesterday and 74 coffins today. So, we had to put priority there.

From tomorrow onwards, we will again rebuild our capacity in the field at the crash site to recover the remaining remains and as much as possible

their personal belongings.

COOPER: Would the Netherlands be willing to send a military force, either on their own or with Australia or with other nations to try to

secure the crash site? Is that going to be necessary? And would you support that?

RUTTE: Well, we are currently following a two-track approach. First of all, as I said, we will increase our effort at the crash site within the

current context, within the current parameters. We will also look into various options we see which would help to make the place a bit more

secure, a bit safer to do the job which is needed to be done.

We will study this in the next 24 to 48 hours and come up with conclusions as soon as possible. But we won't wait for that, and that's why

we will increase our efforts from tomorrow onwards.

COOPER: On Saturday, you said that Russia's president, Vladimir Putin, must act to allow access to the crash site. Do you believe he has

done all he can?

RUTTE: I've been on the phone now with him six times. It's always difficult to assess why thing have been moving a bit further and a bit more

swiftly than at the start of the crash investigation and the recovery of the victims. It started awfully slow.

The pictures were heartbreaking for relatives and families and for the whole nation, for the whole country, to see the people laying there, the

bodies laying there in the fields at 35 degrees Celsius. Unbearable. Luckily, since Monday night, the train which is carrying 203 body bags has

been moving into Ukrainian-held territory, and that's why we were able to start the air lifts yesterday.

But still, as you said, I'm not sure there are 100 bodies there. We don't know -- 203 body bags doesn't mean we have 203 people back home. It

might be more, it might be less. But it is absolutely sure we are absolutely convinced there are still remains which we want to recover,

which we want to bring back to the Netherlands.

COOPER: The question, though, is in your opinion, has Vladimir Putin done enough? Many in your country, as you know, want you to take a tougher

stand against Russia. They are your third-largest trading partner. A, has Vladimir Putin done enough to grant access to the site, and what exactly do

you want to see in terms of sanctions? What would you support?

RUTTE: The Netherlands is supporting sanctions. We have always in the European Union pleased for sanctions, because we feel and we believe

that arming the separatists is wrong. It's the wrong policy. It's helping to destabilize the region.

Ukraine is a sovereign country, and the integrity of Ukraine is of the paramount interest, so that's why we have been pushing for sanctions

always, and we have always been instrumental in the European Union to come to a common decision.

As you know, it is not one country, Europe. We have 28 member states, so it takes sometimes a bit more time to get to an agreement. But once we

get there, we are very firm in the implementation.

COOPER: Do you have any doubt that Vladimir Putin has armed and backed these pro-Russian rebels in eastern Ukraine? There's now a report

that we just aired on CNN saying that in the US there's a belief that Russia is actually firing from Russian territory into eastern Ukraine.

RUTTE: I want to get to the bottom of this. That's why I first of all want to bring back our people. But at the same time, it is extremely

important to find out what happened, and then to be able to bring to justice those who did ti.

RUTTE: And I'm extremely committed to also bring about these two remaining -- next to bringing back our people, these two other priorities

we have, to find out what happened and to bring to justice those who did it.

I don't believe I'm furthering the process or helping the process by pointing my finger. I want to base this on evidence from our intelligence

community. I'll be working very closely together with the American and our intelligence communities.

And the support from President Obama and the fact that he visited our embassy in Washington and was writing in a book of condolence has been a

very moving -- it's been a very moving experience for the Netherlands, and we have highly valued the fact that he did.

COOPER: Mr. Prime Minister, finally, what is your promise to the families of the victims of this crash?

RUTTE: One: that we will do everything in our power to bring back our people, to bring back their loved ones. Secondly, that we want to get

to the bottom of this. We want to know what has happened, who has done this. And thirdly, I will not rest before I've done everything I have in

my power to bring those perpetrators to justice.

COOPER: Mark Rutte, appreciate it, thank you very much.

(END VIDEOTAPE)

LAKE: The remains of 74 more victims of Malaysia Airlines Flight 17 have arrived in the Netherlands. In a remarkable display of grace and

composure in a time of national grief. For a second day, coffins were moved by hearse to a forensic testing facility. CNN's chief medical

correspondent Sanjay Gupta is live in Hilversum in the Netherlands and joins us now.

