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E.U. Green-Lights Massive Surge in Military Spending; Stocks Slide Among Trump's Tariff Chaos; Impact of Israel's Blockade on Humanitarian Aid into Gaza; Russian Media Applauds Trump's Shift on Ukraine. Aired 12-12:45a ET
Aired March 07, 2025 - 00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LAURA COATES, CNN ANCHOR: Next.
[00:00:13]
JOHN VAUSE, CNN INTERNATIONAL ANCHOR: Reality bites for Europe. Ahead here on CNN NEWSROOM.
(BEGIN VIDEO CLIP)
URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: Fact is that Europe is facing a clear and present danger.
(END VIDEO CLIP)
VAUSE: With Russian aggression to the West and a less -- East, rather, and a less-than-reliable U.S. ally to the West, Europe approves a surge in defense spending.
The on-again, off-again, on-again Trump tariffs are off again.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: This is very much about companies and countries that have ripped off this country.
(END VIDEO CLIP)
VAUSE: With the U.S. president announcing tariffs for Mexico and Canada are now on hold.
And while war may soon return to Gaza --
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE (through translator): The food aid is what's keeping us alive.
(END VIDEO CLIP)
VAUSE: The misery never left. And only made worse now, with Israel refusing to allow aid deliveries across the border.
ANNOUNCER: Live from Atlanta, this is CNN NEWSROOM with John Vause.
VAUSE: For European leaders, what was a concern, turned fear, now seems to be reality. U.S. commitment to their defense, no longer a rock-solid guarantee.
And at an emergency summit in Brussels, the E.U. approved a surge in defense spending. And all but one country signed onto a declaration of support for Ukraine.
The E.U. promised ongoing financial assistance for Kyiv and said any deal with Russia to end the war must respect Ukraine's independence and territorial integrity, and can only be made with Ukraine at the negotiating table.
And after relations between the U.S. and Ukraine plummeted last week, both sides will resume talking next week in Saudi Arabia, according to presidential special envoy Steve Witkoff.
And Europe is demanding a role in negotiating a peace deal between Ukraine and Russia, as well.
(BEGIN VIDEO CLIP)
VON DER LEYEN: We all want peace through strength: a just and lasting peace, but a peace -- peace from a position of strength. And this is also in the interest of President Trump to have a peace through strength. And if he wants to achieve this, it is only possible with the support of the Europe Union and its member states.
(END VIDEO CLIP)
VAUSE: And while E.U. leaders held an emergency summit in Brussels, the U.S. president confirmed why. Donald Trump repeating an old warning the U.S. will not defend any country which has not been -- which has been skimming, rather, on its own defense spending.
More now from CNN's Nic Robertson.
(BEGIN VIDEOTAPE)
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: Thank you.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (voice-over): Barely inside the doors at the E.U. in Brussels, Ukraine's Volodymyr Zelenskyy huddles with top officials. Diplomacy across Europe accelerating as the U.S. tightens ties with Moscow.
ROBERTSON: This is what Europe working at speed looks like. Unlike the high-speed decision making inside the White House, leaders here have to meet again and again and again, meaning there are no quick fixes to fill all the security gaps they fear the U.S. is leaving them.
ROBERTSON (voice-over): This meeting about raising money to pay for a massive defense spending hike, with as much as 800 billion euros at stake.
VON DER LEYEN: Europe faces a clear and present danger, and therefore, Europe has to be able to protect itself, to defend itself.
ROBERTSON (voice-over): It's not just Ukraine feeling let down by U.S. President Donald Trump. It's Europe, too. After years of fearing how a second Trump presidency would impact allies, reality has hit; and it's ugly.
ROBERTA METSOLA, EUROPEAN PARLIAMENT PRESIDENT: It is about damn time. This is something that we have been asking for a long time: that the Europe Union, that Europe is capable of standing up on its own two feet.
ROBERTSON (voice-over): Zelenskyy, reeling from the apparently capricious cutting of U.S. Intelligence and wider U.S. military abandonment, at the table, his nation's future hanging on how fast European funds are authorized, and how quickly the money is turned into weapons.
