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Biden, Zelensky Discuss Threat of Russian Invasion; Macron Lays Out Agenda Ahead of E.U. Presidency; Unofficial Tribunal Rules China Committed Genocide; COVID Cases on Rise in Parts of Asia, Australia; Biden: Protecting Democracy is Our 'Defining Challenge'; Johnson Aide Resigns after Staff Breaks COVID Rules; Investors Brace for Another Inflation Report; Turks Struggle as Inflation Sinks the Economy. Aired 12-12:45a ET

Aired December 10, 2021 - 00:00   ET

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

JOHN VAUSE, CNN ANCHOR: Ahead here on CNN, Joe Biden's telephone diplomacy, reassuring Ukraine's president, as well as nine leaders of NATO countries, that he made no deals with Russia's Vladimir Putin, offered him no concessions.

[00:00:24]

Macron makes his move. Barely a day since Germany's Angela Merkel steps down as chancellor and de facto E.U. leader, the French president outlines a grand vision for Europe during his upcoming six months as president of the E.U. council.

And an unofficial U.K. tribunal finds China guilty of genocide, crimes against humanity, and torture of Uyghur Muslims, boosting the U.S. call for a diplomatic boycott of the Beijing Winter Olympics.

ANNOUNCER: Live from CNN Center, this is CNN NEWSROOM with John Vause.

VAUSE: Great to have you with us for another hour of CNN NEWSROOM. Now two days after Joe Biden put Vladimir Putin on notice over Ukraine, two days after he warned the Russian president any military escalation on Ukraine's border would lead to severe, punitive, economic sanctions.

Two days after briefing European and NATO allies about that conversation, Joe Biden has now spoken with Ukraine's president, Volodymyr Zelensky, by phone, for more than an hour, reassuring him of America's commitment to Ukraine's sovereignty, which remains under threat, with an unprecedented Russian military buildup on the border, with concerns Vladimir Putin could order an invasion within weeks.

The White House on Thursday strongly denied the U.S. president was willing to pressure Ukraine to give up territory to Russia as a way of defusing tensions.

Notably, there have been few details released from the Biden-Zelensky phone call.

The U.S. president also spent Thursday on the phone, reassuring nine other countries, all NATO allies in the region.

According to Reuters, the Russian foreign ministry now says negotiations for a peaceful settlement with Ukraine have practically hit a dead end. While the Russian deputy foreign minister says the crisis over Ukraine could be a repeat of the Cuban missile crisis in 1962, when the U.S. and the Soviet Union came to the very brink of nuclear war.

We get the latest details now from CNN's Oren Liebermann, reporting in from the Pentagon.

(BEGIN VIDEOTAPE)

OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT (voice-over): President Joe Biden, trying to lower the temperature as tensions soar in Eastern Europe, promising Ukrainian President Volodymyr Zelensky support for his country's sovereignty, amid a massive buildup of Russian forces.

JEN PSAKI, WHITE HOUSE PRESS SECRETARY: What we know is that the aggression here is on the Russian side. The military buildup is on the Russian side. There is a path, a diplomatic path, forward. But part of the president's objective, our president's objective, in having the call, was to convey that clearly.

LIEBERMANN: Russia has amassed 125,000 near Ukraine's borders and in Belarus to the north, Ukrainian security forces tell CNN. That includes tanks, ground vehicles, and aerial patrols, potentially laying the groundwork for a quick strike and rapid reinforcement, the sources say.

On Monday, Biden warned Russian President Vladimir Putin of severe economic sanctions if Russian forces invaded Ukraine, steps the U.S. wasn't ready to take the last time this happened.

Since the Russian occupation of Crimea in 2014, the U.S. has given Ukraine more than 2 and a half billion dollars to bolster its self- defense. This year alone, that amounts to $450 million, including lethal Javelin anti-tank missiles. Small arms and ammunition from the latest security assistance package are set to arrive this week. And more could be coming if Russia attacks.

JAKE SULLIVAN, WHITE HOUSE NATIONAL SECURITY ADVISOR: We would provide additional defensive materiel to the Ukrainians above and beyond that which we are already providing. And we would fortify our NATO allies on the eastern flank with additional capabilities in response to such an escalation.

