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Defense Gap, James Mattis Is Back At Work Today, But Who Can Fill The U.S. Defense Secretary's Place As A Voice Of Reason For President Trump; Hacked Allegations, China Denying What It Calls Fabricated Facts By The U.S. After Its Nationals Are Indicted For Breaching Cyber Security; And Drones At Large, Passengers May Be Passing Through Gatwick Airport Once Again, But The Drones And Whoever Is Flying Them Are Still Out There. Aired: 8-9a ET

Aired December 21, 2018 - 08:00   ET

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

WILL RIPLEY, SENIOR INTERNATIONAL CORRESPONDENT, CNN: I'm Will Ripley in Hong Kong. Welcome to "News Stream." Defense gap, James Mattis is back at

work today, but who can fill the U.S. Defense Secretary's place as a voice of reason for President Trump? Hacked allegations, China denying what it

calls fabricated facts by the U.S. after its nationals are indicted for breaching cyber security. And drones at large, passengers may be passing

through Gatwick Airport once again, but the drones and whoever is flying them are still out there.

We begin on this Friday with major shifts in American military policy, shifts that can impact thousands of lives across multiple countries.

First, the Trump administration is looking for a new Defense Secretary after the abrupt resignation of James Mattis. A senior U.S. official says

Mattis was vehemently opposed to the U.S. President's decision to withdraw troops from Syria.

Mr. Trump initially insisted ISIS has been defeated there, something he later contradicted in a tweet. Meanwhile, global reaction continues

pouring in. France's Defense Minister says it does not share that analysis that ISIS has been wiped out in Syria. Turkey, meanwhile, is saying it

welcomes the U.S. decision to withdraw and right now, their President, Recep Tayyip Erdogan, is giving a speech making what's called an important

statement relating to Syria. We are monitoring this and we'll let you know what he says.

Another reported factor in Mattis' resignation, the U.S. Military has been ordered to plan for a substantial withdrawal of U.S. troops in Afghanistan.

Meanwhile, a top Russian lawmaker says Mattis' departure is rather positive for Russia. We're covering every angle of the story; senior international

correspondent Nick Paton Walsh is in London and our Moscow Bureau Chief, Nathan Hodge is standing by with reaction from the Kremlin.

So Nick, first to you. Even some of President Trump's supporters are criticizing this potential pullout from Afghanistan. The U.S. Republican

senator, Lindsey Graham, he said it could pave the way for a second 9/11. Do you agree?

NICK PATON WALSH, SENIOR INTERNATIONAL CORRESPONDENT, CNN: It depends how you subscribe really who to what U.S. foreign policy has done since 9/11.

I mean, it's pretty much not in debate that if you allow areas to create terrorist havens, then there is the strong possibility they will be used as

launch pads to attack western countries, including the United States.

A lot of that though has changed. Sometimes, now, for example, with ISIS, you don't actually need to have a sort of caliphate or a territory in which

attacks are planned. They're made up by loyalists often in the country where the attack is committed, often with a very short time frame.

So much has changed, but more broadly, the augment about Afghanistan is what kind of country you leave behind? What have the last 17 years of

American sacrifice there really left in Afghanistan? What have they amounted to? And we're at a very delicate point right now as the U.S.

clearly, under the Obama administration exercised all its military might with a surge, that didn't have the effect they needed.

Now they have a smaller force of 14,000 trying to assist the Afghan military and they're also, I think it's fair to say, quite hurriedly trying

to establish a political accommodation with the Taliban now, with the first direct talks between the insurgency and U.S. officials happening now in the

Emirates.

What Donald Trump did, by allowing this announcement of having the number of troops potentially as fast as January, what he essentially did was take

off the table one of the major playing cards that the United States has when talking with the Taliban. The Taliban want to know how quickly the

U.S. will withdraw their troops and how many they will leave behind permanently, Donald Trump has basically taken that out of the equation

entirely.

And I think many people in Afghanistan now deeply concerned what exactly what the U.S. strategy is if it's not simply cut and run.

RIPLEY: So based on your experience reporting about this extensively, do you think that the Afghan government is capable of protecting itself or is

this providing a real opening for the Taliban?