Sanjay, this is such a difficult time for that nation. The people in that facility behind you have an incredibly difficult task ahead now,

trying to identify. And I'm assuming that this is not going to be a typical medical autopsy that they're dealing with.

SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: No, not by any means, Maggie. Obviously, just on scale alone, this is going to be a very

different sort of task. But let me just put an exclamation mark on what you said earlier that the grace, the composure, the quiet, the

respectfulness.

There were thousands of people lined up as those hearses came through here a few hours ago, 74 of them into the military base here. It was

amazing. People came up quietly afterwards to pay their respects at the memorial. It was just an incredible display. The emotions here sometimes

more conservative, people tend to grieve in solitude and in private, but it was just remarkable thing.

But that process of trying to identify these remains has now started here. Behind us, 75 examiners representing countries from around the

world, countries that had passengers on that plane, and they're all coming together to try and go through a systematic process, everything from

features -- unique features of the person.

Clothing they may have been wearing. Jewelry. Two dental records, medial records, and also DNA analysis. It's going to be a daunting task.

It's going to take some time. But as I said, it's already begun, and they're expecting more remains, still over the next few days, Maggie.

LAKE: Hopefully at least they'll begin to bring some solace to those families. Sanjay, thank you so much.

After the break, we will be live in eastern Ukraine. Stay with CNN.

(COMMERCIAL BREAK)

LAKE: It is a week since Malaysia Airlines Flight 17 was shot down over war-torn eastern Ukraine. It has turned a regional conflict into a

full-blown international crisis. And now, the country's government is being dissolved. Prime Minister Arseniy Yatsenyuk made the announcement to

Ukrainian parliament, saying he and his cabinet intend to resign.

(BEGIN VIDEO CLIP)

ARSENIY YATSENYUK, PRIME MINISTER OF UKRAINE (through translator): In the absence of a new coalition and the current coalition in the

parliamentarian presidential republic has split, the government and the prime minister have to tender their resignation.

I'm announcing my resignation because of the split in the coalition and blocking of government initiatives. Glory to Ukraine.

(END VIDEO CLIP)

LAKE: Ukraine's parliament has been in chaos. A brawl broke out among members on Tuesday while debating increasing troops to fight rebels

warring in the east of the country. For more, Phil Black joins us from Donetsk.

And Phil, this is a country that is facing a political crisis, an economic crisis. One would think there would be an effort to come

together. Instead, we seem to be watching a situation that is further destabilizing.

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Indeed, Maggie, it is a dramatic announcement. Arseniy Yatsenyuk, the man who has held the

position of prime minister since the former president, Viktor Yanukovych, was driven out by protesters, today stood up before parliament, and in a

very passionate way, announced that his government was resigning because its coalition had collapsed, because it has been unable to agree on key

pieces of necessary economic reform legislation.

And Arseniy Yatsenyuk spoke about why this is a very bad thing for the nation of Ukraine. But in Ukrainian politics, everything is not always as

it seems. And it's possible there could be something else at play here.

We always knew that the president, Petro Poroshenko, wanted to call early parliamentary elections. The current parliament dates back to that

previous president, Viktor Yanukovych. Still has a number of members that are part of his -- were part of his ruling party of regents, and there is a

theory that suggests this could be a precursor, if you like, a necessary step in order to make those early parliamentary elections possible.

As I say, Ukrainian politics often murky, often difficult to decipher. Very often dramatic, as we've seen. But I think we'll start to get a

clearer idea of just what the president of this country, Petro Poroshenko, is trying to achieve in the coming days, Maggie.

LAKE: Phil, that's excellent context for us. Thank you so much. We are also at the same time tracking another story, CNN has been reporting it

all day, and that is the abduction of a freelance journalist, can you bring us up to date on what's happening there?

BLACK: We're talking about a man named Anton Skiba. He's a freelance journalist working for CNN two days ago. We were returning from a day at

the MH17 crash site to this very location, this hotel.

When we pulled up outside, there were a number of heavily-armed pro- Russian militants looking at us very, very closely. They were in the company of a man in civilian clothing, they were all studying a photo, and

it was a photo of Anton Skiba.

Within moments, they had him in custody and were, in fact, taking him away. In discussions with those men as they were trying to take him away,

they made a number of serious allegations, described him as dangerous, a terrorist, and so forth.

