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Ukraine-Russia Prepare to Meet in Belarus; Central Bank of Russia to Raise Interest Rates; Ukrainian Crossing Borders for Safety; Rallies in Support of Ukraine Held Worldwide. Aired 2-3a ET

Aired February 28, 2022 - 02:00   ET

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

[02:00:00]

MICHAEL HOLMES, CNN HOST: The new rules could theoretically allow Russia to place nuclear weapons in Belarus which is already being used as a launch pad for Russia's attacks on Ukraine. Some extraordinary developments there and they come as Ukrainian and Russian delegations are preparing to meet near the Belarusian border in the hours ahead. But as bitter fighting continues, Ukraine's president appears to have little hope the conflict will be resolved.

(BEGIN VIDEO CLIP)

VOLODYMYR ZELENSKY, PRESIDENT OF UKRAINE (through translation): Alexander Lukashenko asked for the Ukrainian and Russian delegations to meet on the Pripyat River and I emphasized this without any condition. I will say this frankly, as always, I don't really believe in the result of this meeting, but let them try so then later on no citizen of Ukraine would have any doubt that I, the president, did not try to stop the war when I had a chance, small as it was.

(END VIDEO CLIP)

HOLMES: So far, Ukrainian forces have managed to defend the capital, Kyiv, despite being outgunned and outmanned. But Russia keeps pressing forward. New satellite images showing a military convoy stretching more than four kilometers. This is on a road that is leading to the capital.

Now to the south, Russian forces have taken control of a town on Ukraine's coast that is home to a small naval base. We are hearing that from the town's mayor.

(VIDEO PLAYING)

Also, intense fighting in and around Ukraine's second largest city, Kharkiv. And all Ukrainian officials say more than 350 civilians, including more than a dozen children have been killed since the invasion began. Ukraine's armed forces also releasing this video, which reportedly, shows a drone attack on Russian forces outside Kyiv.

Meanwhile, the Russian president, Vladimir Putin, seems to be escalating the crisis. He has put Russia's deterrence forces that include his nuclear arms, on high alert. The U.S. says the move is part of a wider pattern of "manufactured threats and unprovoked escalation from Moscow."

Meanwhile, the streets of Kyiv are mostly empty as Ukraine's capital prepares for the Russian forces. CNN's Alex Marquardt reports on that.

(BEGIN VIDEOTAPE)

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT (voice- over): Ukraine's capital is bracing for the worst. Checkpoints with armed forces. Sandbags stacked in front of the mayor's office in central Kyiv.

(On camera): There are no Russian forces in Kyiv right now according to the mayor, but there have been battles against them. And the mayor says that large groups of Russian saboteurs were destroyed overnight.

(Voice-over): In the physical heart in Ukraine's 2014 revolution, the Maidan, the streets are deserted.

(On camera): And it was exactly here, eight years ago, that Ukrainian citizens rose up against a pro-Russian government, a pro-Russian president, and ousted him, and that is something that President Putin has complained about for years. Now, his own forces are descending on the city and circling it in order to try and topple this government and replace the president with a puppet who would answer to President Putin.

(Voice-over): Now, four days into this Russian invasion, there is mounting evidence of Russia's attempt to encircle the city, fighting in every direction around. Plumes of smoke, marking the areas of the most intense fighting. Living in the city, these days, is not for the faint hearted.

While we're out, right on cue, another deep boom breaks through the silence. Below the Maidan, in the tunnels of the cities metro, which also act as bomb shelters, the arteries of the city, are also deserted. A pinging (ph) only adding to the eeriness. Kyiv has held strong for longer than some of the more dire predictions, which saw it falling within 24 to 48 hours.

Optimism has grown with the Russians inability to take any real control here. But, everyone knows, it is far too soon for any confidence. Alex Marquardt, CNN, Kyiv.

(END VIDEOTAPE)

HOLMES: Now, Kira Rudik is a member of Ukraine's parliament. She has been speaking with us throughout Russia's assault. Have a listen.

(BEGIN VIDEO CLIP)

KIRA RUDIK, UKRANIAN PARLIAMENT MEMBER: Every single night after the war was declared was a tough one. And every single night we were prepared for a fight because you never know with Russians, what's going to happen next. This is why it's so important that we are armed and that we are able to protect ourselves and to execute on our duty to help out the country and to defend the country. [02:05:05]

We totally understand that Putin right now is losing and so that's why he will be raising the stakes and he will be putting more and more human force into the war so that's why it will be so important and so critical that people and citizens of Kyiv and other larger cities will be protecting the cities themselves.

