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Biden Admin. Offers Russian Arms Dealer For Griner And Whelan; Ukraine Targets Key Bridge To Resupply Russian Forces; Biden, Xi To Talk Ahead Of Pelosi's Possible Taiwan Trip; Bringing U.S. Inflation Under Control; U.S. Stocks Soar After Fed Hikes Interest Rates; Pope Francis Meets Canadian Leaders. Aired 12-1a ET

Aired July 28, 2022 - 00:00   ET

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

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JOHN VAUSE, CNN INTERNATIONAL ANCHOR (on camera): Hello. Welcome to our viewers joining us from around the world. I'm John Vause. Coming up here on CNN Newsroom.

VAUSE (voiceover): Let's make a deal. From the U.S., one merchant of death, a notorious Russian arms dealer, in return for an American basketball star and a former U.S. Marine.

Talk therapy. President Biden and Xi will speak by phone in the coming hours. Their first conversation in months overshadowed by Pelosi's possible trip to Taiwan.

And falling short. The Canadian government says days of apologizing and begging for forgiveness by Pope Francis for abuse of indigenous people by the church just is not enough.

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

VAUSE (on camera): One of the world's most notorious arms dealers could soon be free from a U.S. prison in exchange for two Americans detained in Russia. As first reported by CNN, the Biden administration has offered to trade Viktor Bout for American basketball star Brittney Griner and ex-marine Paul Whelan.

Bout who's been nicknamed the Merchant of Death is serving a 25-year sentence for selling military-grade weapons to terrorists and conspiring to kill Americans. The Kremlin has long called for Bout's release but has not yet agreed to this exchange. The White House says the U.S. president was directly involved in the offer.

(BEGIN VIDEO CLIP)

JOHN KIRBY, WHITE HOUSE NATIONAL SECURITY COUNCIL SPOKESPERSON: The President and his team are willing to take extraordinary steps to bring our people home, as we've demonstrated with Trevor Reed. And that's what we're doing right here. It's actively happening now.

(END VIDEO CLIP)

VAUSE: News of the prisoner swap came just hours after WNBA star Brittney Griner took to the stand for the first time in her criminal trial. She testified about events leading up to her arrest. CNN's Kylie Atwood is tracking the latest developments now from Washington. (BEGIN VIDEOTAPE)

KYLIE ATWOOD, CNN U.S. SECURITY CORRESPONDENT (voiceover): This is the man nicknamed The Merchant of Death, convicted arms trafficker Viktor Bout currently serving a 25-year sentence in the United States.

THOMAS HARRINGTON, OPERATIONS CHIEF, U.S. DRUG ENFORCEMENT ADMINISTRATION: When arrested, he oversaw operations capable of delivering enough weapons to launch rebellions, fuel revolutions, and slaughter untold thousands of people. He was an accessory to violence on a scale that is beyond comprehension.

ATWOOD: And now, according to sources briefed on the matter, the Biden administration has offered to return him as part of a proposed deal for two Americans the United States says are wrongfully detained in Russia, Brittney Griner and Paul Whelan. Secretary of State Antony Blinken saying they've offered a deal to Russia but not confirming the details.

ANTONY BLINKEN, U.S. SECRETARY OF STATE: We put a substantial proposal on the table weeks ago to facilitate the release. Our governments have communicated repeatedly and directly on that proposal.

ATWOOD: Though the administration has been loath to engage in prisoner swaps to free American citizens, concerned that countries like Russia could be incentivized to try and hold more Americans, it's one of the few tools that actually work. And now, sources say, President Biden supports the swap especially after the last swap between the United States and Russia earlier this year received bipartisan support.

Bout is a former Soviet military officer who's been accused of using front companies to funnel Soviet-era weapons into conflict zones like Afghanistan, Liberia, and Sierra Leone, even working with U.S. government contractors in Iraq.

