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CNN International: Israel: Around 200 Rockets Fired From Lebanon Into Israel; Hezbollah: Launched Scores Of Rockets Towards Israel; U.N. Inquiry Accuses Israel, Palestinian Militants Of War Crimes. Aired 11a-12p ET

Aired June 12, 2024 - 11:00   ET

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

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RAHEL SOLOMON, CNN HOST: Good morning or good evening, depending on where you're watching. I'm Rahel Solomon live in New York.

Ahead on CNN NEWSROOM, the U.S. Secretary of State wrapping up his trip to the Middle East, as Israel faces a barrage of rockets fired from Lebanon, and a damning report from the UN, accusing both Israel and Hamas of war crimes. We are live in Tel Aviv and London with the latest here. Plus, it is a massive day for U.S. economic news with the latest inflation report and the Federal Reserve interest rate decision happening in just hours. We will look at what this all means for consumers. And Russian navy ships in the Havana Harbor, what this show of force has signaled, with live reports from both Cuba and Moscow.

Well, it's time for the haggling to stop and a ceasefire to start. Those words from U.S. Secretary of State Antony Blinken, as he leaves the Middle East with a cautious message of hope. In a news conference with the Prime Minister of Qatar a short time ago, Blinken said that Hamas has proposed a number of changes to a U.S. outlined ceasefire deal, calling some of those changes workable. Blinken insisted that Israel has accepted the plan, although it has not done so in public, and he is now putting pressure squarely on Hamas. Listen.

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ANTONY BLINKEN, U.S. SECRETARY OF STATE: If one side continues to change its demands, including making demands and insisting on changes for things that it already accepted, you have to question whether they're proceeding in good faith or not. But, based on what we've seen and what I've discussed with the Prime Minister and what we discussed with our Egyptian colleagues, we're determined to try to bridge the gaps, and I believe those gaps are bridgeable. It doesn't mean they will be bridged, because again, it ultimately depends on people saying yes.

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SOLOMON: Blinken also said that a Gaza ceasefire would have a tremendous effect on lowering hostilities between Israel and Hezbollah. The Israeli military says that around 200 rockets were fired into Israel from Lebanon today, and no injuries were reported. Hezbollah did claim responsibility, saying that the attacks were retaliation for the Israeli assassination of a key Hezbollah commander in South Lebanon. The IDF confirming that it killed the commander in an airstrike, saying that he was responsible for multiple attacks against Israeli civilians.

Let's bring in now Oren Liebermann, who is following all of these developments from Tel Aviv. Oren, Blinken now wrapping up this trip in the Middle East. Did he accomplish what he needed to with the ceasefire negotiations?

OREN LIEBERMANN, CNN CORRESPONDENT: What he needed to, yes. Does that mean a ceasefire is in place? No. We're not there yet. And you heard that right from Secretary of State Antony Blinken there. He wasn't looking to accomplish and have a ceasefire in place before this trip is over. But, it's also clear that he is realistic about where this stands right now, calling on Hamas to accept the ceasefire proposal that's on the table. That's not what happened. 12 days after President Joe Biden publicly backed a ceasefire proposal, one that got endorsement from the UN Security Council, Hamas finally responded last night. Qatar saying this is neither an acceptance or a rejection.

Instead, Hamas has put forward a number of amendments and changes to the proposal. Blinken said some of them are workable. Crucially, he said, some of them are not. But, it is clear that he sees a window as do the Qataris to try to move forward here, and that's the goal. Now, they didn't expect to lock this up and wrap this up, while Blinken was in the region. But, there is a chance for opportunity here, and that's what they're trying to focus on. Blinken made it clear, Israel is on board for the proposal that's on the table, and now they'll try to bridge the gaps. The problem is, as they've done before, this has sort of run aground and stalled on the details, and that right now is the fear, and that's what Blinken is being very realistic about.

It's not just that, though. He also said, look, there needs to be a day-after plan for temporary ceasefire to turn into permanent ceasefire, and that is where they've run into trouble with the Israelis, because even Israel's own war cabinet has called out Prime Minister Benjamin Netanyahu on not engaging on a day-after plan, and that needs to be a part of his. Blinken said the U.S.'s own proposal on a day-after plan will come in the coming weeks.

SOLOMON: OK. Oren, let's turn to the north, northern Israel seeing some 200 rockets launched from Lebanon today. Hezbollah, as I said, vowing to escalate attacks after Israel killed one of its top commanders. Oren, obviously, tensions had been simmering along that border there for months now. Is this a tipping point for tensions there?

LIEBERMANN: It is closer to that tipping point than anybody wants to be right now. Israel carried out a strike that killed a senior Hezbollah commander, Taleb Sami Abdullah, last night, including several other Hezbollah militants, that according to Hezbollah and according to the IDF.

[11:05:00] Hezbollah has responded with some 200 rockets fired into northern Israel, sparking a number of fires. There were tens of thousands of citizens evacuated from northern Israel. This led to several more evacuations, according to Israel police. The area has seen an escalation over the past few weeks. In fact, there were fires raging across northern Israel from Hezbollah rockets one week ago, about, and now we're seeing these fires again.

