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WORLD RIGHT NOW WITH HALA GORANI

Sources: Trump And Australian Prime Minister Clash Over Refugees; Assessing Trump's Tough Approach To Diplomacy; Trump: Nothing Is Off The Table On Iran; Tensions Erupted Between Trump And Iran; British Government Lays Out Details For Brexit Strategy; Reports: Twenty Three Civilians Died In U.S.-UAE Raid In Yemen. Aired 3-4p ET

Aired February 2, 2017 - 15:00   ET

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


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HALA GORANI, CNN INTERNATIONAL ANCHOR: Hello, everyone. I'm Hala Gorani. We are live at CNN London. Thanks for being with us, this Thursday. This

is THE WORLD RIGHT NOW.

We begin tonight with Donald Trump's roller coaster style of diplomacy, which is sending shock waves across the world. His new top diplomat, Rex

Tillerson, showed up for his first day of work and into a myriad of problem.

In his inbox, Iran, where President Trump says nothing is off the table. More tough talk with Mexico, and a surprising diplomatic spat with a very

close ally, Australia. Tillerson told his employees, it is time for the State Department to work together.

(BEGIN VIDEO CLIP)

REX TILLERSON, U.S. SECRETARY OF STATE: I know this was a hotly contested election and we do not all feel the same way about the outcome. Each of us

is entitled to the expression of our political beliefs, but we cannot let our personal convictions overwhelm our ability to work as one team. Let us

be understanding with each other about the times we live in, as we focus our energies on our departmental goals.

(END VIDEO CLIP)

GORANI: Well, the United States and Australia have a long-standing alliance, but to friend and foe alike, President Trump has shown that he

does not mince words. Sources tell CNN, President Trump had a heated exchange with Australian Prime Minister Malcolm Turnbull, over an Obama-era

agreement to accept refugees.

Mr. Trump on Twitter called the deal dumb, and reportedly ended the call abruptly. Here's what Malcolm Turnbull had to say about the call on

Australian radio.

(BEGIN VIDEO CLIP)

MALCOLM TURNBULL, AUSTRALIAN PRIME MINISTER (via telephone): He committed to honor a deal, done by his predecessor, that, no doubt he would say that

he would not have done himself. But he committed to stick to the deal that President Obama has done. I'm very pleased that he made that commitment

and I thanked him for it.

(END VIDEO CLIP)

GORANI: Kevin Rudd knows the long-standing alliance between two countries better than most, as a former Australian prime minister and foreign

minister, he's live in Abu Dhabi this evening. Mr. Rudd, thanks for being with us. First of all, your reaction when you heard about this call. What

did you make of it?

KEVIN RUDD, FORMER AUSTRALIAN PRIME MINISTER: Look, I think the U.S./Australia relationship is big enough, old enough, and ugly enough to

cope with this snafu. It's been around for the better part of a hundred years. In fact, it is a hundred years this year since Australians and

Americans first went into battle with each other the western front.

So I think this snafu, as I think it will be seen, will blow over and we'll get back to the fundamentals of the relationship. And on that, both sides

of politics in the U.S. and in Australia remain deeply committed.

BOLDUAN: You call it a snafu, but I mean, it is unprecedented in modern history, that a U.S. president would basically call a deal his country has

committed to "dumb." According to our reporter, our White House reporter, he signaled to his aides that he wanted to end the call early and ended it

abruptly. I mean, is that not something you find any cause for concern about?

RUDD: The bottom line is, neither of us, you or I, were party to the actual conversation itself, so we'll let the two principles place their

accounts of the call on the record. But on the broader question of disagreements between the United States and Australia, within this

alliance, we've had stacks of them over the years.

When I was prime minister of Australia, I came into office with President Bush, who is a strong proponent of the Iraq war. I was a bitter opponent

of the war from the get-go and we had some very testy and difficult times. So these things come and they go.

The key thing, I think, though, the fundamentals of this alliance has survived 14 U.S. presidents, 14 Australian prime ministers, both sides of

politics, and will keep going in the future, because we've got mutual interests at stake.

GORANI: And when you talk about mutual interests, you're talking also, of course, about a military presence in Australia, 1,250 marines stationed in

Darwin. The United States needs Australian cooperation in this part of the world, doesn't it?

RUDD: Well, alliances between the U.S. and its allies in the Pacific will always be a two-way street. There are alliances with Japan, with Korea,

the Philippines, ourselves, and, of course, in Europe and the Atlantic, you have NATO as well.

[15:05:10]I think what this president, though, is indicating is that he intends to be demanding more from his allies in general, and obviously, his

style of diplomacy is vastly different from his recent predecessors. He's much more in your face and I supposed the diplomacy of the rest of us have

to get used to that. So I think --

GORANI: You seemed to admire his style. From what you're saying, you seemed to think this is just style, not substance. That the relationship

will survive in the way that it is, intact, that this is just something the world has to get used to, this type of leadership style from Donald Trump.

Is this something you find admirable?

RUDD: I simply take it for what it is. He's the president, he's been elected that's the way in which he's conducting himself. The rest of us

have to deal with that reality, including the allies. I actually think President Trump, from what I know of the people around him, and from what

he's also said privately, to a range of others, values highly the alliance with the United States -- the alliance with Australia.

And that's going to continue into the future. We have also seen reaffirmations of that from members of the administration today and I think

a great American, Senator John McCain, who we all admire in Australia, has underlined that point again.

