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First Move with Julia Chatterley
Second Day of E.U. Talks on Ukraine; Biden Says U.S. Won't Send Ukraine Long-Range Rockets; Biden's Inflation Fighting Plans; Agatha Hitting Mexico with Heavy Rain; European Commission and European Council Presidents Speak on Ukraine. Aired 9-10a ET
Aired May 31, 2022 - 9:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
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ELENI GIOKOS, CNN ANCHOR AND CORRESPONDENT (voice-over): You are watching CNN. I'm Eleni Giokos in Dubai.
We begin with the crisis in Ukraine and in Brussels. E.U. leaders are holding a second day of talks. They have already agreed on an almost total
ban on Russian oil imports in response to the Moscow invasion of Ukraine. So far, all of the leaders seem to agree on its principles, according to
the European Commission president.
(BEGIN VIDEO CLIP)
URSULA VAN DER LEYEN, PRESIDENT, EUROPEAN COMMISSION: Thanks to this, council should now be able to finalize a ban on almost 90 percent of all
Russian oil imports by the end of the year. This is an important step forward.
(END VIDEO CLIP)
GIOKOS: An important step. Meanwhile, in the Ukrainian east, the Russian army is said to control parts of the key city of Sievierodonetsk, according
to a local military official. But the official denies Russian reports that they have captured the entire city.
In the meantime, a ship loaded with 2,500 tons of steel has left the port of Mariupol, bound for Rostov (ph) in Western Russia, according to a
Russian spokesperson.
This video was released by the Russian defense ministry. It is the first vessel to depart from the port since Russia took the city. Let's go
straight to day two of the E.U. leaders' summit. Anna Stewart is following this from London.
There was a lot of compromising. Oil was on the table. Gas still seems to be discussed. It is a unilateral approach to the gas front. Give me a sense
of whether there was overall agreement on big items.
ANNA STEWART, CNN CORRESPONDENT: The real big item was oil, wasn't it?
It took months to get people on board with an oil embargo. It was agreed on at 1 am this morning but with some big concessions. The biggest being that
it will not include the southern part of Druzhba pipeline.
That means the landlocked countries of Hungary, Slovakia and Czech Republic, ,who rely on oil from Russia, will still get it.
There was quite a big timeframe. It was expected six months until the oil embargo takes place, in terms of the seaborne oil; eight months for refined
products. Experts have been critical of this timeframe.
It gives Russia more time to find new customers. They have had plenty of time since the invasion and the talks of embargos of oil and gas when it
first took place. Josep Borrell, the top E.U. diplomat, has spoken about this, the fact that Russia will likely try to find new customers and that
is out of their control. Take a listen.
(BEGIN VIDEO CLIP)
JOSEP BORRELL, E.U. HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS & SECURITY POLICY: Certainly, we cannot prevent Russia to send their oil to someone
else. We are not so powerful. But we are the most important client for Russia.
They will have to look for another one. And certainly, they will have to decrease their price. The purpose for the Russians to get less resources,
less financial resources to feed in the war machine, and this certainly will happen.
(END VIDEO CLIP)
STEWART: He makes some important points there. The E.U. is by far Russia's biggest customer when it comes to oil and gas. It will be hard to replace
it, frankly. At the moment, they pay around $10 billion a month for Russian oil.
Once the embargo does kick in between 6 to 8 months time, that will reduced down to $1 billion. When it does find new customers and sells the oil on,
you can expect an even greater discount in terms of the price than what we are already seeing.
Right now it's trading around $34 a barrel cheaper than Crude. They are shipping it further away. And trying to find enough bankers and insurers is
getting increasingly harder for Russia.
GIOKOS: Incredibly complex supply chain. I want you to give me a sense in terms of what is happening with gas. Gazprom are cutting out certain
clients which are not significant enough for them to feel pain. Interestingly, you're also seeing countries trying to wean themselves off
before gas is sanctioned.
STEWART: Today, as the E.U. leaders arrived for a second day of summit, this was the question for a lot of them.
What about gas?
If you're trying to limit how much Russia makes from the E.U. in terms of energy, shouldn't there be an embargo on that as well?
They're trying to reduce it to two-thirds by the end of the year.
[09:05:00]
STEWART: They already said that they are going to embargo coal and mining as of yesterday. In terms of gas, it was interesting to hear from the
president of Latvia this morning. He supports the embargo of all energy and has since the invasion.
