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At This Hour

Ukraine Retakes 6,000 Square Kilometers from Russians; U.S. Stocks Down Sharply, Inflation Remains High; Queen Elizabeth II Makes Final Journey to London. Aired 11-11:30a ET

Aired September 13, 2022 - 11:00   ET

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

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KATE BOLDUAN, CNN ANCHOR (voice-over): Hello, everyone. AT THIS HOUR, the swift and stunning advance by Ukraine but now a new worry about how Russia will hit back.

Plus Northern Ireland honoring Queen Elizabeth as her coffin soon begins the journey back to Buckingham Palace.

And inflation, still stubborn, still not going anywhere fast. But a new report is shedding new light on what we're all up against today.

This is what we're watching AT THIS HOUR.

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BOLDUAN: Thank you so much for being here. I'm Kate Bolduan. We have been tracking closely the lightning advances that Ukraine is making in reclaiming territory seized by Russian forces.

Today President Zelenskyy said his military has liberated 2,300 square miles since the beginning of this month. While it is not really possible to verify these exact numbers, these images of Ukrainian flags being raised in several villages in the east and the south, they're circulating widely.

We're also following big economic news happening as we speak. U.S. stocks down sharply at this hour. Following new inflation data. We'll have much more on all of that in a moment.

But let's begin with Sam Kiley, live in Kharkiv.

What is the latest?

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the latest is that, in spite of this very rapid and successful advance, 6,000 kilometers captured in the north -- or recaptured in the north and south of the country, the Russians have hit back.

They've hit back by taking out the power supplies in Kharkiv province. There is currently a power cut here in Kharkiv city. But I could say, also, that it is possible to verify in large part what the Ukrainian government is claiming, because yesterday we drove through -- for many hours through recently liberated territory, starting at one end of the -- where the battlefield had been, the front line had been.

And it took us at least 1.5 hours to get to our target destination. And it was very remarkable scenes of captured trucks, armored personnel carriers, artillery pieces, tanks being repurposed by the Ukrainians back into the fight. Kate.

BOLDUAN: Talk more about the special access that you gained to one of the liberated cities. Tell me more about what you saw.

KILEY: Well, we were able to get into Izyum, which is the major prize in this offensive. It is the logistics base, was the logistics base for Russia, particularly in terms of prosecuting its eastern offensive.

It is an important link to supply lines due north into Russia. Now those supply lines are under attack as we speak. But this is the flavor of what we found on the ground.

(BEGIN VIDEOTAPE)

KILEY: So down here we've seen a medical facility, called it something like that, in this bunker. There is the barracks and then, of course, the command center here.

As I walk along here, it is actually really extraordinary. There are the different labels for the different roles of the senior Russian officers on these school desks that have been arranged in this bunker, in now what looks like a brick factory.

(END VIDEO CLIP)

KILEY: Now Kate, that bunker was used by the command and control, the commanding officers of the eastern war effectively.

They have been put to flight. It is critical now for the Ukrainians to keep them on the run, if they're going to maintain the momentum and drive them back even further, particularly out of the territory that the Russian supported rebels captured back in 2014.

BOLDUAN: Sam, thank you so much for that.

Joining me now is CNN military analyst retired Maj. Gen. Dana Pittard and former U.S. ambassador to Ukraine, John Herbst. He's now a senior director at The Atlantic Council's Eurasia Center.

Thank you both for being here.

General, the Biden administration, I should say, seems cautiously optimistic with what they are seeing and Sam Kiley is reporting on the ground. and the Biden administration talking about it as the momentum that they see Ukraine having right now.

I know that you share that view, that cautious optimism about what it means. How will you know, what are you looking for to determine if this is an

actual turning point in this war?

MAJ. GEN. DANA PITTARD, CNN MILITARY ANALYST: Well, good morning, Kate. Yes, I do. I did share the view to be cautiously optimistic about this current counter offensive.

