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Children Victims of Pakistan Taliban School Attack; How U.S. Embargo Against Cuba Began; Alan Gross, U.S. Spy Swapped for Remaining Cuban Five; Who Loses if Russia's Economy Crumbles?

Aired December 17, 2014 - 14:30   ET

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

BROOKE BALDWIN, CNN ANCHOR: One father told the Associated Press, and I'm quoting him, "My son was in a uniform this morning. He's in a casket now. My son was my dream. My dream has been killed."

Another man tweeted this, saying, "The smallest coffins are the heaviest."

But amid the evil, I want to take a minute to focus on survivors, the ones that found hiding places, the ones that played dead, they join another survivor, Malala Yousafzai, who took bullets from the same Taliban just for wanting to learn. She and the others prove they won't ever let the terror win, and some dreams refuse to die.

(BEGIN VIDEO CLIP)

MALALA YOUSAFZAI, WINNER, NOBEL PEACE PRIZE: We stand with all of those families and all those children who are injured right now and who are suffering through this big trauma. And now it is time that we unite. And I call upon the international community, teachers in Pakistan, all political parties and everyone that we should stand up together and fight against terrorism and we should make sure that every child gets safe and quality education.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BALDWIN: Bottom of the hour. I'm Brooke Baldwin.

Why has there been a U.S. embargo against Cuba? It began in the 1960s, so it's easy to understand if you're not entirely up to speed.

Let me get you there with the help of our CNN colleague, I bring you five questions you might have been embarrassed to ask about the Cuban embargo.

Number one, why did the embargo start? The U.S. began imposing sanctions against Cuba after Fidel Castro seized power back in 1959, and soon after, he nationalized more than a billion dollar in American assets on the island. Senator John F. Kennedy made the embargo official in 1962.

Number two, what kind of restrictions does the embargo currently impose? Answer, the embargo not only keeps American companies from doing business in Cuba but also prohibits Americans from traveling there or spending money as tourists. American citizens can face up to a $65,000 fine for spending money in Cuba according to the U.S. Treasury. The embargo also limits the amount individuals can spend to family living in Cuba.

Number three, so what's changing as of today? Well, both countries will work towards reestablishing embassies. We heard that. The U.S. will ease travel restrictions, making it easier for Americans to travel to Cuba and do business there. And U.S. and Cuban banks will be allowed to start building relationships, and that means American travelers will be able to use their credit and debit cards when visiting.

Number four, why doesn't President Obama end the embargo all together? Easy answer, he can't. Only Congress can end a trade embargo. But White House officials say the president can ease certain restrictions under his executive authority. This is the third time President Obama has acted to ease the embargo, but today's agreement goes way beyond any measure before.

And finally, how much has Cuba been impacted by this embargo? Cuba said, in 2011, that the economic damage of the U.S. embargo topped $1 trillion in its five-decade history.

I want to talk you live to Havana and speak with Wayne Smith, a senior fellow of the Cuba Project at Johns Hopkins University.

Wayne, nice to see you, sir. Welcome.

WAYNE SMITH, SENIOR FELLOW, CENTER FOR INTERNATIONAL POLITICS: Pleasure.

(CROSSTALK)

SMITH: I'm actually at the Center for International Politics.

BALDWIN: Forgive me. Thank you for correcting that.

Let me just begin with the question that we went through five questions people are asking, and let me begin with how does this impact Americans potentially traveling to Cuba, goods Americans would want to bring back, i.e. cigars and what not. Does that change?

SMITH: I have no idea whether that changes or not. You've been able to bring some things back for a while. Whether this changes it, I don't know.

BALDWIN: How about why don't you tell me -- you were there in Havana. I heard that church bells were ringing. Have you had a chance to speak to Cubans? How are they reacting to the news?

SMITH: I haven't been in Cuba in Havana. I have actually. I'm in Havana right now as a matter of fact. There was tremendous enthusiasm in the streets here in Havana when the news came that the U.S. was going to ease restrictions on Cuba. We're going to establish diplomatic relations with Cuba. It's been a long time coming. Let me just say that the embargo, the hard-line policy that the United States has followed for the past 40 or 50 years hasn't worked and surely it's time to change. When something doesn't work, you should change it before 50 years have passed.

BALDWIN: You know, we're hearing from some Republicans, some potential presidential candidates come 2016, who are not singing hallelujah as Senator Bill Nelson was. I don't think we should be negotiating with an oppressive regime is what Jeb Bush said. Senator Lindsey Graham saying this is an incredibly bad idea. What would you say to them?

