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First Move with Julia Chatterley
UBS to Buy Credit Suisse in Bid to Halt Banking Crisis; UBS Buys Credit Suisse in Emergency Rescue Deal; Ethos CEO: This may Create an Unwelcome Precedent; Xi Jinping Arrives in Moscow for Talks with Vladimir Putin; China's President Xi makes State Visit to Moscow; U.S. Stocks Mixed after Weekend of Emergency Action. Aired 9-10a ET
Aired March 20, 2023 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
JULIA CHATTERLEY, CNNI HOST: A warm welcome to "First Move", fantastic to have you with us and a very happy first day of spring to you all. And we're
certainly springing into the very latest on Chinese President Xi Jinping's first visit to Moscow since Russia invaded Ukraine. What may come from his
talks with President Putin just ahead?
But first the action on global markets after another historic weekend of deals in decision making aimed at shoring up competence in the financial
system. The key development, a de facto shotgun wedding, let's call it that between Swiss banking giants UBS and its beleaguered competitor Credit
Suisse.
The cost some $3.25 billion equivalent in stock, UBS will also take a hit for a further $5 billion worth of losses if required. The Swiss National
Bank will also provide some $100 billion worth of liquidity assistance again, if required now, the initial response from stock investors across
European Banks including.
Let's be clear, UBS shareholders too is concerned, I'd call it that although admittedly, shares are way off their worst levels earlier on in
the session. UBS down around 3 percent, as we speak, and other European majors down around 1.5 percent that stock for debt holders, I think it
shock.
Now the reason for the nervousness there is tied to how this deal treats debt holders versus shareholders. Now, just to be clear, normally,
shareholders are the first in line to take a hit when a bank gets into trouble. However, in this deal, some value for shareholders is being
preserved, while $17 billion worth of debt is effectively being wiped out.
Now, you're going to hear a lot of talk about something called 81 debts. That's a debt here that was established after the financial crisis to be a
buffer in case a bank got into distress in the future. The problem now is that this sends a warning shot across the bow of other investors in this
kind of debt, that perhaps it's riskier than they first thought.
So you have to watch the debt markets now, rather than perhaps the stock markets. Now, in another move reminiscent of the financial crisis, the
Federal Reserve and other global Central Banks announced measures to boost the availability of dollars. The message, you can keep lending to customers
and businesses, were not going to let you run out of cash, and there's no need to hoard money, that's the message.
Now after all, this U.S. futures moving higher after earlier weakness, green arrows, as you can see that for Europe too, though, there's still
nervousness in U.S. regional banks with shares of First Republic set to resume their slide. In early trading today, after yet another downgrade,
you know what I think of the rating agencies.
So I won't elaborate further now, more on all of that in just a moment. But first, another weekend, another emergency rescue. Anna Stewart joins us
now. Anna, we sought to call this but even I was surprised at the speed upon which this happened. Just talk us through the contours of the deal.
ANNA STEWART, CNN REPORTER: Yes, this was rapid and as ever, with any kind of takeover, there are winners and losers. But it feels like there are a
lot of losers on this one. So when we look at the share price of Credit Suisse, and essentially what UBS is buying this for a 60 percent discount
on where shares closed on Friday, and they were at a big low, of course, for Credit Suisse.
That is kind of where we're actually seeing Credit Suisse shares trade right now, about 60 percent down on the day. Then there is the loss, of
course, related to that for Saudi National Bank, Qatar Investment Authority. Think of all those massive shareholders who've lost billions of
dollars on that.
And then your point on the bondholders, the 81 bonds, these convertible bonds, that has sent a shock through the market, because you would expect
shareholders to be punished. First and actually, it's interesting, because we've had European banking regulators come out this morning, and saying,
while they welcome this takeover, they welcome the news.
If it were to happen for the European Bank, they would be punishing the shareholders before the bondholders. So an interesting development there,
we will keep an eye on prices on 81 bonds, though, because I think we're already seeing some impact. There was also a lot of support.
So yesterday in the many Press Conferences we had, it was very clear by multiple authorities and regulators that this is not a bailout. However,
there is a lot of government support for this takeover. Makes you wonder how much cajoling maybe UBS needed to get to this point.