[11:05:00]

PITTARD: What the Ukrainians have done, which is actually a pretty brilliant move, was to attack to the south. And they made a lot of noise about that attack in the south, which, in fact, then drew Russian forces to the south, toward Kherson.

And at that point, once the Russian forces were committed, the Ukrainians then launched their major attack to the north in Kharkiv, which caused the Russians to start retreating, completely surprised the Russians.

And they were in general retreat in some ways which has caused them to give up their equipment, give up territory. But I see this really as merely another phase in the war. The first phase was the initial attack around Kyiv, in which the Ukrainians were able to repel that from the Russians.

And then phase two really is what we saw in the Donbas area, where the Russians successfully pushed the Ukrainians into the south. So I see this as merely phase 3.

I think it is too early to tell if this is a turning point. This war will have ebbs and flows. It is a war of attrition. It will take years. The Ukrainians are not going to give up until they get back all of their territory, at least that is what they've said. And that will take years.

BOLDUAN: Ambassador, you were just recently in Ukraine in Kyiv.

What was the sense that you got there from people while you were there?

JOHN HERBST, FORMER U.S. AMBASSADOR TO UKRAINE: Well, they were exultant about this successful, albeit limited counter offensive. They are exultant to see territory liberated that was taken by the Russians, not since just the big invasion this past February but going back to the spring of 2014, when the Kremlin aggression began.

But they were also cautious. They understood this is not necessarily a turning point. They understand that Moscow still controls a substantial part of their territory and that even though Moscow is running out of smart weapons, they have a lot of dumb bombs, which could do serious damage.

And the Russian military has proved to be excellent at raping women and murdering civilians, not so expert about dealing with Ukrainian forces. But they still control a large part of Ukraine. And they could continue to wreak havoc on civilians there. And, of course, abducting over a quarter of a million Ukrainian children.

BOLDUAN: Something that we've talked about on this show but we could not talk about enough is what is happening to the children of Ukraine. Ambassador, thank you for raising that.

General, the White House spokesperson John Kirby was on this morning talking about the Ukrainian advances. He called them swift and stunning but also spoke to something of what could be a concern over the potential of them pushing beyond their supply lines. Let me play this for you.

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ADM. JOHN KIRBY (RET.), COORDINATOR FOR STRATEGIC COMMUNICATIONS, WHITE HOUSE NATIONAL SECURITY COUNCIL: I think they've planned this counter offensive pretty carefully, George. They've thought this through. We're all watching these swift and stunning images today.

But we need to remember there were weeks and weeks of planning that went behind that and the Ukrainians have done a good job thus far in this war, managing their logistics and sustainment, their supplies to their troops. And I think they are mindful of that going forward.

(END VIDEO CLIP)

BOLDUAN: What do you think of that?

PITTARD: Yes, the Ukrainians have what we call tactical operational momentum right now and they're motivated to win. What they must be careful on in this current counter offensive is overreach.

They have a good plan. But they must be careful in overreaching as far as territory and not being able to consolidate. That is one thing that we would call operational culmination.

And at that point, when their offensive culminates, the Russians could take advantage of that. So what the Ukrainians must do at this point is continue to consolidate their gains as they continue to push Russian forces out of Ukraine.

BOLDUAN: Now Ambassador, the reaction within Russia has been interesting. And it seems different to this counter offensive in particular. CNN is reporting that nearly 50 municipal deputies in Russia have signed a petition, demanding the resignation of Vladimir Putin over the war.

That is 29 more than had signed on as of Monday.

How unusual is that from coming inside of Putin's Russia?

What do you think it means?

HERBST: Given the strong repression we've seen since at least the third week of the post February invasion period, this is a remarkable sign. So, too, is the sharp criticism Putin is facing from the ultra nationalists, like the former FSB officer, who is very active in Ukraine at the beginning of Moscow's war of aggression.

But the thing about the Russian regime is, it seems to be able to cope until suddenly it is unable to cope. We don't know if these signs of dissatisfaction are signs that mean that Putin's power is crumbling. But it is conceivable that it does. But I'm in no position to predict this.