We only knew him for 24 hours, that's how long he worked for us. He worked for a number of other international media organizations here in

Donetsk in this region. In recent weeks, in recent months, there were a lot of international journalists here who were very concerned about his

welfare, because we haven't seen him since.

He's still very much in custody and, indeed, human rights groups, journalist protection groups, even the US State Department, have all issued

statements demanding that he be released.

The sad fact is, though, that this is very much a phenomenon that has existed throughout this civil conflict. I'm talking about journalists

being detained, often for great periods of time, and it has affected both sides of this conflict, both the pro-Russian separatists and, indeed, the

Ukrainian government as well.

Just at the moment, there is another journalist, an English journalist working for the Russian network RT, Graham Phillips, who's been detained by

Ukrainian government forces before. His network now believes that he has been detained by those forces again. So, as I say, unfortunately, a trend,

very much a real phenomenon throughout this civil conflict, Maggie.

LAKE: Really underscoring the risks that all of you are taking to bring the world this story. Phil, thank you so much, Phil Black for us.

After being forced from their homes, more than a dozen people were killed when a UN shelter was hit in Gaza. We will have the latest from the

scene.

(COMMERCIAL BREAK)

LAKE: At least 16 people have been killed at a UN shelter in Gaza. A strike hit a school building that was housing people, many of whom had fled

their homes. Palestinian health officials say more than 200 people have been injured.

The source of the strike is unclear. A United Nations spokesman says that the UN had tried to flag its location to the Israeli military. Chris

Gunness tweeted: "Precise coordinates of the UNRWA shelter in Beit Hanoun had been formally given to the Israeli army."

Well, Turkish prime minister Recep Tayyip Erdogan says Israel's actions in Gaza have surpassed Hitler's persecution of Jews. In an

exclusive interview with Becky Anderson, Erdogan said that Turkey must speak out against Israel because the West will not.

(BEGIN VIDEOTAPE)

RECEP TAYYIP ERDOGAN, PRIME MINISTER OF TURKEY (through translator): When I met Sharon in Tel Aviv, he used an expression, saying "The most

enjoyable moments of my life are those when I was on top of tanks in Palestine." I can never forget this. Of course, it clearly displays the

viewpoint of one human toward another.

At the moment, Israel's position in Palestine is apparent. When we meet and discuss with our American friends, whether it's Mr. Bush or Mr.

Obama, they always refer to a two-state structure in the region in the form of Israel-Palestine, and we kept working on this with Palestine all the

time, meaning you accept Israel, and that Israel accepts you.

And facing such a picture, it's beyond comprehension that Israel is still defended by the West, and the world is silent about it. Therefore,

we cannot remain silent, and we will not be silent.

BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: You have invoked Hitler in accusing them of their actions in Gaza. You've talked about

genocide. Do you stand by those comments?

ERDOGAN (through translator): I completely stand by my comments, because Nazism, the Fascism that was applied by Hitler, if you put all

these on the table just like that, you can see that what Israel does to Palestine, to Gaza right now, has surpassed what Hitler did to them.

We don't approve. We don't accept what Hitler did either, but right now, we do not accept this persecution, the massacre, the genocide by

Israel. Hamas and Fatah are unified in respect of this two-state structure, and they've formed a national consensus government. Israel does

not want this government to make progress, they want to break it up.

And, in fact, I told this to Mr. Abbas. Mr. Abbas says,"This is the pressure that is applied on me," and he told us this very clearly and

openly. Israel is disturbed of a unification here. This is what primarily lies under the problem behind these current attacks.

(END VIDEOTAPE)

LAKE: There are stunning accusations from the US State Department tonight. They say they have damning proof of Russia's involvement in the

conflict in Ukraine. We'll have that next.

(COMMERCIAL BREAK)

LAKE: Welcome back, I'm Maggie Lake. These are the top news headlines this hour. Mali's president says the wreckage of Air Algerie

Flight 5017 has been located. That is according to the Reuters News Agency. The aircraft, with 116 people onboard, was flying from Burkina

Faso's capital to Algiers. It fell off the radar around 50 minutes after takeoff.

In an exclusive interview with CNN, the Dutch prime minister Mark Rutte has promised justice for those who lost their lives on Malaysian

Airlines Flight 17. The remains of up to 74 people killed in the crash arrived in the Netherlands Thursday, following 40 others Wednesday.

