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U.S.: Russia Has Added 7,000 Troops Around Ukraine; Brazil City Ravaged by Flooding, Landslides; Kamila Valieva Set to Compete in Women's Free Skate; Report Alleges World Bank Group Unit Funding Xinjiang Projects. Aired 1-2a ET
Aired February 17, 2022 - 01:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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MICHAEL HOLMES, CNN ANCHOR: Hello, everyone. I'm Michael Holmes live in Ukraine with new claims doubting the Russians of withdrawing troops as they say, but actually adding 1000s more along the border.
JOHN VAUSE, CNN ANCHOR: I'm John Vause at CNN's world headquarters with a new investigation alleging the International Finance Corporation, part of the World Bank Group invested hundreds of millions of dollars in companies using forced labor it China's Xinjiang region.
Nearly 100 people leave dead in Brazil after a month's worth of rainfalls in a single afternoon on one city.
HOLMES: Welcome everyone, NATO and Ukraine casting doubt on Russia's claim that it's wrapping up some military drills and pulling back some troops from near Ukraine's border. A senior U.S. official says talk of diplomacy from Vladimir Putin is just a guy's and Russia has actually added about 7000 troops to the region in recent days.
The U.S. State Department claims that Russian forces are moving into fighting positions, and the British defense minister says he has seen no evidence of a Russian troop withdrawal.
Now, new satellite images show Russia adding forces to several regions close to Ukraine. These pictures you're seeing there show a newly constructed pontoon bridge in southern Belarus just six kilometers from the border with Ukraine.
Meanwhile, NATO leaders will meet again in the coming hours in Brussels, the Secretary General suggesting the alliance could strengthen its eastern flank to protect its allies.
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JENS STOLTENBERG, NATO SECRETARY GENERAL: There are signs from Moscow that diplomacy should continue. But so far, we do not see any sign of de-escalation on the ground. No withdrawals of troops or equipment. This may of course change. However, what we see today is that Russia maintains a massive invasion force ready to attack.
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HOLMES: CNN Contributor for Russian Affairs Jill Dougherty is in Moscow but first CNN's Matthew Chance with details on the Russian military buildup. He's reporting for us from Kyiv.
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MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the latest Ukrainian military intelligence assessment has said that there was about 148,000 Russian troops that they've observed close to Ukraine's borders, more than that figure, in fact, and that brings it pretty much in line with what President Biden said 150,000. Now, the reports of another 7000 Russian troops according to U.S. intelligence reports, that have come to areas close to the Ukrainian border as well.
But even with that level, it's not clear that it's going to change the calculus that's been made by Ukrainian intelligence. And that is this, that with that concentration of Russian forces poised on the border of Ukraine, inside Russia and an occupied territories near Russia. And that's still not going to be enough the Ukrainian say, for the Russians to stage a full-scale military attack inside Ukraine, it's not going to be enough for a full-scale invasion. It doesn't mean, of course, you can't do something smaller or attempted invasion with that level of forces.
But it takes a large number of forces not just to invade but to hold that territory as well. And again, Ukrainian assess assessment at the moment is that the Russians are not there at this point. And what the intelligence assessment says in this country is that instead, Russia knowing that Russia is concentrating on destabilizing the internal political situation in Ukraine, pulling economic levers using energy as a weapon, and of course, using cyber-attacks to create instability inside Ukraine. Matthew Chance, CNN, Kyiv.
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JILL DOUGHERTY, CNN CONTRIBUTOR, RUSSIAN AFFAIRS: It's really Dave contradictions here in Moscow, Russia continuing to insist that it is pulling back some of its troops from the border with Ukraine, and that some of those military exercises that had been taking place in Belarus are being concluded. But NATO and also the U.S. Secretary of State Antony Blinken saying they see no signs of that.
Also, President Putin contributing to this atmosphere of contradiction, saying on the one hand that diplomatic efforts should continue, and on the other hand, using a real red flag word of genocide, referring to the Donbass region that's the break wait region in the eastern part of Ukraine where Russian speakers live saying that the Ukrainians are carrying out genocide against those people.
[01:05:09] In addition, the government's Investigative Committee is having now a criminal investigation, looking into allegations of what it says are the extermination of the people of Donbass. So again, military contradictions, and also diplomatic maneuvering, with no sign that this conflict that has dragged on now for eight years and has taken 14,000 lives is any closer to being resolved. Jill Dougherty, Moscow.
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HOLMES: And joining me now from Moscow, Andrey Kortunov, he is the Director General of the Russian International Affairs Council. It's good to see you, sir. I'm curious, NATO talking about troop movements of its own. I mean, how united do you see the Western alliance on all of this as united as they are portraying?
ANDREY KORTUNOV, DIRECTOR GENERAL, RUSSIAN INTERNATIONAL AFFAIRS COUNCIL: Well, I think the Western alliance is united, as far as a hypothetical Russian invasion is concerned. But it is getting back to business as usual, I think that we will see various shades of opinions and different positions, among of Western countries. Some of them would like to stick to a very tough approach. Others would prefer to engage into negotiations with Moscow. So, a lot depends on how the situation evolves.
