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Ukraine's Financial Crisis; Ukraine in Crisis; Imagine a World

Aired March 05, 2014 - 14:00   ET

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

HALA GORANI, CNN CONTRIBUTOR: Good evening, everyone, and welcome to the program. I'm Hala Gorani, sitting in for Christiane Amanpour today.

Tough talk and delicate diplomacy: these were the scenes in Paris today as Western nations piled pressure on Russia, urging it to reach out to Ukraine's new government to try to ease tensions over Moscow's military intervention in Crimea.

Now Russia's foreign minister was also in the French capital, along with his British, French, U.S. and German counterparts. Also in town was this man seen here on the left, Andrii Deshchytsia, Ukraine's acting foreign minister. Russia has been refusing to meet with him, prompting the West to issue this warning to Moscow if it didn't show signs of trying to resolve this standoff.

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WILLIAM HAGUE, FOREIGN SECRETARY OF GREAT BRITAIN: There are things that we can do on the diplomatic and economic side. The prime minister and President Obama have both made clear that there must be significant costs to Russia of violating its international obligations in this way. And now, of course, we would much prefer to make diplomatic progress. But in the absence of that progress, there will be costs to Russia, both in the short term and, I think, very much in the long term.

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GORANI: Well, there was William Hague today, while the diplomatic frenzy was underway in Paris. These were the scenes that a government building in Donetsk in Eastern Ukraine. Ukrainian forces ejected a group of pro-Russian protesters who'd taken over the building over the weekend.

Meanwhile, the country's economy is still very much in serious trouble. The E.U. announced today it will give Ukraine 11 billion euros in financial aid with some conditions. That's about $15 billion dollars, on top of the U.S.' $1 billion pledge.

Pavlo Sheremeta is Ukraine's economy and trade minister, and he joins me now from Kiev.

Sir, thanks for being with us. First off, I want to ask you about this diplomacy. Sergey Lavrov in Paris today, all the foreign ministers including the acting Ukrainian foreign minister, what did you make of the meetings today? Are they giving you any hope?

PAVLO SHEREMETA, MINISTER OF ECONOMY AND TRADE, UKRAINE: Well, they give a lot of hope.

Hello, Hala. They give a lot of hope. That's the recognition of the Ukrainian government. That's the recognition of the crisis in the Ukraine. And that's the huge support that we greatly appreciate.

GORANI: Now we heard from the prime minister, quoted by the Associated Press today, appearing to make some sort of promise to the semi- autonomous region of Crimea, saying essentially we want Crimea to remain inside of Ukraine. But it may get more autonomy.

Is this one of the areas where the transitional government is willing to compromise, perhaps?

SHEREMETA: Why not? You know, the key point for the government here in Kiev is that this issue should be solved exclusively and only by peaceful means. So the negotiation table, any kind of communication, any kind of discussion, let's bring up all of the issues that Crimea has. Let's discuss them at the table, not through pointing guns at each other.

And let's figure out the solution. This nation already lost lots of lives. We do not want to risk anymore lives on either side of this conflict.

GORANI: Do you know if the acting foreign minister, Andrii Deshchytsia, if he was able to meet with Sergey Lavrov in Paris?

We know the Russians so far have said they're not talking directly to your government. They're saying essentially you took over as the result of an armed coup.

SHEREMETA: Well, there are particular areas within the -- with the Russian position. I don't know about my friend, Andrii Deshchytsia, but I know that, on some other levels of the Ukrainian government, we were able to talk to our Russian counterparts.

GORANI: What areas were those?

SHEREMETA: Well, economy was one of them. So -- and by the way, we have lots of common challenges. That's something that we have discussed with my Russian friends and police. It's the issue of getting out of the middle income trap. That's the issue of slowing (sic) good growth. That's the issue of increasing labor productivity, you know, how to get -- how to go out of the resource-based economy into knowledge-based economy.

I mean, we have lots of issues that we need to find solutions together with Russia, not against Russia.

