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Markets Trading Flat; GM Massive Recall; Hagel and Dempsey Testify to Congress; Russian TV Anchor Slams Crimea "Occupation"; Defense Secretary Comments on Ukraine

Aired March 05, 2014 - 09:30   ET

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

(COMMERCIAL BREAK)

JAKE TAPPER, CNN ANCHOR: Good morning to our viewers in the United States and around the world. This is a special edition of CNN's NEWSROOM. I'm Jake Tapper, in for Carol Costello.

Wall Street is looking at a flat open this morning. The opening bell just rang. Investors eyeing the situation in Ukraine, as well as the employment outlook here at home. On Friday, we'll find out how many jobs were gained in the month of February here in the United States. Here to help us navigate today's trade, chief business correspondent Christine Romans.

Christine, this has been a volatile week. Any indication what we can expect today?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Well, today it looks like at least calmed nerves -- you know, nerves have been calmed and you can see a little bit of a gain this morning. But I want to really caution you, Jake, at any moment here you are one headline away from violent swings in this market. Let's be honest, you still have developments, especially developments along the lines of sanctions and what kind of retaliation there could be for sanctions from Russia. So that's going to be really important for markets and for the business world overall.

But you're very right to mention the jobs market because as at least it feels as if Putin has backed off from the brink or the situation has backed off from the brink of outright conflict in Crimea, you've got to focus going back to the jobs situation on Friday. We get that jobs report, 150,000 jobs expected to be added, 6.6 percent unemployment rate, which would be steady. But it will be difficult to really read it because of all this crazy weather we've had. So for the time being at least, the path of least resistance is, well, it was slightly higher, now it's slightly lower. I think you're going to see a little bit of jockeying today as people try to find their footing.

Remember, Monday, the Dow was down 154 points. Tuesday it rallied 228 points. That's an amazing two day move basically getting you to where you started. But the S&P 500, Jake, at a record high yesterday. I mean in five years it's basically gone straight up even with these concerns about Ukraine still hanging over our heads.

TAPPER: And, Christine, a big move today from -- or a rare move especially from General Motors, the CEO, Mary Barra, is personally going to direct the recall of vehicles over faulty ignitions. What else do you know about this?

ROMANS: It's her -- really the first big test of her new job running General Motors. She wrote a letter to their employees saying that she was going to order an investigation to get the unvarnished truth of what happened in that recall, saying that they acted appropriately. She said, when this was brought up to my team a few weeks ago, this is what she said, Jake, in her letter, "we acted without hesitation to go well beyond the decision by the technical experts."

You know, what are we talking about here? We're talking about a recall that's now 1.4 million vehicles. We're talking about 31 front end crashes that resulted in 13 fatalities. More fatalities than the company originally told us. And we're talking about a lot of questions about the timing, the timing of when GM knew that there was a problem with the ignition switch. You had heavy key chains, for example, that could flip the car from the run to the accessory position, and that caused a lot of problems when there were these front-end crashes. So we'll be hearing more about this issue and the GM CEO personally overseeing that recall.

Jake.

TAPPER: Oh, very disturbing. Christine Romans, thank you so much.

In Washington, D.C., today, Defense Secretary Chuck Hagel is taking his proposal to scale down the size of the U.S. military directly to the U.S. Congress. And that's where he's going to find some lawmakers who have not only voiced concern about this proposed budget, but who have also pledged to protect those affected in their home states and districts. Hagel will be joined by the chairman of the Joint Chief of Staff, General Martin Dempsey.

Let's bring in Pentagon correspondent Barbara Starr, she's monitoring the hearing, and in Boston, retired U.S. Army Brigadier General Kevin Ryan.

Good to see both of you.

Barbara, let me start with you. Hagel recently said that the current U.S. strategy in Ukraine focuses on diplomatic efforts. Do you expect him to mention Ukraine during today's hearing?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Jake, if he doesn't mention it, they're certainly going to ask about it. That may, in fact, be topic number one because he's going to this committee to talk about cutting the military budget in the United States at a time when now suddenly the military's facing the potential of a major national security crisis. No one is talking about military options for Ukraine and Russia for this crisis, not putting military force into the mix, but certainly he's going to be asked about, could this budget make it more difficult if there was to be military force used. Can the military still be large enough, strong enough to deal with whatever it might face, whatever threats it might face. Hagel will say, yes, but it's skirting the edge of that, that he's concerned that cutting is getting - that the budget is simply getting cut to the bone.

Jake.

TAPPER: General, CNN has just learned that several nations, including the United States, believe that international observers should be sent to Ukraine to preserve the peace there. What can you tell us goes into such a planning (ph)?

BRIG. GEN. KEVIN RYAN, U.S. ARMY (RET.): Well, I think this is a great proposal. In order to orchestrate that, you have to find the right sponsor, probably the United Nations, but maybe the European Union might be one. And then you have to select the right kinds of people. Plenty of European nations have very talented and experienced observers who have worked in similar situations around the world and we could easily put together a team of several hundred that could be in the Ukraine within days.