LIEBERMANN: The Ukrainian military also trains alongside U.S. troops. About 150 guardsmen from Florida's Task Force Gator recently arrived in Ukraine, rotating in for the 81st Striker Brigade.

The 81st was there for months, working with Ukrainian forces and taking part in September's rapid trident exercise. There has been an increase in U.S. diplomacy, with European allies and partners in recent weeks to coordinate any response to Russian aggression. But the most serious sanctions targeting Russia's energy sector remain

a last resort, U.S. officials say, as the White House remains wary of roiling domestic gas prices.

(on camera): A senior official from the National Security Council says the White House will not take into account domestic political considerations if, and when, it becomes time to impose sanctions on Russia.

Experts warn, if you don't target Russia's energy sector, you may not have the leverage or the influence required to affect Kremlin decision-making.

Meanwhile, how important is that security assistance to Ukraine? The White House requested 250 million more for next year, and Congress added another 50 million, as of right now, on top of that.

[00:05:07]

Oren Liebermann, CNN, at the Pentagon.

(END VIDEOTAPE)

VAUSE: France's president says he will soon take a more active role in trying to defuse the crisis on Ukraine's border. And it seems Emmanuel Macron is planning on playing a much bigger role in European and world affairs, when France assumes the presidency of the E.U. next month.

Macron is scheduled to hold talks with the presidents of Russia and Ukraine next week.

(BEGIN VIDEO CLIP)

EMMANUEL MACRON, FRENCH PRESIDENT (through translator): It's true that the situation continues to be very difficult, unstable, and we are in a conflict which stays frozen. Do Europeans have a chance to change this alone? No. It depends on the good faith of the other parties.

(END VIDEO CLIP)

VAUSE: David Sanger is a Pulitzer Prize winner who covers the White House and national security for "The New York Times." He's also a CNN political and national security analyst.

David, thank you for being with us.

DAVID SANGER, CNN POLITICAL AND NATIONAL SECURITY ANALYST: Great to be with you, John.

VAUSE: The French president seems to be feeling his oats a little bit right now. No longer in the shadow of Angela Merkel, stepping down as German chancellor just a day ago.

And, on Thursday, Macron was calling for a more powerful Europe, as France assumes the presidency of the E.U. Council. Here's some of what he said. (BEGIN VIDEO CLIP)

MACRON (voice-over): The first theme of this presidency is a more sovereign Europe. A sovereign Europe, for me, has the foremost aspect of being capable to keep its borders under control. We see it again, in the last couple of weeks, with the crisis we have experienced at Europeans' eastern borders. At the Lithuanian and Latvian border, in late summer. Then, at the Polish border.

(END VIDEO CLIP)

VAUSE: In much of what Macron outlined came as no surprise, but what seemed to be a little surprising is that he did it in the context of France taking the presidency of the E.U. It's a six-month rotating position, which comes with very little authority. So what's the subtext to all this?

SANGER: Well, I think there are a few things going on, John. First, and most obvious, we expect him to run for reelection. Probably wouldn't announce for a few months. He made no mention of it today, but there was some sense that this sort of more nationalistic, or at least regionalistic phrase, about a Europe of -- that is more powerful, one that turns away from internal cooperation to one that is, in his words, active in the world, fully sovereign, free in its choices, and master of its destiny.

Sounds an awful lot like he is out there to go make a point before he runs.

Also, Angela Merkel has been out of power now, fully, 24 hours. And here is the French president looking to fill the vacuum left by the woman who was considered the most powerful leader in Europe.

VAUSE: Yes, well, Bloomberg is now reporting that the overlap here, potentially, running for reelection while holding the E.U. presidency, Macron had the opportunity to postpone France's turn, to avoid mixing presidential politics with the E.U.'s broader agenda. Senior officials advised him to do that, according to people familiar with the discussion.

So as a political move, using the E.U. presidency as a platform for trying to get reelected as the president of France, is that a move that could be too smart by half? Could this potentially backfire?

SANGER: I guess that it could. But first of all, France has not had the president -- European Union presidency for 13 years. Remember, there are now -- they rotate every six months. And so, it doesn't come around all that often. So he may well have concluded that this is his chance.