HOLMES: Yeah, good point. I mean, what -- I'm curious, what do you think the political risks are here for Joe Biden? I mean, the U.S., of course, was caught flat footed by the Russians moving into Crimea, more proactive this time. But what's at stake for him in terms of his handling of this?
KORTUNOV: Well, if there is no serious escalation, I think the administration will have to explain its forecasts and his predictions about almost imminent invasion. Of course, these statements did contribute to chaos and uncertainty inside Ukraine. And it's not accidental that President Zelensky is trying to appeal to his western partners saying that Russia is not going to invade. Don't panic, you know, the situation is under control. So, I think that definitely there might be some reputational damage to the U.S. administration, if nothing dramatic happens in Ukraine.
HOLMES: Yeah, there's been a lot of talk about the Minsk agreement as a baseline here for a possible resolution. What are the chances of that agreement being enforced when it hasn't until now?
KORTUNOV: Well, I think that the real danger on the Russian side is that the cabinet might go ahead and recognize the breakaway republics. And if it happens, it is likely to be the end of the Minsk agreements. I hope that Putin will simply keep this option as a Trump card on his sleeve and would not go for that. But definitely the Minsk agreements is a top priority for the Kremlin. And they would like Ukraine to be somewhat more consistent in abiding by the provisions of the Minsk agreements, they maintain that Ukraine is very selective in its approach to various parts of this deal.
HOLMES: I want to ask you about something you've written about. The west, of course, folks have massive punitive sanctions on Russia, if it does move in. And many have said China might help Russia out if that happens. How do you see the Russia-China dynamic in the context of what's happening now?
KORTUNOV: While it's interesting, because on the one hand, China does not want to take sides in the Russian Ukrainian dispute, because China has a lot of trade with Ukraine. It has investments in Ukraine. So, it is not really interested in a war. However, China alliances with Russia in Russia's opposition to the NATO enlargement, and that was reflected in a joint Russian Chinese statement released when Mr. Putin came to visit. Chairman Xi during the Olympic Games in Beijing. So, the China-Russia alliance is deepening. And I think that, of course, this dual containment policy by the U.S. administration is a factor which consolidates this partnership between Beijing and Moscow.
HOLMES: A fascinating analysis. Andrey Kortunov of in Moscow, really appreciate it. Thanks so much.
KORTUNOV: Thanks.
HOLMES: And I'll be back with a bunch more from Lviv at the bottom of the hour but first I'll throw it back to John in Atlanta with the day's other news and John if you are hearing a noise here, we're under a tent and it is really raining in Lviv right now.
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VAUSE: Try to stay dry. We'll catch up with you later in the hour, Michael, thank you.
Well, in Brazil at least 94 people are dead after floods and landslides and also Rio de Janeiro. Rescuers are still looking for survivors in the city of Petropolis, where heavy rains turn city streets to rivers. CNN's Shasta Darlington has a report.
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SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT (voice-over): A terrifying scene as rushing water carries a car down an embankment. Heavy rain drenched the city of Petropolis, a mountainous region of Brazil's Rio de Janeiro state, causing deadly flooding and landslides. Emergency crews tossed debris out of a giant hole racing to find anyone left alive under the muddy mess. Dozens are dead including several children. The Rio de Janeiro fire and Civil Defense Department says it's unclear how many people are still missing. Rio's governor visited the area to assess the damage.
CLAUDIO CASTRO, RIO DE JANEIRO GOVERNOR (through translation): I think that is not time yet to discuss numbers. Our work now is to try to find survivors in this horror scene to clean and to rescue any bodies that are here.
DARLINGTON: A rescuer carries a dog to safety and residents look on what's left of their neighborhood. More than 1500 families have been displaced as the property destruction is enormous. The city has declared a state of public calamity. One shopkeeper says he lost everything in a matter of minutes. HENRIQUE PEREIRA, SHOPKEEPER (through translation): It arrived by surprise. It started flooding gradually. The wall here in front was taking everything. The water pressure was taking everything. Everybody on the street had 100% damage. It was very difficult now to start over.
DARLINGTON: Brazil's President Jair Bolsonaro, who's on a trip to Russia tweeted that he has asked for immediate assistance to be sent to the victims. Rio Civil Defense says that Petropolis had more rain in one afternoon than the historical average for all of February. Officials are urging residents to relocate to safe areas or shelters until the debris can be cleared away. Shasta Darlington, CNN, Sao Paulo.
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VAUSE: Let's get more now from CNN Meteorologist Derek Van Dam, he's at the CNN Weather Center. So, Derek, what are we looking at here in terms of forecasts, how much rain is yet to come?
DEREK VAN DAM, CNN METEOROLOGIST: Yeah, well, it's been raining in many of these locations that have been hit hardest by the flooding since December. So, this has been an ongoing thing. It's just that within the past couple of days, it has been particularly heavy. In fact, we exceeded the entire month of February's average rainfall total in Petropolis. Just in a three-hour period, they received 210 millimeters and you combine that with a mountainous terrain across the state of Rio de Janeiro and you've got a recipe for disaster that leads to landslides and mudslides. And unfortunately, that is the cause of the fatalities that we've experienced.
