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Early Start with John Berman and Zoraida Sambolin

Saudi Arabia's King Abdullah Dies; Japanese Hostage Deadline Passes; 6,000 ISIS Fighters Killed; Obama Won't Meet With Israeli Leader; Major Shift From Argentina's President

Aired January 23, 2015 - 05:30   ET

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

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JOHN BERMAN, CNN ANCHOR: Upheaval in the Middle East. The leader of America's most important Arab ally there dies overnight. The government of another key partner crumbles. Changes that could spell trouble for the U.S. war on terror.

This morning, the United States is moving workers out of that region as al Qaeda looks to increase its power. We have live team coverage ahead.

CHRISTINE ROMANS, CNN ANCHOR: The deadline passes for two hostages held by ISIS. Terrorists are threatening to kill these men unless Japan pays a $200 million ransom, this as the U.S. and other world leaders revealed new progress in the war on ISIS.

Live team coverage tracking the latest developments this morning. Good morning. Welcome back to EARLY START. I'm Christine Romans.

BERMAN: Great to see you today. It is 31 minutes after the hour. I'm John Berman. Breaking overnight, the most powerful Arab ally the U.S. has in the Middle East has died. Later today, there will be a funeral for Saudi Arabia's King Abdullah.

He died at age 90 on Thursday. He had pneumonia. His half-brother, Prince Salman has been declared the Saudi Arabia's new king. That country is key in the war against ISIS and al Qaeda in the Middle East.

Let's talk about what this means in the fight against terror. I want to bring in senior international correspondent, Nic Robertson, for the latest. Good morning, Nic.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, John. Look, in Saudi terms, continuity is the most important thing. The passing of power from one hands, King Abdullah to King Salman now, making sure there is a smooth transition and that is understood globally by the fact that it's carried off well.

And that's the way that it's going right now. It is very important for Saudi Arabia. Where do the United States interests with Saudi Arabia intersect? With King Abdullah in the past couple of years had really become the lead Arab player in facing off against ISIS. But he has been advocating a stronger approach, 50,000 troops on the ground inside Syria to take Bashar al-Assad out of power and to tackle ISIS. So there is already a tension behind the scenes with the United States on that issue.

To the south, Yemen, Saudi Arabia there, very much views that through the prism that Iran is behind the instability there. They see Iran as the problem to the north. When the United States tries to make a nuclear deal with Iran, this worries Saudi Arabia.

Saudi Arabia's big card to play into all of this, the swing oil producer, oil prices right now at a long time low. Saudi Arabia very much can play an influential role.

Certainly in the background, it has been circulated in Saudi Arabia that one way to undermine Iran for them will be to bring the price of oil down so all of this is going to be on the table now for King Salman.

How will he play this with his western allies? What will he push for? Clearly, a huge amount of flux at this time, but we can expect in the shorter midterm at least continuity -- John.

BERMAN: Crucial influence on the U.S. economy and security, big moments there. Nic Robertson, thanks so much.

ROMANS: All right, now to another key U.S. ally in the Middle East descending into chaos, which could open the door to al Qaeda. The government of Yemen now in shambles as the president and prime minister and cabinet all resigns in the space of a few hours.

Officials say they want to wash their hands of what they call destructive political chaos in the wake of a deal that gives rebel insurgents more power.

Up until now, the government of Yemen has been a key ally in the fight against al Qaeda in the Arabian Peninsula. The terror group may now try to fill the political vacuum in response to the turmoil, the U.S. Embassy in Yemen's capital now further reducing its staff.

Our Jomana Karadsheh joins us now live with the latest on this. Yemen, when Americans hear Yemen they think 2000, the bombing of the USS Cole where 17 American sailors were killed.

I think 2008 where the U.S. Embassy in Sana'a was bombed, 12 people killed there. They think in 2006 when the architects of the "USS Cole" bombing escaped prison there. This has been a hotbed of extremism.

The U.S. has been an ally with this government trying to contain that and now all hell has broken loose.

