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U.S. Cluster Munitions Arrived In Ukraine; Blinken "Raised" Breach Of U.S. Govt. Agencies By Chinese Hackers; USCG Launches Internal Probe Over Sex Assault Cases. Aired 2-2:30p ET

Aired July 13, 2023 - 14:00   ET

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

[14:00:00]

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JIM SCIUTTO, CNN ANCHOR: Putin's purge. New signs that the Russian president may be attempting to eliminate top officials in the military after the failed mutiny by Wagner mercenaries just last month as Russia faces a reinvigorated NATO that is vowing to help Ukraine finish its fight against Russia.

BRIANNA KEILAR, CNN ANCHOR: And the nation's top diplomat confronts a top Chinese official over a recent hack targeting U.S. government agencies. What we're learning about those talks and new details on who was targeted. We're following these major developing stories and many more, all coming in right here to CNN NEWS CENTRAL.

SCIUTTO: U.S.-made cluster munitions have already arrived in Ukraine, that according to a Ukrainian general, telling CNN those weapons now "radically change the battlefield, despite the risk to innocent civilians down the line." The general's speaking to CNN's Alex Marquardt. He joins us now from Dnipro, Ukraine.

Alex, I wonder how this general responded to concerns about the safety of these weapons after the fight in effect. Them not exploding. Lasting there in the battlefield threatening civilians down the line.

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, Jim. He says that these are certainly going to be used within the framework of the deal that was struck with the United States. And they will be keeping careful track of where these are fired for those future de- mining efforts. The general we're talking about is Brigadier General Oleksandr Tarnavskyi.

He is in charge of arguably the most important section of the southern front when it comes to this counter-offensive. He says that these cluster munitions from the U.S. are now in the country. That they have not yet been used. But he does believe that they can be extremely effective on the battlefield. He says he thinks that Russian troops are very worried and that they may indeed leave areas where these clusters can be most effective.

Now, he does acknowledge how dangerous these cluster munitions are. He says that they will not be used in densely populated areas. That was one stipulation also from the United States alongside the need to keep track of where they're being fired.

He also says that it will be senior leadership, a military leadership that will decide when and where these cluster munitions are deployed. Take a listen to a little bit more of what the general told me earlier today.

(BEGIN VIDEO CLIP)

BRIG. GEN. OLEKSANDR TARNAVSKYI, UKRAINIAN COMMANDER OF TAVRIA JOINT FORCES OPERATION (TEXT): In general, this is a very powerful weapon.

MARQUARDT: Have you used them already? And how much do you think they're going to change the fight?

TARNAVSKYI (TEXT): We just got them. We haven't used them yet but they can radically change the battlefield. Because the enemy also understands that with getting this ammunition, we will have an advantage.

(END VIDEO CLIP)

MARQUARDT: And, Jim, when the U.S. announced that these very controversial cluster munitions would be heading to Ukraine, one of the first things that they noted was that Russia has been using their own cluster munitions for the entirety of this war.

SCIUTTO: Yes.

MARQUARDT: Not just against Ukrainian troops, but also against Ukrainian civilians. And after that announcement, we heard Russia say that they would respond in kind. So, we could maybe expect Russia to reciprocate.

We heard from the former president, Dmitry Medvedev, who has become quite a firebrand saying that their arsenal needs to be emptied out of these inhumane weapons, as he called them. Of course, rather hypocritically --

SCIUTTO: Yes.

MARQUARDT: -- because they have been using them for so long, Jim.

SCIUTTO: Did the general have an answer explanation for the so far disappointing results in Ukraine's counter-offensive in the south and the east? Did he play down those reports -- those assessments?

MARQUARDT: Yes, it's an excellent question. It's something that I certainly did ask him about it. He says they are having success. He claimed -- he notes that it is modest.

[14:05:01]

And he said rather honestly that it is less than they would have anticipated. That's why you know in part at least he is eager to get these clusters onto the battlefield because he does believe that they will make an impact. What he says, Jim, is what we heard from others before that despite the fact that the Ukrainian side has built up a formidable arsenal of new Western weapons and armored vehicles and gotten all this training in Germany, that they are still up against very strong Russian defenses.