He talked about how Ukraine is paying the price in terms of people and money should not matter at this stage. Of course, it is easy to say that
for countries who are not supporting. It they say they will all move together. When it comes to weaning themselves off gas, they will act as a
bloc.
I think it is interesting to note there are some countries who are refusing to obey Russia edict and pay with rubles. So they have been cut off. So
some countries have already started moving unilaterally on this. The Netherlands, Bulgaria and Poland have already been cut off from Russian
gas, Eleni.
GIOKOS: Anna Stewart, good to see you. Thank you so much.
Now we move to the Eastern Ukraine. The regional military says that Russian forces are now controlling parts of the key city of Sievierodonetsk.
Meanwhile, a Ukrainian official telling us that victory against Russia is not likely if the U.S. does not send long range rockets.
This is after President Biden said he will not ship any weapons that could reach Russian territory. Melissa Bell is live in Zaporizhzhya.
This situation in Eastern Ukraine is very delicate right now. Biden is saying no long range missiles that can reach Russia. The Ukrainians are
saying this is going to make or break their fight in the east.
Can you give us a sense of what is happening on the ground and why the Ukrainians are saying that this is a must, to get this kind of weaponry?
MELISSA BELL, CNN CORRESPONDENT: What is so interesting, Eleni, is I think the wording that has been chosen by Joe Biden, that the United States would
not be providing multiple launch long-range rockets that could reach Russia.
That is important, because the type of long range rocket that Ukraine desperately needs are the ones that would be useful here, where I'm
standing now in Zaporizhzhya. Where I'm standing along the Dnipro River, 30 miles to the south, are the first Russian positions.
One of the towns that so many of those are trying to flee back into Ukrainian held territory have been being held at over the course of the
last 24 hours. The point is, villages like that and other villages along the front line here on the southern part of that line that delineates
Russian-held Ukraine for the rest of the country, what we have been seeing over the last 24 hours and last few days are cruise missiles hitting
Zaporizhzhya.
We have seen shelling in the last 24 to 48 hours. We have also seen long- range Russian missiles hitting some of the areas to the south of Zaporizhzhya. The feeling here and what is happening elsewhere along the
long front line, which is hundreds of miles, is that the Russian forces are gaining ground.
They are inching forward. We have seen it with the fall of Sievierodonetsk -- this information is hard to come. What we are hearing is from the
Ukrainian side. They are desperately to get those 15,000 civilians trapped in the city out and more humanitarian aid in.
But it is a story that, all along the front line, of Russians being, for the first time in a while and we saw the turning point come a few days ago,
in a position of having gained momentum. They are in the position of having better manpower, better firepower behind them.
We have been hearing this from Ukrainian military intelligence sources. We have been hearing it here on the ground, that if they do not get that
weaponry that they need, in particular, those long range rocket systems, even if they are the ones that can make it over rivers like this one or
further down this one, they are going to lose the war.
With a sense of urgency, we have been hearing this from Kyiv for last three or four days, with one man from Ukrainian military intelligence telling us,
this is a country of 45 million people. If we do not get weaponry that we need, these front lines that we are seeing, that has been the scene
fighting over the last course -- over the course of the last few weeks will continue to inch forward.
Beyond that, Eleni, it will continue to harden. This is part of the story that we are seeing here in Zaporizhzhya. It is not just the Ukrainians are
trying to flee Russian control that are struggling to get through. But we are increasingly seeing, on this side of the border, Ukrainians who are
trying to get back to their homes in Mariupol, in Melitopol, in Kherson, that they have had to flee because of the violence.
They're trying to get back to their relatives and their homes. They are not being allowed to do it. The border is hardening, Eleni, even as it
continues to inch forward.
GIOKOS: Yes, a reality check. Definitely the messaging here from the Ukrainians is important.
[09:10:00]
GIOKOS: Melissa, thank you so much.
Now Russian troops, also closing in on another key city in the Donbas region, Lysychansk. This new video shows a big fire after Russian artillery
attacks there. Residents who remain in that city are now preparing for the worst. Nick Paton Walsh went there.
(BEGIN VIDEOTAPE)
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): This is the last road into Lysychansk. Putin's forces have moved with rare
focus here and they soon encircle the pockets of two cities on the river we're driving into.
Ukrainian forces we saw here, mobile, tense, at times, edgy and this is why. Across the river here, the besieged city of Sievierodonetsk,
increasingly more in Russian hands, whoever you ask.
We can hear the crackle of gunfire down toward the river below.
What we were told, the Russians have tried already to get into town and it looks like we might be witnessing another attempt over there. That smoke
near one of the remaining bridges into the city.
