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Early Start with John Berman and Zoraida Sambolin

Gaza Violence Escalates; White House Condemns Gaza School Attack; MH17 Shot Down: Dangerous Crash Scene; Russia Scorns Sanctions

Aired July 31, 2014 - 04:30   ET

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

(COMMERCIAL BREAK)

CHRISTINE ROMANS, CNN ANCHOR: Breaking news this morning: the fighting in Gaza intensifies. Israel adding 16,000 additional soldiers to the conflict, increasing attacks by air and on the ground. As Hamas -- Hamas vows not to back down. We are live on the ground in the Gaza and Jerusalem with the very latest.

JOHN BERMAN, CNN ANCHOR: More breaking news this morning. This time in Ukraine. The country's military just announcing a cease-fire at the crash site of Malaysia Airlines Flight 17. Investigators desperate to recover bodies at the remains of the scene.

This as Russia shrugs off sanctions for arming the rebels in Ukraine.

We have live team coverage ahead.

Welcome back to EARLY START, everyone. I'm John Berman.

CHRISTINE ROMANS, CNN ANCHOR: I'm Christine Romans. It's 30 minutes past the hour.

We welcome all of our viewers here in the U.S. and around the world.

We begin with the conflict in Gaza growing bloodier by the hour. We want to warn you. These pictures we are about to show you are disturbing. Israeli warplanes bombarding a crowded marketplace in Eastern Gaza City, killing 17 Palestinians and wounding 200 others. This, after a deadly blast at a U.N. school left at least 17 Palestinians dead.

Israel announcing it's calling up 16,000 more reservists, insisting Hamas bears responsibility for the bloodshed at the school.

The U.N. secretary general puts the blame squarely on the Israelis.

(BEGIN VIDEO CLIP)

BAN KI-MOON, U.N. SECRETARY GENERAL: All available evidence points to Israeli artillery as the cause. Nothing is more shameful than attacking sleeping children.

MARK REGEV, NETANYAHU SPOKESMAN: We know for a fact that Hamas terrorists were using the vicinity at the school as a shield to shoot at our forces.

SARA SIDNER, CNN CORRESPONDENT: The area, though, but not the school itself.

REGEV: If you are standing by the front gate and shooting and you don't want to be shot back because there's a school behind you. It's the same.

(END VIDEO CLIP)

ROMANS: And this just in: Palestinian Authority President Mahmoud Abbas firing off a letter to the U.N. secretary general saying, quote, "Israel's systematic and deliberate attack on civilian homes as well as on U.N. schools sheltering civilians and on hospitals constitute war crimes. I have declared the Gaza Strip a disaster area."

Karl Penhaul live from Gaza this morning.

And, Karl, I do not see the off ramp here. You got both sides -- both sides moving forward with their respective operations.

KARL PENHAUL, CNN CORRESPONDENT: Absolutely, Christine. I was just thinking the very same thing. On one hand, you have the Israeli government warning its citizens to still themselves, to prepare themselves for a prolonged campaign on the other, Hamas wing that there can be no middle ground. Both sides believe they are going to go for this war, in many senses, it's shaping up to what Hamas politicians said it could be, a war to end the wars.

And we have seen those horrible pictures from yesterday and the impact is falling on civilians. Yesterday, over 120 people killed.

But I don't think it's right we focus on the numbers. That does not give us the pictures. One reason, the pictures you are looking from -- at that came from that crowded marketplace, those were brought to you because two Palestinian journalists were on the ground there. One got killed in that explosion and his assistant simply picked up the camera and carried on rolling. He could focus on nothing else but his job at the time. He thought that that was so important.

The same when we went to the United Nations school in northern Gaza. Again, finding out what the human picture there was.

A lady was telling us that this school, we fled here because we thought it was going to be a safe haven. More than 3,000 people crammed in that school. Artillery shells rocked it while people were still sleeping. The lady said, imagine, I'm rocked awake with explosions, I got smoke in my eyes, and a rain of shrapnel coming down on me.

A man said I looked around at an elderly man I was talking to the night before simply cut to pieces.

And right now, the United Nations is coming out firmly regarding that United Nations school attack and blaming the Israelis. U.N. investigators spent hours combing the scene yesterday morning and say they have hard evidence to conclude that Israel was to blame -- Christine.

ROMANS: All right. Karl Penhaul for us this morning live in Gaza -- thanks, Karl.

