Return to Transcripts main page

QUEST MEANS BUSINESS

Oil Prices Spike After Attack in Saudi Arabia; Boris Johnson Booed By Protesters in Luxembourg; Democrats Call for Impeachment of U.S. Justice Brett Kavanaugh. Aired 3-4p ET

Aired September 16, 2019 - 15:00   ET

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


[15:00:19]

PAULA NEWTON, CNN INTERNATIONAL HOST: So behold the losses. Some said it could have been much worse though. It is the final hour of trading on

Wall Street. The Dow's eight-week winning streak appears to be truly over. We're down about half a percent now in New York and this is what

investors are watching now.

Saudi Arabia's oil production attacked. Accusations are flying, oil prices are spiking and security experts warn. We should have seen this coming a

long time ago. We've got it all covered from all the angles.

On strike. Nearly 50,000 U.S. auto workers walk out for the first time in more than a decade. Sources telling CNN talks remain tense.

And the company at the center of the U.S. opioid epidemic files for bankruptcy. But Purdue Pharma's legal woes, nope, they're not over by a

long shot. Live from the world's financial capital, New York City. It's Monday, September 16. I'm Paula Newton, in for Richard Quest and this is

QUEST MEANS BUSINESS.

Okay, tonight, Saudi Arabia stands at a crossroads and the global oil market hangs in the balance. Though no public evidence has been shared,

sources tell CNN the U.S. has determined drone attacks on key Saudi oil facilities originated inside Iran.

Now Yemen's Houthi rebels say they are responsible. Last hour, Iranian President Hassan Rouhani broke his silence. He said it was quote, "A

reciprocal response from Yemen for years of Saudi aggression." Now as finger pointing ensues, there is much confusion over how the Trump

administration will respond. Donald Trump tweeted he is quote -- it's a quote, "locked and loaded."

Now the White House says that doesn't necessarily mean that military action is imminent. Now the attacks targeted state-owned oil company Aramco, the

crown jewel of Saudi Arabia's oil production facility, in fact, half of the kingdom's oil capacity -- half -- about five percent of the world's daily

supply is now offline.

The price of Brent crude as you can imagine, it's up almost 15 percent nearly $70.00 a barrel. Our Nic Robertson is in Riyadh live for us right

now. I mean, an extraordinary day, 24 hours in terms of even just the tweeting from the President. What we're all waiting for, though, Nic, is

the Kingdom's reaction. Has there been any real reaction from them about what they will do next? And crucially, what they want the United States to

do next?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: No, there hasn't. And I think that speaks to the role that they're trying to play here to step

back, be the sort of statesman in the region, if you will, provide some of that historic that Saudi has sort of calm on the region.

But they have had the military spokesman from the coalition say the attack did not come from Yemen, that it did involve Arabian made weapons. He said

that they will find out where the weapon systems were fired. And he did say that journalists would be taken to see some of this evidence.

But as yet, nothing from the Saudi leadership about how they want to move this forward. But I again, I think, because we're not hearing that that is

indicative that they're trying to play a more moderating, more statesman- like position at the moment. So when they present the evidence, they can build some international support for their position, because this argument,

this anger and frustration with Iran, from the Saudi perspective, has been going on for a long time. And they want that changed.

NEWTON: They want it changed, but also there will be dire consequences, depending on which direction they go in. And, Nic, I don't know if you can

help clear up some of the debate here on whether or not this attack was low tech or high tech, because there has been a debate as to whether or not

those Saudi air defenses should have been able to stop something like this.

ROBERTSON: Sure, let's call it new tech. Let's call it sophisticated drones that you can fly multiples of 19 strikes that we're aware of, 19

different impacts. So coordinated, sophisticated, not your average drone attack by any stretch of imagination flown over in apparently long

distance.

Look, I was going to Saudi oil facilities here back when al Qaeda was an issue. And of course, back then they were thinking that the attack may

come from a small aircraft potentially flying off the Persian Gulf and into one of those big port oil facilities. That was the concern.

They also beefed up security at the gates of facilities and around the facilities. So if there was somebody trying to drive a truck bomb in or

something they could defeat that.

[15:05:08]

ROBERTSON: You know, security to get into this complex is tightened up. They've tightened up security since the war with Yemen on having

ballistic/anti-ballistic missile systems that can take out some of the big scud missiles that the Houthis have fired towards Riyadh, towards Jeddah,

and towards some of the other big cities. Some of these have even hit airports.

So the Saudis have taken a lot of precautions, but they don't seem to have been ready for this one. And this speaks to again, high tech, low tech.

This is sophisticated. This is a new development, you know, the path and the future of drone technology, although it's sort of been out there on in

the global air space, if you will, for over 10 years, thoroughly militarized, et cetera. This is a sort of the poor man's drone, if you

will. And this is a new realm that really I think we're only beginning to see the cutting edge of.

NEWTON: Yes, and if it does prove to be cutting edge, or if it was something more crude that actually was able to do this, so happy to have

you there on the ground, Nic, and we will continue to check in with you. Appreciate it.

And now the latest of course, on that finger pointing, Iranian President Hassan Rouhani is now saying that the attack was a response by the Yemeni

people for the years of Saudi assaults on their country.

Now sources telling CNN that the U.S. has assessed the attack originated from inside Iran, and that it involves drones and cruise missiles, clearly

something much more sophisticated than many had expected.

Nick Paton Walsh is in Tehran for us live tonight. Nick, what's interesting here is whether or not there is any conclusive proof. Rouhani

saying it was the Yemeni people exercising their right to self-defense. And yet has there been any proof offered anywhere so far today that these

attacks could have originated from inside Iran?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: No is the simplest answer to that. And we are now close to about 48 hours since U.S.

