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Asia Markets Fall as Iran Hits Energy Facilities in Mideast; Jay Powell Says War With Iran Raises New Economic Uncertainties; U.S. Federal Reserve Leaving Interest Rates Unchanged; European Lawmakers to Hold Vote on Trade Deal Thursday; Iran War Forces Kuwaitis to Scale Back Plans for Eid Festival; Zelenskyy Visits Spain to Strengthen Bonds, Partnerships; Football Legend Lionel Messi Scores 900th Career Goal. Iran: U.S. And Israel Hit Oil And Natural Gas Facilities; What Iranians Are Saying As The Conflict Ramps Up. Aired 2-3a ET

Aired March 19, 2026 - 02:00   ET

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

(COMMERCIAL BREAK)

[02:00:34]

ANNOUNCER: This is CNN breaking news.

ROSEMARY CHURCH, CNN ANCHOR: Hello and welcome to our viewers joining us from all around the world. I'm Rosemary Church.

And we begin this hour with rare criticism of Israel from U.S. President Donald Trump over the war with Iran. State media in Tehran report new attacks on its oil production facilities and the world's largest natural gas field. This marks a significant escalation in the conflict. President Trump says Israel lashed out in anger and the U.S. knew nothing about this particular attack. He goes on to say, no more attacks will be made by Israel pertaining to this extremely important and valuable gas field.

Iran wasted no time in firing back at oil facilities around the Persian Gulf. Qatar reports extensive damage at its main energy hub, and Saudi Arabia says it intercepted four ballistic missiles over the capital, where foreign ministers were meeting.

The diplomats called for Iran to immediately end its attacks, which they said targeted residential areas, oil facilities, desalination plants, airports and diplomatic premises.

CNN's Eleni Giokos is live this hour in Dubai. But we begin with our Senior International Correspondent Ivan Watson in Hong Kong.

So, Ivan, what more are you learning about this apparent split between President Trump and Israel over its attack on the world's largest natural gas field in Iran?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Rosemary, that statement that President Trump put out is pretty remarkable, isn't it, to suggest, as he's put it, that a bit more than two weeks into this huge regional war that the U.S. and Israel are carrying out strikes and not coordinating together.

And this is, after all, a war that the two allies began together with their surprise bomb attack on Iran. Also what President Trump is asserting here, it contradicts what one Israeli source has told CNN, that the U.S. was, in fact, aware and the Israelis did coordinate with the U.S. when the South Pars' facilities, gas facilities in Iran were targeted.

But make no mistake, the fact that that attack took place there, it demonstrates an expansion of this regional war which had seen some attacks on some energy infrastructure, but now the damage appears to be much more serious, and the response from Iran's Islamic Revolutionary Guard Corps after these explosions on the northern side of the Persian Gulf vowed revenge. Take a listen.

(BEGIN VIDEO CLIP)

EBRAHIM ZOLFAGHARI, IRANIAN MILITARY SPOKESPERSON (through translator): This is a firm warning to those responsible for attacking parts of Iran's fuel and energy infrastructure in the south. In response, the fuel energy and gas facilities at the source of the attack will be set ablaze and reduced to ashes at the earliest opportunity.

(END VIDEO CLIP)

WATSON: And sure enough, on Wednesday, Qatar announced that its gas infrastructure -- natural gas infrastructure was targeted at the Rass Laffan industrial city, and that there was extensive damage, and it appears to have come under fire more than once.

In just the last couple of hours, we have learned that there was a ship off the coast of Rass Laffan that was also targeted, and Abu Dhabi has announced that its gas operations have been suspended after there was some kind of damage there from debris falling from intercepted projectiles.

If this continues, and though Trump is trying to establish some new guardrails by saying, hey, we won't attack energy infrastructure if you stop attacking energy infrastructure. I don't know whether or not how that message will be received in Tehran and by the embattled leadership there, which has been losing top officials due to U.S. and Israeli strikes, kind of day after day, we'll just have to see.

But with the attacks on shipping and the choke point in the Strait of Hormuz already driving energy prices up, now, the attacks on energy infrastructure, if this continues on both sides, it's lose-lose for everybody, for Iran that depends on energy exports, and certainly for the GCC and consumers around the world who rely on energy from this part of this world?