Very active infrared satellite imagery, look at how the thunderstorms move over the Petropolis region into the northern sections of the Rio de Janeiro state. This isn't a meteorological phenomenon known as training, training of thunderstorms. That means that the thunderstorm forms, develops and moves over the same location for several hours at a time producing extremely heavy rainfall totals. It's not only the coastal areas of Brazil, but you work your way inland. And you can see that we have had precipitation over the past seven days that have totaled over 150 millimeters, according to NASA's Global Precipitation Monitoring Program that they have. So, this is a hefty amount of rain.
In an area, of course, we've got a lot of tropical activity within this region. It is summertime in the southern hemisphere, and it is La Nina season. But unfortunately, you just combine all these factors together and you've got the risk of landslides and mudslides, more rainfall to come. Rainfall totals over the next two days across the Rio de Janeiro state could total over 125 millimeters, leading to the potential of more landslides and mudslides. Back to you.
VAUSE: That's not a good forecast. Derek, thank you. Derek Van Dam there with the very latest. We appreciate it though.
As heavy rains turns deadly in Brazil just over the border to the south, the lack of rain is a major problem for Argentina. Officials say wildfires burning in the Northeast since mid-January has scorched more than 1.2 million acres, burning almost 50,000 acres a day or close to 200 square kilometers.
Parts of Argentina are affected by a historic drought and an ongoing La Nina, weather pattern, which is contributing to low rainfall, high temperatures.
At the Beijing Winter Olympics, the Russian skater Kamila Valieva, who tested positive for a banned substance is the favorite to win a gold medal in figure skating when she takes to the ice just a few hours from now. The Court of Arbitration for Sport ruled Monday the 15-year- old could continue to compete even though she failed a drug test in December.
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Outrage over the decision has only grown louder after the York Times reported that along with banned, trimetazidine, normally used to treat angina, Valieva declared taking two other heart medications, but neither one is on the list of prohibited substances. Let's go live to Beijing, CNN's Steven Jiang, standing by with very latest, and I guess this is one of those moments with all those people who training and been clean athletes who are going out there on the ice against her are very, very distinct disadvantage through no fault of their own?
STEVEN JIANG, CNN SENIOR PRODUCER: That's right, John. But that's also why when she skates onto the ice Thursday night, as the top scored athlete from Tuesday's competition, she is not really halfway towards another gold medal because no gold medal will be awarded, according to the IOC. Instead, they will be asked to work appearing next to her results to indicate the ongoing investigations, but also, according to the IOC, no medal ceremonies for any events that she takes part in.
Now, that obviously is mean, that means this whole thing affects not just her and the Russians, but also other athletes who have won or will potentially win alongside her. That's probably why we have learned that Thomas Bach, the IOC President held a two hour behind closed door meeting with Team USA, for example, because obviously, the Americans win, won silver from the team event last week behind the Russians, so Bach, presumably was trying to reassure them of the IOC stance on this issue, as well as they're trying to find a way to recognize the achievements of clean athletes and teams.
But all of this, of course, again, shining a spotlight on the minimum age for skaters to compete at the Olympics. Right now, it's 15. That's why Valieva, is there but some have suggested it should be raised to 17 or 18. But as many have pointed out, the issue here is not the age of the young athletes. For one, they say if you're considered mature enough to compete with adults, then you should be treated the same when it comes to doping. And the other point they say is the bottom line here, if there are corrupt adults surrounding these young athletes, flouting rules to gain unfair advantage, then changing the age requirement wouldn't really make any difference. And they say the issue here is the IOC for too long has been giving a pass to the Russians, even when Russia has been proven to have a track record of systemic doping. Here's what CNN's Sports Analyst Christine Brennan has just said.
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CHRISTINE BRENNAN, CNN SPORTS ANALYST: They've been stealing medals in some cases, from clean athletes, and it continues and then they kick the can down the road. What I would do is you have to basically say to Russia, you cannot appear, no athletes at the Paris Summer Olympics in 2024. No athletes from Russia at the Milan Winter Olympics in 2026. And maybe even go to LA in 2028. It should be so severe because what they have done here is basically blow up the Olympic Games.
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JIANG: Some very strong words from Christine there before. Now, John the Olympic Games here in Beijing continue on with all eyes on Valieva as she skates onto the ice on Thursday night. John.
VAUSE: Steven, thank you. Steven Jiang live in Beijing with the very latest. We appreciate that. Very short break, when we come back, a leading development thanks investments are under security, a new report finding funding to companies that allegedly use forced labor in China's Xinjiang region. We're back just a moment.
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VAUSE: For decades, the International Finance Corporation part of the World Bank Group proclaimed its success in funding companies that help end poverty in developing nations. But disturbing findings in a new report alleged hundreds of billions of dollars went to companies using forced labor in China's Xinjiang region. CNN's Ivan Watson has details.
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IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: A new report accuses an arm of the World Bank of pumping hundreds of millions of dollars into Chinese companies that the report accuses of participating in a campaign of repression against Uyghurs in China's Xinjiang region.
