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Biden and Zelensky Meet at Summit; Inflation Cooled in June; China-Based Hackers Breach U.S. Government Email Accounts; FBI Director Faces GOP Critics; Biden Speaks at NATO Summit. Aired 9-9:30a ET

Aired July 12, 2023 - 09:00   ET

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

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(BEGIN VIDEO CLIP)

PRESIDENT VOLODYMYR ZELENSKYY, UKRAINE (through translator): And I believe that NATO needs us, just as we need NATO. And I believe that this is absolutely fair. I am confident that after the war Ukraine will be in NATO.

(END VIDEO CLIP)

KATE BOLDUAN, CNN ANCHOR: And short of that ultimate goal for Ukraine, the United States and other NATO members are announcing huge military aid packages for Ukraine at this summit. France, Germany, Norway among them. And what's been dubbed NATO-light. G-7 leaders laying out these long-term security commitments to Ukraine.

SARA SIDNER, CNN ANCHOR: All of this comes amid more aggression from Russia. Russia launched drone attacks on Kyiv overnight, but they were repelled by Ukrainian air defense. Ukraine's military also shot down several Iran-made attack drones near the Cherkaski (ph) region, which is in central Ukraine.

Our reporters and correspondents are standing by to bring us the latest from across the globe.

We are going to begin this morning with CNN White House correspondent Arlette Saenz. She is in Vilnius, Lithuania.

Arlette, can you bring us up to speed on this meeting that is going to happen shortly between Biden and Zelenskyy?

ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: Yes, Sara, we do expect President Biden and Ukrainian President Zelenskyy to sit down for the first time for a private meeting here at the NATO summit in just a short while. But right before that we are anticipating that the president and other G-7 leaders will be appearing at an event to roll out what they've described as the joint declaration regarding Ukraine. And officials say that this will include the U.S. and other G-7 countries, laying out some long-term commitments that they are making towards Ukraine, security assurances that they are offering them to try to help them defend themselves in the current war, but also defend themselves and deter any future aggression that they could face from Russia.

Now, this all comes as there had been so much tension heading into this summit around the prospect of NATO seeking membership - or of Ukraine seeking membership into NATO. The communique that was released by the NATO alliance yesterday fell short of the timeline that Zelenskyy did want to see put in place at this summit.

But there were some issues in that communique that did remove one -- at least one of the barriers to -- for Ukraine to join the NATO alliance down the road. And NATO Secretary-general Stoltenberg said that they would invite Ukraine into the alliance once certain commitments had been made. Now, that's a point that President Biden has been making heading into this summit. He said that Ukraine was not ready to join at this time, in part because of that war in Russia and the fact that if they were to join that would then dive the NATO alliance into direct conflict with Russia.

Additionally, the White House has been saying that they want to see these reforms, democratic, and on the security side made by Ukraine before they can be accepted into the alliance. So far they really haven't detailed exactly what those reforms would be, but that would be part of a pathway for Ukraine to join into NATO.

But so much of this summit has been trying - been about trying to send a message to Russia, not just with support for Ukraine, but also when you think of the fact that they were able to expand the -- expected to expand the alliance with Turkey blocking their opposition to Sweden joining. And with these meetings coming up today, as the president and Zelenskyy are expected to sit face-to-face, officials say that they do anticipate that some of the disagreements might come up. But the president will be straightforward in explaining why he felt this way and took this position regarding Ukraine's members hip in NATO, and also listen to what Zelenskyy has to say.

But what they are trying to focus on today is putting some of that tension behind them and focusing on what they can offer Ukraine in the here and now and also long-term down the road.

BOLDUAN: Arlette, thank you so much for that.

Let's go to -- let's bring in Nc Robertson right now for much more on this because it's a little bit about -- now it's about what Zelenskyy and Ukraine will be getting, not what will be kept from them in terms of - in terms of this point of the summit. And these security commitments, the ones that have been announced, and the ones that are about to be announced, these are huge, Nic.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, they are. I mean Zelenskyy came in today with a much more sort of moderate tone saying three things on his agenda. One, the immediate military aid packages. He - so he had a series of bilateral meetings with a bunch of prime ministers and the German chancellor as well. Kind of got all that. That was the military aid that he needs right now. Got it. That's in the bag.