Our police escorts shout drone, often used to direct artillery attacks. We are on high ground, exposed and scattered. It is a tale of two desperations
here, that which makes people stay and that which makes them finally flee.
UNIDENTIFIED MALE (through translator): We've not slept for three months.
WALSH: Leonid (ph) is the latter.
UNIDENTIFIED MALE (through translator): Shooting. Windows shaking. It's a catastrophe. One man told me the Germans in the war were better.
WALSH: Some who stay are increasingly angry of what's left of the Ukrainian state here. A young woman was killed here, a day earlier, by a
shell. And locals told us not to film, saying cameras attracted shelling.
Russia's bloody persistence and unbridled firepower is bringing the kind of victory in the ruins they seem to cherish. This cinema was a bomb shelter,
local officials said it's unclear if, when the huge airstrike hits, the Russian military was aware it had been empty days earlier.
Just startling how whole chunks of this cinema have been thrown into the crater there. Just the ferocity of the airstrikes we're seeing here,
designed simply to get people out of this town.
Those who stay among the shards of glass feel abandoned already.
ANYA, LYSYCHANSK, UKRAINE RESIDENT (through translator): Many, many people but there is no gas or water or power or anything. We asked the aid workers
today when it will all come back and they say there are only prostitutes, junkies and alcoholics left. That means the aid workers have left here.
WALSH: Lydia (ph) is carefully picking up the pieces of the air strike, which she felt the full force in her apartment, eight floors up.
There's an old lady on the first floor and me, with my disabled son, she says. He doesn't really understand the war is happening. Retreat lingers in
the empty air. If Putin takes here, he may claim he's achieved some of his reduced goals in this invasion. It's the unenviable choice of Ukraine's
leaders if this is the hill its men and women will die on -- Nick Paton Walsh, CNN, Lysychansk, Ukraine.
(END VIDEOTAPE)
(END VIDEOTAPE)
GIOKOS: The ongoing war in Ukraine could push inflation even higher over the next few months, as the European oil ban against Russia kicks in.
New numbers show Eurozone inflation hit record highs for a seventh straight month, pushing more pressure on the ECB to raise rates. in the U.S., Joe
Biden assures Americans in a "Wall Street Journal" op-ed that he has plans to bring down prices.
We have Rahel Solomon joining me.
Reading this op-ed was very fascinating. It gives a glimpse into Joe Biden's experience through various cycles, including hyperinflation during
his lifetime. He draws on those. But he says he cannot meddle in what the Federal Reserve will do.
He is going to try to tackle policies that will help bring down inflation. But this cannot happen overnight. We know this. This takes time.
RAHEL SOLOMON, CNN CORRESPONDENT: Right, Eleni, these are not short term fixes. It's important to mention that today is the day that many Americans
return back to work after the Memorial Day weekend.
[09:15:00]
SOLOMON: No doubt they notice a higher price for gas, higher price for food and barbecues. Take a look at Brent crude, trading at about $119 a
barrel, the highest level since about 2012. So let's get into this op-ed.
From "The Wall Street Journal," President Biden say in part that the most important thing that we can do right now is to transition from rapid
recovery to stable, steady growth is to bring inflation down.
In this plan he talks about, as you pointed out, letting the Fed do its job, saying he would not meddle with the Fed. He called for Congress to
pass clean energy legislation and also said that he will continue to make efforts to further lower the trade deficit.
This is not necessarily new information or a new plan but it is a lot. And what we're seeing is an example of a full court press attempt from the
White House to try of manage inflation concerns as we deal with inflation at a 40-year high in the U.S. I want to play for you a clip from Brian
Deese, essentially President Biden's top economic adviser.
He spoke to CNN's "NEW DAY" this morning.
(BEGIN VIDEO CLIP)
BRIAN DEESE, DIRECTOR, WHITE HOUSE NATIONAL ECONOMIC COUNCIL: If you step back and you look at the inflation challenge we face, it's clearly global
in nature. We're seeing record high inflation in Europe, in the U.K., in France, in Germany.
And it is driven principally by supply chain challenges coming from the restart of the economy and now exacerbated by Putin's war in Ukraine.
The real question now is, how can we actually address that issue?
(END VIDEO CLIP)
SOLOMON: Now to be clear, some of the inflation that we're seeing is, yes, global but some would argue that part of it is because of fiscal measures
taken here in the U.S.