I think it's important to put this sort of basis for this disagreement, which is about a complex area of refugees and immigration policy in

Australia, and an arrangement made with a previous administration, into its context, let's resolve it in the detail.

And I think it is capable of being resolved, and if it's not, those refugees should be accommodated back in Australia, as they should have

been, two or three years ago.

GORANI: Do you think that his ban on refugees and immigrants, even with lawful visas, in many cases, from those seven countries, including Iraq and

Syria, do you agree with that? Do you think it's a good plan?

RUDD: Well, I'm not an American citizen, but I am president of an American think tank, and we take an independent view of these things. I'm president

of the Asia Policy Institute in New York. And when I look at it, the questions which come to my mind, about this piece of policy, and I've said

so publicly before is, A, what will be the implications in terms of ISIS recruitment strategies and their effectiveness right around the world, and

B, what will be the effect on further radicalization within the United States?

These are the valid grounds for policy debate now within the United States. And based on our experience in Australia, when we felt some of these

challenges and pressures in the past, what we have done within Australia is tried to keep the lid on the whole question of creating community dissent,

with our Muslim minority in Australia as well. We need to tread very carefully on these questions, and not create a bigger problem than that

we're seeking to solve.

GORANI: All right. Well, I'm not sure if you support it or not, with that answer, I'll be honest, but thank you for joining us, Kevin Rudd, the

former Australian prime minister in Abu Dhabi. We appreciate it.

RUDD: I'm happy to be with you, and I'm taking it as it is.

GORANI: All right, thank you. Let's dig deeper into these issues. CNN White House reporter, Jeremy Diamond is in Washington. Michael Smerconish,

CNN political commentator and host of "SMERCONISH" on CNN joins me live from Philadelphia. Thanks to both of you for joining us.

Jeremy Diamond, I want to start with you and this National Prayer Breakfast. And it seems like every day we'll bring another sound bite from

Donald Trump that the world will try to analyze, will repeat, will broadcast far and wide.

In this particular case, he spoke about "The Apprentice" at the National Prayer Breakfast and Arnold Schwarzenegger, the replacement host's ratings

compared to his. What's been the reaction in Washington to this?

JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: That's true. I think the reaction is basically, you know, this is classic Donald Trump. You know,

he's continuing to prove that he is remaining the exact same person that he was before he became president, and kind of just applying that to the

presidency.

You know, he veered completely off-script in these introductory remarks, you know, talking about everything from "The Apprentice" to the senate

chaplain, and then eventually making his way to the prepared remarks, which talked about religious liberties, religious freedoms, and issues of more

substance that are more typical of this prayer breakfast.

But what he also did during this prayer breakfast, which is interesting is he talked about the call with the world leaders. He talked about these

tough calls that he's had lately, reporting of these calls surfaced yesterday about his calls with the Mexican president and the Australian

prime minister, and Trump is not really shying away from how contentious these calls have been.

GORANI: And Michael, let's talk about these calls. I was just speaking with the former Australian prime minister. He was very careful not to

condemn Donald Trump's particularly brash style. But I find it interesting that sources from within the White House are talking to reporters about how

chaotic some of these calls seem to be, seem to be, inside the oval office. I mean, what do you make of the fact that this information is coming out to

begin with?

[15:10:08]MICHAEL SMERCONISH, CNN POLITICAL COMMENTATOR: Well, I think you're raising an issue that will really will troublesome to the new

president and that's the problem of leaks. They've plagued all of his predecessors, but he prides himself on loyalty.

Take a look, Hala, at the individuals with whom he's surrounded himself. It's very obvious that loyalty is the chief criteria that he looks for.

And so I think there's going to be a real problem for him and probably an effort to rid out those who have loose lips.

I would just like the observation that it's easy for us to regard many of the things that we're discussing as faux pas, because they are so unusual.

But this blunt talk, this bombastic approach is what got him where he is, at least with his base.

And so I find -- I'm catching myself, because I'm quick to say, I can't believe he said this, can you imagine that he said that? But I have to be

reminded that it plays well in the heartland of America.

GORANI: And Michael, in fact, I was going to say -- Jeremy, I'll get to you in a moment, but Michael, in fact, when he introduced his Supreme Court

nominee, the fact that that went off without a hitch, that he read a prompter and introduced his nominee and then walked off with him, that was

actually the unusual moment in the first two weeks, was that it was a more traditional sort of approach to leadership in the White House, right?

SMERCONISH: I think he had a very rocky first week, week, ten days, and that was seamless. You know, that particular announcement and I have to

say that I remember tweeting at about 8 minutes to the top of the 8:00 hour, which is when he announced that here in the states, how surprised I

was that he'd been able to keep it under wraps. They were able to keep it a secret.

GORANI: Right. And Jeremy, I've got to ask you, Michael was talking about loyalty. How, for Donald Trump, it's very important that he surrounds

himself with a team, very close-knit, that he can trust. And I understand, when he authorized, according to reports, a ground raid in Yemen that he

was at a dinner table that included his son-in-law, Jared Kushner, one of his advisers, but also Steven Bannon, who was the former chairman of the

alt-right website, Breitbart News. How much influence does Steven Bannon really have in the White House?

DIAMOND: Well, we know that the president gave him a permanent seat on the Principals Committee of the National Security Council. That's basically

the most senior officials on national security in the U.S. government. And so that's clearly a sign that Steve Bannon, who is President Trump's chief

strategist, is not just playing a political role, of course, but really has kind of established himself as the architect of the Trump political and

policy agendas, right?

