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Russian Sanctions may Rattle U.S. Markets; Reports: Clinton Compares Putin to Hitler; Putin Faces International Criticism; Eyewitness to Conflict in Crimea

Aired March 05, 2014 - 10:30   ET

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

WOLF BLITZER, CNN ANCHOR: Monica, what's your advice to your clients under these roller coaster circumstances, shall we call them?

MONICA MEHTA, MANAGING PRINCIPAL, SEVENTH CAPITAL INVESTMENT: Well it's to understand that there is a difference between a standoff scenario and you know a greater war scenario. If it's a standoff then we're really looking at instability for the market and the market doesn't like instability.

So in the near term, as Christine mentioned, gas prices could go up. Natural gas and oil. Grain prices could go up.

BLITZER: I think we just lost our connection with Monica but we'll try -- we'll try to reconnect with her.

But Christine, let me bring you back into this conversation. Because a lot of folks are watching they are looking at their portfolios.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes.

BLITZER: Their looking at their mutual funds, their 401(k)s. They are wondering if this situation escalate what would be the impact on them.

ROMANS: Yes.

BLITZER: Here in the United States, in Europe and elsewhere around the world. That's totally understandable.

ROMANS: You know I wrote a piece this morning basically saying, "Don't let Vladimir Putin be your financial manager." You shouldn't trade on geopolitical events. I mean your 401(k) should be based on your age, your risk factors, you know how long you have until you retire, how comfortable you are with stocks, bonds, alternate investments, I mean all of those fundamentals are personal finance.

Another thing here Wolf to remember is that, you know, S&Ps -- Sam Stovall a market historians have gone back. All these big events since World War II. You look at them overall, big, geopolitical events. And guess what? Over time, markets tend to go up right. So if you're jumping in and out of the market base and what's happening in Ukraine that's really not advisable, it's not a good idea for your own personal investment. But I will say, Wolf, how this diplomacy bears -- goes forward here. It's going to be really critical for whether the stock market can keep going up. But it's how desperate the stock market, the bigger market is the bond market. What happens to bond yields, what happens to oil prices? What happens to Europe's very fragile recovery?

Wolf they have been in a recession for years. They are just coming out of it. Now, if you are going to have some sort of trade dispute with Russia. Big, powerful Russia. What is that going to mean to Europe's fragile recovery? That's got to be in the forefront of minds of diplomats today too. How do you contain a government whose economy is not at all contained in your neighborhood?

BLITZER: Yes and let's not forget that we just heard the Secretary of Defense, the Chairman of the Joint Chiefs of the United States announce some largely symbolic but military steps to reassure NATO allies in Eastern Europe and other friends in Eastern Europe that presumably will trigger some Russian military steps.

And we'll see if this escalates. So that could have an impact on a jittery market tensions as well. If the military side of this crisis should escalate. Christine, thanks very much. Sorry we lost our connection with Monica. But we'll try to reconnect with her.

We will continue our breaking news coverage on the crisis in Ukraine right after this.

(COMMERCIAL BREAK)

BLITZER: We're continuing the breaking news coverage on the crisis in Ukraine. I'm Wolf Blitzer in Washington. Let's go to Kiev right now, the capital of Ukraine. Our correspondent, Michael Holmes, is on the scene. What are you hearing on this sensitive day, Michael?

MICHAEL HOLMES, CNN CORRESPONDENT: Yes Wolf, it is interesting. The fog has rolled back in here as it has for the last couple of days after clearing out for a few hours today. You know the people down in the square behind me in Independence Square, they are still there. The barricades are still up. The speeches are still being made. Prayers are being said. And the national anthem is sung with regularity. There are prayers going on right now behind me.

It's interesting, Wolf, today, we saw a lot of people both from here and in Kiev. But also outside of the capital coming in with their cameras all very well-dressed almost sort of protest tourism if you like -- taking photographs, honoring those who have died in these protests. The fear still exist here and angered too at what has happened in Crimea and what continues to happen there and the fear that were things to spread into other parts of Eastern Ukraine.

The politicians keep talking in Europe and elsewhere, they are just waiting to see what happens next.

The Ukrainian parliament did meet today. They had some discussions about how they could help their troops in Crimea. Some of those bases, of course, surrounded by those mysterious soldiers. We can call them Russians I think and decided at the end of the day they couldn't afford to do very much and offer their support.

So here at Independence Square, they say those barricades are staying up. There are elections that are expected to take place in May. And the people down there say they are not going anywhere. Because they don't trust what could happen next -- Wolf.

BLITZER: Is there still concern right now given the face of international opposition to what the Russians have been doing? Is there still concern Russian troops might move from Crimea right into other parts of Ukraine? Or do they think the Russians have basically stopped their maneuvers?