Secretary of State Mike Pompeo launched his two tweets suggesting Iran was behind this. And since then, we've had a lot of anonymous U.S. officials

suggesting that maybe this didn't come from the direction of Yemen, that it came from a northwesterly direction that might suggest southern Iraq or

Iran, possibly, actually their Northeast.

And it is a confused picture and one which does not contain the basic simple evidence or detail that you would expect a sophisticated power like

the United States to be able to provide. Maybe it will come down the line.

Interesting what you heard there from Nic. Saudi Arabia, not directly blaming Iran for this saying it's Iranian-made weapons they found but that

doesn't necessarily mean that they're backing up the U.S. claim that Iranian territory was in fact used.

I say the U.S. claim that's actually not something that they've said publicly. That's something in their briefing anonymously, too. So a lot

of a distance between the sort of intensity of the threats and the rhetoric and what we've actually seen evidence for it at all.

That's left Iranian officials from the very beginning, denying any involvement in this at all. That was continued today, certainly by a

Foreign Ministry spokesperson, reminding people that Donald Trump's words often last about 24 hours. That was after the U.S. President suggested

that the U.S. is locked and loaded to respond.

Even a White House official there came forward after that, and said in fact, he was referring to oil reserves, not military action. So great

confusion, I think regionally is exactly what the U.S. position is.

You have Mike Pompeo acting as the Iran hawk after the departure of National Security adviser, John Bolton who was the most hawkish in the

White House before that, and maybe making people feel that diplomacy, which many had felt was the most logical development after Bolton's departure is

definitely on the backseat.

We heard Iran today reiterate that it doesn't think a face-to-face meeting between Donald Trump and Hassan Rouhani, the Iranian President is on the

cards at this stage. Donald Trump said he wanted it without conditions. And he said that was fake news. He did want conditions. He hasn't said

what the conditions are.

Frankly, it's very hard to know what the U.S. necessarily thinks its position is. But that doesn't really matter where we are right now,

because we have this substantial game changing attack on Saudi Arabia's oil infrastructure threatening a 20th of the world's oil supply. That's a

massive change for the building of tensions in the region here.

And the concern, I think, is no matter what the conclusion ends up being, there may be an onus on Saudi Arabia or the U.S. to flex its muscles here.

And there are Iranian officials, I'm sure trying to work out exactly where that may manifest itself.

But I think deep sadness possibly in many of the hearts of many normal Iranians who had hoped diplomacy might ease sanctions at some point

somehow, make their ordinary lives better. But now it's a case of trying to work out exactly what the same old powers in the region do to try and

make everyone realize who is the toughest of all of them.

NEWTON: Yes, one thing about the Iranians, they know escalation when they see it, and they know that they will suffer through it. Quickly, Nick, it

before I let you go, the issue is that it's not like Iran admonished Yemen for doing this.

Whether they had any involvement or not, they clearly believe that the Yemenis had a right to do this. That also shows certainly a certain

audacity when it comes to trying to approach the Americans right now, do you think that is an approach that they will continue? They want to get to

a table so that they can get those sanctions lifted and they are willing to put on that maximum pressure any way they can.

[15:10:24]

PATON WALSH: Yes, look, I mean, I think the Iranian point of view has always been that the Yemeni people are under attack from the Saudis with

American and European armaments back in the mark, that was reiterated again today by Hassan Rouhani.

And frankly, there are a lot of independent reporting suggesting the humanitarian scale of the suffering as a result of that Saudi-led campaign,

which has been faltering, frankly, for a number of months.

So Iran, I think, is taking the side obviously, of those suffering inside the Yemeni conflict there. They've been accused of backing the Houthi

rebels. The Houthi rebels, frankly, aren't entirely an Iranian proxy, they have their own agenda entirely.

So it's way more complicated than certain U.S. politicians have tried to portray it. But Iran, of course, before the Trump administration came into

power during the fight against ISIS was sort of seeing its regional peak of influence here. It had backed many in the fight against ISIS, seen a loss

of his power increase along with the success of the Assad regime in Syria.

And so it was at a kind of peak really of influence the Trump administration put max pressure on to try and reduce that and now we're in

this extraordinary moment where I think possibly many were expecting the Trump administration's power vacuum to leave them confused about their

response and that's kind of what we're seeing so far. But it's the unexpected I think the leaves many nervous here.

NEWTON: Yes. And who can blame them at this point. Nick for us live from Tehran. Appreciate it.

Now it's important for us to set the table here right financially. The markets are set to end their eight-day winning streak and I suppose with

good reason. The Dow, as you can see it down there a little bit better than 130 points on news of that attack in Saudi Arabia.

Investors worry rising oil prices, of course could hurt global growth around the world. Still, you know it, there are some winners in an oil

supply disruption. Energy stocks, look at that, such as Exxon and Chevron, up on higher oil prices.

You can't make too fine a point of it. That was an industry that was in a bear market up until a little while ago. Airline stocks, on the other hand

are down. Fuel is one of their biggest cost.

Paul La Monica is here to break it all down. I mean, what just turned around those energy stocks, beleaguered as they were literally for months

and months. You can't call this an earthquake, but certainly a tremor through the market in certain sectors today.

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think when you look, Paula, at the energy sector, clearly, if oil prices continue to climb higher,

that's going to be probably positive news for many of those oil companies that had been struggling a little bit, at least from a market perspective.

And obviously, Dow.

You know, the Exxon and Chevron are both members of the Dow, so that helps mitigate some of the losses that we've seen today. Of course, energy

companies are rising, but airlines are really, really in big trouble if oil prices continue to spike higher, it really hurts them when fuel costs are

going up.

