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CNN International: Australia, U.K. & U.S. Seal Submarine Deal To Counter China; China On Sub Deal: Going Down A "Wrong And Dangerous Road"; Regional Banks' Stocks Tumble Amid Financial Concerns; WSJ: Xi & Zelenskyy To Hold A Virtual Meeting Next Week; At Least Two Killed, 8 Injured In Attacks In Eastern Ukraine; Cyclone Freddy Kills 100 Plus In Malawi, Mozambique; Reports: ICC To Open War Crime Cases Against Russia; Masatoshi Ito, Who Made 7-Eleven A Global Giant, Dies At 98. Aired 8-8:30a ET

Aired March 14, 2023 - 08:00   ET



MAX FOSTER, CNN ANCHOR: Hello and welcome to CNN Newsroom. I'm Max Foster in London. Just ahead, China accuses the U.S., the U.K. and Australia of walking a dangerous path after they announced a major submarine deal.

Global banking stocks take a hit following the collapse of two U.S. banks. And Cyclone Freddy leaves chaos in its wake. We'll have a live report on this deadly tropical storm.

China leveling scathing criticism of a nuclear submarine deal reveals the AUKUS meeting in California. The Australian, U.S. and British leaders announcing that Australia will buy U.S. nuclear powered submarines to counter China's growing influence in the Indo-Pacific region. Beijing today, accusing those countries of going down a, quote, wrong and dangerous road.

The AUKUS leaders say the deal is timely and just the start.


JOE BIDEN, PRESIDENT OF THE UNITED STATES: AUKUS has one overriding objective, to enhance the stability of Indo-Pacific amid rapidly shifting global dynamics. In this first project, this first project is only the beginning. More partnerships, more potential, more peace and security in the region lies ahead.

RISHI SUNAK, BRITISH PRIME MINISTER: The U.K. is today announcing a significant uplift in our defense budget. We're providing an extra 5 billion pounds over the next two years. Immediately increasing our defense budget to around 2.25 percent of GDP. This will allow us to replenish our war stocks and modernize our nuclear enterprise, delivering AUKUS and strengthening our deterrent.

ANTHONY ALBANESE, AUSTRALIAN PRIME MINISTER: The AUKUS agreement we confirm here in San Diego represents the biggest single investment in Australia's defense capability in all of our history. (END VIDEO CLIP)

FOSTER: Will Ripley joining me from Taipei. I mean, this -- the big picture here is quite stark, isn't it, which is why we're getting this very powerful language from all of those leaders.

WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: And you have very powerful language from China before they even made the announcement, Max, which is certainly a sign of how closely Beijing is watching this and how troubled they are by the problem that the AUKUS partnership, you know, places on their ambitions to have a naval fleet that is supreme in this part of the world.

They want control over the South China Sea, that's why they've been militarizing islands. But China, you know, does not have the underwater capabilities of the United States. They just don't have the submarine technology, even though they're making, you know, vast inroads in outer space, and in their own, you know, missile development, hypersonic weapons, but submarines, they're still way behind, aircraft carriers as well.

And so just now to have the United States, basically, transforming Australia's was obviously very key strategically. You know, their underwater capability will be completely transformed within 25 years. They're helping, you know, expand the U.S. military presence in the Philippines. They're welcoming Japan's growing its own military and expanding its purpose.

Of course, they're selling billions of dollars in weapons here to Taiwan. And all of this is because President Biden -- and the Trump administration before him, Max believed that China is the leading long term threat to global peace and stability. And they're doing what they can to try to prevent some sort of huge potential blow up here, especially given the series of international incidents, just of late were from the spy balloon to the, you know, thought that China might be arming Russia and Ukraine, there's that possibility.

And with President Xi, consolidating his power, he basically now has the ability to do whatever is on his list. So, of course, the U.S. is hoping that this sort of partnership, this AUKUS partnership, will help possibly maybe prevent China's potential eyes on this island in Taiwan, Max.

FOSTER: OK. Will, thank you very much indeed.

Regional banks across the U.S. are grappling with turmoil, despite assurances from President Joe Biden that the banking system is safe. Monday was a volatile day on Wall Street as shares of dozens of regional banks plunged following the back to back collapse of Silicon Valley Bank and Signature Bank. Mr. Biden tried to calm nerves and promise more protections are coming.


BIDEN: I'm going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again, and to protect American jobs and small businesses.


FOSTER: Christine Romans joins us now live from New York. I mean, we're in the realms of psychology, aren't we, to some extent --


FOSTER: -- where we're looking at how, you know, you're seeing some banks lose deposits and then you worry --


FOSTER: -- about your own money, perhaps you go to your own bank.


