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First Move with Julia Chatterley
U.S. & Allies Prepare to Sanction Russia Over Ukraine; Putin Recognizes Separatists Areas of Ukraine as Independent, Escalating Fears of Imminent Invasion; Germany Halts Certifications of Nord Stream 2 Pipeline; Ukraine Braces or Prolonged Economic Pain; Ukrainian Businesses Feeling Impact of Rising Tensions; Putin Orders Troops into Separatist-Held Areas of Ukraine. Aired 9-10a ET
Aired February 22, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: Live from New York. I'm Julia Chatterley. This is "First Move" and here is your need to know. Putin's
plan, world leaders condemn Moscow's ordering of troops into Eastern Ukraine.
Sanctions step up. The EU and U.S. prepared to respond as Germany blocks the Nord Stream 2 pipeline and sentiment sours. Stock prices fall as oil
nears $100 a barrel. Its Tuesday let's make a move.
Welcome once again! Firstly, thank you for joining us it's a day where the prospect of open conflict looms large over Europe this after President
Putin's decision to formally recognize the independence of two breakaway regions in Eastern Ukraine and order troops into the region.
The international condemnation was swift. The U.S. and its allies are expected to respond with new sanctions in the coming hours. Germany has
already announced it will halt the certification of the Nord Stream 2 Pipeline that was expected to increase Europe's reliance on Russian gas the
reaction on global markets also swift.
First and foremost in the commodities market take a look at this oil prices. As you can see there is surging brunt up almost 5 percent crude up
just over 3 percent but also in the agriculture markets too corn and wheat prices are soaring.
Just to give you some context Ukraine and Russia provide 30 percent of global wheat exports this of course, just exacerbating the global
inflationary fears. What about the stock markets while sentiment also there dented by the ramp up in tensions and the sheer uncertainty, I think over
what comes next but it is a mixed picture as you can see.
Europe was the underperformer there, as you can see, Asia had a very tough session too. U.S. Futures are interesting. And you can see the follow
through from what we're seeing in France and the UK too currently well off the lows that we saw overnight trading floors, of course, were closed on
Monday. It's a resilient showing.
I think perhaps some of the concern is being tempered by the realization that it's tough for the Federal Reserve to hike. It's tough to hike even
just a quarter of a percent but certainly not more. In that March meeting given the geopolitical backdrop plus the context here key too. We're
already down over 9 percent from the January highs in the S&P 500.
What about elsewhere? Well, no real sign a flight to safety in sovereign bonds. I can give you a quick look at what we're seeing in terms of the
yields for German 10 year bonds and the U.S. 10 year bonds prices is steady. We've got gold a tiny touch higher but not much to speak about.
The real story is in precious palladium and platinum, again important Russian exports. What's clear is that there is a price to pay and this
aggression and Russia is paying it. Take a look at these you're looking at the RTS Index the MOEX Index, which is the Russian Ruble Denominated stock
market currently off some 2 percent that plunged 10 percent.
During the session on Monday, the Ruble is currently at its weakest level in more than a year and close to record lows. And that's before we get more
concrete details of what sanctions from the United States and its allies may look like much to discuss.
Let's get to the drivers. Moscow has not confirmed whether Russian troops Entered Eastern Ukraine overnight. This after President Putin agreed to
recognize breakaway areas and announced plans to send in what he calls peacekeeping troops.
Now, despite all that, Russia says it's still open to talks with the United States. Ukraine's President Zelensky meanwhile, downplaying the threat of
war just listened to what he had to say a few hours ago.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKY, UKRAINIAN PRESIDENT: As regards the military footing, we understand that there will be no war. There will not be an all-out war
against Ukraine. And there will not be an escalation a broad escalation from Russia. If for the race, then we will put Ukraine on a war footing.
(END VIDEO CLIP)
CHATTERLEY: His call also for a rapid international response seemingly heard the EU will announce sanctions this afternoon. Britain is already
targeting banks and wealthy individuals. CNN's Nick Paton Walsh is in Lviv in Western Ukraine near the Polish border Matthew Chance is in the Capital
Kyiv for us. Gentlemen welcome, Nick. I'll come to you first swift condemnation but differences in the handling of whether or not this is
considered an invasion when you look around the world also confusion over what troops are doing whether or not Russian troops have crossed the
border. What more do we know?
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Little to be honest, and as you point out in all of this Russian troops have been in
Eastern Ukraine for eight years not necessarily wearing uniforms or declared as such, but the separatist movements there have received long
term assistance from the Russian military and the Russian military were involved in their initial moves.
So the question really is since the order given by President Putin last night to provide these when he called peacekeepers to assist freshly
recognized by Russia Donetsk People's Republic have we seen new troops go in?
