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Early Start with John Berman and Zoraida Sambolin

Report: Israel Spied on U.S. Nuclear Talks with Iran; Yemen on Edge of Civil War; Ted Cruz Criticized by GOP Colleagues. Aired 4:30- 5a ET

Aired March 24, 2015 - 04:30   ET

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

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[04:30:36] CHRISTINE ROMANS, CNN ANCHOR: Breaking overnight: Israel accused of spying on nuclear talks with U.S. and Iran. Using that information to pit Congress against the White House. But with one week before the deadline in the negotiations, could this report derail any progress? We are live with the very latest, ahead.

Welcome back to EARLY START. I'm Christine Romans. Thirty minutes past the hour. Good morning, everyone.

Breaking overnight: accusations emerging that Israel has been spying on negotiations with Iran over a nuclear deal almost from the very beginning. This is from "The Wall Street Journal". "The Wall Street Journal" reporting that Israel eavesdropped on negotiations, in addition to getting information from confidential U.S. briefings, informants and European diplomatic contact.

Israeli officials denied, denied directly spying on U.S. negotiators. "The Journal" says it spoke to more than a dozen current and former U.S. and Israeli diplomats, lawmakers and intelligence officials. The report comes with one week left before the deadline to reach a framework for a deal.

The State Department announcing that Secretary Kerry returns on Thursday to Switzerland where negotiations with Iran are currently on a break.

I want do bring in CNN's Oren Liebermann live for us in Jerusalem with the latest.

And we have heard from Benjamin Netanyahu over the last week said Israel's understanding of the deal is something that the Israelis were concerned with. Does that understanding include spying?

OREN LIEBERMANN, CNN REPORTER: Well, the Israeli government here absolutely denying the allegations of spying. Here's the statement they released, a very strongly worded statement from a senior administration official. I want to read this to you.

"These allegations are utterly false. The state of Israel does not conduct espionage against the United States or Israel's other allies. The false allegations are clearly intended to undermine the strong ties between the United States and Israel, and the security and intelligence relationship we share.

But, Christine, you're absolutely right. At the same time, we have heard Netanyahu's government talk about our understanding of these deals. That doesn't come from guessing about the deals. That comes from information. Regardless for the moment of how they got that information -- again, the strong denial of any accusations of spying.

And what we have seen over the last few weeks is a shift in how the government uses that information. It used to be Netanyahu pointed his efforts at the White House and President Barack Obama. He has shifted that to Congress, to working with his friends, the Republicans, some very strong ties there, and, of course, House Speaker John Boehner, who will be here in Israel. We expect him next week.

So, that's been the force of Netanyahu's efforts over the last few weeks as he shifted away from working with the White House and a very strained relationship there, and shifted towards influencing Congress. The real question will be, what will be the long term effect of the story and these allegations. Christine, that's where we can expect to see a deepening rift between these two leaders. Already, we know the relationship is strained. These allegations certainly won't make it any better.

ROMANS: Yes, strained and moving in the wrong direction, no question. Thanks for that Oren Liebermann, from Jerusalem.

Now, report of Israeli spying in "The Wall Street Journal", it comes with one week left before the deadline set to resume for negotiations in Switzerland. With Secretary Kerry returning on Thursday to Lausanne, what will he face when he gets there?

Joining us now, senior international correspondent Nic Robertson in London.

Nic, let's talk about the latest progress on the nuclear negotiations, and these accusations, this report in "The Journal" of Israeli spying, how that could affect the progress?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, certainly, you know, whatever Israel has learned through whatever mechanisms it has, it's going to use that to lobby whoever it can and we have seen Prime Minister Benjamin Netanyahu doing that clearly already. But it will lobby the other members of the P5-plus-1. That's, you know, France, German, Britain, the United States, France, China and Russia. It will lobby those countries that it thinks are going to listen.

And right now, that would be seemed to be France. France is known in these talks to take a very tough position. France is in the talks. They get a voice at the table. So, it really gives Israel a stronger position to lobby for what it wants.

The talks right now, Secretary Kerry, when he wrapped up the talks last week said that substantial progress had been made. He met with French and German and British foreign ministers Saturday. They agreed that there had been progress. But still, there are issues that need to be tackled. There are areas where they don't have agreement. And from the Iranian side, we are hearing quite a bit of push back. Is it political rhetoric?

The supreme leader there, Ayatollah Khomeini, at the weekend, said the United States was bullying the Iranians and they were not about to give in.

