Return to Transcripts main page

CNN Newsroom

Stocks Rebound Despite Ukraine Fears; Kerry Arrives in Ukraine to Discuss Aid; U.S. Plans $1 Billion Loan Guarantee to Ukraine; Putin Breaks His Silence

Aired March 04, 2014 - 09:00   ET

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

ANNOUNCER: This is CNN Breaking News.

JAKE TAPPER, CNN ANCHOR: Good morning. And thanks for joining me for this special edition of CNN NEWSROOM. I'm Jake Tapper in for Carol Costello.

We begin this hour with Russia's invasion of neighboring Crimea. In Moscow President Putin digs in on the front lines. Tensions ratcheted up.

A tense scene, Russian forces firing warning shots as unarmed Ukrainian troops try to approach them. One Ukrainian leading the advance appeals for the brother nations to hold negotiations. Ukraine says 16,000 Russian forces now control the southern region.

And this morning President Putin says even though the action has been peaceful, force remains an option. He also says Russia has no plans to make Crimea a part of Russia.

Also new this morning, Secretary of State John Kerry arrives in Kiev in Ukraine to discuss financial assistance for the beleaguered nation.

And Washington sends a message to Moscow suspending its plan trade and investment talks with Russia.

But first, global markets making a comeback today. U.S. stocks took a big hit yesterday including the Dow which suffered a triple-digit loss.

Let's bring in CNN chief business correspondent Christine Romans.

Christine, what is behind this bounceback? And how do the markets look right now?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: You know, the markets look very good right now for U.S. stocks. What's behind the bounce back is the fact that President Vladimir Putin ended those military exercises in Russia.

When that happened, and then the president gave his press conference about four to five hours ago, and said that he was not going to annex Crimea, that what the moment when you saw the highs reached in some of these stock futures. The Dow futures right now up 165 points. Nasdaq up as well. And look, Jake, there at the S&P 500 futures. If they rise 18 points, 19 points, 20 points, you will see a record high in the S&P. Something that a lot of market watchers are saying is pretty interesting given all of the tension you're seeing in this really strategically vital area of the world.

And again, it's very volatile. They're also pointing out everything can turn on a dime depending on what kind of developments we see out of the region.

I'm seeing oil prices cool off a little bit. I'm seeing grain prices come down a little bit. You're seeing Russian stocks earlier rose a little bit, although it didn't take back everything they lost yesterday. Essentially a snap back from that very big shocking dramatic move that you saw yesterday.

It could be very volatile this week, though. I want to be pretty clear here. This is no time for individual investors to be changing their portfolios based on what they're seeing overnight. This is very fluid, things could change rapidly.

And we end the week, Jake, with the jobs report. So who knows? We'll be looking for signals of strength for the U.S. economy as well.

TAPPER: And, Christine, when we spoke yesterday, you talked about how the economic effects of Russia's incursion into Crimea could be almost like another diplomat at the table exerting himself. How do you see that shaping up? Are things you said bouncing back a little but not enough yet?

ROMANS: I think that's one of the reasons you've got a bit of a bounce back here. I mean, inside Russia you've got business leaders, you've got people who are -- who are really needing foreign direct investment, who are saying look, this president, President Putin, cannot risk damaging a weakening Russian economy.

And when you talk about, would Russia do some sort of retaliation to Europe, for example, with oil flows or -- Russia needs that oil business with Europe just as much as Europe needs the oil from Russia. So everyone here has a very important financial stake in things not getting worse. That's what markets are telling us.

TAPPER: And when we hear about European nations pushing back against President Obama's desire for sanctions against Russia, how much of that is directly tied to natural gas from Russia for Europe versus other trade impacts as a result of sanctions?

ROMANS: You know, it's so interesting, Jake, because Russia's integration in the European -- in the world economy and with the European economy is greater than it's ever been before, right? And in fact, Russia has been wooing international business, multinational companies, foreign direct investment over the past 10 years.

And so now this step back, I guess, in diplomacy from the Russian president is something that's really causing concern among those who want Russia to do business, play like a -- like a regular trading partner with everyone else. So it's really kind of -- someone earlier told me it's 19th century politics in the 21st century economy.