So, on one side, the fighting there doesn't interrupt ceasefire negotiations. On the other side, the fear is that it could lead to another front in the war, and that's what everyone is trying to avoid here. And even if ceasefire negotiations aren't disrupted by the fight in northern Israel, it is also the case and Blinken made this clear that a ceasefire between Israel and Hamas will lead to at least a cessation of hostilities on the northern border, and that's why the ceasefire, Blinken made clear, is so important.

SOLOMON: OK. So, certainly a lot of fronts to watch there. Oren Liebermann live for us in Tel Aviv. Oren, thank you.

And another big story we were following today, a damning new UN report on the first three months of the Gaza war, and the inquiry finds that both Israel and Hamas have committed war crimes and grave violations of international law. It's the UN's first in-depth investigation of the October 7 attacks and Israel's ensuing war on Hamas. Now, the report accuses Hamas of intentionally directing attacks against civilians as well as murder and torture, while it accuses Israel of quote "crimes against humanity", defining that as widespread systemic attacks on the civilian population of Gaza. Israel, for its part, strongly disputing these findings.

Let's get more now from Jomana Karadsheh. She is live for us in London. Jomana, what can we expect to happen or what might happen as a result of this report now?

JOMANA KARADSHEH, CNN CORRESPONDENT: Well, I think, Rahel, we're not going to be seeing any sort of immediate impact. But, this is likely to add more pressure on Israel that has come under intense criticism on the global stage for the way it has been conducting this war by -- it's come under criticism from UN bodies and from others in the international community about the devastating humanitarian situation inside Gaza, about the casualty toll, when you are talking about thousands of women and children who have been killed over the past eight months of this war, about the flow of humanitarian aid into Gaza.

And so, you look at what the recommendations are coming from the UN Commission of Inquiry in this report, and they call on both sides, they recommend and call on both, Israel and Hamas, to take immediate steps. When it comes to Hamas and the other Palestinian armed groups, they are calling on them to release all hostages now to cease indiscriminate rocket attacks against Israeli cities and towns.

And when it comes to Israel, it is a call for an immediate ceasefire, allowing humanitarian aid into Gaza. And importantly, they point out that it must implement the emergency measures that were -- the -- that were announced by the International Court of Justice. That is, of course, looking into the case, trying the case, looking into the case of the -- against Israel, what has been described as the case of plausible genocide that has been brought against Israel by South Africa.

So, what we have seen in the past, Rahel, is these sorts of reports, these investigations by Commissions of Inquiry, that sort of evidence is used by international judicial bodies like the ICC, like the ICJ. So, we could likely see that happen in the future with this sort of evidence when you have these cases that are being considered, that are being tried that this sort of evidence would be used.

SOLOMON: Yeah. I mean, it's an important point that reports like this tend to be used in future proceedings, whatever they may look like. Jomana, how much do we know about how this investigation was conducted?

KARADSHEH: Well, Rahel, this is something that the Commission made clear in the reports and in statements. They said that -- they accused Israel of obstructing its investigations by not allowing it to gain access to the occupied Palestinian territories or to Israel. And this is something that we've heard from the Israelis for months, saying that they were not going to cooperate with this UN body, accusing it of bias against Israel, of antisemitism. And so, there were even reports in Israeli media that they were telling victims, doctors, people, not to cooperate and not to speak with the Commission.

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But, what they did over months is interview, speak -- conduct these interviews with victims, with witnesses. They did that remotely. They also traveled to Turkey and Egypt where they met with people there. They went through -- they say thousands of open source items that they used, verification methods, they say, forensic analysis to really go through all of this. They had hundreds of submissions. They went through satellite images and a lot more. This is months and months of work, but it's definitely not been an easy task.

SOLOMON: OK. Jomana Karadsheh, certainly a lot to sort out. Thank you for your reporting there, live for us in London.

All right. Back here in the U.S., it is a double dose of economic news today in the U.S., for us econ nerds. It's a big day. First, we got the release of the latest Consumer Price Index (CPI). We got that this morning, which showed that inflation is cooling off in May. Consumer prices rose 3.3 percent on an annual basis from a year earlier. That is softer than many economists had been predicting, also softer than we saw the month before. Monthly figures also show that prices were unexpectedly flat in May. All of this ahead of the Federal Reserve's decision later on interest rates. That is expected in just a few hours.

Let's break this down now with CNN's Matt Egan. So, Matt, walk us through the report. What do we learn?

MATT EGAN, CNN REPORTER: Well, Rahel, we learned that there has been some progress, right, much needed progress with arguably the biggest problem with this economy, and that's the cost of living. Now, today's report showed that consumer prices up by 3.3 percent year-over-year, in a vacuum. That's not really a good number, right? Two percent is what the Fed is targeting. And I was just looking back in history, and between the end of the Great Recession and COVID, there was rarely a time where you had three percent plus inflation. But, obviously, this is not in a vacuum. It's taking place after a period of very high inflation. And this does represent more progress.