Now, this comes as the U.S. has been leading a diplomatic boycott of the Beijing Winter Olympics after accusing the Chinese government of genocidal policies in Xinjiang of the mass roundup and internment of up to 2 million ethnic Uyghurs and members of other ethnic minorities. The report titled financing genocide from the Helena Kennedy Center for International Justice. It says that the International Finance Corporation, this arm of the World Bank, which is aimed at poverty alleviation, put $486 million into for Chinese companies at the height of the government campaign against Uyghurs in Xinjiang, accuses these companies of participating in and benefiting from forced labor programs, from compulsory land appropriation programs, and publishes photos of what it says are facilities factories owned by some of these companies in close proximity to suspected internment camps over the years as those internment camps then grew.
The report goes on to say that does not appear to have been adequate due diligence and monitoring of the investments to make sure that they met the IFC's standards. And says that there was only one monitoring group that went out in 2019 to Xinjiang, reportedly staying on the ground just 24 hours there and being detained by police no less than three times during that short visit.
Now, CNN has reached out for comment, it has independently verified that money did in fact go from the IFC to these four Chinese companies, and they did use some of that money for their Xinjiang operations. The companies did not respond. The Chinese foreign ministry issued a statement saying China has repeatedly emphasized that the so-called issues of forced labor and repression against ethnic minorities are huge lies concocted by anti-China forces in the U.S. and the West. They're baseless. And goes on to say that it attempts to attack and smear China are bound to fail.
The IFC did not respond to specific questions from CNN. It did say, "We do not tolerate discrimination or forced labor under any circumstances" and added that it would work to verify and investigate serious allegations brought to their attention.
I might add that I have interviewed people, Uyghurs, who say they had been put in internment camps, and after months of terrible treatment been released, provided that they work in factories for almost no money under threat of being sent back into detention if they complain or refuse to work in these jobs. Ivan Watson CNN, Hong Kong.
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VAUSE: This report was the result of a joint investigation by the Atlantic Council and a nonprofit research group known as NomoGaia, which focuses on business and human rights. And joining us now from Denver, Colorado is Kendyl Salcito, Executive Director of NomoGaia.
So, thank you for being with us, Kendyl. We appreciate your time.
KENDYL SALCITO, EXECUTIVE DIRECTOR, NOMOGAIA: Thanks for having me.
VAUSE: OK, so just to follow up on the report we just heard from Ivan Watson, and the response we received from the IFC, a spokesman also told CNN that the corporation has, "strong environment, social -- and governance standards that are diligently applied during the life of the investment and are considered a model for development finance worldwide."
He then added that the allegations of forced labor discrimination will be urgently investigated. So, have you seen any indication that happened -- that is happening, and this business model is considered to be a model for development finance world over? Does that raise concerns that maybe this is just the tip of the iceberg?
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SALCITO: The IFC does have a set of eight very clear performance standards that are supposed to ensure that investments are environmentally and socially responsible. And when they were -- they were last updated in 2012, they were indeed a model for development bank's worldwide.
Our research was just an inquiry into how four of IFC's direct investments in Xinjiang had met those performance standards. And we found that all four companies were at incredibly high risk of violating them in extremely risky investments in Xinjiang. And our aim was to understand what we could glean from these operations using the performance standards as a lens and that they weren't applied was actually incredibly worrisome to us.
VAUSE: Well, four companies that were receiving the funding. They called the Chenguang Biotech Group, which is an international manufacturer of agricultural products and herb extracts, I should say, another one called the Camel Group which recycles car batteries for the largest car battery manufacturers in the world, Century Sunshine, which manufactures and develops ecological fertilizer, Jointown Pharmaceutical Group, which claims to be the largest non-state-owned pharmaceutical distribution company in China, and the third biggest overall. So, when it comes how this sort of pattern of abuse, if you like, was playing out? Is there a similar thread which is wearing through all of these companies in terms of forced labor, and discrimination?
SALCITO: So yes, and no. We found that all four seem to be a very high risk of violating IFC standard on indigenous peoples because there was no way to get consent from Uyghur peoples pertaining to any of these investments. But we found just incredibly severe violations of resettlement and land acquisition standards at Chenguang Bio where essentially, the company is converting entire villages across regions into farms that only grow crops for Chenguang, no food crops, no small farms, they're all being agglomerated for Chenguang's use.
Camel built a lead smelter directly atop an irrigation system that Uyghur is built in ancient times to irrigate traditional crops. And Century Sunshine is -- they're all using forced labor all four companies have confirmed cases of transferring labor but atop that there are these additional violations. So, Century Sunshine is billed as an agricultural fertilizer company, but it's also a magnesium smelter, an alloy producer. And that process is incredibly polluting and dangerous for workers. And the Uyghur workers that are filmed in state propaganda, have no respirators, have no face masks, have almost no protective gear at all. So, the violations that we found really ran the gamut, including forced labor and labor transfers at every operation.
VAUSE: I'm wondering if you could sort of step back for a moment and explain how the report came about in the first place. Because in many ways, it seems like tracking down this kind of information would be like searching for a needle in a haystack unless you know where to look.