So he's not only shaping the message around that agenda, but also helping to actually implement and craft the policy that he can then help sell to

the American people.

And it's really interesting, especially when you look at Steve Bannon's views on everything from Islam, you know, he's referred to Islam not just

radical Islam, but Islam, the religion in general, in pejorative terms, and of course, he has some fairly hardline views on immigration.

A lot of these are in line with President Trump's, but, of course, the difference here is that Steve Bannon is truly an ideologue who has studied

these issues and who believes in these issues very strongly over the course of intellectual study whereas Donald Trump seems to arrive at these more

via instinct, right?

And so therefore, it's Steve Bannon's opportunity here to kind of fill the ideological vacuum in the White House with his ideas.

GORANI: And there seems to be a big focus on Islam, the anti-extremism program will only reference, we understand now, according to Reuters,

radical Islam. No other form of extremism. I mean, how will that shape policy going forward, do you think, Michael?

SMERCONISH: Well, I think when you factor that in into the decision that there will be this ban on refugees coming to the United States from seven

majority Muslim states, if you put those two factors together, it doesn't bode well for certain portions to have the world that are seeking to have a

closer relationship with this president, meaning the Muslim world.

The president says one thing, Steve Bannon's comments in the past, via Breitbart and his radio program seemed to tell a different story. So a lot

of folks are troubled by what they're seeing thus far in that regard.

GORANI: All right. We'll see how things develop. I'm sure we'll speak again very soon. Michael Smerconish, thanks very much and Jeremy Diamond

in Washington, D.C.

President Trump says when dealing with Iran, nothing is off the table. It was in response to a question about possible military action. We're

talking about that again.

The warning comes days after Iran test fired a ballistic missile in just one day after the U.S. national security adviser put Iran, quote, "on

notice."

Earlier, Iran said it had no plans to cave to threats from the new administration. A senior adviser to Iran's supreme leader dismissed what

he called the president's extremism and baseless ranting.

Our senior international correspondent, Frederick Pleitgen, joins me now. He was just in Iran. So we know that the war of words between Iran and the

U.S. has heated up in the past. Is this is all that this is this time?

[15:15:09]FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's very hard to say, with everything, that the Trump administration and

Donald Trump has been saying what exactly is behind this.

And, you know, yesterday, when Michael Flynn came out, the national security adviser, and said, we're putting Iran on notice, and Donald Trump

echoed that in one of his tweets, everybody was asked what exactly does that mean? And then for him to be asked today, you know, is military

action on the table, and for him to say, nothing is off the table, those are pretty strong words because the big --

GORANI: Iranians are worried.

PLEITGEN: There's a lot of Iranians that are quite concerned about the future relations between Iran and the United States and --

GORANI: But military action.

PLEITGEN: Yes, exactly. Whether or not things could spiral out of control because we have to keep in mind, there are a lot of areas where the U.S.

and Iran are very close to each other, and where there are some interactions that are not friendly, especially if you look at the Persian

Gulf, at the Strait of Hormuz, where it's very tight there, and there's a lot of Navy vessels that often come into conflict with each other.

There have been warning shots fired under the Obama administration. Of course, you have to ask yourself, will the rules of engagement change now

that you have the Trump administration and its strong stance on these ballistic missile tests.

GORANI: What was this ballistic missiles test? Did it violate any of the agreements?

PLEITGEN: It probably didn't violate any of the agreements. Essentially what the U.N. Resolution 2231 says is that the Iranians shouldn't do any

ballistic missile activity testing, test-firing for ballistic missiles that could carry nuclear warheads.

Now, the Iranians say it absolutely can't carry a nuclear warhead. The U.S. obviously has a different take on that. It is very difficult to say.

Certainly, the Iranians wouldn't say we're pushing the boundaries, but we're probably quite close to the boundaries.

GORANI: I was going to say, the timing --

PLEITGEN: They've been doing the same with the Obama administration. It is true that the Iranians, ever since the nuclear agreement, the hardliners

there have used very strong rhetoric against the United States. You've had ballistic missile tests, you had a ballistic missile test with a missile

that said Israel must be eradicated on it.

The Iranians have for the first time shown video of their underground bunkers that have the missiles in them. So they have been using some

strong rhetoric. They've been pushing the envelope and it seems to be that perhaps, they were waiting to see what exactly the Trump administration

would do.

GORANI: Yes, last question on the deal itself. This isn't just a U.S./Iran deal. I mean, all these other countries are involved. So they

would have to have a say in it.

PLEITGEN: Well, yes, that's true. And we also have to keep in mind that the other countries that are involved have moved pretty quickly to start

trade with Iran, start dealing with Iran. The French, their automakers are back in Iran. The Chinese have -- Chinese oil companies, the Russians are

looking to move back, Boeing and Airbus are looking to move back in.

GORANI: American companies --

PLEITGEN: Well, certainly Boeing is looking to move back in. The big question is, if you have an adverse Trump administration, what will that

mean for Iranian politics in the future? Because they have a presidential election coming up on May 17th, if Rouhani or the current president looks

week and is portrayed as weak, is there a chance a hardliner might be voted into office? And that, of course, could spell doom for the Iran nuclear

agreement.

GORANI: Well, we'll see. Thanks very much, our senior international correspondent, Fred Pleitgen, for joining us on that important story.