[02:05:17]

CHURCH: And Eleni, let's go to you now. What has been the reaction from some of the Gulf nations, and how will oil prices responding to these escalating attacks on oil facilities across the Gulf? ELENI GIOKOS, CNN CORRESPONDENT: Yes, Rosemary and as Ivan says, this is a clear escalation in this war. We have seen the targeting of critical energy infrastructure over the past few weeks, since this war started across the Gulf region, but there is a significant shift here.

What was interesting that while Iran was retaliating against Gulf States because of the strike on itself, South Pars gas field, there was a critical meeting that was taking place with 12 Arab foreign ministers. That meeting was held in Riyadh. They were looking for a diplomatic off ramp, and they were talking about how Iran needs to respect international law, that Iran was not only targeting U.S. assets, but also things like desalination plants, airports, critical energy infrastructure, even residential buildings.

The Saudi Foreign Minister says that it's not a coincidence that the strikes were occurring while this meeting was going on, and they believe that the Iranians are sending a clear message in terms of what they believe, in terms of perhaps not getting into diplomatic discussions at this juncture. I want you to listen to some of the harsh words he used, listen in.

(BEGIN VIDEO CLIP)

PRINCE FAISAL BIN FARHAN AL-SAUD, SAUDI FOREIGN MINISTER: The targeting of Riyadh while a number of diplomats are meeting, I cannot see as coincidental, and I think that's the clearest signal of how Iran feels about diplomacy. It doesn't believe in talking to its neighbors. It tries to pressure its neighbors, and what I can say categorically, that's not going to work. The Kingdom is not going to succumb to pressure. And on the contrary, this pressure will backfire.

(END VIDEO CLIP)

GIOKOS: Backfire militarily, he said, also morally, and saying that Saudi reserves the right to respond if and when it deems necessary.

And frankly, we've heard that even from the UAE as well, that UAE also reserves the right to respond to Iran's attacks on Gulf states, and specifically here on its territory as well.

What was also interesting is, you know, the Saudis were asking, you know, what is the purpose of that? That's what the foreign minister asked, what's the military purpose? What's the purpose of attacking neighbors?

And it seems very clear to you know, the international community that the Gulf states are now starting to turn their back on Iran. We saw the closure of the consulate in Qatar. We've also seen moves diplomatic moves in the region as well. The question now becomes, can President Trump deescalate? I mean, he was saying that Israel acted alone in targeting the South Pars field, that it's not going to happen again, because this is the lever that Iran has to inflict economic pain through the energy markets, closure of the Strait of Hormuz, and also targeting the Gulf's energy infrastructure because it's close in proximity, but also risks what is to come. You know, oil prices WTI as well as Brent crude rallying on the back

of this news, because we're hearing about significant energy infrastructure damage because of these strikes. If you put it all together and all the strikes that we've been seeing on energy infrastructure over the past few weeks, there's an assessment to be made.

It's not just about the oil flow through the Strait of Hormuz, but also what is the long-term damage of taking capacity out of the system, Rosemary . That is the fear right now we're talking about an energy price shock, and the prognosis is we could see oil prices rallying $220 and even $150 a barrel, and that's going to have global ramifications.

CHURCH: Certainly will. Eleni Giokos and Ivan Watson, many thanks to you both for bringing us up to date on the situation.

All right. Well, now a close up look at the aftermath of Israeli strikes on Tehran. A new video posted by Iran's Red Crescent Society shows the moment a woman was pulled from the rubble of a collapsed building. She could be heard asking if her child is alive, and a rescuer telling her the child is OK.

While this footage shows rescue crews combing the area after an apparent separate strike just hours ago, the Post says an air strike hit a residential area and several people were killed.

Israel is also ramping up attacks against Hezbollah. The Israeli military says it struck several gas stations in southern Lebanon on Wednesday, it claims they supported Hezbollah's military capabilities. Nearby buildings were also damaged in the strikes. Lebanese state media is reporting that Israel is also bombing crossings on the Litani River. Israel says it's trying to stop Hezbollah from moving weapons. All this as the death toll keeps rising. Lebanon's health ministry says nearly 1,000 people have now been killed in less than 2.5 weeks.

[02:10:34]

We have more ahead here on CNN, including controversy in Washington over Senate testimony from National Intelligence Director Tulsi Gabbard.

