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Pentagon Tracking Suspected Chinese Spy Balloon Over U.S.; House Speaker Slams China, Calls For "Gang Of Eight" Talks; U.S. Military: No Plans To Shoot Down Suspected Spy Balloon; Experts Say New Bots May Replace Many Current Workers; E.U. Leaders in Kyiv for Summit with Zelenskyy; Kherson Perseveres in the Face of Heavy Artillery Strikes; Adani Fails to Calm Investors, Company Losses Top $100B; Kraft Wants Brady to Retire as a New England Patriot. Aired 1- 2a ET
Aired February 03, 2023 - 01:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[01:00:00]
ANNOUNCER: This is CNN.
MICHAEL HOLMES, HOST, "CNN NEWSROOM": Hello, and welcome to our viewers joining us from all around the world. Appreciate your company. I'm Michael Holmes. Coming up on the program, it is believed to be from China. It is flying over the American Heartland, and it's watching something, something, below. It sounds like a definite problem, but the U.S. government plans to leave it alone for now.
Also,--
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FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: There were just two massive missile strikes, right in our vicinity. You can see it. It's just a couple of yards away from where we are.
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HOLMES: A close call, a CNN team just steps away from a deadly blast in Ukraine.
Also,--
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VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Which jobs is AI coming after first?
SHELLY PALMER, PROFESSOR OF ADVANCED MEDIA, SYRACUSE UNIVERSITY: If you're a middle manager, you're doomed.
(END VIDEO CLIP)
HOLMES: Friend or foe, could Artificial Intelligence be coming for your job? UNIDENTIFIED MALE: Live from CNN Center, this is "CNN Newsroom with Michael Holmes".
HOLMES: A suspected Chinese spy balloon, the size of three buses, is floating over the northern U.S., and this has been going on for several days. The balloon is a tiny white dot within the shaded area there. You can just about see it. The Pentagon keeping a close watch, but it's decided that for now it will not launch any sort of strike or try to bring it down. The balloon is flying at a very high altitude. We're told it does not pose a significant intelligence risk. But, it is traveling near sensitive sites, and people living in the Billings, Montana, area definitely noticed something strange in the sky.
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UNIDENTIFIED FEMALE: There is the moon. Then, there is that. What planet is that?
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HOLMES: Here is a better look at the balloon. Back in Washington, lawmakers want answers, the U.S. House Speaker blasting what he described as "China's brazen disregard for U.S. sovereignty". And, he is calling for a meeting of the "Gang of Eight". That's a group of top congressional leaders and top lawmakers on the House and Senate Intelligence Committees.
Meanwhile, the Biden administration says it acted immediately to prevent the balloon from collecting any sensitive information. CNN's Pentagon Correspondent Oren Liebermann picks up the story.
OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT: For several days now, the U.S. has been tracking this surveillance balloon over northern U.S., specifically over Montana. The U.S. says they believe, they're very confident, in fact, that it's from China, a balloon that drifted in or came in over Canada, and has been over sensitive sites, depending on admits, over Montana. Now, they haven't specified what those sites are. But, Montana is home to several ballistic missile fields, ballistic missile silos, and perhaps that's what this surveillance balloon was going after.
The Pentagon says, when this first came over and they started watching it, they did launch F-22 fighter jets. In the end, the decision was made not to shoot this down. President Joe Biden asked for military options for the possibility of what it would take to shoot this down. In the end, senior military leaders, including the Chairman of the Joint Chiefs of Staff, General Mark Milley, the top U.S. officer, recommended against shooting it down, for a number of reasons. First, there is a risk to what's on the ground, facilities and people there on the ground, even if it is Montana and isn't densely populated. More importantly, though, the Pentagon says they don't believe this has intelligence gathering capabilities, what satellite communications above what Chinese spy satellites already have.
In the end, the decision was made not to shoot it down. But, depending on emphasize that should they determine this is a high risk, they do retain that option of carrying out a military option against this, of essentially shooting this surveillance balloon down. The Pentagon will keep watching this. It's important to note that the Pentagon did bring this up through diplomatic channels both in Washington and in Beijing, and it comes at a time of incredibly high tensions with China. Oren Liebermann, CNN, at the Pentagon.
HOLMES: Now, our next guest has said two parts of America's nuclear triad are in the path of this balloon, meaning bombers and missiles. CNN Military Analyst Cedric Leighton is a retired Air Force Colonel, comes to us from Washington. Always good to see you, sir. So, what do you make of this thing? How much of an intelligence threat? The military doesn't sound too worried.
COL. CEDRIC LEIGHTON (RET.), CNN MILITARY ANALYST: Yes. Well, it's interesting, Michael, because it is actually going over areas that are kind of interesting from an intelligence collection perspective. And, like you mentioned, two parts of the triad, which includes bombers and missiles, the other part being submarines, are directly in the path of this balloon, and if it has the right collection capability, both from a signals intelligence perspective and an imagery intelligence perspective, it could pick up some very interesting data.
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HOLMES: What would it see that a spy satellite couldn't, because they're pretty good these days?