GORANI: But you can only do that if the Russians talk to you. Right now they're not even recognizing the acting government. And they're, for all intents and purposes, controlling Crimea in Southern Ukraine.

SHEREMETA: Hala, you know, once again, there are particular areas in the Russian position. It's not -- it's not uniform. So again, as I mentioned, I know for -- from the energy minister that he was able to get to his Russian counterparts as well.

So it's not -- it's not the uniform rejection of the Ukrainian government. We are communicating. We are talking. And that's the right thing to do. I think our prime minister talks to the Russian prime minister. So -- and of course, going back to Crimea, we absolutely stay on the position that this -- Crimea is the part of Ukraine. No question, no doubt.

GORANI: Right.

You've been able to speak to your counterpart and you're saying some ministers in the acting government in Ukraine, in Kiev, have been able to speak to their counterparts in Russia. So there is some dialogue there?

SHEREMETA: There is some dialogue going on. We would like this dialogue to be intensified. That is why we are bringing up the issue of the commission, the joint commission of the economic operation. We have issues to discuss. We have challenges to tackle. And let's tackle those challenges rather than pointing guns at each other.

GORANI: But, Mr. Sheremeta, if, for instance, the Russians and those troops that are in Russia, as you know, Vladimir Putin says it's not the Russian military; these are self-formed local groups, which have -- the statements having raised eyebrows.

But let's say they do retreat back to their bases.

What would Ukraine then give in return?

I mean, is there a give-and-take here? Do you foresee that in the future?

SHEREMETA: Well, Crimea already has a sizable autonomy within Ukraine. If Crimean people want to have more autonomy, let's discuss that. The deal -- the law in languages that the Crimean people were sensitive about -- let me put it this way -- we are willing to discuss and to develop the new law that shoots the Crimean people.

I made a couple of veto addresses and appeals to the people, not only in Crimea, but also living in the east of Ukraine, in Russian. My colleagues in the Ukrainian government did the same thing. As a sign of gesture, it's not about the language. It's about the common future of our integrated Ukraine.

GORANI: And you're the minister, acting minister of the economy and trade. And one of the things about Ukraine is that it relies, depending on where its government leans, either on Western help or on Russian help, discounted gas prices from Russia, Russian aid packages.

Here, as we mentioned, we have the E.U. promising $15 billion U.S. in an aid package, Kerry promising $1 billion U.S. dollars.

I mean, is it just trading one lifeline for another lifeline?

SHEREMETA: No, it is not. It is not, because the conditions attached and strings attached are quite different. And what we have with the Western assistance and the Western loans, international loans is a pretty clear set of conditions. And this was made in public. That's very important.

Besides, as an economy minister, something that bothers me is that Ukrainian economy is deficit-addict. We are addicted to internal deficit, the fiscal deficit as well as external trade balance deficit. That's something that we need to get out of, that disease. We believe that conditions that are set forward by the international organizations -- by the way, we are still discussing them, the details -- as you know, the IMF mission is in Kiev right now. I had a meeting with them this morning.

We are discussing the conditions. But these conditions help us, you know. This is a cure in many -- in many respects. While there could be some other sorts of assistance, which is another piece of drug -- that we need to repay in two years, and we don't know how to do that.

So it's better to make our economy more healthy, to facilitate the business development in this country, so that it can take care of itself, fill in the coffers in the country, within the country, so that we can repay the assistance and hopefully, by the way, we wouldn't need that much.

So as soon as we relaunch the economy, we will be able to repay the debt and the loans that we are taking right now.

GORANI: And I'm sure ordinary Ukrainians would very much agree with you. They're going through a tough time.

Thank you very much, Mr. Minister, Pavlo Sheremeta, the minister of economy and trade, joining us from Kiev.

SHEREMETA: Thank you, Hala.

GORANI: Thank you.

Katrina Vanden Heuvel is the editor and the publisher of "The Nation," and an analyst on Russia, And she joins me now live from New York.