But second, he has been making this case for European sovereignty, especially in recent years, especially during the Trump years, as he was trying to basically argue that Europe is big enough, rich enough, to be its own sovereign power and doesn't need to depend on the United States. And that's probably not a terrible way to be running for president of France. VAUSE: Well, Macron seemed to leave no stone unturned in what he was

talking about on Thursday. He even had some harsh words for post- Brexit Britain, saying the government in London is incapable of acting in good faith. Here he is.

(BEGIN VIDEO CLIP)

MACRON (through translator): Today, we have relations that are difficult. And why are they difficult? Because the current British government, until now, I hope things will change, and we can reengage, in good faith, in an agenda of trust. Simply, it doesn't do what it says.

(END VIDEO CLIP)

VAUSE: You know, it's always a safe move, politically, for a French politician to have a shot at the Brits. But, you know, what are the current state, right now, of relations between Britain and France? How strained are they?

SANGER: Well, obviously, strained because of Brexit. But then came the the submarine deal, and you know, what's interesting is that in the deal that ended up breaking France's contract to supply submarines to Australia, they ended up blaming the British more than they blamed the Americans or the Australians.

[00:10:21]

Now, that may be, because the Australians, first, went to Britain, not the United States, and they encouraged this whole idea.

But the French have gone out of their way to sort of say, Well, we've shrugged it off now, to the United States. Clearly, they haven't for Britain. And I think it really angered him to lose what was a major defense contract, but also lose it in an embarrassing way and lose it to the British and to the United States.

VAUSE: David, as always, it's good to have you with us. We appreciate your time.

SANGER: Always great to be with you, John.

VAUSE: The central Uyghur tribunal is backed by no government, has no power to sanction or punish, but by methodically and carefully laying out the evidence and building a case that China committed genocide, crimes against humanity, and torture of Uyghur Muslims, might compel the world to act.

It also found China's top leaders, including President Xi Jinping, directly responsible.

This artificial panel has no power of sanction or to enforce this finding, but the chairman explained the verdict, which came after testimony from hundreds of witnesses.

(BEGIN VIDEO CLIP) GEOFFREY NICE, CHAIR, UYGHUR TRIBUNAL: On the basis of evidence heard in public, the tribunal is satisfied, beyond reasonable doubt, to the PCR, by the imposition of measures to prevent births, intended to destroy a significant part of the Uyghurs in Xinjiang, as such, has committed genocide.

(END VIDEO CLIP)

VAUSE: Live now to Beijing, and Steven Jiang is standing by for us there.

This is interesting. So it's, what, 57 days before the opening ceremony, and this is happening at the same time where that -- the call for a diplomatic boycott of the Winter Olympics in Beijing, it's gathering some pace, slowly, but gathering pace nonetheless.

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: That's right, John.

But you know, this verdict is certainly not surprising, and so is the official Chinese response. From day one, since the tribunal was set up, the government here and the state media have been relentless in their attacks against the setup, and its process, and saying that the witnesses were clowns and actors, and the whole process was a so- called, political farce, based on a pile of lies, orchestrated by anti-China forces aimed at smearing China.

So really familiar language, by now, whenever they try to push back allegations on its Xinjiang policy.

But, this tribunal, as I said, is an official. So because of its lack of sanction, and enforcement power, when it comes to international pressure on this issue, I think the Chinese are actually more concerned about legislation in the U.S. Congress. As you know, the House of Representatives just passed this Uyghur Forced Labor Prevention Act, which could potentially ban all imports of goods and products made in the Xinjiang region.

But of course, the U.S. Senate also passed the different version, and the two versions need to be reconciled before it could be sent to President Biden to sign into law.

But all of this, of course, is also not happening in a vacuum, as you mentioned. From Beijing's perspective, they do see this U.S.-led campaign, increasingly with its allies, calling out on China's human rights abuses and its record, not only on Xinjiang, but also on Hong Kong, and many other issues.

And that's why, in the past few weeks or months, we've seen this almost unprecedented, ferocious pushback from Beijing, as they try to redefine what democracy is, and are pointing out the fatal flaws of western liberal democracies, while trying to tout the superiority of its own one-party system, and the efficiency of the top-down power structure.