LEIGHTON: The other spy satellites are actually quite good. When you compare the camera resolution of a spy satellite from let's say the 1970s to the one today, it's like night, more than night and day. It's like from the Stone Age to the modern day. But, when you look at what a balloon can do, there is a greater loitering time than some of the satellites. It's also lower in altitude than a satellite would be, and potentially could be able to pick up some signals that a satellite might not be able to pick up from a communications intelligence or signals intelligence perspective.
HOLMES: And, the thing is big, as we were saying. I mean, the military saying it doesn't want to bring it down and create any problems on the ground, but it's flying over some pretty remote area. Wouldn't there be a way of getting it somehow? You think they'd want to?
LEIGHTON: Well, in some ways, it would be interesting to see exactly what it has on board. And, the problem, though, is it would be a bit difficult to bring it down and bring it down intact, because chances are the gases on the balloon would explode upon impact from a projectile of any type. So, you wouldn't get much information under normal circumstances unless it just descended very naturally because of some--
HOLMES: Yes.
LEIGHTON: --accident, like a week (ph) or something like that. So, it would be great to get it down. But, the problem is that the risk, at least according to the Pentagon estimates, outweighs the need to eliminate-- HOLMES: Yes.
LEIGHTON: --from its collection path.
HOLMES: I guess, the reality is balloons do not stay up forever. At some point, it has to come down somewhere. What could be learned from what it's carrying? And, can you see a rise to retrieve it? I mean, it could come down at sea, and there might be a scramble.
LEIGHTON: Yes, it certainly could, and if it's detected in time, there could be a scramble. We've had those happen before where some satellites have come down, and something analogous to that could actually happen. So, if that does occur, then you could bet that the various intelligence agencies around the world would want to get a hold of it, especially with the U.S. intelligence agency. And, of course, the Chinese would want to keep it for themselves so they'd be interested in making sure they could retrieve it.
HOLMES: Yes, yes. Exactly. I guess the Pentagon says they've been tracking it for days. I've actually seen a flight path of how it's come down from China and across Canada. But, apparently, they're also saying it's not the first time this has happened. How regularly do you think this kind of thing might happen, and the public, by and large, just doesn't hear about it because the military wants to keep it to themselves?
LEIGHTON: Yes. So, it - this could happen fairly frequently depending on how many balloons the Chinese actually have in their inventory. There is some reports that they've been using them against Taiwan and Guam. So, the sightings that may have occurred in those areas, will have to be looked at. So, it probably doesn't happen quite as frequently as we would think. But, it does happen perhaps a dozen or multiple times a year.
HOLMES: All right. CNN Military Analyst, Colonel Cedric Leighton, always good to see you, sir. Thanks so much.
LEIGHTON: You bet, Michael. Good to be with you.
HOLMES: OK. Now, the discovery of the suspected surveillance balloon comes as the U.S. is beefing up its presence in the Indo-Pacific region. The U.S. will build a new Military base, its first in 70 years, on the island of Guam, which is a U.S. territory. You see it there on the map. And, a new agreement gives the U.S. Military expanded access to four more bases in the Philippines. This weekend, the U.S. Secretary of State Antony Blinken traveled to China to discuss a range of issues with Chinese officials. So, let's go to Beijing where we find our Bureau Chief there, Steven Jiang. Good to see even see you, Steven. Antony Blinken about to arrive in China, this balloon flying over the United States at the moment. What does that say about the trust level?
STEVEN JIANG, CNN BEIJING BUREAU CHIEF: That's where, Michael. And, interestingly, just a short while ago, China state media has finally broken silence with the Global Times reporting the story, citing a few foreign media outlets including CNN, with the story's opening line accusing the U.S. of hyping up so-called China threat. But, the timing of this revelation, as you mentioned, makes this a very delicate situation and a potentially consequential matter ahead of that high stakes visit. In a way, this really complicates things, because at least publically both governments have said they want to reset at least stabilizing this increasingly contentious relationship, and incidents like this one really played right into the hands of hardliners on both sides.
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In Washington, we've already seen some members of Congress, especially on the Republican side, calling for stronger actions, new hearings, and portraying this as another evidence of President Biden's China policy being too weak. And, on the Chinese side, this could potentially stir up further nationalistic sentiment and feelings as well. But, this obviously doesn't take place in a vacuum, as you were talking to your guest. Already, we've seen a flurry of activities ahead of this visit, both on the economic and technology front, but also in the military spheres very much targeting China. So, that's why without - even without this revelation, expectations already very low out of these talks between Blinken and his Chinese counterpart.
From the American perspective, the key seems to be keep communication channels open and smooth at all levels to prevent miscalculation, to prevent disagreements from escalating into a real conflict, and that includes military to military communication, which has been cut off by the Chinese after the - a controversial visit to Taiwan by then U.S. House Speaker Nancy Pelosi last year. So, that's why some American experts seem to think this revelation of the spy balloon, maybe deliberate, by U.S. officials to put the Chinese on the back foot ahead of these meetings to allow Blinken to address this issue more directly with them to tell them what the U.S. knows and what the US wants them to do. Michael.