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HERBST: But there is no question that the military misadventure in Ukraine is a serious political liability for him.

BOLDUAN: So more to be learned and more to see where this goes. Good to see you both. Thank you so much.

All right. We also have a new point of concern to watch. The government of Armenia now said dozens of soldiers were killed in new clashes in Azerbaijan. The renewed fighting there sparking fears that the decades-old conflict may be on the very of reigniting in a much bigger way. CNN's Eleni Giokos has the very latest on this for us.

Eleni, what are you hearing about this?

ELENI GIOKOS, CNN ANCHOR AND CORRESPONDENT: Kate, look, Armenia has said that 49 soldiers were killed in overnight clashes with Azerbaijan. And this is significant because he said, as Azerbaijan fired toward three towns, Azerbaijan saying there were strikes but this was in defense of their own territory and accusing Armenia of striking into one territory.

This centers around disputed territories which have resulted in so many clashes over the past few decades. The Armenian prime minister also personally made phone calls to international leaders asking for what he said should be adequate response, including the E.U. foreign policy chief Josep Borrell, who said they are sending an E.U. representative to the region.

Antony Blinken also saying there must be immediate cessation of hostilities. And Armenia leaning on its ally, Russia, which was pivotal in the peacekeeping deal when the last clashes happened in 2020 that lasted six weeks.

What is a twist of irony here, Armenia has always relied on Russia; it has peacekeeping forces in Armenia, also asking for the West for assistance. And we have to focus on the power dynamics playing out, where Azerbaijan is allies with Turkiye and Russia.

And this is all happening on the doorstep of Europe at this point in time. And analysts are watching this very closely, clashes that often escalate further.

BOLDUAN: Absolutely. Thank you so much for that.

Coming up for us, stocks falling sharply after new inflation figures released this morning. What you need to know. That is next.

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BOLDUAN: So AT THIS HOUR, take a look at that. The markets are down sharply following the release of new inflation data, remaining stubbornly high in August. Yet gas prices continuing their downward trend. There is a lot going on here.

Rahel Solomon, why is the market responding like this?

RAHEL SOLOMON, CNN CORRESPONDENT: Well, this was not the inflation report that really anybody was hoping for. We were hoping to see some decline in inflation and that is not what we saw.

We saw some easing but not what we were we were hoping for. So let's get into it. Inflation increased 0.1 percent and we were hoping for a decline of 0.1 percent. But if you take a look over the last few years, you could see, on a yearly basis, we're at about 8.3 percent.

That appears to be easing, certainly better than the 9.1 figure we posted earlier in the summer. What is happening is that energy prices continue to fall so we're getting some relief at the pump. But food prices are certainly not among other categories.

Food prices continue to rise on a yearly basis, 11.4 percent. That is the largest increase since 1979. And core inflation, which you're looking at here, also problematic. That shows signs of acceleration. So we saw a number posted twice what we were expecting and what we saw the month prior

So that's problematic. And that is an area that the Fed watches closely. When we look at the largest drivers of this inflation, while shelter prices, which, by the way, if you're looking for an apartment, I don't need to tell you, rent prices are through the roof.

But 6.2 percent compared to a year ago, medical care continuing to rise; new cars posting double-digit increases compared to a year ago. And furniture up about 10 percent.

So this is the reality that so many people are facing right now. You're getting some relief at the pump but you're not getting it at the grocery store and in so many other categories.

In terms of what all this means for the Fed and its fight to fight inflation and lower inflation, well Bank of America just put out a note in response to the CPI report, saying the Fed's work is only just beginning. And that gives you a sense of sort of how difficult this path might be.

BOLDUAN: It is good to see you, thank you so much for that.

Let me bring in now, for more on this, CNN chief political analyst Gloria Borger and CNN chief business correspondent Christine Romans.

So on inflation, hotter than expected or just not cooling off fast enough?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: This is a real challenge because the markets over the past week have been thinking the Fed is doing its job and this is just confirmation there is still a lot of work to do.