SALCITO: So, it wasn't actually that hard to find information we used. The companies often brag about their participation in these state poverty alleviation programs, which in some regions are poverty alleviation in Xinjiang, they're almost always coercive, they're always coercive. And I wasn't looking to investigate these industries. I was looking at IFC implementation of its indigenous peoples standard, and I just happened across these investments. And I flagged them for IFC back in November of 2020. And I said, I don't know how you can be investing here, but it looks incredibly dangerous.
And they put forth a bid started looking into this but continued to invest. And that led me to want to understand further how they could justify that given the presence of the performance standards. And once I had IFC's companies laid out but with the work of Laura Murphy and Nyrola Elima, my co-authors, they are incredibly talented researchers of state propaganda, and, and shipping records and media. And so, we could triangulate data sources among the three of us to really pin down these companies.
VAUSE: It seems like an incredible lot of work but work which is very valuable. So, thank you, and thank you for being with us.
SALCITO: Thank you so much for having me. I really appreciate it.
VAUSE: You're welcome.
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A landmark ruling by the E.U.'s top court has cleared the way for Brussels to withhold billions of euros in financial assistance to Poland and Hungary for violating democratic rights and freedoms.
Right-wing governments in both countries have been accused of backsliding on democratic reforms in recent years, exerting excessive control over the judiciary, stifling media freedom, and denying LGBTQ rights. Both countries are also major beneficiaries of E.U. subsidies. And after this ruling, those payments could now be cut in the violations continue.
The E.U. Commission has welcomed this new leverage to enforce the European Union's declared values.
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DANA SPINANT, E.U. COMMISSION SPOKESMAN: The president said very clearly that the court upholds the legality of this important tool that enables us to protect better the E.U. budget and the financial interest of the European Union against breaches of the principles of the rule of law.
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VAUSE: Hungary's justice minister slammed the E.U. ruling as a political decision, one which could impact the result of national elections in April.
When we come back, investors focused like a laser on the Ukraine standoff that's fueling -- led with a surge of fuel prices as well as energy prices, and how that will factor into inflation. All of that, when we come back.
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HOLMES: Hello everyone, I'm Michael Holmes live in Lviv, Ukraine where it is about 8:30 on a rainy morning.
Now, despite Russian claims of a military pull back, a senior U.S. administration official says Russia has actually added another 7,000 troops along Ukraine's border. Now, that official, calling President Putin's public openness to diplomacy a guise. Accusing him of privately mobilizing for war.
Now, the Ukrainian government says that even if Russia has an estimated 150,000 troops lurking nearby, that's still, in their view, isn't enough for a full scale invasion. And it won't be enough to take and hold the capital, Kyiv.
Meanwhile, there are concerns about a new bridge being built in Belarus during those joint exercises between Russian and Belarusian forces. It's just a few kilometers from the Ukrainian border, and would make it easier for the Russian military to move from southern Belarus, into Ukraine.
America's top diplomat with this warning.
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ANTONY BLINKEN, U.S. SECRETARY OF STATE: Unfortunately, there's a difference between what Russia says and what it does. And what We're seeing is no meaningful pullback. On the contrary, we continue to see forces, especially forces that would be on the vanguard of any renewed aggression against Ukraine continuing to be at the border, to mass at the border.
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HOLMES: And one of those borders, of course, is Crimea, the Ukrainian territory annexed by Russia eight years ago and occupied over since. Russian state media has claimed troops are leaving Crimea, but new satellite images show dozens of helicopters arriving there earlier this week.
CNN's Jim Sciutto picks up the story.
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JIM SCIUTTO, CNN CHIEF U.S. SECURITY CORRESPONDENT: A very public display, Russia's ministry of defense posting video of armor leaving Crimea across the Kerch Strait. And it says, "returning to their home bases. Their participation in said to be over.
A few hours later, another convoy of fuel trucks filmed getting ready to leave Crimea as well. Then filmed on that same bridge, also heading east.
All part of a choreographed effort by the Kremlin in the ongoing information war over its intentions in Ukraine. Russian diplomats across Europe scoff at western claims that an attack is imminent. But both U.S. officials and NATO officials, including the secretary general, say, in fact, Russian troop numbers are continuing to rise.
JENS STOLTENBERG, NATO SECRETARY GENERL: So just that we see movement of forces. So battle times doesn't confirm a real withdrawal. It has been a big up and down, back and forth all the way. But the trend of the last weeks and months has been a steady increase in the Russian capabilities close to Ukraine's borders.
SCIUTTO: This is one of the videos issued Tuesday by Russia's defense ministry on units beginning, it claims, to go home. Followed up on Wednesday with more footage of the tanks loading onto trains, destination unknown.
Back in Crimea, the much advertised pullout involves units whose bases are, in any case, around Russian cities still close to Ukraine. Analysts say it will take at least several days to establish whether there is a true drawdown of Russian forces from positions around Ukraine.
For now, the picture remains mixed. There is plenty of Russian armor and air power still within just a few miles of the Ukrainian border. This, according to social media videos uploaded in the past day. Satellite images from earlier this week, show fighter bombers and helicopters arriving at air bases close to Ukraine.
The joint exercises in Belarus continue as well though the Belarus defense minister insisting every piece of Russian equipment will leave when those exercises are over.