Nonetheless, these methods, not necessarily short term fixes as we pointed, out there's a lot of skepticism about them in general. But we do know, as
we continue to hear from the White House, more and more often it seems these days it helps to manage inflation expectations that, one, the White
House knows that it is a top priority and a concern for many Americans.
And two, it is going to let the Fed manage with independence. So that hopefully helping manage inflation expectations. But in the short term, it
doesn't appear like there any quick fixes here.
GIOKOS: Yes, it's a tough balancing act when it comes to monetary policy. Rahel Solomon, really good to see, you thank you so much.
Straight ahead, a community prepares to say their final goodbyes to three of the victims in the Robb Elementary School shooting. More from Uvalde,
Texas, after the break.
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GIOKOS: Welcome back.
In Uvalde, Texas, this morning. visitation and rosaries said for three of the victims of the massacre at the Robb Elementary School. And with
communities on edge in the wake of the shooting, schools across the United States are increasing their security measures. Nick Valencia has the
latest.
UNIDENTIFIED MALE: Oh, my God.
NICK VALENCIA, CNN CORRESPONDENT (voice-over): Chilling new video captured an apparent radio call outside Robb Elementary school where a gunman had
opened fire inside classrooms.
UNIDENTIFIED MALE: Are you injured?
UNIDENTIFIED FEMALE: I got shot.
UNIDENTIFIED MALE: Where?
UNIDENTIFIED FEMALE: (INAUDIBLE).
VALENCIA (voice-over): In the video, what sounds like a student says they've been shot. The man who recorded the video, who did not want to be
identified, tells CNN the audio came from the radio of a Customs and Border Protection vehicle outside the school in Uvalde, Texas.
He said an officer turned off the radio once officers realized he could hear.
This as new dispatch audio obtained by ABC News indicates dispatchers relayed that at least one student was alive in the classroom.
UNIDENTIFIED FEMALE: Advise we do have a child on the line. Child is advising he is in a room full of windows. Full of victims at this moment.
VALENCIA (voice-over): CNN has not been able to independently verify the audio or at what point during the shooting this occurred.
Law enforcement's timeline shows that the gunman remained in the classrooms for more than an hour while at least eight 9-1-1 calls were made by at
least two students, begging for help.
Officers had arrived within two minutes but the commander on the scene decided to wait before confronting the gunman.
COL. STEVEN MCCRAW, DIRECTOR, TEXAS DEPARTMENT OF PUBLIC SAFETY: From benefit of hindsight where I'm sitting now, of course, it was not the right
decision. It was the wrong decision, period. There's no excuse for that.
VALENCIA (voice-over): The massacre is one of a string of mass shootings that have left the nation on edge. School districts nationwide are
intensifying security protocols, fearing copycat attacks, like in Buffalo, where a gunman opened fire at a Tops supermarket, killing 10 earlier this
month.
New safety protocols include all doors remaining locked during the school day. And any person who wishes to enter must call ahead for approval.
REP. COLIN ALLRED (D-TX): Americans are on edge. And they're on edge, because they don't know if it's going to be their place of worship, a mall,
a concert, their children's school.
VALENCIA (voice-over): In Uvalde, the community plans for two weeks of funeral services to lay to rest the 21 victims.
Uvalde's mayor has decided to postpone a city council meeting in which several new members were to be sworn in, including school police chief
Pedro "Pete" Arredondo. He was elected to the city council earlier this month and reportedly was the official who made the decision not to breach
the classrooms while the shooter was locked inside.
Arredondo has not spoken to the media since the day of the shooting.
The mayor says Arredondo's role in the shooting response will not impact his ability to serve on the council. Arredondo's decision has angered
victims' parents, like Amerie Jo Garza's father.
ALFRED GARZA, AMERIE JO'S FATHER: They needed to act immediately, you know. There's kids involved. You know, there's a gun involved. There's an
active shooter wanting to do harm.
(END VIDEOTAPE)
GIOKOS: These are the stories making headlines around the world.
The first named storm in the eastern Pacific region is barreling through southern Mexico with heavy wind and rain. Agatha made landfall Monday as a
category 2 hurricane, the strongest to hit Mexico's Pacific coast in May.
It has been downgraded to a tropical depression but officials say it could still produce life-threatening floods and mudslides.
(WEATHER REPORT)
[09:25:00]
GIOKOS: Tensions between the U.S. and China are rising as Taiwan signals it plans to deepen security ties with the United States.