For instance, the Swiss Central Bank will provide a loan of over $100 billion to boost liquidity and once UBS if it needs to assumes just over $5
billion of losses, the federal government will give it a guarantee and the amount of $9.7 billion.
[09:05:00]
So there was a bit of a bail in how it can be there's a little bit of a bailout and a giant takeover a lot for us all to absorb on a Monday
morning.
CHATTERLEY: Yes, and I think cajoling is a great word to use here cajoling on the side of Credit Suisse, which I think given the broader environment
really had no choice, but also on the part of UBS because now they have to digest, absorb, decide what to do about this monster business and it raises
all sorts of separate questions.
Something that did catch my eye when I was poring over the details beyond the initial hit, which was the debt holders, as you've mentioned, was this
idea that they were paying around a 60 percent discount compared to the value of Credit Suisse on Friday, but to your point, you top up that $3
billion, with the $5 billion potential hit that UBS takes.
And that brings you back to the $8 billion that Credit Suisse was worth on Friday. The cost savings, though, Anna, talked to me about the potential
cost savings for UBS, relative to that $8 billion sum that we're talking about, which is why I mentioned that?
STEWART: This was a really key part of the earnings, not the earnings call, sorry, the call with UBS executives late last night, which I was on, which
is why I'm a little bit tired today. But $8 billion of saving a year by 2027 and this will mean of course, huge job cuts.
And my heart goes out to people that work for Credit Suisse, who are probably worried about that position today. There will be a lot of
synergies; they didn't have an answer to all of the many questions. For instance, what happens to the whole plan to spin up Credit Suisse's
investment bank to Credit Suisse First Boston?
I think that looks like it's on the rocks - are looking to reduce and slim down any investment bank operations and bring it into line with their
culture of risk management. There was a lot of excitement. It was a very short presentation in terms of slides, just the one slide, very succinct,
but a lot of excitement for UBS about wealth management and what Credit Suisse will bring to its portfolio.
Combined, they will have $5 trillion worth of invested assets, UBS was looking to expand in - and Asia and this will certainly help it to do that.
But a lot of cost savings along the way. And one big question that I don't think we have the answer too really but the domestic banking operations
which of course quite profitable, in terms of Credit Suisse, what that will bring to UBS and to competition, I think domestically, Julia.
CHATTERLEY: Yes, great point, for some you can talk about synergies for other you can talk about consolidation and a lack of competition, perhaps
going forward, because these are the two biggest banks in the country. So huge questions, we've got a shareholder in Credit Suisse, the Ethos
Foundation coming up later on the show to talk about all of these things.
And the fact of course, we should mention shareholders didn't get a choice. They were told what was going to happen here. They weren't allowed to vote.
Anna, great job, thank you so much, and well done for being on that call! Anna Stewart there! And let's bring in Richard quest now, Richard much to
discuss.
We can talk about Credit Suisse and the decisions in Switzerland. We can also talk about, again, a repeat of what we saw in 2008. Where were all the
Central Banks come in and provide liquidity even before perhaps they worry, I think the situation here is always you don't know, what you don't know
until you find out.
RICHARD QUEST, CNN EDITOR-AT-LARGE: And that is exactly the problem at the moment. There was always the fear, you know, this Julia well, that the
rising interest rates would expose weaknesses in the plumbing system. But nobody really knew where or how far good example, of course, was Liz
Truss's mini budget that wasn't, which exposed huge weakness in portfolio insurance and the pensions industry overnight in one fell swoop.
While these rising interest rates have now exposed weaknesses in those banks that were long bond heavy, and weren't risk managed properly.
Interestingly, the New York Times, of course, over the weekend had the story about how SVB was warned several times by the Fed about its risk
management position.
And so Julia, what I think you're seeing today is a sort of a torch, a flashlight as the Americans would say, being shone into all corners of the
financial system and plumbing, working out where the leaks, where's the problems, what's next?
CHATTERLEY: I guess the difference that we can make, and it's a huge one, and there are many differences between today and 2008 for United States in
particular, were not in recession. The challenge back in 2008 was the torch lights were flashing but even when you found sort of what you were looking
for in terms of toxic assets.
You didn't understand the value of those toxic assets; you didn't understand what the entire exposure between banks was? And that's why
everybody was panicking. I don't want to lend to this person. I don't know what my exposure is to this person. And that created a freezing effect in
the plumbing system.