JOMANA KARADSHEH, CNN CORRESPONDENT: Absolutely. This is the concern right now, Christine, is that looking at the situation, this political chaos and vacuum, really this creates that ideal ground for terrorist groups. For example, Al Qaeda in the Arabian Peninsula, AQAP, al Qaeda's branch in Yemen that is really active and powerful there to gain more ground.

Also, to take advantage of the situation of the sectarian rift in the country to gain more support and grow stronger so this really is the concern. When it comes to the United States battle against AQAP, it's war on terror there. The government of President Hadi, as you mentioned, a key U.S. ally in that fight.

Troops there fighting AQAP on the ground and also PRESIDENT Hadi allowing the U.S. drone strikes to take place so a lot of concern of what comes next, who replaces this current government as we see now with the rebel group, the Houthis, the Shi'a group, is really consolidating its power in the capital of Sana'a and government posts there in the capital.

While it has been fighting AQAP on the ground, the Houthis are not a U.S. ally at this stage, this historically Iranian backed group. One of its main slogans has been death to America and the group opposes U.S. drone strikes.

So really a lot of concern about what happens next especially when it comes to the terror threat that is coming from AQAP and Yemen especially at a time when the group does seem to be trying to reassert itself as a main terror organization on the international scene claiming the attack on "Charlie Hebdo" magazine in Paris -- Christine.

ROMANS: All right, Jomana Karadsheh for us in Amman, Jordan, thank you, Jomana.

BERMAN: A lot going on this morning. Happening right now, the deadline for Japan to pay that huge ransom for two hostages held by ISIS, the deadline has passed, with no word so far this morning on their fate. ISIS said it would kill the two men unless Japan hands over $200 million.

The Japanese government had been scrambling over the last couple of days to contact ISIS while saying publicly it would not yield to terrorist threats. In Tokyo right now, CNN's Will Ripley. Will, what is the latest?

WILL RIPLEY, CNN CORRESPONDENT: John, government officials in Tokyo are making a point that Christine made about 30 minutes ago. They are questioning now whether ISIS actually has any true intentions of negotiating with the government.

The reason for that is that they have been trying since Tuesday to reach out to this terror group to start some sort of discussions. They have had no luck despite reaching out to intelligence sources on the ground using all their government channels.

And yet, an ISIS spokesperson has been more than willing to e-mail back and forth with a media outlet here. The public broadcaster, NHK, saying an announcement is expected soon and refusing to comment on whether ISIS and the Japanese government are negotiating.

This could very well be a troubling sign for the families of these two men who have now the deadline passed about five hours ago and they still don't have any answers. If ISIS is not willing to negotiate or accept a smaller sum than the $200 million, the next most valuable thing that they have is attention and headlines.

Because we know sadly that whenever they conduct these brutal executions on video, it helps them recruit new members. People who see this and for whatever reason, then people compelled to join themselves.

So there is much apprehension and fear here, but still no answers as this deadline has now passed and we continue to move forward without knowing the fate of these two men -- John.

BERMAN: It is simply barbaric. Will Ripley for us in Tokyo. Thanks so much, Will.

ROMANS: Secretary Of State John Kerry is in London meeting with allies in the battle against ISIS and now seeing significant progress in that fight now for the first time. Kerry says the Iraqi ground troops and some 2,000 coalition airstrikes have retaken 270 square miles of territory.

At the same time, another U.S. diplomat has revealed an internal Pentagon tally of the U.S. -- of ISIS fighters killed, an estimated 6,000 including half of the terror group's top command.

I want to bring in CNN's Atika Shubert in London now. Atika, trying to gauge what kind of success the U.S. and its allies have had against ISIS. The U.S. cautioning against the idea that there is a body count, but indeed we are seeing signs of progress.

ATIKE SHUBERT, CNN CORRESPONDENT: That's right. I mean, Secretary Kerry saying that thousands have been killed, and you know, mentioning those 2,000 airstrikes and gaining a lot of territory back from ISIS. Having said that, clearly, you cannot gain ground without boots on the ground and for that, they need to train and equipped more forces to fight ISIS specifically Iraqi forces and Syrian opposition forces.