But the problem, John, is all those arguments become very feeble when you just look at one recent example when they basically deployed the whole state apparatus, trying to censor one woman's sexual assault allegations against a former leader. And that is, of course, Chinese tennis star Peng Shuai.

So, no matter what you call the system, I think everybody wants transparency, openness, and fairness and justice. And that seems to be something still lacking, very much lacking, in this system here -- John.

VAUSE: To say the least. Steven, thank you. Steven Jiang, live in Beijing. Thank you.

With the Omicron variant spreading at a concerning pace, the World Health Organization now urging vaccine-rich countries not to hoard supplies for booster shots. The director general says the world is not on track to make vaccine targets, and that lower income countries are, especially, vulnerable.

(BEGIN VIDEO CLIP)

TEDROS ADHANOM GHEBREYESUS, WHO DIRECTOR-GENERAL: Yesterday, marked the one year since the first COVID-19 vaccines were administered. We all believed and hoped that a year later, we would be nearing the end of the pandemic.

[00:15:02]

Instead, the death toll has more than tripled, and the world remains in its grip. Despite our best efforts in the year since the start of the global vaccination campaign, low- and low middle income countries, have been left behind.

(END VIDEO CLIP)

VAUSE: Many countries are where Omicron is now spreading, and they are without vaccines. And, in fact, in Africa, where that variant was first discovered, just 7 and a half percent of the continent's population has been fully vaccinated.

South Korea's daily infections hit a record high this week. Cases have been steadily rising in Australia's largest city, Sydney, as the virus spreads in pubs and other social venues.

CNN's Paula Hancocks joins me now live. You know, this is a country that has a zero COVID policy. There appears to be some cracks in that policy.

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, John, certainly what we're seeing here in Australia at the moment, that the numbers of new cases are going up. Just over 500 for the first time that we've really seen since early October.

But the hospitalizations are not high, as well. So in that respect, it's not quite as concerning.

And when you consider how many people are vaccinated in Australia, in New South Wales alone, there's some 93 percent of those 16 and over who are fully vaccinated.

So even though the numbers may be rising, you're not seeing that translating yet into critical cases.

But of course, we are going into party season here. Christmas parties coming up. There have been some cluster cases at some larger venues, the pubs, the clubs, and that's something the officials are concerned with, to say the least.

But when you look elsewhere, at South Korea, for example, they are now struggling with record numbers of critical cases. And that is of concern. Yes, the numbers of new cases are above 7,000 for the third consecutive day, but those critical cases are really what is concerning officials. Many of them are those over the age of 60 who have been fully vaccinated but haven't received a booster shot, because they were vaccinated early on in the process.

So there's a real rush there now with officials there to try and get the booster shot to as many over-60s or, in fact, over 18s as much as possible. In fact, the prime minister just announcing that the booster shot can now be given three months after the last shot, as opposed to four or five months. So they're trying to crack down on that.

And then when you talk about zero COVID countries, you have to talk about China. They still are having a number of new cases. There's about 60 new cases in seven different cities have been just reported. But they are not yet letting go of that zero COVID case policy, and they are still trying to stamp it out.

But it shows just how difficult that is, even with your borders completely shot off in many cases, they are still finding new cases.

So across the board in Asia, certainly, Omicron is becoming an issue. It is spreading. But what we are seeing here in Australia, the hospitalizations are not -- not too high in -- but in the likes of South Korea, there is a concern that they need to try and bring out those booster shots for those who are over the age of 60 and, of course, those who are still, as yet, unvaccinated -- John.

VAUSE: The situation in Australia's that they have been so tough, and they have been so meticulous about tracking this, they can actually find out where an outbreak happened down to, like, the hostel in Bondi (ph) where 42 people tested positive.

And we are coming to the holiday season, but at least on the positive side there, it is summer. So at least, there's not the people packing indoors like it is in the northern hemisphere, right?

HANCOCKS: Well, it's interesting that you say that, because the weather over the last couple of weeks here has actually been dreadful, certainly in Sydney and in New South Wales. It's cold. It's raining. So most of those events that would be outdoors normally, because we are in summer in Australia, have been driven indoors.

