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Trump: Certainly Looks like Khashoggi Is Dead; Defense Chiefs from U.S. and China Meet in Singapore; Canada is Second Country to Legalize Marijuana; Turks Acted Swiftly to Khashoggi's Disappearance; Thousands of Central American Migrants Head for U.S.; China Reports Slowest Quarterly GDP Growth in Years; E.U. Ready to Extend Brexit Transition. Aired 12m-1a ET

Aired October 19, 2018 - 00:00   ET

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

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NICK WATT, CNN ANCHOR (voice-over): The Trump administration continues to give the benefit of the doubt to the Saudis but the U.S. president does now admit it certainly looks like journalist Jamal Khashoggi is dead.

As a caravan of Central American migrants draws closer to the U.S. president, Trump is threatening to seal the border and now praising Mexico for its handling of the crisis.

And Canadian cannabis, it is now legal to puff the funky stuff up there but some of the regulations remain a bit hazy.

Hello and welcome to our viewers joining us from all around the world. I'm Nick Watt and this is CNN NEWSROOM.

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WATT: We are learning stunning new details about the disappearance and possible murder of missing Saudi journalist Jamal Khashoggi and just how quickly Turkish authorities leapt into action.

Sources say that it only took a few hours on the day he disappeared for Turkish authorities to suspect Khashoggi had been killed. Even U.S. president Donald Trump now seems to accept the worst.

When asked by reporters on Thursday if Khashoggi was dead, Mr. Trump responded, "It certainly looks that way to me."

Underscoring that grim assessment, U.S. Treasury Secretary Stephen Mnuchin on Thursday announced he is canceling his appearance at next week's high profile investment conference in Riyadh.

The move came just hours after his French, British and Dutch counterparts also pulled out. An all this triggering a selloff on Wall Street with the Dow closing down 327 points.

The Turkish response to Khashoggi's disappearance began about 3.5 hours after he went inside the Saudi consulate in Istanbul. That is when his fiancee, who had been waiting for him outside, alerted an advisor to the Turkish president that "The Washington Post" columnist had apparently vanished.

That one phone set off a rapid chain of events. Here is CNN's Nic Robertson.

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NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: We're talking to multiple sources here in Turkey and other sources elsewhere. We've been able to develop that much more precise picture of how quickly authorities here were able to realize what had happened to Jamal Khashoggi to the point that the very evening but the day that he disappeared they were able to get the police at the airport and intelligence operatives at the airport to check out a private charter jet that was flying back to Saudi Arabia. Jamal Khashoggi's fiance was waiting outside the consulate.

After about three and a half hours she realized something was wrong, she called a senior advisor to President Erdogan. He then called a number of government officials including intelligence officials and as well called the Saudi ambassador in Ankara.

The Saudi ambassador said he had no knowledge about what had happened to Jamal Khashoggi. So about 6:00 pm that afternoon the intelligence officials began to review their data from their recording material inside the consulate. This is recording material that the Turkish authorities have not yet publicly acknowledged that exists.

So the intelligence officials after screening that material and they get their hands on it around about 6:00 pm in the afternoon, within an hour or so they beginning to realize what has happened to Jamal Khashoggi that he was beaten, tortured --

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ROBERTSON: -- killed and his body dismembered.

They then contact the airport police and say that they're concerned that Jamal Khashoggi might be abducted. The police at the airport say that they've got seven Saudis there. The Turkish officials were later -- were later named people of interest, people they say we're on a hit squad that came to kill Jamal Khashoggi.

The police at the airport say they've screened those seven Saudis who were waiting to get onto that private charter jet later that evening to fly back to Riyadh. They screened them and screened their bags. They say there's nothing suspicious there.

Undercover intelligence operatives then go on that private charter jet. They're dressed as cleaners, there -- so they have a disguise. They search the aircraft find nothing untoward there. The aircraft and the seven passengers were able to take off later that day.