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[02:15:10]

CHURCH: Top Trump administration officials have now testified publicly for the first time since the launch of the war with Iran nearly three weeks ago, but comments from National Intelligence Director Tulsi Gabbard are drawing the most attention. She said it isn't her job to determine what constitutes an imminent threat, even though the administration has argued military action was necessary because of an immediate risk from Iran, take a listen.

(BEGIN VIDEO CLIP) SEN. JON OSSOFF (D-GA): Was it the assessment of the intelligence community that there was a, "Imminent nuclear threat posed by the Iranian regime?" Yes or no?

TULSI GABBARD, DIRECTOR OF NATIONAL INTELLIGENCE: Senator, the only person who can determine what is and is not an imminent threat is the president. It is not the intelligence community's responsibility to determine what is and is not an imminent threat.

OSSOFF: It is precisely your responsibility.

(END VIDEO CLIP)

CHURCH: Later CNN's Manu Raju asked Senate Democrat Mark Warner about Gabbard's comments.

(BEGIN VIDEO CLIP)

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: What is your -- what is your takeaway from her for not saying this is an imminent threat? I mean, she was asked this repeatedly, what do you draw from that?

SEN. MARK WARNER (D-VA): I draw that the -- I draw the same conclusion I've made since day one of this war. This was a war of choice. There was no end of threat. Now, the Iranian regime was awful. The unfortunate thing, it is still awful, and I'm -- if anything, we've ended up with a worse and more repressive leader right now.

And again, I don't see any of the four goals the president laid out of regime change, getting hold of the enriched uranium, eliminating all of the ballistic missile capability and drone capability.

(END VIDEO CLIP)

CHURCH: Gabbard notably did not read a portion of her opening statement that said that Iran's nuclear program was obliterated by U.S. and Israeli bombs last year.

The former U.S. counter terrorism chief says there was no intelligence that Iran was preparing to attack the U.S. Joe Kent spoke Wednesday with conservative podcaster Tucker Carlson one day after Kent resigned from his position in the Trump administration, citing disagreements over the Iran war. Kent told Carlson that Iran was not close to creating a nuclear bomb.

(BEGIN VIDEO CLIP)

TUCKER CARLSON, FOX NEWS CHANNEL HOST: Was Iran on the verge of getting a nuclear weapon?

JOE KENT, FORMER DIRECTOR, U.S. NATIONAL COUNTER TERRORISM CENTER: No, they weren't -- you know, three weeks ago when this started, and they weren't in June either.

I mean, the Iranians have had a religious ruling, a fatwa against actually developing a nuclear weapon since 2004, that's been in place since 2004, that's available in the public sphere. But then also, we had no intelligence to indicate that that fatwa was being disobeyed, or it was on the cusp of being lifted.

(END VIDEO CLIP)

CHURCH: Kent also told Carson that he believes Iran's late supreme leader was moderating the country's nuclear program before his death.

(BEGIN VIDEO CLIP)

KENT: Going aggressively after the Ayatollah was the last thing that we ever should have done again. Like, I'm no fan of the former supreme leader, you know, Ali Khamenei, however, he was moderating their nuclear program. He was preventing them from getting a nuclear weapon.

If you take him out, if you kill him aggressively, people are going to rally around that regime. And the next Ayatollah that you get, and I think this is the case by all data that we have with the son, the next Ayatollah that you get is going to be more radical.

(END VIDEO CLIP)

CHURCH: The late Iranian supreme leader, Ayatollah Ali Khamenei, was one of several high-level assassinations since the war started. Another one was national security chief Ali Larijani. Crowds gathered in Tehran Wednesday for his funeral. Larijani was killed in an Israeli strike on Tuesday. Larijani is thought to have played a key role in suppressing anti regime protests in January and led the government transition following Khamenei's death, Iran has vowed revenge for his death.

Abbas Milani is the director of Iranian Studies at Stanford University. He's also a research fellow and co-director of The Iran Democracy Project at the Hoover Institution. Appreciate you joining us.

ABBAS MILANI, DIRECTOR OF IRANIAN STUDIES, STANFORD UNIVERSITY: My pleasure.

CHURCH: So, during Iran's antigovernment protests at the start of the year, protesters wanted the United States to step in and help them. Now, 20 days into the war, what are Iranians saying about this war?