All the while, a very public war of words continues over Ukraine's aspirations to join NATO. Over the fate of the breakaway eastern regions of Ukraine. And over Russia's demands for cast iron security guarantees.
President Putin and Russian officials repeat that Ukraine's desire to join NATO must be off the table. That however, is a nonstarter for the U.S. So far, the path to diplomacy and much of the weaponry seem frozen in place.
U.S. is now closely watching the Donbas region in eastern Ukraine. The Russian president claims a crime against ethnic Russians there, as the Russian parliament has now given the president the power, at least, to recognize the Donbas area as independent. U.S. concern is that Russia might use that as a pretext to further invade eastern Ukraine.
Jim Sciutto, CNN -- Kyiv.
(END VIDEOTAPE)
HOLMES: Now, the cyberattack that temporarily blocked access to a number of important Ukrainian Web sites on Tuesday has been described as the largest ever such attack to hit Ukraine. That's according to a government minister who says it's too soon to know who was responsible.
It was a so-called DDOS, or Distributed Denial of Service Attack, and it bombarded the Web sites of Ukrainian defense agencies and also banks with phony traffic. A top U.S. State Department officials says the Kremlin is the likely culprit.
I'm Michael Holmes here in Lviv in western Ukraine. Much more from here in the next hour but for now, let's toss it back to you, John, in Atlanta.
VAUSE: Michael, thank you. We can hear that rain still coming down. Stay warm, stay dry.
Fears of Russian invasion are driving up energy prices and the U.S. president warning the situation could get much worst should Russia attack. Two U.S. officials were sent to Saudi Arabia this week to urge the kingdom to pump more oil to stabilize energy markets.
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JOE BIDEN, PRESIDENT OF THE UNITED STATES: We are taking active steps to alleviate the pressure on our own energy markets and offset raising prices. We are coordinating with major energy consumers and producers. We are prepared to deploy all the tools and authority at our disposal to provide relief at the gas pump.
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VAUSE: At this hour, the cost of crude, Brent Crude $93.55 -- that's down by one and a third percent. And also WTI crude just down by 1.5 percent at $92 -- just over $90.
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On Wednesday, U.S. crude briefly hit $95 a barrel before backing off. Investors are concerned about disruptions to Russian energy supplies. All this when the global supply just cannot keep up with demand already.
Live to Los Angeles now, Ryan Patel, a senior fellow with the Drucker School of Management -- I was about to give you a CNN title -- at the Claremont Graduate University . Good to see you, Ryan.
RYAN PATEL, SENIOR FELLOW, CLAREMONT GRADUATE UNIVERSITY: Well, on all the drama that we've been covering, might as well be.
VAUSE: We'll give you a de facto one, a field promotion.
Ok. So we've seen this before in the lead up to a major conflict, the U.S. had someone in Saudi to ask, can you do us a solid, can you pump a bit more oil for a while. So are the Saudis is still in a position to influence global prices, and if they are, can they do it for any significant stretch of time?
PATEL: Key point here is the significance of time. This is just more of a band aid John. I mean this this is more the U.S. kind of looking at what we saw last year with the oil crisis as can you put -- can you keep the prices without getting out of control.
And the reason why, you know, I think the U.S. administration has learned from last year is the reason why this is really important right now and getting ahead of it is that inflation is at 7.5 percent, you don't want this thing get out of -- further out of control, because it will have a detrimental effects in the short term.
VAUSE: That's the key to all of this, right now, the price of oil and inflation are directly linked. Right now, inflation is at a 40 year high, so if there is a Russian invasion, don't expect -- there's an expectation that crude can hit $130 a barrel. Clearly, that will bump up inflation.
But for long and how will that complicate efforts to reduce inflation in the long term?
PATEL: It definite complicates it, not only to try to fight it down, because that would make the Fed, who's watching this really closely, to have to increase interest rates more quickly I guess.
But you know, what you just mentioned when the markets are looking at this, there are just kind of these three key things that get this uncertainty to kick off, especially selling off and stocks where investors are provided confronted with the possibility of an oil shock.
You mentioned higher inflation, and then the certainty of inter connect business. This causes the Federal Reserve bank and everybody to really pay attention to what's next.
VAUSE: Yes, last Thursday, about two hours left in the trading day, the U.S. National Security Adviser warned there were signs of Russian escalation at the Ukrainian border.
Then by the close of trade, the headlines, Dow dropped 500 points, Nasdaq sinks more than 2 percent on fears of a Russia attack on Ukraine. Past forward to this to this past Tuesday, Putin says he's drawing down Russian tanks and troops from Ukraine's border, suddenly Wall Street surges as easing geopolitical worries fuel broad rally.
Yes, there's nothing new about the price of s tuff being inversely linked to a likelihood of a major negative event, right. But given it moves this much just on a talk of escalation or de-escalation. How badly can stocks tank if Putin does give an order to invade.