What I see the Central Banks doing here now around the world is saying, look; don't worry however much money you need, however concerned you are
the money's going to be there.
[09:10:00]
And this is a very different feel to me, even with to your point that I agree with you so just separate crises that we're seeing.
QUEST: Totally different situation, you nailed it there. And Credit Suisse is a perfect example of this difference, because the potential of
counterparty risk in Credit Suisse was absolutely enormous who would want to be on the receiving end of their overnight money and their overnight
paper or indeed any of their paper.
So the Central Banks moving in, and then the coordinated swap activity, which basically says, as many dollars, euros, yen, as you like, stuff your
gills with them. We can always get more, that shows they've learned the lesson, not just of Lehman, but of course, the Bank of England with Liz
Truss.
Get in there fast; flood the system with money, stand behind even when you're going to lose, and then work out who pays the bill afterwards.
CHATTERLEY: Yes, lesson learned. Richard, thank you so much for joining us.
QUEST: Until next time, until then. I don't think that's going to be something somewhere, that's going to be sort of an alarming and somebody's
going to say, well, we don't need to worry about that until they do. But at the moment, this is not 2008 all over again, at least as I see it.
CHATTERLEY: Getting one parallel, I can think I'm going to get yelled at Richard. And there's not enough time for the two of us to rant about this.
The role of the ratings agencies, where were the ratings agencies once again --?
QUEST: All regulators' look, we haven't got time for that my - is waiting for me --.
CHATTERLEY: --an hour. We'll reconvene Richard; get to that in, thank you. OK, on to a possible legal showdown looming for Donald Trump. The Former
U.S. President says he expects to be arrested tomorrow.
So that's Tuesday. Amid the investigation into an alleged scheme to pay hush money to adult film star Stormy Daniels. Former Legal Adviser to
Trump's Attorney Michael Cohen is set to appear before the New York grand jury today. Kara Scannell is following the case for us in New York.
Kara, it was the President, the Former President himself that suggested that he was going to be arrested on Tuesday this week. I believe the
campaign is raising money off the back of it. What do we know about whether or not he is indeed going to be arrested?
KARA SCANNELL, CNN REPORTER: Well, Julia, as far as we know, no decision has been made yet at this point but the grand jury is still active. And Bob
Costello, who was once an attorney for Michael Cohen, back when Michael Cohen and Trump were on the same side he is expected to appear before the
grand jury this afternoon.
That source told me that Costello had reached out to both the Manhattan District Attorney's Office and lawyers for Former President Trump saying
that he had information that would contradict Michael Cohen's testimony. Now, Cohen appeared twice before the grand jury last week.
As you recall, he pleaded guilty several years ago to federal charges. And at the time, he said that he made these payments in coordination with an
app the direction up, Former President Trump. Now Costello has turned over hundreds of documents, including emails back from that time period when he
was working with Cohen because Cohen had waived attorney client privilege.
And we're told that Trump's lawyer sent a letter to the DA's office asking for them to put Costello on the stand because they said Costello would say
that Cohen told him at the time that he was aware of no illegal activity by Donald Trump. So that's some testimony that Trump's team wants to get
before the grand jury today.
Now, Michael Cohen was on MSNBC over the weekend and said that he would be appearing today in court to the DA's office asked him to be on standby. He
wasn't sure if that was to be a rebuttal witness before the grand jury or just to answer additional questions by the prosecutors.
You know, there's a lot of expectation and some tension about you know, when an indictment could possibly come down when a decision will be made on
whether to pursue and we're starting to see some of the security around the courthouse change.
This morning, our team observed NYPD officers installing security cameras on the top of the lights in this vicinity, all part of the enhanced
security protection and concerted concerns that everyone has with a potential indictment of a Former President and his public appearance in the
courthouse just next to me, Julia.
CHATTERLEY: Yes, fireworks all round. We shall see. Great to have you on the show! Thank you so much for that. OK, we're going to take a quick
break. But straight ahead, Shotgun weddings, harmonious honeymoon we'll discuss the future for that emergency merger between Credit Suisse and UBS
with a Credit Suisse shareholder after this plenty more to come.