PATON WALSH: No, I mean, look it's a sad thing to admit, but the decades of efforts by the United States and NATO allies to train and equip the

Afghan military throughout that decade, relentlessly we've been told what progress was being made, how good the Afghan Security Forces were, but

they're dying now in such extraordinary numbers that those numbers are, in fact, kept classified. We're not allowed to know them. That isn't

necessarily a sign of good news.

The Taliban are currently in control and influencing more territory than they have since the invasion. And more civilians have been dying over the

last year or so than we've seen before, as well. It is the worst it's ever been. This is the time in which the U.S. is trying to get the Taliban into

politics to find some kind of nonmilitary end to the war. Everybody knew that was where we would eventually end up being one day. That was even the

Obama plan.

[08:05:05]

PATON WALSH: The problem really is, as I say, if during that delicate process of brinkmanship, the Commander-in-Chief says, "Oh, we're leaving,

anyway," which essentially is what we heard. That small force will have probably a counterterrorism limited mission left behind and then that

radically undermines exactly what potential state the 17 years of U.S. and NATO sacrifice actually brings to the Afghan people, who I have to say have

suffered like you could not simply imagine, Will.

RIPLEY: Such an abrupt end, too, to America's longest war and who knows what might happen next. Nick Paton Walsh live in London, thank you.

Let's go over to Moscow now and Nathan Hodge, our Bureau Chief there, you have been speaking with the Kremlin today. If the U.S. pulls out of Syria,

what does that mean for Russia?

NATHAN HODGE, MOSCOW BUREAU CHIEF, CNN: Will, President Trump's decision and the resignation of Secretary Mattis have been music to the Kremlin's

ears. President Vladimir Putin yesterday in his marathon press conference said that he thought that the decision to leave Syria was a correct one and

Russian officials have been saying and telling us for months now that they believe the U.S. has no legal basis, no legal foundation to be in Syria.

So in a lot of ways, this decision by the Trump administration leaves Russia as the main broker, the main shaper of outcomes on the ground in

Syria, which is exactly where Moscow wants to be in all of this. Putin intervened militarily on behalf of the regime of Syrian President Bashar

al-Assad in 2015, essentially turning the tide of the war in Assad's favor.

And now, with the U.S. exiting, this allows Russia to move forward with shaping the outcome that's in its favor and in favor of what it sees as its

partners in the region. So this is a stunning turn of events for everyone, but certainly it's being welcomed here in Moscow, Will.

RIPLEY: Yes, unsurprisingly, so given what President Putin has said repeatedly wanting the U.S. to pull out of Syria. Nathan Hodge in Moscow,

thanks so much. We need to get over now though to Istanbul. We have our senior international producer Gul Tuysuz who has been listening to the

Turkish President.

He just gave a speech, Gul, what did he say about all of this?

GUL TUYSUZ, SENIOR INTERNATIONAL PRODUCER, CNN: Well, the main pull away from all of this is that Turkey is going to be going ahead with an

operation into Northern Syria in the coming months. So we still don't have an exact timeline, but that Turkey will be going in not just to fight off

those Kurdish fighting forces that Turkey views as an extension of terrorists here at home, that's what Turkey considers them, but also to go

after the remnants of ISIS.

So there is now plans here in Turkey for the Turkish military to go in and push through not just to push those Kurds back, but also to fight the ISIS,

the remaining ISIS presence there in Syria. Turkish President Recep Tayyip Erdogan noting that Turkey does not have its eyes on any part of Syria's

territory, that this is not meant to be a land grab of any sort, but that it's about expelling those Kurdish fighting forces from Turkey's borders

and in the process of doing that, also combatting the remaining ISIS presence there.

So very new developments with Turkey. Having said this over the last couple of weeks, that they are considering going into Northern Syria to

clear that area of the YPG, that's that Kurdish fighting force that Turkey views as a terrorist group, but now we're seeing the first concrete

statement coming from the Turkish President saying that they are, in fact, going to do it and that they're going to be doing it over the next couple

of months -- Will.

RIPLEY: Pretty quick development there, Gul, and I'm curious what you're hearing about this phone call exactly one week ago between President Trump

and President Erdogan, and you know, tell us more about how the Turkish government and its military are benefiting from this move by the U.S.