What Turkish authorities weren't able to do was to search a plane that again a private charter jet that flew to Riyadh earlier in the day. And again that plane, one of -- one of two planes the Turkish officials say carried members of that hit squad enter into Turkey on that day to kill Jamal Khashoggi and then left.

And so Turkish authorities able to act very, very swiftly and their information on what happened inside. The consulate has remained consistent throughout that Jamal Khashoggi, within an hour or so of going into the building, was brutally tortured, killed and his body dismembered.

And the Turkish authorities now continue to look for his body. They were very fast off the mark that first night but where the whereabouts of his body remains a mystery -- Nic Robertson, CNN, Istanbul, Turkey.

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WATT: There are, of course, global ramifications to this apparent murder, some touting that fallout is the greatest foreign policy challenge of Trump's presidency. Sources telling CNN that his advisor and son-in-law Jared Kushner, who is close with the Saudi crown prince, is advising Trump to proceed slowly and cautiously, citing seemingly crucial Saudi support in U.S. dealings with Iran and other issues.

Now on Thursday, Democratic Congresswoman Tulsi Gabbard, who serves on the House Foreign Affairs Committee, tweeted about the president's mention of arms deals with Saudi Arabia as a reason for caution.

She tweeted, "Trump's argument is, if the U.S. does not sell weapons to the Saudis, someone else will. That is like a heroin dealer justifying his trade."

Speaking with my colleague, Jake Tapper, earlier, Gabbard also said that Trump is acting like the U.S. is a corporation and he is a businessman without a conscience. She also had this to say about Saudi Arabia.

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REP. TULSI GABBARD (D), HAWAII: This should challenge us to look at the facts of Saudi Arabia's record beyond what has happened to this journalist, things like Saudi Arabia being a theocratic dictatorship, Saudi Arabia being this number one exporter of the extreme Wahhabi Salafist ideology that's fueling terrorist groups like ISIS and Al Qaeda to the tune of billions of dollars a year, Saudi Arabia waging -- continuing to wage the centuries-old sectarian war, the Sunni-Shia war in which part of that war they are funding, financing, providing weapons and support to terrorist groups like Al Qaeda in places like Syria and also waging a genocidal war in Yemen.

So this should force this tougher conversation here and to be confronted with the fact that Saudi Arabia, in fact, is not our ally. Their interests do not align with ours.

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WATT: I'm joined now by Bob Baer. He's a CNN intelligence and security analyst and a former CIA operative.

Bob, what do you think is on behind closed doors between the U.S. and the Saudis right now?

BOB BAER, CNN INTELLIGENCE AND SECURITY ANALYST: Well, I think the main thing that's happening as the Turks are providing more and more forensic information, they've clearly backed Trump into a corner. You can't claim this as a rogue operation. You can't claim that Khashoggi disappeared in Istanbul and I think he's dealing with the facts now. And they're looking for a way out.

This is a terrible dilemma simply because the Trump administration cannot break with Saudi Arabia or even Mohammed bin Salman in any major way simply because of oil, arms and everything else and it's our -- frankly it's our only Arab ally with any weight behind it in the Middle East. And this -- there goes as Iran policy if he breaks with Saudi Arabia. So I know right now tonight the White House is desperately looking for

a way out and one consideration is easing Mohammed bin Salman out you know, you know, get him to abdicate from being Crown Prince.

Now, clearly this man is not going to walk away easily but the family has got to come together, get to the king and say this young man has got to go. I don't I don't see any other out.

WATT: Bob, I mean, we heard from sector state Mike Pompeo again today and he had this to say. You know, we ought to give them, the Saudis is a few more days to complete their investigation so that we too have a complete understanding of the facts. And he goes on to say you know, we have a long-standing relationship with the kingdom. They're an important partner. We need to be mindful of that as well.

Now, you and Pompeo were both in this kind of the same line of work. Would you be like Pompeo is sort of accepting that this Saudi investigation of themselves will actually yield any meaningful, truthful answers?