[04:35:00] A slightly toned down version of that, if you will, from President Rouhani of Iran. He said, you know, that progress was made and a deal was still possible, but it will take more from the position of the United States and Secretary Kerry's opposite number in the talks Foreign Minister Zarif has been very clear. He said back off on the pressure if you want to get a deal done.

So, you know, when they sit down and start talking Thursday, it's not going to be easy. It may be made harder by the revelations of what Israel in effect learned as well -- Christine.

ROMANS: All right. Nic Robertson in London for us on those, thanks, Nic.

With U.N. officials declaring Yemen on the brink of civil war, the elected government of the president there, Abd Rabbuh Mansur Hadi, is calling on other Persian Gulf nations to intervene, to stop Houthi rebels advancing across Yemen, and to help bring President Hadi back to power in Yemen.

This as we learned Britain has pulled the last forces out of Yemen. The U.S. evacuated more than 100 Special Operations troops out of the country over weekend. Security experts say the developments simply crippling American counterterror efforts in the region, raising the possibility that Yemen could be a fertile staging ground for global terror.

We are learning new details about those 11 medical students suspected of traveling to Syria to work in ISIS-controlled hospitals. The group includes seven Britons, an American and a Canadian. A Turkish lawmaker says he believes they were, quote, "brainwashed". But the students' families are now saying those students went to the border between Syria and Turkey to offer voluntary medical help to refugees and they have since disappeared.

For the latest, let's bring in CNN's Atika Shubert. She is near Turkey's border with Syria.

Atika, such a mystery about what drew these medical students to the border and what happened to them since.

ATIKA SHUBERT, CNN CORRESPONDENT: Exactly. Where are they now? This is what their parents want to know.

We actually had a chance to speak with the families yesterday. They are here right on the border with Syria, and they say they're not leaving until they get their children back home. Now, they gave us a statement yesterday saying their children went to

Turkey, quote, "willingly to offer voluntary medical help." They also said in the statement there, "Our children's intentions are good, humanitarian motivations within their medical objectives."

Now, we understand, they arrived here on the 12th. What happened then is what the parents are trying to find out. Did they cross over into Syria? If they did, are they in ISIS-controlled territory or in the control of an area by another militant group? This is critical because that depends on whether or not British authorities, for example, will prosecute them.

Now, as far as we know, these students are still in touch with their parents. They sent text messages saying that they are helping in hospitals and clinics with refugees. But they won't say where they are or if they are in an area controlled by ISIS. So, this is what parents are hoping to find out in the next few days, and they are urging their children to come back home as soon as they can -- Christine.

ROMANS: All right. Atika Shubert for us on the border in Turkey -- thank you, Atika.

There is new evidence this morning that ISIS is making tentative steps to expand its recruiting efforts into Afghanistan. Take a look at this -- this exclusive CNN video of an ISIS recruiting session in Afghanistan. Now, it appears to be a small very early effort, but U.N. official tells us there is real concern ISIS could gain a foot hold, adding to the challenges the Afghan government already faces fighting al Qaeda and the Taliban.

Meanwhile, this morning, Afghanistan's new president, Ashraf Ghani, meets with President Obama. Ghani's number one mission, convincing the president to slow the planned withdrawal of U.S. troops. The Afghan president warning that pulling all American troops out of the country by the end of 2016 as planned, the president of Afghanistan says that would have devastating consequences for the security situation there.

A House panel investigating the Secret Service warning the head of the agency not to come to today's hearing alone. Investigators have asked Director Joseph Clancy and four other Secret Service officials to testify later this morning. But Clancy has already advised and he will be the only one attending. Panel members firing back with a letter, warning the director that it is not acceptable. So far, no response from the Secret Service.

Let's get an early start on your money this Tuesday morning. CNN Money correspondent Alison Kosik joins me now.

Alison, good morning. Nice to see you. What are futures doing this morning?

ALISON KOSIK, CNN MONEY CORRESPONDENT: Not doing much. Pretty sleepy morning. U.S. stock futures are slightly higher right now. It looks like we

could be in for more gains, if it holds. Yesterday, though, we did see stocks take a bit of a breather. The Dow and S&P 500, they pull just back a bit. It was kind of a quiet day. The NASDAQ closed lower as well, though, remember, it's still above 5,000 near the March 2000 high.

You know what's funny is the Dow gets all the love, because the Dow makes all of the milestones.

ROMANS: Right.

KOSIK: Thirty-eight record highs last year, four so far this year. NASDAQ, it will be in 15 years since its last high.

ROMANS: A long slug for the NASDAQ. It really is a different NASDAQ today than it was 15 years ago.