And I think that officials at the Fed, they're going to be happy with that month-over-month figure, the fact that prices did not budge, that inflation was zero, and you can't even see it on that chart because the bar just doesn't exist, because it was zero for May. That is good news and that is progress. That was because gas prices fell. We saw price drops for apparel, for new cars. All of that is helping, of course.

And core inflation was also encouraging, right? That excludes food and energy. But, it's something that economists and Fed watchers pay very close attention to. Core inflation is at the lowest rate in three years. So, I think when you put it all together, inflation, of course, is not solved, right? Life is so much more expensive than it was a few years ago. And we're not going to turn back the clock on all those price hikes. But, this is a step in the right direction. And I would argue, Rahel, a significant step.

SOLOMON: Yeah. It's interesting. When the report came out, Matt, you'll appreciate this. Myself and the business producer, Kevin, looked at each other and we thought, is this a good report? Like, is this a positive report? But, Matt, let me ask. So, in a few hours, we're going to hear from the Federal Reserve Chairman Jay Powell. What does he do with this? What do they do with this news?

EGAN: Well, I think he has got to treat it with caution, right, because we've had some head fakes in the past. I mean, remember, at the end of last year, this CPI was around, was a little over three percent. And then, we sort of went backwards and then progress stalled. So, one month or even two months, that's not really going to be enough for the Fed to convince them that we're definitely back towards that two percent goal. But, I think he has also got to leave himself some wiggle room, some options, right?

And so, when the Fed releases that statement, we're, of course, expecting no change in interest rates. I was just looking, there is less than a one percent chance priced into the market of a cut today. But, the big question is, what is the Fed projecting out into the future? And so, we are getting that dot plot where the officials pencil in where they think rates are going. And previously, as you know, Rahel, the Fed was penciling in three rate cuts this year. Just looking at the calendar, I mean, that looks very unlikely.

But, the question is, whether or not they're going to be penciling in two rate cuts, which would leave open the possibility for a pre- election cut in September, or if they take two off the table and they only project one? A lot at stake here for, obviously, investors, but also for everyone out there borrowing -- SOLOMON: Yeah.

EGAN: -- mortgages, credit cards, car loans. It's tough out there.

SOLOMON: Yeah. No. Well said. It's interesting because the Fed after this meeting has four meetings left this year. So, you're right. I mean, three would mean they essentially raise -- or they cut every meeting. But, we'll see. I mean, for those who are in the rate cut camp, they are back in the game after this report. Things are back on the table. Matt Egan, good to have you. Thank you.

EGAN: Thank you, Rahel.

SOLOMON: All right. Still ahead for us, we're going to have much more, as we look ahead to the Fed's decision on interest rates.

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I will speak with Chief Economist Diane Swonk of KPMG about what comes next for the U.S. economy. Plus, a historic setback for the Biden family, the son of the U.S. President now facing possible time behind bars. Details ahead as Joe Biden balances his duties as a world leader and as a father.

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SOLOMON: Welcome back. U.S. President Joe Biden has met with his son Hunter in Delaware. This after Hunter's conviction on three felony gun charges. The Tuesday meeting comes before the President's planned trip to Europe for the G7 summit. Hunter Biden now faces a maximum 25-year sentence and a fine of up to $750,000. Now, the judge has not yet set a date for sentencing, but it will likely occur before the presidential election in November. CNN spoke with one of the jurors following this historic verdict, and they spoke about Hunter Biden's credibility factoring into the jury's final decision.

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UNIDENTIFIED MALE: When you look at that form, are you a drug addict, are you an unlawful user of drugs, and he said, no. Clearly, he lied.

(END VIDEO CLIP)

SOLOMON: I want to talk more about this and what this conviction now means for the President, President Joe Biden. Joining us now is CNN's Senior White House Reporter Kevin Liptak. Kevin, obviously, on a personal note, an emotional day for the Biden family and for the President himself. What do we know about his mindset now that Hunter has been convicted?

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yeah. And there is no question that this is a difficult moment for the Biden family. And I think more than any statement, more than any speech, the best way to see how the President is feeling is to just look at those images from yesterday afternoon in Wilmington, Delaware, of the President getting off of Marine One and embracing his son, Hunter, on the tarmac. The White House can choose when and when not to have cameras around,

and they very much chose for this photo op in a way on the tarmac to demonstrate the President's desire to keep his son close, even amid this very painful moment. And that really does tell you everything you need to know about where the President's head is at, at this very dark moment for the family, and this has been his strategy in a way all along, is to keep his son close, avoid isolating him, avoid pushing him away despite whatever the political fallout might be. Behind that, I think, is a real concern and then a real fear on the part of the President and on the part of the First Lady about how this is all affecting their son.

And we know that he is a recovering drug addict. And I think the fear among Biden's family is that this scrutiny could eventually lead to a relapse, which is something that they very much would want to avoid. Now, in terms of the politics of all of this, when you talk to Biden's advisors, there is not a real sense that this is going to move the needle at all.