HOLMES: Yes. It does seem interesting that the Pentagon says this has happened before, but we've never heard about it, and the timing of telling us about this one just on the eve of this visit is certainly curious. Steven Jiang in Beijing, always a pleasure. Good to see you, sir.
All right. Now, to the war in Ukraine, where the next six months will be absolutely crucial, according to an assessment by the CIA. Director Bill Burns says developments on the battlefield will be key because Russian President Vladimir Putin is not serious about negotiating. Burns says Mr. Putin believes he can grind down Ukraine, while political support from Europe and the U.S. wanes. He says, that calculation is just as flawed as Russia's decision to invade last February.
Meanwhile, there is no let-up in Russia's missile barrage against residential areas in Ukraine. At least seven people were wounded, one critically, in the latest attack on Kramatorsk. CNN's Fred Pleitgen and his team were heading to the scene when a one strike when a second missile hit.
PLEITGEN: Two missile strikes on the city Kramatorsk in eastern Ukraine--
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UNIDENTRIFIED MALE: Let's go.
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PLEITGEN: --right at the location we were about to fill. There were just two massive missile strikes right in our vicinity. You can see it. It's just a couple of yards away from where we are. We're not exactly sure what kind of missiles it was. But, this is a residential area. We're right in the middle of town. Photojournalist Matias Heng (ph) films the damage caused by the impact. Ukrainian authorities later said they believe the missiles were S-300s, normally used to shoot down planes, devastating when launched at urban centers. As medics tended to the wounded, producer Tim Lister checks in with our headquarters.
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TIM LESTER, PRODUCER, CNN: Extremely loud detonations, really really close. We're going to stay in shelter.
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PLEITGEN: As we take cover, residents are clearly traumatized by the violence. It is terrifying, Natalia tells me, but what can we do? The strikes came as search and rescue efforts were ongoing in exactly the same neighborhood after a Russian missile leveled an apartment block on Wednesday night, killing at least three and wounding eight.
The Russians seem to be bringing the cities of this region into their war regardless of the consequences. And, Russian President Vladimir Putin is saying there is worse to come. Putin spoke Thursday at events commemorating the Battle of Stalingrad where Soviet forces defeated Nazi, Germany, 80 years ago, openly threatening the U.S. and other countries supporting Ukraine.
Clearly, they don't understand that modern war with Russia will be quite different for them, he said. We won't send our tanks to their borders, but we have the means to respond, and it won't be with the use of armored vehicles. Cities like Kramatorsk already know that the Kremlin is ready to escalate its war on Ukraine. Largely quiet just weeks ago, they are now in the eye of the storm, as Russian forces seek to grind their way through Donetsk.
When the coast seemed clear, we left Kramatorsk. We're going to get out of here as fast as possible just in case there is more missile strikes coming, but it's certainly seems to us as though the Russians are making Kramatorsk a frontline in this war.
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A grim prospect for the thousands of civilians here and in other towns in eastern Ukraine. Fred Pleitgen, CNN, Kramatorsk, Ukraine. HOLMES: Now, the leaders of the European Union are in Kyiv at this hour to discuss EU membership to Ukraine and a host of other issues. We'll have more on that in about 20 minutes or so.
Now, China will fully reopen its borders with Hong Kong and Macau starting on Monday. People entering Mainland China from either region will no longer need to show a negative COVID test unless they've traveled abroad in the past seven days. China is also lifting daily caps on the number of travelers from Hong Kong and Macau.
The coldest wind chills in decades moving towards the northeastern United States, people are being told to limit their time outdoors as this brutal blast can cause frostbite in minutes. We'll have details in few moments.
Also, fighting inflation, Europe is raising interest rates sharply while the U.S. is easing off, details on their different reasoning.
Also, Big Tech blues, some of the top companies disappoint Wall Street with their latest earnings reports. We'll discuss that after the break.
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HOLMES: People in the Northeast U.S. will be feeling the coldest temperatures in decades as dangerous wind chills. The summer's cold is 50 degrees Fahrenheit below zero, are expected to hit the region in the coming day. Fortunately, the deep freeze will only linger for about 36 hours. More than 15 million people though are under wind chill warnings and advisories. Take a look at this brutal snow squall. This is in New York State, about 240 kilometers northeast of Buffalo.
Meanwhile, some southern states got more freezing rain on Thursday after an ice storm crippled parts of the region earlier in the week. At least eight people have died in Texas and Oklahoma due to the storm, hundreds of thousands of homes and businesses still don't have power. That's according to PowerOutage.us.
Europe's two largest central banks raised interest rates sharply on Thursday, opting for bigger increases than the U.S. Federal Reserve did. The Bank of England and the European Central Bank hiked rates by half a percentage point. Benchmark rates for both are now at their highest level since 2008. Across the Atlantic, the Federal Reserve eased up on rate hikes Wednesday, delivering just a quarter point increase, saying it's making progress against inflation. But, the banking chiefs of the EU and the UK say there is still a ways to go.
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CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: This is the highest in all time that core inflation has been in our part of the world. So, I get it. Headline inflation has gone down, and more so than we had expected, and that many had expected, but underlying inflation pressure is there.
