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Death Toll Rises in Leveled Mexico Beach; Crews Scramble to Evacuate Patients from Panama City's Damaged Hospital; Death Toll Expected to Rise as Officials Search Devastated Areas; Turkey May Have Audio & Video of Missing Journalist's Being Killed; Lawmakers Press Trump to Do More in Missing Journalist Case; Pastor Andrew Brunson to be Released from Turkish Prison; As Stocks Rally Trump Blames Fed for Volatility & Initial Drop. Aired 11-11:30a ET

Aired October 12, 2018 - 11:00   ET

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


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[11:00:21] KATE BOLDUAN, CNN ANCHOR: Hello, everyone. I'm Kate Bolduan.

The Florida panhandle in crisis this morning. Hurricane Michael has come and gone, but the emergency is really just beginning. Some of the hardest-hit towns are still largely cut off. Roads still impassable. Power still out. Communication still spotty at best. And because of that, there's still no real sense of the size and scope of this disaster that they have on their hands.

Mexico Beach is virtually leveled. Residents navigating the maze of closed and treacherous roads only to wander into neighborhood streets that are now unrecognizable. Landmarks are just gone. As well as their homes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I can't describe it. It's just terrible. I just can't describe the feeling. And I know I'm not the only one who feels the same. They have lost everything.

(END VIDEO CLIP)

BOLDUAN: Geez. These satellite images we're showing you show a before-and-after look at Mexico Beach. One, a typical coastal beach town. The other, a surreal scene looking more like a war zone than anything else.

And as everyone feared, the death toll is rising. And 11 are confirmed dead in the region. And top officials are saying that's likely to go up still today.

Let's go to the ground. Miguel Marquez is there in Mexico Beach.

Miguel, what are you seeing there today, what are you hearing there today?

MIGUEL MARQUEZ, CNN CORRESPONDENT: Here's why they're worried about that death toll. Everybody that I meet here who rode out the storm says that their neighbors were around, their friends of neighbors were around, and many of them they have not heard from. They don't know if they survived this.

It is just utter devastation. The wind and then a massive tidal surge came through here, just wiping much of this town off the face of the earth. I want to show you sort of where we are. This used to be a normal neighborhood. It is no longer. We have a camera up high off the truck we're off of that gives you a better sense of just how widespread the damage is. There's neighborhood after neighborhood, block after block, that are literally just buzz-sawed down to the foundations. You have homes that have now washed from being beachfront properties way into town.

And that is what search and rescuers are trying to get through now. They have dogs, sniffer dogs, in the hopes of finding those who are arrive and perhaps trapped. And they also have dogs in here that will be able to smell cadavers if it comes to that. Many of the people we met said, please, get word out that we're alive and well. Cell phone service was up for a few hours overnight, and then it went down again. So no one can get out.

Let me read off a few names. Robin Retspp Slough (ph), out of Michigan, wants her family to know she's all right. Dawn Vicars (ph) and her sons and dogs are OK. Robert Brock is OK. David Sebert, his mom is in Mobile, Alabama, he's OK. Annette Caufield (ph) and her 92- year-old mother, they're OK. And Hector Morales, who I met earlier today, he worked at the famous Toucan Bar here. He says that is gone. His wallet is gone, his car is gone, his job is gone, but he is alive. They're waiting for much worse news -- Kate?

BOLDUAN: And, Miguel, I'm just kind of struck. I'm looking at the disaster around you. Again, this morning, no matter how many times I'm looking at this image, I cannot wrap my mind around it, the fact there are so many homes, businesses, anything, even a street sign, standing. The trees wiped out as well. I'm still having a hard time wrapping my mind around it. I can only imagine what folks are telling you when they come across you on the ground. This is their life. This is their neighborhood. This is their street.

MARQUEZ: This is their home. This is a spectacularly beautiful part of the panhandle as well. There were beautiful homes along this beach. The beaches are white sand beaches. It's gorgeous down there except for a massive amount of debris that is right along the beach right now. This was a really lovely, beloved town that was much more built up and modern than, to be honest, than I expected it to be. Even the buildings that looked like they survived. Even this large apartment or condominium building, it looks pretty much intact. Windows blown out, doors blown out, roof ripped off. Other homes sort of going right through it, pushing it over halfway. It is a loss. Everything here, most everything, if not everything, will have to be bulldozed and start all over again -- Kate?

[11:05:02] BOLDUAN: Have to scrape it and start all over. All of them having to do that is what I just can't comprehend right now. Miguel, thank you so much. I know even reporting on it isn't easy

because there's nothing there. So thank you. It's great to see you. Thanks, man.