MILANI: I think some are still very much defending the idea and appealing for continued help. Some are beginning to get worried about the destruction that is having under country, and we have very little way to know what the people's sentiments inside Iran. It's easier to gage the sentiment of the diaspora, but people inside Iran who are experiencing the brunt of this, it's very difficult to get their clear sense. The regime has shut down their internet, 95 percent sometimes, and the only people who have access to free internet or regime supporters.

[02:20:29]

So, anyone who is not a regime supporter has to either buy and pay exorbitant prices Starlink, which is a crime to use a Starlink, the regime goes after people who have Starlink or try their luck, occasionally they can connect outside.

So, getting a clear sense, a precise sense is very difficult, but I think those who are very much hoping for it are still supporting the effort. They're hoping that this regime will collapse, or that there's some radical change in the regime, and some are beginning to worry about how much the damage this is doing to the infrastructure. The attack on the infrastructure, the days of today's attack, for example, on parts, my guess is, will have a negative impact on public sentiments.

CHURCH: And the killing of Iran's supreme leader at the start of this war resulted in the 86-year-old being replaced by his younger son, 56- year-old, son who's even more radical than his father, and still, this war rages on, with Iran now waging global economic war with the closure of The Strait of Hormuz.

So, what exactly has the war achieved when it was sold as a way to help Iranian protesters and also bring an end to Iran's nuclear program, which will be very difficult to achieve?

MILANI: I was always against the idea that this Iran's nuclear program has a military solution. I always believed that this regime, when push comes to shove, when its survival is at risk, will do exactly the kinds of things that it has done, both to the people of Iran, American en masse, and put the entire world economy at peril.

They want to survive at any price. And from the moment the war began, I think that was their strategy. Their strategy was not to defeat Israel or the United States militarily. Their strategy was to increase the cost of this war globally, as you said, so that it is discontinued and they're allowed to survive.

I think their game plan right now can be defined in one word, the regime survival. Not that survival of Iran necessarily, but the regime survival. And the only way they can do that is exactly what they have done.

CHURCH: So, how will this war likely change Iran when it eventually comes to an end, and what will it mean for the lives of the majority of Iranians?

MILANI: Well, I think it depends on how the war ends, if the war ends in a few weeks, for example, and if the regime is in some radical, understandable way changed. This regime right now has put itself on a warpath with the world, but also with the Iranian people. It keeps constantly threatening the Iranian people shutting down the internet, to me, indicates that they know how isolated they are, because otherwise they would allow the Iranians to show the support for the regime.

So, they will face, I think, regardless of how it ends, they will face very, very serious challenges. Almost the entire Persian Gulf states that might have been on the border in terms of whether Iran should be weakened, I think, are now clearly of the European mean that this regime has to change, whether it's a regime change or whether it's a new constellation that comes.

But the notion that you can have the likes of Mr. Khamenei, the junior who still hasn't appeared, who still hasn't said a word, you have two or three cryptic messages from him and the commander of the IRGC, who are the two most radical voices of this regime, run the state and essentially hold international community all hostage to their survival, I think, makes it very difficult for them to survive.

And I think the big Achilles heel for the regime is exactly the Achilles heel they have created for the international community, the economy. The economy is going to be what I think ultimately does this regime, because the economy is on the verge of collapse. Money has lost its value, the regime's ability to sell oil, although in the last year, they have sold almost $60 billion of oil, although they were supposedly sanctioned, I think those will be very much curtailed, and only more brute force can keep them, and they have used all the brute force that they can use.

[02:25:28]

So, my sense is that change is inevitable, but if it gets prolonged, there is, I think, a possibility of civil war. I think there is a possibility of chaos, and that, I think, is again, part of the strategy of the regime, putting themselves as the only alternative, and saying it's either us or a global economic chaos and regional chaos and local civil war that is not a good strategy for survival.

CHURCH: Abbas Milani, thank you so much for joining us and sharing your perspective and analysis. Appreciate it.

MILANI: My pleasure.

CHURCH: New air strikes and soaring energy prices, we are live in Hong Kong with how these are affecting the markets. Back in just a moment.