SMITH: I would say that's foolish. We have and have had for some time normal diplomatic relations, trade and everything, with China which has a communist government. There are certain repressive measures in China. The idea here is that there are things about the Cuban government we don't like but we've had this hard line policy refusing to deal in place for 50 years and it hasn't accomplished anything. Surely after 50 years it's time to try something new and I'm relieved and pleased to see that Obama is. I thought his speech was excellent. The measures that he has indicated are very sound.

BALDWIN: You know, at the exact same time President Obama is speaking at noon eastern today, we heard from the president there in Cuba from President Raul Castro, giving Obama respect. Which is something that surprised a lot of people following U.S./Cuban relations mean a myriad of administrations for decades. Your reaction to the word "respect" out of Raul Castro's mouth?

SMITH: I'm sorry, I didn't understand. We didn't hear the word "respect" out of Raul Castro?

BALDWIN: Let me start over, sir. The fact that we heard when Raul Castro gave his address today at noon, he said "giving Obama respect," based upon this decision today. And my question to you, as someone that's followed the U.S./Cuban relations so closely for years, when you hear a U.S. president giving -- rather a Cuban president giving a U.S. president "respect," how do you interpret that?

SMITH: I think it's very good. It's a very positive development. What else could it be?

(LAUGHTER)

BALDWIN: Wayne Smith there in Havana, Cuba. Thank you so much for joining me. I really appreciate it.

So with this historic shift in relations between U.S. and Cuba, we're now hearing of the release of one of the most important intelligence agents the U.S. has ever had in Cuba. What the president said earlier today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Cuba today released one of the most important intelligence agents that the United States has ever had in Cuba and who has been imprisoned for nearly two decades. This man, whose sacrifice has been known to only a few, provided America with the information that allowed us to arrest the network of Cuban agents that included the men transferred to Cuba today as well as other spies in the United States.

(END VIDEO CLIP)

BALDWIN: The president speaking just a little while ago about the release of the remaining three imprisoned members of the so-called Cuban Five.

We'll talk about those political prisoners with Stephen Kimber. He is the author of "What Lies Across the Water, The Real Story of the Cuban Five."

Stephen, welcome.

STEPHEN KIMBER, AUTHOR: Hello. How are you today?

BALDWIN: Hello. I'm wonderful.

Let me begin with this mystery spy who led to capture of the Cuban Five, who were prisoners held in the U.S., and why they were convicted of espionage?

KIMBER: The Cuban Five were all members of an intelligence network that was sent to Miami in the early 1990s. What was going on was, after the fall of the Soviet Union, and exile groups in Miami were plotting and carrying out terrorist attacks against Cuba. They were attacking tourist installations. In the 1990s, there was a series of bombings. A Canadian-Italian tourist was killed in one of those. They also plotted, and one of the things that agents were able to uncover and derail, was a plot to blow up an airplane filled with tourists coming to Cuba. They infiltrated the exile groups and discovered what they were plotting and sent it to Havana and Havana was able to stop it in most cases but not in all cases.

BALDWIN: You have three of those Cuban Five as part of this swap. Alan Gross was in Cuba and you have this mystery man, this intel agent, this mystery spy who was also released in Cuba. What do we know about this individual?

KIMBER: Not very much. I mean, first of all, during the trial of the Cuban Five, it was disclosed that the United States had been following the members of the Cuban Five for about two years before they were arrested. But nobody ever in that trial said how they got onto them in the first place. The information that came out from President Obama and others today seems to indicate this would have been a high- ranking official in the Directory of Intelligence in Cuba, who would have had access to information about the Cuban Five, but also about some other operations in the United States. That would have to be a pretty high-ranking person because, in Cuban intelligence, it's very compartmentalized. People wouldn't know if they didn't need to know. The fact that somebody knew about different operations seems to indicate that this was somebody fairly high up, a Cuban national high up in the intelligence apparatus in Cuba.

BALDWIN: Seems like a key player just listening to President Obama talking about him.

Let's focus then, of course, on Alan Gross. Take me back to 2009, Stephen. He took four different trips to Cuba prior to the fifth trip in which he was imprisoned. He was working as a subcontractor. What is it he was trying to do in Cuba?

KIMBER: I think it's important for Americans to understand that he was not the humanitarian do-gooder of State Department releases. He was operating in a regime-change program that was going on in the United States -- or in Cuba, and he brought in sophisticated telecommunication equipment. He used religious groups to carry some of the equipment in. He had a SIM card that was only available to the State Department and the CIA. He was not as good -- the humanitarian do-gooder caught in the wrong place in the right time as state officials said. That said, it's also clear tht he was somebody that was a victim of a failed American policy. He was there for the wrong reasons at the wrong time, and like the members of the Cuban Five, trapped in this failed policy that had been going on for more than 50 years.