The meeting that he will have just been involved in, this is the one where he was hoped to get - where he said, you know, get everyone on the same page about Ukraine's membership, about NATO. Different tone to yesterday.

But he's been very specific -- very, very specific about what he wants in this G-7 communique. The F-7 communique is going to be umbrella and it's going to say the G-7 nations are going to give these long-term security commitments.

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That -- OK, jump below those big headlines, what does it mean? Actually, the nations do their own bilateral agreements with Ukraine. But the language in that overarching statement that Zelenskyy has said twice today that is so important for him, knowing that he didn't get the language that he wanted in the NATO communique, but in the G-7 statement he is hoping that the language says that these security guarantees we give you are valid on your way to becoming a member of NATO. And he said that language is super important to him. So, that's what he's going to be listening for.

And you got the sense from him when he was speaking at a press conference with Jens Stoltenberg earlier today that perhaps that language is there from the G-7. A smaller group than NATO. Seven versus 31. Easier to get agreement and alignment perhaps. And that's what he will feel good about taking home, plus the short-term military aid, plus the long-term military aid. They're important. But that language right now seems very important to him.

BOLDUAN: Yes.

Nic, stick with us. We're all standing by to see the -- first this big meeting of leaders together and then we'll be seeing the sit-down, the one-on-one between Zelenskyy and President Biden.

SIDNER: All right, joining us now, CNN global affairs analyst Kim Dozier and retired U.S. Army Brigadier General Mark Kimmitt.

Thank you both for joining us.

I want to start with something that's just come down to us from the head of the office of Ukraine President Volodymyr Zelenskyy. I want to start with you, Kim.

Look, Zelenskyy has called the absence of a timeline for Ukraine's membership to NATO unprecedented and absurd. This is after Biden has said, look, he's agreed to proposed language for Ukraine's future ability to join NATO.

Can I ask you what you think about Zelenskyy's tactics as he has been very blunt, very forceful. Has that served him well?

KIM DOZIER, CNN GLOBAL AFFAIRS ANALYST: Well, all along he's done this reach for the stars and you won't end up with a handful of mud kind of strategy. And it seems to have worked time and again. Remember when he was pushing for F-16s. A year later, now it looks like he's getting them from multiple countries. Once again he's come into this summit almost messaging back home, but

also messaging all of the populations that Biden, Britain, European nations answer to, preparing them and also asking them, push your leaders, we need this now, we are under fire. And while he doesn't look like he's going to get that -- look, we've already got the concession of NATO is not going to make them go through the bureaucratic membership plan, which is a series of economic and other hoops that a country would have to jump through. And they're also talking about giving Ukraine Israel-style status, which is a huge security guarantee that is very different from, hey, remember going into this war, before the invasion started, President Biden was saying that Ukraine wasn't part of the United States' security strategic pantheon. Now it's become a linchpin.

SIDNER: Now to you, Brigadier General, I want to ask whether or not the situation that's happening in Ukraine with the offensive, that isn't going as swiftly as people had hoped. Do you think the fact that that is the case in Ukraine will push NATO to go even further in what is going to be given as we're expecting this major announcement this morning?

BRIG. GEN. MARK KIMMITT, U.S. ARMY (RET.): No, not really. Kim makes an important point, that to become a NATO member there is a logical and rational membership action plan that all aspirates (ph) have gone through. You don't bring in Ukraine simply for security guarantees. But to get into NATO, you also have to meet certain economic, the resourcing, some pre-market ideals. In other words, the idea that you can't just join NATO by applying. You have to meet criteria to join the club. And they are eliminating these criteria, which many countries -- most countries have taken years to meet, to go straight to the heart of the issue, which is to bring in a security guarantee eventually for Ukraine, which is not simply a guarantee, but it's an obligation on the part of other countries to defend the land of Ukraine if attacked in the future. So, to me, it seems to be a logical responsibility and it seems to be a responsible way to bring Ukraine into NATO.

BOLDUAN: General, what do you think about - just -- we have heard over the year plus of the Ukraine war so many security commitments, you know, and progressively more and more heading over.

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But just in the last two days, how do you put in perspective kind of the significant number of commitments we've heard from individual nations and then this long-term commitment we're about to hear from the G-7 leaders, you know, France, Germany, Norway, and what they're agreeing to send over now, what does that show?