PREET BHARARA, PROSECUTED VIKTOR BOUT: He's a dangerous person. He was one of the most prolific arms dealers in the world. He was convicted in the U.S. federal court in New York of conspiracy to kill Americans.

ATWOOD: A far cry from Bout's global arms smuggling operation, Greiner has pleaded guilty to bringing less than a gram of cannabis into Russia.

BRITNEY GRINER, PLAYER, WNBA: I did not plan or have the intent to bring any cannabis or banned substance to Russia. I do understand what my charges are against me. And with them being accidentally in my bags, I take responsibility.

ATWOOD: Griner says she had medical cannabis to treat her pain from numerous sports injuries and that she accidentally took it with her while she was rushing to pack up for the trip having recently recovered from COVID. In a Russian courtroom today, she described her harrowing arrest at the Moscow airport.

GRINER: My rights were never read to me. No one explained any of it to me. I definitely knew I was being detained and I kept asking if I could leave or what's next. But it just was wait, wait for results.

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ATWOOD: But with Russia's invasion of Ukraine still raging and U.S. sanctions still pressuring Russia's economy, U.S. officials believe the Kremlin is using Griner as a political pawn. The family of Marc Fogel, who was similarly detained for bringing cannabis into Russia that he said was for treating chronic pain, believes he is also being used as a pawn. Last month, he was sentenced to 14 years in a Russian penal colony, though the State Department has not declared Fogel to be wrongfully detained.

ANNE FOGEL, SISTER OF AMERICAN DETAINED IN RUSSIA: He made a terrible mistake by taking medical marijuana into Russia. But 14 years in a hard labor camp is essentially a death sentence for him. He's 61 years old and he has a very long history of spinal injury.

ATWOOD (on camera): Now, there are questions today about why the Biden administration is publicly saying that they have put a substantial offer on the table for the Russians when typically these negotiations are kept very closely held with very few details being described publicly. And National Security Council's John Kirby said that that decision wasn't made lightly and it was made in the context of these ongoing efforts to bring home both Paul Whelan and Brittney Griner.

And there's also questions about why Secretary of State Tony Blinken is affording a phone call with Foreign Minister Lavrov of Russia could be viewed as a win for the Russians. And he said he thinks it's -- there's utility in conveying clear messages to the Russians on top priorities for the United States. Kylie Atwood, CNN, the State Department.

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VAUSE: Jill Dougherty is a CNN contributor and adjunct professor at Georgetown University. And for almost a decade, she was CNN's Moscow Bureau Chief. It's good to see you again, Jill.

JILL DOUGHERTY, FORMER CNN MOSCOW BUREAU CHIEF: Hey, John.

VAUSE: OK, so this is long history of the Russians and the Americans conducting prisoner swaps. They're the hallmark of the old Soviet-era during the Cold War. So, is it now back to the future in a way as relations between Moscow and the West, you know, continue to sour? Will we see more prisons swaps like this? And to swap a prisoner, first you have to go out and get one.

DOUGHERTY: Yes, that's the problem. Sometimes, you know, the reason countries sometimes don't want to do it, especially the United States, is that the theory is, it would just encourage companies to grab Americans and do it all over again. But, you know, I think this case is a little bit different because usually, the way these things are conducted is behind the scenes where it can be, you know, very deep -- and I'm sure there have been -- but very deep conversations, and nothing is leaked. And then finally, they come out, both sides, and they say we are swapping these people.

But in this case, the United States is saying, look, we have this -- we made this substantial proposal to the Russians. We think it's something that could be successful based on these conversations that we've been having, which nobody knew really about. And the Russians haven't said pretty much anything since June when it was proposed.

So, it is different. It might be -- there might be many reasons for that. Maybe, you know, the United States is trying to bring it out in the open and kind of pressure Moscow. But this is a very sensitive time, as we all know, in the relationship. So, maybe we can't expect it to be completely, you know, according to tradition.