PATEL: In the short term it most definitely will -- I mean the problem, you know, when we have our (INAUDIBLE) well, the markets are resilient overtime, but not from day to day, right now. And part of that is this nervousness of uncertainty really, of all shock. But really I think it's really it's really confusing for many near the investors. It's really what it would look like, right. and you know, the Fed last year use this word of transitory description as you talked about, it relating to inflation. But what if it is a full invasion. Will the fed use the same term, or will they course correct on to ensure, as you and I have talked about of the COVID-related inflation.
Well, happens if this is a full invasion potentially, you know, will the Fed use that same term or will they jump in and course correct and in turn sure, like because it's $120 per barrel. We're talking about 10 percent of inflation potentially and that, you
know, that putts the economy in a growth -- really in a tough spot.
VAUSE: When we talked about the sort of the long term outlook here, we heard from the NATO Secretary General on Wednesday saying this this heightened state of military alert in Europe is now the new normal. And most of the imminent attacks are like myself, just get used to this sort of stuff coming from Russia.
What does that do for investors? what does that do for the fed and for those people who's had interest rates and always people in the hands on the leaves of the economy.
PATEL: Well, I mean I don't think it's going to get (INAUDIBLE). The argument is they still won't be able to get used to it -- business leaders are not going to get used to it.
Russia is the world's second largest producer of both oil and natural gas. Of all global oil supplies and If you think about it Russia is the largest supplier of natural gas and crude to the E.U.
So as I mentioned, we are interconnected. If the E.U. is affected, obviously the U.S. is going to be affected. It's a domino effect to that degree.
So, I mean we saw this in the trade war with the U.S. and China with semiconductors, one piece supply chain -- it caused a domino effect. And having the military at the border even in any sense of bad news with a market that's already, I'm going to say, looking for bad news. That's already on the tips of kind of waiting to see if we're going to go backwards or not. It doesn't help.
And really this uncertainty of information too, John. Are they going to invade? Are they not going to invade? It does have an impact on the markets and on businesses and how they move forward.
VAUSE: Yes. He says he's not going to invade, but then they increase the number of troops even though they say the troops are drawing. It is confusing. It is uncertain. And that's the stuff that markets do not like.
[01:44:54]
VAUSE: Ryan, we like you though. Thanks for being with us. Ryan Patel there live in Los Angeles.
PATEL: Thanks, John.
VAUSE: Take care.
Coming up, daily COVID infections are surging in South Korea. Health officials warn cases could rise by more than 300 percent by the end of the month. We are live in Seoul with the very latest.
(COMMERCIAL BREAK) VAUSE: Well, more European countries are set to ease COVID restrictions. Officials have cautioned it does not mean the pandemic is over.
Still Australia will begin a limited rollback on Saturday. Most restrictions will end March 5 with no limits on social gatherings, full access to public locations, and no curfew.
In Germany by March 20, different households will be allowed to gather if everyone is fully vaccinated or has recently recovered from COVID.
In the past week, much of Europe has seen COVID cases decline or hold steady, compared to the previous week.
Very different story in South Korea now seeing record numbers of new COVID cases. More than 90,000 daily infections for a second straight day. Health officials fear that number will continue to climb for some time.
CNN's Paula Hancocks, live for us this hour kin Seoul. And you know, we've got a situation here that many countries have seen before. You have the surging numbers of infection and while the number of critical cases are going up as well, they're going up at a much slower pace and hospitals are managing to cope at least for now.
PAULA HANCOCKS, CNN CORRESPONDENT: That's right, John.
And that's really what health officials are focusing on here. Yes we have numbers of daily cases that are unprecedented for South Korea. 93,000 plus for yesterday.
But what we are seeing is that hospitals are coping. They do have enough ICU beds. They do have enough regular COVID hospital beds as well.
So at this point, what we are seeing is that the government and health officials are actually considering whether or not they ease restrictions in the country. They had a meeting on Friday, and the prime minister already said this week that what they are focusing on is to try and to minimize the economy impact.
There is still a curfew of 9:00 p.m. for restaurants and other entertainment venues here, and we have seen some protests from small businesses saying that they simply can't cope, at this point, that these curfews are crippling them.
So what we could see is these restrictions start to ease at the same time as we are seeing these record numbers. We are also seeing a step away from the government enforced track and trace system. The government enforced school system, where the government dictates who should be sent home when there is a case in the school. And there is going to be more trust put in those schools.
So, for example, when schools do go back here in Korea, in a couple of weeks' time, there will be at home tests sent to all the parents. It won't be mandatory, but it will be recommended, and it will be up to their schools how they decide who to send home once there is a positive case.
So it is a case where you have the government taking a step back from very stringent rules that it had before. We still have the quarantine coming in, it's still seven days if you come into South Korea. Although, in the United States the CDC has just advised American citizens not to travel to South Korea, saying, only do so if you really need to, because of the COVID situation, John?
[01:50:00]
VAUSE: Paula, thank you. Paula Hancocks, we appreciate the update there live from Seoul.
Well, police are demanding protesters leave the Parliament Hill area of Ottawa and end their weeks' long demonstration against COVID regulations which have paralyzing the Canadian capital.
The so-called Freedom Convoy have clogged roads and taken over public spaces, and has angered many local residents.
On Wednesday, police handed out fliers warning anyone blocking the city streets will face charges.
