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Russian Hacking Controversy; Syria Cease-fire. Aired 4-4:30a ET

Aired December 31, 2016 - 04:00   ET

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

[04:00:00]

NATALIE ALLEN, CNN ANCHOR (voice-over): Vladimir Putin dedicates part of his New Year's speech to Donald Trump as the tension continues between the U.S. and Russia. And a new development in the hacking investigation.

Plus: the cease-fire in Syria is under pressure with a new report of possible violations.

And at least 28 people are dead after two suicide bombings in Baghdad.

It's all ahead here on CNN NEWSROOM. Thank you for joining us. I'm Natalie Allen in Atlanta.

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ALLEN: Just hours after Russian president Vladimir Putin announced he would not take any immediate action over new U.S. sanctions, we're now hearing that Russian malware has been discovered on a computer belonging to a U.S. power company in Vermont.

Investigators believe it's the same type of malware recently used to hack into U.S. political institutions. More on that in a moment.

Meantime, President Vladimir Putin stunned Washington Friday when he said he would hold off on expelling U.S. diplomats from Russia. President-elect Donald Trump called Putin's move, quote, "very smart." For the latest, here's CNN's Jim Sciutto.

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JIM SCIUTTO, CNN CHIEF U.S. SECURITY CORRESPONDENT (voice-over): Russians vacating compounds shut down by the U.S.

Russian President Vladimir Putin, however, dismissing Washington's payback, instead wishing President Obama and his family a happy new year, saying in a statement, quote, "We will not stoop to the level of irresponsible diplomacy. It is a pity that the President Obama administration finishes its work this way, but, nevertheless, I congratulate him and his family a happy new year."

Russian Foreign Minister Sergey Lavrov recommended Putin expel 35 American diplomats from Russia after the U.S. ordered 35 alleged Russian spies to leave the U.S. by this weekend. SERGEY LAVROV, RUSSIAN FOREIGN MINISTER (through translator): We cannot let such escapades happen without a response. The Russian Foreign Ministry, together with our colleagues from other departments, have made a proposal to declare 31 staff from the embassy of Moscow and four diplomats from the general consulate of St. Petersburg as persona non grata.

SCIUTTO: President Putin, likely waiting for a far friendlier administration under Donald Trump, did not take that advice, saying in his statement, "We will not create problems for American diplomats. We will not send anyone away."

With a stroke of drama, Putin even issued this invitation to American children.

"In response to the new U.S. sanctions, I invite all children of the U.S. diplomats to the new year and Christmas children's show at the Kremlin," signed, "Yours sincerely, Vladimir Putin."

The U.S. shut down two Russian government-owned compounds, one in New York, where law enforcement was seen outside and another in Maryland, a 45-acre property purchased by the Soviet government in 1972. Today, vehicles were seen leaving the Maryland estate and returning to the Russian Embassy in Washington. The White House says the Russians working at the compounds were spying on the U.S.

Russia, however, refutes that the estates were being used for espionage.

VITALY CHURKIN, RUSSIAN AMBASSADOR TO UNITED NATIONS: I think it's quite scandalous that they chose to go after our kids, you know?

They know full well those two facilities which they mentioned in their notes, they are vacation facilities for our kids and this is Christmastime.

SCIUTTO: Four of the Russians sanctioned by the U.S. are part of the Russian military intelligence unit known as the GRU. One of them is the unit's chief.

MICHAEL WEISS, CNN CONTRIBUTOR: It's assigning blame to Russia's military and intelligence service, but the actual perpetrators of these hacks are contractors, if you like, people who have been found by the Russian government to do their dirty work for them.

Keep in mind that election hacking is not the only issue of disagreement between the U.S. and Russia. You have the annexation of Crimea, the invasion of Ukraine, bombing of civilians in Aleppo and elsewhere Syria. Those are issues that Donald Trump will have to face as president as well -- Jim Sciutto, CNN, Washington.

(END VIDEOTAPE)

ALLEN: We want to turn back to that Russian malware found at a U.S. power company. Burlington Electric in the state of Vermont has released a statement,

saying, "We took immediate action to isolate the laptop and alerted federal officials of this finding. Our team is working with federal officials to trace this malware and prevent any other attempts to infiltrate utility systems."

President Putin has issued his annual New Year's Eve address to the world. U.S. President Barack Obama was notably absent from the long list of international leaders Putin congratulated by name. But he did single out U.S. president-elect Donald --

[04:05:00]

ALLEN: -- Trump for a special greeting.

And we quote, "Major global and regional challenges that our countries have confronted in recent years clearly confirm that Russia-U.S. relations are an important factor in ensuring stability and security in the modern world."

Lilit Gevorgyan (ph) is a senior economist with IHS Global Insight and she joins us now live from London.