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[02:30:51]

ROSEMARY CHURCH, CNN ANCHOR OF "CNN NEWSROOM": Iran's strikes on major energy facilities in the Middle East are having a ripple effect on world markets, while causing oil prices to skyrocket.

They're now above $110 per barrel. CNN's Kristi Lu Stout is following the impact live from Hong Kong. She joins us now. Good to see you, Kristi.

So after these strikes on gas facilities across the Middle East, how are Asian markets responding?

KRISTI LU STOUT, CNN CORRESPONDENT: Rosemary, shares here in the Asia-Pacific region are trading lower, tracking U.S. losses overnight. The price of oil is getting higher and higher. All this after tit-for- tat strikes on major, very significant gas production facilities across the Middle East. We are always monitoring the Asia-Pacific markets for you. Let's bring it up for you, and you will see how it's been at down days (ph) so far.

If you look at the markets in Japan, for example, the Nikkei under pressure, it's losing about 3.4 percent. Earlier today, the Bank of Japan announced that it will leave interest rates unchanged. Investors are also bracing for that meeting due to take place with the Prime Minister, Takaichi, as well, meeting with Donald Trump. It will be their second visit -- second meeting together.

Here in Hong Kong, the Hang Seng is down 1.9 percent, the Seoul Kospi down 2.7 percent, the Shanghai Composite losing about 1.2 percent. We're also monitoring Brent crude, the global benchmark index for oil, and the Brent crude price continues to rise this day.

The conflict in the Middle East has been expanding, and it's now escalated to this point of direct state-on-state strikes on critical energy infrastructure. So, analysts are saying this is going to have a profound effect, a profound effect leading to long and global changes in terms of being able to access gas supplies.

In Asia here, this region is particularly vulnerable. The Asia-Pacific region consumes 80 percent of the natural gas and oil that flows through the Strait of Hormuz. In fact, the gas that is produced in places like Qatar, like UAE, mainly head here to the Asia-Pacific region. And there's no alternative.

There is no alternative to bring this vast amount of energy here to Asia. And so, governments here are scrambling to find a way to navigate the shortfall. We've learned that Cambodia is now sourcing energy from its neighbors, from Malaysia and Singapore.

We also learned earlier this week that Japan has released its national oil reserves. And South Korea, after it earlier introduced that fuel price cap, is now shifting more towards using coal power, even nuclear power.

On top of that, governments across the Asia-Pacific region have also introduced fuel rationing measures, including work-from-home mandates. Rosemary, back to you.

CHURCH: And Kristi, strikes on oil facilities, along with a selective blockade of the Strait of Hormuz, is pushing oil prices higher, as we've discussed. What are governments doing to navigate the disruption? What other ways are they likely getting this fuel?

LU STOUT: Yeah, governments have been finding ways, alternative ways, to get around or get through the Strait of Hormuz.

Let's first focus on the energy suppliers. For example, Saudi Arabia is now relying on this east-west pipeline to bypass the Strait of Hormuz entirely and to get its gas and supplies out to increase its exports. The UAE is taking a similar measure, again, using a pipeline to bypass the Strait of Hormuz. As for major energy consumers, for example, here in Asia, India, a major energy consumer, what it is doing in this situation, it is sending warships to the Strait of Hormuz to escort oil tankers through the Strait to bring that much needed gas supply and oil supply to its shores.

But the Strait of Hormuz, this vital channel through which 20 percent of the world's oil and gas supply flowed before this conflict began, has now become a choke point. And so these governments have to think of ways to get around it. Back to you.

CHURCH: All right. Thanks to Kristi in Hong Kong, bringing us that live report. Appreciate it. Well, the U.S. Federal Reserve is predicting the disruptions to the global energy markets will be relatively short-lived, but is giving itself some wiggle room.

[02:35:00]

Fed Chief, Jerome Powell says we just don't know how things will shake out. Well, what we do know is that interest rates won't be going down yet. As expected, the Fed voted to keep benchmark lending rates unchanged at 3.5 to 3.75 percent.

(BEGIN VIDEO CLIP)

JEROME POWELL, U.S. FEDERAL RESERVE CHAIR: The implications of events in the Middle East for the U.S. economy are uncertain. In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy.

(END VIDEO CLIP)

CHURCH: Powell went on to say that a rate cut won't happen until there's progress on inflation and on the overall performance of the economy.