U.S. senator Tammy Duckworth met with Taiwan's president earlier, following an unannounced visit. On Monday, Taipei accused China of sending dozens of
military planes into Taiwan's air defense zone. CNN's Kristie Lu Stout has more.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN ANCHOR AND CORRESPONDENT: A U.S. congressional delegation, led by Senator Tammy Duckworth, is in Taiwan for an unannounced
three-day visit. They stressed the importance of U.S. and Taiwan's partnership on security as well as economic collaboration.
President Tsai Ing-wen thanked Senator Duckworth for America's donation of COVID-19 vaccines as well as U.S. support on the security front.
(BEGIN VIDEO CLIP)
TSAI ING-WEN, TAIWANESE PRESIDENT (through translator): We look forward to deeper and closer U.S.-Taiwan relations in matters of regional security. At
the same time, to address the challenges of the post-pandemic era, Taiwan and the U.S. have reviewed and assessed the many facets of our trade
cooperation.
(END VIDEO CLIP)
STOUT: China slammed the visit with its embassy in Washington saying it firmly opposes it. And in a statement, a spokesperson of the Chinese
embassy in the U.S. says, quote, "We urge the U.S. side to earnestly abide by the One China principle and the three Sino-U.S. joint communiques
handled Taiwan related issues in a cautious and proper way so all forms of official and directions of Taiwan and avoid sending wrong signals to the
Taiwan independent separatist forces," unquote.
The visit comes right after the U.S. President's visit to the region and his assertion that the U.S. would intervene militarily if China tries to
take Taiwan by force, a comment that he has made before and which was quickly downplayed again by the White House.
But tension is rising in the region. On Monday, Taiwan's ministry of national defense said 30 Chinese warplanes made incursions into its Air
Defense Identification Zone, the highest daily figure in more than four months.
A Taiwan member of parliament calls it, quote, "a very worrying trend," and "the more China does this, the sooner we become used to it."
And it will become increasingly difficult to determine if China is just doing the routine exercises or are they preparing to launch an attack on
Taiwan?
This is a very worrying trend. Taiwan's president has vowed to maintain peace while adding that she will defend Taiwan if attacked. China claims
Taiwan as its own territory and hasn't ruled out taking it by force if necessary -- Kristie Lu Stout, CNN, Hong Kong.
(END VIDEOTAPE)
GIOKOS: Stay with CNN, the market open is up next.
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[09:30:00]
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GIOKOS: Welcome back.
U.S. stocks are up and running after the long Memorial Day weekend. Mostly lower open after last week's rally on the last trading day of the month.
Europe is also lower as well.
Global investors will be monitoring a high level meeting in Washington today. President Biden and Fed chair Jerome Powell meet to discuss their
inflation fighting plans. Both men need to show that they are laser focused on bringing down the cost of living as U.S. gasoline prices spiked to fresh
records.
Oil price spikes could lead to higher prices at the pump globally. Both Brent crude and U.S. crude are up over 3 percent. This is after the E.U.
announced almost a total ban on Russian oil imports in response to the Moscow invasion of Ukraine.
Art Hogan joins me. He is the chief market strategist for the National Securities Corporation.
Art, it is really good to see you. Welcome to the show.
I have to say, here's the question, where do you run and hide in this market?
You have said, in your commentary, that the S&P 500 is offering big values at 16 times six times forward earnings versus the 21.5 times forward
earnings earlier this year.
Where to go, especially if you are trying to fight inflation?
ART HOGAN, CHIEF MARKET STRATEGIST, NATIONAL SECURITIES CORPORATION: Such a great question. What you really need to focus on, this year, it is a new
paradigm, you need to focus on companies that actually have free cash flow and earnings.
Last year and the last two years, arguably, there was a lot of excitement and sponsorship of those fast growing technology companies. Obviously, that
is a portion of the market that has been hurt the most. I think this year is going to be a renewed focus on PEs.
By the way, they have gotten quite reasonable, not just in the S&P 500 index but from a lot of those household names. I think a focus on PEs and a
focus a bit more defensively on the cyclical side of the barbell approach. Growth from PEs I think will be the best way to approach the next 12 to 18
months.
GIOKOS: So I have to ask you this question. We have seen this inflation coming through. By the way, it has been a huge warning for many years, even
during the financial crisis. We saw truckloads of money through quantitative easing being put into the market and during the pandemic.
It is being compounded by commodity supply issues, supply chain issues. Wall Street was really happy when they saw the stimulus coming through.
Are you worried about this next rate hiking cycle that needs to happen to try to tame inflation?