[09:05:00]
WALSH: And then it is not clear at this stage that they necessarily have. And you might expect, given the sort of choreographic nature of what we saw
yesterday that if those troops did go in, they would indeed be highly visible, but the reaction from the West, while you might argue that some of
these this incremental measure by Vladimir Putin, certainly not the full- fledged invasion that Western officials have been warning about for weeks or months.
You might argue that while his move was possibly incremental, not the worst option he could have done at this stage, we may see this escalating over
the weeks ahead. The reaction from the West has been pretty harsh so far; certainly I did not expect Germany to at this stage, cancel or delay the
certification of Nord Stream 2, that's a huge move.
And we've already seen Russian officials suggesting that will have a huge impact on the gas price in the market in the years and weeks ahead, but
also to the British measures you mentioned as well against very high profile Russians, who have assets in the United Kingdom, and we wait to see
quite what the U.S. will do as well.
So this may play into Vladimir Putin's calculation is unclear whether he thinks he's done enough damage to himself by the smaller move, and to
Russia as well, or whether he feels there's nothing to lose. And it's worth continuing.
But it is, frankly unclear quite what this move to recognize these two Republic's has done in terms of changing things on the ground, if we
haven't seen Russian uniform, new personnel enter into those separate areas. And there is still confusion also as to exactly what has been
recognized the territorial scope of that area.
The separatists control parts of the Donetsk and Luhansk regions, not all of them, although they had ambitions to control all of them. So that will
continue to be a moment of lacking clarity. But that's frankly, what you get if the decision maker is one man who seems to make his decisions by
himself, but still, very perilous moment, certainly, but sanctions, relatively swift and fierce.
CHATTERLEY: Yes, an important distinction that you make this will be fresh troops. There are already troops there. Matthew, come in here, please
because Nick called it a huge move. I was going to call it a dramatic decision from the Germans today to hold the certification of the Nord
Stream 2 Pipeline, which would have increased the vulnerability of Europe in terms of their imports of European - Russian gas.
Does this provide a deterrent effect despite the bravado that we've seen from the Russians this morning? In response to that, does it provide the
deterrent effect that Germany is hoping for?
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: I mean it might do. You know, if that's certainly the intention, I expect, that they want to
make sure that this conflict, which has been, as Nick rightly pointed out, underway for the past eight years, and has been escalating over the past
several months with the deployment of tens of thousands of forces near Ukraine's border.
Then last night, with the recognition by Vladimir Putin, of those two separatists rebel republics don't expand any further. And of course, that's
the big concern at the moment, that that recognition by the Kremlin, of those rebel republics, it is just the start, potentially, of a much bigger
sort of military/political incursion by the Russian authorities.
The reason for that is this is that the rebels in the east of the country, they control just a small area of the territory that they claim, which is a
much bigger area. There are cities that are controlled by the Ukrainian government at the moment that the rebels want as theirs.
And so the big concern at the moment, is whether the war will restart, you know, in its full blown capacity in the east of the country, and rebel
forces backed by Russian tanks perhaps will move out from their current positions, and try to grab land that they claim as being part of their now
recognized by Russia independent state that hasn't happened at the moment, of course.
But it's something that could happen in the future. It's not clear at the moment from the Kremlin, about whether they support that kind of maximalist
definition of those separatists Republic's or whether they want the separatists to kind of stay in that box and stay in their current area that
they control?
But it is a big concern that this could be this small recognition, or this recognition of these of these rebel republics could be the start of
something much, much bigger. There's a broader concern as well, which is that the tone of Vladimir Putin speech last night, the anger with which he
was talking and redefining Ukrainian statehood as being an artificial state that was essentially created by the Soviet Union drawing on Russia's
ancient lands.
You know, it gives the impression that in the future, you know, he wouldn't have any problem at all about redrawing Ukraine's borders as and when he
sees fit. And so, yes, there are these two kind of looming concerns hanging over the situation at the moment.
We've seen Vladimir Putin now recognize these people public's in the east of the country is that the end of this round of escalation or is it just
the start of something much bigger?
[09:10:00]
CHATTERLEY: It's a great question. And Nick I'm going to throw it to you because I think anybody watching the bitter vent against Ukraine yesterday
by Vladimir Putin and the stage theatrics that took place early on the day, we'll perhaps argue it felt like overkill if just signing a piece of paper
and acknowledging the independence of these two breakaway states and perhaps sending in further troops is the end game here.
WALSH: It wasn't a performance designed to dispel any fears that Vladimir Putin may have been a bit on his own a bit isolated during the pandemic,
even when he met his top security officials he was meters away from them kind of talking via microphone as he addressed his Foreign Intelligence
Chief down demanded he talked plainly and told his Deputy Chief of the Presidential Administration Dmitry Kozak to speak up at one point.