Lilit (ph), thank you for joining us. The Russian president's talk usually goes on a long time. He has a lot to say. This time, probably, it's easy to surmise that Donald Trump will be mentioned and has been mentioned in this speech.

LILIT GEVORGYAN (PH), IHS GLOBAL INSIGHT: Well, absolutely. I think it's very interesting to see that the Russian leadership is definitely looking forward to the new administration and effectively dismissing all the signals that the outgoing administration is sending to Moscow.

They believe that there will be a dramatic change in the U.S. -- new administration's attitude towards Russia, which sits very well with Russia's external foreign policy objectives at the moment.

VANIER: Dramatic change.

What does that look like?

What might that be specifically?

GEVORGYAN (PH): Well, I think, from Russia's perspective, it's very important to have a United States that is inward looking, that agrees that Russia has certain areas of influence and it will not be hindering the Russia's pursuit of this interest.

This is particularly concerning the former Soviet states. Also amid the list (ph) Russia is looking for the U.S. administration that will not interfere with its internal affairs.

And also more practically, we're talking about lifting sanctions, particularly sectoral sanctions, financial sector and energy sector are very critical for Russian economy, which has been faltering for some time now. And it is a real concern for Vladimir Putin. Also it will be very good news for Moscow if the U.S. decides to lift

these sanctions because then it will put further pressure on the European Union to review its own set of sanctions against Russia.

ALLEN: Yes, that's a big question, what will Donald Trump do when he becomes president, vis-a-vis, these sanctions?

And especially since the Obama administration has just significantly ramped them up.

You know, so many people in the media and people watching the situations wonder what's going on between Donald Trump and Russia. And we just don't know. But there's just a sense that there's something there.

GEVORGYAN (PH): It is difficult to interpret what is going on. But I think if we put the new administration's stance on Russia and compare it to the former administration, it is clear that the new administration has new ideas about many things in foreign policy and domestic policy. So Russia is no exception in this sense.

I think the United States is seeing a very lively political change, which is very challenging. So I think it is not entirely surprising that, if you have a president-elect who is not really your traditional type of leader, then you will have more surprises.

But I have to say that these surprises will also concern Russia. Consistency was something that you had with previous administration, in a sense. With the new administration, Russians will be as much in the dark, so to speak, as the others in some respects.

I think there will be a reset but I think it will not be completely smooth sailing because we really don't know how the new administration will pursue its foreign policy, not least because there is division within the U.S. -- within the U.S. policymakers, division within the top position holders that Donald Trump has already indicated he would go for.

But really, I think, most importantly for Russia, at the moment, is to ensure that the power vacuum that was created by the Obama administration in some part of the world remains.

[04:10:00]

GEVORGYAN (PH): In the long term, what we're seeing now is probably not great news for Russia because, ultimately, they have to deal also with those disgruntled Democratic Party policymakers and those who believe that the U.S. should have firmer stance on Russia. And ultimately, Russia has to work with these policymakers as well.

ALLEN: We appreciate your insight. Thank you so much for joining us, Lilit Gevorgyan (ph), thank you.

In other news we're following, at least 28 people are dead in Baghdad after suicide bombers attacked a busy commercial area. The blast also wounded at least 53 other people and leveled some businesses. Police say the bombers were wearing vests that detonated. So far, no claims of responsibility.

The nationwide cease-fire in Syria has made it past the 24-hour mark but rebel groups say it won't get much further if the Syrian regime continues to violate this agreement. Our Ian Lee is monitoring the cease-fire from Istanbul. He is live now.

Do we know exactly what the rebels are charging about the regime, Ian?

IAN LEE, CNN CORRESPONDENT: Well, Natalie, the cease-fire seems as fragile as ever, as both sides are accusing the other of violating the cease-fire. The rebels saying that the Syrian regime and the Russians have had over 30 violations.

On the other side, we are seeing that the Russians are accusing the rebels of 12 violations.

This isn't unusual. We've seen violations before when cease-fires have happened and they haven't always derailed them. But it does make it fragile. We're also hearing from the Free Syrian Army, they're accusing the Russians of contradicting what they agreed upon, saying that the Syrian regime got a different agreement than the one the rebels thought they were signing and that many main points and non- negotiable points were deleted from the Syrian regime's side.

So another accusation by the rebels, a violation of the cease-fire. But today, the U.N. Security Council is going to see a Russian-backed resolution affirming this process. The cease-fire, leading to negotiations and potentially a peace deal, which is going to be hashed out next month in Kazakhstan. But, Natalie, that's a long time between now and then.

ALLEN: Absolutely. We'll remain hopeful. Thank you so much, Ian Lee for us in Istanbul.

And thank you for watching, I'm Natalie Allen. "CNN Inspirations" is next.

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