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[09:15:00]
CHATTERLEY: Welcome back to "First Move", and another weekend of extraordinary action by Central Bankers and government officials and
bankers. To shore up the global banking sector Switzerland's biggest bank UBS agreed to buy its ailing rival Credit Suisse. And an emergency deal
works on $3.2 billion.
Credit Suisse shareholders will be largely wiped out although shares will retain a fraction of their value. The same cannot be said for owners of $17
billion worth of additional tier one bonds. As we've discussed, investors in this riskier class of bank debt will lose everything.
Joining us now is Vincent Kaufmann. He is the CEO of Ethos Foundation, a holder of more than 3 percent of Credit Suisse stock. Ethos is composed of
246 Swiss pensions and public utility foundations. Great to have you on the show, sir! Today is a very tough day. Talk me through how you're feeling on
behalf of those you invest for?
VINCENT KAUFMANN, CEO OF ETHOS FOUNDATION: Yes, so first of all, just the precision we Ethos Foundation are not the holder itself. It's more the
Swiss pension funds, who are members of Ethos which actually delegates as a voting rights of an associate will act as a proxy advisor. So we don't have
directly hopefully the Swiss pensions.
But the Swiss pensions fund actually lost a lot of money during the last week and during the last years with Credit Suisse. So we have repeatedly
asked for different measure, different strategic orientation. So it's a sentiment of yes, big disappointment because we're convinced something
better should have happened.
But now we have to look at this, I would say more positively and say that the Swiss government had some information and had to act this way to
certainly avoid a second Lehman - case and the comparable financial crisis as in 2008. So hopefully, the measure will stabilize the situation.
CHATTERLEY: So the way you're looking at this now is you're saying this was basically the only choice?
KAUFMANN: That's the filling we have, knowing that we left on Friday with Credit Suisse weighs about 7 billion market cap and now we have another 3
billion valuing the company at 3 billion which is unbelievable, unimaginable a couple of weeks ago. So that would certainly mean that the
amount of outflows and liquidity problem was huge. And yes, a lot of thing we didn't know.
[09:20:00]
And that's push to the federal considers U.S. government to act this way and also to amend the laws merger and acquisition law and super passive
voting power of shareholders. This is never seen in Switzerland and in the governance field usually as a shareholder.
We have a say on such an important matter on both sides UBS and Credit Suisse. Here, the government's made an ordinance, which actually, oh, the
operation to go without shareholder approvals. It's a never seen.
CHATTERLEY: Do you think it ever happens again, Vincent, because?
KAUFMANN: That's my worry a little bit that we have a precedent now.
CHATTERLEY: Right.
KAUFMANN: And in terms of governance, I mean, this is quite catastrophic for shareholder rights and investor protection. So hopefully, so it's a one
off, but it still creates a precedent. So we will really fight against any regulation, which would go in the direction because for shareholders, it's
so important to have a say on such deals.
CHATTERLEY: Yes, you don't want this enshrined in law. So it raises questions about your purpose, to your point about clarifying the role that
you play here, too. I want to ask you, one of the big questions that are being asked at this moment is why shareholders were at least given some
protections and those that the creditors that would normally be given greater protection than shareholders, the debt holders have been completely
wiped out?
Vincent, what do you make of that, because this is also setting a strong precedent too, which has broader consequences than just Switzerland?
KAUFMANN: You're right. It's also something never seen, I think it's the first time we have a kind of a triggering event on the --. Usually, the
triggering event is a conversion of those debt instruments into equities. That was my understanding. So really, when I discovered the possibility to
write it off completely, I was shocked myself, and we were never those kinds of - capital.
For instance, we have always pushed for strong and real shareholder equity. We still believe a lot of banks are also the legislation push for higher
capital. But I think how financial products are more and more toxic, short term and volatile. We believe we should have much higher core capital.
And those buffer instruments were always a little bit for us, not the best solution. But here, you're right, it's certainly that was possible within
the perspective of this instrument. So I assumed the holders of that instrument should have been aware that such a triggering event was
possible, but I don't know. I really don't know, but that's also something which is creating a precedent, which is totally not welcome.