And I think as you point out on this chart, Southwest was the performer that did the best. You know, it's flat, and they famously have these fuel

hedging contracts, so that they try and mitigate some of the big price moves that come into play. And I think that's helping them obviously, on a

day like today.

NEWTON: And it's funny how everybody thought that was a bad thing at the time. And now they may be briefing some more of that. Quickly, Paul,

before I let you go, some people are saying that the market is not factoring in what could happen next, for the next shoe to drop here. Do

you think that there would be a big market reaction if we see any military response?

LA MONICA: I think if there was military response, you would have to think the market would not think that that is a favorable thing, but one of the

reasons why maybe the markets has this somewhat mitigated, you know, not that big of a drop today, I think we've got the Fed coming in a couple of

days and everyone is hoping, Jerome Powell comes to the rescue with a rate cut, maybe an even bigger one if we're starting to now all of a sudden feel

that oil is a big problem for the global economy as well.

NEWTON: That half rate cut everyone is dreaming about. I don't know, I say perhaps "Dream on." We'll see if I'm wrong. Paul, you can remind me

on set when we get back to that. Paul, thanks so much. Appreciate it.

The strikes on Saudi Arabia have caused the largest oil disruption in history. Analysts are warning it will not be easy to fill that supply gap.

And Purdue Pharma files for bankruptcy, but may not be off the hook, when it comes to America's opioid crisis. We will explain all of that, next.

(COMMERCIAL BREAK)

[15:17:00]

NEWTON: All right, grave impacts of all this. The Saudi Arabian oil output now slashed by 5.7 million barrels a day after that coordinated

attack on its facilities. Now that's the largest supply disruption in history. Analysts are warning that it won't be easy to make up for that

gap.

Now sanctions in Iran and Venezuela will prevent those countries from increasing supply. Shale producers in the meantime in the U.S. won't be

able to ramp up fast enough to make a difference.

Left among the big producers is OPEC and most of the group's excess capacity comes of course from Saudi Arabia. Our John Defterios is in Abu

Dhabi for us now.

I mean, can we overstate really, John, how much of a game changer this attack has been when it comes to the energy market?

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, when speaking about the global energy market, I would describe it as an earthquake,

Paula, because the epicenter is Saudi Arabia and it is the number one export and let me go on to say that there's probably going to be tremors

for at least four weeks going forward.

I mean, the narrative has changed dramatically in the last week, upside down, in fact. I met the Minister of Energy here in Abu Dhabi, the new one

and we were talking about an oversupplied market and why they had to continue with the OPEC Plus Agreement. Now we're looking at a shortage, as

you suggested 5.7 million barrels a day is a record knocked out over a weekend by any stretch of the imagination.

Go back to the 1990s, to the invasion of Kuwait, the ouster of Muammar Gaddafi, it is unprecedented. And that's the description I got from Saudi

Arabia today. They're suggesting they have about 200 million barrels of spare capacity. It sounds like a lot, Paula. And that storage is in Asia

and in Europe, and in Saudi Arabia, I'm told now, but that only covers them for 35 or 40 days.

And the sources I'm speaking to are suggesting they have to manage expectations, because they've never seen anything like it before. So this

is a tough road ahead. We're not at the levels that we were even in October of 2018 when we peaked at $86.00 a barrel from the pressure from

Donald Trump on to Iran.

But something like this and having the removal of so much oil, and as you suggested, Paula, there is no magic spigot in the United States. The shale

producers cannot fill that void. It took them six years to add six million barrels, and that was a record in the United States.

NEWTON: Yes. And reminding that on this whole equation, it also has to do with refining capacity and what kind of oil are you pumping? Where's it

being refined?

John, I know that your sources have been telling you some very interesting things about how long it's going to take for these facilities to get back

on stream.

DEFTERIOS: Yes, so they've said it's not days, but actually weeks.

NEWTON: Weeks.

DEFTERIOS: And I think that they're trying to guide the market -- yes, weeks -- to restore it to the levels they were before and Paula, I've been

to these Aramco facilities. They are the best at what they do. So they say it's going to take weeks. That's a pretty good reality check.

The other thing I thought was interesting in the market today, Paula, is that we spiked up to 20 percent in Asia, right? And then we came back down

with like a seven to eight percent gain. In the last three hours, we are surging back up to a 14 percent gain, because this is the real deal. I

think the trading community is starting to realize that there's a problem on the horizon.

[15:20:11]

DEFTERIOS: We're waiting to see if Donald Trump will deliver on the promise to release oil from the Strategic Petroleum Reserve 645 billion

barrels. But we have to know when, at what level and how long will it take to get to the market here.

The final thing I would add, whoever is doing this, the perpetrators have been extremely surgical. We can bring up the graphic here. They started

by hitting a pumping station for Saudi Aramco in the East West pipeline above Riyadh, Pumping Station 8. They went to the Shaybah Field, the gas

field a month ago, many were hitting tankers in the Gulf in July.

And then, you know, the dagger to the heart was a go to the processing station there and the second largest field in Saudi Arabia. This is no

simple game, and it certainly makes it very challenging for the Crown Prince to push forward his vision 2030 plan, I would say, Paula.

NEWTON: Yes, not to mention an IPO. We have to say look, what does this mean in terms of vulnerabilities throughout the world on a lot of the oil

facilities? It is going to be just something a lot of people are going to be looking at in the coming weeks. John, thanks so much for walking us

through that. Really appreciate it.

Now, as we were saying, Saudi Arabia is China's second largest source of oil. China analysts say the strikes may prompt Beijing to start looking

for alternatives. This as China's economy continues to slow.

Now, the country released data today showing its August industrial output increased by just 4.4 percent from a year earlier. That's its weakest

growth in 17 years.