Palestinian authorities say Israel shelled a U.N.-run school in Gaza Thursday, killing 16 people. Hundreds of people were taking shelter there

at the time. Israel says it is investigating, and suggests a rocket fired by militants may be responsible.

The Iraqi Parliament has elected Fouad Massoum as the country's new president. He is a veteran Kurdish politician. The next step to form a

government in Iraq will be naming a new prime minister.

The U.S. State Department says it has proof that Russia is attacking Ukrainian military from across the border. A State Department spokeswoman

has also said the United States has evidence that Russia intends to deliver heavier and more powerful rocket launchers to the pro-Russian forces

fighting in Eastern Ukraine. For more, CNN's Pentagon correspondent Barbara Starr joins us now. And, Barbara, these are serious accusations.

Do we know what this evidence looks like? Or do we have more details?

BARBARA STARR, PENTAGON CORRESPONDENT: Good day, Maggie. From the Pentagon we do not have specific detail, but we are led to understand that

it is U.S. satellites and radars in the region that've picked up the details about Russian artillery firing from the Russian side of the border

across into Ukraine. This is has been going on by all accounts according to U.S. officials for the last several days since flight 17 was brought

down. Russian forces have been moving, they say, closer and closer to the Ukraine border. And of course the question is why are they doing this?

One leading theory is that basically the Russians are looking for plausible deniability. They fire from their side of the border, they don't

acknowledge it, and they're trying to open up some areas for the pro- Russian rebels to operate in. In the last several weeks, the Ukrainian government forces have made progress, they pushed the rebels into smaller

areas, this is not what Moscow wants to see. They want to see the rebels controlling Eastern Ukraine so the Russian forces if they shell the area,

they push the government forces back, they see that as success in opening up this area for pro-Russian separatists/Russian rebels to move back in and

dominate the area.

But look, Maggie, make no mistake, this is very concerning to the U.S. It puts the region on even more of a hair-trigger than it's already been.

Maggie.

LAKE: It absolutely does. Barbara, do we know what the U.S. plans to do with this evidence?

STARR: Well, we don't. I mean, right now clearly the effort is all the pressure to get the Russians through sanctions to feel the bite and to

ratchet back their tensions. One of the things the U.S. is just kind of quietly wondering is if the Russians think they can get away with these

latest moves because the world's attention is focused so much on the downing of Malaysia Air 7 - flight 17. The world's attention's clearly

focused on that attack and the humanitarian aftermath of that. But with the U.S. officials are privately saying is, look, we're keeping a very

close eye on what the Russians are doing and what their next moves may be. Maggie.

LAKE: All right, Barbara Starr for us. Thank you so much, Barbara for that very important development. Where Europe's leaders are still

negotiating how they plan to set up sanctions against Russia, talks on new sanctions will continue in Brussels Friday. New measures now on the table

include sanctions on Russia's state-owned banks and their access to European funding. E.U. leaders will also discuss adding new names to the

list of Russian figures whose assets will be frozen.

Now, all of the major parties stand to lose out economically if these measures go through. The French construction company Technip says Russian

sanctions will hurt its profit margins this year. The French government has also been reluctant to let an arms embargo affect a deal two French

warships to Russia. There's been a lot of talk on that. The deal has also been criticized by the British Prime Minister David Cameron. The British

finance minister has warned bankers in the city of London they have to expect to take a hit if there are Russian sanctions - or sanctions on

Russian investments.

German businesses are also nervous. It is Europe's largest trading partner with Russia. Businesses have urged Chancellor Angela Merkel to

show some restraint. However, it is Russia that could suffer the most. The IMG downgraded its growth forecast Thursday, but the Russian ambassador

to the U.K. said sanctions are a pointless task.

(BEGIN VIDEOCLIP)

ALEXANDER YAKOVENKO, RUSSIAN AMBASSADOR TO THE U.K.: First of all we believe they're illegal, unreasonable and counterproductive. They have

nothing to do with the national interests of the countries concerned including America. It is clear case of the price of oil globally is

becoming prohibitive. In my view, the sectorial sanctions against Russia will trigger the long-anticipated endgame of the present global crisis.

(END VIDEOCLIP)

LAKE: Earlier today, I spoke with the IMF's chief economist Olivier Blanchard. I asked him whether the effective sanctions on Russia could

push Europe back into recession.