A lot more to come ahead. The Brexit plan is officially out. We'll tell you what the new white paper means for Britain's exit from the E.U.

And it was the first military engagement on President Trump's watch, but Sunday's raid on an al Qaeda compound in Yemen did not go as planned, at

all. We'll look at what went wrong, next.

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[15:20:49]

GORANI: All right. Finally, we're getting some details about Brexit, how it's going to proceed. The government in this country has set out some of

the details in a white paper, as it's called. It's 77 pages, so we get a lot more details saying the government will seek a, quote, "new strategic

partnership with Europe."

The Brexit secretary, David Davis, laid out some of the key points of this paper to parliament. Listen.

(BEGIN VIDEO CLIP)

DAVID DAVIS, BREXIT SECRETARY: It reiterates our firm view that it's in the U.K.'s interest for the European Union to succeed politically and

economically, and that cannot be said too firmly. We want the E.U. to succeed, politically and economically, and so we approach the negotiation

to come in a spirit of goodwill and working to an outcome in our mutual benefit.

(END VIDEO CLIP)

GORANI: Well, outside the Houses of Parliament is where we find our Nina dos Santos. So Nina, first of all, some of the things that stood out to

me, what happens to E.U. nationals inside the U.K.? What about banks? Will they be able to continue operating in London and have access to the

E.U.? Did we learn anything on those fronts?

NINA DOS SANTOS, CNN EUROPE EDITOR: I wish I could stand here this evening, Hala, and tell you that we had answers to all of those kind of

questions. But the reality is, is that this is a document that is very vague, and the opposition parties will probably say, rather optimistic.

It's no wonder that the Labour Party called it meaningless, and the Scottish National Party said it was totally overdue and utterly

underwhelming.

Let me just read to you a paragraph about financial services, for instance, one of the two things that you mentioned here. Remember, as a huge

component of U.K. GDP, they simply say, quote, "in our new strategic partnership agreement, we will be aiming for the freest financial trade in

financial services between the U.K. and E.U. member states, there will be a legitimate interest in mutual cooperation agreements that recognize the

interconnectedness of these markets."

Well, that sounds optimistic, doesn't it? There's not an awful lot of detail on how exactly this country will manage to keep access to the

single-market financial transactions when it leaves the full single market.

And you mention there the movement of labor, not just capital, for instance, in the financial services. And remember, there's 2.8 million

E.U. citizens, who currently call Great Britain their home. They work here, they pay taxes. They're desperate to know whether they can stay

here.

There's another 1 million British citizen who is live on the European continent across the E.U. All this document seems to say is that the

government considers it a priority for those people's rights to be secured at the utmost urgency, but it doesn't say how they're going to do that.

The document sticks very closely to the guiding principles we've already heard from Theresa May a month or so ago in her famous Lancaster House

speech when she set out what she's going to be looking for from Brexit, noticeably, free control of the U.K. borders, freeing up the U.K. laws away

from the European Court of Justice, so on and so forth, and coming out of the free trade single market at the moment.

But it doesn't say what she would be prepared to compromise on. Obviously, she's in a difficult position, because she doesn't want to give the game

away to Brussels.

GORANI: So it's more of a wish list at this stage. What about possible stumble blocks? Could anything get in the way of this unfolding in March,

in the way the government wants, triggering Article 50? I mean, what could get in the way at this stage, if anything?

DOS SANTOS: Well, first of all, you've got to imagine that the E.U. leaders who are currently meeting in Malta for their informal summit, right

now as we speak, Hala, they're going to be looking at this document, and they're going to be seeing what the U.K. government will be aiming for.

And you can imagine all of those 27 other countries will come with their own wish lists when the U.K. finally gets going with those Article 50

negotiations. For the moment when it comes to things here in Britain in terms of stumbling blocks, well, Theresa may has already managed to pole

vault one of them.

That was yesterday's second reading of the Brexit bill, the vote comfortably passed by 498 for, just 114 against. But a lot of the MPs are

now going to be looking at this and saying, there's not enough detail to take the big decisions we need. They'll be trying to table a number of

amendments over the next week.

[15:25:02]This particular document and the bill that just passed yesterday will be going through the Select Committee stage next week, and then it

will be debated further in the House of Commons. Back to you.

GORANI: Lots of debating to look forward to. Thanks very much. The white paper, printed conveniently on white paper there, the very latest. Nina

dos Santos, thanks very much.

New details are emerging about President Trump's first military engagement authorization since taking office. Sunday's raid on an al Qaeda compound

in Central Yemen killed an American commando. In fact, Donald Trump went to Dover to honor the remains of the soldier, as he was returned to his

family.

A human rights worker in the organization "Reprieve" now say 23 civilians were also killed in that raid and questions are multiplying about what

exactly went wrong because it sounds like a lot went wrong.

Officials in Yemen have released images they say show the aftermath of the raid, but we warn you, the images are very graphic. You can see what

appears to be a home with the windows blown out and a wall covered with bullet holes. Then the images become disturbing.

Yemeni officials say children were among the civilians killed during this anti-terror operation, which was a ground operation by Navy SEALs. We've,

of course, pixilated their bodies and faces and injuries.

CNN Pentagon reporter, Ryan Browne, joins me now from Washington with more. First of all, why did everything go so wrong, it appears as though

everything that could have gone wrong did in this case?