Talking about Rahel's point, the core inflation upticking. And that is a worry. And inside of the numbers, you could see where there is easing because of gasoline prices but elsewhere there are still signs that prices are too high and are troubling.

That right there, that is what the markets are looking at, that uptick. But the others look at the one-month change, this bar chart I'll show you next. And that is what the White House is pointing to and that does show the easing.

See the last two?

That is what you want to see. This is not as painful as it is been over the past months and almost a year. But still more work to do.

BOLDUAN: That bar chart is what the White House is focused on, the markets seeing the other.

That is right.

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BOLDUAN: So every time I have a member of the president's economic team on, I have asked them, how low is low enough to be comfortable with inflation?

They don't answer it or maybe they don't really know yet.

Is it clear, though, when inflation will be at a point where it is no longer such a problem for the president and Democrats politically?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: No. It is not clear and it certainly wouldn't be clear before the midterm elections. And that is their real problem. So you see the president out there, trying to say, look, things are getting better. Your gas prices are getting lower.

But as we've been saying, when your wages don't keep pace with inflation, you have a real problem. So they're trying a two-pronged strategy. One is to say things are better, because the midterms are a referendum on the current president and, two, look at these Republicans. . They didn't vote for anything to try to make your life better and, by the way, they're extreme. So Biden is trying to make this about Trump. And he's also got the issue of abortion on his side, which is going to motivate a lot of Democratic voters. But the bottom line here is that people aren't feeling good about the

economy. It is still the number one issue.

BOLDUAN: And Christine, there are a couple of reasons why people feel about the economy and in some areas that you're troubled by. The three areas when you are looking at inflation year-over-year, gas, food and shelter.

Why is this troubling you?

ROMANS: The gas number has come down but it could be an unpredictable fall. You have a hurricane season and an unpredictable Vladimir Putin.

When you look at food category, 11.4 percent year-over-year food inflation, that is the highest we've seen since I think 1979. And any comparison to the '70s and early '80s make us cringe.

You could change which cut of meat you're buying at store or a different brand and try to accommodate. But on shelter, you can't. And that is a real problem here. And I don't see where that is showing any signs of getting any better soon.

So that is what people feel in their pocketbooks. But there was a number this week, that it is starting to look better. That's because of gas prices. Gas prices have come down pretty swiftly.

BOLDUAN: That is where people can feel it first, where they could see that immediate --

ROMANS: Routinely.

BOLDUAN: Good point. And Biden is hosting an event to promote what they call the Inflation Reduction Act. I want to play what Biden said yesterday about inflation.

(BEGIN VIDEO CLIP)

JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: Inflation eased in July. I said last spring, our top economic priority was to bring down inflation without giving up on all of the gains American workers have made last year.

But there is more to do, a lot more to do. But the American people should have confidence that we're on the right track.

(END VIDEO CLIP)

BOLDUAN: Is it risky that he's, I don't know if we call it hanging his hat on that.

But do you think that is risky?

BORGER: Yes, I think it is risky but I don't think he has much of a choice.

BOLDUAN: That is a good point. BORGER: He could say we're on the right track as we know inflation

went up but not a tremendous amount, obviously, as we've been talking about. And he's got to say, you know, I'm working for you. . And so look at those -- look at those gas prices. But as we've all been saying, go to the supermarket; the prices are higher. That is why he can't only talk about one thing, he has to talk about a couple of things. And that is what they're trying to do and they're keeping their fingers crossed that maybe next month things will look a little bit better.

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BOLDUAN: Sorry to jump in. We have to jump over to overseas. Queen Elizabeth's coffin is now beginning the final journey to London. The queen's daughter, Anne, will travel with her mother all along the way on all of these stops. CNN's Matthew Chance is live in London with more on this.

Matthew, this long journey now begins.

What could we expect when the queen's coffin arrives?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: You can see the crowds here outside of Buckingham Palace have already started to form because there is a great deal of anticipation about this moment that we're about to experience.