(BEGIN VIDEOCLIP)

OLIVIER BLANCHARD, CHIEF ECONOMIST, INTERNATIONAL MONETARY FUND: I think the sanctions on Russia would probably not have a major effect on

Europe. The issue is whether Russia in turn takes steps against Western Europe. And the thing that clearly has been on the mind of many people is

cutting gas supply. That would be a fairly major event. They would be - the Russians would be shooting themselves in the foot if they did this, but

they might want to do it. But this is beyond the scenarios we have considered at this point.

LAKE: The uncertainty itself has caused capital flows out of Russia already. What is your forecast for the Russian economy?

BLANCHARD: Yes, I mean already we have revised our forecast for Russia considerably so relative to last April. And the reason is indeed

uncertainty and geopolitical uncertainty repeating domestic investors, foreign investors to just freeze, do nothing so investment has dropped,

capital flows have been very large. So we have -- beginning at this stage -- we have .2 percent for growth in 2014 this year. It could well turn

negative if the sanctions are taken.

(END VIDEOCLIP)

LAKE: Still to come, Israel fights accusations its airspace is unsafe. We'll have more on that claim next.

(COMMERCIAL BREAK)

LAKE: The aviation industry is now in the throes of a security crisis. Sources tell Reuters that the U.N. Civil Aviation body will meet

with airline industry groups next week in Montreal. The groups will discuss how to manage airspace in conflict zones. In Brussels, the

Association of European Airlines is calling for an urgent international debate on airspace security guidance. U.S. and European authorities have

lifted their restrictions on flights to Tel Aviv. European Aviation Safety Agency says airlines and national agencies should make their own decisions

based on the risks involved. Bearing that in mind, Lufthansa has suspended flights into Tel Aviv. The move affects flights on Lufthansa, Germanwings,

Austrian Airlines, Swiss and Brussels airlines. Well, Israel's finance minister says Los Angeles' airport is ten times more dangerous than Tel

Aviv. He strongly rejects the idea that it is dangerous to fly to Israel right now. CNN's Wolf Blitzer asked him if the flight ban had been an

economic setback.

(BEGIN VIDEOCLIP)

YAIR LAPID, ISRAELI FINANCE MINISTER: Well, we are a strong economy. We are - we are - we have sustained successes in the past few years. We

can hold - we can stand this and we can stand even a much longer operation.

WOLF BLITZER, SENIOR ANCHOR ON CNN: You welcomed the decision by the U.S. Federal Aviation Administration to reinstate flights to Israel - that

was a major setback for Israel.

LAPID: Yes, it was and it was wrong, you know.

BLITZER: (Inaudible) Hamas.

LAPID: Listen, LAX is ten times more dangerous than the Israel Ben Gurion Airport.

BLITZER: How can you say that? There are -

LAPID: Because the traffic there is so big - I'm comparing to us.

BLITZER: But there are no rockets flying around LAX.

LAPID: Well, there are no rockets - there are no rockets flying around the Ben Gurion Airport.

BLITZER: There was one that landed a mile away.

LAPID: There was one landed more than a mile away. This - listen, the minute we presented the FAA with the details and the facts of the

matter, they say, `OK, you can go back in flying there.' It's totally safe to fly to Israel and I recommend it by the way to everyone who wants to

come in.

BLITZER: But you know the State Department issued a travel advisory saying that all non-essential trips to Israel and the West Bank for that

matter should be avoided right now.

LAPID: Well, I understand American point, but I'm telling you people feel pretty safe here, we know what we're doing. It's a time of a military

operation, of course there are hazards, but basically we - to fly to it - it's no problem flying into Israel.

BLITZER: And so you're sticking by that statement that LAX is more dangerous than Ben Gurion Airport?

LAPID: And this after being a few times in LAX, yes.

BLITZER: All right.

LAPID: I hope I didn't offend anyone in L.A.

BLITZER: I think you offended people at LAX.

LAPID: Well I think they know a lot about their own airport.

BLITZER: I fly into LAX all the time and I feel pretty good, but -

LAPID: Well you should feel also pretty good when you fly over here.

(END VIDEOCLIP)

LAKE: Earlier today Jim Boulden spoke with EASA executive director Patrick Ly. He asked whether pressure had been put on EASA to reverse its

decision on flights to Tel Aviv.