(END VIDEO CLIP)

HOLMES: Now, the European Union is answering that call to make sure that Ukrainians are well-armed, for the first time in its history. The E.U. pledging weapons to a country at war. It will send arms including fighter jets to Ukraine. And in a significant reversal of its defense policy, Germany's chancellor increasing defense spending to more than 2 percent of the country's GDP. Berlin will spend also $112 billion to re-equip its armed forces.

In the United States, President Joe Biden will be hosting a call with allies in the coming hours to coordinate a united response to the crisis. Meanwhile, Senate Democratic Leader Chuck Schumer will push for a vote on a $6.4 billion dollar emergency aid package to Ukraine. According to Reuters, that bill would augment $650 million in security assistance and the $52 million in humanitarian aid.

The U.S. has already, committed to Ukraine over the past year as well as the $1 billion sovereign loan guarantee announced last week. Now, the crisis has resulted in rare, bipartisan unity among U.S. lawmakers on punishing Vladimir Putin with more sanctions and getting Ukraine the help it needs to fight the invasion.

(BEGIN VIDEO CLIP)

SEN. MITT ROMNEY (R-UT): Let's keep cranking up the sanctions against what is an evil regime. John McCain was right. He said he looked at the Vladimir Putin's eyes and saw the KGB. And that's what we're seeing. A small, evil, feral-eyed man, who is trying to shape the world in the image where once again Russia would be an empire. And that's not going to happen.

SEN. AMY KLOBUCHAR (D-MN): I think we have handled it right, and that is to continue the focus on supporting the people of Ukraine. And I think Vladimir Putin thought that he was going to march into this country and that they were going to throw rose petals at him. And instead, it was Molotov cocktails. That is exactly what happened here.

And when I met with President Zelensky with a group of -- bipartisan group of senators, his very clear focus was on getting the weapons that he needed. We were already supplying some weapons, but you've seen the world now coming to his aid with counties like Germany and Sweden. Today, Denmark announcing that they would also send him weapons.

(END VIDEO CLIP)

HOLMES: For more now on the White House response, let's turn to Jasmine Right who is standing by in Washington. And Jasmine, President Biden today said to hold that call with allies on their coordinated response including weighing out whether more sanctions could come against Russia. What is on the table?

JASMINE WRIGHT, CNN WHITE HOUSE REPORTER: That's right, Michael. On President Biden's call where he will have in the Situation Room when he returns to Washington, D.C. from his home in Delaware. Sanctions will be a part of that discussion. We can certainly expect as the U.S. and western allies continue to try to ratchet up pressure on Russia in the face of its aggression.

But also, likely to be talked about is this new threat from President Putin as he put the order and to put his troops kind of into this alert stance. And I think one thing that the White House is appearing to do is try de-escalate.

Instead of matching President Putin's rhetoric here, they're taking a step back and saying, look, this is part of President Putin's wider patent -- wider pattern of really, unprovoked escalation, as well as manufactured threats. And White House Press Secretary Jen Psaki, she summed the administration's position up very clearly here in an interview on Sunday morning. Take a listen.

(BEGIN VIDEO CLIP)

JEN PSAKI, WHITE HOUSE PRESS SECRETARY: This is really a pattern that we've seen from President Putin through the course of this conflict, which is manufacturing threats that don't exist in order to justify further aggression. And the global community and the American people should look at it through that prism.

(END VIDEO CLIP)

WRIGHTL: And so, Psaki also said that, you know, U.S. has a capability to defend itself, but it's important to focus on calling out President Putin's playbook here. And now, while this really comes as Putin is basically facing a united western allied front as they are on the same page about condemning Russia's continued actions, but also about this wave of intensifying sanctions that U.S. officials say are happening proportionally to Russia's continued aggression.

[02:10:05]

Now, though the White House and U.S. officials are taking this new threat from President Putin very seriously, they are also assessing in realtime the tangible impacts that it could have, but they declined to say or update rather the current nuclear alert level that currently stands. Instead, they said that the U.S. is prepared to protect itself and its country should that be necessary.