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: We are very thankful that we are not alone. And these are not just words. We feel it.
ROBERTSON (voice-over): Not alone, but Europe not even close yet to having the money or deciding how to spend it. Europe's leaders still hoping for Trump's security partnership in Ukraine.
OLAF SCHOLZ, OUTGOING GERMAN CHANCELLOR (through translator): We must make sure, with a calm and wise approach, that U.S. support is guaranteed for the coming months and years, because Ukraine is also dependent on their support for its defense.
ROBERTSON (voice-over): Inside the E.U. leaders' meet, two pro-Russian leaders, Hungary's Viktor Orban and Slovakia's Robert Fico, didn't derail Europe's rearmament. Plans to raise the defense funds got the go-ahead.
[00:05:08]
Nic Robertson, CNN, Brussels.
(END VIDEOTAPE)
VAUSE: We'll stay with this story for a little longer. Joining us now from Brussels is Matthew Karnitschnig, editor in chief of "Euractiv."
Matthew, thank you for being with us.
MATTHEW KARNITSCHNIG, EDITOR IN CHIEF, "EURACTIV": Thank you for having me.
VAUSE: OK. So, you know, the most significant announcements, or one of them anyway, coming out of this emergency summit was this big increase in defense spending.
Here's Ursula von der Leyen, head of the E.U. executive arm.
(BEGIN VIDEO CLIP) VON DER LEYEN: The fact is that Europe is facing a clear and present danger. And this is why I presented the rearm Europe plan today to the leaders, a plan to give Europe the military capability that it needs to face today's threats. It could mobilize up to 800 billion euros.
(END VIDEO CLIP)
VAUSE: Notably, a statement in support of Ukraine was signed by every country except Hungary.
So, how significant is that opposition from Hungary to the support of Ukraine? And overall, is this a watershed moment, if you like, for Europe, when the history books are written? Is this the moment when Europe significantly shifted away from the United States, or at least began that shift?
KARNITSCHNIG: I have to say, I think the whole past week, ten days or so, from the time that Trump kicked Zelenskyy out of the White House and that clash that we saw there, this is really kind of the watershed moment, I think.
What happened last night was important, because it did show, in the end, that the European countries are coming together. Hungary, as expected, did not sign onto this declaration of support for Ukraine. But the other 26 did.
So, I think that is certainly a victory for Ursula von der Leyen.
But the devil is in the details. And the real question is where is this money going to come from? Are they going to be able to push forward with the kind of spending that von der Leyen was talking about last night?
This 800 billion figure is a bit of a fantasy number, to be honest. And, you know, it's going to -- it's going to take a lot to get even the 150 billion that most people are focusing on, which would be new spending.
People are going to have to borrow this money. Countries are going to have to borrow this money and then find ways to spend it.
And unfortunately, it's -- it's not really a matter of flipping a switch and going and buying some -- some bombs and bullets and so forth. This type of procurement takes years, which is why the Europeans are still trying to reach out to the United States and preserve that relationship.
Because without the American security guarantee, they're pretty much standing naked in -- in -- in the European continent at the moment. And this is why they're still trying very hard to bring Donald Trump back on their side here.
VAUSE: Poland's prime minister, Donald Tusk, made the point that even without U.S. support, Europe isn't entirely helpless. Here he is.
(BEGIN VIDEO CLIP) DONALD TUSK, POLISH PRIME MINISTER (through translator): Europe, as a whole, is really able to win any financial, economic, military confrontation with Russia. We are simply stronger. We just have to start believing in it.
(END VIDEO CLIP)
VAUSE: And certainly, from a military point of view, Europe appears to be strong, at least on paper.
But when it comes to the defense of Europe -- and you touched on this -- there are still certain roles -- logistics, command, and leadership roles -- which the United States can only provide.
How long will it take Europe to replace the United States in those -- in those roles?
KARNITSCHNIG: Well, many military experts think it could take decades. I'll give you one example, which is reconnaissance.