TUYSUZ: Well, as I just mentioned, Will, Turkey has been saying for actually a couple of years now that they will not tolerate the presence of

that Kurdish fighting force along their border. But there was a major hurdle for Turkey. And it was this - the U.S. main allies on the ground,

in the fight against ISIS in Syria are those very same Kurds that Turkey wants to expel away from its borders because Turkey views them as a

terrorist organization or an extension of a terrorist organization that they have here at home.

But that meant a Turkish operation with a U.S. troop presence there on the ground meant that the two NATO allies, the U.S. and Turkey, would have been

facing off against each other in a very complicated and chaotic battlefield.

[15:10:05]

TUYSUZ: Once the U.S. troops from Syria leave, that major road block for the Turkish military, that possibility of coming in contact with or having

a confrontation with the U.S. is removed and that leaves the Kurds there, that U.S. ally that has been instrumental in the fight against ISIS is

severely exposed to an eventual Turkish operation.

RIPLEY: And they feel betrayed and they've said as such. Gul Tuysuz, I know you're watching all of it in Istanbul and we'll check back in with you

as the situation develops. Thank you.

I want to focus more now though on the Mattis resignation. This really does look like a turning point for this administration, this President, and

the United States. First Mr. Trump tweeted, "General Jim Mattis will be retiring with distinction at the end of February." Notice there, the

President said Mattis is retiring. Well, that's not the way Mattis put it. He said he is quitting over profound differences of opinion with the boss

on just how to treat America's allies and enemies. Mattis said the President should have a Secretary of Defense who is better aligned with the

President's views.

Without the steading hand and intellect of General Mattis, there is grave concern among U.S. allies that anything can happen with a President seen as

impulsive and at times, unhinged. Mattis suggests Mr. Trump is taking aim at the very foundations of U.S. global power.

Joining me now is Retired Rear Admiral John Kirby, he is a CNN military and diplomatic analyst and former Pentagon and State Department Spokesman.

Admiral Kirby, it's great to have you on, especially right now. I want to know what you make of this really pointed resignation letter by General

Mattis and what it tells you about his state of mind leading up to this.

JOHN KIRBY, MILITARY ANDD DIPLOMATIC ANALYST, CNN: I know that General Mattis - Secretary Mattis did -- the last thing he wanted to do, Will, was

to quit the job. He's never quit anything in his entire career as a Marine. He always got the mission accomplished and kept going on. So I

know this is the last thing that he wanted to do. That he did it and that he did it in such a clear, formal, concise and pointed way tells you how

strongly he felt about his policy differences with the President.

Now, look, this is very much in keeping with military tradition. As you raised up through the military, we are taught that if you can't ethically

or morally complete the orders that are given to you by your chain of command and by your boss, in this case, the Commander-in-Chief, then you

have an obligation to resign. And that's what he did.

I think there's two things really embedded in this letter that are important to remember. One, and you already hit on it is his focus on

alliances and partnerships. Trump has fundamentally misread the generals that he calls his generals. He doesn't understand that these generals grew

up in the post-Cold War world where with alliances and partnerships and coalition building were really the method to our success in establishing an

international world order.

And number two, he talked about -- and you rightly pointed that quote, this idea of being aligned, that you need a Secretary of Defense that's more

aligned with your world views. On that point, I happen to disagree with Secretary Mattis. I think it's important right now, with all the dangers

and the things that you were just talking about with your correspondents out in Syria and Afghanistan, to have a Secretary of Defense who is willing

to speak truth to power like Mattis did.

And so what worries me, Will, is that in seeking a Mattis replacement, Trump is going to default to somebody who is more of an ideologue, lap dog,

somebody who is just going to accept his world view and not question it and that's a real problem for American leadership on the world stage.

RIPLEY: And you made such a good point that somebody with a military background who is used to obeying orders, for someone like that, someone

like Mattis to resign, it just goes to show how far he was pushed. But we're hearing from Russia - there was a top Russian lawmaker who said

Mattis' exit is rather positive for Russia. So what does this mean for America's adversaries and frankly, U.S. allies?