VAUSE: But the price for the two Americans being detained in Moscow was the release of the Merchant of Death, a.k.a. Viktor Bout, a.k.a. the man who insisted to you when you interviewed him that he was just an honest, ordinary, everyday businessman. He's a little more from your interview in 2002.

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VIKTOR BOUT, MERCHANT OF DEATH: I'm not afraid. I don't did anything in my life for what I should be afraid. And this whole story looks to me like a witch hunt. Look, I'm coming to your office. I have no problem. And I said, hey, who's looking for me? I'm here. I'm not hiding from nobody. I am having my normal life. And I don't want this story going on.

(END VIDEO CLIP)

VAUSE: He doesn't come across as a Merchant of Death, but he is a notorious arms dealer feeding conflicts around the world as well as arming terror groups like al-Qaeda. So, why is the Kremlin so hot for this guy? Why do they want him back so bad?

DOUGHERTY: Well, he's one of theirs, so to speak. He -- it has always been believed, at least by the Americans, that he was involved or connected to intelligence in Russia. And remember the old -- early -- the old Soviet days and early independence Russia, you had a lot of, you know, chaos and people making money in a variety of ways.

And this guy came in and was apparently very sharp in the way that he put together this company that transported weapons and a whole I'd else around the world especially in conflict zones. So, you know, that's really how he came to do that. And in order to carry that out at that time, he really had to have connections pretty much with the KGB. And that is what the Americans who allege.

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VAUSE: In connection with the KGB, does that mean connections to Vladimir Putin? DOUGHERTY: Well, Vladimir Putin was a KGB officer. I don't know personally if he is connected. But you know, Mr. Putin has made it clear that he always feels that he has a responsibility to people who are their own and to bring them back, so that could be part of it. Which makes it a little bit more intriguing that the Russians aren't kind of jumping at this deal. So, we have to figure out now why wouldn't they be immediately saying, yes, let's do it.

It's -- I talked with a couple of diplomats today and there is another idea that perhaps there actually is a deal that exist that we don't know about yet but that could be announced. But that's only a theory. There is a whole lot behind the scenes that we don't know about. And we probably won't for at least, you know, a while.

VAUSE: Exactly. Well, if anyone is going to find it out, I guess you will, Jill. So, it's good to have you with us. Thank you.

DOUGHERTY: Thank you.

VAUSE: This proposed prisoner exchange comes three months after American Trevor Reed was freed in the Cold War-style prisoner exchange. He'd been held in Russia for more than two years. Reed says he thinks Griner and Whelan have a really good chance of being released.

(BEGIN VIDEO CLIP)

TREVOR REED, FORMER RUSSIAN PRISONER: I'm extremely optimistic about it. I think that that's a good possibility. And I think that, you know, if the Russians are not stupid, that they'll take that offer. And, you know, I'm hoping that they're not that stupid, but we'll see.

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VAUSE: Multiple Ukrainian cities are reporting Russian shelling, including the capital Kyiv, as well as Chernihiv and Kharkiv in the Northeast. Meantime, the fight to control the Eastern Donetsk region continues to intensify with the Bakhmut under relentless rush of shelling. Ukraine officials say at least one person was killed on Wednesday after a hotel was partially destroyed.

But with 100 Howitzers on their way from Germany, the Ukrainians will be able to hit back harder and deeper behind Russian lines. And Ukrainian officials have accused Russia of staging attacks from the Zaporizhzhia nuclear power plant. Local mayor says Russia is using the facility like a fortress safe from Ukrainian fire because of fears of damaging the plant. U.S. warning that Russia will soon move to annex Ukrainian territory now under its control.

(BEGIN VIDEO CLIP)

BLINKEN: Here's what we expect to see next. Russia-installed leaders will hold sham referendums to manufacture the fiction that the people in those places wants to join Russia. Then they'll use those false votes to claim that the annexation of these regions is legitimate. We must and we will act quickly to make clear to Russia that these tactics will not work.