It will be 7 o'clock tonight local time, about 2:00 Eastern time, that the coffin of Queen Elizabeth II will arrive back here in London and make its way straight here to Buckingham Palace.

It will be placed in what is known as the Bow Room, which is a private chamber that overlooks the acres of park land that lay behind that majestic building. And it will be there; there will be members of the royal family as well.

[11:25:00]

CHANCE: It will be attended by clerics and by priests on a constant basis, of course. And it will be in the morning, the following day on Wednesday, where the coffin will make a solemn procession toward Westminster Abbey, where she will lay in state for five days.

And that is when the big security operation, the big massive crowds are really expected.

As well as the many world leaders that will be coming to attend the funeral, which is taking place on Monday, the expectation is that there will be hundreds of thousands of ordinary people from Britain, from around the world as well,, who will want to file past that coffin and pay their respects.

And so that in itself, you could imagine for five days, hundreds of thousands of people, it is an enormous event that will bring this city, this country in some ways, to a standstill, Kate. BOLDUAN: One thing that we know. We saw, Matthew, all of the queen's

children walking in the procession, including the new king. But now kind of in this final trip back to London, Princess Anne is with the queen and she is going to be with her and has been with her every step of the journey.

What is the significance of that?

CHANCE: Well, I mean, this is the queen's daughter. So I think it underlines the fact that, apart from this being a national commemoration of the life of this monarch, who ruled the United Kingdom and 15 other countries for 70 years, it is also an intensely personal occasion.

With the queen's family, who have been directly affected by the loss of their mother, grandmother, great-grandmother in some instances. And so I think we have to bear that in mind. This is public mourning. There is going to be a very public celebration.

But of course, behind the walls of Buckingham Palace and in private, this is just an ordinary family who will be mourning the loss of a loved one, Kate.

BOLDUAN: What are you hearing from people there in the streets of London?

I know you've been out and you can't say everyone has one opinion or feels one way about something as big as this.

But what are you hearing from the people in London?

Are they kind of ready and aware of the global response, the attention and what all is -- what all is about to be happening right there?

CHANCE: Yes, I think so. I mean, this has affected people really quite deeply in the sense that Queen Elizabeth is someone that all of us, with a few very old exceptions, have lived with as their monarch throughout our whole lives.

And so, the fact that she is now gone is a big break with the past. She was a figure of continuity. It has had an impact on people. It is also a measure of that -- you've got young people and old people, people bringing their children here, even though there is a generational divide on the monarchy as an institution.

When it comes to the esteem, that cuts across the population. I mean, there are people young and old here that have come here out of respect for the queen. And I think we're going to see a large proportion of those people spending a great deal of time, lining up to pay respects at the actual coffin as well.

I spoke to some people who were from other countries because it is more than British people but people from all over the world paying their respects. People are coming for historical reasons. This is not just people affected by the loss. Other people are coming because they realize this is a moment they may

never get to witness again. It is the death of a British monarch, the funeral, the state ceremony that goes with that. And it's a chance to witness history. So that is why a lot of people are coming here as well, Kate.

BOLDUAN: Absolutely. And as we're watching, the hearse, the queen's body, her coffin making its way through Edinburgh on its way back to London. You know, it is a reminder that we should remember that these plans were all decided in large part by the queen herself.

And from what we've seen so far, I don't know what you think and kind of what she would want from this moment.

CHANCE: Well, that is a good question. You're right about the lengths that have been gone to, over the decades, since the 1960s, that Operation London Bridge, as it was called, in deference to the queen, has been planned for.

And it has been every -- every detail has been meticulously organized. And you're right to say that many of the -- of the events that have been -- are unfolding now were approved of by the queen herself when she was living. Of course they have to be rubber stamped by the current monarch, King Charles III.

But it is essentially her wishes. And I think it talks, this idea, that not only was she the grandmother and the mother of a family but she lived her life as a public figure.