BAER: No, no way. I mean, I've watched Saudi Arabia from the inside and as a journalist and they just are not going to talk about internal affairs to us.

They are not going to come clean with us. Pompeo has got to know by now. If there are disputes in the family or if Mohammed bin Salman, they find out that he gave the orders to dismember Khashoggi, they're just not going to -- they're not going to level with us especially Mohammed bin Salman.

I think that Pompeo is just hoping they come up with the scapegoat for this man's murder, one that's believable and so far they're not. As far as I've heard he got nothing out of the Saudis when he went to Riyadh, nothing at all.

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WATT: I mean, within the Trump Administration, the person who seems to be the most forceful in his words towards the Saudis is Mike Pence. What might the thinking be there that Pence is being the kind of more vocal striving one?

BAER: Well, Pence understands that Mohammed bin Salman has got to go and he's looking for a way out as we speak. I mean, he's much more realistic.

Foreign policy a lot has gravitated to Pence's office. This is over the last six months so I think you're going to see Pence as going to be a decisive vote on where we go next. But frankly, whether you're -- you detest Trump or you like him, he is in a horrible situation now.

I mean, again I keep on going back to oil. If Mohammed bin Salman should cut back a lifting oil by four or five million barrels, it will cause the world's economy to go into a tailspin.

Let's be frank about it. It's the worst thing that could happen to the Trump administration is for Americans to pay $4 or $5 for a gallon gasoline. They know it. You know, I hate the pun but they've got us over a barrel.

But what do you do?

We just -- we don't understand how the Saudi royal family works and we do not have many levers to make changes there. Even you have a despot in control of that country but I don't see his abdicating happening anytime soon.

WATT: I mean, I wonder how this is going to play out, how you think this is going to play out. I mean, is there going to be lots of hand- wringing and then eventually we all just move on the new cycle rolls on and in a few months this is all but forgotten?

BAER: That's up to Erdogan. If Erdogan releases the tapes and especially if there's video and it show some horrible situation. The Turks are pretty much controlling this and they're doing a wonderful job of roasting Mohammed bin Salman and Trump on this. They really have them in a corner and it's up to Erdogan.

And it's -- maybe Erdogan's going to cut a deal with the Saudis. Everybody is talking about that -- or with the Qataris.

You know you lift the embargo, you -- money exchanges hands, the Turks backtracks, well maybe it didn't happen this way. There's any number of scenarios. Frankly, I don't trust the Turks or the Saudis and we are on the sidelines which is the situation we really don't want to be in where the country is important, Saudi Arabia.

I mean, I have no time for its culture or its export or its connections to 9/11.

But on the other hand if the country is destabilized were in trouble and I just do not see Mohammed bin Salman spending the next 60 years on the throne of Saudi Arabia, however long he lives, and not have another catastrophe occur or completely destabilize the kingdom. I just don't see a happy ending to his ascending of the throne.

WATT: Bob Baer, thank you as always for your insight and your time.

BAER: Thank you.

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WATT: A caravan of migrants is approaching the U.S. border with Mexico and President Trump is warning that he will shut the border down if Mexico can't stop that flow of desperate people.

Right now thousands of men, women and children are traveling north through Central America. They're hoping to apply for humanitarian visas in Mexico that will let them through and maybe into the U.S. But the Trump administration is telling Mexico to stop the migrants before they get to the U.S. border.

Secretary of State Mike Pompeo is meeting with leaders in Mexico City Friday to drive that message home. Earlier Pompeo welcomed Mexico's decision to get help from the U.N. Refugee Agency to process the migrants. President Trump, meanwhile, is blaming the whole thing on the Democrats.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: As you know, I'm willing to send the military to defend our southern border if necessary. All caused because of the illegal immigration onslaught brought by the Democrats because they refuse to acknowledge or to change the laws. They like it. They also figure everybody coming in is going to vote Democrat.