The storm, it also slammed into nearby Panama City. We have been talking about this a lot. Here's an important part of the story. Its largest hospital, Bay Medical Sacred Heart Hospital, hospital crews have been scrambling to evacuate patients from the heavily damaged complex.

CNN's Dianne Gallagher is joining me.

Dianne, you spoke with a doctor at a nearby hospital. What did he tell you?

DIANNE GALLAGHER, CNN CORRESPONDENT: Yes, Kate. We actually had to move from the hospital today because of that cell phone service that Miguel was talking about, we're dealing with the same issue here in Panama City. And that is creating problems for the way they're trying to fix the issues at the hospital right now.

The main priority is getting all of the remaining patients out. And I can tell you, I saw ambulances from as far away as New Mexico, all the way up to Massachusetts, Michigan, and they're transporting the remaining patients, who rode the storm out in the hospital there with the doctors and nurses, to hospitals in Jacksonville, in Destin, in Pensacola. That's because they're running on a generator, Kate. There's no running water in Panama City right now. They have tanker trucks of water. They're trying to pump it in to continue working their emergency room, but to provide proper long-term care, they need to get out. They rode it out together.

Take a listen to what the doctor had to say.

(BEGIN VIDEO CLIP)

DR. AMIR HAGHIGHAT, CONSIERGE, BAY MEDICAL SACRED HEART HOSPITAL: A very scary few hours of howling winds, windows blowing in, crashing roofs, ceilings collapsing. But patients being cared for throughout all of it. You have these nurses, these respiratory techs, physicians and leadership in place. And they have been committed to this hospital for life. This is their life.

(END VIDEO CLIP)

BOLDUAN: And you know, Kate, they were there with their families as well. The doctors brought their families, and some of the patients had their families in there. The good news is no one was hurt. There were no deaths at the hospital attributed to the hurricane.

One more thing, Kate. The hospital allowed those families of the doctors and staff members bring their pets. They had a special area for that which a lot of them credit for the reason why their families left their homes and stayed in a much more secure structure. Many of these staff members were away for 48 hours, they lost their homes, they lost everything. BOLDUAN: Still, thank goodness for them to keeping watch over all

those patients who are so vulnerable in such a scary time.

Dianne, thank you.

So disaster officials are warning that the storm's death toll is likely to climb today as search crews really continue, or in some places, are just beginning to comb through some of the more devastated and remote areas.

Our next guest took part in rescues Wednesday night in the immediate aftermath of the storm. Lieutenant Jane Pena is a helicopter co-pilot for the U.S. Coast Guard.

Lieutenant, thank you so much.

LT. JANE PENA, CO-PILOT, U.S. COAST GUARD: Thank you for having me.

BOLDUAN: The last number that I saw was that the Coast Guard had conducted 40 rescues from the storm. Do you know -- are you getting a sense of rescues are picking up or slowing down at this point?

PENA: My sense is that rescues are slowing down. However, I don't necessarily have the latest and greatest information on the current situation. I mostly am familiar with the Wednesday night activities I was involved with.

BOLDUAN: We're showing our viewers video from some of the Wednesday night rescues that took part in the late, late hours. Really amazing and treacherous. It's treacherous in the best conditions. I can imagine what it was like, what you were dealing with. What did you see when you were out on your missions?

PENA: It was more devastated, I think, than I was ready for. Boats were piled up in the marina. It's, as your reporter was saying earlier, roofs are gone. Houses are flattened. Trees are everywhere. And so it was an eye-opening amount of damage, for myself, for sure.

BOLDUAN: Yes. I spoke last night to one of the Coast Guard's operational commanders, and he said that you all have been up against extremely challenging conditions with these rescues, with this storm. Especially when flying at night, which you were. Can you describe -- just describe it to me, kind of what you were all up against in trying to pinpoint folks and get people to safety.

PENA: Sure. The night did make it challenging. We had a really good crew, which made all the difference. And conducting urban SAR was interesting for me because we were not going necessarily off GPS positions so much as addresses. So the challenge of finding a clear area, a safe area that we could hoist our rescue swimmer down so he could essentially go door to door, try to find these addresses, and then finding a safe place to then hoist people out of was challenging. And at night, under the goggles, it can be hard to see things like power lines until you're really close to them. So there were a couple times that we thought we had a safe area, we didn't have a safe area. We would have to find a different spot. The local responders were a huge help. I know the local police drove

our rescue swimmer around to find an address, as did some local firefighters. And without their help, it would not -- we could not have done it without their help.

[11:10:40] BOLDUAN: What is -- I don't know if you had a chance to hear from the folks you rescued, but what did they tell you?

