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Early Start with John Berman and Zoraida Sambolin

Russia Memorializes Its War Dead In Classroom Displays; Laid- Off Twitter Africa Team "Ghosted" Without Severance Pay Or Benefits; China GDP Grows 6.3 Percent In Second Quarter As Momentum Slows. Aired 5:30-6a ET

Aired July 17, 2023 - 05:30   ET

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

[05:30:00]

CLARE SEBASTIAN, CNN CORRESPONDENT: Russia has been saying that part of the agreement has not been met. So, today, they are saying they're letting the deal expire.

The Kremlin spokesman, Dmitry Peskov, saying that this is unrelated to the attack overnight on the Kerch bridge -- the Crimean bridge. He says they are separate events, and once the concessions that Russia is looking for have been fulfilled, then they could look to reinstate the deal.

But this is a deal that -- just for some background -- that has allowed Ukraine to safely, through several maritime corridors, export some of its grain and other agricultural products to the global markets. Ukraine, a major supplier of things like wheat and corn. And the blockade of those ports on the Black Sea led to a huge uplift in food prices around the world. A hardship for developing countries who were already, in some cases, facing famine.

So this really is the only diplomatic achievement of this war so far that has allowed those food prices to come down and some relief for those developing countries. Now it looks set to expire -- Rahel.

RAHEL SOLOMON, CNN ANCHOR: And Clare, put a finer point on that for me in terms of the potential damage from this now deal sort of falling through in terms of both food prices around the world, as you pointed out, but also the potential for really catastrophic consequences for developing countries in terms of potential famine.

SEBASTIAN: Yes. So the number from the Black Sea grain initiative is that, so far, 33 -- almost 33 million metric tons of grain and other foodstuffs has been exported through this deal. It -- you know, the controversy -- one of the other controversies that Russia has been bringing up is they are saying not enough of it has gone to developing countries.

The Black Sea grain initiative says about 750,000 metric tons has gone through the World Food Program, specifically to some of the hardest- hit countries. So not an enormous proportion but the impact on bringing down the cost of food globally has been much more significant by getting these foodstuffs out to global markets. I think now that the Kremlin is saying they're essentially canceling

-- terminating was the word that Dmitry Peskov used -- this deal, we may see the reverse effect. And don't forget that when this grain deal was signed and, in fact, many parts of the world still are, inflation was a major issue affecting not just developing but also developed economies. This helped alleviate elements of that as well, so it is intensely concerning that it is being now allowed to lapse -- Rahel.

SOLOMON: Yes, certainly a fair point. Where inflation is actually starting to come down in a lot of parts of the world now you have this, which sort of creates an element of the unknown.

Clare, meantime, Russia is trying to convince the next generation -- and I want to switch gears there to Russia, specifically -- the next generation that the war in Ukraine is justified. They're putting memorials in classrooms.

What does this tell us in terms of who and perhaps trying to get in front of public opinion in this war?

SEBASTIAN: Yes, it's part of the toolkit, essentially, Rahel, alongside ever longer prison sentences for dissenters' control -- or, in fact, you could say almost stamping out completely free media and things like that. They really are stepping up efforts now that the war has been going on for almost 17 months to bring the message of patriotism -- you know, feelings of pro-war sentiment into classrooms.

They're doing this in various ways but one that we have been particularly looking at is really an acknowledgment, I think, that they can't really fully conceal the true cost of this war to families so they are attempting to make a patriotic virtue out of it.

Take a look.

(BEGIN VIDEOTAPE)

SEBASTIAN (voice-over): The marching not perfectly in time but what this ceremony lacks in military precision it makes up for in the propaganda value. These children in central Russia will now get the chance to sit at a new desk emblazoned with the face of one of Russia's war dead, a former pupil at this school, killed just three days into the invasion. His grieving mother struggling through.

These so-called hero desks turning classrooms into bleak memorials of a death toll Russia has otherwise tried to hide are actually part of a government initiative. Russia's ruling party says they now number over 14,000. They apparently include veterans of other wars.

DANIIL KEN, HEAD, ALLIANCE OF TEACHERS UNION: You see his picture, his name. He was our pupil just several years ago. He tried to save our country. And for young people -- really young people, it's hard to not to feel the pain from it.