KIRBY: I think it depends, Will, on who gets nominated to replace Mattis. I am not of the mind right now that the sky is falling. He is going to be

in office until February. Let's see who Trump nominates. If he nominates a lapdog, an ideologue, somebody who is just not going to question him and

has the same disdain for alliances and diplomacy, then I think we're in trouble.

But let's see who he nominates. I do understand why Russia and probably China are cheering his departure, because if you look at the National

Defense strategy that Mattis submitted earlier this year, it's very strong on great power competition and it makes very clear that our two major

adversaries in the world are those two countries, so I am not at all surprised that Putin is cheering this announcement as he cheered President

Trump's decision to pull troops precipitously out of Syria.

It gives him breathing room and it potentially opens up opportunities for him, but as for the next Defense Secretary, I think it's really important

that we wait to see who he nominates.

RIPLEY: And I appreciate how cool headed you're remaining because there are people out there who have been calling this scary and frightening.

You're telling everybody "Calm down, let's see what happens. The mission goes on," and Admiral Kirby, it's really great to have you here on "News

Stream," I hope to chat with you again very soon.

KIRBY: Thanks, Will.

RIPLEY: Thank you.

KIRBY: Good to be with you.

[15:15:00]

RIPLEY: Coming up next, China - they are fighting back after the U.S. accuses it of working with hackers to steal intellectual property across

the world. We are live in Beijing. And the planes are flying again at London's Gatwick Airport after the skies were held hostage by drones. So

how close are they to finding out would did this?

Seventeen minutes past 9:00. It is Friday - Friday night here in Hong Kong. You're watching "News Stream". The U.S. Justice Department has

charged two Chinese nationals with taking part in a worldwide computer hacking scheme. They are accused of stealing trade and technology secrets

from dozens of U.S. companies under a program allegedly directed by the Chinese government.

The U.S. says its action was coordinated with 11 other nations including Japan, India, Australia, and Germany. But Beijing insists all the charges

are based on lies. CNN's senior producer Steven Jiang joins me now from the Chinese capital. Steven, Beijing must feel like the United States just

keeps putting more and more pressure at a time that they are trying to expand their diplomatic footprint and influence around the world, how do

you see this playing out in Beijing in the coming days?

STEVEN JIANG, SENIOR PRODUCER, CNN: Well, Will, the Chinese response has come quickly and strongly. But the authorities here did not really address

any of the specific digital evidence presented in these latest indictments, which we have also seen in several previous reports by the world's leading

cyber security firms.

This is the kind of digital footprints left behind by these alleged Chinese hackers, the kind of practices or techniques they tended to deploy.

Instead, the Chinese government has resorted to their usual angry rhetoric. Here is what a Foreign Ministry spokeswoman said earlier.

(BEGIN VIDEO CLIP)

HUA CHUNYING, CHINESE FOREIGN MINISTRY SPOKESPERSON: (Through a translator). The United States fabricated facts out of thin air, launching

groundless accusations against China on cyber security and indicting two Chinese nationals.

(END VIDEO CLIP)

JIANG: So, obviously this is not the first time we have seen this kind of back and forth between the two governments, but what is different as you

mentioned, Will, is this is no longer the U.S. accusing the Chinese alone this time. This is the U.S. government along with 11 other nations really

banding together presenting this united front calling out China on this kind of behavior and tactics in terms of stealing trade secrets and other

sensitive information through state sponsored hacking involving key industries, really, the Chinese have been trying hard to dominate.

We're talking about aviation, satellite, maritime technologies. That's why the U.S. officials say they're increasingly concerned. They say this kind

of tactic is really posing grave national security threats to the U.S. Now, one thing worth noting is there is no extradition treaty between the

U.S. and China.

[08:20:04]

JIANG: So it is highly unlikely we'll see these two Chinese men appear at a U.S. courtroom. U.S. officials say they're aware of this, but they are

still trying to send a very strong message to Beijing, and that is, "We have caught you red-handed again. You need to stop doing this right now,"

especially now there is increasing international consensus -- Will.

RIPLEY: And with a dozen countries, of course, that's just going to add to the suspicion there in Beijing that the United States is trying to somehow

contain the rise of China, but I want to know what you think the implications could be for U.S.-China trade at this sensitive time, you have

these new talks set for January.