Now, one thing I do want to know, Michael, is that a senior defense official said today any miscalculation here could make things much, much worse. So, that is a kind of stance that we are seeing from the White House, but certainly, all of this will be a topic of discussion for President Biden when he returns here to Washington and speaks with his allies. Michael? HOLMES: All right, Jasmine, appreciate the update. Thanks so much.

Jasmine Wright there in Washington. All right, I want to bring in Neil Melvin now. He is the director of international security studies at the Royal United Services Institute. He joins me now, from London. It's good to see you again, sir. Did you -- do you expect much from these talks in Belarus? There doesn't seem to be high hopes.

NEIL MELVIN, DIRECTOR, INTERNATIONAL SECURTIY STUDIES, RUSI: To see a diplomatic breakthrough on the conflict that Russia has sent a relatively low level team. And of course, Ukraine is not really prepared to back down at this point as it feels it's holding the Russians rather successfully. But I think it is encouraging that Moscow has opened to talks. That suggest that they've also got some concerns about how the conflict is going.

HOLMES: Far from backing down, of course, Vladimir Putin putting nuclear deterrent forces on alert. What do you think he's doing strategically, with that or is that another sign that he thinks things aren't going well and feeling more isolated as ever?

MELVIN: I mean, Vladimir Putin has used the threat of nuclear escalation in past interventions. In 2014, he also raised this. So, it's very clear signaling to the west to stay out of this conflict. And of course, it comes at a time when the west is stepping up and has exceeded many people's expectations about the unity.

Just in the last few days, of course, we have seen offers to provide increased weapons and economic support to Ukraine and NATO, sending its rapid response force to the eastern flank. So, this is Putin, I think, escalating further around the conflict and trying to push back against the growing pressure coming from the international community.

HOLMES: And to the point, all the aspects you've just been discussing, does that all point to the sense that Mr. Putin and his military underestimated the ability of Ukrainian forces who, of course, got plenty of motivation to fight. Perhaps more motivation than a 19-year-old Russian conscript?

MELVIN: I think there is no doubt that the Russians have underestimated the Ukrainian resistance. They thought the Ukrainians would roll over very quickly. At the same time, I think we do need to be cautious. Its still very early days in the conflict. Russia can adapt. It's only deployed a fraction of its military force, and up to now what it's done it it's tried to avoid major urban conflict and high casualties.

So, he could begin to see a shift and this I think is what Russia will be looking at now, is how can it move more quickly to achieve its aims? Particularly as there are -- is a prospect that maybe military resources coming in from the E.U, from NATO and others that it can want to achieve its goals quite quickly in that context so we could see a further escalation on the ground.

HOLMES: Yes. I talked about that last hour with, Max (inaudible) in Moscow, too. When we look back at Putin's past wars, I mean, we saw what he did in Grozny in Chechnya. We saw what he did in Syria with overwhelming brutal force. Almost razing parts of Grozny. That's what he's not done so far. Would he go that far in a European capital and increase the ferocity to that sort of level?

MELVIN: I think this is a key question and there's no doubt that the Russians have this in their arsenal as you mentioned. They've done it in the north caucuses (ph), they've done it in Syria and elsewhere. This is I think a different context because Ukrainians feel so close to Russians many families caught between the war even many in Russia's -- in the elite in Russia actually come from Ukraine, have Ukrainian family members.

And so they're being reluctant. I think they've been doing a kind of Russian hearts and minds, at least, in trying to avoid this. But, as the conflict becomes more desperate, and I emphasize again, we are only in the first few days of this and these things can go on for a long time and become very bitter and protracted.

[02:15:02]

And particularly, Putin begins to feel himself cornered then, of course, there also this risk that they may start to follow these kind of techniques.

HOLMES: Yes. You know, when you look at how the world has coalesced in opposition to what Putin is doing, how isolated is Russia and Putin right now and how might that affect his mood? I mean, even close friend President Xi of China, he hasn't criticized the invasion, but he hasn't offered support either. What is the level of isolation and what could be the effect of that?

MELVIN: As I mentioned, I think the western unity has been surprising, but there's also been a very effective global diplomacy by the western community. Initially, India and China and others seem to be, if not, exactly siding with Russia or at least giving tacit support. There now seems to be a bit of a gap opening up even with the Chinese who I think are uncomfortable about the implications of a regional war in Europe.