That was a remarkable scene, and then the speech itself 57 minutes in length rambling through Soviet history, Ukraine's history, taking a brief
break to get upset the Bill Clinton snubbed him 22 years ago, it was remarkable. It seemed like his audience was himself or possibly, if you
delve into criminology may be people seeking to change the balance of power between individuals inside that very closed building in Moscow.
But it certainly gave me the impression that he's not done in airing his grievances, and that he conceives Ukraine to have a very minimal right to
exist as a nation. He perceives NATO has already here he described that their missions to train Ukrainian forces were basically basis, and that
Ukraine would be a platform for NATO to attack Russia.
An elaborate series of justifications, as Matthew points out, that may well be part of what we see Russia leaning on in any future action. And I think
of all the things we saw yesterday, the recognition of Republic's that have always frankly, been run by Russia were created under a Russian scheme
eight years ago, was not in itself, particularly shocking.
It was a lesser option for the Kremlin. It was that speech he gave and the mentality that it exposed, I think left certainly left me thinking that
there may be more to come and that certainly, we may be seeing less of the rational actor of Vladimir Putin than people have liked to champion him as
over the past decades or so. I'd say he's advocates, not as critics.
CHATTERLEY: Nick Paton Walsh great to get your insights. Thank you. And Matthew Chance there too. In the meantime, and as we've discussed, Germany,
taking action Chancellor Olaf Scholz has halted the certification of Nord Stream 2, the pipeline that was set to double Russian gas exports to
Germany in response.
Of course to Moscow his latest move, Former Russian President Dmitry Medvedev responding to Germany's decision tweeting German Chancellor Olaf
Scholz, has issued an order to halt the process of certifying the Nord Stream 2 gas pipeline well, welcome to the brave new world where Europeans
are very soon going to pay 2000 euros for one cubic meter of natural gas.
Nina dos Santos joins me now bravado from the Russians an incredibly difficult decision for the Germans to take at this moment when Europe
already faces an energy crisis with consumers paying very high prices.
NINA DOS SANTOS, CNN CORRESPONDENT: That's right. And this was supposed to provide about 50 billion cubic meters per year to the German consumers
enough to affordably heat about 26 million people's homes over there badly needed at a time.
But of course, there is, as you pointed out a spike in energy prices and also concerns about the reliability of the largest provider of gas to this
part of the world, which is of course Russia. Remember that Germany already depends upon Russia, for about a third of its gas needs and Nord Stream 2
would have made it even more beholden on Russia as a supplier.
Now, obviously, this decision has come amid intense pressure the German government, successive German governments, since Nord Stream 2 was started
in 2015, have consistently tried to say that this is just a commercial project, a commercial arrangement. But it has never really been that it's
always been a lever of geopolitical influence.
And the real concern people had here with regards to Ukraine is that the moment Nord Stream 2 would have been opened, it would have essentially
nullified the role of Ukraine and also Belarus and Poland as transit countries for other pipelines, pumping Russian gas towards this part of the
world.
And as a result, what that would have done is would have made it more easy for Russia to have more military and other influencing parts of the world
like for instance, Ukraine. So for this reason, this has been stopped at the late stage.
However, a lot of people here in this part of the world, Julia, as you well know, are aghast at the fact that the German government could have let this
go right until the last minute. This is a pipeline that has cost Gazprom the Russian backed gas-company $11 billion to build. It was completed in
September.
It's been pumped full of gas and is full and ready to go. Except at this late stage Germany has decided that they have put a hiatus on that
certification process.
[09:15:00]
SANTOS: The question is will the United States and other gas providers make up the difference for Europe's largest economy? And also what other
sanctions can be punitive to Russia and implemented from here, Julia?
CHATTERLEY: Yes, absolutely. And can Russia replace those lost revenues too lots of questions? Nina Dos Santos, thank you for that. Now top U.S.
officials say the White House will impose additional sanctions on Russia Deputy National Security Advisor Jon Finer said significant steps will be
announced in the coming hours.
President Biden signed an executive order imposing targeted sanctions on the breakaway regions of Donetsk and Luhansk on Monday. John Howard joins
us now from the White House, John, great to have you with us. They felt symbolic the announcement yesterday after we saw the announcement of the
declaration at least of independence from Russia.
The last thing Joe Biden wants to be accused of here is appeasing Russia, should we expect aggressive sanctions now in response?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, I think we should, Julia because there's been a big change in tone overnight last night, of course,
after Russia, and Vladimir Putin did what they did yesterday, the administration, in a call with reporters was equivocating on whether this
actually constituted an invasion.