ROMANS: Yes, it's so fascinating how this is very emotional, right? And I have to say that the former Treasury Secretary Larry Summers, the current president of the United States, and a lot of experts, Sheila Bair used to run the FDIC have been telling us again, and again, the U.S. banking system is safe, and it's the strongest it's been at any point since the financial crisis of 2008.

But you still will have these flash points of weakness, because the Fed has raised interest rates so much. Let me show you some of these regional banks from yesterday, just unbelievable declines for names like First Republic and First Horizon, PacWest Bancorp, Western Alliance Bank, and others.

This morning, I am watching some of those bounce off the lows, so we'll be carefully watching to see if they attract interest. We also know that a senior Treasury Department official telling CNN yesterday that the outflow of deposits that they had feared is starting to slow.

And you're starting to see people look around for higher yields on their banking deposits. So that's probably a good thing for people's personal finances to make sure that if you have money in a bank account, that you're getting as much return as you can on that.

But indeed, a period of turmoil here and you saw that the bond market yesterday, you saw the biggest one day rally in U.S. government bonds since 1987. And that was just a sign of sort of the fear and the changing expectations of interest rates, Max, going forward.

A week ago, it was sort of baked into the Fed could raise interest rates and other half point, that is not the case today of futures markets, Fed funds future markets, saying more like 25 basis points is more likely because the Fed will not want to roil the banking system here, Max.

FOSTER: OK, Christine, thank you for joining us with that from New York. We continue to watch the leaders of Ukraine, and China reportedly plan to speak next week for the first time since the Russian invasion. That's according to a report in The Wall Street Journal which talked to people familiar with that matter. Neither Ukraine nor China has confirmed what is said to be a virtual meeting, the U.S. will only officially say it's been encouraging Chinese President Xi Jinping to reach out to President Volodymyr Zelenskyy.

Salma Abdelaziz joins us with a closer look at this potential meeting. And it's interesting to see China getting involved in this crisis when normally they don't really reach out into this sort of diplomatic space.

SALMA ABDELAZIZ, CNN CORRESPONDENT: The context here is absolutely everything. You're right, Max. President Xi Jinping has now secured his third term and unprecedented third term. And he seems to now be looking outwards, looking towards foreign policy, trying to play a more active role on the international stage. Take, for example, just last week, not to get too much into a sidebar, but that Saudi-Iran deal that was brokered by Beijing.

And now Beijing looking to get potentially involved in trying to secure some sort of deal or being a peacemaker, and negotiator when it comes to Russia's invasion of Ukraine. So we have these reports that there's going to be a virtual meeting held at some point between President Xi Jinping and President Zelenskyy, that's something that the United States welcomes and encourages, but it comes off of the back of a potential meeting that we're expecting next week in Moscow.

President Xi is expected to meet with President Putin in Moscow. These leaders have met dozens of times, but experts say their relationship is growing ever closer in the wake of the invasion of Ukraine. President Putin just a few months ago was boasting how their relationship was reaching new frontiers, that there is no limit to the relationship between China and Russia.

The United States has been highly concerned because intelligence officials say China could be preparing to send weapons to Russia to replenish its arsenal. You also saw just last month, this 12-point plan coming from Beijing. It was a proposal essentially for peace coming from China, again, that's trying to position itself as a neutral power broker when it comes to Ukraine.

That was dismissed by the United States, seen as Beijing trying to side with Russia in this conflict. But it matters, of course, when you're talking about a superpower like China, trying to get involved on the world stage, increasing or growing its relationship there with President Putin, who very much needs friends right now.

And then finally, I have to point to President Biden as well, who is also expecting a call from President Xi Jinping in the coming weeks and months. So a lot of geopolitics playing around here. But for President Zelenskyy, if this call takes place, it's going to be absolutely crucial for him to express the importance of what's happening on the ground and to try to gain --


ABDELAZIZ: -- a partner in President Xi. FOSTER: It'd be interesting to see what Xi says coming out of that meeting. Will they change his positions? Thank you to Salma.

Ukraine's President says his country's future is being decided by what's happening all along that Eastern front line. His words come amid a series of deadly attacks there, including this one in the city of Kramatorsk. Ukraine says at least one civilian was killed and two others injured in the strike. More than two dozen buildings were damaged.

President Zelenskyy thanked all the troops putting their lives on the line to defend that region.


VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translation): The situation in the east is very tough and very painful. We need to destroy the enemy's military power. And we will. Bilohorivka and Maryinka, Avdiivka and Bakhmut, Vuhledar and Kamianka, and all other places where our futures being decided, where our future, the future of all Ukrainians, is being fought for.


FOSTER: CNN International Correspondent Ivan Watson is on the ground in Kramatorsk in eastern Ukraine joins us now with the very latest. Ivan?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Max, what we're seeing here in Kramatorsk is a repetition of what is basically being played out day after day across this country ever since Russia launched its invasion of Ukraine a little bit more than a year ago.