(BEGIN VIDEOCLIP)

PATRICK LY, EUROPEAN AVIATION SAFETY AGENCY: We did not receive any type of specific pressure from anybody. We were of course challenged by a

certain number of airlines, also by a certain number of member states who asked us on which bases we had taken our position and which were asking us

when and how we would lift the recommendations. The Israeli authorities of course were doing what they could to, let's say, reassure us, but the

safety risk was well managed, and it's on the bases of both discussions with the Israeli Aviation Authority and the discussions with the U.S. that

we decided that indeed we could envisage to fly into Tel Aviv again.

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Now, not all European airlines followed your advice, so you are different from the U.S. FAA which

simply told airlines not to fly in Tel Aviv. For instance, British Airways did not take your recommendation. So you don't have the authority then to

stop airlines from flying where they choose? Is that correct?

LY: It's a correct statement. In the E.U., nothing is easy as you know. We share responsibilities between, first at the European level and

the member states, which have the possibility to prohibit airlines from going to a specific destination. For instance, I know that the French

authorities prohibited the airlines to fly into Tel Aviv yesterday. And what we can do is issue recommendations for national administrations and

aircraft operators to follow or not, knowing that if an aircraft does not follow a recommendation, then they have to have solid grounds on which they

can base their decision not to go in the line with the recommendations that we issue.

BOULDEN: I did notice a few days ago a plane that was trying to avoid flying over Ukraine then flew south and then went over, for instance,

Syrian airspace. So it is very difficult, isn't it, when you close off one corridor to find maybe another corridor that is safer. So it must be a

challenge for your organization to try to help the airlines decide what is the safest route.

LY: One of the difficulties that we have first at the European level, is that - as you may imagine - the decision to close a portion of airspace

is based on the risk assessment which is made by the member states. And if you take the example of Tel Aviv, for instance, the safety assessment made

by the Israeli authorities was clearly different from the safety assessment which was made from other authorities, and that's where we - I think - have

something to do in the global aviation community in order to make sure that when the member states decides to close an airspace or decides to keep an

airspace open, we need to be able to review on which assumptions was the decision taken and we need to be able to have an independent advice or

independent analyses of whether those assumptions are the right ones or whether we should be more conservative or less conservative.

(END VIDEOCLIP)

LAKE: All right. More than a half a decade after the financial crisis, the global economy is still struggling to get moving again. My

interview with the IMF chief economist next.

(COMMERCIAL BREAK)

LAKE: Returning to the other major story, in the Middle East today another 16 people have been killed at a U.N. shelter in Gaza. A strike hit

a school building that was housing people, many of whom, had fled their homes. The source of the strike is unclear. Ian Lee joins us live from

Gaza. And, Ian, I know that you were at the site of the scene today. What can you tell us?

IAN LEE, FREELANCE CORRESPONDENT: Well, Maggie, being at the hospital it was sheer pandemonium - people running around, well over a dozen people

were killed in this strike and hundreds injured. It was quite chaotic as people were looking for their loved ones, trying to find out if they were

OK or not. You still had people streaming in to get emergency care, and when you were looking at these people - at the injured - a lot of them were

children and that is the one thing that struck me the most.

And when we were talking to some of the eyewitnesses about what happened because there really is a mystery surrounding how the events took

place. In other incidents where we do see attacks happen, it's usually fairly clear - what happened and what took place. But this one in

particular, a lot of mystery. When we talk to eyewitnesses, they said that they were told that to gather in the courtyard of the school and that Red

Cross busses were going to take them to safety. Now, the U.N. has said today that they tried to talk with the Israeli military twice to get a

window where they could evacuate the people safely, and the Israelis said that they did grant this window between 10 a.m. local time to 2 p.m.,

although the U.N. said that they never heard of any sort of window to evacuate. That's just one part of the mystery.

The other part of the mystery is what actually hit this school? Now, Hamas is saying that it was an Israeli strike, but the Israelis are saying

that it actually could have been a Hamas rocket. We had a CNN team that went back to the site - Karl Penhaul was there, he was looking around and

really there wasn't anything definitive to say what it was - was there either a rocket or was it an Israeli strike. So there's mystery around

that, that's going to have to be answered by the U.N.