PENA: I haven't spoken to anyone that we rescued. But we dropped them off at the hospital, and I imagine that they were glad to be out of their situations.

BOLDUAN: And first and foremost, glad to see you guys coming to the rescue.

Lieutenant Pena, thank you so much. Appreciate it.

PENA: Thank you.

BOLDUAN: Still to come for us, new clues that Turkey has audio and video evidence of what happened to the "Washington Post" contributor who walked into the Saudi consulate and never left.

Plus, a CNN exclusive. What President Trump is preparing to tell Special Counsel Robert Mueller and what this means for the Russia investigation.

We'll be right back.

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[11:15:44] BOLDUAN: "Washington Post" contributor, Jamal Khashoggi, walked into the Saudi consulate in Istanbul on Tuesday, October 2, 10 days ago, and he has not been seen or heard from since. Well, now Turkey says it has audio and video evidence that proves Khashoggi was killed inside the Saudi consulate. But still, Saudi Arabia says that he left the building alive that same day.

This news comes as members of Congress are really trying to increase pressure on President Trump to do more.

Here's what Republican Senator Lindsey Graham told me last night.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM, (R), SOUTH CAROLINA: If this is done at the hands of the Saudi government, if the crown prince was involved in this in any way, it will virtually destroy his ability to lead his country on the international stage.

(END VIDEO CLIP)

BOLDUAN: So where are we right now?

CNN's Sam Kiley is standing by in Riyadh.

First, let's go to international diplomatic editor, Nic Robertson, in Istanbul.

Nic, what are you hearing? What do we know right now about this new evidence from Turkey?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Sure, it does seem that Turkey is trying to bolster its claims and its belief that Jamal Khashoggi was murdered pretty much after he set foot in the consulate on the 2nd of October. They're sharing evidence they have with Western intelligence allies. A source of CNN was briefed by one of the intelligence officials who have seen this material and have been shown this material, we understand both audio and video. It depicts a very brutal struggle within the consulate. Jamal Khashoggi appears to be overpowered at the end of this brutal struggle. We understand it's very clear he's killed. What the source is telling us is that these Western intelligence officials, who are used to dealing with some pretty graphic situations, say that they were shocked, deeply shocked, by the evidence that was put before them. And do now appear to be strongly understanding what it is and the strength of evidence that Turkey has supporting its claim that Jamal Khashoggi was murdered. This evidence does seem to be very powerful, very strong, and we're told, brutal and ugly -- Kate?

BOLDUAN: Let alone seeing it, even hearing it described at this point is horrible to even think about.

Nic, thanks so much.

Sam, what is the reaction to all of this in Saudi Arabia right now?

SAM KILEY, CNN INTERNATIONAL CORRESPONDENT: Well, the Saudis, for some time, have flatly denied any responsibility for what they would say is the alleged disappearance of Mr. Khashoggi. That is obviously being contradicted by the reporting that Nic is saying, that the Turks are claiming. But they have gone fairly quiet, the Saudis, as they have sent a team in to do a joint liaison with the Turks over this. The UAE, which is the neighboring nation to Saudi Arabia, very much in lockstep with them diplomatically, their foreign minister has come out with a very robust statement suggesting this is nothing short of a smear against Saudi Arabia and the future strength of Saudi Arabia that will define the future of the region, and really going to bat for the Saudis. While the Saudis figure out how to react to something that whatever the truth of what went on inside that consulate, is already having very profound diplomatic and potentially economic effects.

And from the Western perspective, of course, they have to go slightly softly, softly, Kate, because Saudi Arabia is seen as a key ally in the fight against violent Islam. This is the center, for example, of international efforts to trace the funding of terrorists -- Kate?

BOLDUAN: Sam, great to see you. Thanks so much.

Nic, thank you so much. I really appreciate it.

So, of course, this begs the question: What is the role of the United States in all of this right now? Joining me is a Robert Malley. He's a former adviser to President

Obama on the gulf region. He's now the president of the International Crisis Group.

Robert, thank you for coming in.

ROBERT MALLEY, PRESIDENT, INTERNATIONAL CRISIS GROUP & FORMER ADVISOR TO PRESIDENT OBAMA: Thanks for having me.

BOLDUAN: This new information coming out that Nic Robertson is talking about is really startling. As if it wasn't startling and troubling enough that he was missing for 10 days. The fact Turkey is sharing with Western intelligence allies that audio and video confirming that Khashoggi was killed. From your dealings with Turkey, do you have a reason to think they would be making this up?