They have important economic interest in Ukraine. They certainly have important economic interest in the E.U. and the United States. And so, as this conflict continues to damage those kinds of relations, China is getting nervous about this, even while it's keeping a rhetorical support for Russia in place and giving some diplomatic sustenance to them.

HOLMES: This next question will require your crystal ball because nobody knows for sure, but what would make the Russian elite rebel, pushback on what Putin is doing and where this is all headed?

MELVIN: I mean, this is really another key question. We saw that when Vladimir Putin convened the Security Council, he has an iron grip on the security operators at the moment. So, it's going to have to be something quite major. I think, I mean, there are a couple of scenarios and certainly a protracted conflict that dragged on that falls the Russian military into sort of a regular drumbeat of casualties dripping back into the public consciousness. That is going to look like a serious failure and miscalculation by a

leader who's led them into war that no one really wanted. To be honest in Russia and the benefits were pretty extremely elusive. Another one of course is we're going to have to see how the sanctions play out. Already there has been a big impact from Russia.

Key economic interest and much of the elite around Putin are not just security officials, but they also benefited economically from what's been going on. So as some of these cost begin to amount, there may be something to start to really question whether their leaded has sent them down the right path.

HOLMES: Yes. Always sharp analysis, Neil Melvin in London. Appreciate it. We'll see you soon, I hope.

MELVIN: Thanks so much.

HOLMES: All right, we've got some news coming into us here at CNN, in a sense perhaps all of the impact that sanctions are having, the Russian central bank now saying it has decided to raise its key interest rate from 9.5 percent a year to 20 percent a year.

I just want to read part of the statement here for you. "External conditions for the Russian economy have drastically changed." And they add that the increase in the key rate will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks.

So, a big financial move there and does sort of illustrate the pressure that must be on the Russian economy right now. We'll have more on that a little later in the hour.

Meanwhile, the humanitarian crisis, well, it's becoming more dire every hour as Ukrainians try to escape the fighting. Coming up, what E.U. leaders are saying about possibly taking in millions of refugees. We'll be right back.

(COMMERCIAL BREAK)

[02:20:00]

(BEGIN VIDEO CLIP)

UNKNOWN: My father is military so, he's in Kyiv. He's defending Kyiv and my family, my mother and my sister and kids, and my cat, they stay in the western Ukraine. There is house. It's safe but not really. There were sirens last night.

(END VIDEO CLIP)

HOLMES: Now, according to the United Nations, at least 368,000 people have fled to Ukraine to neighboring countries and there are predictions that millions more could flee the country in the days ahead. Leaders in the European Union already considering just what to do with refugees likely headed to E.U. states.

(BEGIN VIDEO CLIP)

YLVA JOHANSSON, EUROPEAN COMMISSIONER FOR HOME AFFAIRS: I'm really impressed of the strong solidarity that E.U. citizens are showing towards the Ukrainians are coming.

UNKNOWN: Do you have any estimations on how many refugees there might be in the future?

JOHANSSON: No, but I think we need to prepare for millions.

(END VIDEO CLIP)

HOLMES: People fleeing the violence in Ukraine are threatened by more than just bombs and bullets. The journey can be arduous, it can be long, and there are freezing temperatures, too, which can be brutal. It was minus eight degrees Celsius here a little earlier, 17 Fahrenheit. The emotional toll, too, equally hard. CNN's Arwa Damon is near the Polish border as thousands pour across in hopes of reaching safety.

(BEGIN VIDEOTAPE)

ARWA DAMON, CNN CORRESPONDENT (voice-over): Little hands clutch bigger ones that would give anything just to keep them safe. Sleepy, tiny, cold faces and tired arms. The hum of voices you would expect from the number of people that are here, it doesn't exist. It's as if the shock and disbelief has brought with it and odd silence. It's mostly women and children here who have had to say goodbye to husbands, brothers, and fathers. Men aged 18 to 60 are not permitted to leave.

(On camera): How were you able to say goodbye to your father?

UNKNOWN: I think that it was the most awful thing to say.

UNKNOWN: She was crying.

DAMON (voice-over): And then, there is this sheer hell of getting here. Walking for hours, waiting in some cases, for days. Out in the bitter cold, hungry, thirsty. We meet Ishmael (ph) and his family. They fled Afghanistan last May getting asylum in Ukraine. His 7 year- old daughter barely made it here.

(On camera): Maruwa (ph).

UNKNOWN: Gladura (ph).

DAMON: I'm Arwa.