RYAN BROWNE, CNN PENTAGON REPORTER: Well, that's right, Hala. There were definitely some challenges. I think, you know, an operation like this,

it's called a sight exploitation raid. It's designed to gather as much intelligence on the terror group al Qaeda in Yemen as possible as to

facilitate future drone strikes or future raids.

So this requires boots on the ground. Already you're dealing with a very complex environment in Yemen. It's not like Iraq or Syria, where there's a

little bit more military infrastructure that the U.S. can rely on.

So there were some logistic challenges and I think those came into play here and one was the timing of this. Of course, this mission was

recommended back in November by General Joseph Otel, the commander of U.S. forces in the Middle East.

And eventually, made its way through President Barack Obama's Pentagon, getting the recommendation and making it to the NSC, but because of certain

operational factors including the need to have an absence of moonlight.

To provide some additional concealment, it actually fell to Donald Trump to authorize this mission and we understand he did so three days before the

operation took place. Now unfortunately even despite that moonlight, these forces were detected by the al Qaeda group and an intense firefight broke

out, that eventually resulted in some of these civilian casualties.

GORANI: Well, I mean, if you're talking a reprieve of saying 23 casualties, one Navy SEAL killed, there are logistical challenges, and then

there are operations that go a lot more smoothly than this. Has there been any postmortem on what really -- was this just the wrong time? Why were

the people in the compound potentially tipped off that this was going to happen?

BROWNE: That's right. I think right now the pentagon is assessing and the Central Command, which oversees forces in the Middle East released a

statement last night saying that they now believe it was likely that civilian casualties were caused.

Now, military officials say the intelligence that they had indicated that there were no civilians present, and what happened was the al Qaeda

fighters, once they started engaging the U.S. Navy SEALs, who are accompanied by UAE Special Forces, once that engagement happened, they ran

to pre-position areas and intermingled with buildings that now we believe had civilians in them.

That wasn't apparent to the planners of this operation. So there might have been a bit of a gap in the intelligence beforehand, but they're still

conducting an investigation to kind of see what happened.

Of course, an additional mishap occurred when an aircraft sent to help evacuate the wounded U.S. service members actually suffered a malfunction

and crash landed and the U.S. had to destroy that with a deliberate air strike to prevent the technology from falling into the enemy's hands.

GORANI: All right. Ryan Browne, thanks very much at the Pentagon.

Still ahead, Russia is cracking down on some of its own spies. What we know about treason allegations. A report from outside Moscow Security

Services is next.

Plus, he's officially on the job and already has a long to-do list. A look at the diplomatic challenges facing new U.S. Secretary of State Rex

Tillerson. Stay with us.

(COMMERCIAL BREAK)

[15:30:00] (COMMERCIAL BREAK)

HALA GORANI, CNN ANCHOR: The new U.S. Secretary of State spoke to his colleagues on his first full day in office saying, we're all on the same

team. Rex Tillerson asked for accountability, honesty, and respect from each State Department employee, even in moments, he said, of political

disagreement.

In other stories, the Treasury and State Departments both weighed in on another topic today. Some U.S. companies can now do business with Russia.

The White House insists it is just a normal adjustment and not a shift from sanctions that were imposed after election hacking.

(BEGIN VIDEO CLIP)

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: It's a fairly common practice for the Treasury Department, after sanctions are put in place, to go back

and look at whether or not there needs to be specific carve-outs for different, you know, either industries or products and services that need

to be going back and forth.

(END VIDEO CLIP)

GORANI: Well, Russia is purging its spy ranks. Four people have been charged with treason according to a lawyer for one of the defendants.

Matthew Chance has details from outside Security Services headquarters in Moscow.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Hala, this has been a highly secretive espionage case unfolding in Moscow over several

weeks involving allegations that Russian computer hackers passed on classified information to the United States.

Details are very thin on the ground, of course, but a Russian lawyer involved in the case has now confirmed to CNN that three cybersecurity

experts have been formally charged with treason here. The lawyer, Ivan Pavlov, tells us that two of them work for Federal Security Services, the

old KGB, whose headquarters are right here behind me in the center of Moscow.

Russian media reports, quote, anonymous sources are saying the arrested officers are the head of the FSB Information Security Center and his

deputy. They've both been accused, apparently, of passing confidential information to the CIA.

A civilian employee of a Russian internet security firm, Kaspersky Lab, has also been charged with treason as part of the case, prompting the company

to make a statement confirming that he's under investigation for a period predating his employment with the firm. Speaking to CNN, the lawyer,

Pavlov, says a fourth person has also been charged with treason.

But the Kremlin has refused to reveal any details in this case, which comes in the aftermath of U.S. allegations of Russian hackers interfering in the

U.S. presidential elections. Russian media reports, again quoting unnamed sources, have linked the case to hack attacks on Russian officials. So

still plenty of confusion surrounding this very difficult, very secretive case.

Back to you, Hala.

GORANI: Thank you, Matthew Chance in Moscow.

And this news just in to us. We expect the Trump administration to impose additional sanctions on Iran. This would be in response to that country's

ballistic missile tests Sunday. Sources say these sanctions would not impact the nuclear deal, though.

[15:34:57] But that's not all that's on Secretary Rex Tillerson's agenda. President Trump is also scrutinizing a refugee deal with Australia.

Tillerson may have to smooth feathers over a reportedly contentious phone call between President Trump and his Australian counterpart, Mr. Turnball.

On another call, Mr. Trump's word choice, including one of his catch phrases, "bad hombres," may have upset Mexico in a call with the President.