Thanks for being with us. Were you able, Katrina, to hear my discussion there with the economy -- the minister for economy and trade?

KATRINA VANDEN HEUVEL, EDITOR, "THE NATION": I was, and I thought it was a very important discussion, because Minister Sheremeta sits in a very sober position. You know, one of the first casualties of war or conflict is the truth. And I would suggest in these last days we've seen too little multicultural (ph) perspective, too little cool analysis and some bluster.

And we need some common sense. We need some sober talk. And that's what we heard from Minister Sheremeta.

You know, the sadness is we've also lost some historical perspective. Last November, on offer was the possibility of the -- of Ukraine not being either/or with the European Union or with Russia. There was a tripartite offer that would have allowed Ukraine to be part of both.

And as you listen to the economic story and with all respect for Ukraine, it's a basket case. I mean, it's bankrupt in many ways. It is going to need as much as assistance as it can get from both. It should not be an either/or, zero-sum game, Hala.

And I think you heard that in terms of not much bluster from Minister Sheremeta, in fact, none. What he's talking about is what I think we will see in these next days, diplomatic engagement. He's talking to his Russian counterparts. He spoke of others in the Kiev government, speaking to theirs.

GORANI: And I thought that was -- I've actually -- this is not sort of alignment comes out of much of the reporting that I've seen, that there are discussions actually between members of this acting government and ministers that were in previous governments and their Russian counterparts.

And I think perhaps because there is a realization that there is a common interest here in not essentially shutting down entirely the Ukrainian economy here.

VANDEN HEUVEL: I mean, you know, in -- it's as -- it's very sad that in Washington there's basically just there's a lot of reckless saber- rattling right now. Our war party is on the offensive. You could argue the war party in Moscow is on the offensive.

But this isn't going to provide a way forward for Ukraine. I mean, in these next days, diplomacy's so key to provide for the territorial integrity of Ukraine, to lead toward fair and free elections, which will be inclusive. The new Kiev government has two representatives from the south and eastern parts of Ukraine, the Russian-speaking parts.

How do you have a fair election if you don't have more representation?

And also then, how does the E.U. and how does the Russian customs union provide a way forward for Ukraine economically?

And one last point historically is guarantees, security guarantees that NATO will not expand into Ukraine, because those some think Vladimir Putin is delusional. Right or wrong, he's asserting Russia's security interests and arguing that NATO and the expansion of NATO in the last two decades has been a threat to Russia's security interests, and a violation, broken promise, of what James Baker and George H.W. Bush promised to Gorbachev, then Soviet leader in the aftermath of the collapse of the wall.

NATO would not expand one inch eastward. And that has been shattered as a promise.

GORANI: All right. And we're hearing it, as you said, there from officials and politicians. And Washington, including John McCain, saying that we should speed up Georgia's accession to NATO.

But one of the things that I found interesting from the minister of the economy is we're seeing offers already. I mean, there are -- this is no accident that we heard from the prime minister this morning and now we're hearing from the minister for the economy as well, saying, look. If Crimea wants more autonomy, we'll talk about that. If you want the law in languages, for instance, to be rediscussed, retabled, we'll talk about that.

We're hearing that coming from them. And do you think this is going to resonate in Crimea or not?

VANDEN HEUVEL: Oh, I do. I mean, in fact, there's going to -- misperception, I think that you see in Crimea, even among the self-defense forces, a separatist instinct. What you see is a federalist instinct, in fact, slogans at some of the rallies in the eastern part of Ukraine and Crimea, we are that -- we are federalists, not separatists.

It's key that Russia be offered security guarantees for what is already the existing situation of autonomy for Crimea and for its military base there. So I think that is possible. And that will be the next step. And you know, the key of government right now is not elected. It is not legitimate. So fair and free elections moving forward and also a respect for the diversity, Hala, as you know. It's not one Ukraine. It's two, three Ukraines, through the territorial integrity is key. And the United States is interesting, Europe, and Angela Merkel is so key, as so much of CNN's reporting has suggested. She is key. She -- Germany is the -- Russia's fourth largest trading partner.