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They do sort of view this as a family matter, and they think Americans will view it as that as well. They do think that this image of the President rallying around his son, who is a drug addict, could potentially resonate with Americans who have, in their own ways, struggled with this very same crisis. And so, I think the President sort of going about his daily life is what you'll see going forward. And certainly, he did just get on a plane to head to the G7 summit in Italy.

We also just learned that Jill Biden, the First Lady, who had attended this trial over the last week or so, is beginning to pick up her own schedule as well. She'll be traveling to a number of states over the coming days to talk about Biden administration policies and campaign politics. So, you see the family sort of restarting their lives, going about their jobs. But certainly, it's a painful moment and one that will continue to weigh on them going forward.

SOLOMON: Yeah. Kevin Liptak live for us there at the White House. Kevin, thank you.

I want to discuss this further with CNN Legal Analyst Joey Jackson in New York. Joey Jackson, always good to see you. So, just walk me through -- I mean, what happens now? I mean, a lot has been thrown around about what he could potentially face in terms of sentencing. But, help us understand the process now.

JOEY JACKSON, CNN LEGAL ANALYST: Yeah, without question, Rahel. Good to be with you. So, the process is as follows. Initially, he'll go to what's called pretrial services. That's probation at the federal level. They will do a deep dive with regard to who he is, his background, his financial condition, his mental health condition, etcetera, right? They'll do a full workup as it relates to that.

And then what they will do, Rahel, they being Department of Probation at the federal level, is they will issue a report recommendation that pretrial report or pre-services report, pre-sentencing report will then be presented to the judge. The judge will evaluate that, which will have literally in front of the judge who is sentencing everything about Hunter Biden. Next what happens is, is that there are dates for the submissions of briefs. What kind of briefs? His lawyers, that is his defense lawyers, will submit a communication to the court, which would be accompanied by a number of letters of reference and recommendations, clergy members, business people, colleagues, people who know him well. And in that particular document, his defense lawyers will state what they believe the appropriate sentence will be.

Thereafter, prosecutors will also submit a response to the defense and they will know, prosecutors, what they believe the sentence should be. And then, of course, the judge at the time of sentencing will hear oral argument from both sides. And of course, Mr. Biden, Hunter Biden, well, if he has or wants to, present a statement for himself as to any sentence can then do that. The judge will then pronounce sentence.

Last point, Rahel, and that is as it relates a specific sentence, we hear a lot thrown around about the statute, 10 years, 25 years. There are sentencing guidelines at the federal level in the United States and those guidelines are advisory. But, what they include are really two critical things. Number one, the offense for what you committed and what the specific level is, right, from low to high, and that really factors into what the sentence should be.

And then, on the other spectrum, it's not the offense level. It's your criminal history. I say that to say that with those advisory guidelines, we have to remember this is a first offense, in addition to a person having no criminal history. It's also a non-violent offense. And so, there is not any what we call statutory minimums. That is a minimum that the judge has to impose. And so, it's widely based upon judicial discretion with regard to what the ultimate sentence will be.

SOLOMON: Well, to that point, Joey, in terms of judicial discretion, how, based on your experience, in courtrooms, how impactful is it, those character statements? And if Hunter decides to speak for himself, how much do you think that could sway or really weigh into a judge's sort of factoring?

JACKSON: So, Rahel, that can be significant. But, remember, there'll be an appeal here predicated upon a number of things, like what predicated upon, whether or not it's a Second Amendment violation, right, to bear arms, and whether you can take away someone's right for an addiction or some other purpose. So, there'll be an appeal based on that. There'll be an appeal based upon whether he should have, that is Hunter Biden, had the ability to offer an expert as it relates to addiction to explain to the jury how it could affect their processing of information. So, all that is important.

And so, what'll end up happening is not withstanding the fact that there is this appellate issue going on, there will be, the judge having to move forward and the judge having to do what the judge does in terms of render that sentence, but remembering the rendering of the sentence because of the appeal, that could be a stay on any execution of a sentence. We should also note, obviously, that because his father is the President of the United States and has the pardon power, he said he is not going to pardon. But, if the judge gives time, the issue then becomes whether or not the President will commutate that time, right? That means really eliminate it.

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And so, timing is very critical here, because of the fact that you have this case, and usually, in the event that the judge is going to give you a specific sentence, they'll give you a date to surrender. When will that be? And let's not forget, he also has this case pending in California, which he has not gone on trial for, relating to taxes. That's in September, in the fall. If he gets convicted there, when will that sentence be? We don't know. I'm not suggesting he will get convicted. What I'm saying is because the President of the United States has a pardon power, which he said he wouldn't use, he did not rule out the commutation power.

So, if his son is in jail and he is in the White House, I mean, will he commute the sentence? I would suspect so, if he is not in an office at the time because he is not reelected, not saying he won't be. He very well could be. But, all of these things that we don't know --

SOLOMON: Yeah.