You have mile upon mile of fields that are just covered in Russian mines that are very difficult to cross. As soon as a certain section is cleared, then the Russians come back out and lay mines again. The Ukrainians are coming under significant fire.

So, that's -- it's really that the stiffness of that Russian defense that he says is really responsible for the -- for the lack of progress. One thing, Jim, that he says he wishes he had more of his long-range ammunition.

SCIUTTO: Yes.

MARQUARDT: Of course, Jim, you know, we have heard that time and time again from Ukrainians.

SCIUTTO: Yes. No question. Alex Marquardt, in Dnipro, please keep yourself and your team safe. I want to bring in now U.S. Army Major Mike Lyons. Mike, there's reporting in the Wall Street Journal today that's been consistent with other reporting.

And that seems to indicate that Putin is looking through the senior ranks of the military to see who was with him, and who was against him in this including holding a senior general it seems perhaps against his will. In your view, does Putin have the juice? Does he have the power to successfully put this down?

MAJOR MIKE LYONS (RET), U.S. ARMY: You know, it's just going to depend. He -- someone like this always has people around him that are willing to do what it takes to stay close to him. The Russian defenses in Ukraine still are what they are, and they're still much in his chain of command that believe in their mission and they're not going to go against him.

So, I think it's not a good idea for us to hope that the collapse comes from within right now within Russia in order for Ukraine to have victory on the battlefield. We got a president -- they -- today say that Russia is losing. I'm not sure that was the smartest thing to say. But it just is going to depend on how deep and level of his chain of command is.

Look. Prigozhin is still alive. And the Wagner group is going to -- is not going away. So, that tells you that he's still really not giving up.

SCIUTTO: But let me ask you about the Wagner group specifically because there was also some reporting that Putin is attempting to dismantle it. And the leaders fade certainly in question here. We saw that meeting with Putin earlier in the week but you have to wonder about Prigozhin's safety going forward. Does the Wagner group survive this as a fighting force but also as a -- as a challenge potentially to Putin's power? LYONS: Well, I think that they're likely still aligned with him. If they're living to fight another day, it's going to be in Belarus, still creating problems on the Polish-Belarus border, let's say. We know the Wagner group exists in the Middle East and Syria and Africa and helps collect rare earth minerals for Vladimir Putin.

The bottom line is Prigozhin's an earner. And I think from that perspective, for Putin to just get rid of a mercenary army that he has significant control over is not smarter on his -- at his end.

SCIUTTO: Right.

LYONS: So, given the fact that others within Russia too are likely gathering mercenary armies themselves. So, I don't think that you've heard the last of the Wagner group. I think they all become a force down the road, not necessarily in Ukraine though.

SCIUTTO: On these cluster munitions. It strikes me having covered this from the beginning that there's often been the most attention on high- profile marquee weapons systems. So, it -- whether it's F16s, haven't gone yet, Leopard tanks, HIMARS, ATACMS.

The cluster is -- it's an ugly weapon. It's an old-school weapon. It's a dangerous one. And the ask here seems to be this is what Ukrainians need to break through those entrenched Russian lines, which, you know, harken back to World War One.

In your view, was this the right call to send these weapons? And do you see them as being potentially impactful in the Ukrainian counter- offensive?

LYONS: Jim, the cluster munitions are not game-changing, but they will affect how the artillery is used either from a breakout perspective with regard to trying to get Ukraine forces through or denying space for Russian units that are currently on the move. So, they'll have some impact. But it's going to take the strategic weapons like you mentioned, the F16s and the ATACMS, other things in order for Ukraine to really claim some level of success.

The other thing issue is they're going to - they're running out of artillery ammunition. And we don't have enough. We can't make it fast enough to send it to them. NATO can't. This is going to keep the guns firing, so to speak, and so they don't go quiet.

The Ukraine counter-offenses are in real risk of culminating. And that means getting stopped and not moving forward as much as they would like. And I think they still have six to eight weeks before that NATO equipment shows up.

So, yes, it was the right decision to make. It's going to keep the artillery going. But it's a tactical type of weapon system that really won't impact strategically on the ground.