Sort of paraphrase something that -- John Kerry said last week. And that's something that's really caught the business world by surprise. There's be a lot of pressure from business and from the people who run money in this world that Putin not make things worse.

TAPPER: Christine Romans, thanks as always for your insights.

Speaking of John Kerry, just moments ago in Kiev, Secretary of State Kerry toured Independence Square, the sight of the anti-government protests that ousted Ukraine's president. Memorials now honor the dozens of protesters who were killed in violent clashes with police there.

Here's what Secretary of State John Kerry said just minutes ago.

(BEGIN VIDEO CLIP)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: And what's your reaction to seeing these things?

JOHN KERRY, SECRETARY OF STATE: It's very moving. Very, very, very moving, very distressing and inspiring.

CHANCE: Do you think that Ukrainians paid too high a sacrifice?

(END VIDEO CLIP)

TAPPER: That was Secretary of State John Kerry speaking to CNN's Matthew Chance.

Matthew joins us now from Kiev with the latest.

Matthew, what is the latest there?

CHANCE: Well, John Kerry has now gone off -- has left these very emotional scenes in Independence Square. And he's gone to meet with members of the Ukrainian interim administration to discuss what kind of concrete measures the United States can adopt that will perhaps try and force the Russians to move out of Crimea or at least put some kind of diplomatic or political pressure on them to do that.

You can see the scenes here, though, continue to be very emotional. There are lots of flowers that have been laid here along barricades that were the scenes of pitch battles between the protesters and the authorities here, as the protesters tried and eventually succeeded, of course, to oust the government of Viktor Yanukovych.

This is the place where many of the people, nearly a hundred of them, were killed by snipers on the roof of a building just over there. But you can't see because of the fog. And that's why these flowers have been laid here. Also these religious symbols, these icons, people have been lighting candles in remembrance of the dead.

Also very emotional poems like this one over here. It's in Ukrainian but it reads something along the lines of, you know, Mother, I'm sorry I had to go. I was shot by the police because I couldn't turn back.

Very, very emotional scenes here. Again, you know, I spoke to John Kerry, you heard what he said there when he came out. It's very difficult to get any words from him at all, but he said he was very, very moved indeed by what he saw here -- Jake.

TAPPER: Matthew Chance, thank you so much.

Part of the financial assistance that the United States will give Ukraine is the form of a $1 billion loan guarantee.

For more on that, I want to bring in CNN foreign affairs reporter Elise Labott. She was on the plane with Secretary of State John Kerry as he arrived in Kiev. She joins me now by phone.

Elise, what's the reason for this assistance? And is it enough?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER (via phone): Well, Jake, the U.S. is giving this particular loan guarantee to help insulate the Ukrainian economy from the reduced -- from the effects of reduced energy subsidies from Russia. Because that's where the Ukrainians have been getting most of their oil and gas and they've been able to do it cheaply.

Now that they want to rebuild the economy, the economy is very fragile, they need to work with the IMF on this. And one of the things that the IMF is looking for them to do is raise energy prices.

So a lot of this is geared toward the energy sector. The U.S. will also be sending technical advisers to Ukraine to work with the government on the energy reforms and also on other types of financial reforms that they need to do to rebuild the economy. They also want to help the Ukrainian businesses. And they're talking about technical assistance and further assistance toward that. They'll also be sending advisers to work on anticorruption and recovering stolen assets.

But is it enough? Don't know. The Ukrainians have said they need $30 billion to raise -- to rebuild their economy. So this is just a drop in the bucket -- Jake.

TAPPER: And obviously the Obama administration, Elise, have been -- they've been trying to motivate and rally members of the European Union to join them in threatening at the very least sanctions and other punishments against the Russian government and individuals in the Russian government, perhaps even some of the Oligarchs.

I'm wondering what you've heard about some of the more -- some of the difficulties that the U.S. has had? We saw yesterday an individual with the British government walking the 10 Downing Street.

There was a photograph of him holding a -- basically talking points arguing why there should not be -- why the UK should not join the U.S. in sanctions against Russia. Obviously we've also heard from the German government pushing back on the idea of distancing itself from Russia economically and diplomatically. How tough a sale is this for Secretary of State John Kerry?

LABOTT: Well, it's a pretty tough sale. And obviously there's a lot of tough rhetoric coming from the Europeans. But there are two factors here. First of all the Europeans have much closer trade ties with Russia, much more deeper commercial relations. And they're getting a lot of oil and gas from Russia.