JACKSON: -- uncertainty, go throughout this process. And so, they're important to talk about, even though we don't know the factual underpinnings yet --

SOLOMON: Yeah.

JACKSON: -- precisely of what's going to play out.

SOLOMON: Joey, it's fascinating, and we'll have to leave it here. But, as you lay it out there, even though there was obviously a Special Counsel, even though this was obviously separated from the politics of the administration, there are inherently political considerations, as you lay out the timeline, and what it could potentially mean, if anything. But, Joey Jackson, great to have your insights and perspective, as always. Thank you.

JACKSON: Thanks, Rahel.

SOLOMON: Yeah. All right. Just ahead, pictures of Russian navy ships in the Havana Harbor. What this show of force could signal? We have reports from both Cuba and Moscow coming up. Plus, President Biden on route to Italy to meet with fellow world leaders at the G7, and he comes armed with a fresh round of hundreds of sanctions, taking aim at Russia. We'll be right back.

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SOLOMON: Welcome back. You're watching CNN NEWSROOM. I'm Rahel Solomon live in New York. And here are some of the international headlines we are watching for you today.

At least 49 people were killed after a six-storey building housing workers caught fire this morning in Kuwait. India says that some of its citizens died in the fire. This video that you see here was posted to social media. Police said that 11 people are being treated in different hospitals. The Deputy PM also blamed real estate owners for violations that contributed to that fire. The cause of the deadly fire is being investigated, and the owner of the building has been detained.

One of the Americans injured in a stabbing attack on Monday while in China says that he saw a man with a knife trying to push him and his three co-workers. It looked like they had already been shoved. He then looked at his shoulder and saw that he was bleeding. Iowa's Cornell College instructor, David Zabner, with IPR news about the incident. A Chinese tourists who tried to help the Americans was also attacked. Police arrested a 55-year-old man as a suspect. The American teachers are in China as part of an education exchange program.

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In the U.S., federal agents have arrested eight people from Tajikistan over suspected ties to ISIS. Sources tell CNN that the nationals were arrested on immigration charges. They had reportedly entered the U.S. via the southern border and were screened by American officials, who found no red flags at the time. But, sources say that possible links to ISIS members were later discovered, which led to a federal investigation. Senior U.S. officials then decided to expel the individuals. A process underway right now.

And video from Havana, Cuba, as Russian naval ships, including a nuclear-powered submarine, arrived in ports, the biggest visit of its kind in years. U.S. officials tell CNN that American warships and planes have been tracking the vessels, and the U.S. assesses that the U.S. -- or that the Russian sub does not have nuclear weapons on board. We are tracking the story from around the globe.

CNN's Chief Global Affairs Correspondent Matthew Chance is live for us in Moscow. But, first, let's begin with Patrick Oppmann, who was live in Havana. Patrick, how are Cuban officials viewing this, and why is this happening now?

PATRICK OPPMANN, CNN CORRESPONDENT: Well, they welcomed the submarine and three other vessels, which are just behind me. Let's step out of the way and show you the port of Havana. You have an icebreaker and rescue tug. And then behind that you'll see this Russian submarine, the Kazan. You can't see it so well. But, on the other side is this frigate Gorshkov, which is one of the most modern Russian ships of its kind. It usually would be carrying some of the most sophisticated missiles, can shoot cruise missiles. And none of these ships, Cuban officials tell us, are carrying nuclear warheads. We'll just have to take their word on that.

But, certainly, very symbolic. I was talking to Cubans in the port as the submarine came in, and certainly submarines from Russia and from the Soviet Union were frequent visitors to Cuba over the years during the Cold War. But, the Cubans said they had never seen a submarine come in above water into the port. Very clearly, Vladimir Putin is trying to send a message to the United States. And it's worth pointing out that for years, this port was full of U.S.

cruise ships. But then, the Trump administration enacted policies that banned those cruise ships from coming to Cuba. They have not come here in years. And today, we see it full of Russian warships. So, you can't ask for more symbolism than that, to have the port of Havana absolutely full. There is no more space right now of Russian warships. They will actually allow Cubans to tour these ships starting tomorrow. That is something that's very unusual that they allow them to do that. But, clearly, the Russian government, Vladimir Putin, trying to show the world and Cuba, America's neighbor, the might of the Russian navy and try to send a signal to Washington that as weapons are sent by Washington to Russia's borders, that Russia has a similar capability.

SOLOMON: Well, OK. Patrick Oppmann live for us there Cuba. Patrick, thank you.

Let me now bring in Matthew Chance with a perspective from Moscow. Matthew, as Patrick just said there, I mean, it is unusual. I mean, talk to us about your perspective. I mean, how unusual is it really for Russia to send a group of warships so close to U.S. waters?

MATTHEW CHANCE, CNN CHIEF GLOBAL AFFAIRS CORRESPONDENT: Well, I mean, to be honest, I don't think it's that unusual. I mean, it happens quite frequently, in the sense that since 2013, really, Russia has really tried to re-establish its links with the island of Cuba, and has been sending regular sort of naval detachments there as a show of force, just like this latest one. I mean, it's very unusual for a nuclear submarine to be sent as part of that group of ships. And I think that's what makes this particular deployment so noteworthy and potent.