Now Secretary of State John Kerry did meet with Iraq's prime minister yesterday and they spoke as part of this coalition group about how more equipment and training can be given to troops, specifically more weapons. This is what Iraq forces need most said the prime minister.

Now also he mentioned that Syrian opposition forces will start training in the spring in countries neighboring to Syria and Iraq. So there does seem to be the ramping up of effort and progress has been made, secretary of State John Kerry did say, but more needs to be done.

That is why from every month now, there will be a meeting of core members of the coalition to assess progress in the fight against ISIS.

ROMANS: All right, in London, Atika Shubert, thank you for that, Atika.

BERMAN: U.S. military bases in Europe are stepping up security measures following the recent attacks in Paris and continuing intelligence that fighters are returning to their home countries from Iraq and Syria.

Officials from the United States European command did not specify what steps are being taken, but generally these types of security measures include physical checks of people and vehicles that enter these bases.

ROMANS: All right, 40 minutes past the hour, time for early start on your money this morning. Stocks are up. European and Asian shares are up after the European central bank announcing a bond buying stimulus program.

U.S. stock futures are not moving much yet here, but stocks had a really great day yesterday, the fourth day in a row for stock gains. The Dow is up about 260 points. That's a good move for the day.

Oil prices watching those this morning, they are up a bit after news of the death of the Saudi Arabia king. Saudi Arabia, the leader of OPEC keeping oil output high. Prices have been plummeting. They refuse to trim the output. Overall, you could say the oil market reaction is muted. It is unlikely the new king will change the issues soon.

Here in the U.S., crude stockpiles reached the highest level in 80 years this week. That is why the oil prices keep falling, a lot of it out there.

BERMAN: You're right, domestic controversy International drama. The president will not meet with Israel's prime minister when he comes to the United States. Why not? We're live in Jerusalem next.

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ROMANS: New developments in the Israeli prime minister's planned speech to Congress and the kerfuffle around it announcing that President Obama will not meet with Benjamin Netanyahu when he comes to Washington March 3rd. The official line is the president doesn't want to harm the elections in Israel after the prime minister's visit.

This is a new low with the relationship with Obama and Netanyahu. I want to bring in Elise Labott live from Jerusalem. When we said a new low, there is a new low after that, a troubled relationship.

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: That is right and a lot of back and forth, Christine. I mean, just a few months ago, we were talking about the U.S. official who had a slur for Prime Minister Netanyahu in a magazine. Prime Minister Netanyahu always criticizing President Obama and particularly his policy on Iran.

That's why the White House is so upset with Prime Minister Netanyahu because he has accepted this invitation by House Speaker John Boehner in effect to give a speech critical about U.S. policy towards Iran. Here in Israel, you know, opposition parties and Israeli public critical of Prime Minister Netanyahu.

They say he is trying to get a leg up in the upcoming election. It is interesting that the white house said they are not meeting with -- President Obama will not meet with Netanyahu due to the election. Netanyahu met with Romney close to the U.S. election when President Obama was running.

ROMANS: Great stuff. Elise Labott, you have a great piece on CNN.com. Check that out. Elise Labott in Jerusalem, thank you.

ROMANS: All right, some big political news today. Jeb Bush delivers a speech in San Francisco today. Everyone watching everything he says because he is doing everything he can right now to run for president raising money around the country.

Beyond fund raising, a big meeting yesterday in Utah, the former Florida governor met with Mitt Romney there. They set up the meeting before Romney, the one-time presidential nominee, said he is considering a third run for the White House. Both sides said they were friendly meetings.

ROMANS: How can it not be awkward?

BERMAN: I don't know. Romney's team is meeting with Boston today. They could talk about the future as well.

ROMANS: If you are Jeb Bush, you said you didn't want this job. I'll go for this job.

BERMAN: That's great. Neither has anything they cannot offer. Neither would take the vice president job.

ROMANS: Would you arm wrestle --

BERMAN: Speaking of arm wrestling, let's bring in Chris Cuomo, to find out what's going on, on "NEW DAY" -- Chris.

CHRIS CUOMO, CNN ANCHOR, "NEW DAY": How are you, my friends? Here is the deal we are dealing with. You have world leaders coming for the funeral for King Abdullah, the former head of Saudi Arabia. He died at the age of 90.