What we've heard this morning from Jon Finer, the Deputy National Security Advisor is a characterization that this is an invasion. And coupled with
the response from Germany that is halting the certification of Nord Stream 2 that says that the Western alliance United States Germany, other members
of NATO are willing to begin paying the price that will involve economic blowback for the U.S. economy for the European economy in order to sanction
Vladimir Putin and Russia, not-withstanding that taunt from Dmitry Medvedev that you read earlier.
Now the question is how much of the full package of sanctions will we see today? We won't see all of it. A senior Administration official told me
today, if we're going to deter Vladimir Putin from taking Kyiv and the entire country of Ukraine, we've got to hold some sanctions back as a lever
as an additional potential deterrent, but we are going to see significant sanctions.
And we may hear from President Biden directly during the course of the day. There's no confirmation of that. But you clearly have a stepped up tone and
tenor from the White House today.
CHATTERLEY: Yes, there has to be some fear of the unknown it seems. John Harwood we'll see thanks you so much for that. OK, straight ahead here on
"First Move" more from Ukraine we'll have my Former Government Minister who warns of severe costs for the country if the crisis continues, stay with
us.
(COMMERCIAL BREAK)
[09:20:00]
CHATTERLEY: Welcome back to "First Move", the Ukraine crisis reverberating in economies around the world and within Ukraine itself, bracing for
billions of dollars of economic pain and lost investment, currency depreciation, and sheer uncertainty.
Just one example Ukraine is a major exporter of wheat and corn. At a time when fuel prices or near a 10 year high supply interruptions could drive
them higher worldwide much to discuss. Tymofiy Mylovanov is the Former Ukrainian Minister of Economic Development, Trade and Agriculture and joins
us now. Sir great to have you on the show!
I want to talk about the economic costs. But first and foremost, just to get your take on what we've seen in the last 24 hours and the decision and
announcements from Vladimir Putin.
TYMOFIY MYLOVANOV, UKRAINE'S FORMER MINISTER OF ECONOMIC DEVELOPMENT, TRADE & AGRICULTURE: Yes. Yes, I'm currently in Kyiv. So it's a little bit more,
you know, it feels much more real than, you know, last week I was in the U.S. People here are still relatively quiet.
But everyone was shocked by yesterday announcement of recognition of the separatists, breakaway regions and people, some people were worried and,
you know, kind of bracing themselves for imminent deterioration of the situation.
But it looks like the sanctions or the rhetoric in the EU and the U.S. and Canada has been stepped up. And that brings some relief. And we are hopeful
that the sanctions will work and we'll be able to deter, but part of me thinks that it will come down to the strength of the army. In the end,
hopefully, we won't see that. But we should be ready.
CHATTERLEY: You fear war? Tymofiy, are you saying you feel war? You said it comes down to the army are you fearing war?
MYLOVANOV: Concern that, you know, you know, OK, we have been in the war for eight years, and there's been constant shelling in the east, of course,
over the last weeks, it has been, you know, it has intensified. But, you know, I've been talking to people around Kyiv today and my university and
you know some people worry that there will be some action in the east at the very least.
And so people fear that, yes. And the economy responds to that too. But, you know, most people now have backup plan, you know, contingency plan in
where they move what they do in which conditions? So it feels very, very, you know, somber.
CHATTERLEY: Yes, let's talk about the economic cost. As you said, if people are talking about leaving, or certainly moving out to the east or beyond,
we've seen international airlines canceling flights, because the insurance costs are soaring, the cost of insuring ships in the Black Sea, for
example, is rising. Do you have any sense? And can you quantify the kind of cost that's already been borne by the Ukrainian economy?
MYLOVANOV: Yes, we have a report at the School of Economics, were currently the president and we've worked for the government to provide this reports
and our estimates just from the blockade and harassment of the experts, routes, routes, the cost would be between 12 percent GDP to 3 plus percent
GDP a month.
So If this situation continues, even if nothing happens, kinetically there is no major military action outside of this breakaway regions, there will
be substantive laws, because agriculture and some of metallurgy and some of other commodities, it would be difficult to export, there will be higher
logistic costs.
And I think we even have an estimate that the cost of wheat worldwide might go up as much as 8, 9 percent. That's one example. The other example is
access to capital markets, capitalization of the companies in Ukraine, overall logistical costs and diversion of investment from development
projects.
CHATTERLEY: I mean there's much to discuss there, what kind of scenario creates an 8 percent rise in wheat prices around the world? What was the
scenario that you were forecasting or modeling for that?
MYLOVANOV: So Ukraine has a share of wheat production or expert in the world trade between 8 and 11 percent. And that's a very little known story
that before the annexation of Crimea in 2013, it only had 3 percent. So it's a rising giant in a way.