So that is a concern for officials. They're hoping the weather improves sometime soon, because that can have a detrimental effect on the number of cases, and when you have those Christmas parties, you have these holiday events inside, as opposed to outside, it's obviously going to have more of -- more of a risk factor.

VAUSE: Paula Hancocks there, reporting live from Sydney, looking back onto Sydney Harbor and the North Shore. Thank you. Paula Hancocks, appreciate it.

Coming up, the holidays are nearing, but it's not all jolly in the United Kingdom. Ahead, when COVID rules are sparking Christmas confusion.

Also, President Joe Biden warning democracy needs champions in the face of rising autocracy. How world leaders are addressing the issue at the first Summit for Democracy. That's next.

(COMMERCIAL BREAK)

[00:21:54]

VAUSE: Nicaragua, after severing ties with Taiwan, has now officially restored diplomatic ties with Beijing. The two nations signed a joint communique on Friday. It comes after Nicaragua said it recognizes only one China and views Taiwan as part of the People's Republic of China.

Taiwan expressed pain and regret at the decision but said it will continue to promote steadfast diplomacy to try and grow its international space.

Taiwan now has just 14 diplomatic allies. China views Taiwan as a renegade province.

The U.S., though, highly critical of this decision by Nicaragua, saying it does not reflect the will of its people during a recent sham election which gave Daniel Ortega another term as president.

U.S. President Joe Biden says protecting democracy is the defining challenge of our time. He's been meeting with world leaders for a global two-day summit focused on ways to safeguard rights and freedoms, while pushing back against a rise of authoritarianism.

CNN's Kristie Lu Stout, live for us in Hong Kong.

Democracy is in retreat, and Joe Biden wants to do something about it. It's a big ask.

KRISTIE LU STOUT, CNN INTERNATIONAL CORRESPONDENT: And it's getting a lot of reaction and pushback from China. In fact, additional reaction today. China continues to dismiss and denounce President Joe Biden's form of democracy. We heard from China's Taiwan Affairs Office, calling it, quote, "a political maneuver."

And a new op-ed out in "China's Global Times" calls it, quote, "a joke." The United States has invited representatives from over 100 governments to take part in this two-day virtual summit and democracy.

China was not invited. Taiwan was invited. And Taiwan is, of course, the self-ruling democracy that China insists and claims is its own territory.

Later this evening, local time, we'll be hearing from Taiwan's digital minister, who will be speaking at this event on how to counter digital authoritarianism.

We're also going to be able to hear through this Biden democracy for him from Nathan Law. Nathan Law if, of course, the exiled Hong Kong pro-democracy activist who has been branded a secessionist and a traitor by Chinese officials.

In the days running up to this Biden democracy forum, China has announced it. And China has also been positioning its own one-party system as a democracy and one that is better than the United States. In fact, last weekend, it held its own rival democracy forum. It invited representatives from over 120 countries around the world.

At the same time, the state council as the cabinet in China, published a very lengthy, 13,000-word white paper called "China: Democracy that Works."

We have an excerpt of that white paper. I'll bring it up for you. It says this: "There is no fixed model of democracy; it manifests itself in many forms. Assessing the myriad political systems in the world against a single yardstick and examining diverse political structures in monochrome are in themselves undemocratic," unquote.

Now look, most international observers would agree that China is not a democracy. It is a single-party state. There is no universal separations of powers. There is no universal suffrage or independent media.

So the question is, why is China positioning itself as a democracy that works right now? Listen to this.

(BEGIN VIDEO CLIP)

PROF. JEAN-PIERRE CABESTAN, POLITICAL SCIENTIST, HONG KONG BAPTIST UNIVERSITY: I think China is on the offensive. China wants to demonstrate that its political system is not only a system which delivered but also a system -- it wants to demonstrate that the one- party system, which presides upon China as the destiny for now 70 years. It's the best system for China but also maybe for the rest of the world.

(END VIDEO CLIP)

STOUT: So political observers say that why is China doing this? They are trying to assert their superiority, and this all comes at a very politically sensitive time.