[04:40:00] KOSIK: It is.

ROMANS: Let me talk about overseas markets, because I know the U.S. market doesn't open for another five hours or so. But overseas are firing on all cylinders.

KOSIK: Exactly. And there are actually big concerns this morning, Christine, about growth in China. Asian shares are mostly lower after China factory activity slumped in March to the lowest level in 11 months. It's the latest disappointment for China. There are more and more signs that growth did not, is only kind of OK. Not stellar. And that's putting pressure on the central bank to act.

But let's put this in perspective. I mean, we would love to see growth of 7.4 percent, which is the lowest that China saw in, what, 24 years.

ROMANS: Right.

KOSIK: We'd love to see 7.4 percent.

ROMANS: I know, it's all relative, right?

KOSIK: It really is.

ROMANS: Seven-point-four percent.

Let me ask you about this big deal, this big baseball deal.

KOSIK: There is. Wilson Sporting Goods is buying Louisville slugger brand of baseball bats for $70 million. That was going to happen there. That will marry two of the leading baseball brands just before the season starts. Good timing.

The 130--year-old family business will make bats for Wilson at its Louisville factory. Fund fact: Wilson makes the official football out of Ohio.

ROMANS: Oh, really? OK, fantastic. Love to see that domestic production.

Thanks so much, Alison. We'll talk to you again in a little bit.

Drama unfolding inside the Boston marathon bombing trial. What investigators found on the accused's computer and why it could help the defense. That's next.

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ROMANS: The prosecution in the trial of accused Boston marathon bomber Dzhokhar Tsarnaev nearing the end of its case.

[04:45:02] In court Monday, jurors heard more testimony about alleged militant materials found on Tsarnaev's various communications devices.

CNN's Alexandra Field has more.

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ALEXANDRA FIELD, CNN CORRESPONDENT: Christine, Dzhokhar Tsarnaev's digital devices, including his cell phone and is laptop come under the microscope. Defense attorneys argue that prosecutors cherry-pick, showing the jury only the most incriminating files that they found on Dzhokhar's computer, including an article with instructions on how to make a bomb, an audio recordings from the terrorist Anwar al-Awlaki.

The defense grilling an FBI witness on cross-exam, asking whether or not investigators could tell with certainly who created specific files and whether a computer had more than one user. The defense suggesting that Dzhokhar's computer was used mostly for typical teenage activities.

A top search in his Internet history, Chechnya, the area near where he's from. Islam and jihad not on the list of top searches, the defense pointed out. The two top search terms on Dzhokhar's computer, they weren't revealed to the jury, but the defense noted, they were typical for an adolescent boy -- Christine.

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ROMANS: Real estate heir and accused killer Robert Durst now being linked to a cold case in Vermont. Police are investigating a connection between Durst and the disappearance of Middlebury College student Lynne Schultz in 1971. Durst owned a health store there at the time. Meantime, a judge in Louisiana denying a bail for Durst, citing the prosecutors who say he is a flight risk. The 71-year-old Durst faces a murder charge in Los Angeles and lesser charges in New Orleans.

More testimony today in the case against former NFL star Aaron Hernandez, who was on trial for murder. Prosecutors expected to present new evidence tracing the movements of Hernandez and two alleged accomplices on the night that Odin Lloyd was killed. In court Monday, the focus was on the guns. Jurors hearing details of a $15,000 payment Hernandez allegedly made to a Florida man for weapons. There are new details concerning the arrest of University of Virginia student Martese Johnson, an arrest that left him bloodied and captured on video. An attorney says Johnson intends to plead not guilty in court Thursday. The 20-year-old was arrested last week outside a bar in Charlottesville and was charged of public intoxication, obstruction of justice. The bar owner says Johnson was cordial after being denied entry to the war. He was not belligerent as officers claimed. Virginia state police are investigating that incident.

Utah's governor signing a bill to give the state a back-up plan for executions. That back-up plan, firing squad. Lawmakers approved the measure earlier this month that OKs death by firing squad if lethal injection drugs are not available. Those drugs are in short supply nationwide. Utah is the only state to allow firing squad as an alter measures of execution. Utah currently has eight inmates on death row.

This morning, we are learning Angelina Jolie, the actress and director, she has had her ovaries surgically removed to prevent the possibility of cancer. She reveals this in an op-ed in "The New York Times". The actress said a recent blood test showed early markers that could be a sign of ovarian cancer.