[01:20:00] ANDREW BAILEY, GOVERNOR, BANK OF ENGLAND: We have done a lot on REITs already. The full effect of that is still to come through. But, it's too soon to declare victory just yet. Inflationary pressures are still there, and we can see that in the data, and we hear it from our agents. And, we need to be absolutely sure that we really are turning the corner on inflation. And, that's why we've increased bank rate today. And, that is why we will of course continue to monitor the data very carefully.
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HOLMES: The European Central Bank says it expects to raise interest rates further by another half a percentage point in March.
Some tech giants reported earnings Thursday that disappointed Wall Street, Apple posting its first revenue decline since 2019, with sales falling five percent in the final three months of the year, significantly worse than analysts had expected. Shares of Apple fell more than four percent in after-hours trading. The Google parent company. Alphabet, reported its profits fell by a third in Q4, along with nearly flat revenue growth. Alphabet shares also dropped about four percent immediately following the report. And, despite beating estimates with a nine percent increase in revenue, Amazon stock fell nearly five percent after the company reported slower growth in some closely watched segments.
Mike Isaac is Technology Correspondent at The New York Times. He joins me now from San Francisco, and thanks so much for doing so. So, as we round out the Big Tech earnings season, what are we to make of these various reports? What do they tell you about the state of the sector?
MIKE ISAAC, TECHNOLOGY CORRESPONDENT, THE NEW YORK TIMES: It's really fascinating. A lot of these companies have spent the past eight, 10 years of a bull market, really riding that wave of growth, and whether it's Meta, formerly known as Facebook, or Google, or Apple, they have all really benefited from revolutionizing an industry, especially digital advertising, and bringing a lot of those ad dollars online. But, I think they're just hitting the law of big numbers and growth over time, which is that you - there are limits to how big you can get, not to mention it's reflective of the overall economy as well, and sort of softening in demand across all different sectors, from hardware to digital ads.
HOLMES: Yes. Of course, there has been a ton of layoffs in the tech sector, tens of thousands from--
ISAAC: Yes.
HOLMES: --Google, Microsoft, Amazon, Facebook, dozens of others as well. What do you make of that trend, and whether there could be more to come? Is the Golden Age over for Silicon Valley?
ISAAC: Yes. It's very - it's fascinating, because as they rode this wave of growth for a very long time, they also really didn't have to worry about over hiring for a long time. Facebook has only gotten huger over time. Google has - Alphabet has more than 100,000 employees. And, I think the - Mark Zuckerberg in his earnings call earlier this week basically said 2023 is going to be the year of efficiency for Meta. And so, the idea is all of these companies are going to start basically seeing where they have waste or excess or places where they can trim. What they see is just excesses--
HOLMES: Yes.
ISAAC: --that they really didn't have to worry about for a very long time. And, I think that's going to continue, absolutely.
HOLMES: Right. And, there was a ton of excess. I mean, tell us more about where Silicon Valley misstepped? I mean, they were massive top- end executive salaries, the fancy IQs. I think part of Facebook's layoffs were a dozen massage people. Too big too fast. What did they most misjudge?
ISAAC: I think the - I think you're exactly right. There was the unlimited perks. Earlier - late last year, we were reporting on how basically the Facebook employees now have to do their own laundry because they cut away the laundry service that they had, which is driving some people insane. Part of it was just also - it became like a sort of table stakes hiring thing in Silicon Valley, which is, I could go to Dropbox because they have the best sushi buffet, which they did, rather than let's say bowl (ph) who makes you pay for your food at their cafeterias. And, that started to be something that engineers actually cared about. So, it was excess, but at the same time, a weird sort of recruiting tactic that became almost commonplace, basically. And so, now it's very drastic retrenching as engineers get used to the new reality out here.
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HOLMES: Yes. They do their own laundry and get a massage on their own time. So, then - what is the year ahead look like for Big Tech? What are you going to be looking for?
ISAAC: I think we honestly look for - one thing I've been hearing about - around Mark Zuckerberg and his sort of strategy is basically focus on the projects that are working, rather than give a ton of runway to things that either aren't getting traction or aren't making money. They're willing to kill their darlings a lot faster, basically. And, that has been - we're seeing at Amazon, they've killed off, laid off a lot of folks in the Alexa division, which is extremely expensive and not paying off for them. Google has wound down a bunch of their sort of moonshot projects. So, I just think it's going to be a lot more of that. And, frankly, a lot more folks sort of holding tight to their seats, because those - that mobility just isn't as easy as it was, or used to be just a few short years ago, basically.
HOLMES: Yes. Great point, great analysis. Good to chat with you, Mike. Mike Isaac is at - with The New York Times. I appreciate it.
ISAACL Thanks for having me.
HOLMES: Well, if you haven't heard of ChatGPT yet, you will. The brand new Artificial Intelligence application is rapidly encroaching on education, art, business, manufacturing, and much more. It might even be coming to your job. After launching as a free app in November, ChatGPT is now believed to have 100 million monthly users, according to a recent study. I admit I am one. That is the fastest growth of a consumer internet application in history. ChatGPT is so advanced it can write complicated essays, compose music, tell you a joke, even pass some of the most rigorous medical and legal exams.