Who is the successor? What does it mean? This is the United States strongest ally in the war on terror. It couldn't happen at a worse time because of what happened in Yemen, government their stepping down, the rebels now in charge. It happened sooner than the rebels thought.

Are they ready? Who is going to What will that mean for the war on terror for the U.S.? We have experts to discuss that. We have what is going with the hostages held by ISIS. The deadline has passed. The Japanese government still seems stymied by communication over the $200 million ransom. Are they still alive?

What will happen with that? We will give you the latest as well. Of course, deflate-gate will not go away. You heard from the main players. There are many Patriots fans out there who are disgusted and ashamed by the allegations.

Yet, don't really seem to feel there should be any punishment. That is an odd form of hypocrisy. I heard people say things with themselves and shame, but what should happen to the Patriots? What did you say? What?

BERMAN: It should come down on the New York Jets. I think that would only be fair.

CUOMO: That stings. That is not the way we are here on NEW DAY. I promise you a different tone at the top of the hour.

BERMAN: Can't wait for that.

CUOMO: Look at him squirm.

ROMANS: Thanks, Cuomo. Was a prosecutor set to reveal a terror attack cover up murdered? Now weighing in with a surprising response next.

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BERMAN: A major reversal from the president of Argentina following the death of a prosecutor probing a deadly bombing of a Jewish center there. Kristina Fernandez to (inaudible) now says that the death was not a suicide.

It comes among mounting evidence that the president and her aides may have helped shield Iran from prosecution in the bombing. This is a complicated web there. Why her reversal and what is next in the widening mystery? Shasta Darlington with more.

SHASTA DARLINGTON, CNN CORRESPONDENT: Hi, John. Hi, Christine. I'm standing here in front of the apartment building where special prosecutor was found dead on Sunday afternoon. As you can see, it is a 24-hour media circus. There are more twists and turns in this case and the latest comes from the president of Argentina.

Christina Fernandez saying she no longer believes this is a suicide. She said the opposite two days ago. This is the prosecutor who accused the president trying to cover up Iran's role of the bombing of the Jewish center 20 years ago.

His body was found hours before he was supposed to appear in front of a congressional committee to present his evidence. Many government officials have focused on the theory this could be a suicide. Most Argentines are not buying it.

They have gone to the street to demand justice. Now it appears the president might agree with him. She said the allegations against her are calls, but she believes Nisman could be the victim of fake informants. She said in the open letter, they used him and he turned up dead. She said in the letter, she is convinced this is not a suicide the official investigation continues.

The chief in charge of that investigation was here at the suspect for a few hours on Thursday. No doubt she will be back and we can expect more bombshells in coming days. Back to you, John, Christine.

ROMANS: Wow. What a mystery. A lot of turns in that case. Interesting. All right, we're getting a look at how much damage the hackers did inside Sony. You won't believe it. EARLY START on your money next.

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ROMANS: Just about the top of the hour. Let's get an EARLY START on money. Stocks climbing this morning thanks to a boost from the European Central Bank. European and Asian stocks up after the big stimulus.

U.S. stock futures barely moving. This is the longest winning streak of the year. Four days in a row. The Dow up 260 points yesterday.

Sony is delaying earnings report this quarter. The company trying to recover from the cyber-attack tied to the release of "The Interview." Sony says the damage was so extensive, the accounting and financial applications will not be restored until next month.

You cannot report to the FCC and investors how your books look when you cannot see the books. Regulators were asked for a couple of extra weeks.

BERMAN: Maybe the hackers should do the report.

The country's cheapest homes saw a 6.8 percent in value last year. These homes are the hardest hit by the recession. The rising home values are important for homeowners who are now in a better position to refinance or sell. That should boost as millennials start to buy.

BERMAN: Starting to move out of mom's basement. Buy houses --

ROMANS: They call them Henry, high earners, not rich yet. Millennials are starting to make money. When they are ready to start buying big things, buy houses.

BERMAN: Upheaval in the Middle East this morning. Major implications for the U.S. war on terror. "NEW DAY" picks it up right now.