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SCIUTTO: Yes. And just as you've been talking, here it is on our big screen. This is one of those cluster munitions dropping. You could see breaks into dozens, sometimes hundreds of immunization -- munitions, and those are intended to kill personnel. Major Lyons, always good to have you on. Thanks so much. Brianna.

KEILAR: The good news on inflation keeps on coming. A key indicator showing that wholesale inflation was up by just one-tenth of a percent last month. Analysts were expecting a bigger jump than that. The president, of course, crediting his Bidenomics, but the CEO of America's biggest bank is not so sure.

(BEGIN VIDEO CLIP)

ZANNY MINTON BEDDOES, EDITOR-IN-CHIEF, THE ECONOMIST: Do you think Bidenomics has been a success?

JAMIE DIMON, CEO, JPMORGAN CHASE: God, it's a tough question to answer. It shouldn't be political. It should be purely economic. And also the fiscal spending, five trillion dollars of excess fiscal spending over two years, some to counter COVID but some is far more in excess that is causing inflation.

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KEILAR: All right, let's discuss this now with Justin Wolfers. He's a professor of Economics and Public Policy at the University of Michigan. OK, so will you answer that question? And he says it's very tough. Does the president get some credit here with his Bidenomics that he's been taking a victory lap on?

JUSTIN WOLFERS, PROFESSOR OF ECONOMICS & PUBLIC POLICY, UNIVERSITY OF MICHIGAN: Well, I think there's two parts to that question. One is, is the economy doing well? And on that score, unemployment is at a 50- year low. Inflation has fallen from nine percent just a year ago, down to three percent, a much more normal rate.

And he has a whole lot of other things to boast about. The one he's not talking enough about, I think, is that inequality is falling. The much harder question is how much credit does the president deserve for that?

And we see this with every administration. The White House says the economy responds to us and only to us. And outsiders say there are so many other factors going on.

I will say that economists tend to think that people inside Washington overstate the importance of Washington, per the state of the economy. But there are a million ways that Washington can mess things up. And the least you could say about President Biden is he definitely hasn't messed things up.

KEILAR: OK. So, talk a little bit about that you said inequality. The shrinking of the wage gap being part -- a bigger part of the story here. What are you seeing, and what is really standing out to you?

WOLFERS: This has just been the first -- it's been a fabulous economic recovery. And it's the first one in most of our lifetimes in which we've seen inequality fall. Real wage rises. A recurring.

Well in excess of the rate of inflation. For those at the very bottom end of the income distribution, those who need it most. That's a big force for lower inequality.

But we're also seeing a hot labor market. So, a rising tide, that lifts all boats. We've seen in recent months that African American unemployment rates are at their lowest rate ever.

We've seen that prime-age employment rates are at their highest rate in 20 years, and nearly their highest rate for a much, much longer period. We've seen that employment rates among the disabled are higher than they've been in a long, long time. All of this is when you run a hot labor market, it's the most beautiful labor market program you can imagine.

You get people into jobs. They acquire skills. And you also show employers that if they look a little harder, they'll find some hidden talent in places they wouldn't previously have looked.

KEILAR: Yes. That's a really interesting point. So, as we increase the chances of looking at these numbers of a soft landing, which I think is music to everyone's ears, why is it that people still are pessimistic about how things are? Maybe they're optimistic a little bit about their individual financial situation, but they're still a little sour on how they think broadly, the economy is performing. Why is that?

WOLFERS: Last two years have been the most puzzling two years of my professional career as an economist because we've seen the economy move to get stronger and stronger and better and better throughout that entire two-year period. And there has been a drumbeat from Wall Street, from the media, or in public opinion that we're in the midst of a recession, which never arrived.

What we're currently seeing on Wall Street is almost every Wall Street firm is now quickly sending out new research notes, saying oh, we don't think a recession is coming after all. So, I think the first thing that happens is elite opinion is going to change. And you're seeing this. There's a lot less talk about a recession now. And we're going to start to see a lot more of this on Main Street.

One of the most important things that has just happened is, in recent months, wages have finally started to grow at a more rapid pace than inflation. And as inflation keeps coming down, people are going to see more and more of that, which means that their paychecks are going to go a little further. So, I'm optimistic about the state of the economy.