HOLMES: Well, that is the fear, of course. You know that's a very important part economically of Ukraine, the eastern part of the country, the industrial part of the country, a lot of resources there. A lot of that area too is ethnically Russian as well, the majority ethnically Russian as well and there are sympathies there toward the Russian side of the border.

Yes, there is a fear that that could happen. There is no indication, of course, that it is on the cards. And Russia certainly isn't -- isn't giving any indication that it has those desires. Its focus has been on Crimea, which is of course if very important to Russia, strategically and historically.

So it looks at the moment like it's just staying with Crimea. But is it a fear? Yes, it is -- Wolf.

BLITZER: All right just folks are worried about that. All right Michael thanks very much. Michael Holmes, reporting from Kiev.

Hillary Clinton is reportedly making some rather controversial comments comparing the Russian President Vladimir Putin to Adolf Hitler. Listen to what she reportedly said during a fund-raiser in Long Beach, California, yesterday. We'll put it up on the screen. Quote, "Now this sounds familiar, it's what Hitler did back in the 30s. The ethnic Germans, the Germans by ancestry who were in places like Czechoslovakia and Romania and other places, Hitler kept saying they're not being treated right, I must go and protect my people and that's what's gotten everybody so nervous."

She then continued, "When he looks at Ukraine", referring to Putin, "he sees a place that he believe is by its very nature part of Mother Russia."

Joining us now is CNN senior political correspondent Brianna Keilar. Brianna, Hillary Clinton putting Vladimir Putin basically making this comparison with Hitler. That's always dangerous to do so. I'm surprised that Hillary Clinton would make that comparison but what are you getting? What kind of reaction?

BRIANNA KEILAR, CNN SENIOR POLITICAL CORRESPONDENT: Well right now, I'm trying to get some reaction from her camp. Specifically Wolf, there is none. They are not commenting on this. But you're right if you invoke Nazi Germany, if you invoke Adolf Hitler, it's sort of like the third rail of rhetoric. It's just something that certainly gets so much attention. And whatever Hillary Clinton -- her opinions are, about Putin, is really just sort of increases the volume, if you will. We heard her last week, she was in Florida, not on camera but talking about Putin. And this was before the invasion of the Crimean peninsula. She likened him to czars. She likened him to communist leaders of Russia.

But this is obviously to a whole new level. And that's why so many people are surprised at this point. It would certainly be out of character for her. She is pretty disciplined when it comes to staying on message and not really ratcheting up something unless she wants to. But it's sort of unclear where this came from at this point.

But to put it in context, this was off camera, Wolf, it was at an event which would have been last evening for us, early evening or earlier in the day on the West Coast. She was speaking to supporters of the Long Beach Girls and Boys Club.

So it was really an event where she was talking about gender equality, which is one of her big issues. And this was something that she began her remarks with. As it is obviously so timely because of what's going on in Ukraine.

BLITZER: Yes as you actually accurately point out, it's always a mistake to make these comparisons with Nazi Germany, with Adolf Hitler. You can criticize the Russian President Putin all you want but clearly he is not engaged in any activities at all along the lines of what Hitler was doing, including genocide, mass murder and all of the occupations that he was engaged in.

And as I say given Hillary Clinton's involvement, four years as secretary of State, knowing her as you know her and as I know her, I am surprised she would go that far and make that statement, even though she does have an opportunity I assume in the coming hours to clarify it right.

KEILAR: That's right she will be speaking at UCLA today and this will be on camera. So this will be an opportunity to say something where there will be a lot more eyes and, pardon me, reporters watching her.

Yesterday, as we understand it, it was just one reporter from a local paper who heard the comments. It was a closed event. But to put more context around this Wolf during her time at the State Department, she was seen as the face of the reset with Russia. There is tremendous amount of frustration from the Obama administration from Hillary Clinton's camp. Obviously but that did not go so well. And as she does look towards 2016, the things that she will be judged by, the relationship with Russia is one of the things that certainly she will be judged by.

So you have to kind of look at her comments, her frustration with Vladimir Putin as she also sort of to kind of -- to give some context to what she was saying yesterday, I think the question is, is it some overcompensation in a way? This is someone who she is going to be dealing with if she, let's say, is the nominee for Democrats, if she decides to run. If she does end up winning the presidency, this is going to be a relationship that she will have to continue to deal with and certainly I think there is a question of whether her remarks yesterday are sort of -- I guess sort of making a statement for the criticism that she will get for how things have gone with Russia certainly, before when she was at the helm of the State Department.

BLITZER: Good point -- good point, Brianna we'll watch in the next few hours. She has a chance to clean this up a little bit. We'll see what she says -- Brianna Keilar is our senior political correspondent. Thank you.

We're continuing the breaking news coverage here on CNN. When we come back, one reporter's take on what's actually happening on the ground in Crimea right now.