So they need to consider that. And also the Europeans are very traditionally want to make sure that they've exhausted all of diplomatic measures before they implement sanctions. So that's why Angela Merkel, the German chancellor, has been trying to get a diplomatic track together, offering President Putin some kind of monitor, the diplomatic off ramp, and some kind of contact group.

I understand that the U.S. also has been trying to do this, trying to get a meeting of the so-called Budapest countries that signed this amendment and this agreement to help Ukraine build their sovereignty after they give up their nuclear weapons. And the Russians are saying they won't attend that meeting.

So, you know, while there's a lot of diplomatic process in place, the U.S. is saying it doesn't matter what the Europeans do. Obviously they'll have to calibrate how much their sanctions they impose depending on what the Russians do. But they've said they're determined to go ahead. But Russians -- the Europeans not so sure -- Jake.

TAPPER: Elise Labott, traveling with Secretary of State John Kerry, in Kiev, Ukraine. Thank you so much.

We heard tough words from Vladimir Putin this morning about the crisis in Ukraine. Breaking his silence the Russian leader defended the invasion, calling it a humanitarian mission. He was also very critical of Ukraine's new leaders and said Nazis and anti-Semites are in Ukraine.

Let's take a listen.

(BEGIN VIDEO CLIP)

PRES. VLADIMIR PUTIN, RUSSIA (Through Translator): What can cause the use of military force, of course it is extraordinary. Firstly its legitimacy. Firstly we have a request of the legitimate President Yanukovych to protect at both the local population. We have neo-Nazis and anti-Semites in some parts of Ukraine including Kiev.

(END VIDEO CLIP)

TAPPER: CNN's Phil Black is in Moscow.

Phil, you were listening to Putin. What's your take away?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Well, Jake, an interesting point I think is that President Putin is still talking about military operations in Ukraine in a hypothetical sense. He's still denying that those men in uniforms without insignias are in fact Russian troops.

Who are they? Well, according to the president, he says they are local self-defense teams. Why they're wearing uniforms very similar to Russians? Well, he said those sorts of uniforms are available in shops all across the former Soviet Union.

He was asked specifically where Russians involved in securing Crimea? And he said no repeatedly. So we're going to make the point that that stands very much against what CNN's own teams on the ground in Crimea are reporting, who've spoken to some of these soldiers and who have admitted to our teams on the ground.

But yes, they are Russia, which would explain why they're behaving like professional soldiers. So well armed, driving armored vehicles and why some of those armored vehicles have Russian registration plates -- Jake.

TAPPER: And Phil, it's interesting, in a readout of the phone call between German Chancellor Angel Merkel and President Obama, it was said that Merkel expressed -- I don't think concern is quite the right word but expressed the opinion that Vladimir Putin was in another world, did not seem tethered to reality. That's my paraphrase.

Earlier this morning on CNN's "NEW DAY", former Secretary of State, Madaleine Albight, said that she thought Putin was behaving in a delusional way.

But if somebody who has -- been reporting on Putin for years, what's your take? Is this somebody that disconnected from reality or is this somebody who is just willing to say whatever he needs to say in order to accomplish what he wants to accomplish?

BLACK: I think Putin is off viewed rightly as the ultimate pragmatist. He rarely acts without thought or intention. In case, the main point of difference between his take on what's going on on the ground and what those Western leaders believe is this claim to a threat to the ethnic Russian population in the south and the east.

Putin says there is a direct threat to these people, that's why Russia is concerned. The West, the United States says there's absolutely no evidence of this whatsoever. But what Putin made very clear today is that the military option remains on the table in terms of escalating Russia's military intervention in Ukraine particularly in the east of the country. If he believes that those people there are under threat and call for Moscow's help.

He says Russia will do absolutely everything it can under those circumstances to help those people. And Russia will -- in doing so. So I think that, for whatever his intentions are, needs to be a threat that should be taken seriously -- Jake.

TAPPER: And yesterday, Phil, the Russian Federation ambassador to the United Nations spoke of a letter that the Russians had been sent from the former president of Ukraine, Yanukovych, requesting that Russia invade his country and provide military assistance. Now as you know, just a week or so ago Yanukovych was saying that he did not want Russia to go into Ukraine. Of course now Yanukovych is in Russia. And I imagine at least a bit beholden to the Russian government.