JIANG: That is a very interesting question. These things are really becoming increasingly interconnected. Now before the DOJ announcement on

Thursday, there were a lot of speculations or expectations of even tougher actions taken by the U.S., including imposing sanctions on Chinese state

firms that had benefit from cyber thefts. Now, that did not happen apparently because of more cautious voices within the Trump administration

trying to induce the impact of these indictments on the ongoing trade talks which of course have been top priority for both leaders, both President

Trump and President Xi Jinping of China.

So, really, this is another example of people on both sides trying not to let any single issue hijack this entire complicated relationship. That's a

very delicate balance that's increasingly difficult to strike -- Will.

RIPLEY: CNN senior producer, Steven Jiang, live in Beijing. You've been working some very long hours this week and something tells me you're going

to keep on doing it. Thanks so much for your time tonight.

Turning now to North Korea, the U.S. is saying that it is willing to explore some new way to build trust with the reclusive country even as the

two remain deadlocked in negotiations over how Pyongyang will denuclearize in exchange for easing U.S. sanctions.

Talks have stalled since U.S. President Donald Trump and North Korean leader Kim Jong-un signed a pledge back in June to work towards

denuclearization. Special envoy to North Korea told reporters, the U.S. is willing to look at other measures to build trust, but he declined to give

details.

(BEGIN VIDEO CLIP)

STEPHEN BIEGUN, U.S. SPECIAL ENVOY TO NORTH KOREA: The United States has no intention of easing our unilateral or United Nations sanctions.

However, within the context of the engagement that we have with the DPRK, we are prepared to explore a number of other things that could build trust

between the United States and North Korea.

Of course, we're not going to negotiate that through the media. We intend to discuss that directly with the DPRK, but we do have a number of

initiatives that we would like to look at as we begin the process of denuclearization in North Korea.

(END VIDEO CLIP)

RIPLEY: On Thursday, North Korea's state-run news agency said that Pyongyang will not relinquish its own nuclear weapons until the U.S.

eliminates its own nuclear threat.

Well, finally, a sliver of good news for some of those beleaguered air travelers, holiday travelers in London, planes are back in the air at

Gatwick Airport after a 32-hour shutdown. Remember, all takeoffs and landings were halted late on Wednesday because drones were spotted flying

around the airfield leaving tens of thousands of people stranded right at the height of the busy Christmas travel season. Police think that was

deliberate by the way.

Many flights are still grounded right now. The airport says dozens of Friday flights have already been cancelled, a quarter of million - a

quarter of a million were due to arrive at or depart from Gatwick today and the next few days expected to get even busier. So let's go to CNN's Anna

Stewart who is back at the airport. She has been following all of this from Gatwick, so Anna, what do we know at this stage about these drones and

are they any closer to finding out who is flying them?

ANNA STEWART, REPORTER, CNN: Okay, what do we know about these drones? We know what they're very high tech. They're of industry specifications which

means they have long ranges, they could be very technologically advanced, indeed. We know that they haven't been found. We know that the

perpetrators haven't been apprehended. But some good news, Will, we haven't had a sighting since just before 10:00 last night, which is one of

the major reasons why flights are finally able to take off and land at Gatwick Airport today.

Of course, it's a limited schedule, partly because planes are obviously in all the wrong places around the U.K. and Europe as a result of this mega

chaotic 30-something hours that we've had. But I can tell you that 150 flights were canceled today, but that's out of 780 scheduled so far. So

things are definitely picking up here, Will.

RIPLEY: So why has it been so difficult to stop this? Why not just shoot the drones down?

STEWART: So there are so many issues here. First of all, there's how do you prevent it and then there's what do you do when you find the drones

there? Preventive is quite hard. These drones are so advanced. They keep improving. That means the technology to detect them has to keep improving

as well.

So some of them, you can use Wi-Fi jamming equipment and things like that, but of course, some of the drones can certainly navigate this sort of

thing. Some of them don't need signals at all. Some of them work by telemetry, some of them work by AI. Some of them don't even need an

operator, then as you said, how do you get rid of them once they are up in the air ...

[08:25:10]

STEWART: ... causing a nuisance. Yes, you can shoot them down, but there are plenty of other options. There are shoulder mounted nets. There are

hawks that can take them down, I am told. A lot of these problems though of course, heavy drones falling down onto people is a concern that was a

concern yesterday, but it's one of the options actually being being considered now.