Russia has depends on the year and harvests between 18 and 20 percent and locally in this region for the Middle East for some of the Asian countries
and for Africa this is going to be a major trader. So this is a source of wheat for a number of important countries.
[09:25:00]
MYLOVANOV: If this supply will be disrupted and it's probably going to be disrupted both for Ukraine and Russia, so you're going to have a temporary
shortage of, you knows substantive part of the market. So there will be substitution effects. And so the demands will go up and the prices will
rise up.
So there are models, there are generally, this is jargon, you know, economists use general equilibrium models, which estimate substitution
effects, logistical costs, and those models produced 8 to 9 percent, temporarily increasing in prices.
CHATTERLEY: What do you think, based on your understanding of both economics and financial markets is the best way to sanction Russia, the
most efficient way to sanction Russia at this stage and to have the greatest deterrent effect.
MYLOVANOV: OK. So one, of course, is obviously if I access to financial markets. And there's been talk today about sanctioning Russia that
sanctioning Russian banks, but also you can sanction even the Central Bank of Russia. That's what's on the on the kind of on the surface.
Much more interesting, much more difficult issue is energy. Europe relies on Russia for gas and other energy supplies, and it's not easy to diversify
away. But at the same time, Russia also relies on Europe to expert. And, you know, it's more than half percent of its exports, revenues coming from
energy.
And it's also not easy for Russia to diversify so - all kinds of all kinds of policies, which will make it costly for Russia, or will tax them on the
revenues, which comes back to Russia, from selling gas and oil, might be an effective deterrent in the end of the day.
CHATTERLEY: So the whole thing of the Nord Stream 2 Pipeline, even if Russia responds with a flippant response, actually is a smart way to tackle
Russia at this moment.
MYLOVANOV: Yes. So there is, this is true, but also not just because of money and the expertise, but because Russia is using North Stream 2 to
pitch some European countries against each other. Because providing, you know, more supplies through one pipeline, rather than the other create some
disagreements because it provides gas at different prices to different countries.
And so internal lobbies, industrial lobbyists, they have a little bit of a conflict. So for the EU, it would be great to have a unified front in
dealing on the energy policies with Russia. And so not certifying on North Stream 2 is a strategic step not only financially but also in terms of
providing fewer opportunities for the for Russia to create conflict within the EU countries.
CHATTERLEY: Do you think creating a stranglehold undermining confidence in Ukraine's economy is part of Putin's plan?
MYLOVANOV: Yes, it has been on sorry.
CHATTERLEY: No, I was just going to say, in terms of the response from the Europeans from the United States, does there have to be a financial
response to support Ukraine to at this moment to try and offset some of that loss in confidence?
MYLOVANOV: Some people say and I agree with that view that, you know, Ukraine is quite resilient in terms of economy. And because this kind of
economic harassment has been going on for a while it's a part of war suppression strategy and actually started before the annexation of Crimea
in 2014.
The embargo or harassment increasing, you know tariffs on trade and agriculture was done by Russia as early as 2012. So, yes, there is a cost.
It's continuous. And it's done in multiple ways. And most of them we have not really been discussing, but you know, I served in the government, I
served on the Central Bank Supervisory Board, I had a number of positions. And every time we saw some kind of different approaches in economic warfare
from Russia.
Now, what is the smart way to deal with that to provide support to Ukrainian corn, of course, because you have a more resilient Ukrainian
economy? That translates immediately in security situation, you know, there's more confidence domestically, there is less political infighting.
There is more ability to support and have resilient military substitute logistical paths, if needed, and all kinds of other economic issues could
be resolved with the support.
So yes, I would argue that support is as important economic support and financial support is as important as military and diplomatic support at
this point.
CHATTERLEY: Yes. Tymofiy, great to chat to you sir! Thank you for your time and stay safe, please. President of Economics and Former Ukrainian Minister
of Economic Development Trade and Agriculture thank you, sir! The market opens next stay with us.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to "First Move", we've just had the opening bell over on Wall Street in U.S. stocks are trading. For the first time since
Putin acknowledge the independence of breakaway regions in East Ukraine and order troops across the border considerable uncertainty remains as to
whether or not that's happened?
Of course, but we are seeing that uncertainty reflected in financial markets the DOW off some eight tenths of 1 percent at this stage, the
NASDAQ also off eight tenths of 1 percent. Remember, markets were closed yesterday. So this catch up taking place for these markets to over in
commodities land.
That's where we're really seeing the price action shifting Brent crude up more than 5 percent at this stage WTI up some 3.5 percent in the session.
Christine Romans joins me now to discuss. Christine, I'm actually quite surprised by the lack of response for stock markets.