BALDWIN: Caught in the crosshairs. He's now home. Thrilled to be home.

I think one of the most fascinating pieces of this entire thing, A, the fact that 16, 17, 18-month negotiation between Cuba and the U.S. never leaked and part of that came down to the pope, right Stephen? Apparently, according to the president today, this letter to Raul Castro and President Obama and also Canada. Your country of Canada, where you are joining me from today, played a vital role. What involvement did the Canadians have here?

KIMBER: I think the Canadians sort of provided a safe haven where discussions could take place. The pope was somebody who was instrumental. But it's important, if you think about over the past 10 years, and we're talking about both the Cuban Five in that period and Alan Gross from 2009. The people, who were trying to free the Cuban Five or get Alan Gross freed, were operating in a vacuum. Nobody was paying attention to them.

And slowly but surely things have changed. I know that for me, I went to Washington back in September, and I had been there a number of times talking to Congress people and people in the State Department, and you could sense that there was a sea change in how people were responding to this case.

So on the one hand, I was surprised when this happened today, and particularly the wide scope of what's happening, but it was also something that had been building for some time. And clearly, there were a lot of people pushing for this in Latin America --

BALDWIN: In Congress.

KIMBER: -- and certainly the pope.

BALDWIN: Stephen Kimber, thank you very much.

KIMBER: You're welcome. Thank you.

BALDWIN: We're going to take you back to this breaking story out of Cuba.

But meantime, let's talk Russia. Who loses in Russia's economy crumbles? The surprising answer to that. Plus, how President Obama is suddenly winning against Vladimir Putin.

(COMMERCIAL BREAK)

BALDWIN: Russia is moving to prop up its currency which lost half value against the U.S. dollar this year and Russian consumers have been scrambling to stock up on imported goods, which get more expensive as their currency drops. The finance minister is selling foreign currency in hopes of bringing stability to Russia's financial markets.

I have two experts here to walk us through this and how it could affect us, global economics analyst, Rana Foroohar; and business correspondent, Richard Quest, host of "Quest Means Business."

Good to see both of you.

Yesterday, we covered this. It seems, in 24 hours, the ruble is doing better today.

For you, gut check, how hard is this hitting Russia's economy?

RANA FOROOHAR, CNN GLOBAL ECONOMICS ANALYST: It's huge. Russia's economy follows the path of oil and oil has fallen off a cliff in the last few months. 40 percent decrease in the last four months. A petro economy where exports are 70 percent oil, that's it. They're down for the count.

BALDWIN: Is there a sense we saw when it collapsed, Richard Quest, 23 years ago when you saw people racing out for milk and bread, is it the kind of thing we'll see again?

RICHARD QUEST, CNN HOST, QUEST MEANS BUSINESS: Not immediately. The economy of Russia is not particularly strong but it's stronger than it was 20-odd years ago. And Russia does have very, very sizable foreign reserve offsets. It has lots of assets they can call upon, hundreds of billions. Now, they have squandered quite a lot of it trying to prop up a failing currency but it is not going to be as immediate or dramatic.

What is very likely to happen is this drip, drip, drip effect, down further and further. Because every barometer is flashing red. It's not called stagflation anymore. It's in recession. Inflation is high. Currency is collapsing. Unemployment remains high.

FOROOHAR: Huge debt.

QUEST: Yeah.

FOROOHAR: This is the thing with U.S. sanctions. They can't renegotiate their $700 billion in debt. That's another crushing thing on top of the economy there.

BALDWIN: OK.

QUEST: And every potential short-term answer. Jacking up interest rates is a waste of time. It sends you further into recession. But everything else they can do creates a pressure cooker.

BALDWIN: Drip, drip, drip --

QUEST: Yes.

BALDWIN: -- as we focus on Russia. But global picture, who then loses as the economy in Russia is drip, drip, drip?

FOROOHAR: The good news -- not great good news -- the good news is it's only 3 percent of the global economy. This is not going to trigger the meltdown you might see if something similar was happening in Europe.

BALDWIN: It won't?

FOROOHAR: It will not. Back in 1998, there was a meltdown in the Russian economy. That had a bigger effect because Russian finances were more interconnected. Sanctions have hit hard. The interconnections -- except with Europe. Europe will be harder hit than the U.S. Germany in particular.