But what I can tell you is that at least a dozen people were killed in this strike, and this is one of the - this is the worst strike yet to

happen at a U.N. school. And these are schools where people are going for shelter. They're trying to be safe from the surrounding fighting. And

this school in Beit Hanoun was on the frontline, and that's why people were wanting to get out of there and go to another U.N. facility. But U.N.

facilities that we've seen over the course of this conflict at times have become centers for fighting. On one hand you've had at least - or two

Israeli strikes hit U.N. schools, and that's according to the United Nations. But the U.N. has also said that Hamas - or militants rather -

have hit in (ph) rockets at least two schools as well. So, while these schools are supposed to be places where just your civilians can go and get

shelter, at times they've been right in direct in the middle of the fighting, Maggie.

LAKE: And as you said, today one of the worst incidents and that is a very alarming development. All right, Ian Lee, thank you for bringing us

the scene from the ground where you all were today. Thank you so much and stay safe. Now, the International Monetary Fund says it is concerned about

geopolitical risks in the year ahead. It cut its global growth forecast for 2014 to 3.4 percent. That's just 0.2 percent higher than the world's

economy managed to muster in 2013. I spoke with the IMF's chief economist Olivier Blanchard earlier and asked him, after a disappointing start to the

year, if the United States' economy was back on track.

(BEGIN VIDEOCLIP)

BLANCHARD: We think so, and we think - we think - that the first quarter which was this one was a one off (ph) thing, and, you know, our

forecast for the rest of the year at an annual rate back to 3 percent growth, next year about the same, we think the recovery is on track. Now,

you know, we'd still have to explain the first quarter. We think it's due to a number of specific factors which are probably now going to have a

lasting impact. So the recovery looking forward for the U.S. is still very much on course.

LAKE: We've heard from some Federal Reserve officials, some other regulators, the concern that the global monetary conditions we face have

created excessive risk-taking. Are you at the IMF concerned that dangerous bubbles are forming?

BLANCHARD: No, we're watching because it is true that when you have very low interest rates for a while, the incentives of a desire to make

more money to look for more risk, more return is there. So we've been - we've been - watching very closely. We think that some markets are, I

would say, optimistically valued. It's not general, and we don't worry too much because the position of the investors in these markets seem not to be

very leveraged. So, even if the prices in these markets dropped quite a bit, it would not have the kind of adverse implications that we saw during

the financial crisis.

LAKE: What markets have you most worried? Are we talking about bonds, are we talking about equities? What should investors watch out for?

BLANCHARD: Again, I'm not very worried. I mean, the question is, for example, whether the stock prices are reasonably valued. People point to

the fact that the recovery is not very strong, but, you know, what determines stock prices is both the growth rate of the economy and the

interest rates. The interest rates are very low, so the valuations are not obviously crazy at all. They're high but one can see them as reasonable.

LAKE: When we look at China, the economy's so important as an engine of growth for the global economy. There also was faltering there, some

concerns about a slowdown - things seemed to be rebounding. What are we expecting from the Chinese economy?

BLANCHARD: So we haven't changed - (inaudible) we haven't changed our forecast for China. What's happening is that there's a housing slowdown -

not a bust, but a slowdown. But the Chinese government has taken a number of measures in terms of infrastructure projects, social housing, allowing

for more credit flows, which have more or less set the adverse effect of the housing slowdown. So our growth rate forecast remains about the same,

they still have to do over the next many years the rebalancing from investment to consumption. This will probably slow down their growth, and

that's still to come.

(END VIDEOCLIP)

LAKE: IMF Chief Economist Olivier Blanchard. And we'll be right back.

(COMMERCIAL BREAK)

LAKE: A recap of our top story tonight. The Dutch Prime Minister Mark Rutte has promised justice for those who lost their lives on Malaysia

Airlines flight 17. The remains of up to 74 more people killed in the crash have arrived in the Netherlands, touching down at a military base in

Eindhoven earlier on Thursday. Meanwhile, the United States says it has proof that Russia is firing missiles into Ukraine. Earlier, the Dutch

prime minister spoke to CNN's Anderson Cooper.

(BEGIN VIDEOCLIP)

RUTTE: I want to get to the bottom of this. That's why I, first of all, want to bring back our people. At the same time, it is extremely

important to find out what happened and then to be able to bring to justice those who did. And I'm extremely committed to also bring about these two

remaining - next to bringing back our people - these two other priorities. We have to find out what happened and to bring to justice those who did.

(END VIDEOCLIP)

LAKE: For now, I'm Maggie Lake in New York. "The Situation Room" with Wolf Blitzer live from Jerusalem is next.

END