The Ukrainian authorities say a Russian projectile, whether it's a rocket or missile, it's not clear, slammed into the side of a four- storey apartment block, somewhat similar to the ones I'm standing in here, killing at least one person, wounding several others.

In the hours since then, when we arrived on the scene, already, residents were cleaning up the rubble from their own apartments, knocking out shattered window from -- glass from their windows. Very close by, there was a kindergarten where volunteers and teachers were cleaning up.

They'd been supplied with plywood from the local administration to board up those buildings. Thankfully, none of the children were there because they have been evacuated some six months ago, have not been going to the school. The school's director tells me who was knocked to the ground by the blast at about 8:30 this morning.

This is just one example, again, of what we see taking place all across this country. Every day, there's a report, one civilian, two civilian, servant civilians killed by a Russian rocket strike in the north, in the east, in the south. This is the war that is being waged against Ukraine right now. There are soldiers, service personnel on both sides of the frontlines who are dying, also killing each other. But civilians are also being mutilated in this deadly conflict. Kramatorsk is a city perhaps somewhat similar to the south eastern city of Bakhmut that has been this deadly battleground between both militaries for the better part of six months.

And that is the kind of scenario that the Ukrainian military is trying to prevent from expanding further to reaching a city like this. That said, there are communities all across eastern Ukraine that are living with this constant threat. This city is about 25 kilometers, some 15 miles from a very active frontline.

You can hear periodically, the echo of artillery in the distance. And there are still families here, there are still businesses open. And when you talk to the people in the immediate aftermath of this deadly strike, nobody's complaining. Nobody's crying. Everybody's just kind of cleaning up and getting on with it.

Jose Andres, the chef, his world central kitchen was on the scene within hours of the strike distributing food to people. And this is just a reality that, quite sadly, Ukrainians have become quite inured to. Max?

FOSTER: Ivan Watson in eastern Ukraine, thank you.

More than 100 people have died after Cyclone Freddy slammed into the -- into Malawi and Mozambique this weekend with the death toll expected to rise. Southern Malawi, one of the worst affected areas is now a state of disaster. The storm caused landslides, flash flooding and widespread blackouts. And in neighboring Mozambique, at least 10 people have died and 22,000 others have been displaced.

Larry Madowo joins us live from Nairobi, Kenya. Just take us through how people are coping there.

LARRY MADOWO, CNN CORRESPONDENT: It's a difficult situation, Max. There are still people who are reported missing, some are trapped in places where roads have been completely wiped out where lots -- mudslides have meant that there's no way to get to them, and so the search and rescue operations continue in Malawi.

10 southern districts are -- have been worst affected, schools there are closed and the Met Department in Malawi is warning that the possibility of strong winds and damaging rains is still high at least through today and into tomorrow. So Cyclone Freddy is turning out to be quite a disaster in southern Africa.

This is the second time it made landfall in the last month. It hit again in Mozambique on Saturday and swept its way northwards into Malawi. And there, disaster areas cover including Madagascar, parts of Zimbabwe. So it's turning out to be, according to the World Meteorological Organization, one of the longest tropical storms on record.

It will be a while until they can see that for sure. But already, it's packed the energy of the entire U.S. hurricane season in just these past couple of weeks in 35, 36 days. And in Malawi, health authorities are on the verge of getting overwhelmed.



KHUMBIZE KANDODO CHIPONDA, MALAWI HEALTH MINISTER: We've done our best to manage the situation because we're receiving patients see, like, every five minutes. We're almost overwhelmed. But we're very fortunate that we had the aerated distance last year due to COVID. But now we have to attend them to, you know, cater for this crisis which has befallen us.


MADOWO: An extraordinary situation where tens that were erected to handle COVID now having to deal with this influx of patients after the impact of Cyclone Freddy in Malawi. Officials there say the death toll is inching closer to 200. We'll have proper confirmation in the hours ahead, Max.

FOSTER: OK, Larry Madowo live from Nairobi, thank you.

Still to come, it is the largest U.S. bank failure since 2008. Will the collapse of SVB and Signature Bank spark a global banking crisis? We'll look into that question when we return.


FOSTER: Will there be a global banking crisis? The collapse of two U.S. banks is provoking fears about contagion. We have something called the CNN business fear and greed index summing up the mood right now. It is extreme fear, as you can see from our chart, which will be coming up.

It is fear and greed that ultimately really runs the markets, any market really around the world. It's humans that buy and sell after all. The banking stocks sell off has spread to Asia, also Europe. Markets tumbling on Tuesday in a very volatile session.

As you can see, people literally pulling their money out of the banking sector, because Clare Sebastian, they're worried about what happened in America, and whether they might lose their money.

CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Max. I think the important thing to understand here is that this isn't ripple effects from Silicon Valley Bank or Signature Bank themselves, even though of course, they were the second and third largest bank failures in U.S. history.

This is concerned about the big macro issue, which is at the heart of what went wrong here, which is of course, the rapidly rising interest rates after years and years of interest rates being at rock bottom. The concern is that the tide is coming out now. And you're going to start to see who else might have, you know, forgotten their wetsuit or neglected to protect their balance sheets in this.

This is essentially what went wrong with Silicon Valley Bank because they really didn't have any protection against rising interest rates on their balance sheet. They had all these long dated securities and interest rates went up. And so the value of those went down. So that's why you see in Japan, for example, a lot of losses for the banking sector today.

They also have long dated U.S. treasuries on their balance sheets. And we're still seeing some contagion here in Europe, not so much. Things seem to have stabilized a little bit but HSBC, for example, which is the bank that essentially swooped in to rescue the U.K. branch of Silicon Valley Bank, that is one of the biggest fallers on the footsie today.


This is fairly significant contagion, Max. Its spread not only to banks but to oil bonds, even the dollar, as I said, some recovery. But there's still an element of that fear out there. And I think that's what's worrying some in the U.S. that that could still spill over.

FOSTER: Effectively, the people are taking their money out of small banks, as I understand it. They're keeping it in the banking system and moving it to the big banks. So I guess we're really looking out for any sort of concern that the big banks made a bad bet in a way that the smaller banks did in the U.S.

SEBASTIAN: Yes, I think there's not too much concern around the bigger banks at this stage, Max. They have much larger balance sheets and would have made preparations for interest rates to go up. I think the concern, certainly, there is some still some concern around those regional banks, those stock prices are coming up today, but not enough, frankly, to reverse the losses that they saw on Monday.

There's going to be a lot of scrutiny of those banks, of the regulations that govern them, whether they were enough. The Federal Reserve has already launched a review into its supervision of Silicon Valley Bank amid widespread criticism that essentially took his eye off off the ball there. And that's what led to this situation, partly.

So you're going to see a lot of scrutiny. And I think this is something that you're seeing around the world as well. People are going to be looking closely at banks to see how they've been affected by this big sea change that we've seen in the economy, these rising interest rates.

FOSTER: OK, Clare Sebastian, thank you. We'll keep watching it.

You are watching CNN Newsroom live in London. Ahead, there is growing momentum to charge some Russians with war crimes, and look at the alleged atrocities and calls for justice coming up.


FOSTER: For the first time since the invasion of Ukraine began more than a year ago, Russian officials could be facing war crimes charges. Reuters and the New York Times report the International Criminal Court is planning to open two cases and issue arrest warrants for several people.

CNN's Matthew Chance has the details and a warning his report contains some graphic images.


(Speaking Foreign Language)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Its horrific attacks like this one on a Ukrainian train station last year. Now reported to be prompting a first prosecution against Russia at the International Criminal Court.

Deliberately targeting civilian infrastructure, like this residential building and car park in the city of Kharkiv is a war crime under international law. Russia says it only hits military targets. Russia also insists it does not abduct Ukrainian children, like the so-called evacuees from war torn eastern Ukraine, shown at a Crimean summer camp.

But latest reports suggest the International Criminal Court is set to prosecute Russia for this too. Ukraine says thousands of kids are being held, some separated from living parents. And indoctrinated with Russian propaganda. Many are then adopted by Russian families, effectively stolen, Ukraine says, by the state.


But inside Russia, the scandal is cast as a humanitarian mission. With the National Children's Rights Commissioner, a person named Maria Lvova-Belova discussing with President Putin their personal involvement.

"Did you adopt a child from Mariupol yourself?" Putin asks on state television. "Yes", she responds. "Thanks to you."

But Putin and his subordinates have far more immediate worries than any eventual prosecution. At least growing grassroots opposition, if not to the war in Ukraine itself, then at least the how it's being fought.

Like these women from the Moscow region, standing up for their men sent to fight. Their sons and husbands were trained to use artillery, the speaker says, but was sent to the front lines and used as storm troopers instead, like lambs to the slaughter, she complains.

It is that kind of allegation of wrongdoing against Russians in this war. Not Ukrainians, to which the Kremlin may be far more sensitive.

Matthew Chance, CNN, London.

(END VIDEOTAPE) FOSTER: Japanese billionaire Masatoshi Ito, the man behind the global rise of 7-Eleven, he's died. He was 98 years old. His company, which operates 7-Eleven say he died from old age last Friday. Ito introduced the American convenience store to Japan in the 1970s and he's been credited with transforming the country's consumer and retail culture.

Thanks for joining me here on CNN Newsroom. I'm Max Foster in London. World Sport with Amanda Davies is up next.