[11:20:17] MALLEY: I mean, they could be, there would be reasons to make it up. At this point, I think a number of us are hoping, have been hoping for some time that the worst was not true, but it's hard to see. It's not just what the Turks have been saying, but it's everything else we have been seeing. Including when, according to contacts in Congress, members of Congress, who we have interviewed, who said they have seen classified U.S. material and nobody is coming out with a different story at this point.

BOLDUAN: Robert, what do you make of the Saudi response? Saudi Arabia has said that he left the consulate alive that same day. That's not "we don't know." That's "we know" and this is what they're saying.

MALLEY: Yes, that's what some of them are saying. I'm struck by how little there is of Saudi pushback, given the strong campaign here on television and in the media. I mean, the accusations against Saudi Arabia have been about as strong as I have seen in any case. The pushback here in the media from the Saudis, when so much is at stake, I have found that their silence has spoken volumes. They have not said that much. And I think as your correspondent just said, it's because they're in a very awkward position. They're denying it, but not as forcefully as they would if there was nothing there.

BOLDUAN: What then do you think is the role of the United States right now? What do you make of the U.S. response? You have Senators, you have members of Congress pushing, basically threatening that sanctions are coming against Saudi Arabia. The president's reaction has been, we're looking into it, that it looks troubling and we're looking into it. Do you think the president should be, could be doing more?

MALLEY: Well, I mean, there's a history to this. Obviously, since President Trump has been in office, the relationship with Saudi Arabia has been one of full support, enabling, including in cases where the actions that Saudi Arabia has taken are against U.S. interests. And one could go down the list. I think, in some ways, this is par for the course. Although, I suspect that given the very strong reaction from members of Congress from both parties, from the media, from the business community, the administration has to take some steps, even though as President Trump himself said, they would probably prefer not to.

BOLDUAN: Give me some perspective on this. When Lindsey Graham says, if this turns out to be true, it would be a game changer in the U.S./Saudi relationship, what does that mean?

MALLEY: I think game changer is probably going too far because there are deep economic, financial, and also political ties. There's an alliance between had the two countries in confronting Iran, for better or worse. But I think you have seen cracks in the foundation of the relationship for some time, going back to 9/11, the Yemen war, which is really, in some ways, is far deadlier and costlier than what just happened and led to backlash among members of Congress. And now this, I don't know if we'll see a fundamental change, but the relationship is not going to be the same tomorrow as it has been for some time because of the sense of outrage and revulsion you're seeing on the part of members of Congress, the business community, the media. The impact may not be felt right away. There may be a halt to some arms sales, which many people have called for as a result of the way Saudi Arabia is prosecuting the war in Yemen, but over time, the next time the crown prince comes to the U.S., he will not get the red-carpet treatment he had last time. And I think we're going to see more of that, unless something happens and the Saudis manage to recover. It's hard to see what they can do at this point.

BOLDUAN: Yes, and it almost seems as if some magic miracle move they can produce Jamal Khashoggi and show him to the world.

Also happening just this morning, I wanted to ask you quickly, is Pastor Andrew Brunson is to be released from a Turkish prison. He was taken into custody in the tail end of the Obama administration. What does it mean to have him released now?

MALLEY: Obviously, it's good news. He was imprisoned on false charges. And I think credit is due to the administration for having convinced and pressured Turkey to release him.

I think it's interesting that that's happening at the same time as what's happening with Khashoggi. I think you're --

(CROSSTALK)

BOLDUAN: Do you think it's linked?

MALLEY: No, I don't think it's linked, but I think Turkey will try to improve its relationship with the United States even as its relationship with Saudi Arabia is likely to suffer. But Turkey wanted to be on America's good side at a time when it is entering a more troubled period in its relationship with Saudi Arabia.

BOLDUAN: Robert, thanks for coming in.

MALLEY: Thank you.

[11:24:34] BOLDUAN: Coming up for us, a roller coaster week on Wall Street. Markets seemed to be finishing strong, about 300, yes, finishing strong after a two-day meltdown. So does the president still blame the Fed today? The president's former economic adviser joins me next.

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BOLDUAN: Stocks are now rallying. The Dow up around 220 points right now. But this is happening after it lost more than 1300 points in two days.

President Trump didn't hesitate, sounding off on the volatility, even blaming the Federal Reserve for the drop.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think the Fed is making a mistake. They're so tight. I think the Fed has gone crazy. I really disagree with what the Fed is doing.

(END VIDEO CLIP)

[11:30:06] BOLDUAN: CNN senior economic analyst, Stephen Moore, joins me now. He's a former economic adviser for the Trump campaign.

Stephen, what is going on this week in the market?