The U.S. may want to be Globocop. But it has very few levers. It is not a major trading partner of Russia nor can it provide for Ukraine economically with its subsidized gas and the IMF and Minister Sheremeta spoke of the delegation there in Ukraine now.

I have to say, if you look out at Europe, and what the Eurozone has been dealing with, brutal austerity measures in Greece, Spain and Portugal, some have compared austerity to surgery with anesthesia. It is going to be very difficult in the tinder box that is Ukraine not to see violence and uprisings if the economic -- if the economics don't go right.

So that's key for the whole world to organize.

GORANI: Absolutely. Great point, Katrina Vanden Heuvel, the editor and the publisher of "The Nation." Thanks so much for joining us with your perspective.

VANDEN HEUVEL: Thank you.

GORANI: And while Russia continues its hardline position, vis-a-vis Ukraine, 25 years ago this winter, when Vladimir Putin was still working for the KGB, the Soviet Union met its match in Afghanistan. The Jihad Museum in the western provincial capital of Herat was built back in 2010 to commemorate this chapter in Afghan history, with brightly colored dioramas. It depicts the nine years of bloody fighting that ended with victory for the mujahedeen and said -- sent Soviet forces back home.

A treasure trove of captured Soviet weapons, including a helicopter, records record their defeat. And there's even a hall of heroes to honor those homegrown warriors who took on a superpower and won.

And after a break, we'll turn to South Africa, the last plot twist in the murder trial that has riveted the Rainbow Nation, that's next.

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GORANI: Welcome back, everyone, I'm Hala Gorani, sitting in for Christiane.

Turning now to the murder trial gripping South Africa and much of the world, Olympic track star Oscar Pistorius charged with killing his girlfriend, model Reeva Steenkamp. Pistorius walked into a Pretoria courtroom for the third day today as the court heard from a neighbor, who said he heard gunshots the day Steenkamp was killed. But Pistorius' lawyer said that sound might actually have been his client trying to break down the bathroom door with a bat.

Prosecutors brought up a separate incident that involved a gun one month before Steenkamp was killed. The court heard from a friend who testified Pistorius wanted him to take the blame for the incident. When Pistorius accidentally fired a loaded gun in a restaurant.

Pistorius shot Steenkamp while she was behind a locked door in their bathroom. He has pleaded not guilty, saying he thought she was an intruder.

Joining me now is Alex Eliseev, a senior reporter for South Africa's Eyewitness News. He's been following the proceedings in Pretoria.

Alex, I thought I -- I hope I pronounced your name correctly.

ALEX ELISEEV, SR. REPORTER, SOUTH AFRICA'S EYEWITNESS NEWS: Absolutely right.

GORANI: OK, great.

What stood out to you today in the proceedings in today's testimony in Pretoria?

ELISEEV: Well, the day began really like every other day so far with slow, intense cross-examination of one of the neighbors that lived close to Oscar Pistorius and then kind of arrived lunchtime, it changed direction. There was a holdup. There was a time that was needed for the witness, the main witness, to go and get some notes.

And so the trial changed direction in terms of one of the smaller charges and that is discharging a firearm in a public place. And that's the restaurant here in Johannesburg. Oscar Pistorius, of course, facing a charge of letting a firearm go off underneath the table of a restaurant. And there we saw the swift movement through about three witnesses, which all testified about how that happened.

And we heard his defense that it was all a terrible accident and that he didn't know that the gun was actually loaded when he was passed that firearm underneath that table.

GORANI: Alex, this case, as you mentioned, they're not just about Reeva Steenkamp's tragic death, but also unrelated, separate gun charges.

Is this trial -- and it's televised as well, very much so. There's a whole separate channel devoted to it.