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WATT: CNN senior political analyst Ron Brownstein joins me now from Los Angeles.

Ron, we just heard the president there at a rally in Montana tonight and also there was, of course, a Twitter flurry today as well and he was using words like assault on our country, criminals in all caps, drugs in all caps, drugs pouring in and onslaught.

Is it any coincidence that he's using this language with less than three weeks before the crucial midterm elections here in the States?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: No. You hit the nail right on the head.

I mean, it is striking. One of these most striking about this election season --

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BROWNSTEIN: -- is that, after 2016, when Republicans were uneasy with the way that the president talked about immigration -- we should remember, when he announced his candidacy, he talks about Mexicans as rapists and murderers -- that the party has moved by and large, I think, to a remarkable extent, we are seeing candidates anyway.

His language ads about immigration and undocumented immigrants as you know, as a threat, that become common in Republican races all over the country. It hasn't really shown to have a lot of bite.

So far, I mean, last year in 2017, the Virginia and the Virginia governor's race which was the first big test of the Trump era, the Republican candidate basically put all of their chips on his warning people about MS-13 at -- you know, Central American gang.

And it didn't -- it didn't produce what they hope. In fact, they produce a backlash in many white-collar suburbs.

But there's no question that Republicans in this midterm election are relying on this theme far more than in 2016, as a reflection of how much the party is being pulled almost like -- you know, finally made it. But toward this vision -- listen that the president has espoused.

WATT: Now, as the other interesting news on this topic out of Washington today was this apparent fight in the West Wing between national security advisor John Bolton and chief of staff John Kelly over immigration.

Apparently, voices were raised, people were worried that one or both of them was going to resign. I mean, Sarah Sanders, the White House spokesperson came back and said, "Well, we are passionate about solving the issue of illegal immigration." The argument was about immigration. We are not angry at one another. However, we are furious at the failure of congressional Democrats to help us address this growing crisis."

What does this fight in the West Wing tell us about the mood in there right now?

BROWNSTEIN: Well, look, they're both hardliners in immigration. You know, General Kelly I think was that many Democrats and immigration experts, when did -- when he came into the administration, thought he was going to be a restraining influence. He really hasn't been.

I mean, he takes a very hard line on these issues as well. I think the point of the dispute was this idea of the president of cutting off foreign aid to countries that he feel is not -- are not sufficiently cracking down on undocumented immigration.

And I think, General Kelly, through his experience in the Southern Command was making the point -- the correct point that -- you know, we don't do this totally out of charity or out of a favor. We do it because we believe it contributes this ability -- this being providing aid -- contributes stability -- contributes the stability in the region and that -- and that revoking it in many ways would be cutting off our nose despite our face.

So, I mean, he is -- he is someone who -- you know has a temper. But on the general thrust of -- you know, pursuing a hard line, it's not really clear there is another side in this administration.

WATT: Yet, Ron, while I got you, I just want to ask you about the language in one other Trump tweet from today. Again, it was about immigration, he's talking about Honduras, El Salvador and Nicaragua and he calls them, countries which seem to have almost no control over their population.

I mean, a country that has control over their population to not let that population out. I mean, that country ruled by a despot. What does it tell us about Trump, that he apparently sees things through that prism?

BROWNSTEIN: Yes, it's fascinating. Look, it's very clear. I mean and it has been clear for -- you know, not only the two years of the presidency but really for the entire campaign that he has a lot of respect for authoritarian leaders.

And he kind of -- you know and he kind of admires their ability to mold their entire society, to control the levers of power, to limit dissent just tonight after this horrific -- you know, apparent murder of a journalist, he was praising in Montana, a Montana candidate, who physically threw a reporter to the floor when he asked him a question that he didn't like and he said that it probably helped him.

And so, you know, that is -- I mean, there is that kind of authoritarian envy in a lot of what he -- what he does and says. It is also worth remembering that -- I think that we talked about immigration, we could talk about the press, we could talk about Democrats.