The entire satellite system that the U.S. has at its disposal for its intelligence agencies. The Europeans don't have this, and this is absolutely essential when you're talking about, you know, nuclear deterrence and this sort of thing, and intelligence gathering, sort of generally.
So, this is an area where the Europeans are going, I think, to try very hard to remain in the good graces of the United States so that they can get that intelligence.
We're already seeing some tensions there between the U.S. and Ukraine, with the U.S. saying they're going to suspend intelligence sharing with Ukraine.
Now, that leaves the Ukrainians more or less blind when they're trying to figure out where they can strike back at Russia. So, that's just one example.
But I think it's -- it's also in the larger area of procurement. I would think that the United States would be willing to sell weapons to the -- to the Europeans at this stage if they -- if they wanted to continue to do so, which I suspect.
But again, you know, this is a process that really takes years to bring -- to bring together. And the Europeans on their -- on their own territory are now talking about refurbishing old armaments plants and whatnot.
But again, you know, this is really a matter of time, and time isn't necessarily on their side.
[00:10:03]
VAUSE: And Europe, obviously, increasingly nervous about Washington's commitment to their security. And President Trump also having doubts about Europe's commitment to U.S. security. Here he is. (BEGIN VIDEO CLIP)
TRUMP: If the United States was in trouble, and we called them, we said, we've got a problem, France. We've got a problem, a couple of others I won't mention. Do you think they're going to come and protect us? They're supposed to. I'm not so sure.
(END VIDEO CLIP)
VAUSE: The very basis of the NATO alliance, Article V, collective defense: an attack against one ally considered as an attack against all allies.
The first and only time it was invoked was just after 9/11. The attacks on the United States.
Fast forward to now, and Europe doesn't have an issue, though, with any international multi-party agreements. So, that question by Donald Trump seems to be kind of a nonstarter.
KARNITSCHNIG: Well, it's a -- it's a strange comment in many ways, particularly because, as -- as you mentioned, it was invoked after September 11th, and the Europeans did come to the aid of the United States.
And indeed, many of them also joined the U.S. in Afghanistan and later in Iraq. So, there's no real basis for that, factual basis for that.
But it does underscore just the nervousness in the transatlantic alliance now amongst people who want to preserve the alliance because it seems day by day that Donald Trump's administration is moving further and further away from the U.S.'s European allies.
VAUSE: Matthew, thank you for getting up early there in Brussels. We appreciate your time and your insights, as well as your analysis. Thank you very much.
KARNITSCHNIG: Thank you.
VAUSE: U.S. tariffs on imports from Canada and Mexico now on hold, just three days after they went into effect. The one-month delay applies to goods covered by the existing USMCA free trade deal.
It's been a rocky week for Wall Street, as investors grapple with the uncertainty around the tariffs. The Dow Jones lost nearly 1 percent -- point on Thursday. The NASDAQ composite slid more than two and a half points, and the S&P 500 also down, as well. More on all of this from CNN's Jeff Zeleny.
(BEGIN VIDEOTAPE)
JEFF ZELENY, CNN CHIEF U.S. NATIONAL AFFAIRS CORRESPONDENT: A whiplash in trade policy here at the White House has sent the stock market reeling for the last several days.
President Trump adjusting course on the Canada and Mexico tariffs, specifically, offering on Thursday yet another month-long reprieve, a day after he offered automakers a similar reprieve.
Now, there is no question the financial markets have been wondering what exactly this White House is up to. As the stocks have fallen, the dollar has weakened, and there's been an inconsistent pattern across many of these decisions.
But the president on Thursday insisting the market had nothing to do with it.
TRUMP: No, nothing to do with the market. I'm not even looking at the market. Because long-term, the United States will be very strong with what's happening here.
ZELENY (voice-over): Of course, that is very much an open question. The president has long used the stock market, and the financial markets as a whole, as a metric for how he guides his success.
He certainly did so during the first term in office. And he has throughout the course of much of his life.
But there is no doubt the president is also still in favor of imposing some type of tariffs, he believes. And he said again Thursday at the White House, that the United States is being ripped off, in his words, by some of these countries.