Is it leading to some soul-searching in South Africa about the problem that country has in some cases with guns?

ELISEEV: I think it's definitely one of the issues that's being looked at here, also that hasn't featured or it hasn't hung over like a shadow over this trial. It's being debated when news first broke about this -- about what happened on Valentine's Day. And it's certainly got the country talking.

But I think more to the point, what the country is now talking about is this unbelievable access that we have inside the courtroom, all of us, live television broadcast of the actual trial. And it's quite amazing to see how the country's responding to that, because it's almost changing the culture of how we digest and consume trial (INAUDIBLE). We've had some pretty big trials here; our president has stood trial. Our police chief has stood trial.

But never before have we had this kind of eye inside the courtroom. We've got 24-hour channels that have popped up to focus strictly on this matter. We've got social networks going absolutely insane with all the conversation that's happening around here.

So I think it's really history being made in terms of the process of how this trial is being broadcast. And I think it's going to set a precedent for future trials in South Africa.

GORANI: And I wonder why were cameras allowed in this case? This is the first time. Why was that particular ruling made for such a high- profile trial?

ELISEEV: I'm sorry. I just didn't catch your question.

GORANI: Why was it ruled that for this trial, that this trial would be the first where cameras would be allowed?

What was the reason given by the judge for that?

ELISEEV: I think you're asking about the trial and the process that's going to be going forward from here. I think we're expecting still quite a long way to go because, of course, the state has just begun its case, and we're going to still hear a lot about the forensics and ballistics that's going to unfold here.

We're expecting it to take five, six, seven weeks. It's really difficult to tell. And then, of course, the defense will bring its own witnesses. And there's going to be really a lot of focus on that.

But ultimately it's going to come down to the interpretation of the law. Was there intent? Or was this negligence? Was it an accident as Oscar Pistorius says that it was?

And you will see, as each of the witnesses comes forward, you're going to get swung and left, right, left, right, because people are going to go along for the ride. But I think ultimately we're only going to know what will happen once that verdict comes in from the judge and her two assessors.

But that is still quite a way away.

GORANI: All right. Alex Eliseev, senior reporter for South Africa's Eyewitness News, thanks very much for being with us.

And after a break, we'll return to a proud empire with a glorious history. No, not Russia, it is Rome, where they almost had to hock the Colosseum and now have to save other priceless ruins from ruin. The last days of Pompeii, when we come back.

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GORANI: And a final thought tonight, our modern world has its upheavals, of course, as Ukraine erupts in violence and Russia seeks to reclaim an empire.

Now imagine a world where an ancient imperial city once destroyed by volcanic eruption is threatened with extinction all over again. In the year 79 A.D., the Roman city of Pompeii suffered one of the great catastrophes of all time, as smoke and ash rained down from Mt. Vesuvius, smothering the population and burying its beautiful buildings and streets.

In our time, Pompeii has become one of the greatest archeological treasures on Earth, a UNESCO World Heritage site. And a must-see destination for millions of tourists each year, anxious for a glimpse of a glorious civilization amazingly preserved.

That is until now. After years of neglect by an Italian government strapped for cash, heavy rains and flooding in the past few days have put Pompeii at risk all over again. On Tuesday, authorities in Rome approved emergency funding of 2 million euros to shore up the damage. But that is just a drop in the bucket, considering that an estimated 100 million euros is needed to save Pompeii.

Or to put it another way, Roma, Rome's football club, well, it pays its top midfielder, Daniele de Rossi, over three times the amount the government is willing to spend on Pompeii. And meantime, Rome itself, the Eternal City, narrowly dodged bankruptcy when the government approved a last-minute 500 million euro bailout last week.

Perhaps Russia and other very powerful countries around the world should take a lesson. Even the greatest of empires have their rise and their fall.

That's it for our program tonight. And remember you can always contact us on our website, amanpour.com, and follow me on Twitter @HalaGorani. Thanks for watching and goodbye from CNN Center.

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