BERMAN: There are signs the White House is becoming frustrated with the Israel's onslaught in Gaza. The White House condemned the shelling of the U.N. school, but did not directly place the blame on Israel. It's a carefully worded statement in which the Obama administration made sure to also condemn those responsible for hiding weapons in U.N. facilities.

Officials in Jerusalem reacting now to a Latin American backlash, calling the decisions by Peru, Chile and El Salvador to pull ambassadors out of Tel Aviv a deep disappointment.

Israel does appear to be getting backing from an unlikely source, Jordan, Saudi Arabia and United Arab Emirates. Over the last few weeks, they have not embraced Hamas the way that in the past they may have, particularly Egypt. "The New York Times" noting that in an article this morning.

I want to go live to Jerusalem and bring in Saima Mohsin.

Saima, give me a sense of what the Israelis are saying today.

SAIMA MOHSIN, CNN CORRESPONDENT: Well, if we start with the American countries, some of them pulling out their envoys here in Israel. Israel has responded by saying it's disappointed, it doesn't reflect their relationship with these countries and that it doesn't recognize Israel's rights to defend itself in the situation.

But overnight as well, Bolivia has now declared Israel a terrorist state. We don't have reaction to that.

Of course, you also mentioned the White House announcing that while it recognizes Israel's right to defend itself, it also says that Israel should also do more to protect civilian lives, do more to avoid civilian casualties. The standards it holds itself to. The White House weighing in with what is considered a humanitarian crisis, a huge displacement of people, 200,000 people in Gaza, crammed into 85 shelters, I believe.

And more than 1,361 people killed. Of which, 315 are children. The United Nations says that's 70 percent to 80 percent of people killed in Gaza are civilians, not militants.

Of course, on the Israeli side, 56 Israeli soldiers have been killed and three civilians.

And casualties on both sides. Calls from across the world for this to end, but it's not looking likely with 16,000 more reservists added just today. That takes it up to 86,000 reservists to join the Israeli defense in this battle Operation Protective Edge.

No let up in sight at all. In fact, it seems to be getting worse, as my colleague Karl Penhaul just mentioned, and of course, while the White House is saying that it's concerned about civilian casualties, there's this controversial move to offer Israel more arms as requested.

The U.S. has a weapons base here, it has a base here. It keeps weapons in $1 billion worth and offering various mortar shells and grenade launchers to Israel, which calls into question, of course, whether the weapons being used really are precise. That's a debate to be held. The nature of the weapons being used targeting these buildings that Israel says are occupied by Hamas, by militants. Israel is very clear and repeatedly says it's not trying to target civilians, it is trying to target Hamas, but Hamas is using civilians as human shields.

But the nature of the weapons used is now being called into question as to how precise they are -- John.

BERMAN: Saima Mohsin for us in Jerusalem, thanks so much for that report, Saima.

ROMANS: All right. Breaking news just into CNN: Ukrainian military declaring a one-day cease-fire in the battle with pro-Russian rebels. It starts today. This as international investigators failed to reach the wreckage of the Malaysia Airlines Flight 17 for a fourth day now.

Now, CNN crew was able to reach the crash site Wednesday, finding human remains, finding passengers' personal belongings still scattered across that debris field. Ukrainian official now warning that anyone trying to reach the wreckage, there could be land mines planted there.

Matthew Chance tracking the latest developments for us. He's live from Kharkiv, Ukraine, this morning.

First, tell me about the cease-fire. Is it just in the region of the plane? Give us a little update on that.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, it's a cease-fire just in the towns and villages where there's been fierce fighting around the crash site of MH17, the Malaysian airliner. And so, it could be crucial in allowing access to the international teams, the Dutch and Australian and Malaysian investigators that have been trying on four successive occasions to gain access and had to abandon their mission to gain access to the site because of the security situation and because of the fierce fighting.

This one-day cease-fire appears to have been -- appears to be the window of opportunity they have been looking for to get to the crash site, try and start the process of recovering dozens of bodies that are still there, to be repatriated, the personal belongings as well, an evidence to determine, you know, what exactly happened to MH17.

In addition to that, within the past hour, state news agencies in Russia are reporting that they expect their investigators from Russia to get to the crash site as well. Apparently, a delegation has already been sent to the Ukrainian capital, Kiev. And they are reporting now that they also expect to be given access during this hiatus in the fighting to the crash site of MH17. So, we haven't had confirmation that any of these teams have arrived yet. But, certainly, the expectations are very high now. It could be a breakthrough today.