UNKNOWN: Arwa, it is similar.

DAMON: Hi, Maruwa (ph).

UNKNOWN: It's very, very cold and my daughter became shocked, we're calling. She not answer.

[02:25:02]

And finally, we tried to contact with ambulance. We found ambulance, the doctor comes just checking, and after that they gave us a chance.

DAMON: You must have been so sad.

UNKNOWN: We had to go there first.

DAMON (voice-over): She clutches one of the donated stuffed animals replacing a similar one she left behind. But who is going to give her the rest of her life back?

UNKNOWN: But I don't know without unknown future.

DAMON (on camera): Again.

UNKNOWN: Again.

DAMON (voice-over): At least this time, unlike in years past, Europe is welcoming refugees. There is a massive, inhumane backlog on the Ukrainian side. But once finally here in Poland, an army of volunteers. At the train station, 7 year-old Maxim (ph) buries his face in his mother's legs. He's not used to the crowds, it's all scary and confusing.

(On camera): They waited for two whole days. Your mother is in Kyiv.

UNKNOWN: My mother is in Kyiv.

DAMON (voice-over): It's tearing her apart, but at least her husband who is not Ukrainian, is out with her. For how do you say goodbye to the love of your life? The father of your children? This woman is not the only one in tears. Others as well, understandably, not wanting to talk. We can't take it, it makes us cry too much, they say. Arwa Damon, CNN, Przemysl, Poland.

(END VIDEOTAPE)

HOLMES: Now, around the world, we are seeing powerful protests and displays of solidarity with the people of Ukraine. Rallies were held in cities across the U.S. over the weekend including the nation's capital, demanding an end to the war.

In Berlin, thousands gathered at Tiergarten Park on Sunday to express their outrage over the Russian invasion. And in Tel Aviv in Israel, thousands of Israelis including many of Ukrainian descent taking to the streets to condemn Russia's aggression.

And to Madrid now, protesters from Spain's Ukrainian community wrapped in Ukraine's national colors, yellow and blue, while speaking out against the invasion.

We're going to take a quick break. When we come back, after days of fighting in Ukraine, it seems Russia's military campaign may not be going as Vladimir Putin might have planned it. We'll explain why, next. Also, Turkey will make it harder to move Russian warships from the

Mediterranean to the Black Sea. We'll have more on the decades old pact throwing a wrench in Russia's plans. That, too, when we come back.

(COMMERCIAL BREAK)

[02:31:40]

HOLMES: Welcome back, everyone. I'm Michael Holmes coming to you live from Lviv in Ukraine. Returning now to a story we brought you moments ago and it is a significant one. The Russian Central Bank saying it has decided to raise its key interest rate from 9-1/2 percent a year to 20 percent doubling. It comes as the West ramps up sanctions against Russia. And a statement says this, "External conditions for the Russian economy have drastically changed."

It goes on to say, the increase of the key rate will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks. Well, meantime a Ukrainian government official telling CNN intelligence indicates Belarus is prepared to join the Russian invasion. Another significant development, that word coming just hours ahead of expected, talks between representatives from Ukraine and Russia at the Belarus border.

Meanwhile, we've seen continued fighting on the ground in Ukraine, including Kharkiv where forces repelled the advance of Russian troops towards an airfield. Meanwhile, the European Commission President spoke with Ukrainian President Volodymyr Zelensky about strengthening the country's defense capabilities. Have a listen.

(BEGIN VIDEO CLIP)

URSULA VON DER LEYEN, PRESIDENT OF THE EUROPEAN COMMISSION: For the first time ever, the European Union will finance the purchase and delivery of weapons and other equipment to a country that is under attack. This is a watershed moment.

(END VIDEO CLIP)

HOLMES: All right. Let's turn to CNN Contributor Jill Dougherty in Moscow. She is monitoring the Kremlin's reaction to the military operation against Ukraine. Now, as Jill explains, it doesn't appear to be going as planned.

JILL DOUGHERTY, CNN CONTRIBUTOR, RUSSIAN AFFAIRS: Several events here in Moscow that may indicate that the Kremlin is more and more concerned that this military operation in Ukraine is not going as they expected. Number one, President Putin ordering his military to put his nuclear deterrence forces on high alert when he called special combat regime. The Russian president saying he was doing it because of aggressive rhetoric coming from NATO, and also from these draconian sanctions that have been leveled by the United States and by Europe.