He's also insisting that reciprocal tariffs will go into effect on April 2nd. And that would really cover the gamut of goods, from autos to alcohol to so many other things, and not just Canada and Mexico.
ZELENY: It's all reciprocal tariffs. Any country the United States does business with.
So, the bottom line to all of this, the questions here now, is the president has delivered a series of threats over tariffs, but taken many of them back. Is he serious about the next round?
Of course, we'll have to wait and see on that as the markets still wonder what this White House is up to.
Jeff Zeleny, CNN, the White House.
(END VIDEOTAPE)
VAUSE: Justin Wolfers is a professor of economics and public policy at the university of Michigan. He joins us this hour from Ann Arbor. Welcome back.
JUSTIN WOLFERS, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF MICHIGAN: Thanks, John. I wish it was for happier news.
VAUSE: Well, I mean, at least it's a delay, even though there does seem to be some confusion on the tariff front at the White House, with President Trump announcing a pause on the tariffs for all products from Mexico that are covered by the USMCA free trade treaty. That's one he negotiated.
He also issued an executive order, adding Canada to the delay, as well.
As to what the exemption covers, depends on who you ask. Somewhere between 10 and 15 percent of goods from Mexico and Canada may not be eligible for the tariff exemption.
It's sort of up in the air.
Also, is this a permanent exemption or a temporary one? You know, there does seem to be a feeling about this sort of tariffs weren't really ready for prime time when they were announced on Monday.
[00:15:06]
WOLFERS: Look, John, what this reminds me of is my dog. My dog Max, whenever we're in the kitchen, he says he wants to be let out into the backyard.
I let him out. He thinks it's fabulous for about 10 seconds. Then he wants to get let back into the kitchen. Let him back in. He looks around. He discovers its boring. And he wants to go back out to the yard.
I don't know if you've got a dog like that. He's lovable, my dog. But he can be annoying, and I never really know what he wants. And I don't really know what he's going to want next.
And that's pretty much where Trump has left not only the American public, but the entire trading world, in trying to keep track of his on again, off again, on again, off again tariffs.
VAUSE: Well, what has absolutely nothing to do with, according to the president and his commerce secretary, Howard Lutnick: the ups and downs in the stock market. Listen to this.
(BEGIN VIDEO CLIP)
HOWARD LUTNICK, U.S. COMMERCE SECRETARY: The president wants American growth and American prosperity, OK? And the fact that the stock market goes down a half a percent or a percent, it goes up a half a percent or percent. That is not the driving force of our outcomes.
(END VIDEO CLIP)
VAUSE: How about 3 percent for the week? That's what the Dow is down and the market is in the red. Since Trump took office, overall, the NASDAQ falling more than 7 percent, the S&P more than 4 percent.
Even if this was about the stock market, the fact that stocks closed down after the delay was announced, it would seem to indicate that the White House has a lot more to do in terms of restoring confidence and calm to try and, you know, outdo the crazy of the last couple of weeks.
WOLFERS: Absolutely. So, there's, I think, two things the stock market is telling us very clearly. The first is, if tariffs are going to work, the way they work is they
rebuild American business and create more opportunities for American businesses. The stock market is essentially people betting on the future of American business.
Every time Trump takes a step forward towards more tariffs, the stocks fall. That's the market, not some nerdy academic economist like me. That's the stock market saying to the president, we see what you want to do, and we think it's not going to help us. In fact, we think it's going to hurt. We think it stinks.
Now it turns out that actually just doing the dance of undoing what you just did -- this on-again, off-again, on-again, off-again. Can't make up my mind. Creating uncertainty everywhere. Chaos spiral comes with its own very real cost.
Any executive you talk with around -- around the world, in fact, right now says there's one major risk that they're trying to handle. It's -- it's not a serious -- it's not an economic risk. It's the president, the president's mood, and the president's impulses.
And so, Trump has really shaken the markets, and he's led all sorts of measures of uncertainty to, in some cases, absolute record highs, record highs when uncertainty starts high, that's going to lead a lot of people to pull off, wait a few months before they're willing to invest or spend money again.