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VAUSE: Ukraine is making moves to break Russia's hold over the southern Kherson region. That's by disrupting Moscow's ability to resupplies forces. CNN's Jason Carroll has more details.

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JASON CARROLL, CNN INTERNATIONAL CORRESPONDENT: These images, the Ukrainian say, are their strategy at work. Ukrainian long-range rockets struck a bridge in Kherson in the Russian-occupied southern part of the country Tuesday night targeting Russia's supply lines. By day, the damage done all to clear. The Antonovsky Bridge not destroyed, still crossable, but the Ukrainian government say it's damaged enough to prevent Russians from using it to send in more heavy armor and other reinforcements.

The Russians admit the bridge is closed off but downplayed the bombing. Local pro-Russian officials saying the attack will ultimately have no effect on the outcome of the war. This as Ukrainian authorities say Russians are sending additional troops to the south. Analysts say Russia is preparing for Ukrainian counter-offensive that is slowly gathering strength in that part of the country.

But in the eastern Donetsk region, it's the Russians on the front foot. These scenes from the town of Bakhmut under relentless shelling by Russian forces. One man recorded the aftermath of strikes on nearby turrets (PH) and survey the damage. He says, missile attack. Everything is completely destroyed.

The state of emergency service in Donetsk says as a result of the Russian shelling, at least one person was killed at a nearby hotel. Russian forces are trying to push further into the Donetsk region. They've captured a power station that had become a battlefield for weeks. But amid stiff Ukrainian resistance, they are making very slow progress.

Jason Carroll, CNN, Kyiv, Ukraine.

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VAUSE: Still to come here on CNN, extreme security planning in the works ahead of a possible Nancy Pelosi visit to Taiwan. And as China fumes over Pelosi's possible trip, the U.S. and China's President plan to have a conversation.

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VAUSE: In the Philippines, warnings for residents to brace for aftershocks after Wednesday's powerful earthquake. The 7.0 magnitude quake struck Luzon, the country's most populous island. State media report at least five people were killed. More than 60 others were hurt. The quake damaged hundreds of buildings including 61 schools, buckled roads and bridges, and triggered dozens of landslides. Authority say more than 200 small towns have been affected.

At least 57 cities in China have issued their highest heat warning. Temperatures are expected to top 40 degrees Celsius or 104 Fahrenheit in the next 24 hours. More than 300 other cities and counties have issued the second highest warning. The ongoing heat wave comes with a struggle to contain COVID outbreaks. More than 500 new cases were reported on Thursday.

The U.S. House Speaker Nancy Pelosi has not confirmed plans for a trip to Taiwan but, just in case, senior American military officials have given her a security assessment of the trip. And a security plan has been developed by the head of the U.S. Indo-Pacific Command. Experts are divided on what China's reaction may be if Pelosi makes the trip. Many think there will be no military action. CNN's Selina Wang has details.

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SELINA WANG, CNN INTERNATIONAL CORRESPONDENT: Taiwan preparing for a possible attack in its annual military drill, as fears of aggression from across the strait grows. That fear coming from fire and fury from Beijing. In response to House Speaker Nancy Pelosi's potential visit to Taiwan, China threatening to take resolute and powerful measures.

A prominent hawkish voice in China even suggesting shocking military response, saying that PLA military aircraft will accompany Pelosi is plane to enter the island.

SUSAN SHINK, PROFESSOR, 21ST CENTURY CHINA CENTER, UNIVERSITY OF CALIFORNIA, SAN DIEGO: Nancy Pelosi is the third public official in the line of succession. It could note that we're treating Taiwan more like an independent country.

WANG: And independence is a red line for Beijing. There have been recent U.S. Congressional visits, but if Pelosi goes to Taiwan, she would be the highest-ranking U.S. official to travel there since then- House Speaker Newt Gingrich in 1997.

This potential visit comes at an extremely sensitive time. China's military is celebrating its founding anniversary on August 1 and we're just months away from a key political meeting when Xi Jinping is expected to see an unprecedented third term.