The key to the Trump electoral strategy which is on display is to constantly mobilize his base by telling they -- telling them they are under threat by people who don't look like them, whether they're Guatemala refugees or undocumented immigrants or coastal elites or any of these.

And that he is the one who can defend it and the only way they can defend themselves is to come out and vote and that is the key. There has to be a threat in enemy. That he is the last line of defense against.

And certainly, immigration was today but there will be others between now and the election 2.5 weeks from now.

WATT: Ron, joining us from Los Angeles. Thanks very much for your insights.

BROWNSTEIN: Thanks for having me.

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WATT: Now moving on, these are live pictures of Britain's Prince Harry climbing the Sydney Harbor Bridge. He's climbing alongside Australia's prime minister, Scott Morrison, and competitors, competing in the Invictus Games. That's the competition that Prince Harry founded after his service in the British Army, an Olympic style tournament for military personnel wounded in action.

The Duke of Sussex and his wife, Meghan --

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WATT: -- are in Australia as part of a 16-day tour.

Now China could be taking a hit from a trade war with the U.S. Even analysts are being caught off guard by its new GDP numbers. That's ahead.

And Brexit talks are becoming a race against the clock. There's new concern an agreement will not be reached before the deadline.

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WATT: It looks like the world's second largest economy might be feeling the impacts of the U.S. trade war. China says its GDP grew 6.5 percent this quarter. Many countries would envy that number, but it's China's weakest quarterly growth since the aftermath of the global financial crisis back in 2009.

This time last year, China was reporting 6.8 percent growth. Here is how Asian markets are doing after that news. All of them right now a little bit down.

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WATT: For more, I am joined now live from Los Angeles by Ryan Patel. He's a global business analyst.

Ryan, is this the result of the Trump led tariff laden trade war?

RYAN PATEL, GLOBAL BUSINESS EXECUTIVE: Not all of it. You know, not yet, at least. So, you're going to start seeing this maybe next year. But this is a part of quite a few things. We obviously knew that sales from different sectors are going to affect this.

Not just for the infrastructure spending, obviously the debt had been a big, big concern for the Chinese government. I'm trying to get that down that's actually helped slow the growth to that perspective.

But what's interesting behind this is you will now start to feel the exporting and business from this trade piece now of where are they going to get this -- you know, get this manufacturing power behind it?

WATT: I mean, is there also an issue with domestic demand? I mean, this isn't just about exports. PATEL: Yes. And it's -- and it is, right? I mean, although it was one cause of thought that came out it was retail sales happened to be actually 9.2 percent compared early to it was a little bit above but what was -- what was kind of in the numbers a little bit was automotive sales -- automotive sales were down.

You had -- you know, investment, kind of they're looking for more investment and create more liquidity in the currency as well. So, that's part of the reason why the GDP is a concern for China. They want to make sure it continued to be -- there is investments in spending still going through.

WATT: I mean, will they take this in their stride or are they genuinely concerned? PATEL: You know, I actually think that they are --

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PATEL: -- fully aware that this is a situation that they need to get a hold of. I mean, concern -- I think any like you said, anybody would want six percent GDP growth.

But for them, they have bigger plans from the 2020 plan, 2025 plan of infrastructure spending. Their focus of not being subtle with this situation. And then -- and I think, with them looking for policy measures and I think the Central Bank came out for China trying to calm the nerves.

That's why you saw the market in China and the Asian markets isn't actually as red as you think it should be. They're not overly reacting to it. But I think the calmness is still kind of there.

WATT: And I mean, this is not the beginning of a gradual dreadful decline for the Chinese.

PATEL: No, I mean it's, it's, it's, very -- I mean, listen, what's the worst it's going to happen to get to six percent next year? I mean, that's still good. I get not in terms of the overall perspective where they want to be. So, it's not like it's going to drop to 2 percent to 1 percent.