Justin Wolfers is a Professor of Economics and Public Policy at the University of Michigan. Good to have you with us.

JUSTIN WOLFERS, PROFESSOR OF ECONOMICS & PUBLIC POLICY, UNIVERSITY OF MICHIGAN: Pleasure to be here, mate.

CHURCH: So as the world deals with surging fuel prices triggered by the war with Iran and, of course, the subsequent closure of the Strait of Hormuz, author and economist, Richard Bookstaber wrote in an opinion piece for The New York Times Monday that he predicted the 2008 financial crisis, but says what's coming may be worse.

Now, do you agree with this assessment? And just how bad could it get, do you think?

WOLFERS: I'll just make fun of the lead in there, Rosemary. Sorry. There's always someone who says they predicted something at some point. There's eight billion people on Earth. I'm not sure we can get too much from that. But look, you ask a more serious question, which is how much worse could things get? Let me give you a very serious answer. On the eve of the Iraq war, Donald Rumsfeld said this could last six days, six weeks, but I doubt six months. Lasted much more than six years in the end. He thought six days, more than six years. What that says is using that as a guidepost, this could be at least 365 times worse than we currently think it is.

Look, war is a weighty matter. It's a dangerous matter for the people who are involved. And it's also very dangerous economically.

CHURCH: And Vice President, J.D. Vance is warning of a rough road ahead, but says that rising gas prices are a temporary blip, just as the president has said. What do you say to that?

WOLFERS: Yeah. That's a lie and he knows it. Look, we know this because people trade the future price of oil in futures markets. The president has been on about this. He's saying it's just a temporary blip. That's not true. The markets are already trading what oil will be in 2026, 2027 and 2028. It's expected to be higher throughout all of that.

Everyone is making plans for oil prices to be elevated for a fairly substantial period. There's no good reason to believe it could go -- it is going to go away straight away. It could, of course, but it also could be much worse than the markets think as well.

CHURCH: And of course, the Federal Reserve did not cut interest rates on Wednesday. No surprise there, perhaps. But what might this war mean for any future cuts this year?

WOLFERS: Yeah, so Rosemary, Happy Fed Day. We love these days. What a beautiful day to celebrate. Look, the Fed sounded very worried about the future prospects for inflation. Jay Powell actually laid it out nicely.

The economics textbook says that when you get hit by a supply shock, that is to say something like an oil shock where it just becomes more expensive to make stuff, the economics textbook says actually you should "look through it," which is the price of oil will adjust up. While that's happening, there'll be inflation.

But once the price of oil is high, it's not going to cause ongoing inflation. So you shouldn't worry about it. That's one side of the argument.

The other side is that the Fed hasn't achieved two percent inflation, which is its target now for five years, and at some point, it starts to worry if it never gets back to target, will we ever get there? And so it's a very difficult, delicate balancing act there right now.

CHURCH: So Justin, how would you describe the economy right now? And how might it look in a few months from now, do you think?

WOLFERS: Mate, it's on the precipice. It was on the precipice before this Iran thing happened. It turns out we got recent job numbers that said since April, which was Liberation Day, the U.S. economy has actually shed jobs. We've lost jobs. That's not how economies are meant to work.

You could call that with a little bit of poetic license, a jobs recession, as opposed to a normal recession, which is when we lose output. So what that does, though, either way, as it says, we were on the precipice of a recession already in February, right on the edge. I think the advice would have been don't do anything rash. And then days later, we invaded Iran.

That puts a lot of risk right on the table at a very delicate moment.

CHURCH: So just paint us a picture of where you think the economy will be by the end of the calendar year.

[02:40:00]

WOLFERS: Let me tell you what I hope and let me tell you what I fear. What I hope is that the U.S. economy is the little engine that could and it keeps shaking things off. And as much as events try to knock it off course, the little engine that could keeps on going and we managed to keep the economy's head above water.

We avoid a recession, we keep unemployment relatively low and we, while inflation will probably be higher at the end of the year, not worryingly high and perhaps on its way back down.

What I fear the other end of this is, already we're shedding jobs. This prolongs that. It deepens that. I don't think necessarily a profound recession, but a mild sort of recession is definitely a possibility. And at the same time, the cost of living continues to rise. And that's without adding the real uncertainties that are coming out of Washington every single day.