Retail sales, meantime, slowed to seven and a half percent, and investment eased off five and a half percent. All of this could make China more

likely to agree to a trade deal with the United States. At least that's what analysts say.

Washington and Beijing have been making gestures of goodwill towards each other ahead of next month's trade talks. Carla Hills is a former U.S.

Trade Representative. She joins me now.

I know how you are always looking at this through a geopolitical prism. So why don't we start there, though? Do you think it shows vulnerability and

we can add the oil attack to that? I mean, China is a captive audience when it comes to energy. Will this make you think the United States and

China better focus their mind at that negotiating table?

CARLA HILLS, FORMER U.S. TRADE REPRESENTATIVE: I wouldn't put it that way. I think that China's economy is softening, and that it would like to make a

deal if, if and if -- if it could have the respect and some kind of a meeting of the minds. And we would like a deal, because we're really

suffering with our tariffs.

You know, China has put tariffs on us that are about 20 percent a little above and the lowered them for everyone else. So there's tremendous

diversion going on in the trade circles.

NEWTON: We talk about diversion, and I think that a lot of people have lost sight of the deal. Could you take the temperature of that for us?

What does a good deal look like? Because some people have speculated that if Donald Trump gets any deal right now that the markets will respond

favorably and in fact, China and the United States can go back to business as usual.

HILLS: It's hard to predict what they will actually come up with. And it may be that they have to go step by step. But there are some things that

China has already started to do. It has reduced its restrictions on inward investment, and it has taken some steps.

But we also have to deal with the Huawei issue, and that's a sort of a red line on both sides. So you'd have to be a real fortune teller to say, how

are they going to get to the table with the atmosphere of what it is, and accomplish a goal that is a win-win situation?

NEWTON: And what does a win-win even look like? I want to go back to those security implications that you mentioned. We've got talks on next

month. Okay. How much do you think though those security implications will restructure, reframe trade policy between the United States and China

for years to come? Not just this trade deal.

HILLS: I think that we're going to see a rapid change in technology, and it won't just be Huawei, it will be a lot of other companies. And what

they're talking about now is that let the Huawei system come in to meet our standards. And if they don't meet our standards, keep it out as we would

keep others out.

But this is complicated. I've talked to high level people who are in the securities field, and some say it's a concern to them, and some say it's

not. So we don't really have a plan and that's worrisome.

NEWTON: It is worrisome especially going forward as the diverging opinions. Ambassador Hills, before I let you go, quickly. What does a bad

deal look like? If you saw it on the table right now, would you say to yourself, "That's a bad deal. We shouldn't have taken it."

[15:25:07]

HILLS: The tariff war is a bad deal. China has raised this tariffs on our products to above 20 percent. Lowered them for the rest of the world.

We've raised our tariffs about 22 percent, and that is having an effect on our consumers.

The uncertainty is causing manufacturers, business leaders not to know what's going to happen tomorrow. And that has got an effect on our economy

and jobs and to our farmers.

So a bad deal is this tit-for-tat trade war that is ongoing. We've got to bring it to a stop.

NEWTON: And we will see where it goes from here, especially as those talks continue. Ambassador Hills, thanks so much for coming in. Really

appreciate it.

HILLS: It's always a pleasure.

NEWTON: Now Purdue Pharma, the maker of the prescription painkiller, OxyContin is in fact filing for bankruptcy. Now, it comes as the company

prepares to pay billions of dollars to state and local governments over accusations that it helped fuel America's opioid crisis. Purdue has denied

any wrongdoing.

Our Jean Casarez who has been following this story so carefully, it has so many layers to it. But at the end of the day, there are so many people

suffering in so many communities that really need this money. Is the money going to get there from this big drug maker?

JEAN CASAREZ, CNN CORRESPONDENT: It will, but I can't tell you when, because everything' is within the Bankruptcy Court now at this point since

they filed late last night. And there will be a plan for allocation for all of the communities.

I mean, think of how many communities are in the United States. Cities, towns, even Native-American governments. Territories are entitled to this.

They have to show that they have an opioid crisis and then they'll get the monies and the allocation plan will be set given to the Bankruptcy Court,

and they'll make the final determination.

NEWTON: I'll bring up two words with you Jean, justice and accountability. How further away are we from that with this bankruptcy filing?

CASAREZ: Well, the settlement that has been going on is not in vain, because that will be now given to the Bankruptcy Court where the Purdue

Sackler family would pay out personal funds of $3 billion, they will sell Purdue Pharma and 30 to 40 of their international companies. The proceeds

will then be divided amongst communities and the Sacklers will take about 10 percent themselves.

And then beyond that, the Sackler are being sued individually in states which may go forward. But if there are Federal suits with the Sacklers

personally that may wind up in Federal Court and be a part of the bankruptcy action.

NEWTON: A part of this, Jean, as well is whether or not people can still get the drug OxyContin after this? What is in place to see what happens

then?

CASAREZ: That will be up to the Bankruptcy Court, and it's an excellent question because they can potentially continue to manufacture OxyContin and

part of the monies would go to communities. They would not take all the profits anymore from manufacturing, but a lot of the communities in this

country in the States believe, you know, there's something just morally wrong with that, because that's the whole point of all of this.

And so it will be left to the judge, a legal question, will it benefit the creditors to allow them to continue to sell it? That's a pivotal issue for

the court.

NEWTON: Jean, thanks so much for coming in. I know you can always parse this legally because you follow it so closely. Such an important issue for

so many people. Appreciate it.

Now, attacks on Saudi Arabia exploited what experts consider an obvious flaw in their oil infrastructure. How billions of dollars in air defense

systems failed to stop crippling drone attacks?