But, yes. I mean, look, every time Russia does this, it is meant as an attempt by Russia to flex its muscles on international stage, for the Kremlin to show that it's able to project power as far as the back door of the United States. I think there is an additional significance on this occasion as well, which is that it comes just days after President Biden gave the green light for Ukraine to use U.S.-supplied weapons to strike targets inside Russia. That has angered the Kremlin. And Vladimir Putin has threatened to supply the enemies of the United States with weapons as well.

Now, there is no plan to do that with Cuba, of course, at least no plan that we're aware of. But, it does send that additional message which is that, from the Kremlin point of view, which is that, look, you may be able to make our task in Ukraine more difficult, but we can also be a nuisance to you in your backyard as well. Rahel.

SOLOMON: OK. Matthew Chance in Moscow, thank you.

And Russia's war in Ukraine expected to take center stage at the G7 summit in Italy this week.

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Right now, President Biden is on route to the meeting after his administration announced a fresh round of more than 300 sanctions targeting Russia and its economy. Mr. Biden is also urging other G7 leaders to back an agreement that would loan Ukraine money from frozen Russian assets. He is expected to hold a joint news conference with Ukraine's President on the sidelines of the summit on Thursday.

For now, though, let's bring in CNN's International Diplomatic Editor Nic Robertson, who is in Monopoli, Italy, where the summit will take place. Nic, talk to us a little bit about what we expect to be on the agenda.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, exactly, as you said, in terms of Ukraine, that the United States is rolling out these additional sanctions to support Ukraine and to target Russia's wartime military economy. It is designed to stop U.S. technologies making their way through, being facilitated through third countries like Belarus, like Kazakhstan, like Kyrgyzstan (ph), all the sorts of ways that Russia has been trying to sort of get around existing sanctions.

So, this will tighten down the sanctions regime on institutions and on individuals, particularly aimed at the technology sector and information, sort of information side of technology, if you will, as well. So, computer chips. That sort of thing. And the ability of companies to use U.S. technology to make chips that then Russia can use. So, really tightening down on that.

And then, the other area is this use of frozen Russian assets. They total about $300 billion. And what the United States, as part of the G7 along with the European Union, want to do is to take the profits from that $300 billion, approximately $50 billion, and give that to Ukraine for assistance to rebuild. It is money that Ukraine needs now, not when the war is over, because typically, you would do this with the enemy, in this case, Russia's money, after the war. But, it's being done now because they have these assets, their valuable use of money that Ukraine could use at the moment.

But, we can expect the Middle East to be on the agenda. The EU official has confirmed that there will be a session on that. But, Africa, development in Africa, climate change, migration problems, these are issues that are key and core to Italy. And Italy, of course, has the presidency and is hosting the G7. So, that will be the first meeting when the leaders gather tomorrow morning.

SOLOMON: Certainly a lot on the agenda, as you lay out there, Nic. Talk to us a little bit more about Ukraine. I mean, obviously, Zelenskyy and Biden were just together in France. What do we know about their expected comments or this event on Thursday when they share news -- share a news conference, share the stage?

ROBERTSON: One of the other things that President Biden is bringing to the table here, we understand with Ukraine, is the United States will become the 14th nation, 32 nations within NATO, that have -- well, 14 have already signed, the United States becomes the 15th to sign a bilateral security agreement with Ukraine.

If we go back about a year ago to the last NATO summit, Ukrainian President Zelenskyy came in there expecting to get some big security package or wanting, even demanding. Some people saw it as a big unified security package from NATO. But, what he has gotten are these bilateral security deals worth billions of dollars, commitments from all these different countries to support Ukraine to get if there is another attack, let's say, down the road in the future on Ukraine, rather than it already being inside NATO and having that joint protection, the Chapter Five of NATO where an attack on one is an attack on all.

Ukraine is still being outside of NATO, but the NATO nations and specifically here, the United States, saying, if you're attacked again in the future by Russia, we will get that on the agenda. We will discuss that in the first 24 hours. We will be there at your side to support you. So, Ukraine is also working on about another 17 of these bilateral security arrangements with other countries. But, the UK, France, Germany, already have signed these bilateral security relationships with Ukraine.

And it's really a solidarity of support, a long-term commitment, but a message from President Biden that even if he isn't President and a more isolationist President arrives in the United States next year, talking about Donald Trump, of course, who would cut, potentially cut ties with NATO, potentially cut funding for Ukraine, that are these guarantees and commitments going forward, and of course, a message implicit in this by the United States doing this now that these other 17 nations to kind of advance their bilateral security plans with Ukraine

[11:40:00]

SOLOMON: Yeah. Really fascinating. Ukraine clearly front and center there. Nic Robertson live for us in Italy. Nic, thank you.