TAPPER: Barbara, several senators wrote a letter to Defense Secretary Hagel saying that his budget, quote, "shortsighted," "creates risk to our national security." Many of them sit on defense related committees. Today we have the news that China is increasing its defense budget by, I think, roughly 12 percent. How big a fight does Chuck Hagel have in front of him?

STARR: Well, I think he's mainly facing this domestic political fight right now. You know, cut the budget, but not in my backyard, that old saying. Senators, congressmen, they're all for cutting defense spending unless it's in their district or their home state because this is about jobs. It's about veterans in their communities. It's about access to military health care in their cities and towns. Nobody in the Congress wants to be in favor of cutting that, but they all say they want to cut defense spending.

And Hagel is facing a real fight on this front. He knows it. But the point that the U.S. is making is this whole -- that the Defense Department is making is the whole notion of sequester, those mandatory deeper budget cuts. That's too much. They want to go for the cuts that they want, that the Pentagon has tailored. They say they simply don't need the massive spending they had during the years of the wars in Iraq and Afghanistan.

Jake.

TAPPER: General Ryan, I'm looking at this statement from the meeting right now going on in Paris between Secretary Kerry and his counterparts, the foreign ministers of other European nations. They're talking a lot about -- in this statement about the 1994 Budapest Agreement. As you know, that's the agreement that, among other things, convinced Ukraine to give up its nuclear weapons in exchange for the promise that its territorial sovereignty would be respected. We've been discussing this internally at CNN because if that is not upheld and if the world does not show that it's serious about allowing -- making sure that Ukraine -- that the promises made to Ukraine are kept, in other words, you gave up your nuclear weapons, the rest of the world will make sure in exchange that your territorial sovereignty is respected, is it not important setting a precedent as the United States and other countries try to convince countries like Iran, North Korea, others to not have nuclear weapons or to give up their nuclear weapons, is it not important to show that the world -- the word of the world means something in these cases?

RYAN: Yes, absolutely it is. And you're right to point out that this is not just an issue or a problem locally within Europe, but it's the rest of the world is watching this. And the United States, I think, and technically if you read the agreement, the United States and other countries are not required or duty bound to send troops in or to provide immediate aid, but the implication was clear and obvious to everyone who signed that agreement, and everyone who would read it today, that the west and the United States in particular has a responsibility to the Ukrainian people and to their country to help protect them against what appears to be a very brazen aggression from Russia.

TAPPER: Barbara Starr at the Pentagon and Brigadier General Kevin Ryan, thank you so much.

We're going to take a quick break and we'll be right back with more of CNN's continuing coverage of the crisis in Ukraine.

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ANNOUNCER: This is CNN breaking news.

TAPPER: Hello to our viewers in the United States and around the world. I'm Jake Tapper, in for Carol Costello on CNN's NEWSROOM.

I want to go to Paris, France, right now, where CNN's reporter, Elise Labott, is there with some breaking news about a meeting that the Secretary of State John Kerry just had with his counterpart from Ukraine and his counterpart from the United Kingdom.

Elise, what have you learned?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: Well, Jake, this is the so-called Budapest Agreement that you've been talking about this morning, which was basically the U.S., the U.K., Russia and Ukraine after Ukraine agreed to, in 1994, to give up its nuclear weapons. These countries agreed on a non-aggression pact with Ukraine that they would have a non-aggression pact if Ukraine were to give up its nuclear weapons.

Now, the U.S. tried to get all of these countries in the room today in Paris, invited Sergei Lavrov, the Russian foreign minister. He declined to come to this meeting. But that meeting took place any way with the Ukrainian foreign minister who came to Paris with Secretary Kerry on his plane, also the U.K. foreign minister, coming out with a statement saying that the United States, United Kingdom and Ukraine agree that direct talks between Ukraine and Russia facilitated as needed by other members of the international community are crucial to resolving the current situation." They also agree international observers should be deployed immediately in Ukraine, especially in eastern Ukraine and the Crimea. And this is what we've been talking about for the last day or two, this so-called international off ramp that the U.S. and other countries are trying to give to Russia to address their concerns, what they acknowledge are legitimate in Ukraine. They acknowledge that Russia has a lot of interests, particularly in the Crimea. So what they want is for Russia to encourage international monitors into Crimea, into eastern Ukraine, to check out what's going on and that could be the basis for talks. The French, the U.K., U.S. hoping to get Sergei Lavrov, the Russian foreign minister, and the Ukrainian foreign minister in the same room later this afternoon, in fact within the hour, to see if they can start to talk about some kind of diplomatic process to end this escalation, Jake.

TAPPER: All right, Elise Labott, with all the latest from Paris, France, thank you.

We're going to take a quick break. We'll be right back.

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TAPPER: An interesting media story in all this. One anchor on state- sponsored Russian TV appears to be mad as hell and she's not going to take it anymore. Abby Martin had a Howard Beal moment on her show breaking the set on RT "Russia Today" slamming Russia for its actions in Crimea.