(COMMERCIAL BREAK)

[15:30:00]

NEWTON,: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment. When a man who warned for years about vulnerabilities in Saudi

oil facilities joins me live. And nearly 50,000 U.S. auto workers walk off the job for the first time in more than a decade. We'll take you live to

the picket line, before that though, here are the headlines at this hour.

Oil prices spiked after the attack on two major Saudi facilities. Brent crude futures soared nearly 20 percent, their largest jump in decades.

Now, they have since stabilized, but are still trading much higher, the attacks cut the world's oil supply, the world's oil supply by 5 percent.

British Prime Minister Boris Johnson was booed by protesters in Luxembourg. He was there for talks on Brexit -- now, the noisy crowd kept him from a

news conference when Luxembourg's Prime Minister who was none too pleased with Britain as he spoke next to an empty podium.

(BEGIN VIDEO CLIP)

XAVIER BETTEL, PRIME MINISTER, LUXEMBOURG: Now, people need to know what is going to happen to them in six weeks time. They need clarity. They

need certainty. And they need stability. You can't hold the future hostage for party political gains.

(CHEERS)

(APPLAUSE)

(END VIDEO CLIP)

NEWTON: Democrats say they want a thorough investigation into newly revealed sexual misconduct allegations made against Supreme Court Justice

Brett Kavanaugh. Now, at least six Democratic presidential candidates are calling for Kavanaugh's impeachment after the "New York Times" published an

excerpt of a new book. Now, it details a new allegation of misconduct when Kavanaugh was a student at Yale.

Votes are being counted in the Tunisian presidential race as the polls indicate the race will likely head to a runoff within weeks as no

candidates seems to have come close to the 50 percent threshold. Official results will be announced Tuesday.

And we return to our top story tonight. The world is waiting for a U.S. response to attacks on Saudi oil facilities. Now, in the Middle East and

around the globe, leaders are trying to parse the messages coming from the White House. President Trump said the United States is locked and loaded.

Officials meantime say that doesn't mean that there would be a military response forthcoming. There is one specific part of the president's tweet,

though, that is raising eyebrows. Mr. Trump says the U.S. is quote, "waiting to hear from the kingdom as to who they believe was the cause of

the attack, and under what terms we would proceed."

Ambassador Gary Grappo was deputy Chief of Mission at the U.S. Embassy in Saudi Arabia. He is in Denver, Colorado, tonight. A puzzling tweet, to be

sure. In terms of that response, though, how fine of a point can you put on it in terms of they need to be able to be in concert with Saudi Arabia

to determine exactly how to proceed here?

GARY GRAPPO, FORMER DEPUTY CHIEF OF MISSION, U.S. EMBASSY IN SAUDI ARABIA: Well, first, Saudi Arabia is a very close ally of the United States, they

always have been for well over 70 years now. And so the idea that we would coordinate with Saudi Arabia in terms of a response sounds entirely

appropriate.

[15:35:00]

In fact, we -- indeed, we should. In terms of the language that the president is using, these terms locked and loaded, that sort of saber

rattling is really uncalled for, particularly coming from the United States. People know the power and the effect in this of the U.S. Armed

Forces. We don't need to be doing this chest-beating.

Moreover, if the president's intention is to calm oil markets, using those kinds of terms is not going to do it, it's only going to create more

anxiety, more apprehension, not only in the oil markets, but I think in the global community as a whole.

NEWTON: And yet, are you on the side of the fence that says, look, some kind of response you have to have at this point that this has been -- you

write, in fact, that Tehran is choosing from a really limited playbook. Is it time to really narrow the Iranian options when it comes to them trying

to get the attention of the United States and the world?

They definitely want those sanctions rolled back, and it seems that they will stop at nothing to get that done.

GRAPPO: Well, the president has offered them an option out of the sanctions in terms of the invitation to engage in a direct meeting with

him. And this is something they probably should consider. If we want to go down the road of a military conflict, we need to be fully aware of what

that's going to mean.

Iran has massive armed forces that includes their normal armed forces as well as the Iranian Islamic Guard Corps. And so, I think we're going to

have to be very careful in terms of any military response to this, particularly when a lot of the details surrounding the circumstances of

these attacks are unknown, including the possible launch point for the attacks.

I -- it is a bit difficult to believe that the attacks could have come or could have been launched out of Yemen given that these two --

NEWTON: Right --

GRAPPO: Facilities are over 500 miles away. But they might have been launched from within Saudi Arabia by infiltrators from Yemen. That is

Houthi infiltrators or perhaps they had collaborators within the kingdom who were able to move closer to the sites to carry out the attacks. And

that's probably where I would look --

NEWTON: Right --

GRAPPO: Before speculating about the attacks from Iraq or Iran.

NEWTON: Yes, but depending on where they come from, whether it was Iraq or Iran, I think most people believe that Iran was certainly complicit in some

way, shape or form. I want to ask you about the character of the blow back here. How material will it be for all of us. You know, and this is

whether you're going to be filling up your gas tank, taking a flight or obviously, more involved in any kind of a military response if there is

one?

GRAPPO: Well, I think one of the first things we're going to have to wait to hear from the Saudis, and that is the extent of the damage and how

quickly they can bring these two facilities back online. Most especially, the facility at Abqaiq. Abqaiq is probably the largest oil processing

facility anywhere in the world.

It's certainly the largest in the Middle East. And it was a major strike on the part of the Houthis or whoever is responsible to hit this facility,

and they certainly knew what they were going after. If oil is the life blood of Saudi Arabia and its economy, then Abqaiq was the heart.

And I think we're going to have to look carefully at just how quickly that facility as well as the second facility can be back online. But speaking

more broadly in longer term, now we know the vulnerability of these facilities. What is Saudi Arabia prepared to do and, indeed, what are

countries around the world prepared to do if we know that drone attacks coming from rebels like these can have this kind of an impact.