SEBASTIAN (voice-over): Daniil Ken, head of an openly anti-Kremlin teachers union now living outside Russia, says the atmosphere in schools changed overnight when the war started. Information so tightly controlled he says multiple teachers have been fired -- some even fined for speaking up. A fate that Olga, a teacher in St. Petersburg -- we've changed her name and disguised her identity for safety reasons -- narrowly avoided.

OLGA, TEACHER, ST. PETERSBURG: I also tried to convince my colleagues that our country has committed a crime. One week later, the director of the school invited me to talk and she warned me that if I continue then she will have to appeal to a special body of the state. She meant FSB.

[05:35:14]

UNIDENTIFIED FEMALE: (Speaking foreign language).

SEBASTIAN (voice-over): And then, there are the not-so-subtle curriculum changes. This video on the Crimean bridge, part of a new state-controlled weekly lesson series launched last year called Conversations About Important Things.

UNIDENTIFIED FEMALE: (Speaking foreign language).

SEBASTIAN (voice-over): "It's not just to transport crossing," the speaker explains, "but a spiritual crossing." No mention of the huge explosion that caused part of the bridge to collapse a few months earlier.

History is being rewritten in the textbooks. This one now includes the so-called special military operation. And it's not just recent history.

OLGA: It is a historic fact that the Russian state began with Kyiv -- the Kyivskaya Russia, so to say. But nowadays the new textbooks of history are issued where this idea is removed.

SEBASTIAN (voice-over): Scenes like this at a school in Crimean will also likely become much more common. Basic military preparation, a throwback to Soviet times, set to officially reenter the school curriculum for older classes.

KEN (through translator): It's a cheap, simple method of reaching a very large audience and to get across the government's position. It is, in essence, moral violence against children.

SEBASTIAN (voice-over): CNN has reached out to the Russian Ministry of Education for comment on the purpose of these changes and gotten no response.

Sitting at these hero desks, in many schools, a reward for only the best students. A morbid incentive designed to breed a generation patriotic enough to accept a war whose consequences they are sure to inherit.

(END VIDEOTAPE)

SEBASTIAN: So does it work, Rahel, and do these children actually believe what they are being told? Well, one teacher told me she thinks the younger kids probably do. As for the older children -- well, they are starting to understand more and more the consequences of going publicly against the party line -- Rahel.

SOLOMON: Clare Sebastian live for us in London. Great piece. Thank you, Clare.

Well, just ahead, is Elon Musk ghosting some former Twitter workers? And meet the new king of the court at Wimbledon. We'll be right back.

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[05:41:35]

SOLOMON: Welcome back.

Former employees of Twitter's only office in Africa say that they never received any severance pay. These layoffs were part of Elon Musk's global cost-cutting plan just four days after Twitter opened an office in Ghana's capital. The staffers had accepted Twitter's offer to pay them three months' severance, but they say Twitter has not followed through since they left seven months ago.

Let's bring in CNN's Larry Madowo. He is live in Nairobi, Kenya with more. Larry, it has been seven months, as we said, since they were laid off. What more are you learning?

LARRY MADOWO, CNN CORRESPONDENT: We're learning, Rahel, that Twitter has gone silent on them. They fear that they may not get paid a cent because their last day at Twitter was officially December fourth, even though they lost access to Twitter systems earlier than that, and we're in July. Not a word from Twitter.

They already feel that this has been a hugely arduous process. Even the negotiation process only took place after CNN reported on that case. They feel that they were lowballed into accepting this three months of severance and they didn't want to get into the extra burden of a legal case. They didn't get any stocks vesting or any of the benefits. And then they agreed to that back in May and Twitter has gone silent on them.

I want to read a quote for you from their lawyer, Carla Olympio, who has been representing them from the beginning. She says, "Unfortunately, it appears that after having unethically implemented their terminations in violation of their own promises and Ghana's laws, dragging the negotiation process out for over half a year, now that we have come to the point of almost settlement, there has been complete silence from them for several weeks."

And the lawyer representing these former employees for Twitter in Africa say that they're considering legal options in different jurisdictions, including in Ghana. But the problem here is if Twitter no longer has a presence in the country, can Ghanaian authorities realistically compel them to comply? It's not clear.