Jolie calling it a moment of clarity, realizing what is important in her life. You may remember she had a preventative double mastectomy two years ago to reduce her rest of getting breast cancer since it ran from her family. Jolie describes this as a personal decision and acknowledges that it is not right for every woman, but it is a decision that she has made.

All right. Forty-eight minutes past the hour.

The gloves are off just hours after announcing he is running for president, Senator Ted Cruz already taking hits against potential rivals. That's next.

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[04:52:20] ROMANS: Fifty-two minutes past the hour. Welcome back.

ROMANS: A prediction from presidential hopeful Ted Cruz. The Texas senator says Jeb Bush will shatter every fundraising record in the upcoming campaign for the White House, but Cruz believes everyone will be surprised by how much support his candidacy receives. So far, that support is not materializing.

Here's Cruz declaring yesterday and listen to the harsh response from a fellow Republican, Congressman Peter King of New York.

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SEN. TED CRUZ (R-TX), PRESIDENTIAL CANDIDATE: Imagine in 2017, a new president signing legislation repealing every word of Obamacare. I believe in you, I believe in the power of millions of courageous conservatives rising up to reignite the promise of America.

REP. PETER KING (R), NEW YORK: Ted Cruz may be intelligent person, but he doesn't carry out an intelligent debate. He oversimplifies, he exaggerates, and he basically led the Republican Party over the cliff in the fall of 2013. He has shown no qualifications, no legislation being passed, doesn't provide leadership, and he has no real experience. So, to me, he is just a guy with a big mouth and no results.

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ROMANS: A carnival barker he calls him. Not a head of state. And quite frankly, he's talking in the fall of 2013 about the government shutdown and the senator standing on the floor of the Senate for 21 hours reading Dr. Seuss. He said that was not presidential. That was chaotic.

Senator Rand Paul is expected to announce his candidacy in early April. The Kentucky Republican says he and Ted Cruz agree on most things, but Paul believes he is more electable than Cruz and has a better chance of beating Hillary Clinton.

So, o what would the Ted Cruz economy look like? We'll fact check his talking points, next.

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[04:57:34] ROMANS: When Senator Ted Cruz announced his candidacy for president, he outlined what the economy would look like if he were elected. Millions of new jobs, four or five or six job offers for new college graduates. That's a good promise.

Fact check: President Obama has certainly seen robust job growth on his watch already. 2014 was the best year for job growth since 1999.

Cruz also wants to abolish the IRS. Everyone will be able to do their taxes on an index card. That means a simple flat tax. But his plans aren't detailed enough yet to really assess. We've heard the flat tax before, and well, so far, it's been sort of like unicorns.

And, of course, Ted Cruz's economy would mean no more Obamacare, which he says would make health care affordable for everyone.

For more news on your money, Alison Kosik joins me.

Oh, the flat tax and tax reform. It has been --

KOSIK: Bring back memories.

ROMANS: It's been that dream that's been unachievable for so many.

Tell me what's going on with futures this morning.

KOSIK: Futures are up a bit right now. Yesterday, stocks took a breather. And the Dow and the S&P 500 pulling back just a little bit from the recent rally. The NASDAQ closed lower, as well, although remember, it's still above 5,000 and getting close to the March 2000 high. We will be watching the NASDAQ today. ROMANS: Alison, the study about the best places to retire. Now, you

and I have kids to put through college before we could be worried about retirement. But it's really interesting some of the spots on this list.

KOSIK: I'm glad you're sitting because Florida is not the top state. I was surprised. It's actually Wyoming. Yes, Wyoming, because it has the lowest tax rate in the country, and the fifth lowest crime rate.

Next is Colorado. Thanks to its access to the mountains and great health care.

And get this, in third place, Utah. Utah has hiking and skiing. So, lots of outdoors activities, plus a very low cost of living. You know, it's interesting because warm weather places first on that list for retirees. You can have all of the sunny days you want, the cost of living is there for you, if you're struggling, you can't enjoy it. Therefore, cost of a living I think --

ROMANS: Wyoming, Colorado, Utah.

KOSIK: Go for it.

ROMANS: Thanks for that.

EARLY START continues right now.

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ROMANS: Breaking overnight: Israel accused of spying on the U.S. and Iran. Reports claiming Israeli eavesdropped on secret nuclear negotiations. Who they supposedly sent that information to and whether this will effect the negotiations, one week now from their deadline.

We're covering all the angles of this new important story right now.

Good morning. Welcome to EARLY START. I'm Christine Romans. John Berman is in D.C. all week. It is Tuesday, March 24th. It is 5:00 on the nose in the East.