The White House did respond but in a much more measured fashion, saying simply that the Kremlin is manufacturing threats that do not exist. And there was no indication, at least at this point, that the United States is changing its nuclear posture. Then another sign, the military, the daily briefing by the Russian military admitting for the very first time that Russian soldiers have been killed and wounded in battle in Ukraine.

There were no numbers given and the military spokesman saying that it was fewer than the Ukrainians had suffered, but still significant, that first example of their admission that people are dying in this military operation. And then finally, another statement, this time from a former Russian President Dmitry Medvedev, saying that there is no need, no particular need to have diplomatic relations anymore.

[02:35:05]

DOUGHERTY: He said we might as well padlock the embassies and we can look at each other through binoculars and gun sights. Jill Dougherty, Moscow.

HOLMES: Now earlier I spoke with Max Seddon. He is the Moscow Bureau Chief for The Financial Times about why President Putin would ramp up the rhetoric by announcing Russia's nuclear deterrent forces are on alert.

(BEGIN VIDEO CLIP)

MAX SEDDON, THE FINANCIAL TIMES MOSCOW BUREAU CHIEF: I think it's less desperation than this is, you know, what he has up his sleeve to respond to the escalatory spiral that we are now and it's his response -- to the Western response to his war on Ukraine. And you remember, Russia has the world's largest nuclear arsenal, it's an obvious card to play. We've been here before. He threatened to you use them against Western countries who meddled against Russia's war in Ukraine.

And then the -- and in 2015, he was talking about the annexation of Crimea the year before. And he said that he gave a similar order to Russia's nuclear forces in case everything went wrong with the annexation. And the West, in his mind somehow tried to stop Russia seizing Crimea from Ukraine. So, this is very much in pattern with his thought with making threats and with Russia's nuclear doctrine.

HOLMES: Right. So a lot at stake of course, with these talks today. President Zelensky doesn't sound too confident that if it does achieve anything, I suppose it boils down to who's prepared to give what? What's your read on these talks?

SEDDON: I think it's more that are -- the Russians prepared to give anything because Ukraine have been pretty consistent in saying that they don't think that Russia is taking this seriously. Russia's demands pretty much amount to the total capitulation of Ukraine and the surrender of its -- of its sovereignty. They set a negotiation to Belarus for talks before Ukraine had even accepted negotiations.

The delegation is held by -- is led by the former culture minister Vladimir Medinsky who's not really seen as any kind of figure with theories influence and he's also one of the major nationalist historical revisionists in Russian government circles, which includes this aggressive line on Ukraine that Russia has taken in recent years. So, I think it really is on Russia at this point to show -- it to show Ukraine that it's prepared to negotiate in good faith.

Because Putin said the other day, we are open for dialogue but our core interests are not negotiable. And what that seems to mean is we're ready for talks, but only if you do everything we want. And we don't make any concessions and that's not going to work.

(END VIDEO CLIP)

HOLMES: Max Sedden of the Financial Times speaking to me a little earlier. Now despite deep ties to Moscow, Turkey is acting to limit the passage of Russian warships from the Mediterranean to the Black Sea. Turkey's foreign minister says the country will implement parts of a decades-old international pact in order to do so. CNN's Jomana Karadsheh joins me now from Istanbul with more.

And Jomana, what is Turkey's position on the Russian invasion of Ukraine? And what are they now doing about the situation?

JOMANA KARADSHEH, CNN INTERNATIONAL CORRESPONDENT: Well, right now, Michael, I mean Turkey's position, it has really tried to maintain this neutral position calling for dialogue, calling for negotiations, they have rejected Russia's actions. But what is really important here, what you were talking about is this limiting of the passage of Turkey -- of Russian naval vessels through the two main waterways, the Dardanelle Strait and the Bosphorus.

This has been a demand a request from the Ukrainian government to Turkey over the past few days, over the past few weeks, asking them to block the passage of Russian vessels. Now, to put this into context, Michael, this is not something that Turkey can just decide to do. Those waterways are governed by the 1936 Montreux treaty. And it's a very technical treaty. We have been trying to read through it.

And, you know, there are certain conditions, there are certain circumstances that would allow Turkey to do that. And one of those conditions is a war. And up until yesterday, Michael, the Turkish government officials have been very cautious, very careful in the terminology that we're using to describe what is going on in Ukraine right now. An invasion, an incursion and an attack but we saw a clear change in the language yesterday.