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And it turns out if you ask people questions like, do you think it's easy to get a job right now, or do you expect to get a wage rise, or if you were to lose your job would you be able to find one again, very quickly? People start to tell you that this economy is one that's really serving them pretty well. KEILAR: Well, that's interesting. So, those are the questions really to ask. Justin Wolfers, it's always great to have you. Thank you.

SCIUTTO: Yes.

WOLFERS: Thanks, Brianna.

KEILAR: Jim?

SCIUTTO: Yes, it's always good to listen to the hard economic numbers there. Ahead this hour on CNN NEWS CENTRAL. We are learning more details about an apparent spy campaign carried out by Chinese hackers, including the government agencies here they targeted.

Plus, the Coast Guard is now responding to a CNN report that revealed years of sexual assault cover-ups within that branch of the Armed Services. What it plans to do about it? And we know everyone wants to put COVID behind them but CNN just learn when you can get your next shot, if you'd like it, to protect yourself

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SCIUTTO: New developments in the breach of U.S. government e-mail accounts by hackers in China, yet another cyber breach. A senior State Department official tells CNN that Secretary of State Antony Blinken raised the issue in a meeting today with his Chinese counterpart face- to-face. We're also getting new information on which of the more than two dozen organizations were targeted by those hackers.

CNN National Security Correspondent Kylie Atwood joins us from the State Department. CNN's Cybersecurity Reporter Sean Lyngaas has been looking at the extent of this. Just tell us how far this went, and for how long.

SEAN LYNGAAS, CNN CYBERSECURITY REPORTER: Jim, this actually didn't go on as long as you might think, you know. As you know, a lot of these hacks are long-running campaigns.

SCIUTTO: Yes.

LYNGAAS: The solar winds carried out by the Russian SVR allegedly was maybe 18 months of access without being noticed. In this case, some U.S. officials are accrediting the State Department for being pretty quick to detect it.

The first anomalous suspicious activity if you will, occurred, I believe, in mid-June. Sort of a month head start that they had. And you know, running up to recent days when they remediating it.

So, it wasn't that long. However, they were able to get access to certain high-level officials' e-mail accounts. You know, the commerce -- the Secretary of Commerce, Gina Raimondo, who -- as you know, commerce has been very tough on certain Chinese companies in terms of sanctioning them. And also commerce officials are considering another visit to China, so that could have been an intelligence-gathering effort. So, there was some success from the hacker standpoint and some success from the U.S. government's defensive measures. So, it's a bit of a mixed bag, Jim.

SCIUTTO: Yes. And Raimondo, of course, essentially evolved in the CHIPS Act, certainly of interest to China as they -- as they tried to troll for information here. Sean, stay with us.

I do want to turn to Kylie now. So, this is notable that the Secretary of State used his face-to-face with the Chinese counterpart to raise, I imagine, a U.S. peek at yet another Chinese breach.

KYLIE ATWOOD, CNN NATIONAL SECURITY CORRESPONDENT: Yes. So, what we know is that the secretary of State met on the sidelines of a foreign ministers meeting in Indonesia today with his counterpart, that top diplomat from China. And State Department said that you know, generally speaking, he did speak about this breach.

What we don't know is how specific he got with that language. It's important to note that the State Department has said that they don't actually publicly have a determination as to who was behind this breach. They're not pushing back on Microsoft saying that it was China that was behind it. So, this public readout that we're getting of the meeting may have something to do with the fact that they're not publicly saying that China was behind it.

Here's how a senior State Department official described the secretary's conversation with Wang Yi on this topic, saying. "I'm not going to get into the specifics, but we have consistently made clear that any action that targets the U.S. government, U.S. companies, American citizens is of deep concern to us, and that will take appropriate action to hold those responsible accountable. And the Secretary made that clear again tonight."

Jim, I do think that the timeline here is an interesting one. Because as Sean was saying, Microsoft, you know, first believes that this was detected this hacking began in mid-May. But it wasn't until June 16 that they were alerted that this suspicion of this hacking had actually happened.

SCIUTTO: Right.

ATWOOD: And that alert came from the State Department. It was the first agency to detect -- to detect that this was ongoing. That June 16 date is important because that is the day that the Secretary of State was actually leaving Washington heading to Beijing for his meeting with his Chinese counterparts. So, it's just an interesting timeline as we tracked down you know what was detected when, and when they actually suspected that China was behind this. Jim.