And the administration managed to anger Germany by alleging that the Euro was being manipulated.

It's worth pointing out, these three examples involve allies of the U.S. Tillerson may have had this list of challenges in mind when he opened with

a joke today.

(BEGIN VIDEO CLIP)

REX TILLERSON, SECRETARY OF UNITED STATES DEPARTMENT OF STATE: Well, good morning all. We apologize for being late. It seemed that, this year's

prayer breakfast, people felt the need to pray a little longer.

(LAUGHTER)

(END VIDEO CLIP)

GORANI: That got a chuckle out of all of us in the newsroom, I have to say. Let's discuss everything on Secretary Tillerson's plate.

Nicholas Burns joins me live from Cambridge, Massachusetts. He's a former U.S. State Department official and a columnist for the "Boston Globe."

Thanks for joining me. How does a new Secretary of State with no diplomatic experience, of course, the ex-head of ExxonMobil, how does he

deal with all these things at the same time on his plate on Day 1?

NICHOLAS BURNS, FORMER UNITED STATES UNDER SECRETARY OF STATE FOR POLITICAL AFFAIRS: Well, it's going to be as complex a beginning, Hala, for

Secretary Rex Tillerson, as with any secretary in decades, because he does have this issue of the White House, in just a couple of days, having very

public disagreements with some of the closest allies of the United States - - Australia, Germany, and Mexico. That's unusual in American foreign policy.

We have an unwritten rule in diplomacy, you're going to argue with your friends but do it behind closed doors. Don't expose differences in public,

and don't make life difficult for your friends -- the Prime Minister of Australia, the Chancellor of Germany, the President of Mexico. So I think

he's got to calm those waters.

He, obviously, has to establish a bond with the White House because the White House seems to have been acting on its own over the last 12 days.

Hopefully, Secretary Tillerson, Secretary Mattis at Defense, they'll be able now to have substantial authority given them, and they'll be able to

center American foreign policy.

GORANI: Yes. But do you think, I mean, having observed the first few days of the Trump administration, that the State Department and that the

Secretary of State could have some impact on shaping policy? Even the Obama administration was accused of being insular, of sometimes freezing

out high-level State Department officials in big decisions. How do you think Trump administration will be in that regard?

BURNS: Well, Hala, in our system of government, obviously, the President has the right to decide how he wants to configure the process in

Washington, D.C. And some presidents want a stronger White House staff, some presidents defer to Cabinet secretaries.

I think in this case, there are substantial challenges ahead for the United States. Secretary Mattis is in Seoul today. There's a big problem, of

course, with North Korea on nuclear weapons. They're going to be a disagreement with China in South China Sea, Middle East, Europe.

And so I think a lot of us feel that you have two supremely gifted people in the Cabinet, Secretary Mattis, Secretary Tillerson, and President Trump

could rely on them to be professional, to run their agencies with a great deal of efficiency. And I can assure you, as a former Foreign Service

officer, the Foreign Service, the Civil Service, the military are going to be loyal to this administration. They're going to help it succeed, but the

White House is going to have to trust them. And I think that will happen.

GORANI: Yes.

BURNS: But these first two weeks have been an unusual two weeks, to start with.

GORANI: But still 900 staffers -- OK, to be fair, out of tens of thousands but 900 staffers nonetheless -- signed an internal memo of dissent at the

State Department. So you do have a little bit of a revolt there, shaping up.

BURNS: Well, I think that the vast majority of people who work in our government and our foreign policy establishment believe that the United

States should continue to accept refugees and accept immigrants, and you saw that in this Dissent Channel message.

And that's a formal channel established in 1971. State Department offices are encouraged, on a confidential private basis, to disagree and to show

and to provide new ideas. And that's what these people did.

It seems to be the largest in the history of the State Department, and so I think it would behoove the administration to listen to these people, show

some respect. But they know, these officers, at the end of the day, it's the President and Secretary of State who will make the decisions.

GORANI: And how do you think that an ex-business man will do as the top diplomat? Those are two very different skill sets.

BURNS: Well, I think they're transferable skills. Secretary Tillerson has led our largest and most global company in the United States, ExxonMobil.

He knows a lot of heads of state. He's traveled all over the world for 40 years. And so I think they're transferable skills.

[15:39:57] And he has the support of the U.S. Foreign Service and the U.S. Civil Service in the State Department. All of our career ambassadors are

there to help him. There'll, obviously, be some start-up costs, he's never been in diplomacy before. He'll have to make up for that, but he's a smart

and impressive man. I expect him to do very well.

GORANI: And you sound like a fan. Can I ask what you base that on? You sound like you're very optimistic about him.

BURNS: Well, I've been a critic of the Trump administration and his first 12 days. I don't agree with much of what the President and the White House

staff have been doing. But I don't know Secretary Tillerson and Secretary Mattis well, but I've met both of them, and I'm impressed by their life

stories, their experience, what they've both accomplished in very complex settings, in the U.S. Marine Corps in the case of Secretary Mattis and

ExxonMobil. And I have confidence that both of these people, assisted by the career professionals in the DOD and State, that they can be successful.

We have to want them to be successful, given, Hala, these huge challenges ahead of the United States.

GORANI: Nicholas Burns, as always, thanks so much for being with us. We really appreciate it this evening.

BURNS: Thank you.

GORANI: All right. Fake news and online trolls are products of a new cyber war. In the Czech Republic, hackers working for a foreign power are

suspected of breaching dozens of government e-mail accounts.