VAUSE: Justin, great for being with us. Justin Wolfers there, our nerdy academic and analyst in Ann Arbor, Michigan. Good to have you back.
WOLFERS: My pleasure, John.
VAUSE: When Israel and Hamas signed a ceasefire, they agreed to the resumption of humanitarian assistance for Gaza. After the break, why Israel has stopped aid deliveries and the impact that's having on a starving population.
(COMMERCIAL BREAK) [00:22:51]
VAUSE: U.S. President Donald Trump says direct talks with Hamas are underway over the release of hostages still being held in Gaza. He stressed no ransom will be paid to Hamas in return for hostages.
Still, this is a sharp break in decades long U.S. policy of refusing to talk to terrorist organizations.
Meanwhile, Human Rights Watch is warning Israel's decision to block humanitarian assistance into Gaza could shut down most of the territory's water infrastructure within a week by starving it of fuel.
CNN's Jeremy Diamond reports on the impact of this crippling blockade.
(BEGIN VIDEOTAPE) JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT (voice-over): In the desolate ruins of Northern Gaza, Hala (ph) assembles scraps of wood and chunks of foam to build a fire.
Proper housing and basic infrastructure are nowhere to be found. But for now, at least, there is flour, water and oil. And Hala's (ph) mother can make bread.
"The food aid is what's keeping us alive," she explains.
Like so many others, Uhm Mohammed (ph) and her family of 11 are surviving thanks to the tens of thousands of aid trucks that entered Gaza during the first six weeks of the ceasefire.
"We eat and drink for the whole month from aid. Without that, it will be very difficult. Food and drinks are very expensive, especially when crossings were closed. We couldn't buy sugar or flour" she says. "Aid makes us live."
DIAMOND: That lifeline is now under existential threat. Israel is laying siege to Gaza once again, shutting down the supply of food and other humanitarian aid, in a move decried by the United Nations and human rights groups as a violation of international law.
Israel says it is trying to pressure Hamas into releasing more hostages, and accuses Hamas of profiting from the aid to, quote, "rebuild its war machine," a claim Hamas calls a baseless lie.
It is also threatening to cut off water and electricity if Hamas does not give in to new conditions. And a return to war could also be on the horizon.
In Gaza, where markets have only recently begun to come back to life, Israel's renewed blockade is already driving up prices. And aid group say minimal stockpiles of aid are beginning to dwindle.
[00:25:06]
Without more aid, the World Food Programme says bakeries and soup kitchens will likely shut down in less than two weeks.
For those living amid the rubble, aid running dry will revive the threat of famine and spell an end to what little they can still rely on.
"We are so happy when aid keeps coming," Ibrahim says. "We have no work. Our lives are on hold. Our businesses and homes are gone. So, when aid comes, the children are happy. Whether it's food, drinks, cleaning products, this is the only way we can live."
For some, the aid blockade already feels like a return to war.
"They are fighting us through food," Abu Mohammed (ph) says. "Netanyahu is now publicly saying, I will close the crossings and starve you. No one is standing against him."
He wonders who will stand with the people of Gaza and how he will feed his children when the aid runs dry.
Jeremy Diamond, CNN, Tel Aviv.
(END VIDEOTAPE)
VAUSE: Well, Donald Trump may have an uneasy relationship with the free press in the U.S., but in Russia, state-controlled media is all rah-rah and gushing over their new best friend in the White House. That's up next on CNN NEWSROOM.
(COMMERCIAL BREAK)
[00:31:00]
VAUSE: Ukraine's port city Odessa has come under attack for a second straight day, with Russian drones hitting energy facilities Thursday. That's according to the regional governor.
A day earlier, Russian strikes on Odessa killed at least two people.
The ongoing conflict in Ukraine and the sudden withdrawal of U.S. support brought an emergency summit of European leaders in Brussels, with unanimous support for a massive increase in defense spending. Almost unanimous support for Ukraine. Hungary opted out of that one.