HOGAN: The good news is, we are realizing that we are behind the curve at the end of November. They have been very transparent parent about their
plans to increase that funds rate.
(AUDIO GAP)
HOGAN: -- next two meetings, not reinvesting the runoff and likely telegraph that in advance so that we know what the cadence and tempo of
that would be.
[09:35:00]
HOGAN: Then we look at the incoming data and see if they're having any improvements or showing tightening in financial conditions, which is
exactly the place they want to get.
So fortunately, the Fed wants to drive some demand destruction because of higher commodity prices. This will slow things down and get down inflation.
It is not going to happen as fast as we would like.
I would argue that like we saw inflation peak in March, sequential improvement in April. It will continue throughout the season quarter and
second half of this year. So while the Fed is trying to slow things down and tame inflation, a lot of demand destruction is happening with higher
prices.
At the very same time, as consumers, typically over the last 25 or 30 years, we have consumed about 65 percent of services and 35 percent goods.
This equation got turned on its head during the pandemic.
This is the pivot point where we are going back to more normalized consumption patterns. That likely has a inflationary effect on goods
pricing. So a lot of things working in the right direction, not as quickly as we would like. But the Fed's is trying to let us know what they are
doing and they are doing a very good job of that.
GIOKOS: We know that the Fed has to be completely independent. We also know that the president is going to be meeting with the Fed chair as well.
Biden wrote an op-ed. He spoke about the cycles that he has lived through.
What would you like to see in terms of policy and messaging from the Fed to calm markets?
HOGAN: I think the Fed's done a pretty good job. I think Jay Powell has gotten better with every press conference he's held since being the
chairman. That continues to be an important part.
They have done a good job of not trying to shock markets and not have intermarket moves or actually moving rates outside of consensus. I think
they've done a very good job of setting out (INAUDIBLE) some of that regional Fed precedence likes James Mueller (ph) suggesting on a
(INAUDIBLE) moves, testing the waters for that and then actually coming back to the meetings and having consensus that 50 (ph) basis points is the
way to go, at least in the here and now.
So I think we have a messaging from the Fed that has been strong and deliberate. The continuation of that pattern is what we would like to see
out of the Fed. We want a consistent pattern of realizing that inflation is significantly above their targets.
We want them to let us know that they are looking at the data during each meeting that they are having and saying, where are we seeing improvement?
Where do we see labor markets as tight as we have ever seen?
Are we seeing an improvement on financial conditions such that it is slowing demand?
What they are really trying to get to is attacking the demand side of the equation. They really do not have any input on the supply side of the
situation, where most of our inflation is coming from.
GIOKOS: A really good point. Art Hogan, really good to see you. Thank you for the insight.
That is the chief market strategist for the National Securities Corporation. We are going to a short break. Coming up, Southeast Asian
super app, Grab, is going beyond ride hailing and food delivery. Its latest endeavor is digital banking. That is up next.
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CHARLES MICHEL, EUROPEAN COUNCIL PRESIDENT: (Speaking French).
GIOKOS: All right, we are cutting into the break. I would like to get to the European Commission president Ursula van der Leyen and Charles Michel,
the president of the European Council, giving a press conference right now. Let's listen in.
(CROSSTALK)
MICHEL (through translator): -- as regards to key points --
(CROSSTALK)
MICHEL: (Speaking French).
(CROSSTALK)
MICHEL (through translator): -- to discuss with African representatives how the European Union and the African Union could cooperate as effectively
as possible to meet this challenge that we jointly face, to take measures to support the African countries in a spirit of partnership to help improve
and strengthen production capacities in Africa.
[09:40:00]
MICHEL: And also to ensure supporting measures so that one can help avert this potentially serious crisis for a number of countries. It could have a
harmful effect in Africa but also in Europe. That is one element that you'll see in the detailed conclusions on that.
MICHEL: Today it is energy. And we all know that it is a fundamental challenge for all of us, extremely important on the one hand to discuss on
the proposals put at the table at the commission in order to prepare the following steps, we follow E.U. It is a very important initiative.
We (INAUDIBLE) to exchange views and to make progress on that topic. Especially we've said that this is extremely important to work on the
possibility and to explore the possibility of import (ph) price caps also with international partners.
We intend also to act in four key areas, (INAUDIBLE), fuels and sources in the renewables, to speed up (INAUDIBLE) is, of course, fundamental. But
also to work in the field of energy efficiency, to save energy is a fundamental priority for all of us.