Admittedly, we're off almost 10 percent from recent highs or the January highs, but I just wonder whether some of the alarm has been tempered by the
fact that we have a Federal Reserve now that we're watching the geopolitics of this situation and thinking, whatever the inflationary threat, perhaps
our hands are going to be tied?
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes. And that's a very, very good point. And also its early days, we don't know what's going to
happen next with Vladimir Putin. We know there's a Ukraine obsession that is contributing to an awful lot of destabilized instability in the region,
and how will that factor into the global inflation story?
So we are in the early days of how this will actually play out? A lot of people are going back to 2014 in Crimea and looking at stocks, you know,
three months and six months past trying to look for any kind of clues really, about what this means in terms of stability in Ukraine and in
Europe?
One analysts this morning was telling me there are three to five bad outcomes for Ukraine any way you slice it, how, what level of bad is the
outcome for from Ukraine? You just had that fantastic guest talking about the grain part of the story. That is really important. It is Ukraine is the
breadbasket to Europe and feeds an awful lot of Africa in the Middle East.
[09:35:00]
ROMANS: So this is a story with ripple effects around the world. Oil prices already zeroing in on $100 a barrel in the U.S., you've got gas prices
already up some 20 cents over the past couple of weeks and zeroing in in the summer to $4, probably for the national average. So the inflation story
here is still the big driver and Vladimir Putin's moves only adding to that story.
CHATTERLEY: I think you raise such a great point that we tend to see in the short term noise for stocks when we see these geopolitical spikes in
tension wherever they are in the world. But you tend to see the reaction, honing in on the most specific elements be it commodities prices, wheat
prices, corn prices, oil prices in this case, or, indeed, the Russian markets themselves that I mentioned at the beginning of the show. The
aggression is being felt in very specific pockets of the market, which is rational I think.
ROMANS: It's interesting to the reaction to the Ruble into Russian stocks. And it's almost when you look at some of the moves and Reuters, the Wall
Street Journal have done some good reporting on this, about the stockpiling of foreign currency in Russia, starting last year, right in December, those
stockpiling foreign currency was something double what it was a year prior.
So these making these moves to try to buffer Russia trying to buffer itself from what will be potentially Western blowback for these moves. But it
feels as though when you look at the last 15 years of things that Vladimir Putin has said and written about Ukraine, it seems as though this is a
strategy here.
This isn't like Crimea, which is a one off this looks like it is the next piece of a strategy for Vladimir Putin in terms of vis-a-vis Ukraine and so
that market implications of that I think we just don't know yet.
CHATTERLEY: Yes, couldn't agree more as always, Christine Romans, thank you for your insights. OK, coming up here on "First Move" many companies with
operations in Ukraine playing a waiting game, one online business already taking steps to ensure its people's safety more after the break.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" and as we've already heard Russia's actions could have a devastating impact on Ukraine's economy. But
for some small business owners the escalating tensions are already causing pain as Michael Holmes reports.
[09:40:00]
(BEGIN VIDEOTAPE)
MICHAEL HOLMES, CNN CORRESPONDENT (voice over): Lida Koniukh manages a small clothing and souvenir business in central Lviv, trying to ignore the
drumbeat of possible war echoing around her country.
LIDA KONIUKH, STORE MANAGER: The situation was a lot better after the New Year, but now you can feel the difference is the last tourist means less
business.
HOLMES (voice over): Small business operators like Koniukh say these are tough times. No tourists and locals are hunkering down. First it was COVID
lockdowns now it's the threat of war, keeping the cash register quiet.
KONIUKH: We don't know what will happen. No one knows that the situation is difficult for sure. But if you asked what to do if it gets worse than my
answer is I don't know. The only thing I know for sure, I will stay here no matter what.
HOLMES (on camera): Now, the pocketbook pain for ordinary Ukrainians is obvious. And nationally, it is as well GDP is down investors having fled to
the sidelines. And obviously, an invasion would make everything that much worse.
But experts say even if Putin's troops stay on the outside, things could be almost as grim as they apply an economic stranglehold on this country.
MYLOVANOC: Absolutely. Because the war is not just you know, again, a kinetic or physical action. It's also economic, its cyber diplomatic and
you know the businesses are suffering now. And they're diverting resources from development from business investments into protecting operations. And
so if it continues that there will be there will be harassment, there'll be damage and so that's a part of pressure.
DARIA BORYSENKO, STORE MANAGER: Not so many customers because we are.
HOLMES (voice over): Daria Borysenko manages a popular burger joint in Lviv. People are still coming in, but she's worried about what might come.
HOLMES (on camera): Are you worried about how an invasion might affect business?