And when you think about former Twitter Africa employees you think it's a big team. No, it's not hundreds of people. It's literally 11 people. So are we seeing that the world's richest man cannot pay severance for 11 people who worked for the company in the African team?

CNN has reached out to Twitter for comment and we got what is now a (INAUDIBLE) response, Rahel -- a poop emoji.

SOLOMON: I'm sorry. I want to understand that correctly. You said you did not get a response but you just got a poop emoji? Is that what you said?

MADOWO: Yes. That's the email to the press at Twitter.com gives back a poop emoji.

SOLOMON: Oh, I see.

Larry Madowo, I know you've been following this story from the very beginning. Please keep on it. Thank you.

All right, turning to sports. There is a new king of the court at Wimbledon. That would be Carlos Alcaraz outlasting Novak Djokovic in an epic five-set marathon.

Coy Wire has this morning's Bleacher Report. Coy, dare I say it is the beginning of a new era?

COY WIRE, CNN SPORTS CORRESPONDENT: No doubt about it. The passing of the torch, Rahel. Good to see you.

Novak Djokovic was looking for his fifth win in a row at Wimbledon. He hadn't lost on center court since 2013 and he still has plenty left in the tank at 36 years old.

But yesterday was all about the 20-year-old from Spain, Carlos Alcaraz, and the future of men's tennis. Joker won the first set and was a point away from taking the second, by Alcaraz rallying, pulling out a return that summoned a thunderous applause as he evened the match at a set apiece.

The two titans then trading shots in a match of attrition. One game in the third set took over 27 minutes, with the entire match lasting four hours, 42 minutes -- the third-longest championship ever at Wimbledon. Djokovic losing his cool at one point, smashing his racket while Alcaraz just showed incredible grit against one of the greatest of all time.

[05:45:00]

And this was the clincher. Alcaraz falling to the grass almost in disbelief after he dethroned the four-time defending champion for his first-ever Wimbledon title.

(BEGIN VIDEO CLIP)

CARLOS ALCARAZ, 2023 WIMBLEDON CHAMPION: It's a dream come true for me. As I said before, of course, it's great to win but even if I would have lost I would be really proud of myself in this run. Making history in this beautiful tournament, playing a final against a legend for our sport -- for me, it's incredible, you know?

(END VIDEO CLIP)

WIRE: Carlos is the first person not named Roger Federer or Raphael Nadal, or Novak Djokovic, Andy Murray to win Wimbledon since he was born 20 years ago.

Things were a little messy in Miami yesterday. Twenty thousand fans waiting in the rain for hours to officially welcome the greatest of all time to MLS. Seven-time Ballon d'Or winner Lionel Messi saying he's eager to start training and competing. Messi signing an historic deal that experts say will skyrocket American soccer's significance on the global stage. He could debut as soon as Friday, Rahel -- Inter Miami.

Currently, last place in the Eastern Conference, so a long way to go. But something tells me they're going to be turning things around soon to come.

SOLOMON: Yes, certainly bringing a lot of star power -- that's for sure -- to the team.

Coy Wire, good to see you. Thank you.

WIRE: You, too.

SOLOMON: All right. Coming up for us and coming up on "CNN THIS MORNING" violent storms slamming the Northeast triggering deadly flash flooding.

And next, right here, is inflation over? Isn't it? We'll explain and we'll discuss coming up next.

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[05:50:52]

SOLOMON: China releasing its second-quarter GDP data overnight. The country's economy expanding 6.3 percent, missing expectations.

CNN's Kristie Lu Stout live for us in Hong Kong. So, Kristie, put this in context for us. I mean, why is momentum slowing in China?

KRISTIE LU STOUT, CNN ANCHOR AND CORRESPONDENT: The pace of recovery, you're right, is slowing down. And on top of that, China's youth unemployment rate has hit a record high of 21.3 percent in June. So the pressure is on Beijing to do something -- to roll out more stimulus measures.

According to the data that was released earlier today, China's GDP grew 6.3 percent in the second quarter from a year earlier, but it grew only 0.8 percent from April to June, according to economist Carol Kong. She says this. Quote, "The data suggests that China's post-COVID boom is clearly over."