Take a listen to what one of the policemen I spoke to today said.

(BEGIN VIDEO CLIP)

STEVE BARRY, ASSISTANT CHIEF CONSTABLE: The option to shoot them out of the sky is always available depending on the threat. So for example, we

have got armed officers here at Gatwick 24 hours a day, so the option is always there.

The issue is whether or not in relation to the threat that is posed is proportionate and what we are saying is, as time has gone on and as the

level of disruption and the level of threat is increased, obviously, that option has come back into availability.

(END VIDEO CLIP)

STEWART: He also told me, there are plenty of sophisticated options they have today that they didn't have yesterday, Will. But they won't tell me

what those sophisticated options are for fear that that would help the criminals behind this. All I can hope is that we have no more sightings,

well, until at least after Christmas, let's say. Back to you, Will.

RIPLEY: Yes, I'm sure a lot of people are hoping for that. To think of all the modern technology, what a sight if they ended up using birds of

prey to try to knock these things out of the sky, just incredible. Anna Stewart, thanks for following all of it at Gatwick Airport there in London.

We appreciate it.

You're watching "News Stream" and we are still following some major new developments involving the conflict in Syria from Washington to Ankara.

Stay with us.

And as the midnight deadline approaches, American lawmakers are running out of time to agree on a spending bill and avoid a partial government

shutdown. You're watching "News Stream."

I'm Will Ripley in Hong Kong. You're watching "News Stream" and these are your world headlines at this hour. The U.S. justice department charging

two Chinese nationals for taking part in a worldwide computer hacking scheme. They were accused of stealing trade and technology secrets from

dozens of U.S. companies and the U.S. says the Chinese government knew all about it. But Beijing insists all the charges are based on lies.

Catalan pro-independence groups are protesting in Barcelona very close to where the Spanish Prime Minister Pedro Sanchez is holding a Cabinet

meeting. It's a year after Catalonia unilaterally declared independence. The Spanish Prime Minister is seeking the support of pro-Catalan

independence parties to secure his government's survival in return for greater autonomy.

[08:30:07]

RIPLEY: More protests are expected on the streets of Taiwan this weekend, by a group inspired by France's yellow vest demonstrations. Protesters

wearing yellow vests marched to Taiwan's Presidential office on Wednesday pressuring the government to enact tax and justice reforms.

There is shock in Washington as U.S. Defense Secretary James Mattis prepares to leave the Trump administration in at the end of February. A

senior U.S. official says Mattis resigned over President Trump's decision to withdraw U.S. forces from Syria, saying Mattis vehemently opposed the

move.

In the past hour, we've heard that Mr. Trump was also surprised by the resignation. We've also just heard at the top of this hour from Turkey's

President on what ahead after a U.S. troop pullout from Syria.

President Erdogan says he has a plan over the next couple of months that will be geared towards both the Kurds and remaining pockets of ISIS.

Turkey says it welcome the U.S. decision to withdraw, but the U.S.-backed Kurds, well, it's a much more dire situation for them and I want to get

more on the global ramifications of Mattis, the troop withdrawals and how world leaders are reacting to it all?

Our chief international correspondent, Clarissa Ward is live in London. Clarissa, it's great to see you. And I want to begin talking about Syria

and the Kurds who have been fighting in Syria backed by the U.S. Some are describing this move as a blatant betrayal, should they be afraid?

CLARISSA WARD, SENIOR INTERNATIONAL CORRESPONDENT, CNN: Well, Will, I think the reality is that they are very afraid. I spoke earlier on today

with a Kurdish fighter who said that they see this as a stab in the back. It's important for our viewers to remember that it is Kurdish forces on the

ground in Syria who have been fighting and dying in the fight against ISIS.

This has been the U.S.' most crucial and strategic ally in the fight against ISIS. What they are fearful now is that the U.S. will pull out and

that Turkey, which sees the Kurds as being an existential threat and views them as a terrorist organization will swoop in and launch some kind of a

bloodbath or massacre to try to contain the Kurds and prevent them from getting some kind of a homeland or their own state.