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From Beijing's perspective, a potential visit by Pelosi to Taiwan would be a reckless act that provokes Beijing at a time it's supposed to be projecting strength, control, and stability.

SHINK: Having the Pelosi visit come now will make Xi Jinping fear that other people will see this as a humiliation of him. And that will cause him to feel that he has to react very strongly. Given the overreaching that Xi Jinping has been doing, I don't believe we can count on his good judgment.

WANG: A U.S. official told CNN China could impose a no-fly zone around Taiwan. But the Chinese government hasn't announced details about how it could retaliate.

JOE BIDEN, PRESIDENT OF THE UNITED STATES: That's a commitment we made.

WANG: Biden has said several times that the U.S. would intervene militarily if China were to attack Taiwan.

BIDEN: Yes, we have a commitment.

WANG: Only to have the White House walk back those remarks each time. But as China's military might grows, more are calling for the Biden administration to end the so-called strategic ambiguity. It's impossible to overstate how important Taiwan is to the Communist Party and its legitimacy. China sees the self-ruled island as a breakaway province that must be reunified with the mainland, even by force if necessary.

And a visit from one of America's most powerful politicians might just give Beijing the push to make a risky move. Selina Wang, CNN, Beijing.

(END VIDEOTAPE)

VAUSE: There might just be clarity on where Beijing stands on a possible trip to Taiwan by Speaker Pelosi with a phone call between Presidents Joe Biden and Xi Jinping in the coming hours. Officials say the conversation was scheduled before the news of Pelosi's plans.

For more, Steven Jiang joins us now live from Beijing. So, if there was to be some kind of military response to this Pelosi visit, when will we know about it? When will there be the science of preparations of some kind of military buildup? Or would we not even know?

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Yes, and that is a big question mark right now, John. And this phone call you just mentioned between Biden and Xi, you know, as much as U.S. officials tried to characterize this as a routine follow-up to the two leaders' last conversation back in March, this is really anything but routine given the latest showdown sparked by this leaked story about Pelosi's possible with visit.

So, you know, it's all but certain that Xi Jinping would raise this issue with Biden during that phone call and asking him to stop her from visiting because from -- especially from the Chinese perspective, the two politicians actually, you know, come from the same political party in the U.S.

But the problem right now, of course, is one there is the separation of powers between different branches of the U.S. government. And two, no U.S. president, including Biden, wants to be seen as caving in under Chinese pressure. So, if after this phone call, Pelosi still goes ahead with this visit, then this would be perceived as a personal insult and a bigger humiliation for Xi Jinping which in a way could compel the Chinese to respond even more forcefully than if there was no phone call between the two leaders. So, that's why you know, this is the danger here. And as you mentioned, right now, the lack of specific countermeasures

from the Chinese is also a big challenge for both the U.S. and Taiwan as well as they tried to prepare for potential threats. Now, as Selina was saying, there are some hawkish voices in China and also outside experts speculated there could be this no-fly zone set up by the PLA. They could also send a scramble fighter jets to shadow her aircraft or even send war planes to fly over Taiwan itself to prevent her plane from landing in Taipei.

But as of now, a direct attack on her plane still seems unthinkable. But the worry, of course, with so many military assets in the air and in the region, from China, from Taiwan, and from the U.S., there is just this growing possibility of miscalculations that could actually lead to conflict. So, that's why the stakes can be higher here. No one can afford to look weak. And there's so much riding on what Pelosi decides. John?

VAUSE: Yes. We will see what happens. Beijing Bureau Chief Steven Jiang, we appreciate that live for us in Beijing.

To Singapore now and with us this hour is Drew Thompson. Before he became a senior research fellow at the Lee Kuan Yew School of Public Policy at the National University of Singapore, he was the director for China, Taiwan, and Mongolia, for the U.S. Defense Secretary. Thanks for being with us.