And we don't know what the next step or misstep from the administration will be.

CHURCH: Very sobering, as always, Justin Wolfers, thank you so much for joining us and sharing your analysis. Appreciate it.

WOLFERS: A pleasure, Rosemary.

CHURCH: European Union lawmakers are set to vote in the coming hours on the long delayed U.S.-E.U. trade deal that's been criticized by some in Europe as too favorable to the United States. Under the deal, most European exports to the U.S. will be subject to a 15 percent tariff rate, but many U.S. products heading to Europe would face zero import taxes.

The trade deal was hammered out before the U.S. Supreme Court struck down many of President Trump's global tariffs, raising questions over the legal basis behind the agreement.

Eid festivities marking the end of Ramadan are being scaled back in Kuwait because of the war with Iran. Still to come, we will show you which holiday traditions won't happen this year and how Muslims plan to celebrate despite the conflict.

(COMMERCIAL BREAK)

[02:46:45]

CHURCH: Welcome back, everyone. Muslims around the world will soon be celebrating the festival of Eid al-Fitr, marking the end of the holy month of Ramadan.

But in the Gulf region, where the holiday begins on Friday, the war with Iran is forcing many Muslims to change their plans. CNN's Nic Robertson reports from Kuwait.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (voice-over): Ramadan and its day-long fasting is ending. Eid al-Fitr is arriving. Families flocking to Kuwait's Bright Souq, shopping for gifts for loved ones, all part of the celebration of the Muslim holiday.

But this year, with a difference, air raid sirens are suddenly common part of everyone's life.

TALAL ABU TERRI, IT SPECIALIST: I think that we feel a sense of safety because we have the Ministry of Defense and the Kuwait Army, and thank them so much for keeping us safe and dealing with any threats coming from Iran.

ROBERTSON (voice-over): Even so, some missiles have been getting through. An 11-year-old girl killed, dozens of civilians injured. And this Eid, the government is telling Kuwaitis not to risk danger and hold big gatherings.

LOLOWA AL-AYOUB, FENCING INSTRUCTOR: Of course, we have to be cautious. Being cautious is very recommended. But family gatherings might not be 200 people. It can be 20.

ROBERTSON (voice-over): Another bit of festive Eid fun is also being put on hold, per government instructions, traditional theater performances.

ROBERTSON: The whole investment here has been huge, this whole wraparound stage recreating the old streets of Kuwait, right down to the chairs for the audience to sit on, the whole theater put together for the Eid performances.

ROBERTSON (voice-over): Eid is peak season, and rehearsals like this one now halted. More than 80 staff involved in this production. The owner and lead actor, who put up close to half-a-million dollars for the Eid shows, is taking it on the chin.

MOHAMED AL-HEMELY, THEATER PRODUCER AND ACTOR (through translator): We are extremely sad that we are in war. This financial situation of the theater, the money and the tickets, all can be compensated. But Kuwait, our love to our nation, we should listen to our leadership. We are sad, yes, but we are not angry. When the war is over, we will return to our normal life.

ROBERTSON (voice-over): And how to do that? His answer, simple.

ROBERTSON: What's your solution?

AL-HEMELY: I don't know.

ROBERTSON: Really?

AL-HEMELY: Maybe I think I'll call for somebody. Hello, stop the war, please.

(LAUGH)

ROBERTSON (voice-over): But the jokes belie a darker reality. Everyone knows the war could get worse.

ROBERTSON: The biggest worry for leaders here is escalation. So far, vital infrastructure, like desalination plants, power-generating equipment, doesn't appear to have been on Iran's target list. But the leaders know, if they join the war, all that could change, putting their populations at even greater risk.

Nic Roberson, CNN, Kuwait.

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[02:50:00]

CHURCH: Ukrainian President, Volodymyr Zelenskyy was in Spain on Wednesday for meetings with Spanish officials and defense companies. He met with Prime Minister, Pedro Sanchez, and signed co-production agreements for drones, radar and missiles. The prime minister vowed to stand by Ukraine's side as multiple global conflicts fight for attention and announced more than $700 million in military aid to the country.