KIMMITT: Well, what I think it shows is that the Ukraine is continuing to receive security assistance, but that's not what we're talking about with NATO membership.

BOLDUAN: Right.

KIMMITT: That's an obligation. That's a treaty between the countries to defend Ukraine when necessary. I don't necessarily see the latest round of commitments, as you would call them, the equipment that we'll be sending over is anything but more support for Ukraine to continue this war, to end this war as quickly as possible.

But those are two separate things. NATO membership and provisional weapons to fight the war are two separate things.

BOLDUAN: And, Kim, you were touching on this a bit. The question I think coming from out of this meeting and out of this gathering is what then does come next? I mean what do you see as the conditions that could be needed, that would get the United States and NATO allies what -- to a place of offering the invitation for Ukraine to join as a member. What are they looking for?

DOZIER: Well, look, first of all, Article 5 means the moment Ukraine is a member, everyone else would be at war with Russia. That's why it's a non-starter. Even if they offered Ukraine a path to membership, you saw how hard it was for Sweden to go because of Turkish and Hungarian objections. I can only imagine how many NATO members might balk at having Ukraine join right now when it would obligate them to send their troops against Russia.

But what this agreement -- there's a side agreement that's being worked on between the G-7 and the U.S. and U.K. where they give multiple-year financial guarantees. We are going to keep giving you this kind of military aid. What that does is, one of the things that Ukraine has faced is shell hunger, not enough ammunition, artillery for the battlefield to keep this war up. And one of the problems is defense companies don't want to invest in very expensive factory production lines that can take a couple of years to build if this war is going to be won and done.

Now that they've got this financial commitment coming up that there are going to be multiple-year buys from these countries with big pockets to keep supplying Ukraine, that means the defense industry can really ramp up. That's good for Ukraine. It's also bad for Russia because it means that capabilities available for all NATO members.

BOLDUAN: Yes.

General Kimmitt, Kim, thank you so much for being here.

We are standing by for a lot of live events that we will be bringing to you. First and foremost, the now delayed meeting of G-7 leaders. President Biden will be there, of course. And then the one-on-one, the sit-down between President Zelenskyy and President Biden. All of that we expect will be happening during our show. We will bring you these key moments live.

SIDNER: All right, China-based hackers breached email accounts at roughly two dozen organizations, including some government agencies. What officials are doing now to contain the fallout.

Also, rescuers are underway in the flood ravaged communities in Vermont. You're seeing those pictures there. The latest on the extreme weather threatening homes and businesses. Also, major economic news this morning. U.S. inflation cooling for the

12th straight month. What that could mean ahead of the next Fed meeting.

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[09:17:55]

BOLDUAN: New this morning, a key inflation gauge showing signs of easing for the 12th straight month in June. The Consumer Price Index is what we're talking about, offering up a sharp cooldown with annual prices rising just 3 percent. That is compared to 9.1 percent in June of last year for comparison.

CNN's Rahel Solomon has the very latest on this. She's joining us now.

Rahel, I'm seeing that this is the smallest increase since March of 2021. Tell us more.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Yes, Kate.

So, this is not only a cooldown, as you pointed out, but even more of a cooldown than most people were expecting. And so you saw futures jump on this news, economists on Twitter are sort of raving about the news.

But, yes, so 3 percent on an annual basis. As you pointed out, the lowest figure we have seen in quite some time. Compare that to 9.1 percent last year, which was the peak of inflation.

So, part of this is that, right, the base is sort of very high and so we're seeing a lower figure now. On a month-over-month basis cases, the index - Kate, the index increased 0.2 percent.

We got some help over the month from declines in areas like airline fares. We saw those prices went down. We saw used cars, those prices went down. Household furniture also going down.

And if you look at the chart here, this is the annual increase over the last few years. Again, now we're at 3 percent, 9.1 percent a year ago was the peak. So, what a difference a year makes.

Let's take a look at some categories specifically. Gas prices have really just come down quite a bit from last year, down 25 percent -- 26.5 percent to be clear. Food prices still much higher. So, if you're going to the grocery store and you feel like, I don't know, I mean things still feel more expensive than they have been, you're probably right. Still higher by 5.7 percent. And shelter prices also higher.