CHATTERLEY: Yes, possible but questionable, I think in this case, and we're certainly seeing that. Yes, Vincent, what about legal action? What we had
in the midst of what was broader global volatility among the banks was an announcement from Credit Suisse, that there were perhaps questionable
practices or material differences in some of the information, they announced?
What was effectively a loss for 2022 that wiped out a decade of profits? Do you want legal action; whether its management, former management, over
decisions that have been made now for a number of years at this bank? Is that some way perhaps to get some value back for the shareholders that have
taken a hit?
KAUFMANN: Yes, there is two ways to do something here with this legislation. One way is we believe we'd be very difficult, we have to file
a claim potentially, we have to analyze if it's possible, but it's for as you say, poor management and here the law is not really in favor of
investor really protected for board of directors on the information side.
And we have also to look at what information was available at the board level and management level and what they did communicate to the market and
that's of course, something where potentially investor may have been, yes, misled by the communication of the bank.
But we still have to prove it as investor and that would be very, very difficult based on the Swiss legislation, also on the Swiss legislation,
the class action style of that you have in the U.S. is not that known. So I know some action is being opened in the U.S.
[09:25:00]
But from the first information we had this morning with our lawyers, it's very, very unlikely and difficult to get something back with Swiss
legislation, at least from the management, and those people who are certainly overpaid during many years. We also have to look at that claw
back mechanisms that were implanted into the valuable compensation structure of that manager.
Especially the one in the year where all the scandal happened but year again, the proof is not easy to have, but we will look at it. But again,
the Swiss legislation is quite on the side of companies and not that on the side of investor protection.
CHATTERLEY: Yes, and by investors, in this case, we're talking about pension funds; we're talking about pensioners, people who have saved for
their retirement or trying to save for their retirement. And I think we always have to remind people what we mean, in this case, when we're talking
about at least some of the investors.
Very quickly, Vincent, you were initially pushing for the Swiss business to be spun off, because that is profitable. Will you still push for that? Or
are you accepting back to the beginning of our conversation that, quite frankly, there's very little say, now, if any, then what happens?
KAUFMANN: Yes, I think that's something we still have to evaluate, because from the Swiss market perspective, we clearly have a failure of the too big
to fail resists legislation. The too big to fail legislation was clearly say that we should reinvent the Swiss business, you know, we are small
countries, and we cease to big banks, we really had to have safety mechanisms.
So one of the safety mechanisms was to have those streets division independent and being listed on the market quite quickly it was too late
last week; clearly, the Swiss division alone would not have been able to survive. That's why we were asking that before.
Now, what we would expect from the Swiss Authority, because they pushed on UBS to make this deal. But I think they could also have in terms of anti-
competitive low, because here, on a normal case, the anti-competition law would have never accepted such a deal.
Here, the protection of creditor overpassed, the anti-trust legislation, but I think the anti-trust legislation could still make the kind of a
condition to say, look, you keep it UBS can keep the Swiss division of creditors quite --. So you guys could work really on us with our
International Wealth Management work on the investment bank makes the things they have they have a lot of money from the confederation not make
the restructuring 9 billion, just a loan to further restructuration.
So they can work on this and keep the Swiss business quite both independent and then potentially in two years, give a dividend - to UBS shareholders as
a spin off and an IPO of the Swiss division.
This is something we'll ask to the resource already, because of course, UBS bought might be reluctant because, of course, they don't want to create a
next competitor again as a competitor. But for the Swiss - for the client of those banks, the Swiss pension fund, typically our client of those
banks, we need this competition.
CHATTERLEY: Yes.
KAUFMANN: --and also for the systemic risk of Switzerland. It stood I'm firmly believing it's too dangerous to keep those two banks into one.
CHATTERLEY: Yes, competition is what keeps prices down for borrowers and supports the real economy. Vincent, great to get your take! Thank you so
much, Vincent Kaufmann, there the CEO of the Ethos Foundation. We're back after this, stay with us.
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[09:30:00]
CHATTERLEY: Welcome back to "First Move"! In a meeting in Moscow Chinese Leader Xi Jinping arriving in Russia earlier today the start of a three day
state visit for talks with President Vladimir Putin. President Putin also made a surprise appearance in the Russian occupied City of Mariupol,
Ukraine over the weekend. You're seen pictures from that visit there.