The arrival of Artificial Intelligence into our daily lives will almost certainly disrupt what people are used to in the near future. Many good paying jobs could disappear as robots do it faster and cheaper.
Now to CNN's Vanessa Yurkevich who explains AI can't do everything at least not yet.
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YURKEVICH: Which jobs is AI coming after first?
PALMER: If you're a middle manager, you're doomed. Any kind of commodity salesperson, report writers and journalists, accountants and bookkeepers, and oddly enough doctors who are looking - who specialize in things like drug interactions.
YURKEVICH: Do you mean out of a job?
PALMER: No.
YURKEVICH: Or, you mean that part of your job?
PALMER: That part.
YURKEVICH: OK.
(END VIDEO CLIP)
YURKEVICH: That's the relief a lot of Americans are looking for right now. The explosion of ChatGPT in AI platform showed us it could do a lot of what we humans do at work, and faster.
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YURKEVICH: Will it take my job?
PALMER: Yes and no. It's not going to replace you. Someone who knows how to use it well is going to take your job, and that's a guarantee.
(END VIDEO CLIP)
YURKEVICH: By 2025, the World Economic Forum predicts that 85 million jobs will be displaced by automation and technology. But, it will also create 97 million new roles. We've seen it before in the auto industry.
(BEGIN VIDEO CLIP) PALMER: While the auto worker may be displaced because they are not as good at welding or as painting as the robot, just probably 35 people that have to be involved in the creation and maintenance of that device, that welds better than a person.
(END VIDEO CLIP)
YURKEVICH: And, that's what happened at Carbon Robotics. Former auto workers now building an AI laser weeder in Detroit for farms.
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PAUL MIKESELL, FOUNDER & CEO, CARBON ROBOTICS: It's a direct result of the history of auto manufacturing that we have that skill set available to us all in one place.
(END VIDEO CLIP)
YURKEVICH: The laser weeder is still operated by a human but run by AI, can do the work of between 40 to 80 people, says the CEO, filling roles that are hard to find humans for.
(BEGIN VIDEO CLIP)
MIKESELL: Labor is harder and harder to find every year, particularly farm labor. And, in AI, system like ours that can do that job automatically saves a lot of time, money, effort.
(END VIDEO CLIP)
YURKEVICH: This music is composed solely by Artificial Intelligence called Eva. It even has an album you can stream. AI music is more affordable. There is no producer, composer, or artists to pay.
(BEGIN VIDEO CLIP)
KARL FOWLKES, ENTERTAINMENT AND BUSINESS ATTORNEY, THE FOWLKES FIRM: It has taken away opportunity from songwriters, producers and artists, right? So, the people are trying to feed them - their families.
(END VIDEO CLIP)
YURKEVICH: Something similar is happening in the art world. Leading artists Karla Ortiz and two others to file a class action lawsuit against three AI art companies for copyright infringement. Ortiz claims they're using her name and art to train the AI.
(BEGIN VIDEO CLIP)
KARLA ORTIZ: It is feast and famine for most of us. We go job by job. And, what happens when there is a little bit less work to go around?
(END VIDEO CLIP)
[01:29:48] YURKEVICH: Stability AI, one of the companies named says the suit misunderstands how AI and copyright law works, adding it intends to, quote "defend ourselves and the vast potential generative AI has to expand the creative power of humanity".
The two other companies did not respond.
ORTIZ: I never thought we'd be here. It's like straight a sci-fi movie.
SHELLY PALMER, PROFESSOR OF ADVANCED MEDIA, SYRACUSE UNIVERSITY: There's a wonderful scene in the movie, "I, Robot". Detective Spooner robots. He says.
WILL SMITH, ACTOR: Can a robot write a symphony. Can a robot turn a canvas into a beautiful masterpiece?
PALMER: And the robot looks up and he goes --
UNIDENTIFIED MALE: Can you?
PALMER: Everyone of us is not Mozart or Rembrandt or Picasso, or choose your super famous amazing artist or artisan, which is people. This is not coming to kill us. It's coming to help us.
YURKEVICH: Vanessa Yurkevich, CNN -- New York.
(END VIDEOTAPE)
MICHAEL HOLMES, CNN ANCHOR: Still to come on CNN NEWSROOM. Ukraine's president demands tougher sanctions on Moscow as European leaders visit Kyiv. We'll see what else is on the agenda.
Also, Russian rockets still causing destruction in the city of Kherson three months after its liberation by Ukrainian ground forces. We'll have that story and more after the break.
(COMMERCIAL BREAK)
HOLMES: And welcome back to all our viewers around the world. I'm Michael Holmes. You're watching CNN NEWSROOM.
Now for several days, a suspected Chinese spy balloon has been flying over the northern U.S. It entered via Canada and its currently floating somewhere over Montana.
The Pentagon closely monitoring the balloon but for now, says will not be shooting it out of the sky. Even though the balloon is close to what they call a number of sensitive sites.