DREW THOMPSON, SENIOR FELLOW, LEE KUAN YEW SCHOOL OF PUBLIC POLICY: My pleasure.

VAUSE: OK, so, China might just be using part of the U.S. playbook for Taiwan with a policy of strategic ambiguity at least in the short term. Beijing has yet to say what the consequences would be if Speaker Pelosi went ahead with this visit. I want you to listen to U.S. Defense Secretary Lloyd Austin on his security concerns.

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(BEGIN VIDEO CLIP)

LLOYD AUSTIN, U.S. SECRETARY OF DEFENSE: My main concern, and you've heard me say this before, about the aggressiveness of the PRC and the kinds of things that we've been seeing in the region lately. And so, I think we have to be vigilant.

(END VIDEO CLIP)

VAUSE: And he's not getting into specifics either. But are there U.S. concerns being driven by the fear that China's military would specifically try to blow her plane out of the sky, but does have more to do with the law of unintended consequences here which increases exponentially with the number of troops and military hardware in a particular region?

THOMPSON: So, this uncertainty that you're describing really underscores the importance of an upcoming phone call between President Biden and Xi Jinping. Even though there's no expectation that there's going to be specific deliverables from this call, it's really important and the value of the call is maintaining that high-level contacts so they can exchange authoritative positions and reduce that risk of misperception or miscalculation.

I mean, right now, all of the debate in the narrative is being fueled by fear and not authoritative voices. The statements made by Chinese officials have been rather measured. And there are discussed consequences but they're unspecified. So they're displeased, but they're not talking retaliation. Whereas former journalists and former military officers are not in a position to make authoritative statements, but that's what's driving the debate.

So, I think that's why the call is so important. And it's also worth remembering, there's going to be a lot of other issues that will be on that call, and that are part of the bilateral relationship that the two sides need to manage.

VAUSE: You know, you said there'd be deliverables out of this phone call. So, is it sort of the best-case scenario here, a lowering of the temperature, defusing some of the tension right now? Is that the best we'd hope for?

THOMPSON: I don't think it's just defusing of the tension. I mean, what the Biden administration seeks to do is set up what they call guardrails. So, the ability to manage the relationship and prevent the bilateral relationship from devolving into confrontation or even conflict. So, I don't think Xi Jinping though is going to be terribly receptive to that message because he probably feels it's incumbent on Washington to stop their overt support for Taiwan. And he sees that as the root cause.

But that conversation is what's so critical to prevent the devolution of the relationship. So -- and as I said, and I think the White House has tried to make clear, it's not just Taiwan that's on the table here. There's other critical issues. There's, you know, the global food and energy crises. There's managing European security and Russians invasion of Ukraine. And I think these are important areas where the two sides needs to talk because they have common interests. They have been -- the necessity of exchanging that authoritative, credible information with one another so that they can avoid challenges and try to solve some global issues at the same time.

VAUSE: Just a few global issues there on their to-do list. Pelosi has been very quiet about this trip up until now. She invited Republican and Democrat lawmakers to join her on a visit to Taiwan. From both sides, there are support for the House Speaker. I want you to listen to Republican Senator Tom Cotton.

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SEN. TOM COTTON (R-AR): The pressure came from Joe Biden who doesn't want her to take this trip because he's once again kowtowing to Beijing. But Lloyd Austin and Joe Biden shouldn't be worried about China's aggressiveness, they should be making China worry about our aggressiveness. For decades, American lawmakers have been traveling to Taiwan of both parties. And that should continue now, especially after it became public.

(END VIDEO CLIP)

VAUSE: There is always a time and a place to say no to bully, but it's that time now? Could Pelosi and senators like Tom Cotton be risking a face-off with China for what could just be a photo-op?

THOMPSON: So, I think this is more important than a photo op. I think, you know, we need to recognize that as you point out, the Speaker of the House has bipartisan support to go. She is a long-standing supporter of democracy and human rights, as well as U.S. alliances and partnerships particularly in Asia.