Senior Turkish official after the other coming out and describing it as a war. And we heard the Turkish foreign minister saying the situation now after their own consultations, they have decided that what is going on is a war. So basically, this paves the way for Turkey right now to implement the Montreux treaty. Now speaking -- our team here has been speaking to experts and analysts about this, Michael.

[02:40:02]

KARADSHEH: And basically this is not expected to change much on the ground this is hugely symbolic for several reasons. But of course, very significant shift in the Turkish position. What -- basically why they don't think this is going to change much on the ground is because whatever Russia needed to move, whatever naval vessels wanted to move between the Mediterranean to the Black Sea, it has already done so in the past few weeks. They're already in position.

The second thing is a very key clause in the Montreux pack which says that even those countries that are party to a war, even if their vessels are being blocked, they can still move through these straits to return to their black sea bases. And then the third point is it cannot -- Turkey does not have the right to restrict civilian and commercial vessels. But what this all does, Michael, is it really changes the Turkish position, very significant.

Not by choice, really, but it has been forced to do so. It has really tried to maintain this neutral position calling for dialogue, calling for negotiations, offering to broker a ceasefire, because they did not want to be in this position. They have very close commercial and defense ties with both Ukraine and Russia. And what this is going to do, this will likely anger Russia even more. You know, Turkey does depend on Russia for a lot of its natural gas imports, tourism and, you know, other trade relations.

And Moscow has not been very happy with Ankara lately, and they have voiced this, Michael, because Turkey has been supplying the Ukrainians with those drones that according to Ukrainian officials seem to be quite effective on the battlefield.

HOLMES: All right. Jomana, appreciate that update there on those developments. Jomana Karadsheh in Istanbul. All right. We're going to take a quick break. When we come back, Russia faces a growing list of severe sanctions from the west. I look at the impact they're already having in a live report after the break.

(COMMERCIAL BREAK)

[02:45:21]

ROSEMARY CHURCH, CNN INTERNATIONAL ANCHOR: Hello, everyone, I'm Rosemary Church at CNN headquarters in Atlanta. We are following new developments out of Russia this hour, where the central bank has just announced it will raise a key interest rate from 9-1/2 percent to 20 percent a year. It says "External conditions for the Russian economy have drastically changed."

Russia faces a growing list of severe sanctions from the west over its invasion of Ukraine. Today we've also seen the ruble plunge about 30 percent against the U.S. dollar. And CNN's Eleni Giokos joins us now from Dubai to talk more about this. Good to see you, Eleni. So sanctions already having a big impact. Russia's ruble plummeting and the country's central bank nearly doubling its key interest rate.

But the rest of the world is feeling some pain too. So what is the latest on all these big developments?

ELENI GIOKOS, CNN CORRESPONDENT: Absolutely. And you're so right to say the rest of the world is going to feel the pain as well. Anyone that has exposure to Russian assets is feeling the pain. We heard the Norwegians sovereign wealth fund had to start divesting its exposure to Moscow assets. You heard B.P. now is also trying to divest 20 percent of its exposure to oil and gas in Russia as well.

And now the central bank increasing its interest rate from 9-1/2 percent to 20 percent. It's trying to counter that 30 percent plunge of the ruble against the U.S. dollar. And the incentive it says is don't take your money out of the banks just yet. We're going to offer you a good interest rate. But already we're seeing a huge liquidity crunch in Russia right now. And this could cause a run on the banks.

This -- these sanctions have triggered enormous volatility in Russia and is anticipated that it's going to trigger more volatility on global markets as well. Markets don't like uncertainty. And that is exactly what we're seeing. Russia is very much part of the international markets. It's started to become a lot more involved in many indexes. And of course, many sovereign wealth funds and pension funds started to get exposure to Russian assets.

So, a lot of people are feeling the pain as well. You've also got to remember here, Rosemary, that the MOEX which is the Russian Stock Exchange, suspend a trading last week. It was made to start trading about 45 minutes ago. It still isn't back online. So, these sanctions are having the desired effect. Now you've got to remember, Canada, the U.S. and E.U. have activated sanctions for Russians banks using SWIFT.