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PEDRO SANCHEZ, SPANISH PRIME MINISTER (through translator): We cannot deny that today, the crisis in the Middle East largely monopolizes attention in the global conversation, takes over all the headlines, draws all eyes. And precisely for that reason, I want to tell you, Mr. President, I also want to tell the government of Ukraine and Ukrainian society that nothing and no one is going to make us forget what is happening in Ukraine.

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CHURCH: Zelenskyy also saw the Spanish King Felipe and he met with an engineering and technology group about production of missiles, air defense systems, and other possible projects.

And we'll be right back.

(COMMERCIAL BREAK) CHURCH: The footballer many consider the GOAT, or greatest of all time, is celebrating yet another accolade. Lionel Messi scored his 900th goal Wednesday. It came during Inter-Miami's Concacaf round of 16 match against Nashville SC who wound up advancing to the quarterfinal. Messi's left-footed smash puts him in the same 900-goal club as long-time rival Cristiano Ronaldo, although it took Ronaldo 100 more matches to hit that milestone.

Messi, who is 38, is the major league soccer MVP, a World Cup champion, and winner of eight Ballon d'Ors.

China's space program is rapidly growing and progressing toward landing astronauts on the moon by the end of this decade. And that advancement is raising pressure on the U.S. as Washington hopes to stay ahead of the competition.

CNN's Jackie Wattles has more on the new space race for the 21st century.

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UNIDENTIFIED MALE: Lift off of Artemis I, we rise together.

JACKIE WATTLES, CNN WRITER, SPACE & SCIENCE (voice-over): NASA officials and U.S. politicians are warning that we are in a new space race.

JARED ISAACMAN, NASA ADMINISTRATOR: We are in great competition with a rival that has the will and means to challenge American exceptionalism across multiple domains, including in the high ground of space.

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WATTLES (voice-over): It's the U.S. and its billionaires against China to see who can return humans to the moon.

ISAACMAN: Because if we fall behind, if we make a mistake, we may never catch up.

WATTLES: The United States has already achieved the only moon landings, but this time around, it's quite possible China will get there first.

JIM BRIDENSTINE, FORMER NASA ADMINISTRATOR: It is highly unlikely that we will land on the moon before China.

WATTLES (voice-over): The U.S. is about to launch a mission around the moon called Artemis II, but NASA doesn't have all the tools it needs to land on the lunar surface just yet, and that's a problem for some on Capitol Hill.

SEN. TED CRUZ, (R-TX): The United States must remain the unquestioned leader in space exploration.

WATTLES (voice-over): China's space program has made significant progress in recent years. The country says it's aiming to land astronauts on the moon by 2030, and the country usually hits its deadlines.

NASA's goal here is not to repeat the flags and footprints missions of the Apollo era, but to develop the technology so that people can live and work on the moon.

WATTLES: But that, of course, requires funding space exploration in the long term. These missions are far more complex than just sending humans to low Earth orbit, as we did with the space shuttle and with SpaceX's Crew Dragon now. And it remains to be seen whether America will maintain the political and economic will that it takes to foot the bill.

CASEY DREIER, CHIEF OF SPACE POLICY, THE PLANETARY SOCIETY: We certainly haven't funded NASA as if this has been a race. And so, we don't want to put our space agency in the position of suddenly being framed as losing when we haven't really given them the resources necessary, even to truly compete if it truly is a time-sensitive situation.

WATTLES: It's important to note that China and the U.S. have very different playbooks. The U.S. is partnering with private industry, including SpaceX and Blue Origin. And China is using a state-run program, and they're putting significant resources behind it.

MIKE GOLD, FORMER NASA OFFICIAL BEHIND ARTEMIS ACCORDS: The moon is a large place, but the number of locations that have the combination of water ice, sunlight, and other aspects that we need are actually relatively limited. And we could lose those to the Chinese if we don't move quickly.

WATTLES (voice-over): But while the best campsites in space may be worth scouting, there could be a lot more options than we realize.

DREIER: The U.S. won the race to the moon more than 50 years ago. We went to the moon. You can't undo that. We need to be confident in our own plan, stay focused. Absolutely welcome trying to move as fast as possible, but it's not the end of the world, figuratively or literally, if China gets there first.

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CHURCH: And thank you so much for joining us this hour. I'm Rosemary Church. I will be back with more "CNN Newsroom" after a short break. Do stay with us.

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