What is your take on that letter and what Yanukovych is seeking at this point?

BLACK: Well, it's another contradiction, is it, Jake? And Putin referred to that letter again today. And it seems that letter is part of the justification from Russia or what they believe legitimatizes any possible Russian action in Ukraine, because the Russian view is that Yanukovych is still the legitimate leader of the country. If the legitimate leader of the country asks for Russia's help, then Russia is absolutely authorized and is covered by international law in going in there and answering that call for help.

The Yanukovych position here in Russia, well, it's a little bit unclear. While Putin says that yes, he's the only leader. He also admits he's got no political future. He's got no chance of a comeback whatsoever and he says he's told them to his face.

So, despite the fact that from the Russian point of view, Yanukovych is political dead meat. They're still using this request as Yanukovych as justification and legitimacy for any military action that could still come from Russia in Ukraine, Jake.

TAPPER: All right. Phil Black, thank you.

We will be right back with a live report from Crimea. Stay with us.

(COMMERCIAL BREAK)

TAPPER: Good morning. Welcome to this special edition of CNN's NEWSROOM. I'm Jake Tapper, in for Carol Costello.

Vladimir Putin says Russia is not trying to annex the Crimea region, that only those who live there can determine their future. And now, a new video obtained by CNN shows a small group of Ukrainian civilians mostly women standing guard near a base, putting themselves between Ukrainian troops inside and unmarked men wielding guns outside.

Nearby, another group of Crimean citizens is raising a Russian flag.

(VIDEO CLIP PLAYS)

TAPPER: As we mentioned earlier, Crimean TV captured images of what was thankfully a non violent confrontation between Russian and Ukrainian troops at a different base. You can see Russian troops firing into the air, warning unarmed soldiers from approaching. At one point, one of the Ukrainians called the brother nation called out for negotiations.

Let's take a closer look at the region. Russia transports gas to Europe through pipelines in Ukraine, while Ukraine is also one of the top exporters of corn and wheat. Disruptions to any commodities could lead to a spike in prices.

Diana Magnay is in Crimea.

Diana, these seem like peaceful demonstrations so far. But they seem also fraught with tension. Tell us about it.

DIANA MAGNAY, CNN CORRESPONDENT: They are. And when you go there, Jake, you get a real sense of the conflicting ideologies, conflicting loyalties in this region. You have the Ukrainian troops hold up in bases who are being asked by the Russians outside to swear allegiance to the Crimean authority who many here in Crimea don't recognize and think was forcefully put in under the auspices of gunmen by a pro- Russian militia effectively.

It's funny that President Putin doesn't think that these troops with their Russian military plates and their Russian flags in their military vehicles are Russian. But what I would say is that in the same breath as he denied their presence here, in the same question he said one day Ukrainian and Russian troops will be standing side by side in front of the barricades. In fact, that is already happening in Crimea he said.

So, you know, from our advantage point, I rest my case. Who else are they if not Russian, Jake?

TAPPER: Indeed, Diana. I'm wondering if you could help truth another claim made by the Russian government. That is of these threats, two Russian speaking Ukrainians from what they describe as ultra naturalistic Ukrainians that seek to commit violence against them, what is your reporting telling you? Are you seeing indications of that?

MAGNAY: Well, I've seen from both perspectives, Jake, because I was in the Maidan much of the three months of unrest and heard the labels accusing the far right of being Nazi's. It was hard to see anything.

You know, they were naturalists, but there wasn't really this kind of Nazi fascist element to it.

And here, this seems to be very much a phantom enemy. In fact, at the base where we just were, a man came up trying to bring food to the Ukrainian troops.

We talked to him. He said, I have lived here 40 years. I have heard about this supposed ultra nationalist threat. In all those 40 years, I have never witnessed anything that would give evidence to that. I don't need the Russian's protection.

In the few days that we've been here where President Putin cited that there have been threats, we have seen nothing. There's one exchange of gunfire in the Crimea capital. We don't know who was behind that.

But, broadly, you know, the pro-Russian majority is very much fed a line on Russian TV that there's a threat. We have not seen any evidence of that threat, Jake.