NEWTON: Yes, you can imagine the other impacts they could have around the world. Ambassador Grappo, really appreciate your opinions on this, thanks

so much. Now, we want to run through of course the nuts and bolts of this. The attacks has demonstrated as we were just talking about those glaring

vulnerabilities in Saudi Arabia's oil infrastructure.

We were just talking that this largest processing plant, it's home to many essential parts of Saudi's supply chain. Analysts say the concentration

creates a weak spot and it makes it easier to carry out a crippling strike. Saudi has invested heavily in advanced air defense systems, meant to

protect this site.

But they're better at defending against those traditional threats that we're used to seeing. Billions of dollars worth of technology could not

stop the drones used to knock the sprawling facility offline, cutting the country's oil capacity in half almost instantaneously.

Former CIA operative Bob Baer has been warning about this plant -- nearly warning about it for years. In the book "Sleeping with the Devil", he

called it quote, "The Godzilla of Oil Processing Facilities". Bob Baer joins me now live from Telluride, Colorado.

[15:40:00]

And yes, that was quite pressing. And yet, now that you see it's actually materialized, how do you think the implications have changed, given what we

see as, you know, the diplomatic implications between what the U.S. and Iran are going through right now?

ROBERT BAER, FORMER CIA OPERATIVE: Well, since I wrote the book, we didn't have drones. The assumption was that this had been an internal attack if

not the employees. And what's interesting for me is back in the '80s, the United States figured out the vulnerabilities of Saudi oil.

The Aramco engineers who built up Abqaiq were asked, what would you do to disable that place? And they basically said, you come up with a couple of

pounds of explosives, you put it in tower one on the pump, it releases hydrosulfite into the system, and you cannot get it back online for almost

two years.

And this is what we're facing today, we don't know what the Saudis think how long it will take. Obviously, they didn't open their processing today,

Monday. So, this could be very long. What we have to keep in mind is that we don't know where these drones came from, right, I find that very

disturbing that it wasn't picked up by radar.

They don't even know if they were missiles or drones. So, the entire Saudi infrastructure is at risk, and now that the Houthis and it doesn't really

matter who did this, said there's going to be more attacks, what do we do about it?

NEWTON: And so, to that point, in terms of Saudi air defense systems, they're certainly substantial, American technology, we should say. Did you

foresee that, the fact that these drones would completely fly under the radar, if you will, if they wanted to launch this kind of an attack?

BAER: It can better defend against drones. But if you're flying them low, I'm talking 50, 60 feet off the ground, they can get through traditional

radar. The Saudis have not cut up, they haven't put the money into anti- drone technology. They will, but you know, how fast?

NEWTON: And Bob, when we talk about where these originated. Is it possible that Iran didn't have anything to do with this, do you think?

BAER: I don't think the Houthis could conduct a concerted attack like this. Too many drones -- someone had a good understanding of Saudi radar.

The other drone attacks have more or less failed, and the fact that they picked out Abqaiq and went for those towers tell me there's a lot of

coordination and somebody knew what they were doing, and there's going to be no evidence of it, but I do think it was Iran.

NEWTON: So, you don't think there will be any evidence in terms of actually pointing the finger directly at Iran?

BAER: Well, you know, look, I base that on my knowledge of the Iranians operating in Lebanon in the '80s and South America and other places. And

they were very meticulous about using proxies and not leaving their fingerprints on attacks. They may have made a mistake or maybe they want

us to know at this point -- I don't know.

But I think at the end of the day, it's going to be very difficult for Washington to pinpoint Iranian culpability.

NEWTON: Yes, which will make a response all that more delicate and difficult. Bob, thanks so much, stay close to that studio, we'll be

talking to you again soon --

BAER: Thanks --

NEWTON: Appreciate it. Now, it is the largest worker strike in the U.S. in over a decade. Nearly 50,000 General Motors staff are on picket lines

across the country, we'll tell you what's at stake, that's next.

(COMMERCIAL BREAK)

[15:45:00]

NEWTON: It's the largest worker strike in the U.S. in more than a decade with more than 48,000 General Motors workers assembling at picket lines

right across the country, now affecting 31 factories and 21 other facilities across nine states. Sources telling CNN that ongoing

negotiations between the UAW Union and GM are, of course, still very tense.

Vanessa Yurkevich is in Detroit for us. In terms of making progress, the UAW, they thought they were making progress at the table may not have

decided to walk out. Do they see this as a tactic going forward or is there a prospect of a long strike ahead?

VANESSA YURKEVICH, CNN BUSINESS CORRESPONDENT: Oh, hi, Paula. You know, I think initially this was a tactic saying that we are going to strike if you

don't even come close to meeting our terms. But you know, at the end of the day, these workers do want to get back to work. The union does want to

put these workers back to work.

Now, some of the individuals you see behind me, there's a small group, but there has been a steady flow all day long joining 50,000 across the country

as you said, nine different states. And what they're really asking for is an increase in health insurance, increase in their starting salary, and job

security.

This plant is scheduled to close in 2020, and they want to try to bring another product back online here. So, these workers have a place to work

next year. I spoke to one of those workers who was picketing just a little bit earlier, who said that he's really concerned about his future, and he

feels like what he's asking for is not that much. Take a listen.

(BEGIN VIDEO CLIP)

MICHAEL BURSON, BODY SHOP EMPLOYEE, CADILLAC: We make pretty good money, but not in this day and age. I mean, it's not that much money any more.

And we work very hard and it does -- it beats you up. Your body pays a price. I just want to have a future, and I don't mind working hard to get

it either, but you know, give us something.