Well, still to come, it is a massive day for America's economy. We have more details on a key inflation report, and an upcoming Federal Reserve announcement, that is expected to happen shortly. Plus, drivers in Europe could soon be paying more for electric cars. We'll tell you why.

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SOLOMON: Welcome back. It's a bit of a double whammy for Wall Street today with two major announcements in one day. U.S. inflation is cooling off, according to the latest Consumer Price Index report. May CPI rose 3.3 percent from a year earlier. That was better than expectations. It was also better than last month. Meantime, we are waiting for the Federal Reserve's decision on interest rates. That is coming in just the next few hours.

But, in the meantime, let me bring in Chief Economist at KPMG, Diane Swonk. Diane, always good to have you. Your top line reaction to this report. And if you were going to give this report a grade, how would you grade it?

DIANE SWONK, CHIEF ECONOMIST, KPMG: Well, it certainly is a good report. It certainly is welcome news. I graded a B-plus, A-minus. This is for the Fed not a victory. But, it is better news than we've had. And it really gets to how hard it is to seasonally adjust data coming out of a pandemic. The cooling we saw on inflation in late 2024 when people were declaring victory was probably overstating the improvement in inflation then. We probably saw it overstating the deterioration.

We saw an inflation in the beginning part of this year. But, if you split the difference between the two, inflation is still too hot. The Fed is still on the sidelines. It keeps the Fed between one and two cuts for 2024, rather than slipping in some outliers that were starting to think about whether or not we needed an additional rate hike. That's the good news in this report.

SOLOMON: OK. So, one to two cuts. That's better news than some out there had been predicting. So, we'll take that. If you are a consumer, what would you say? I mean, how do you read this report? As you just pointed out, prices for many are still too high. And yet, we're seeing progress. How do you read this for a consumer?

SWONK: It's really interesting, as the research on inflation has shown, one, that it affects a lot more people than unemployment because inflation affects everybody, where unemployment affects only a few percentage points of the population. And its scarring effect is much deeper in terms of how long people sort of ruminate on it and feel bad about it. It literally stresses people out to think about the kinds of trade-offs they have to make with high price level. So, even though we've seen inflation cool in the most recent month, inflation is still running too hot, and the price levels are still too high for most Americans out there.

Gas prices are the number one thing that influences people's perceptions on inflation. The good news is they retreated in the last month for the first time since January.

[11:45:00]

But, at the end of the day, they're still looking at things and saying this is still a much more expensive environment than we had in 2019, and that's very hard, because wages have not kept up with many of the essentials, especially shelter costs and insurance costs and the things of the cost of just being wherever you are and living day to day.

SOLOMON: Yeah. I mean, it's a fair point, especially with auto insurance, it seems like. We've seen quite a run-up in those prices. Diane, what are you going to be listening for in just a few hours when we, one, to get the statement from the Federal Reserve, from the FOMC, the Committee that makes these decisions, but also when we hear from Jay Powell at 2:30? What are you listening for?

SWONK: Well, the issue is how hawkish does he come across. And I think today's data makes him a little bit -- but a little light in his step and will make him a little bit -- have a little more levity at the press conference and otherwise. But, the bottom line is the Fed is not moving yet on interest rates, and that's the message they have to convey, and that they are what's called data dependent. Being data dependent, the data are lagged. That means that they're reacting to the data after the fact. And one of the concerns the Fed has had in both getting inflation down

is not wanting to over tighten, because what they're worried about is that when unemployment tends to rise, it can do so very rapidly. And by the time we see red ink on something like employment, that's too late for the Fed to be cutting. And so, this is still a very hard balancing act for the Federal Reserve.

SOLOMON: Wow. Yeah. That's really interesting. Diane, I think about earlier -- early in the sort of inflation cycle, when you and I spoke, and you said, look, getting from nine percent, which was peak, to five percent is not the hard part. It's getting from four percent, to getting to three percent or getting to two percent. Two percent, of course, the Fed's target. We have been at a three handle for CPI for a year, I want to say since July of 2023. What's your best guess or best forecast in terms of when the Fed will finally be able to say they did it?

SWONK: Well, my view is that the Fed is going to need to have enough evidence to really be convinced, which is what the Fed has said they need. They're likely to have wait until December. Now, some are putting in a September rate cut. It is possible with a lot more improvements in the data between now and the September meeting. But, I don't think they'll have enough evidence that inflation is moving towards that target until December. That doesn't mean inflation will be back down to two percent by December, and that inflation will be out of the front of our mind. At least, it will be receding. What we also know is that the half-life on how long the scars of inflation affect our psyche can be quite long, two to three years, and we're over two years into the inflation boat that we've endured at this point in time.

SOLOMON: And Diane, just lastly, I mean, what would you expect to roll over in terms of prices? Like, what categories are you watching really closely? Shelter, for more than a year now, people have expected to finally start to show some signs of relief and start to fall. We haven't really seen that. We've sort of seen that on the margins. But, what are you watching? What categories do you think might finally get us there to that sweet spot the Fed is trying to strike?