BORYSENKO: Yes. It's really hard because it's more psychology situation. Not only about food, not only about smiles, it's rarely nervous.
HOLMES (voice over): Still, like virtually all Ukrainians we meet she's both stoic and confident in her country.
HOLMES (on camera): Are you worried about the war?
BORYSENKO: Many of us yes but we are staying calm because we understand if we will be nervous, and with the different panic attack, it will be not so
good for us.
HOLMES (voice over): Like most Ukrainians nervous, but I'm afraid.
(END VIDEOTAPE)
CHATTERLEY: Now the tensions between Russia and Ukraine incredibly high companies with operations in Ukraine are taking precautions amid threat of
invasion. JustAnswer is an online on demand platform where people can ask experts in a variety of field's questions around the clock. The company has
around 700 employees around the world in the United States, Manila and India.
Around 260 of them are based in Ukraine where it's had a presence since 2010. Now JustAnswer is taking steps to keep its employees and
infrastructure in Ukraine safe in case of an invasion. Andy Kurtzig CEO of JustAnswer joins me now. Andy, great to have you on the show!
I know you have a platform that operates across what more than 190 different countries. Just how much of your time today is being spent crisis
managing and protecting your employees in Ukraine?
ANDY KURTZIG, CEO, JUSTANSWER: Nearly all of it for the last couple of weeks just getting ready for the worst, but hoping for the best.
CHATTERLEY: How are you preparing?
KURTZIG: So we have to think about all the different angles on what Putin might do up there. Obviously, he's already started doing cyber-attacks on
bank. So we got to figure out how to pay our employees. If our bank gets attacked in our bank in Ukraine is one of the banks that were attacked last
week.
We have to think about power, Putin's going to try to take out the power going to try to take out communication. So we're getting diesel generators
for our office, we're getting satellite phones and all kinds of different ways for communication.
And then of course, we're starting to move our employees from the east to the west, and have already started doing that.
CHATTERLEY: So I mentioned you have 260 employees and mostly they were already based in the West. I believe that somewhere in Kyiv, can you give
me a sense of numbers? How many people are saying look, I actually want to move west. I want to leave Kyiv how many staying saying I want to stay.
KURTZIG: So that's right. 19 of our folks are east of Lviv and most of those are in Kyiv but they're those who are all over.
[09:45:00]
KURTZIG: We're actually moving them and their families to one of three cities either to Lviv, - that where they may want to be. And about half of
them have started to either already moved or preparing to move now, and others are just choosing to stay where they are.
CHATTERLEY: For those that are moving can I ask if you're helping? I mean, for most people, if you're paying a mortgage or trying to pay rent, trying
to find that for separate cities, are close to impossible. Why are you helping people with that?
KURTZIG: Of course, both logistically and financially, we're putting them up in hotels where we're giving them days off; we're for taking care of it
for them.
CHATTERLEY: Thanks Andy. Are people frightened?
KURTZIG: There we all are it's a very difficult situation. And worse than ever, we've been there since 2010. We've seen a lot we were there when
Yanukovych was President. We were there before during the Maidan revolution after they Maidan when Russia has been in battling on the east and Crimea
and such and, and this is the worst we've ever seen it.
It's scary. It's terrible for our folks there. And we're all just on edge. I mean, we see that the headlines are the big stuff, and the bombings of
schools and things like that. But what's happening on the ground is, is extensions of that. And so Putin is in his people are calling in bomb
threats to our family, to our employees, kids schools, often, like at least once or twice a week.
And, you know, taking out the internet and banks and things like that, right? Every single time the internet goes out. They think war started. And
we all get worried.
CHATTERLEY: You're portraying an incredibly frightening picture; I want to ask you about that. You mentioned bomb threats, your children's schools
have had bomb threats, you have no sense of where they're coming from, I'm assuming?
KURTZIG: That's right. But of course, they're related, that they must be coming from Russia. And that's just part of the whole Russian plan of
trying to keep Ukraine out of balance and uncertain and, and create fear.
I mean, Putin is not just a bully, but is you know, very deceptive, and is trying to maximize his advantage with his military and with his
misinformation campaigns.
CHATTERLEY: Andy I know, you and your family spent time there. In Ukraine in 2019, you clearly have a Ukrainian flag displayed behind you. But you're
sitting in San Francisco in California yourself. In many ways, how hard is it as a leader of a business to be trying to manage trying to protect your
workers, but actually not being there?
KURTZIG: It's really hard. So my family did a year abroad and spent half of that in Ukraine and made we became friends with all of our folks there and
made lots of friends when we were living there and just really learned about Ukraine and the wonderful people and the history and the culture and
the ways of doing things.