SCIUTTO: Well, it's also notable because there's been a lot of some criticism of the administration for having a tough talk amidst an attempt to soften relations with China. Of course, you had a hack going on in the midst of that effort, but that one coming from the mainland Chinese side. Kylie Atwood, at the State Department, thanks so much. Brianna.

KEILAR: Today, the head of the U.S. Coast Guard was grilled by senators after an investigation by our Chief Investigative Correspondent Pamela Brown and her team uncovered that Coast Guard leadership had mishandled sexual assault allegations for decades. And that they had hid a report heard about it. Commandant Linda Fagan said the agency is launching an internal review but senators want to see more.

(BEGIN VIDEO CLIP)

SEN. MARIA CANTWELL (D-WA): We cannot tolerate the fact that the Coast Guard did not notify us of this. We cannot have the media be the policeman on the beat. And I'm going to ask for an IG inspection so that we can get to the bottom of all the problems that have occurred here.

(END VIDEO CLIP)

KEILAR: CNN's Oren Liebermann is at the Pentagon for us on this. So, Oren, it took five years for the Coast Guard to complete this initial internal probe, then they kept it secret for several more years until CNN began asking questions about it.

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OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT: And that's why you saw so many of the Senators grilled Admiral Linda Fagan about what on earth happened here that first led to the investigation and then kept it quiet for so many years. This all begins back in 2014 when a graduate of the Coast Guard Academy in New London, Connecticut comes forward with an allegation of sexual assault that hadn't been investigated. When the Coast Guard begins this investigation which came to be known as Operation Fouled Anchor, they found much more than that, including dozens of substantiated cases of sexual assault, rape, and sexual harassment at the Coast Guard Academy between 1988 and 2006.

The report itself took five years to complete. But when it was finished in 2019, it was kept secret. It wasn't disclosed to the public, and it wasn't disclosed to the Congressional Oversight Committee. And that's why you saw so much of this anger.

Senator Tammy Baldwin said it was insulting and re-traumatizing that it was kept secret. She also said it was an unconscionable failure of justice as she grilled Admiral Linda Fagan. Fagan, it's worth noting is not only the first woman to lead the Coast Guard, she's the first woman to lead any military service in the U.S.

She said the Coast Guard has come a long way with how it handles sexual assault, harassment, and rape. But there is more work to do. Here's some more of what the investigation found. Take a look at this.

First, many suspects were never criminally investigated, according to this report. Those that were and that were found to have substantiated allegations against them were given light sentences in many cases, including demerits or extra homework. Finally, according to the report, the victims of those assaults were punished for fraternization or for engaging in lewd acts. Here is Fagan on where the Coast Guard is today.

(BEGIN VIDEO CLIP)

LINDA FAGAN, COMMANDANT, U.S. COAST GUARD: It started as legacy sexual assaults that were mishandled at the Coast Guard Academy. But it is clear to me that we've got a culture in areas that is permissive and allows sexual assaults, harassment, bullying, and retaliation, that's inconsistent with our core values.

(END VIDEO CLIP)

LIEBERMANN: Now, one of the open questions about this report, an Operation Fouled Anchor, is why the dates were limited to between 1988 and 2006. Why they didn't look at the last 17 years, for instance? Fagan promised there would be accountability and transparency. She said there's a 90-day review of that. You heard senators call for an inspector general investigation.

One of the big questions, though is how much accountability there can be. And Fagan said she would use the jurisdiction of the Coast Guard to the extent that she could, but some of these cases may have happened too far long ago for that to happen. And many of these people may have left the Coast Guard already, Brianna.

KEILAR: Yes, victims were punished. There it is right there. Unbelievable. Oren Liebermann, thank you for following this for us. Jim?

SCIUTTO: All right. Coming up. Two more Republican presidential candidates say they have qualified for the first GOP debate. We'll tell you who you can expect to see on the stage. What does it mean for Trump's possible participation?

Plus, a jury has decided whether the Pittsburgh synagogue shooter will face the death penalty. We're going to tell you how they ruled just after this.

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