What does this mean for the Fed? Of course, that's the important context here.

BOLDUAN: Right.

SOLOMON: Well, Fed officials have indicated, even as recently as this week, that they still continue to raise rates, that they still see more work that needs to be done. And the reason why is because, remember, their target is 2 percent. So even though 3 percent sounds a lot better than 9 percent, their target is 2 percent. And it could take some time to get from this level to where we want to get.

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And so, when the Fed meets in two weeks, even despite a report like this that shows cooling, as you pointed out, twelfth consecutive month of annual inflation, we still expect them to raise rates.

BOLDUAN: Yes, still offering up some very important and tough questions and decisions for the Fed.

It's great to see you, Rahel. Thanks for bringing it to us.

Sara.

SIDNER: All right, we're learning new details this morning about an apparent spying campaign by hackers based in China. The White House and Microsoft say that email accounts at roughly 25 organizations, including a number of U.S. government agencies, were targeted in attempts to gain access to sensitive information. The full scope of what happened is under investigation right now.

CNN's cybersecurity reporter Sean Lyngaas is following this story.

You have some new reporting for us. Where exactly was this first detected, Sean?

SEAN LYNGAAS, CNN CYBERSECURITY REPORTER: Well, Sara, according to our reporting and our sources, the State Department was the patient zero, if you will, the federal agency that first detected these alleged Chinese hackers who were combing some of the email networks for information. And that the State Department, according to a source, alerted Microsoft. And that's how this hunt began for the hackers.

This kind of espionage is quite common. It's very narrow and targeted. They're looking for senior officials, we believe, who might have information that would be of interest to Beijing. And, of course, there's a lot of possibilities in terms of what the State Department is tracking that may be of interest to the Chinese government.

But the Biden administration, the FBI, numerous agencies have been saying for months that the Chinese government is the most advanced cyberthreat in terms of nation state cyberthreats to the U.S. government. And this is another reminder of that.

Now, Beijing routinely denies conducting cyberattacks and they, in turn, accuse the U.S. government of doing their own cyber espionage, which certainly happens. But this is another challenge for the administration that came to power facing a couple of cyber crisis with the Solar Winds hack from Russian hackers and another Chinese hack involving Microsoft that people have already forgotten about that occurred in the early months of the Biden administration. So, this is a really thorny challenge in terms of how to detect these stealthy attackers and then how to kick them out. And this is not - this is espionage. This is not violating any norms

that we know of. I mean this is something that governments do. But, obviously, the Biden administration doesn't want these hackers in government systems, even unclassified systems, because it could reveal sensitive information that would help the Chinese government.

SIDNER: Yes.

LYNGAAS: Sara.

SIDNER: Yes, it's always sort of a case of cat and mouse, because all nations do spy.

What does this, though, say about the broader challenge of Chinese cyber threats facing the Biden administration or any administration in the future?

LYNGAAS: Right. Sara, I mean, the FBI has said that, you know, the Chinese government has a bigger hacking program than all other governments combined. And based on my reporting and my sources in private industry and government, I would - I would concur with that. It's vast. It's very capable. And it's ever-present.

And, you know, just in terms of numbers, the FBI, if they had agents focusing on this issue 24/7, they've said focused on Chinese hacking alone, they would still be on -- outnumbered many - many times in terms of personnel. So, it's a very tricky challenge in terms of resources, Sara.

SIDNER: All right, Sean Lyngaas, thank you so much for your reporting.

Kate.

BOLDUAN: Next hour on Capitol Hill, the FBI director, Christopher Wray, he is set to testify before the House Judiciary Committee and set to face some of the director's harsh critics. This is his first appearance before the Judiciary panel since Republicans won control of the House.

Now, the committee's Republicans, they are laser focused and critical of the FBI over what they perceive as a political bias inside the agency.

CNN's Sara Murray, she's watching this for us. She's going to be tracking it for us this morning. She joins us now.

Sara, what is going to happen today?

SARA MURRAY, CNN POLITICAL CORRESPONDENT: Well, look, I think Republicans want to cover a number of what they believe are these hot- button issues. So, among them would be Special Counsel John Durham's investigation into the origins of the Donald Trump Russia probe and his conclusion that a full-blown investigation never should have been opened. You know, Republicans on this panel have accused the FBI of doing things like targeting conservative parents because of a warning that went out about behavior at school board meetings. They've also said the FBI targeted Catholics, even though a warning, again, that went out was quickly retracted.