QUEST: Germany in particular, but even then, everybody has had asbestos gloves --

BALDWIN: Asbestos gloves.

(LAUGHTER)

QUEST: -- when dealing with Russia.

FOROOHAR: True.

(CROSSTALK)

QUEST: You don't go and put money into Russia unless you have a very strong stomach.

FOROOHAR: And this is why there's this idea of hiking up interest rates --

QUEST: Yeah.

FOROOHAR: -- and hoping everybody -- nobody wants their money in Russia, no matter what the interest rates are. It's just a --

(CROSSTALK)

QUEST: And if you shove interest rates up to 17. 5 percent, we saw what that did in the U.K. Thailand did it. It doesn't work.

(CROSSTALK)

BALDWIN: You mentioned sanctions a second ago. I remember sitting here six, eight months ago, when you had different people saying sanctions that Obama is putting on Russia not doing much at all. It was even. It was even. Let me quote this, House intelligence chair, Mike Rogers, "I think Putin is playing chess and we're playing marbles." But it seems we just got up with Putin?

QUEST: No, not necessarily.

BALDWIN: Not necessarily?

QUEST: What those sanctions are doing --

(CROSSTALK)

BALDWIN: Seems like they are making a dent in Russia.

QUEST: What sanctions are doing is making a bad situation worse.

FOROOHAR: Right. Right. Absolutely. Again, these are things that hit average people. They can't move their money around. One of the great tragedies of Russia, there's a tremendous amount of human talent there. One thing they did right was invest in science and technology. There are well educated, smart people in this country that don't have opportunities because the government is totally negligent and hasn't diversified the economy.

QUEST: With that thought, you need to bear in mind this is not an economic story. This is a geopolitical story. Putin is going to continue what he is doing no matter how bad the economy gets until either the oligarchs get rid of him or the peasants revolt.

(CROSSTALK)

BALDWIN: Aren't they all in bed with Putin?

(LAUGHTER)

(CROSSTALK)

QUEST: Well, no --

(CROSSTALK)

FOROOHAR: Not so much. They're being hit hard. I agree with that. He's a cornered bear right now. What happens when to autocrats, when they are cornered, when the price of oil is falling, which it will stay low, by the way --

(CROSSTALK)

FOROOHAR: -- because Saudis don't want to pump more because they want to put pressure on Iran. There's a great game of oil going on right now.

(CROSSTALK)

QUEST: And the U.S. isn't going to stop pumping because there's no single authority so you are waiting for every individual fracker, every individual oil man in Texas to say I'm going to stop. This is why the situation is so down-right dangerous.

BALDWIN: It's not helping our air fare at all. I digress. That's another story.

Rana Foroohar, Richard Quest, thank you. I like the two of you together. Let's do it again sometime.

(LAUGHTER)

Appreciate it.

Coming up next, we're getting breaking news from the war against ISIS. There's word that a mass grave has been found. 230 people killed allegedly at the hands of the terror group. Hear what survivors are saying about that attack.

(COMMERCIAL BREAK)

BALDWIN: We continue on hour two. I'm Brooke Baldwin. You're watching CNN.

We're beginning with the first public words uttered in the first few hours of freedom for an American who is no longer a prison in Cuba. We're watching history in the making today. This American speaks as the United States and Cuba, after half a century of ill will and resentment, have pledged to essentially bury the hatchet. The American, Alan Gross, imprisoned by Cuba for the past five years, as of late this morning, he's back on American soil. And he began with an outpouring of gratitude to all of those who tried to help him get out when he was losing faith it would ever happen. We'll get to that in just a moment.

Gross' release by Cuba apparently paved the way for this monumental shift aimed at full restoration of diplomatic ties, the mere mention of which is political dynamite among local Cuban exiles.

President Barack Obama sealing the deal in a phone call with Raul Castro, and announced it to the nation at noon today.

(BEGIN VIDEO CLIP)

OBAMA: I've instructed Secretary Kerry to immediately begin discussions with Cuba to reestablish diplomatic relations that have been severed since January of 1961. Going forward, the United States will reestablish an embassy in Havana and high-ranking officials will visit Cuba.

(END VIDEO CLIP)

BALDWIN: We are talking 50 years of strife that started in earnest with the Cuban Missile Crisis, which was about as close as the world has ever come to a full-on nuclear war. We're also talking about the Castro support for Marxist revolutions in Latin America. And then the perilous journeys across the Florida Straits of Cubans, as you see, seeking refuge on U.S. soil, and the angry official attacks, such as this one, uttered after Cuba downed a small aircraft whose Cuban pilot was trying to defect.