China's economy is slowing down, and also U.S. President Joe Biden has been shoring up alliances, which has most recently manifested itself in the form of diplomatic boycotts in the run-up to the Beijing Winter Olympic Games -- John.

VAUSE: Kristie, thank you, Kristie Lu Stout, live for us in Hong Kong. STOUT: You got it.

VAUSE: We'll take a short break. When we come back here on CNN NEWSROOM, as prices surge and the value of the Turkish lira plummets, the middle class in Turkey say they're feeling poorer by the day. More on this economic crisis in a moment.

(COMMERCIAL BREAK)

VAUSE: Health officials in Scotland would like Christmas parties to be delayed for a while because of the spread of COVID and, in particular, a growing number of Omicron cases.

In the past 24 hours, more than 3,000 people tested positive for COVID. Public Health Scotland is asking for plans to be postponed, large gatherings to be reduced in size, meet people outside and get vaccinated.

Ghosts of Christmas past are coming back to haunt U.K. Prime Minister Boris Johnson. He's surrounded by the controversy over alleged Christmas parties held last year while the country was in lockdown. Meantime, new COVID-19 measures Johnson's enacted are only adding to the confusion.

Here's CNN's Nina dos Santos.

(BEGIN VIDEOTAPE)

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT (voice-over): At this bowling alley in London, they're desperate for the good times to keep rolling for as long as possible.

This festive season is a crucial chance to make up for last year, when parties like these were outlawed. But allegations the government may have broken its own ban on Christmas get-togethers back then, allegedly hosting events at Downing Street, have prompted fury.

UNIDENTIFIED FEMALE: Industry professionals have had to make a really tough call and put lives over livelihoods, so it really is a smack in the face to learn and understand what was happening in central government at that time. It loses all credibility.

DOS SANTOS: An aide has resigned in tears.

UNIDENTIFIED FEMALE: This afternoon I'm offering my resignation to the prime minister.

DOS SANTOS: And an investigation into three events has been launched. Boris Johnson apologized before Parliament on Wednesday.

[00:30:00]

BORIS JOHNSON, BRITISH PRIME MINISTER: I have been repeatedly assured, since these allegations emerged, that there was no party.

DOS SANTOS: Even the birth of Johnson's daughter on Thursday wasn't enough to knock the so-called Christmas-party-gate off the news agenda.

JOHNSON: It's now the proportionate and the responsible thing to move to Plan B in England.

DOS SANTOS: Compounding people's ire, a fresh toughening of COVID restrictions announced this week, with most Britons told to work from home from Monday and masks made mandatory at some indoor venues.

Here, that's caused confusion, with colleagues soon unable to mix in the office but still able to socialize.

UNIDENTIFIED FEMALE: We didn't have any sort of Christmas last year. We didn't have any events last year. For us as a team, I know I'm leaving my team in the next few months, and it would be nice to get together and have a few drinks and just have a good night.

UNIDENTIFIED FEMALE: It's been really lovely to see everyone that you've only seen on the screen for a while. It's been lovely to see people in person and have that connection.

UNIDENTIFIED FEMALE: We all test on the day of every event. We try and get a PCR within 72 hours, as well.

UNIDENTIFIED FEMALE: Yes.

DOS SANTOS (on camera): And this is how government scientific advisors say you can party safely this Christmas, by making sure that you've taken one of these free rapid antigen tests before taking part in any large social gatherings.

So, here goes. Not the most pleasant.

Well, thankfully, that has come up as negative, which means I'm good to go. But the reality is is that this procedure is just a recommendation. It isn't actually a rule.

(voice-over): For large-scale events in the U.K., PCR tests and immunity passports will soon become obligatory. At this point, though, the best Christmas gift revelers could get is probably clarity.

UNIDENTIFIED MALE: The mixed messaging from governments, just over a week ago now, immediately caused huge disruptions. We are roughly about 25 percent down on large groups at this time of year.

DOS SANTOS: As the ghosts of the Christmas past come back to haunt Johnson's government, and with COVID making a comeback, this year's holiday may not end up being the season to be quite so jolly after all.

Nina dos Santos, CNN, London.