So all in all, the Kurds feel that they have been sort of hung out to dry by the U.S. They were very much hoping that the U.S. would remain there

for some time longer, that that would enable them to afford them a level of protection. Their only hope now from what I am hearing is that

potentially, the resignation of Secretary Mattis does put an inordinate amount of pressure on the Trump administration that that might in turn

translate into some kind of a shift in the White House or this administration policy vis-a-vis Syria and the Kurds.

But for now, it doesn't look good. And as you said, those Kurdish forces are frightened. They see this as a real threat and a real betrayal --

Will.

RIPLEY: And then of course, this possibility - a very real possibility that the U.S. will pull at least half of its remaining troops out of

Afghanistan. All of this chaos, all of this confusion, the surprises every day out of Washington, how is this being seen around the world, Clarissa,

both by our allies, but also by U.S. adversaries?

WARD: Well, from our allies, predictably, I think there's a level of dismay, especially from Israel, which counts very much on the U.S.'

presence in the Middle East and the U.S. commitment to fighting Iran. The Kurds, as I have just mentioned, other NATO forces, British troops are on

the ground in Northern Syria, too. What are they supposed to do now? Do they stay it alone? Do they have to pull out, thus humiliating themselves?

That puts our NATO allies in a very awkward position.

But then if you look at other countries, there's a much more positive reception to the resignation of Secretary Mattis and to this troop

withdrawals, I am thinking particularly of Russia, Will, where a Russian senator put a post on Facebook saying that he viewed this as rather

positive and the reason for that is because essentially, it lays bare what people have already suspected, that the values embodied by General Mattis

commitment to old alliances, commitment to fighting against terrorism, commitment to allies and fighting forces on the ground, who you're

partnered with, that those are no longer America's priorities.

That there is a different vision that President Trump would like to see U.S. foreign policy espousing, and to authoritarian regimes, like Russia,

like China, that's music to their ears because it gives them an opening on the world stage to further promote their own agendas.

But as I said, for our allies, it's another story, Will.

RIPLEY: Yes, certainly a big win though for the Russian President Vladimir Putin. You've got to wonder what's going through his mind right now as he

thinks about a strategy moving forward. Our chief international correspondent, Clarissa Ward in London, thanks very much for being with us.

[08:35:03]

RIPLEY: And if the announcements about troop withdrawals and Mattis weren't enough to shock lawmakers in Washington, President Trump fueled

another crisis. This one, over keeping the U.S. government up and running. Congress has just over 15 hours - 15 hours to pass a spending bill that

would avoid a partial government shutdown, a shutdown that would happen right before the Christmas holiday.

Late Thursday, the House of Representatives passed a measure that includes $5 billion the President requested to pay for a border wall. Democrats are

adamantly opposed to that wall and the bill will likely be dead on arrival when it reaches the Senate.

So let's get down with all of this --

(BEGIN VIDEO CLIP)

CHUCK SCHUMER, U.S. SENATE MINORITY LEDER: Today's events have made one thing clear. President Trump is plunging the country into chaos. The

stock market is down another 500 points. General Mattis is stepping down and we know he has real disagreements with the President on Syria and on

the wall and now, President Trump is throwing a temper tantrum and creating the Trump shutdown of the government.

(END VIDEO CLIP)

RIPLEY: That language, the Trump shutdown is obviously very deliberate from Democrats. CNN White House correspondent, Abby Phillip is live for us

now. So Abby, it's the Friday before Christmas. You have a midnight deadline for some Federal agencies and departments, is there any hope there

at this late hour of avoiding at least a partial government shutdown?

ABBY PHILLIP, WHITE HOUSE CORRESPONDENT, CNN: Well, Will, things do seem pretty bleak here in Washington. Not only are we about 15 hours away from

a possible government shutdown, but we have the President on Twitter this morning predicting that if there is a shutdown, it's going to last for a

long time. That is bad news for a lot of Federal workers who are looking at going into the Christmas holiday on furlough, without pay, working

without pay.

Hundreds of thousands of employees in that situation, but President Trump doesn't seem to be budging on this and there is no clear way out. Where we

are right at this moment is that the Senate is expected to take up what the House passed yesterday, which includes a $5 billion for border security

that the President demanded in order to sign a funding bill for the government.