Our Isa Soares in Prague gets a look into a new special unit set up to tackle the threat of disinformation.

(BEGIN VIDEOTAPE)

ISA SOARES, CNN CORRESPONDENT: Prague's heart may lay in Europe, but the ghosts of a Soviet past still haunt the Czechs. Twenty-seven years on

since the fall of communism, the Czech government says their fight is now online, accusing Russia of waging an information war.

TOMAS PROUZA, STATE SECRETARY FOR EUROPEAN AFFAIRS, CZECH REPUBLIC: The ultimate Russian goal is to, again, bring us back into the Russian sphere

of influence. They want to weaken Europe. They want to make sure that we see Europe as not able to stand up to them.

SOARES: In the last few years, Czechs tell me they've seen a rise in anti- U.S., anti-NATO, and anti-E.U. rhetoric.

Direct links to Russia may be hard to prove, but one government source tells me there are as many as 40 pro-Russian websites operating within the

country. So to counter this, the Czech government has set up a specialist unit to tackle what it calls hybrid threats and disinformation, and it's

happening in the building behind me.

Managed by the Ministry of Interior, they've been countering these apparent falsehoods since the beginning of this year, flagging on Twitter stories

they say are hoaxes. The manager of the unit tells me it's a team of 14 young computer analysts and seasoned intelligence experts.

DAVID CHOVANEC, DIRECTOR OF SECURITY POLICY, CZECH REPUBLIC MINISTRY OF THE INTERIOR (through translator): The objective of the disinformation is to

somehow disrupt the social balance in the country. We don't want to be just pessimistic, sitting down and waiting. We want to take a proactive

approach.

SOARES: He has reason to be wary. According to this report by Czech's domestic security agency, there is little doubt of Russia's involvement.

It accuses Russia of infiltrating Czech media to sway perceptions, of creating tensions within the Czech Republic, and spreading alarming rumors

about the U.S. and NATO.

PROUZA: We follow the money and how some of these alternative websites are financed. There's links to people that are connected to Russia.

SOARES: How real is the threat to Europe?

PROUZA: It is the biggest threat Europe has been facing since 1930s.

SOARES: The fear is very palpable here. At this school in Prague, they now teach 17 and 18-year-olds how to spot Russian propaganda.

JITKA KODROVA, HIGH SCHOOL TEACHER (through translator): Media, traditional media, and social networks are influencing the results of

elections.

SOARES: Crucial, given that most of this class will be voting for their first time in Czech elections in October, elections some here fear could be

manipulated by their former foes.

Isa Soares, CNN, Prague, Czech Republic.

(END VIDEOTAPE)

[15:44:11] GORANI: Well, you can check out our Facebook page for more, facebook.com/halagoranicnn.

(COMMERCIAL BREAK)

GORANI: Thousands of children are taking over the streets of New Delhi in support of the goal to end child slavery. The man behind the movement is a

Nobel Peace Prize winner who's motivating young people to be advocates for millions of exploited kids all over the world.

With that story, here is Muhammad Lila.

(BEGIN VIDEOTAPE)

MUHAMMAD LILA, CNN CORRESPONDENT: Kailash Satyarthi is used to standing out in a crowd. And the 2014 Nobel Peace Prize winner has spent a lifetime

standing up for the rights of children. But Satyarthi's latest endeavor is ambitious, even by his own standards.

KAILASH SATYARTHI, NOBEL PEACE PRIZE WINNER: Child safety, child labor, suppression of children is evil, and we have to put an end to it.

LILA: Satyarthi's foundation recently launched "$100 million for 100 Million," a campaign to mobilize young people from developed nations to

advocate on behalf of the estimated 100 million victims of child labor, trafficking, slavery, and violence.

SATYARTHI: So these hundred million better off young people in the schools, colleges, universities, are going to be the change makers and

champions for the cause of those hundred million left out young people and children in the world.

The Laureates and Leaders for Children Summit in December 2016 brought together 25 Nobel laureates and leaders from government, business, and

religion, all to meet and hear directly from child activists.

UNIDENTIFIED FEMALE: One million gone, 400,000 dead in Darfur, 2 million displaced --

SATYARTHI: The most satisfying moment was that former child slaves and the world leaders and Nobel laureates came so closer. They were hugging each

other. They were becoming friends. And leaders and laureates have promised to the children that we are going to respond to the challenge you

made here.

LILA: The event was followed by a peaceful march, which saw 5,000 children take over the streets of India's capital, Delhi.

SATYARTHI: And the children's challenge is that they are not going to wait anymore. They want the end of slavery now.

LILA: But still, there are a lot of questions that remain. Satyarthi wants to see an end to all child slavery within five years, but where will

the funding come from? How will young people actually be mobilized? And what can be done to tackle entrenched ideas in some of the world's toughest

places?

SATYARTHI: People in power still think that, oh, they are poor children, and we cannot get them out of child labor or child slavery, otherwise it is

going to affect the family resources." I am quite confident that in my lifetime, I will see the end for child slavery everywhere in the world.

LILA: A problem spanning centuries and an entire planet, solved in just five years. If only we all had the child-like optimism of one of the

world's elder statesmen.

Mohammad Lila, CNN, Delhi.

(END VIDEOTAPE)

GORANI: Coming up, tech stocks like Apple are surging, with investors expressing confidence in the new man in the White House apparently. But

we'll see if the warm glow will last in Silicon Valley.