(COMMERCIAL BREAK)

BLITZER: As world leaders discuss how to diffuse tensions in Ukraine, their task in large part hinges on predicting what Russia's president will do. Our Suzanne Malveaux has a closer look into the mind of Vladimir Putin.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN CORRESPONDENT: When George W. Bush met Vladimir Putin --

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: I looked the man in the eye. I found him to be very straightforward and trustworthy.

MALVEAUX: The bromance was widely panned as naive, particularly after the relationship was strained when Russia offered support to Syria and Iran.

When you said you looked into his eyes and his soul -- you'll also be meeting with the Russian leader in about a week or so -- what do you think of Putin now that he's expressed a willingness to supply weapons to outlaw regimes.

BUSH: I know that Vladimir Putin understands the dangers of Iran with a nuclear weapon.

MALVEAUX: When President Obama first met Putin in 2009, they looked uncomfortable, an observation even Obama acknowledged over the years.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I know the press likes to focus on the body language and he's got that kind of slouch, looking like the bored kid in the back of the classroom.

MALVEAUX: Nobody is bored now, some Democrats and Republicans even questioning Putin's sanity for pushing the world to the brink.

SEN. JOHN MCCAIN (R), ARIZONA: I think he like to strut on the world stage and I think it could have an impact on him psychologically. MADELEINE ALBRIGHT, FORMER SECRETARY OF STATE: I think that is the tragedy that is going on. Putin is in many ways, I think, delusional about this.

MALVEAUX: Trying to get a read on the former KGB agent fond of flaunting his bare chest and hunting game can be a moving target, and of course, a political minefield.

Relations with Russia once seen as a punch line.

TINA FEY, COMEDIAN: And I can see Russia from my house.

MALVEAUX: People aren't laughing now.

SARAH PALIN (R), FORMER VICE PRESIDENTIAL CANDIDATE: People are looking at Putin as one who wrestles bears and drills for oil. They look at our president as one who wears mom jeans and equivocates and bloviates.

MALVEAUX: Could anybody predict Putin would be such a pain now?

Mitt Romney did, but he was mocked for his warning in 2012.

OBAMA: A few months ago when you were asked what is the biggest geopolitical threat facing the United States, you said Russia, not al Qaeda. You said Russia.

And the 1980s are now calling to ask for their foreign policy back because, you know, the Cold War has been over for 20 years.

MITT ROMNEY (R), PRESIDENTIAL NOMINEE: I have clear eyes on this. I'm not going to wear rose-colored eyes when it comes to Russia or Mr. Putin.

MALVEAUX: Suzanne Malveaux, CNN, Washington.

(END VIDEOTAPE) BLITZER: International leaders are pushing back against Putin with many accusing him of breaking international law. To some Putin critics, that's no surprise.

Let's discuss what's going on. Masha Gessen is joining us. She's a Russian and American journalist. She's also author of the book "The Man Without a Face: the rise and rule of Vladimir Putin".

Masha, thanks very much for joining us. Was Mitt Romney right in 2012 when he said Russia, I think he was referring specifically to the leadership of Putin, that Russia was America's number geopolitical foe?

MASHA GESSEN, AUTHOR, "THE MAN WITHOUT A FACE": I don't know if he was right about that. I certainly think that President Obama has probably gone too easy on Putin. And part of what we are seeing now is not just the United States but the west's failure to respond to Putin's systematic violations of international law which didn't begin last week. BLITZER: So what should the U.S. from your perspective do that would have credibility with Putin?

GESSEN: Well, at this point, it is very difficult to give any kind of advice because at this point it seems to me that there is nothing that can work strategically. Economic sanctions will actually necessitate greater mobilization in Russia and will aid the war effort. And those -- even as a burr on the table which I don't believe it is would again result in greater immobilization.

But anything less would embolden him further, it would just be a continuation of the West ignoring what he's doing.

So at this point there is no way to think strategically. We just have to think about what the right thing to do is.

BLITZER: So you've written -- studied a lot about -- you have done a lot of work on Putin, who is he, what's he all about, where is he from, where is he going. We heard the Secretary of State, Madeline Albright on CNN's "NEW DAY" yesterday say maybe he's delusional right now. Do you believe this guy is delusional?

GESSEN: I believe he is very isolated. I believe that he is in a classic dictator's trap. That he is getting very little information. He basically watches his own TV and has been watching it and believing it for 15 years. I don't know if I would call it a delusion but he certainly has a very different view of the world than you and I do.

BLITZER: Because he does have these lengthy phone conversations, 90 minutes over the weekend with the President of the United States. They went back and forth. Angela Merkel heard about that call. She said, maybe he is living in another world. Others who know him well or who have worked with him say he is by no means delusional. He is very intelligent. He has his mission. He's a Russian patriot, a nationalist. He's doing what he believes is best for Russia.