TAPPER: All right, Diana Magnay, with some truth squading of claims made by Russian officials. Thank you so much.

The U.S. is suspending upcoming trade and investment talks with Russia over this crisis. Officials are considering a further series of economic and diplomatic steps to isolate Russia. And now, all military to military engagements with Russia have been put on hold, according to the Pentagon, that includes exercises, bilateral meetings, port visits, planning conferences.

Brigadier General Kevin Ryan joins me now live from Russian. He is the director of defense and intelligence projects at Harvard.

General, thanks for joining us.

How big a deal is this to put on hold the military relationship with Russia?

BRIGADIER GEN. KEVIN RYAN, U.S. ARMY (RET): Well, as far as I know this is only happened maybe twice before since the end of the Cold War. So, it is a big deal. It happened when Russia invaded Georgia. It happened when NATO forces went into Bosnia.

So, it's a big deal when this happens. Every year the two militaries sign an agreement to do anywhere from 60 to 100 joint activities of which probably anywhere from 40 to 50 are actually done. So, it's a robust cooperation plan. To put it on hold is a big impact.

TAPPER: Do you think it's the right move to put it on hold?

RYAN: Yes, absolutely at this point. It's one of the things that the Defense Department can contribute to an immediate response to what Russia has done. And I heard the conversation earlier about whether this is an invasion or whether these are Russian troops. I can tell you for sure.

I served in Berlin during the end of the Cold War. My job was spotting Russian troops and equipment. These are unquestionably Russian forces that are in the Crimea.

Another thing that's important to note is all of these forces are spending huge amounts of time encircling police and Ukrainian forces and not really protecting the population. So, their activities and their operations indicate a completely different mission than what President Putin is suggesting.

TAPPER: You served in military intelligence. Give us a sense of the capabilities that Russia has and what you think based on their movements on the ground so far they might be considering.

RYAN: Well, so, I think -- first of all, the Russian military is capable, as long as you keep it within the geographic region. It's not able to project power over too long a distance.

The Crimea eastern Ukraine if it happens, these are places that are within their reach as Georgia is. They have all modern equipment. They have the helicopters, aircraft, ships, troops, troop carriers. And they are an overmatch for the Ukrainians. Ukrainians also have a good military, patriotic. I'm sure they'd fight for the western part of the Ukraine. They would fight and show themselves well, but the Russians would be overwhelming in the numbers.

I don't think it's going to come to that fight. I hope it doesn't. But in terms of the Crimea, the Crimea is already lost. The Russians control it. There's nothing the West can do to get it back.

TAPPER: Self-propelled artillery units, Russian one, seem to be in Crimea now. Explain to us, explain to viewers why that is significant, what artillery units, self-propelled artillery, what that can do and what that might indicate Russians are preparing for a fight?

RYAN: All right. Well, if you just have infantry units, if you just have foot soldiers and smaller gauge weapon, then you're not really looking for a battle with the opposing land army. You're basically doing local operations, police work, self-defense and so on.

But by bringing in artillery, Russians would have signaled that they're prepared to take on larger formations if the Ukrainian military for example attempted to march into the Crimea in larger groups. Artillery would be vital to repelling that force.

TAPPER: And lastly sir, as you say, Russia seems to be in operational control of the Crimea. The next concern according to U.S. officials is whether or not they start going into eastern Ukraine.

When they went to Crimea, they had a base they were coming out of. How would they start launching into eastern Ukraine? Would it be across the border or would they come up from the southern peninsula?

RYAN: Yes, I'm pretty sure what they would do is come across the border. They would use the number of high speed avenues of approach into the eastern Ukraine, which would be road networks rails and airports. So, it would not be difficult for them to cross that border and to position their forces wherever they wanted them.

Let me say that I think -- well, you know, all of us may have been surprised by the move into Crimea. Nothing should be discounted. I don't think it's -- I think eastern Ukraine has a lot to swallow for the Russian military. And although they would have a local pop lists supported I don't think they need to do that. They can let the eastern Ukraine be a problem for western Ukraine --

TAPPER: All right.

RYAN: -- and to keep us and Ukrainians busy.

TAPPER: Brigadier Kevin Ryan, thank you so much.

Now, we're going to go to the opening bell.