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ABBY MARTIN, RUSSIAN TV ANCHOR: Before I wrap up the show I wanted to say something from my heart about the ongoing political crisis in Ukraine and Russia's military occupation of command just because I work here for RT it doesn't mean I don't have editorial independence. And I can't stress enough how strongly I am against any state intervention in a sovereign nation's affairs.

What Russia did is wrong. I admittedly don't know as much as I should about Ukraine's history or the cultural dynamics of the region but what I do know is that military intervention is never the answer and I will not sit here and apologize or defend military aggression.

Furthermore the coverage I've seen of Ukraine has been truly disappointing from all sides of the media spectrum and right with this information.

Above all, my heart goes out to the Ukrainian people who are now wedged as pawns in the middle of a global-powered chess game. They are the real losers here. All we can do now is hope for a peaceful outcome for a terrible situation and prevent another full-blown Cold War between multiple super powers. Until then, I will keep telling the truth as I see it.

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TAPPER: Anna Coren is in Simferopol the capital of Crimea. Anna the story is just beginning in many ways. What can you tell us about the possible ramifications of Martin's comments? ANNA COREN, CNN CORRESPONDENT: Yes interesting isn't it Jake. As you say, Abby Martin she works for "Russia Today" also known as RT which is the state-sponsored network; so basically, a mouthpiece for the Kremlin which is why her comments were just so shocking and really caused so many people off guard. She basically slammed the military occupation, as you heard and said that she refused to defend Russia's military aggression.

Now we understand that RT will not reprimand Martin. That she will keep her job. Apparently they did offer her a reporting assignment through here at Crimea to see the story first hand apparently she has refused that. At least that is what she tweeted.

So where does it leave Abby Martin? She still has a job. She is allowed to voice her concerns. She's certainly has an interesting background, she is a 9/11 truther. She believes that America was complicit in the 9/11 attacks. And not surprising she has gained a great deal of support, certainly from journalist, Glen Greenwald who we know is that journalist who broke the story on Edward Snowden and the NSA spying claims.

I just want to read a quote that he put up, which is, "Abby Martin remarkably demonstrated what journalist independence means by ending her program with a clever and unapologetic denunciation of the Russian action in Ukraine."

Jake I can tell you that the people here certainly would not agree with what Abby Martin said. I'm outside the government building. The Russian flag is flying next to the Crimean flag. And there is a small rally happening behind us. But these people are very much on Russia's side, Jake.

TAPPER: All right, Anna Coren thank you.

Our coverage continues after this break.

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(BEGIN LIVE FEED)

CHUCK HAGEL, SECRETARY OF DEFENSE: We have also constantly been in touch as I said with our collaborators on our side of our -- of the Atlantic allies, NATO, partners in particular on the issue.

I was at NATO last week where I attended the regularly scheduled NATO ministerial. We took a few hours to meet with the NATO Ukraine commission. We had then the deputy minister of defense with us of Ukraine and spent some time with him.

Across the administration, our efforts, as you know, Mr. Chairman, have been focused on deescalating the crisis, supporting the new Ukrainian government with economic assistance and reaffirming our commitments to allies in Central and Eastern Europe.

I strongly support the administration's approach to this de- escalation. As you all know Secretary Kerry was in Kiev yesterday. He is in Paris today. He is scheduled to meet with Russian Foreign Minister Lavrov today. There was a NATO meeting yesterday. Another NATO meeting today. OSCE has announced that it is sending 35 observers to Ukraine.

The other forums that the United States is part of, they are also meeting. The U.N. has had one Security Council meeting. I suspect there will be more and other activities along the diplomatic and economic front.

I -- earlier this week, directed the Department of Defense to suspend all military to military engagements and exercises with Russia. In particular, that includes two trilateral exercises that we had scheduled with the Russians, one Canadians and the Russians, the other with the Norwegians and the Russians.

Also this morning, the Defense Department is pursuing measures to support our allies, including stepping up joint training through our aviation detachment in Poland. It's an area that I visited a few weeks ago and augmenting our participation in NATO's air policing mission on the Baltic Peninsula. Our EUCOM commander General Breedlove is convening Central and Eastern European Chiefs of Defense.

Mr. Chairman, I think everyone on this committee knows and in particular I know Senator McCain was in Ukraine a few weeks ago, that this is a time for wise and steady and firm leadership. And it's a time for all of us to stand with the Ukrainian people in support of their territorial integrity and their sovereignty. And we are doing that. That, in particular, is what President Obama continues to do as we pursue diplomatic and economic options. And I would like to again thank the committee, Mr. Chairman, for your role in this.

Just another point about supporting the administration's approach to how we all are coming at this crisis -- this economic package that we are proposing, as you all know, the OSCE has also proposed an economic package working with the IMF for the Ukraine, is a particularly important part of this. We'll continue to work those channels as well as the diplomatic channels.