GESSEN: I don't see a contradiction. I mean he can be delusional and a Russian patriot and irrational in his own framework at the same time. And I think, you know, I think that is all true. I think that at his press conference yesterday, actually, he did something that surprised a lot of people but I didn't find it particularly surprising. He acted the way he always does, like a bully on a playground, like a thug. He kept saying, that's not me. I didn't take that. That was that other guy.

And it wasn't bizarre. It only seems bizarre if you expect him to act on the basis of values that are shared in this country. Yes, he does believe that he has a right to go into the Crimea. He does believe that he is doing what the people want both in Crimea and in Russia. He believes it is his historic mission to reunite the Soviet Union.

BLITZER: Masha Gessen, the author of "Man Without a Face: The unlikely rise of Vladimir Putin. Masha thanks very much for joining us.

GESSEN: Thank you. BLITZER: My next guest had an up-close view of the standoff between Russian and Ukrainian troops in the key air base in the Crimean Peninsula of Ukraine; a confrontation that was nonviolent but was filled with tension. There were warnings shots fired by Russian troops at their Ukrainian counterparts as one of them called for negotiations on the current crisis.

Simon Shuster is a correspondent for "Time" magazine. He's joining us now from Crimea. So Simon, you were there. What did you see?

SIMON SHUSTER, "TIME MAGAZINE": That's right. We spent the night at the base there, it was called Loebek (ph) with the Ukrainian soldiers. And there was a great deal of tension. I mean they were waiting for the latest ultimatum from Russia to run out. After which, the troops surrounding their base -- the Russian troops threatened to attack.

So they were very scared throughout the night, staying up and keeping watch. And when that ultimatum ran out without any attack, the commander of the base essentially said that's it. I've had enough. We are going to lay down our arms and peacefully march on the checkpoint manned by Russians around the occupied air base. That is what they did. They took two flags, one a soviet military banner and the Ukrainian flag and they marched with about 300 men right up to the checkpoint.

BLITZER: You have been there for a while now, Simon.

SHUSTER: Warning shots from the Russian Soldiers also didn't make them stop.

BLITZER: You have been there now for a while. Give us a little flavor of the average person in Crimea. Are they welcoming the Russians, are opposed to the Russians? We know most of the folks who live there are ethnic Russians. You speak to them all the time. What's the situation on the ground like?

SHUSTER: Well, first it is important to remember that there are a lot of pro-Russian rabble-rousers and the propaganda -- the pro-Russian propaganda here is quite intense on television. A lot of the people watch Russian TV by satellite -- Russian State TV.

They do have a somewhat skewed perception of the new government that has come to power in Kiev. They believe that government is really fascist and ultranationalist. That's not generally true. I mean the new interim president is a moderate pro-Western guy. So he's the new prime minister. So the mood here because, I think large part, because of that misinformation, is really trying to steer Crimea toward Moscow, to make Moscow the new geopolitical center of gravity for this peninsula.

And I think if the referendum is held as they are planning in about 2 1/2 weeks, that the people will vote to certainly have I a lot more autonomy from Ukraine and probably to get a lot closer to Russia.

BLITZER: Would they want to secede formally from Ukraine. Would they want an independent in Crimea or would they want to be taken over formally by Russia. What's your sense, if they had a free and fair referendum in Crimea?

SHUSTER: I think there would be a small minority that would say they want to become a part of Russia, basically be annexed by Russia. I don't think that is in any sense a majority. But for my conversations with people here, the majority would want greater autonomy from Kiev. They do not trust the new government in Kiev. And I think it will come down to control of the purse strings, budgetary issues so that they have autonomy there and their own police force.

And it would come down to that. And then the new leaders in Crimea would essentially be able to steer the peninsula into a greater alliance with Russia economically, politically and I don't know if Russia would be satisfied with that. I don't have a sense of whether Putin is actually looking to annex Crimea. But we'll see after the referendum.

BLITZER: He suggested at his news conference yesterday, he had no such intention but you are absolutely right. We will see what happened in Crimea, critically at the heart of this crisis in Ukraine.

Simon Shuster of "Time" magazine. Thanks so much, Simon, for joining us.

We are going to continue to watch the unfolding situation and the crisis in Ukraine, the breaking news -- much more coming up. I'll be back 1:00 p.m. Eastern.

That's it for me right now. I'm Wolf Blitzer in Washington

"@ THIS HOUR" with Berman and Michaela for our domestic viewers starts after a quick break.

(COMMERCIAL BREAK)

JOHN BERMAN, CNN HOST: Happening right now. Face-to-face with Russia. Secretary of State John Kerry, sits down with the Russian foreign minister.