(END VIDEO CLIP)

YURKEVICH: And a lot of the individuals we've spoken to here, a lot of this GM workers has said the same thing. They don't feel like they're

asking for a lot, they feel like GM has now been profitable, and they feel like they should be given some of that profit after they have taken

concessions over the last couple of years.

And as far as those talks, it seems like the two sides are still pretty far apart, but as long as these negotiations continue, Paula, these GM workers

behind me and across the country will be out on the picket lines 24/7. Paula.

NEWTON: And Vanessa, what's so interesting to hear him say I want a future. At what point is this an existential crisis for auto workers

thinking, I either fight for these jobs on the picket line behind you right now or I won't have a job coming up.

YURKEVICH: Right, it's a really harsh reality, a lot of American auto workers are facing right now. It's not just here at GM, it's Ford, it's

Chrysler. We keep hearing these stories of plants closing, people being laid off, jobs moving overseas.

And I think that these auto workers are incredibly hopeful, they do put a lot of faith in their union to negotiate on their behalf. There's also a

lot of political pressure from the president from these 2020 candidates who have been weighing in over the last couple of days.

But they're a hopeful bunch. And a lot of these workers here, this is all they know, and they want to continue to do this into the future and for

their children. They really want this to be a career that stands the test of time. Paula.

NEWTON: Yes, it's interesting there as you said, a lot of families are hoping that middle class existence is dependent on a good job as an auto

worker, and that's what they feel as a threat. Vanessa, thanks so much, appreciate you being able to open the lines for us.

Now, President Donald Trump welcomed the Crown Prince of Bahrain to the White House just a few moments ago. We want to listen now to what he said.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Largely based on relationship that we have, so I look forward to having our discussion.

PRINCE SALMAN BIN HAMAD BIN ISA AL KHALIFA, CROWN PRINCE OF BAHRAIN: Thank you, Mr. President, it's a great pleasure to be here --

TRUMP: At least -- you'd like to say something?

[15:50:00]

AL KHALIFA: Well, I would like to say, thank the president for receiving me and my delegation here today. I'm here to convey the greetings of his

majesty and the people of Bahrain, to strengthen the relationship which is based on shared values where they overlap ideals. We primarily as the

president said are going to focus on discussions related to security enhancement and trade enhancement.

We signed today an agreement to purchase additional or purchase our first Patriot Missile Battery Systems --

TRUMP: Right --

AL KHALIFA: And it couldn't have come at a better time.

TRUMP: Good timing.

AL KHALIFA: Absolutely. And we seek to strengthen America's ability to trade with the world, and we have some concrete ideas on how we can do

that.

TRUMP: Well, thank you very much.

AL KHALIFA: Thank you, Mr. President --

TRUMP: I look forward to the day and spending time with you. And thank you all very much, I'll be doing a news conference outside in a little

while just prior to the trip. We're going to New Mexico and to other places. For two and a half days, many of you will be with us and I look

forward to that. But in particular, I look forward to our meeting.

AL KHALIFA: Thank you.

TRUMP: Thank you very much --

(CROSSTALK)

UNIDENTIFIED MALE: Have you seen evidence, proof, that Iran was behind the attack?

TRUMP: Well, it's looking that way, we'll have some pretty good -- we're having some very strong studies down, but it's certainly looking that way

at this moment and we'll let you know. As soon as we find out definitively, we'll let you know, but it does look that way.

(CROSSTALK)

UNIDENTIFIED FEMALE: Mr. President, do you want war with Iran?

TRUMP: Do I want war? I don't want war with anybody. I'm somebody that would like not to have war. We have the strongest military in the world,

we've spent more than a trillion and a half dollars in the last short period of time on our military, nobody has even come close. We have the

best equipment in the world. We have the best missiles. And as you say, you just bought the Patriot System --

AL KHALIFA: It is --

TRUMP: There's nothing even close. But no, I don't want war with anybody, but we're prepared more than anybody. Two and a half years ago, I will

tell you, it was not the same thing. And with what we've done, we've totally rebuilt our military in so many different ways, but we've rebuilt

it and there's nobody that has the F-35, we have the best fighter jets, the best rockets, the best missiles, the best equipment, but with all of that

being said, we'd certainly like to avoid it.

(CROSSTALK)

UNIDENTIFIED FEMALE: Mr. President, what options would it be down to military?

TRUMP: Well, we have a lot of options, but I'm not looking at options right now. We want to find definitively who did this. We're dealing with

Saudi Arabia, we're dealing with the Crown Prince and so many others of your neighbors, and we're all talking about it together. We'll see what

happens.

(CROSSTALK)

Say it?

UNIDENTIFIED FEMALE: Will you still meet with President Rouhani in Iran --

TRUMP: Well, I have no meetings scheduled. I know they want to meet. I know they're not doing well as a country. Iran has got a lot of problems

right now that two and a half years ago, and even a little bit more than that when I came in, it's hard to believe, it's almost three years. But

two and a half to three years ago, they were causing a lot of trouble and we'll see what happens.

But we'll let you know definitively. As you know, there are ways to see definitively where they came from and we have all of those ways, and that's

being checked out right now.

(CROSSTALK)

UNIDENTIFIED MALE: Are you saying you will meet with the Iranians without pre-conditions to the --

TRUMP: Well, you know, there were always conditions because the conditions if you look at it, the sanctions are not going to be taken off. So, if the

sanctions -- that's a condition. So, you know, that's why the press misreported it. The biggest thing you can talk about are the sanctions and

sanctions are massive.

There's never been sanctions put on a country like that. And I think they have a tremendous future, but not the way they're behaving. We'll see what

happens in terms of this attack. Secretary Pompeo and others will be going over to Saudi Arabia at some point to discuss what they feel. They're

going to make a statement fairly soon.