That is the most vital way of bank speaking to other banks on the international market. It basically prohibits Russia from doing any sort of exchanges or business or import export trades. And it also means that Vladimir Putin can tap into most of its $630 billion war chest. Now the big outlier here is China in terms of what it is going to do. And we know it already has softened some of its imports are rules for Russian grain.

Could it be the lifeline for Putin down the line? That's the big question people are asking. And China also holds 14 percent of Russia's foreign exchange reserves as well. So that is one that many people are going to be watching. Are we going to see alliances forming between emerging markets or even between Russia and China, and what that is going to mean for the West. And its efforts to try and squeeze Putin into a corner to consider withdrawing as opposed to retaliation.

CHURCH: All right. We'll continue to watch the impact of these sanctions. Eleni Giokos bringing us the latest there from Dubai. Many thanks.

Well, parts of the U.S. and Canada are calling for Russian-made liquor to be pulled off the shelves. It's their way of hitting back at Russia for the aggression in Ukraine. It's mostly a symbolic move since almost all Russian branded alcohol is made in other countries. But states like Ohio, Pennsylvania, New Hampshire and Utah are removing bottles already in stores. Some even at the request of state governors.

In Canada, Ontario's Premier is also pulling all Russian products from nearly 700 government-funded liquor stores as a way of standing against tyranny and oppression.

Well, after the break. More on Russia's invasion of Ukraine with Michael Holmes in Lviv. And a look at the resilience of the Ukrainian people were showing and the defending their homes and their country.

(COMMERCIAL BREAK)

[02:53:20]

HOLMES: Hello, everyone. I'm Michael Holmes coming to you live from Lviv in Ukraine. More now on our breaking news. The Russian Central Bank says it has decided to raise its key interest rate from 9-1/2 percent a year to 20 percent. More than doubling. Now this comes as the West ramps up sanctions against Russia. Much more on this major development at the top of the hour right here on CNN.

Meanwhile, a Ukrainian government official telling CNN that new intelligence indicates Belarus may be prepared to join the Russian invasion of this country. The intelligence coming as representatives from Ukraine and Russia are set to hold talks soon at the Belarus border. Now since Russia launched its attack, the Ukrainian government says more than 350 civilians have been killed, hundreds more wounded, and hundreds of thousands have fled. But the Ukrainian people continue to show amazing resilience in the face of such aggression.

(BEGIN VIDEO CLIP)

VOLODYMYR ZELENSKY, UKRAINIAN PRESIDENT (through translator): The last night in Ukraine was brutal. They're fighting against everyone. They're fighting against all living beings.

UNIDENTIFIED FEMALE: We're ready for peace talks. But we are defending the country at the moment.

UNIDENTIFIED MALE: They say they're not hitting civilian infrastructure. Look at this damage around there.

UNIDENTIFIED MALE: Putin's rockets may have shattered glass but not dented the anger here.

UNIDENTIFIED FEMALE: This is a time to be vocal and condemn the actions of President Putin.

UNIDENTIFIED FEMALE: We've been seeing versions on the streets of Moscow, St. Petersburg and other cities.

[02:55:03]

UNIDENTIFIED FEMALE: In fact about 26, 27 cities so far who've been showing up and protesting. They are very quickly usually detained and arrested.

UNIDENTIFIED FEMALE: Our leaders are not at all taking enough actions to help granules where our neighbors and our friends.

YLVA JOHANSSON, E.U. COMMISSIONER OF HOME AFFAIRS: So far around 300,000, Ukrainians has come to the E.U. member states. And I'm really impressed of the strong solidarity that E.U. citizens are showing towards the Ukrainians coming.

UNIDENTIFIED FEMALE: Do you have any estimation on how many refugees there might be in the future?

JOHANSSON: No, but I think we need to prepare for millions.

UNIDENTIFIED FEMALE: Thirty-six to 48 hours walking and waiting out in the cold. The stories we're hearing about these overnights in these freezing temperatures, with no food, no water, no bathroom with little children. And then as they get closer to the actual border crossing from the sheer panic and the emotional agony of at all, it ends up largely being a free for all.

(END VIDEO CLIP)

HOLMES: Now organizations around the world are on the ground in Ukraine and neighboring countries to help those in needs with shelter, food, water, additional light as well. For more on how you might be able to help go to cnn.com/impactforinformation.

All right. Thanks for watching us this hour. I'm Michael Holmes live in Lviv, Ukraine. Our breaking news coverage continues after the break. I'll see you there.

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