But it's not a situation with the country their size being the number two player that they want. So, it will be very interesting to see even last month that the trade surplus between the U.S. and China obviously increased. So, let's see what leverage now becomes between the U.S. and China when it comes to trade war now.

WATT: Ryan from Los Angeles. Thank you very much for your time.

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WATT: Moving on, British Prime Minister Theresa May voiced confidence Thursday that a good deal on Brexit is still achievable. But the chief Brexit negotiator from Europe warns that will require a lot more time. CNN's Erin McLaughlin is in Brussels.

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ERIN MCLAUGHLIN, CNN CORRESPONDENT: E.U. leaders say they're still looking for sufficient progress in the Brexit negotiations and only then will they call for another extraordinary summit on a potential final deal.

We heard from German Chancellor Angela Merkel during her press conference today say that when it comes to the Northern Ireland backstop solution, all possibilities have been explored and that a political solution is now necessary.

The key question being, given the political situation there in the U.K., does Theresa May, the British prime minister, have room to maneuver in that direction?

Something she was asked about during her press conference on Thursday afternoon.

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THERESA MAY, BRITISH PRIME MINISTER: I am confident that we can achieve that good deal and that when I take that deal back to parliament, I think members of parliament will -- perhaps I will be asking members of parliament first to recall that we're delivering all of those to the British people.

We gave the British people that choice. They voted to leave the E.U. We will be delivering on that vote.

And I'll also ask them to think about the importance of protecting jobs and livelihoods in the U.K., protecting our security in the U.K. and protecting the union of the United Kingdom.

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MCLAUGHLIN: On Sunday night, according to an E.U. source, the two sides actually came very close to a draft agreement but said a decision will take in the 11th hour to quash that potential deal, a Brexit negotiator for the E.U., Michel Barnier, saying that much more time is now needed to strike a deal. The question of course, that comes what does time do to this equation.

How does time help British Prime Minister Theresa May finalize a deal? -- Erin McLaughlin, CNN, Brussels.

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WATT: And we are just going to pop back to those live pictures of Sydney Harbor Bridge, Prince Harry climbing up there. Meghan, his wife, is not with him. And that's a good thing; she is pregnant. She is being careful.

But Harry, before the Invictus Games, up there, climbing that landmark bridge in Australia. There you go.

Next, tensions between China and the U.S. have been capturing the world's attention. When we return, how a key meeting just hours ago played out between the defense chiefs from both countries. Stay with us

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[00:30:00] NICK WATT, CNN INTERNATIONAL ANCHOR: Welcome back to CNN NEWSROOM. I'm Nick Watt, with our headlines this hour.

Sources tell CNN that Turkish authorities reacted within hours to the disappearance of Saudi journalist, Jamal Khashoggi, and quickly suspected that he'd been killed. Even the U.S. President now seems to accept that likelihood.

When asked on Thursday, that Khashoggi was dead, Donald Trump replied, it certainly looks that way to me. And the police chief of Afghanistan's Kandahar Province, seen here, has been shot and killed. Afghan officials say that he had just met with a top U.S. commander, when a gunman opened fire. The U.S. says the commander was not hurt, and the assailant was killed by American forces.

Now, to Singapore, where U.S. Secretary of Defense James Mattis has been meeting his Chinese counterpart, Wei Fenghe, reportedly trying to ease tensions between Washington and Beijing. The pair met on the sidelines of the Association of Southeast Asia Nations Forum, just hours ago.

The Chinese government requested the meeting, according to U.S. Defense sources. Now, earlier this month, Secretary Mattis called off a trip to Beijing to meet with Minister Wei, amid rising tensions on multiple fronts between both countries.

Matt Rivers joins us now from Beijing. Now Matt, there was some saber rattling in the South China Sea even just earlier this week.

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes. That's exactly right, Nick. Basically, what you're seeing, the Secretary of Defense do there, in meeting with his Chinese counterpart is really understanding that diplomacy, is the best option to avoid any, sort of, conflict the threat of which, is rising in the South China Sea, if only because of what we've seen over the past several months.