They're wonderful people just like you and I, and they just want democracy and freedom and, and the opportunity just like, you know, we get to have
every day. And so it's really hard to see, you know, Russia trying to pull them in the opposite direction, right?
This is not just bad for Ukraine; it's bad for the world. This is a blow against democracy. And, and so what JustAnswer is trying to do is trying to
do our best with what we have. And that is to be pro democracy. We're not going to run away. We're not going to leave Ukraine hanging; we're not
going to take our dollars away from Ukraine.
We're committed to Ukraine, we're going to stay in Ukraine, and in fact, we're going to grow in Ukraine.
CHATTERLEY: That's exactly what I was going to ask you. You're committed. Sir Andy, thank you so much. Thank you for what you're doing for your
people as well and for the support, and we wish everybody well and please stay safe. Andy Kurtzig the CEO of JustAnswer. Thank you, sir.
KURTZIG: Thank you.
CHATTERLEY: OK, coming up after the break more on crisis in Ukraine. We'll have the very latest in a live report from Moscow. Stay with us.
(COMMERCIAL BREAK)
[09:50:00]
CHATTERLEY: Welcome back to "First Move" Russia says it's still ready for talks with the United States even after ordering troops into two separatist
regions in Eastern Ukraine. The Russian Foreign Ministry Spokeswoman saying "We are always in favor of diplomacy". Listen to President Putin's
comparison of Ukraine to other post-Soviet nations in that light.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, RUSSIAN PRESIDENT: After the fall of the Soviet Union, Russia recognized all the new geopolitical realities and as you knows, is
actively working to strengthen our cooperation with all the independent countries that emerged in the post-Soviet space.
We intend to work this way with all our neighbors. But with Ukraine, the situation is different. This is because unfortunately, the territory of
this country is being used by third countries to create threats against the Russian Federation itself. That is the only reason.
(END VIDEO CLIP)
CHATTERLEY: Nic Robertson joins us now. Nic, it feels like months ago, but a week ago that the Russians were saying they were removing troops. The
picture looks very different as a result of the last 24 hours. Based on what you've seen do you think there's any room for diplomacy left?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, I think if we sort of complete out what President Putin has been saying over the past 24 hours
on Ukraine, it seems really unlikely is saying that it has an illegitimate government that they came to power in a coup, that Ukraine is historically
part of Russia.
Now this is Putin's own sort of reinvention of history, if you like and that's what we heard there when he said that Ukraine is being used as a
base to you know, to foment danger for Russia. What we are hearing from Russian officials now is a sort of backpedaling on what President Putin
signed up to yesterday, he signed up to Russian forces going into Donetsk and Luhansk, as peacekeepers.
But what we're being told in a Deputy Foreign Minister who has just has just said this, and it would the Presidential Spokesman from the Kremlin
said this earlier today, that, although it is allowed for Russian forces to go into these parts of Ukraine, it isn't happening at the moment. That's
what he's saying they will go in if they're needed.
Now, this sort of ambiguity that Russia is creating; clearly is intended to temper and head off the potential for the harshest of sanctions that were
threatened by the United States by the EU by others, if Russia puts forces into Ukraine again.
So this, I go back to the ambiguity of it, because it's very hard to know precisely what Russia is doing. The international consensus has been other
Russia denies it is that they've been supporting, advising providing equipment supplies for those pro Russian separatists rebels in in those
eastern parts of Ukraine over the past number of years.
The formality of Russian forces actually going over the border seems like a line now that they are drawing back from that they don't want a public
knowledge. But I think this is an all the usual caveats that we hear from Western officials, what they say and scrutiny on what they actually do and
are doing right now Julia.
CHATTERLEY: President Putin is very effective at shifting the goalposts effectively with one signature yesterday; you could argue that he sliced
off two more chunks of Ukraine to add to Crimea. And now as you said was sort of talking about truth positioning rather than this declaration that
is the negotiating point that he now sits at.
[09:55:00]
CHATTERLEY: Are the sanctions that we are seeing, and yet to see, Nic, going to be appropriate in your mind for what's happened in the last hours?
ROBERTSON: Yes. So we're beginning to see the sanctions on individuals on banks in the UK, you know, individuals that might have raised finance for
business ventures that would have been beneficial for the for the Kremlin, similar lines coming out from the EU.
I don't think what we're seeing so far is the full ramifications of those incredibly hard and swift sanctions that we were told would be coming. And
I think what we're seeing so far, Putin has already baked into his calculations.
CHATTERLEY: Yes, Nic Robertson great to get your insights, thank you. OK, that's it, for the show. Stay safe, "Connect the World" with Becky Anderson
is next. We'll see you tomorrow.
(COMMERCIAL BREAK)
END