It's worth noting, she has been to Taiwan before. She visited in 1999, which not long after the former speaker -- then-Speaker Newt Gingrich visited in '97. So, this is consistent with past practice. Honestly, at the end of the day, I don't think she's going to be bullied either by China or by other members of her own party or the administration.

So, I think the trip is going to go forward. And the important part is having solid, credible communications between Washington and Beijing, but also between Taipei and Washington to ensure that the trip is managed, the consequences of the trip are manage, and that democratic nations are able to talk together and engage one another and provide global public goods together without coercion from outside countries.

VAUSE: Drew, I think we're just out of time, so I'll leave it there. But thank you so much for being with us. We really appreciate it. Thank you.

THOMPSON: My pleasure. Thank you for having me.

VAUSE: It's a pleasure.

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Still ahead here on CNN, inflation in the U.S. is soaring. The Federal Reserve is taking another unprecedented step trying to cool the economy and bring some prices down.

Also ahead, millions of tons of grains could soon begin shipping from Ukraine's Black Sea ports. Coming up, the latest on that fragile deal with Russia.

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VAUSE: Wherever you are in the world, thank you for being with us. I'm John Vause. You're watching CNN Newsroom.

Another big hike in interest rates by the U.S. Federal Reserve has sent financial markets soaring. The Dow gained more than 400 points Wednesday, the Nasdaq pushed up four percent. But for the second straight month, the Fed has raised rates by three-quarters of a percentage point, an unprecedented effort to try and contain inflation. But with unemployment near a 50-year low, wages continuing to grow, Fed chairman Jerome Powell does not believe the U.S. is currently in a recession currently.

(BEGIN VIDEO CLIP)

JEROME POWELL, U.S. FEDERAL RESERVE CHAIR: We're trying to do just the right amount, right? We're not trying to have a recession, and we don't think we have to. We think that there's a path for us to be able to bring inflation down while sustaining a strong labor market. As I mentioned, along with -- in all likelihood, some softening in labor market conditions.

So, that is -- that's what we're trying to achieve. And we continue to think that there is a path to that. We know that the path has clearly narrowed, really based on events that are outside of our control, and it may narrow further.

(END VIDEO CLIP)

VAUSE: More now from CNN's Rahel Solomon, reporting from New York.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: The Federal Reserve making history, Wednesday, to fight red-hot inflation. The U.S. Central Bank, once again, raising interest rates by three-quarters of a percent. This is not the first time in modern history that policymakers have raised interest rates by three-quarters of a percent consecutively. Before June, the last time we saw an increase of this magnitude was 1994.

During a press conference, Wednesday, Chairman Jerome Powell said that the committee is acutely aware that high inflation is a hardship for many Americans.

[00:35:00]

But doing too little is a bigger threat and potentially allows inflation to remain higher for longer. When the Federal Reserve raises its benchmark interest rate, that then leads to higher borrowing costs and interest rates for everything from credit cards and car loans to mortgages.

When borrowing costs go up, we consumers tend to spend less. The hope is that if we spend less, that creates a bit more balance, and the demand for goods and services and the supply of those goods and services and prices come down.

The concern, however, is the Fed raises rates so aggressively that it brings spending to a halt, and that triggers a recession and job loss. Chairman Powell noted that while the path to avoid a recession may have narrowed, he does not believe the U.S. is currently in one because many areas of the economy, like the labor market, are performing well.

Unemployment is currently at 3.6 percent and demand for workers is very strong. The labor market, a silver lining in a period otherwise marked by decades of high inflation and the fight of central bankers to tame that inflation. Rahel Solomon, CNN, New York. VAUSE: Preparations are underway at three Ukrainian Black Sea ports to be in exporting grain after U.N. broke a deal with Russia. The first shipment is expected to leave within days but doubts linger over Russia's commitment to the deal. CNN's Nada Bashir reports.