We've already heard from the top Democrat on that committee, Jerry Nadler, who's been very critical of how Republicans are going to approach this hearing. He said this is going to be performance art and he said House Republicans are basically attacking the FBI for treating Donald Trump like another ordinary citizen.

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And I think what Chris Wray, the FBI director, is going to try to do is remind everyone on the panel, Americans at home, that the FBI does a whole lot more than just some of these politically sensitive investigations, Kate.

BOLDUAN: Yes, that's exactly right. So, the committee, to state the obvious, the committee has oversight responsibilities of the FBI, which also includes oversight over the FBI -- funding for the FBI and the budget. What more are you learning about what Chairman Jordan is kind of threatening over this?

MURRAY: Well, he's proposed some very steep cuts to the FBI's budget. I mean he's talking about essentially eliminating funding for anything other than these absolutely essential services. He said there shouldn't be any funding for a new FBI headquarters unless it is in Huntsville, Alabama. Again, what Jim Jordan wants, Jim Jordan doesn't necessarily get when it comes to these - these funding claims, but it certainly is a threat that's hanging over the FBI.

And the FBI did put out a statement responding to this talking about how they are using their resources saying the president's budget includes mission critical resources to equip the FBI to address persistent and evolving threats. They go on to say, reductions would be detrimental to the support the FBI provides to the American people.

So, I think what you can expect is not a particularly friendly hearing today, Kate, but, you know, we'll see how it shakes up.

BOLDUAN: And also an opportunity for Christopher Wray to speak up for the many members of the FBI -

MURRAY: Yes.

BOLDUAN: Defend the agency and speak to really the threats that they are covering across the country.

It's great to see you, Sara.

Much more to come on this. That hearing begins next hour.

Sara.

SIDNER: All right, we are closely watching -- we're expecting to hear from Joe Biden. You see him standing on the stage with Zelenskyy. He is about to speak at the end of this, as this NATO summit, which is extremely, extremely important, is about to end. And this is the major announcement I think that we're supposed to be hearing. All right, let's listen in to the president of the United States.

JOE BIDEN, PRESIDENT OF THE UNITED STATES: You know, I think there are very few people in Europe, or in continental United States, in the North American continent, that thought this man would stand up and come to the aid and assistance of Ukraine. He increased his military budget, he stepped up. Japan. Japan. Because he understood that when any part of the world has 185,000 people, soldiers crossing a border stealing sovereignty from another nation, that it affects the whole world.

I want to thank you again publicly.

We just concluded the first meeting of NATO/Ukraine counsel. And we're -- all our allies agreed Ukraine's future lies in NATO. That's not a surprise to any of us, I don't think. I hope it's not a surprise to you, Mr. President.

Allies all agreed to lift the requirements for membership action plan for Ukraine and to create a path to NATO membership while Ukraine continues to make progress on necessary reforms.

But we're not waiting for that process to be finished to make the long-term commitments that we're making to Ukraine's security. Volodymyr and I - we - the - I shouldn't be so familiar. Mr. Zelenskyy and I talked about the kind of guarantees we could make in the meantime. When I was in Ukraine and when we met in other places. And so, today, the long-term commitments we're making are backed up by the notion that in the meantime we're going to provide security to Ukraine for its needs and against any aggression that may occur.

Today, the members of the G-7 are launching a joint declaration of support for Ukraine to make it clear that our support will last long into the future. This starts a process by which each of our nations, and any other nation who wishes to participate, will negotiate long- term bilateral security commitments with and to Ukraine. We're going to help Ukraine build a strong, capable defense across land, air and sea, from which we'll force -- it will be a force of stability in the region and deter against any and all threats.

I want to thank my fellow G-7 leaders and President Zelenskyy for their work to make this happen. I think it's a powerful statement, a powerful statement of our commitment of Ukraine as it defends its freedom today and as it rebuilds the future for - and we're going to be there as long as that takes.

And, again, I thank all of my colleagues for their support on this.

[09:30:04]

PRESIDENT VOLODYMYR ZELENSKY, UKRAINE: Thank you very much, Mr. President.