And we are also determined to invest in infrastructure, in energy (INAUDIBLE) and, of course, in renewable. We want also to improve our
preparedness for possible major supply disruptions. And we have also asked the commission to work on the optimization of the French (INAUDIBLE) of the
European electricity market.
(Speaking French).
MICHEL (through translator): The sad (ph) debate on energy was an opportunity to reaffirm our determination to pick up this challenge as
Europeans. Now we faced this challenge before the war on Ukraine but even more so now, because of the ongoing war in Ukraine.
And then finally, the third point I wanted to mention concerning European defense, you will see the conclusions, too, in this field. We share the
view -- we shared the view around the table that we need to spend and invest more on defense and to do so not just more but also better, to act
more effectively better as Europeans, involving, for example, groups, procurement and also a serious effort to strengthen Europe's industrial
base in this field, taking account in particular of the role of European SMEs, which can play a key role in this process.
It was also an opportunity to reaffirm the importance of what a complementarity and what the E.U. does and what NATO does. There will be a
summit in Madrid. This will no doubt be an opportunity to reaffirm this complementarity between the European Union and NATO.
So these are some of the key points I wanted to share you in the immediate aftermath of the European Council, which has just concluded -- Madam
President.
URSULA VAN DER LEYEN, PRESIDENT, EUROPEAN COMMISSION: Thank you.
You might remember that, in Versailles, the leaders decided to phase out the dependency on Russian fossil fuels as soon as possible. We started with
coal. Yesterday, in the middle of the night, we decided then to have a ban now on de facto 90 percent of Russian oil, imports to the European Union,
by the end of the year.
This comes at a time when we see that Russia has disrupted supplies to now five member states. You know, Finland, Bulgaria and Poland but now to a
company in the Netherlands and to a company in Denmark.
So our answer has to be very clear.
How are we going to manage and what is the road map to really get rid of the dependency of Russian fossil fuels and here with view to gas?
The answer is REPowerEU. It brings basically three different pillars that we have discussed today. The first one is the diversification away from
Russian fossil fuels specifically on gas.
Here we now have a set up a joint task force for common purchases, joint purchases, of gas because the market power of the whole of the 27 in the
European Union is much bigger than every single member state. And we will achieve better conditions.
[09:45:00]
VON DER LEYEN: Since the beginning of the year, we have started to look out for other, more reliable suppliers. And the effort is already paying
off. We see it today the LNG deliveries from the other parts of the world, others than Russia, have doubled in Q1 in 2022, compared to the previous
year.
The second element that we are working on in REPowerEU is the security of supply through better interconnections. This is so that the gas can flow
wherever it is needed. Of course, the common objective to have a more strategic gas storage across the European Union, here we have good news.
Our gas storage is already full at 41 percent of capacity. This is 5 percentage points higher than it was last year at the same date.
The third is the most important pillar and this is the investment in renewables. It accelerates the deployment of renewables across the European
Union. The renewable energy has a big advantage which is not only good for the climate but it is also good for our independence and for our security
of supply. And it creates jobs at home.
So for this plan REPowerEU we have been discussing with the European Council. We are proposing to support it with 300 billion euros from E.U.
funding. There are different parts that are contributing to this funding. If there are any questions, I'm happy to respond to the. But this is the
house of REPowerEU that we have presented and discussed today.
Basically it is solidarity and cooperation that are at the heart of any successful strategy to deal with Russia as a nonreliable supplier anymore.
Cooperation, for example, as has been demonstrated by Denmark, Germany, the Netherlands and Belgium, who showed at a joint summit what it means to
develop the wind power, the offshore wind power in the North Sea.
Our solidarity, this was a big topic today, ensuring that, in case of a full disruption of gas flows from Russia, gas is indeed allowed to flow to
wherever it is needed in Europe.
The second topic was defense. The war was a stark reminder for member states on the need to strengthen our defense capacities. We have seen
positive developments, notably. We are all aware of Finland and Sweden's application to join NATO, the strongest military alliance in the world.
And they will benefit greatly from their membership. But also the fact that since the beginning of the war, leaders and the member states stepped up
and announced by now 200 billion euros in extra military spending.
Now it's important that we ensure that this stepping up and additional investment we get the maximum value out of it and we all know the
challenges that exist with in the European Union or the European model.
On one hand it is the lack of investment over the last years. The gaps have to be filled. But the bigger challenge is the fragmentation we have within
the European defense industry and the duplication (ph) of weapons systems.
Here we see this leads to increased costs, to reduced interoperability. So we have to improve this situation.