A brief ground stop was ordered at local airports, fighter jets were mobilized. And the timing of all of this isn't great. The apparent provocation coming as the U.S. Secretary of State gets ready for his first official visit to Beijing. Tensions already soaring.
China is furious over U.S. plans to expand its military presence in the Pacific. The Pentagon chief was in the Philippines earlier this wee where the U.S. is getting access to four more bases. Beijing says that will endanger regional peace and stability.
[01:34:52]
HOLMES: Leaders of the European Union are in Kyiv for a summit in the coming hours with the Ukrainian president Volodymyr Zelenskyy. European commission president Ursula Von Der Leyen says Russia must be held accountable in court for its quote, "odious crimes in Ukraine".
She announced the E.U. will be setting up an international center in the Hague to prosecute the crime of aggression, as she put.
President Zelenskyy is demanding more punitive sanctions against Russia.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): Now the pace of sanctions has somehow slowed down in Europe. And the tariff state on the country is about to enter the sanctions.
We need to catch up. We need to correct this.
URSULA VON DER LEYEN, PRESIDENT, EUROPEAN COMMISSION: But Today Russia is paying a heavy price. As our sanctions are eroding its economy, throwing it back by a generation.
The price cap on crude oil already costs Russia around 160 million euros a day. And we will keep on turning up the pressure further.
(END VIDEO CLIP)
HOLMES: Timofiy Mylovanov is the former Ukrainian minister of economic development in trade. Now, the president of the Kyiv School of Economics. He joins me now.
It's good to see you again, sir. We just heard Ursula Von Der Leyen saying that the E.U. will quote, "deepen further support and cooperation". Not a whole lot of specifics. What is Ukraine wanting from this E.U. Summit Friday and how likely is it to get what it wants?
TIMOFIY MYLOVANOV, PRESIDENT, KYIV SCHOOL OF ECONOMICS: We would like to get the commitment to start negotiations about the admission of Ukraine to the E.U. We understand that these negotiations may take decades.
We're hoping, of course, for shorter, faster track. But much work has to be done. So that is the specifics that we would like, a commitment to start negotiations.
HOLMES: The E.U. has long demanded moves on corruption. And we've seen Ukrainian authorities conducting anti=corruption actions across the country. And Volodymyr Zelenskyy been promising new reforms. How important is this issue? How bad has the level corruption been in
Ukraine and what impacts have corruption had?
MYLOVANOV: The peak of corruption in Ukraine was -- you know, around 2013. Under then President Yanukovych who later fled to Russia after the revolution of dignity. So corruption is really a fundamental and very political issue for the Ukrainian people.
We are trying to get rid of it, and we have a lot of progress. There's been entire infrastructure of anti-corruption law enforcement set up. And they are working now.
The corruption pockets of it remain. Their areas which are unreformed and it's in our best interest to get rid of the corruption as soon as possible.
HOLMES: Yes. Because of course, you know Viktor Yanukovych, that was a long time ago now. How strongly entrenched are the oligarchs and the other vested interest within the Ukrainian system because obviously -- donor countries don't want their contributions stolen, do they?
MYLOVANOV: Some vested interest remain, others not. For example in the banking system it all is cleaned up. In non defense procurement, it is cleaned up.
But judicial, for example, especially the lower level courts. They continue to operate judges who were appointed long ago and who are notoriously corrupt. There are fewer of them, but this is an ongoing battle.
HOLMES: Your prime minister Denys Shmyhal said in the last couple of days that Ukraine has an ambitious plan -- I think that was the word he used -- to join the European union within the next two years.
How much of an issue will that be at these talks. Do you think it can happen in that timeframe? What are the challenges?
MYLOVANOV: It would look historically, you know -- we know of Slovenia would join the E.U. in five years. And we know of several countries immediately after the collapse of the Soviet Union. But even for Poland it took 20 years.
So, you know, it depends on how fast, and how much and well we do our homework. And I think Ukraine has surprised people and the world about our ability to get things done. So it's good motivation for us.
But let's be realistic.
HOLMES: We've been reporting on what's going on in Bakhmut, Kramatorsk as well. When it comes to the battlefield, how likely do you think a Russian offensive is and soon. And how prepared is Ukraine to counter a Russian offensive?
MYLOVANOV: Russia will try definitely. And Ukraine is prepared. That also is true. Of course it helps to have a better military equipment, weapons, all kinds of support. [01:39:54]
MYLOVANOV: Ukrainian military is being repaired (ph), is being trained everywhere in Ukraine and outside of Ukraine so we thank for that support.
We are prepared, we're ready to defend. It's a very simple battle for us. Evil against good.
HOLMES: Timofiy Mylovanov, always a pleasure to speak with you, sir there in Kyiv. Thanks so much.
MYLOVANOV: Thank you.
HOLMES: Sources telling CNN the U.S. will be sending longer range missiles to Ukraine as part of a soon to be announced military aid package. The sources say the ground-launched small diameter bomb, as its called, a guided missile with a range of 90 miles will be part of a new $2.2 billion security package.
The bombs will effectively double the range of Ukrainian weaponry. But the package will not include even longer range missiles that Ukraine wants sources say the details could be announced as soon as Friday.