I mean, the U.S. and Chinese militaries have come face-to-face in the South China Sea for years now, going back to the Obama administration, but the frequency of those encounters does seem to be increasing more recently.

So, start this week, you had a couple of B-52 bombers fly over portions of the South China Sea. Specifically, we don't know where they flew, but they flew over disputed island chains, where China has been building and militarizing artificial islands.

The U.S. military calls those routines, patrol routine. They say they've been doing them since 2004, but the timing is interesting, given the fact that those two sides are meeting in Singapore right now. And it was just last month that a U.S. Navy Destroyer came within 45 yards of a trailing Chinese vessel as the U.S. ship made was called the Freedom of Navigation Operation, sailing challenging territorial claims made by China at those artificial islands.

So basically, the instances between China and the United States, seeing tension in the South China Sea does continue to go up. And this happens as the Trump administration increasingly views China as an adversary on a multitude of fronts, as President -- Vice President Mike Pence outlined in the speech.

So basically, in totality here, Nick, you have increasing situations of tension between the United States and China, and you have the Secretary of Defense trying to diffuse that, while at the same time, doing what the Trump administration wants him to.

WATT: And, I mean, Matt, is there an off-ramp? Is there a way to actually deal with this properly, rather than just a bit of a grip and grin handshake?

RIVERS: I mean, the problem is that there is no real easy solution to this. I mean, what the United States would want is for the Chinese to back away from those artificial islands, to take off the missile systems they've put on there, to remove the military jets they've put on the islands.

And China is not going to do that. They've invested a ton of money and time in these islands. They view it as a strategic imperative for their military, and they say they view it as their sovereign territory.

So, if the United States wants them to back off these islands, but China isn't willing to, and that's the source of all the tension, where do you go from here? There really isn't a good solution.

[00:35:10] WATT: And, I mean, these artificial islands, that's largely about natural resources or defense?

RIVERS: Well, both. What China sees these artificial islands, you can think of them almost as like a moored aircraft carrier, well ahead or well outside of China's shoreline. I mean, basically, it allows China to project its military power, well into the South China Sea.

But it also is about natural resources, there are vast untapped oil reserves in the South China Sea, China is competing with neighboring countries for those claims. And by putting up these artificial islands, they say look, that's our sovereign territory.

We have an exclusive economic zone around all of those islands that ranges 200 miles under international law. And therefore, we can tap into those natural resources.

So basically, for China, it's all of the above. Natural resources, security, it gives them a stronger footing, projecting their power farther away from their shores. WATT: Matt Rivers in Beijing. Thanks very much. Up next, Canadians light up recreational pot is now legal in Canada, but the first puffs under the new law, came with some hiccups, from supply problem to outstanding legal issues. We'll explain.

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WATT: Recreational marijuana has now been legal in Canada for about 48 hours, Canada, just the second country in the world, after Uruguay, to legalize growing, selling and smoking recreational weed. The historic lifting of the pot provision was met by cheers from enthusiastic customers who lined up to buy their first legal grams, many seeing this as a great moment after a decades-long battle.

UNIDENTIFIED FEMALE: It's another era of, you know, prohibition being lifted.

UNIDENTIFIED MALE: Just 80 years waiting.

UNIDENTIFIED MALE: It's just something that you want to be able to tell your kids that you were there for this moment, because it's going to be in history books.

UNIDENTIFIED MALE: We should respect the fact that this happened because a lot of people persisted and then government actually responded. And so, this is pretty forward looking stuff.

WATT: But there are growing pains. First up, demand, immediately dwarfed supply, some suppliers saying that that problem could last six months, also, one driver was ticketed for toking at the wheel within the hour after they legalized it.

Canada appears to still be figuring out just how to police all this. And some are saying that the Cannabis tests for drivers aren't actually up to snuff, and the government is under pressure to now expunge the records of those convicted of minor pot use in the past.