ROMANS: All right. Matthew Chance, thank you for that, in Kharkiv, Ukraine. Again, a one-day cease-fire only in the area around the crash site. Not a cease-fire overall in the conflict.

BERMAN: I want to go over the border, because an independent survey of Russians asks, who shot down Malaysia Airlines Flight 17? And the overwhelming majority of Russians believe that it was Ukraine that shot down that plane. Eighty-two percent believe the passenger jet was taken out by a Ukrainian missile or military plane.

Meanwhile, the government showing disdain for expanded new economic sanctions imposed by the West. The Russian stock market and its currency rallying today. Investigators relieved the sanctions did not target Russia's critical gas industry.

I want to bring in Nic Robertson monitoring this developments live from Moscow.

And, Nic, you have been telling us now, for more than a day, that these sanctions may not cause Russia any pause.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: And one of the reasons it won't cause some pause is no political pressure on President Putin to do that. Why? Pretty much because he controls and influences the media in this country. There is no strong opposition political voice. There is no strong opposition media.

So, what essentially, whatever the government says, that is what people are going to read and hear. So, when we hear his popularity is over 80 percent and we get a similar figure for the people that believe Ukraine was responsible for shooting down MH17, there's no surprise the numbers come so close together. What we are hearing is a lot of criticism of the West saying that both the United States and the European Union are the one that is are going to suffer for the sanctions. One senior politician here accusing President Obama of restarting the Cold War.

What we are not seeing is reaction in terms of closing down and shutting down and restricting Western interest. That's not to say it won't happen here in the future. There's been a lot of rumors about what could happen. But that doesn't appear to be on the cards at the moment.

However, having said that, it's also interesting President Putin hasn't come out and made a big, bold, public statement about all of this. We are hearing a lot from the foreign ministry.

Right now, what they are saying is they want to see a humanitarian crisis situation set up in the east of Ukraine, involving the U.N., involving the International Red Cross, involving a lot of international organizations. Humanitarian disaster is what they think is in the making in eastern Ukraine at the moment. And they want a reaction, a U.N. reaction to help prevent that sort of calamity, John.

BERMAN: Great point. Sometimes international diplomacy is what is not said that matters. This time, what is not being said by Vladimir Putin could be a sign.

Nic Robertson in Moscow, thanks so much.

ROMANS: All right. Time for an EARLY START on your money this morning.

Stocks down around the globe right now. Asian stocks closed mixed. European stocks, lower, U.S. futures are down. You can see 75 points lower for the Dow.

We learn this week the economy is a little stronger than we thought. Tomorrow, we learn how strong the jobs growth. But so far this week, the Dow and S&P are down half a percent. And the NASDAQ is up about 0.3 percent. This is what I call a pause in the bulls run here right now.

Big corporate story this morning, Bank of America slapped with $1.3 billion fine over mortgage fraud. The fraud stems from thousands of bad loans made by mortgage lender Countrywide. Remember Countrywide --

BERMAN: It's on your side.

ROMANS: It was bought by Bank of America in 2008. Countrywide made thousands of loans quickly, often without any income verification and sold those fraudulent loans to government backed lenders. You know, Bank of America bought Countrywide, and now, Bank of America is paying for the sins of Countrywide, $1.3 billion is that fine.

BERMAN: Forty-three minutes after the hour right now.

Airports on high alert this morning as the Ebola outbreak, it widens. This morning, the Peace Corps evacuating hardest areas, as more Americans have come into contact with the virus. We'll have the very latest, next.

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BERMAN: The Peace Corps is now moving hundreds of volunteers out of West Africa over fear of the Ebola virus, 340 members now left Liberia, Guinea, and Sierra Leone. This as two Peace Corps volunteers being placed in isolation after being in contact with a person who later died of Ebola.

Meantime, we are hearing from the son of an American woman infected of Ebola. Nancy Writebol contracted the disease while helping a missionary in Liberia.

(BEGIN VIDEO CLIP)

JEREMY WRITEBOL, MOTHER CONTRACTED EBOLA: Dad's visits with mom right now are through a window at the home where mom is isolated. He's in a containment suit. The Ebola virus, in terms of mortality rate, right now, is about 64 percent. And so, that's good news for us. We feel like that's -- mom has a chance.