Still, the French president announced more than $33 billion in E.U. assistance for Ukraine.
The speed and degree of Donald Trump's pivot towards Moscow has been so fast, so extreme, it seems Russian state-controlled media initially appeared caught off-guard, possibly struggling to understand just what was happening.
Not now, though. And while it may have taken a few days, pro-Kremlin television, they're now cheerleaders for the new man in the White House, with pundits and commentators almost giddy with excitement about this new world order.
CNN's Matthew Chance has more now, reporting in from Moscow.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)
MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT (voice-over): It's a sign of the times that even the Kremlin's old propagandists are rapidly changing their tune. Dmitry Kiselev is the state mouthpiece who once boasted how Russia could reduce America to nuclear ash.
DMITRY KISELEV, RUSSIAN TV HOST: (SPEAKING FOREIGN LANGUAGE)
CHANCE (voice-over): Now he's talking about a great troika: the U.S., Russia and China forming the new structure of the world.
And Ukraine is where that structure is being forged. Trump administration's hard line on Kyiv, including the suspension of U.S. military aid, has been greeted with glee in the Kremlin, with Russian officials now berating Europe while flip-flopping on Washington's historical role.
SERGEY LAVROV, KREMLIN SPOKESPERSON: (SPEAKING FOREIGN LANGUAGE)
CHANCE (voice-over): "All of the tragedies of the world originated in Europe," claims the foreign minister, Sergey Lavrov. "Colonization, wars, the Crimean War, Napoleon, World War I, Hitler. If we look at history in retrospect," he says, "Americans played no instigating or even inflammatory role."
It's extraordinary revisionism in extraordinary times.
TRUMP: You don't have the cards right now. With us, you start having cards.
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: Not playing cards. We are serious.
TRUMP: Right now, you don't -- you're playing cards.
CHANCE (voice-over): This was the moment that underlined how everything had changed. The humiliation in the Oval Office of the Kremlin's sworn enemy took even Russians aback, with Kremlin channels struggling to make sense of Washington's seismic shift.
UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)
CHANCE (voice-over): "Trump speaks about peace, and those around him talk about Ukraine's success," says this reporter on state television. "But it looks like he's giving Russia all the cards to achieve success on the battlefield," he adds.
TRUMP: So, Vladimir, thank you very much.
CHANCE (voice-over): And it's far more than that. The strange Trump- Putin bond is now threatening Western unity. In exchange, all Putin has done is offer potentially lucrative business deals. Trump's kryptonite, according to one Russian commentator.
UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)
CHANCE (voice-over): "Trump is like Superman, and our president, Putin, has found his weakness," he tells state TV. "As soon as Trump hears the words 'rare earth metals,' he's ready to accept any terms," he adds.
Little wonder the Kremlin's propagandists are now falling over themselves to praise the United States. They may have changed their tune, but America has, too.
Matthew Chance, CNN, Moscow.
(END VIDEOTAPE)
VAUSE: SpaceX described it as a rapid, unscheduled disassembly. Or, put another way, spaceship go boom-boom. The latest on another failed test flight for Starship.
(COMMERCIAL BREAK)
[00:39:35]
VAUSE: Test flight number eight went much the same way as test flight number seven for Starship, SpaceX's heavy lift vehicle exploding minutes after liftoff.
Debris was seen lighting up the sky over the Caribbean. The flight was uncrewed. There are no reports of any injuries on the ground.
[00:40:04]
We have this just in. A South Korean court has ruled impeached President Yoon Suk Yeol can be released from jail. He was arrested in January on charges of leading an insurrection and had been in detention since then.
Yoon was also impeached after his failed attempt to impose martial law in early December, which wound up lasting just hours.
His criminal charges are separate from the impeachment trial. South Korea's top court will decide in the coming weeks whether to uphold the impeachment or reinstate him as president.
I'm John Vause, back at the top of the hour with more CNN NEWSROOM, but please stay with us. WORLD SPORT starts after a short break. See you back here in about 19 minutes.
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(WORLD SPORT)