Joining me now to discuss Canada's pot roll-out is Eugene Oscapella, a Professor of Criminology at the University of Ottawa, in the Canadian Capital. Eugene, was this always going to be a legal quagmire?

EUGENE OSCAPELLA, PROFESSOR OF CRIMINOLOGY, UNIVERSITY OF OTTAWA: Well, remember, we have almost 95 years of criminal prohibition in this country and we're moving to a completely different regulatory systems. We also have 14 jurisdictions involved in Canada.

We have the Federal government, which is responsible for criminal laws, but the provinces are now going to be responsible for the retail distribution of Cannabis. Municipalities are going to be involved in setting places of consumption.

So, it's going to be complicated. Prohibition is the easy solution. It's just that it doesn't work.

WATT: So, am I right in thinking then, that pot has been legalized, but the actual legal framework of how it's going to pleased is still, kind of, a work in progress?

OSCAPELLA: I mean, we have -- we have Cannabis legislation, it's a 40,000-word document. Federal legislation explaining the Federal government's role on the (INAUDIBLE) has enacted legislation as well.

So, there's legislation in place. But the actual practical roll-out is what can be problematic. I mean, obviously, do you have enough supply of the product that people want on the day that they want it? That's one of the obvious problems we've had so far.

So, you know, the market, there isn't enough supply right now to satisfy the demand on the legal markets, so some people will continue to use their previous illegal suppliers until the legal market gets more effectively established and this, sort of, the wheels that get to better greased.

00:40:19] WATT: And, I mean, that was one of the main points of this whole thing, was to end that black market. But as you say, that's going to continue until supply of the legal stuff gets up to snuff. Now, this driving issue, I'd read somewhere that the test for stone driving doesn't work particularly well in cold weather, which could obviously be a problem in a lot of Canada.

OSCAPELLA: Well, there is a machine -- there is a machine that is a saliva test, basically. And I'm told that it doesn't work that well in cold weather. But there are other ways of identifying impairment. We have what we called Standardized Field Sobriety Test.

You know, can you walk a straight line? Can you close your eyes and touch your finger to your nose? We have specially trained police officers whose called drug recognition experts. But, the problem of drug-impaired driving is not new. This is something that has existed before, and there is no real reason to think that there is going to be a significant increase in it, with legalization of Cannabis.

I mean, we actually have a better chance of doing honest education and talking about social responsibility under a legal regime, than we do under a regime where everything is hidden and criminalized.

WATT: And in terms of the military and police departments dealing with their personnel, there is not a blanket guideline across the country that says, you know, police officers can never use weed or should only smoke, you know, certain number of hours before they come on shift. I mean, that seems to be -- to me, a little bit of a muddled patchwork.

OSCAPELLA: Well, you're correct. I mean, it is a patchwork. But individual police forces are going to make their own -- are going to make their own decisions. You know, some of them will say eight hours, some of them might say 24 hours, some might say 28 days, in which case is, effectively, what they're saying is it's a prohibition on any use of cannabis, if the waiting period is that long.

But, I mean, these are all things - we knew right off -- we knew that we wouldn't get it right off the bat. This is -- this is essentially a work in progress. But the fundament problem of criminal prohibition, that is the main thing that we're getting rid of right now.

And the rest is -- it's sort of details. And it can be -- I mean, they can be mind-bogglingly complex sometimes; the details, but they are just details. The main thing is we shifted away from this very badly failed experiment for 95 years of criminal prohibition, and we're moving to a regulatory model that we hope will serve as an example for other countries that are interested in something similar.

WATT: Eugene Oscapella joining us from Ottawa. Thank you so much for your time.

OSCAPELLA: Thank you, Nick.

WATT: Thanks for watching CNN NEWSROOM. I'm Nick Watt. Stay tuned now for "WORLD SPORT." We'll leave you with video of Britain's Prince Harry climbing the Sidney Harbor Bridge, more on that, next hour. Meantime, you're watching CNN.

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