(BEGIN VIDEOTAPE)

NADA BASHIR, CNN REPORTER (voiceover): A landmark agreement, now ready to be enacted. Delegations from both Russia and Ukraine brought together again in Istanbul. This time to mark the inaugural meeting of the Joint Coordination Center.

HULUSI AKAR, TURKISH DEFENSE MINISTER (through translator): The duty of the Center is to ensure the safe sea transportation of grain and other supplies to be exported from Ukraine. It has become necessary to establish a sea corridor for the safe delivery of more than 25 million tons of grain. Leaving in Ukrainian ports to the countries in need in a short period of time.

BASHIR (voiceover): It is a deal which has taken weeks of negotiation to secure. And with the framework set to remain in place for at least four months, the work of this unprecedented collaboration could prove decisive in alleviating some of the pressures of the global food crisis.

BASHIR (on camera): Well, you can see the media storm behind me, and that's because this center here, the Joint Coordination Center, is set to be the heartbeat of the grain exports initiative, bringing together representatives from Turkey and the United Nations. But crucially, from both Russia and Ukraine to oversee the export of grain and other vital agriculture goods through the Black Sea. The real question now is whether all four (ph) parties and in particular, whether the Russian Federation will commit to the framework outline and this agreement.

BASHIR (voiceover): But trust in Russia's intentions on the Black Sea is tenuous. Just a day after the deal was signed in Istanbul on Friday, Russian forces launched an attack on a Southern Ukrainian port of Odessa, raising concerns over the viability of the agreement. Now, Ukraine says it's placing its trust in Turkey and the United Nations.

FREDERICK KENNEY, U.N. INTERIM COORDINATOR, BLACK SEA GRAIN INITIATIVE: Well, I can say that with all parties here have expressed their commitment to making this initiative a reality and getting it operational. I think that's demonstrated by the fact that all parties had a very senior person arrive here on extremely short notice.

BASHIR (on camera): Are you confident that Russia will commit given the fact that we have already seen an attack?

KENNEY: I'm confident that we will -- this will be a successful initiative, yes. And we're going to work very hard to make sure that does happen.

BASHIR (voiceover): According to the Ukrainian government, work is now underway to finalize safe corridors from three of Ukraine's Black Sea ports. And with no shortage of urgency around this initiative, officials say the first shipments could leave Ukraine by the end of this week. Nada Bashir, CNN, Istanbul.

(END VIDEOTAPE)

VAUSE: Still to come, Pope Francis is in French-speaking Canada, meeting political leaders and still making amends with indigenous communities. We will have the latest.

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VAUSE: Pope Francis will celebrate mass in Quebec City in the coming day as he continues to what the Vatican calls as pilgrimage of penance and Canada. Since Sunday, the Pope has met with multiple indigenous groups, apologizing for the role Christians played in the abuse of indigenous children at residential schools run by the church, many of them anyway.

Had many welcomed his words, but some say they do not go far enough, and that includes the Canadian government. CNN's Delia Gallagher has more now reporting in from Quebec.

DELIA GALLAGHER, CNN ITALY AND VATICAN CORRESPONDENT: On Pope Francis's first day in Quebec, he met with Prime Minister Justin Trudeau, as well as the Governor General Mary Simon. She is the first indigenous governor general for Canada, and the Pope spoke to political authorities here and reiterated his own request for forgiveness for so many Christians he said, who had done wrong to the indigenous communities.

But he also asked the government to continue to address the goals set by the commission for truth and reconciliation and to help indigenous communities to thrive. On Thursday, Francis meets with the catholic community here in Quebec and will say mass with them. And on Friday, he will go north to the Arctic to meet with some members of the Inuit indigenous communities. Delia Gallagher, CNN, Quebec City.

VAUSE: Thank you for watching CNN Newsroom. I'm John Vause. And I will be back at the top of the hour with another edition of CNN world news. In the meantime, World Sports is up next after a very short break. See you soon.

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