SWONK: Well, the shelter cost is really important. It's one of the things that we've heard many at the Fed, participants at the Fed. Fed President Austan Goolsbee has talked about it a lot. If we don't get shelter costs rolling over, like the Fed expects in the second half of this year, it's very, very hard to get to price stability. And I think that's something that Fed takes very seriously.

The other issue has been, of course, home insurance and vehicle insurance. Vehicle insurance, we got a bit of a breather this month. That's great news. But, the bottom line is, it's still up over 20 percent from a year ago. So, it peaked out at 23 percent last month, but it still is very, very expensive. And these are things that are starting to give you more structural rather than cyclical in nature. Home insurance being affected by the number of extreme weather events and disasters on properties, and the fact that insurers have to raise rates for everyone when that occurs. Some places can even get access to home insurance now because of the number of disasters or flooding that they've experienced, and the damage to property.

All of those things make -- means that the Fed has to really hit other prices much harder, and we need to see a drop in other prices, goods prices, to be able to offset that lingering inflation in the service sector.

SOLOMON: It's such a fascinating point, Diane, about home insurance, in particular, because of all of those other sort of existential, external factors that are having a real impact on the cost of insurance, both on a macro level in terms of the data, but on a personal level for a lot of people who are finding either they can't get a home insurance or it's just too expensive.

Diane Swonk, it's obviously a conversation for another day.

[11:50:00]

But, thank you so much for the insights today. Thank you.

SWONK: Thank you.

SOLOMON: All right. Speaking of prices, electric cars may soon be more expensive for drivers in Europe. The European Union is increasing tariffs on electric vehicles imported from China. Now, previously, the EU imposed a flat tariff rate of 10 percent to counter what it sees and what it says as artificially low-priced cars. But, the new duties range from 17 percent to as high as 38 percent. China says it is quote, "strongly dissatisfied with this decision. The EU must decide by November whether to make the higher tariffs permanent."

Let's get more now from CNN's Anna Stewart, who joins us live in London. So, Anna, talk to us a little bit about the timing. Why has the European Union decided to do this now?

ANNA STEWART, CNN CORRESPONDENT: So, they launched the investigation last October. But, it's interesting to note that this, of course, comes a month after President Biden quadrupled import duties on Chinese EV makers as well, bringing it to 100 percent. So, essentially, pricing Chinese EVs out of the U.S. market. And here you have the EU do something very similar, trying to protect its own EV makers in Europe from cheaper imports from China.

You ran us through some of this and the main details of the tariffs. They range between 17.4 percent to 38.1 percent. They come on top of an existing 10 percent tariff. And by November, we'll find out whether or not this is temporary or whether they'll make this a permanent situation. There is also actually a range for different carmakers as to whether they have to pay a lower range or a higher range in terms of the tariff. And Tesla's is still, it looks like, being decided by the EU Commission at this stage.

But, already, we've had a response from China. The Ministry of Commerce says the bloc is creating and escalating trade tensions, which brings the question, what will this end up doing? Will China retaliate with similar trade tariffs or trade restrictions? Will we have the return of a sort of trade war between the EU and China? And ultimately, will this end up hurting the very EV makers in Europe?

The EU is trying here to protect, for instance, Germany, which sells a lot of cars and car supplies into China. It's a massive market for it. On the weekend, German Chancellor, Olaf Scholz, expecting this announcement to be made. As she said, protectionism and isolation ultimately just makes everything more expensive and everyone poorer. So, you can see what the plan here is from the EU. The question is whether or not it will work.

SOLOMON: Fascinating. Anna Stewart live for us in London. Anna, thank you.

Well, still to come, a reunion more than a year in the making. The oldest member of K-pop phenomenon, BTS, gets back with a band to celebrate the end of his military service. But, do they still have it? We'll talk about, when we come back.

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SOLOMON: Welcome back. And this just in. The White House has declined to rule out the possibility that President Joe Biden could commute an eventual sentence for his son Hunter Biden. This after the younger Biden's conviction on federal gun charges. Press Secretary Karine Jean-Pierre speaking aboard Air Force One, pointed instead to President Biden's comments, saying that he had ruled out a pardon. But, on other potential avenues of clemency, she said she hadn't discussed the matter with the President.

All right. Before we go, one more thing. K-pop's supergroup BTS reuniting just hours ago. Look.

[11:55:00]

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Jin, the group's oldest member, was discharged from the military after completing his 18-month mandatory service requirement. He was greeted by five of his six bandmates, as we see here. South Korean media report that they've requested leave from their own military assignments to celebrate the occasion. Jin immediately got in front of the camera on the social media app Weverse, racking up more than three million views. A performance and a fan event are planned for Thursday. At age 31, Jin is now the first member of BTS to finish military service, with the band expected to reunite next year once all members are discharged. Jin is back.

All right. We know your time is money. So, thank you for spending some time with me today. I'm Rahel Solomon live in New York. Stick with CNN. "ONE WORLD" is coming up next.

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