But they also know something that most people don't know as to where it came from, who did it, and we'll be able to find that out and figure that

out very quickly. We pretty much already know.

(CROSSTALK)

Say it?

UNIDENTIFIED MALE: Are you saying the United States is prepared for war?

TRUMP: The United States is more prepared than any country in the history of -- in any history, if we have to go that way. As to whether or not we

go that way, we'll see. We'll have to find out definitively who did it. We have to speak to Saudi Arabia, they have to have a lot of -- they have

to have a lot in the game also, and you know they're willing to do that.

I think everybody knows they're willing to do that. So, we'll be meeting with Saudi Arabia, we'll be talking to Saudi Arabia, we'll be talking to

UAE and many of the neighbors out there that we're very close friends with. We're also talking to Europe, a lot of the countries that we're dealing

with, whether it's France, Germany, et cetera, talking to a lot of different folks and we're figuring out what they think.

[15:55:00]

But I'll tell you, that was a very large attack, and it could be met with an attack many times larger very easily by our country. But we're going to

find out who definitively did it first.

(CROSSTALK)

UNIDENTIFIED FEMALE: Mr. President, so you said that you think that Iran is responsible for the attack. Do you think that the attack --

TRUMP: I didn't say that, why do you say that? I said that we think we know who it was. But I didn't say anybody, but certainly, it would look --

to most likely, it was Iran, but I did not say it the way you said it, go ahead.

UNIDENTIFIED FEMALE: Do you think it was launched from Iran as the --

TRUMP: You're going to find out in great detail in the very near future. We have the exact locations of just about everything, you're going to find

out at the right time. But it's too early to tell you that now.

(CROSSTALK)

UNIDENTIFIED FEMALE: Do you want to release your oil from the oil reserves to help cushion oil prices that are rising more?

TRUMP: Well, they haven't risen very much, and we have the strategic oil reserves which are massive, and we can release a little bit of that and

other countries including Bahrain, but other countries can be a little bit more generous with the oil and you'd bring it right down.

So, no, that's not a problem. It went up $5, and that is not a problem.

(CROSSTALK)

And you have to remember, we're now the largest producer of oil and gas in the world. So, a lot of people in the old days -- and this happened over

the last very short period of time, we're number one in the world by far.

AL KHALIFA: Yes, you are --

TRUMP: By far. So, I never want to be benefitted that way. But the fact is, there are those who'd say we benefit, I don't view that as a benefit.

We are certainly -- we take in more money than anybody else from energy, not even close.

UNIDENTIFIED MALE: Mr. President, do you still think it's the responsibility of the Saudis to defend themselves?

TRUMP: No, I think -- I think it is certainly the responsibility of them to do a big deal of their defense, certainly. I also think it's the

responsibility of the Saudis to -- if somebody like us which are the ones - - are going to help them. They -- I know that monetarily will be very much involved in paying for this.

This is something that's much different than other presidents would mention, John, but the fact is that the Saudis are going to have a lot of

involvement in this if we decide to do something. They will be very much involved and that includes payment, and they understand that fully. But

they're going to be -- look, they're very upset, they're very angry.

They know pretty much what we know. They know pretty much where they came from, and we're looking for the final checkpoints, and I think you won't be

surprised to see who did it.

UNIDENTIFIED FEMALE: Mr. President, will you discuss the Israeli and Palestinian peace plan with the Crown Prince since Bahrain --

TRUMP: We'll be discussing it, yes, we'll be discussing it.

UNIDENTIFIED FEMALE: (INAUDIBLE) --

TRUMP: Oh, we're going to see what -- I mean, it's -- the election is on Tuesday. So --

AL KHALIFA: Tomorrow --

TRUMP: Having an election tomorrow. So, I would think it would be afterwards, OK. But we -- you do have an election, big election tomorrow

in Israel, and that will be a very interesting outcome. It's going to be close. Going to be a close election.

UNIDENTIFIED MALE: Did Chairman Kim invite you to North Korea?

TRUMP: I don't want to comment on that.

UNIDENTIFIED MALE: OK --

TRUMP: The relationship is very good, but I don't want to comment on that.

UNIDENTIFIED MALE: Would you be willing to go there?

TRUMP: I just still think it's appropriate for me to comment.

UNIDENTIFIED MALE: Would you be willing to go to North Korea?

TRUMP: Probably not. I don't think he's ready, I don't think we're ready for that. I would do it at some time, at some time in a later future. And

depending on what happens, I'm sure he'll love coming to the United States also. But no, I don't think it's ready for that. I think we have a ways

to go yet.

UNIDENTIFIED MALE: Do you stand with the auto workers in the strike against GM?

TRUMP: Well, I have great relationship with the auto workers. I got tremendous numbers of vote from the auto workers. I don't want General

Motors to be building plants outside of this country. As you know, they built many plants in China and Mexico, and I don't like that at all.

My relationship has been very powerful with the auto workers, not necessarily the top person or two, but the people that work, doing

automobiles. Nobody has ever brought more companies into the United States.

You know, I have Japan and Germany and many countries have been bringing car companies and opening plants and expanding plants and big things are

happening in Ohio including with Lordstown. And very positive things are happening. We have many plants that are either being renovated or expanded

or built new right now in the United States.

Many more than we've had for decades and decades. So, nobody has been better to the auto workers than me. I'd like to see it work out, you know,

but I don't want General Motors building plants in China and Mexico. This was before my watch. And I don't think they'll be doing that. I don't

think.

I had meetings with Mary Barra; the head of GM, and I don't want them leaving our country. I don't want them building in China, I don't want

them to build them in other countries. I don't want these big massive auto plants built in other countries, and I don't think they'll be doing that

any more.

END