(END VIDEO CLIP)

BERMAN: The virus has now killed 670 people and sicken hundreds more.

ROMANS: Mom has a chance. We wish her well.

American-born jihadist who blew himself up outside a restaurant in Syria left behind a chilling video tape. The footage now appearing on an al Qaeda Web site showing Florida-born Moner Mohammad Abu Salah chewing up his U.S. passport and warning all Americans, quote, "We are coming for you."

There's also video of Abu Salah making a bomb and strapping it to his body, saying, "I want to rest in the afterlife."

BERMAN: House Republicans moving ahead with plans to take President Obama to court. They voted to approve a lawsuit that accuses the president of overstepping his constitutional authority by circumventing Congress with executive action or inaction in this case, specifically how he chose to enforce the health care law.

The president calls the suit a political stunt. He says he's still working -- willing to work with Republicans even if they don't like him.

ROMANS: Former President George W. Bush is busy with his paintings and another passion project, writing a biography of his father, George H.W. Bush. According to Crown Publisher, the book will cover Bush 41's life and career both inside and outside of politics. The untitled work is scheduled for release in November. Crown published Bush 43's best selling memoir, "Decision Points" in 2010.

And I wonder if Bush will have any get trouble getting access to his subject.

BERMAN: I was going to say, is it an authorized biography? An unauthorized biography of George H.W. Bush by George W. Bush. The controversy begins right here on EARLY START.

ROMANS: All right. A busy Costco parking lot, the scene of a crash landing. Look at that. What happened next, right after the break.

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ROMANS: Welcome back. Fifty-two minutes past the hour.

An investigation underway this morning after a small crashed in a San Diego shopping center, killing an 80-year-old passenger. Now, the pilot is recovering this morning at an area hospital. Witnesses say the plane bounced while landing at a nearby field and then clipped a top of a Target store before crashing into the parking lot.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: We were taking off about the same time she was on a different runway and we heard her say she was having issues with her power, and then a few seconds later, she said she was going down. We saw the smoke right afterwards. I mean, we saw her taking off. For the time, we saw her airborne until the smoke could have only been 15 seconds or so.

(END VIDEO CLIP)

ROMANS: The pilot sent out a stress call saying he had just lost power just before crashing.

BERMAN: Details on the huge water main break. UCLA saying the city's department of water and power should foot the bill for clean up, 700 cars stranded in flooded garages. They will not be moved until later today, if they are lucky at the earliest.

The water loss, we're now told, close to 20 million gallons.

(BEGIN VIDEO CLIP)

COUNCILMAN PAUL KORETZ, LOS ANGELES: We're wet. I mean, UCLA is very wet. Fortunately, you know, for us at least, the flood is over. We are restoring functions. So, we are busy pumping out the two parking garages that get inundated.

The Pauley floor which many people all over the world have written to me about is drying out. And let's hope we'll be able to repair that or replace it quickly.

(END VIDEO CLIP)

BERMAN: City officials say it's too soon to determine whether a water rate hike to cover the cost of this flooding will be needed.

ROMANS: Can you imagine if your car is parked there and you have your laptop tucked under your front seat.

BERMAN: Can you dry out your car? I have a serious question, if it's inundated with water and the upholstery and carpet rugs, does it ever get out? If you know the answer to that question --

ROMANS: Tweet us.

BERMAN: Tweet us.

ROMANS: Let us know.

All right. Argentina spiraling into default. Argentina can't pay its bills, folks, the second time in 13 years. What does this mean for global markets and your 401(k)? An EARLY START of your money, next.

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ROMANS: It's just about the top of the hour. So, that means it's time for an EARLY START on your money. Stocks down around the globe right now. Asian stocks closed mixed.

Europeans have turned lower. U.S. futures are down a little bit. Could be a lower day for stocks. What's been a good month.

On the last day of July, here is the report. The Dow and S&P are up about half percent. The NASDAQ is up more than 1 percent this month.

Also happening this morning, Argentina is in default. Last minute talks failed to produce a deal with the bond demanding payment. Now, the Argentina has defaulted for the second time in 13 years. The change in its credit rating with this default will raise borrowing costs and make it harder to pay its bills and will put pressure on the economy.

Not to worry about the markets, though. Investors saw this one coming. Stocks in Argentina actually up on this news.

BERMAN: EARLY START continues right now.