But the problem is, it doesn't look like Republicans have even enough Republican votes to get this passed today. Meanwhile, in order to get it

passed altogether, they would need 60 votes total, which would require Democratic votes. So there is no clear path forward here. There are votes

expected by midday today that are also expected to fail, and the White House this morning, we asked Sarah Huckabee Sanders if there was some kind

of Plan B, some kind of backup plan, they seem to indicate that there was none, that President Trump had no intention of moving off of his position

and it seems like right now that there is likely to be a government shutdown at midnight tonight.

RIPLEY: Which the Democrats will keep calling the Trump shutdown. You've got to wonder, Abby, if he is going to go on that two-week vacation to his

Florida estate. He is supposed to leave later today. I know, you'll be watching it all in Washington. Thank you.

You're watching "News Stream" and when it comes to toy production, not even Santa's workshop can beat China. But the toys that China makes could get

more expensive for Americans next year. We will explain the unintended consequence of the trade war.

China - toymaker to the world, but if the trade war between China and the U.S. continues in the next year, these playthings made by Chinese workers

are going to become a lot more expensive for American consumers ...

[08:40:09]

RIPLEY: ... come next Christmas. CNN's Matt Rivers explains.

(BEGIN VIDEO TAPE)

MATT RIVERS, CORRESPONDENT, CNN: Santa's workshop China edition. No elves, but these workers are busy making sure American parents can spend

their hard earned money on presents, namely, toys.

The U.S. Toy Association says around 85 percent of all toys sold annually in the U.S. are made at factories like this one here in China.

Billions of dollars' worth are shipped each year, sold by companies in the U.S. This particular factory makes foam figurines -- Batman, Spiderman,

Darth Vader, footballs for the Tennessee National Guard and minions -- but these guys and the rest could be more expensive next Christmas.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: China wants to make a deal and it's just not acceptable to me yet. China has taken advantage of the

United States for many, many years.

(END VIDEO CLIP)

RIVERS: The U.S. and China are locked in a trade war with the negotiations ongoing after a meeting between Donald Trump and Xi Jinping at the G-20

this month. There's hope for a deal, but if it falls through, get ready for more tariffs.

(BEGIN VIDEO CLIP)

REBECCA MOND, VICE PRESIDENT, THE TOY ASSOCIATION: Quite simply, tariffs are attacks on consumers.

(END VIDEO CLIP)

RIVERS: The U.S. has already put tariffs on $200 billion in Chinese imports to the U.S. In other words, U.S. companies have to pay more to buy

Chinese products. And the administration has threatened to tax $267 billion more. Toys have largely avoided that tax for now, but if the trade

war continues, they will get hit, too.

(BEGIN VIDEO CLIP)

MOND: If the tariffs were to go into effect on toys sold to the United States, that would be devastating particularly for small companies.

(END VIDEO CLIP)

RIVERS: They would avoid those tariffs if they imported from somewhere else. But China is unique. The skilled labor here, the established supply

chain, the same factories capable of making different toys depending on demand, no other country can do that.

So even if tariffs are put in place, experts say that moving all of this to another country like say the United States just doesn't make financial

sense.

So companies will keep buying Chinese products even if tariffs make them more expensive and that extra costs will likely get passed on to the

consumer a.k.a. you, mom and dad.

Imagine this, he says, they need to spend $150.00 or $200.00 on what used to cost just $100.00. It is going to be tough especially for medium and

low income Americans.

The Trump administration says tariffs are a tool to force China to change. For decades, they've stolen U.S. intellectual property and best practices

and they've restricted market access for American companies. That is a fact. But changing that behavior with tariffs has a cost.

Trump's policy was meant for helping the American people, but it's a double edged sword. It hit China, but it's going to hurt American wallets, unless

both sides can come to an agreement.

So if you don't want next year's Christmas to cost more, you would likely hope for a deal and for President Trump to turn his attention to some other

pressing foreign policy issues. Matt Rivers, CNN, Ningbo, China.

(END VIDEO TAPE)

RIPLEY: And that is "News Stream" on this Friday night here in Hong Kong. I'm Will Ripley. Don't go anywhere, "World Sport" with Christina

MacFarlane is next.

(SPORTS)

[09:00:00]

END