On the frontlines, a major city liberated from Russia's ground force is not getting a break from its artillery. Shells and rockets keep raining down on the city of Kherson, which is only separated by a river from Russian positions.
Sam Kiley has a firsthand look into the life under constant threat of artillery attacks.
(BEGIN VIDEOTAPE)
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: 12 weeks ago, Ukrainians celebrated the liberation of Kherson from months of Russian occupation. This is the scene today.
The Russians continue to fire with direct fire from tanks across the river which is just a few hundred meters in that direction. And on top of that, locals are telling us that it's being regularly shelled with grads (ph) the multiple rocket launching systems, completely indiscriminate.
Homes have been blown up. Hospitals torn by high explosives in weeks of an ever intensifying bombardment. Local authorities here talk of scores of artillery attacks from Russian positions just across the Dnipro River.
Every day, firefighters and emergency workers keep their base location secret, their prime target, the Russia's guns.
Two people were killed around the city overnight. A missile landed very close to here recently, adding urgency to this food distribution to people who are still here because they're trapped by poverty.
Grad rockets flew in during the day. At half past three, right here, our guard was standing there, the guard got hit, they said.
Why do you think the Russians are doing this?
"Revenge, probably," she said, "probably, revenge because they ran away."
KILEY: This underpass is a brief refuge taken by desperate civilians seeking help and food.
"Most of the houses are destroyed," he said. People are staying without electricity, water and gas, and there is constant shelling.
We're on the contact line, we live near the bridge. I'm Anatoliy will take what help he can get from local government.
A Russian strike against city hall five days ago means that this plastic sheeting can be put to better use.
What are you going to do with that?
"I'll board up the window's out, no glass."
He'll have to walk home. No one will drive to his neighborhood, it looks out across the river at the Russians.
Sam Kiley, CNN -- in Kherson.
(END VIDEOTAPE)
HOLMES: After 16 years on the run, one of Italy's most wanted men is behind bars. Coming up, how authorities say he was hiding in plain sight.
Also, shares of the company headed by Indian billionaire, Gautama Dani, plunged further even after he posted a video message aimed at reassuring investors. We'll have a live report from Vedika Sud when we come back.
[01:44:10]
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HOLMES: Welcome back.
One of Italy's most wanted mob bosses has been arrested in France working as a pizza maker. Edgardo Greco was convicted in absentia for the murder of two brothers in the 1990s and had been on the run for 16 years after escaping police custody in Italy.
Under his new identity, Greco was even featured in a local French newspaper as a, quote, authentic Italian pizza maker. The 63-year-old will likely be extradited to Italy.
The financial meltdown continues for Indian businessmen, Gautam Adani who has lost his status now as Asia's richest man. On Thursday the billionaire businessman spoke up for the first time
sense an American research company accused his conglomerate of fraud and manipulating stock markets. Now experts warn the fallout could impact other large Indian businesses.
To talk about all of this, from New Delhi, is CNN's Vedika Sud. And there's been some growing demands for an investigation into this Hindenburg (ph) report by opposition lawmakers in parliament.
VEDIKA SUD, CNN CORRESPONDENT: Absolutely, Michael, there has been. For day 2 now parliament has been adjourned because opposition lawmakers have been demanding a statement from Indian Prime Minister, Narendra Modi.
Critics have always mentioned that Gautam Adani has had close ties with India's Prime Minister. They both hailed from the state of Gujarat. So that is one. The other is an independent probe is what the opposition lawmakers are demanding.
So parliament has been adjourned for a couple of hours. They should reconvene at about 2:00 local time here. But also, Adani shares have opened red well most of them today for yet another day which means panic, the meltdown in the markets continue over the Hindenburg Report.
Now this man has been very intriguing for a lot of people, especially after this report has been out. So here's what you want to know about the controversy and the man in the midst of it.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Sustainable cities for tomorrow.
SUD: Protests by opposition lawmakers in India's parliament on Wednesday highlighting concerns of the finances of an Indian billionaire.
On the same day his conglomerate Adani Enterprises called off its $2.5 billion share sale after a significant drop in share prices.
GAUTAM ADANI, BILLIONAIR BUSINESSMAN: For me the interest of my investors is paramount and everything is secondary.
SUD: Even a statement from the low-profile businessman, Gautam Adani, wasn't enough to calm India's stock market.
It all started after U.S. research firm and short seller accused his business of fraud and stock manipulation. The Adani group had denounced the allegations as baseless and malicious. It called the report a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.
The Adani Group founded about 30 years ago controls power stations, sports and airports with huge stakes in the energy and logistics sector. It has long been linked to the wider success of India. TIM BUCKLEY, DIRECTOR, CLIMATE ENERGY FINANCE: The Indian economy has
been growing as one of the fastest-growing emerging markets in the world for a decade now. And that profound success story in India has certainly been a cornerstone of the Adani Group, because they are investing in infrastructure in India.
[01:49:56[
SUD: This dip (ph) in growth has often been flagged by detractors. Adani is seen as a close ally of Indian Prime Minister Narendra Modi. Critics say Adani's rise rested heavily on crony capitalism, which Adani has repeatedly dismissed.