[15:49:55] We'll be right back.

(COMMERCIAL BREAK)

GORANI: Well, American tech companies depend on skilled labor from around the world, lots of engineers from other countries, for instance. So

President Trump's travel ban could hurt their bottom line, but not for now, eventually.

For now, tech stocks seem to be thriving, despite of or because of the new Commander-in-Chief. Apple and Facebook wowed investors with better than

expected earnings, and Amazon's latest results are due out shortly.

And that's good news for the NASDAQ, the tech-heavy index, which is already up 5 percent this year alone. There doesn't seem to be a better place to

put your money, but can this all last?

CNNMoney Correspondent Paul La Monica joins me now live from New York. A, why the enthusiasm, and, B, what's the outlook?

PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Yes, the enthusiasm, Hala, is simply put, despite some of the tough talk between Silicon Valley

leaders and President Trump, people are still buying iPhones. They are still liking a lot of content on Facebook. And as we'll probably find out

shortly after the market closes, they probably bought a lot of things at Christmas, you know, from Amazon, and that is good news for all these tech

companies.

Will it last? That's where things get a little dicey. There's a love/hate relationship, I think, between Silicon Valley and the new President.

On the one hand, investors are definitely worried about immigration reform because many of these companies rely on foreign workers for talent. But at

the same time, if President Trump cuts taxes, that would allow a company like Apple to bring back cash it has overseas, use it here. And also,

anything that juices the U.S. economy is going to help big tech companies.

GORANI: I was thinking, if there's one company that has so much cash that it probably doesn't need to bring any back from overseas, it's Apple.

Don't they have like $200 billion or something in cash?

LA MONICA: They have $246 billion in cash, but $230 billion of it is overseas. So the hope is --

GORANI: Interesting.

LA MONICA: -- if they get a tax break on it, will Apple then pay a higher dividend? Will they buy back more stock, buy more companies, or as

President Trump would probably want them to do, build more factories in the U.S. and hire more American workers?

GORANI: Now, the outlook, it's always difficult. I mean, obviously, if we could predict stock prices, we'd all be, you know, doing financially very

well. But, I mean, what's the outlook for stocks? You just cannot have a stock index that goes up and up and up and up and never comes down.

LA MONICA: Clearly. I mean, we've seen what's happened in the past when we've had market bubbles. I think why people are hopeful still about tech

stocks and maybe the broader market in general is that President Trump, despite the occasional distraction, you know, talking about the "Celebrity

Apprentice" ratings, for example, his policies, if they get enacted, should boost growth in the U.S. economy.

The bigger problem, I think, is going to be all the protectionism, the isolationism. American companies still need a healthy Europe and a healthy

Japan, a healthy China. We really shouldn't be so antagonistic towards them because they are going to buy products from America if their economies

are doing well.

GORANI: All right. Paul la Monica, thanks very much. We appreciate it. Live in New York.

LA MONICA: Thank you.

GORANI: Finally today, while many Americans are divided on President Trump, there's one thing most fashion experts agree on, his ties are too

long. Here's Jeanne Moos.

(BEGIN VIDEOTAPE)

[15:55:02] JEANNE MOOS, CNN NATIONAL CORRESPONDENT: When Jon Stewart came out, flinging his endless red tie, you didn't have to be a fashionista to

know who he was mocking.

JON STEWART, FORMER HOST, THE DAILY SHOW: Super long tie, dead animal on head, boom!

MOOS: Even on dress your best Inaugural Day, there was no tie when it came to whose tie was longer. And when the wind blew, there it was, tape. The

second time Donald Trump had been caught with his tape showing, inspiring tweets like, "Ran over to Macy's to pick up a Trump brand tie clip." And

this "Scotch tape is great again" hat to go with his tie.

The "Fashion Police" want the President to say so long to ties that are so long. "Business Insider" called the length sad. "Crimes against cravats"

screamed a headline. The CVS Receipt of ties compared his neckwear to the notoriously long drugstore receipts. "If Trump's tie were any lower, it

would be his approval rating," tweeted Seth Meyers' show.

But why, oh, why, does a man with his own line of ties wear them so long? Celebrity stylist Phillip Bloch has a theory.

PHILLIP BLOCH, CELEBRITY STYLIST: I believe he is thinking he is hiding his gut. I think he thinks it's creating an elongating sensation, which it

sort of does, because your eyes goes to the long red line that, again, is pointing down, where we don't want to go.

MOOS: The rule is that the end of your tie is supposed to hit right at the middle of your belt. Your tie should not touch the chair when you sit.

"GQ" suggests that the President swap this monstrosity for a skinnier tie.

"I dressed myself greatly," reads this "New Yorker" cartoon. But maybe regular guys like that this President is no fashion plate. He's a plate

held together with scotch tape.

BLOCH: But we actually have things called tie clips for that, and they actually have them in the White House. They sell them.

MOOS: No point in hitting below the belt, like the President's ties do.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

GORANI: That's going to do it for me. I'm Hala Gorani. "QUEST MEANS BUSINESS" is up next.

(COMMERCIAL BREAK)

[15:59:56] RICHARD QUEST, CNN ANCHOR: Closing bell ringing on Wall Street. The Dow is just up nine points as the market comes to a close.

What have we today? I've got a really good feeling about this EFT of O'Shares and how they gavel. It's going to be a strong one.

Yep! Four, five, six, seven --

END