(END VIDEOTAPE)

VAUSE: The latest U.S. inflation numbers are due out on Friday, and when we come back, expectations are that it's 6.8 percent. The last time they were this high, "Greece 2" was playing at the cinema, and "Physical" was No. 1 on the radio. We'll have more in a moment.

(COMMERCIAL BREAK)

VAUSE: In the U.S., economists are predicting inflation will hit an almost 40-year high when new data is released by the Labor Department Friday.

The headline annual rate expected to be 6.8 percent. The last time the U.S. saw that level of inflation was 1982.

Just a year earlier, mortgage rates hit a record high, almost 18 and a half percent, the end result of the government's efforts to slow inflation by increasing official interest rates.

[00:35:08]

Rana Foroohar is CNN's global economic analyst and associate editor for "The Financial Times."

Good to see you.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Great to see you.

VAUSE: OK. Can we now agree, this war over is it transitory, is it not transitory, is it now over? High inflation will be here for a while.

FOROOHAR: It will be. You know, I mean, that Fed speak is always so interesting.

I think transitory was more like a wishful thinking word. We're hoping this will be over in a month. It won't be over in a month.

This year, John, as much as we're seeing the data point to higher inflation, it's an up and down story, right? I mean, you know, we've got the new variant that is actually lowering oil prices, because we're probably going to see less travel during this holiday season, more working at home.

At the same time, you've got tight labor markets. You've got, you know, some continuous supply chain issues. So it's really up and down. And I think that, you know, month on month, this is a story that could change very quickly.

VAUSE: Well, in a very clear sign that the Biden administration has some concerns about these imminent numbers to be released. The White House released their own statement on Thursday, saying there's nothing to be concerned about.

It reads, "Tomorrow, we will get a report on consumer prices that experts to be elevated again, driven in part by energy prices and used car prices. Fortunately, in the weeks since the data for tomorrow's inflation report was collected," to your point, "energy prices have dropped."

OK. So, as important as fuel prices are to the CPI, have they fallen enough to negate price increases in other parts of the economy for products and services not impacted by supply chain issues like what the bankers saw (ph)?

FOROOHAR: Well, you know, in two words, not yet. I do think that they're going to fall farther in the next month or two, because of the holiday travel issues that I mentioned. But you've got other commodity prices going up. You've got food prices up. You've got all kinds of other minerals, you know, things that you use to make all the clean tech and electric vehicles that we need so much of, and that governments around the world are pushing. These are all rising.

So, you know, oil may be going down. Gas may be going down, other commodities up. And again, it's six and one half dozen. And I think that this makes it really, really hard for central bankers around the world to make policy, you know.

But -- but that is saying, yes, this is not transitory. We're going to have to think about hiking interest rates and pairing back on the bond-buying program in the new year. Is that going to bring markets down? What's that going to mean for consumption? How will that affect policy?

I mean, I, honestly would not want to be a central banker right now. I can't think of a time in modern history where it's been as difficult to make decisions.

VAUSE: Well, they've had it easy for over the last 10, 20 years. Just keep interest rates zero. OK? So that wasn't hard.

FOROOHAR: Yes.

VAUSE: Back in the '90s -- '70s and '80s, ten-year inflation was brutal. Those prices went up, and the Fed kept increasing official interest rates reaching an all-time high, 20 percent, March 1980. Twenty percent with inflation rates close to zero. So what are the options here?

FOROOHAR: We haven't seen that. I mean, you've really hit the nail ion the head here. It's been more than a generation since anyone has experienced really runaway inflation.

So, you know, I think investors don't know what to make of this. Consumers are panicked. And by the way, in the U.S. in particular, fiscal payments, post-COVID fiscal payments are starting to run out. So, you had consumers having a lot of savings on hand. That's now being run down.

I think that there's been a sort of, a willful blindness to the fact that there is a pendulum shift here. We probably are going back to an era in which we're not going to see these kind of low rates forever. And what's that going to mean?

You know, we have a record corporate debt bubble. You know, we have rising debt levels in certain sort of vulnerable populations in the U.S. Auto moans, subprime loans. We don't know yet what it's going to mean.

And at the same time, we've had the last few years of just unprecedented easy money policy and fiscal stimulus at the same time. So we don't know what's going to happen in the next two or three years. It's really uncharted territory.