ADANI: Prime Minister Modi and myself. Both are coming from state of Gujarat. And that makes me the easy targets of such business allegations.
SUD: And this caution that the fallout of the report by Hindenburg Research not only poses a risk to the Adani Group, but to the Indian economy.
HEMINDRA HAZAN, INDEPENDENT BANKING AND ECONOMIC ANALYST: In the normal case of events the regulator would have announced an investigation but sadly in this case, the regulator at least for the public has chosen to remain silent.
SUD: The immediate impact has been obvious. More than $100 billion wiped off the value of his business empire. The wider challenge now for India's market regulator and the Modi government, will be to try and cap the market chaos and regain the trust of nervous investors.
(END VIDEOTAPE)
SUD: Michael, according to the Bloomberg Billionaire Index, Gautam Adani's net worth last Monday just a day before the Hindenburg Report was out was at $120 billion. Cut to today, according to the Bloomberg Billionaire Index. It is at about $61 billion.
You have to look at his net worth now. It is a staggering drop and a very, very intriguing report, clearly, Michael?
HOLMES: Yes. Some belt tightening coming up.
Vedika good to see you. Vedika Sud, appreciate it. Only $60 billion now.
Still to come here on the program, NFL legend Tom Brady says he is retiring for good this time. But New England Patriots owner, Robert Kraft, hopes the 45 year old quarterback won't be able to pass up his offer. We'll be right back.
(COMMERCIAL BREAK)
HOLMES: Assault charges have been dropped against Australian tennis star Nick Kyrgios, according to Australian affiliate Network 9. He had pled guilty in a court in Cambridge to shoving his girlfriend during an argument in 2021.
The magistrate rejected a bid to dismiss his charges on mental health grounds. Instead the court found the charge was at a low level of seriousness, and let Kyrgios go because he was not a risk of re- offending.
U.S. basketball star Lebron James is edging closer to becoming the NBA's all-time leading scorer. James scored 26 points with his Los Angeles Lakers in their win over the Indiana Pacers on Thursday. Now, the 38-year-old forward needs just for 63 points to surpass Kareem Abdul-Jabbar and become the league's all-time leading scorer.
This is the 20th season for James and he is showing no signs of slowing down. Since James celebrated his birthday on December 30, the four-time NBA champion has averaged nearly 35 points a game. Abdul- Jabbar has held the record of 38,387 points since he retired in 1989 --
[01:54:55]
HOLMES: -- anyway, Jabbar said that he is expected to attend two games in Los Angeles next week where James could break that record.
All right, just when NFL legend Tom Brady thought he was out of the game, New England Patriots owner Robert Kraft wants to pull him back in, at least symbolically. Brady announced his retirement after 23 seasons on Wednesday this time for good, he says.
He did briefly retire last year, you remember before returning to the Tampa Bay Buccaneers for one more season. But he spent the vast majority of his career with the New England Patriots, winning six of his record seven Super Bowls with that team.
Kraft said he wants Brady to sign a one day contract to officially retire a Patriot.
(BEGIN VIDEO CLIP)
ROBERT KRAFT, OWNER, NEW ENGLAND PATRIOTS: Not only do I want it, Our fans are clamoring for it. And to us he is and always has been and always will be a Patriot. We will do everything in our power to bring him back, have him sign off as a Patriot, and find ways to honor him for many years to come.
(END VIDEO CLIP)
HOLMES: Super Bowl 57 is a bit more than a week away and for the first time in U.S. pro-football history, black quarterbacks will be leading both teams. Jalen Hurts (ph) with the Philadelphia Eagles and Patrick Mahomes of the Kansas City Chiefs noted the importance of the moment.
(BEGIN VIDEO CLIP)
PATRICK MAHOMES, KANSAS CITY CHIEFS: Yes, I mean to be on the world stage and have to black quarterbacks start on the Super Bowl, I think it's special. And I've learned more and more about the history of the black quarterbacks since I've been in this league. And the guys that came before me and Jalen set the stage for this.
And now I'm just glad that we can kind of set the stage for guys and kids that are coming up now.
JALEN HURTS, PHILADELPHIA EAGLES: I think it's history. I think in some (INAUDIBLE) where you're being noted and it is history. You know, it's come along way. I think there's only been seven African American quarterbacks who played in the Super Bowl.
So to be the first for some reason is pretty cool. So I know it will be a good one.
(END VIDEO CLIP)
HOLMES: The Eagles and the Chiefs kickoff on Sunday February 12th in Glendale, Arizona for the Super Bowl.
Now, first generation iPhone still sealed in its original box could dial in some big numbers at auction. The device is an obsolete relic by today's standards, but to savvy investors it's a valuable piece of history.
Originally costing about $600 when it came out in 2007. Another like it just recently sold for about $40,000. The owner of this device says she's hopeful it might fetch as much as $50,000. Bidding opens on Thursday and ends on February 19.
Thanks for spending part of day with me. I'm Michael Holmes. You can follow me on Twitter and Instagram @HolmesCNN.
Stick around, Kim Brunhuber will pick things up after the break.
[01:57:50]
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