Now, economists say this -- that China is counting the cost of weak demand both at home and abroad. There was fresh-out data that came out last week. The data revealed that China's exports fell at their fastest pace in three years in June. And another factor here is the so-called scarring effects of zero-COVID. You know, the uncertainty. It caused consumers and businesses to save more instead of purchasing more.

So, all eyes now on what policymakers in China are going to do next -- Rahel.

SOLOMON: Yes. I think a lot of people expected the Chinese population to spend more than they ultimately did. They're still pulling back, as you pointed out.

Kristie Lu Stout live for us --

STOUT: Yes.

SOLOMON: -- in Hong Kong. Thank you, Kristie.

All right, let's take a look at markets around the world very quickly. You can see Asian markets are mixed, with the Hong Kong up nearly positive right now -- about one-third of a percent. European markets are all solidly lower. Paris is off 1.4 percent.

Let's take a look at U.S. futures really quickly if we can. Across the board, red arrows with Dow futures worse among them.

U.S. stocks closed mixed on Friday. JPMorgan Chase, Wells Fargo, and Citibank all beating estimates after a week full of encouraging economic data. But investors still bracing for the Federal Reserve to once again hike interest rates later this month.

A key inflation gauge has now declined for 12 consecutive months. In March 2022 -- since March 2022, the Fed has rolled out 10 consecutive interest rate hikes and finally pressed pause last month.

Let's bring in John Leer, chief economist at Morning Consult. John, we know that the Fed is expected to raise again, as we said, but with the last CPI inflation report at three percent, at what point do you think the Fed is ready to declare victory on inflation?

JOHN LEER, CHIEF ECONOMIST, MORNING CONSULT (via Webex by Cisco): Yes, thanks for having me.

I think the Fed is quite a long way actually away from declaring victory on inflation. There are two reasons for that. One is while we got really positive news last week that the CPI had started to fall it's a bit of inside baseball here. But the Fed focuses on another reading of inflation called PCE, which we won't get until the end of the month. And PCE has been less -- has been falling less dramatically than CPI. So the preferred indicator of the Fed is actually looking more flat than what we got last week.

I think on top of that there's a lot of history sort of at stake right now and so the Fed certainly doesn't want to be known as the institution that eased on inflation prematurely and ultimately maybe gave rise to persistent inflation.

SOLOMON: One thing that got my attention is that for the first time, wages for people at home -- for American workers outpacing inflation. That has to be significant for people at home. But how do you think the Fed views that?

LEER: I think on net, it's going to be a really positive driver of the consumer -- consumer finances. In the near term, again, do think it's positive because it's going to allow consumers to continue spending.

I think the balancing act that the Fed faces is, in fact, they're trying to make sure the consumer isn't too robust and consumer demand isn't too robust. And that could, in fact, drive additional interest rates going forward.

SOLOMON: Let me just ask you this news that we got overnight -- in just the last few hours, in fact, that Russia is not going to continue to take part in this grain deal. What impact do you think that has for food prices for the developing world, for sure, but also for U.S. consumers and U.S. inflation?

LEER: Yes. On net, I think it will drive inflation higher, particularly in those very volatile food and energy categories.

[05:55:00]

I mean, it's important to note, I think, that the U.S. is looking relatively strong on an inflation front and even on an economic front compared to the rest of the world.

You spoke earlier about China. We've seen -- Morning Consult has seen how dramatically consumer sentiment has fallen over the last few months. Similarly, Europe has essentially flatlined. And so, in many ways, the U.S. is looking relatively strong on a global basis.

But I do think that some of these sort of shocks -- global supply chain shocks could continue to reverberate and create that uncertainty. It's one of the reasons I think the Fed is really not ready at this point to start cutting or even lowering interest rates.

SOLOMON: Yes, and we'll hear from them almost -- about a week and a half from now.

John Leer, we'll talk to you soon, I'm sure. Thank you.

LEER: Thank you.

SOLOMON: And we are learning more about the suspect arrested in the Gilgo Beach murders. Why police think he may have killed even more people ahead.

And the bridging linking Russia to Crimea damaged again. What this means for Russia's war in Ukraine coming up on "CNN THIS MORNING."

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