Therefore it is, first of all, helpful that since the beginning of this mandate that the European defense fund is up and running. It's a strong
incentive to work together. The pilot program so far has benefited more than 600 entities and 26 member states have used so far the European
defense fund.
This is an encouraging start. But a second element, when we replenish the military materiel that's been sent to Ukraine, for example, it is important
that this is coordinated.
For this, we are setting up a task force to coordinate and to deconflict the replenishment of the national stockpiles. The commission will propose
before end of June to mobilize 500 million euros over the next two years from the E.U. budget to incentivize the joint procurement by at least three
member states.
[09:50:00]
VON DER LEYEN: This is a pilot for a longer term proposal that will come in the course of this year for European defense investment program.
Finally, the third topic was on food security, Charles Michel introduced the whole topic already. We are facing an overriding urgency. That is 20
million tons of wheat that are stuck in Ukraine. They have to get out. Therefore, we have created and we are working hard on the solidarity lines,
planes, that will enable it to bring out part of this wheat through a land route, trains, toward our part.
It is not trivial and is, of course, more tedious and expensive but it is necessary to get this wheat out.
We now give relief to the vulnerable populations and the possibility to afford to food. For that, we have pledged 2.5 billion euros and we propose
to mobilize reserves from the European development fund to support for example sub-Saharan Africa.
The third element in that is that we step up our own food production. We expect a record export of cereals of 40 million tons in '22 and '23. Within
this scenario, we call on all partners not to restrict global trade on agricultural products.
So any kind of trade restrictions have absolutely no place in our member states or globally.
Finally, this is the mid and long term, we really have to develop better strategies in North Africa and sub-Saharan Africa to increase the
production and the resilience with new technologies, precision farming, nanotechnologies.
So a lot of topics combine to this food topic, from the urgency to the mid- and to the long term.
We will coordinate all our actions with the Team Europe approach to feed into this work. I will travel to Cairo mid-June to discuss all these issues
with President al-Sisi. We have to look at them not only from a European/Ukraine perspective but also from the regional and bilateral
perspective. Many thanks.
UNIDENTIFIED MALE: Thank you, Madam President.
(Speaking foreign language).
QUESTION: (Speaking foreign language). I have a question for both presidents. With export from Ukraine, do you see any chances that all this
solidarity lies and calls for the E.U. member states for help, in export, could adapt (ph) to the capacities sufficient for exporting Ukrainian wheat
(INAUDIBLE) this summer?
If not, because it seems for now it is still too little.
What should be your comment on the ideas of transporting the wheat through Belarus or the (INAUDIBLE) through Baltic states?
And if not, do you see any diplomatic possibility to convince or to make Russians to unblock all the export of the wheat?
Thank you.
MICHEL: No, you're absolutely right. It should be the first priority because there are 22 millions of tons of grains that are blocked in
Ukraine, especially in Odessa. A few weeks ago, when I went to Odessa, I had the occasion to see with my own eyes what was the situation was on the
ground.
For instance, countries like Egypt and other countries in Africa, they are victim of this situation. We see fully support all the efforts made by the
United Nations in order to find an agreement to open a maritime corridor their the Black Sea.
It will be the best option to make sure it is possible to export grains. But we are uncertain when (INAUDIBLE) we hope it will be possible to get
agreement on that important topic and decide we are also working, based on a proposal from the commission on those green lanes in order to facilitate
alternative routes.
And as the leaders today and yesterday, we discussed the different possibilities in order to develop alternative routes. But we know it is
more difficult, more expensive for options, logistics reasons. And we try to facilitate in order to reduce the alternative (ph) burdens.
[09:55:00]
MICHEL: It is also an important question. We have access in the Baltic Sea and we understand that we were also told, by the United Nations, on the
topic. And we support all of these efforts.
But in the short term, we do not see a concrete result, a concrete achievement. You know that if you have decided on sanctions of Belarus, on
the fertilizers and machines, it is a very important to maintain pressure.
GIOKOS: All right, that is Charles Michel, the European Council president; also Ursula van der Leyen speaking there. Really important commentary
today. They announced the REPower Europe plan. $300 billion euros to wean themselves off of fossil fuels from Russia. They spoke about food security
to get grain out of Ukraine.
They also started to increase food production out of Europe and sorting out the Africa issue when it comes to food security. Defense was big on the
agenda. We will give you more analysis on this as the day goes on.
Thank you very much for watching the show. I am Eleni Giokos in Dubai. CONNECT THE WORLD with Becky Anderson is up next. Take care.
[10:00:00]
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