Meantime, the Royal Canadian Mounted Police report that four people have been charged with conspiracy to commit murder in connection with the border blockade, and a weapon seized in Alberta. The stash of weapons included 13 long guns, and one machete.
A Honduran court has detained former president Juan Hernandez after an extradition request by the United States. Hernandez faces multiple charges in the U.S. including drug trafficking and firearms possession.
On Tuesday, he surrendered to police and agreed to cooperate with the court.
And CNN's Matt Rivers has the very latest.
(BEGIN VIDEOTAPE)
MATT RIVERS, CNN CORRESPONDENT: What has been a dramatic week so far in the country of Honduras, which really began on Tuesday, when we saw the arrest of the country's former president, Juan Orlando Hernandez in some dramatic video, you can see Honduran national police arresting Hernandez outside of his own home.
They put shackles on both his ankles and his wrist and then they take him to a waiting police car where he is then brought to a detention center.
Honduran National Police say they did so, they arrested him on this at the request of the United States.
They said the United States put into extradition request for Hernandez, where they say he is facing drug trafficking charges in the U.S. Fast forward to Wednesday morning, where Hernandez made his very first appearance in a Honduran courtroom for his first extradition hearing.
It was in that hearing that the Honduran judge, basically said that Hernandez needs to remain in detention on a provisional basis as these extradition hearings play out, the next hearing is set for the middle of March. Afterwards, you could eventually see Hernandez extradited to the United States.
And as dramatic as it is, to see a former president of a country like Hernandez being put into shackles and being discussed at being extradited to the United States. In some ways, this has been the writing on the wall for some time now because of what we have seen happen in the United States.
Hernandez's brother, Tony Hernandez, is currently serving a life sentence in a United States prison for drug trafficking. In the court filing surrounding Tony Hernandez's case, U.S. investigators actually identified one Orlando Hernandez, the former president, as a co- conspirator. Basically saying that he funded, in large part, some of his presidential campaigns over the past decade, using money from those drug trafficking operations.
It is a stunning downfall for a former 0president of Honduras, who just a few weeks ago was still the president of that country, and is now sitting in a Honduran detention center.
Matt Rivers, CNN -- Mexico City.
(END VIDEOTAPE)
VAUSE: Quick footnote here, Hernandez has repeatedly denied being a coconspirator in his brother's alleged drug trafficking operation. He said in a message Tuesday morning that he would face the situation and defend himself.
When we come back, how an odd-looking staircase led to the discovery of a little girl who went missing two years ago.
(COMMERCIAL BREAK)
[01:54:51]
VAUSE: A six-year-old girl is back with her legal guardians after disappearing more than two years ago in New York state. She was found hidden under a staircase, with her mother in her grandfather's home. Police believe she was abducted by her biological parents.
CNN's Miguel Marquez has our report.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: I'm just shocked, because it seemed like they just were regular people.
MIGUEL MARQUEZ, CNN CORRESPONDENT: Neighbors stunned after a little girl, missing for two and a half years, is found alive and well, located in what police described as a secret hiding spot.
JOSEPH SINAGRA, SAUGERTIES POLICE CHIEF: It was intentionally built that way, it was apparent that that location had been used on more than just that occasion.
MARQUEZ: Paislee Shultis (ph) now six, disappeared from Cayuga Heights New York, where she was living with her legal guardian in July of 2019.
Monday night she was found at this home in the small town of Saugerties, about 160 miles east of Cayuga Heights, where her biological parents, Kimberly Cooper Shultis and Kirk Shultis Jr. lived.
Police say the couple does not have legal custody of Paisley, and that officers have been to the same home roughly a dozen times since she was reported missing but were never allowed in the basement or bedroom areas.
SINAGRA: The majority of the time, the interaction between the homeowners and the police was adversarial and not on our part. They were upset. They accused us of harassing them.
MARQUEZ: Then Monday, acting on a tip, police got a search warrant, and went to the house. That's when they say an officer noticed something weird about the staircase.
SINAGRA: He just said there was something, he couldn't put his finger on it, but there is something about the staircase that bothered him, and he uses a flashlight to look between the crack of one of the stairs, and he sees -- actually the stair meets the riser and he sees what he believes to be a blanket.
And as they're removing the steps off the staircase, they see a set of feet, little feet. They discovered that it was Paisley.
MARQUEZ: Police say, they also found Kimberly Cooper Shultis, hiding inside this wet dark and cramped secret area under a stairwell.
ANNETTE WROLSEN, NEIGHBOR I just feel sick to my stomach. I'm dumb founded because my granddaughter has been over there playing and everything, and I just figure they were just normal people.
MARQUEZ: The couple were arrested and charged with her disappearance. So was Paisley grandfather, Kirk Shultis, Sr. Police believe Paisley had been living there since she disappeared.
Miguel Marquez, CNN -- Saugerties, New York.
(END VIDEOTAPE)
VAUSE: Thank you for watching CNN NEWSROOM.
I'm John Vause. Please stay with us. CNN NEWSROOM continues after a short break with Rosemary Church here in Atlanta and Michael Holmes in Ukraine. I'll see you back here tomorrow.
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