VAUSE: Yes. We're going to wrap it up here, but we've been addicted to all that easy money. And the very thought of it being taken away, everyone goes into, you know, shock and horror.

FOROOHAR: Temper -- temper tantrums. Taper tantrums.

VAUSE: Taper tantrums. I like it.

FOROOHAR: I would like to come up with a new alliteration for this.

VAUSE: Taper tantrums. Rana, fantastic. Thank you.

FOROOHAR: So good to see you.

VAUSE: Well, while inflation has been soaring to new heights, the -- the Turkish lira has been falling like a brick while inflation was soaring to new heights. All the direct result of the Turkish president's economic policies, which in polite company could best be described as unorthodox.

Despite inflation hitting 20 percent, Recep Tayyip Erdogan has insisted on slashing interest rates, defying the most basic economic common sense. And now the pain is being felt across the country.

CNN's Jomana Karadsheh has our report.

(BEGIN VIDEOTAPE)

JOMANA KARADSHEH, CNN INTERNATIONAL CORRESPONDENT (voice-over): In this middle-class Istanbul neighborhood, people say they're getting poorer by the day.

With inflation at more than 20 percent, and the Turkish lira in free fall, Turks are watching their incomes dwindle as prices skyrocket. Recep Baradar (ph) says he is barely surviving on his pension. He now can't afford to take his grandchildren out.

"You can't even buy them a toy. A toy worth 10 lira IS now 40," he says. "Children want everything they see. What will we do?"

But it's not just the luxuries. Many here say they can barely afford the basics. Asaman Osra (ph) no longer brings a shopping cart to the market.

"I bought two eggplants, a few zucchinis, and one cauliflower," she tells us. "That's it. In the past, I used to buy kilos of everything. I used to fill up my shopping cart. Now it's impossible."

This woman interrupts to tell us everything is very expensive. She says that her husband, a tailor, hasn't worked in over a year after he got ill with COVID. The couple live off their pension, and it's barely enough to cover their expenses.

"I get discounted bread from the municipality. We can't eat red meat. Not even once a week. I have no idea how we're going to survive."

It's a question, on the minds of many Turks, who, at times, are watching the cost of pretty much everything rise on a daily basis.

(on camera): Simit, the Turkish bagel, as it's known, is a popular, inexpensive street food and a breakfast staple in this country. This has gone up by 30 percent in the past few days. Shocking for a lot of people here, who say if the simit wasn't spared, what's next?

(voice-over): The Turkish lira lost nearly half of its value this year. More than 30 percent of that, in November alone.

Most experts blame this on the Turkish president's unorthodox economic policies. To fight inflation, most countries raise interest rates. But Turkey is doing the opposite.

President Erdogan, a staunch opponent of high interest rates, that he describes as an evil that makes the rich richer, and the poor poorer, or has pushed the central bank to cut borrowing costs.

Lower interest rates, and a depreciated currency, he argues, will boost production, jobs, tourism, and exports. But experts are questioning the president's plan.

CAN SELCUKI, GENERAL MANAGER, ISTANBUL ECONOMICS RESEARCH: Turkey is now raising the prices for the entire economy, for the benefit of, actually, around 20, 25 percent of the economy.

So it's not really helping the households that's trying to cope with high inflation. The problem is there is no focus on fighting the inflation, which is a core of the problem, right now in Turkey. And, there unpredictability that comes along with it.

KARADSHEH: President Erdogan's promising results within six months, but with the 2023 elections fast approaching, much rides on his ability to deliver.

SELCUKI: At the current present, Erdogan's success, for the better health of the past two decades, was his ability to delivery is for it middle- and low-income houses. And now, it seems to have completely turned around, where you know, middle-income, and low-income households are really suffering.

KARADSHEH: This suffering may cost Erdogan at the polls, but, for now, it's ordinary Turks who are bearing the brunt of this political gamble.

Jomana Karadsheh, CNN, Istanbul.

(END VIDEOTAPE)

VAUSE: Thank you for watching CNN NEWSROOM. I'm John Vause. Michael Holmes will be here at the top of the hour. In the meantime, WORLD SPORT starts after the break.

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