In the meantime, a Senior White House official says the Biden Administration is watching Xi's visit "Very, very closely, as it warns
against any calls for a ceasefire". Will Ripley joins us now on this. Will, the broader message I think from Xi Jinping choosing this as his first
state visit, having achieved his unprecedented third term clear for all to see.
WILL RIPLEY, CNN SENOIR INTERNATIONAL CORRESPONDENT: I mean its clear his priorities lay with Vladimir Putin, despite the war crimes charges, the
condemnation from the West the sanctions that China is helping Russia evade.
And a lot of people might be scratching their heads, you know, why would Xi Jinping with a much larger economy and a much more important financial
relationship business relationship trade relationship with the United States in the West still continue to prioritize his connection with a man
who is increasingly becoming a global pariah.
And the answer is, is pretty simple. Economics is one thing for Xi, but it's kind of secondary to ideology and when it comes to ideology Putin and
Xi are on the same page. They both want to see a return to this authoritarian, you know, world order. They basically not even return they
want to see the U.S. led world order that's been in place since the end of World War II, broken up.
They want to weaken the influence of the United States in the West culturally, economically, certainly militarily. And so this you know, trip
which they are touting you know, a journey of friendship, cooperation and peace, behind closed doors behind all of the lavish ceremonies you know,
the champagne toasts, they're going to be having some serious conversations.
Putin is going to ask Xi Jinping, most likely for weapons and ammunition, which China has, if China provides that overtly they face huge, huge
penalties potentially from the West, the United States has warned as such.
So I wouldn't necessarily expect a big announcement on that front. But we certainly need to watch very closely Julia the trade data and see what's
actually moving from China, into Russia for potential use in Ukraine.
You know, China doesn't necessarily enforce sanctions against North Korea, either. And they've been launching a barrage of missiles this year. So this
authoritarian alliance is rock solid to use a term that the United States and the West have often used, you know, politically as well and now Chinese
diplomats are also using it.
They are getting together friends, no matter what the other one does, it seems and that certainly does raise concerns for Ukraine. This Chinese
peace plan, you know, could China actually ask Ukraine to just like give up what Russia has taken.
[09:35:00]
And just award Russia for illegally stealing their land and butchering their people. That's what the 12 Point Plan certainly seems to imply Julia
and still, of course, no conversation between President Xi and President Zelenskyy even as he's there in Moscow meeting with Putin, so a lot to
watch, probably, it won't be so overt on the surface. But it'll be very interesting after this meeting to see where this whole situation goes.
CHATTERLEY: Yes. Will Ripley much to discuss certainly thank you so much for that. And who better to discuss it with then Ian Bremmer, President and
Founder of G ZERO Media and Eurasia Group. Ian, always great to get you on the show!
It feels like a renormalization of the Xi Putin relationship. And I guess you could argue at this moment, from Xi's perspective, at least he's got
very little to lose in terms of his deteriorating relationship with the United States. Why not do this?
IAN BREMMER, PRESIDENT AND FOUNDER OF G ZERO MEDIA AND EURASIA GROUP: Well, China does not want a new Cold War with the Americans, and they don't want
to see more sanctions from the Americans. So I mean there's still a floor on that relationship that could well be tested after the next few days.
But you're absolutely right. This is a renormalization. If you go back, Julia, I think you and I was chatting just after the Shanghai Cooperation
Organization meeting, when Putin and Xi Jinping saw each other in Central Asia back in September.
And at that point, it was a much more frosty a much more formal meeting. And Putin had to admit, in his comments that Xi Jinping had some concerns
about the Russian war in Ukraine. This is a very different story. This is a three day state visit, starting with a dinner, more conversations going on
tomorrow.
And on the back of Putin having traveled to occupy Ukraine, literally hours ago, Xi Jinping would have been briefed in advance of that. This is Putin
showing that he is not giving up any of the territory that he has taken away from the Ukrainians.
And does not expect Xi Jinping to be in any position or interest in pushing him to do so that's a serious problem for the Ukrainians of course, it
means that they have to be successful in their counter offensive because otherwise the level of political pressure on them is going up.
CHATTERLEY: Two days before that visit, of course too, you had the International Criminal Court issuing an arrest warrant for President Putin
as well. So to have Xi Jinping in his country, post that as well is also I think an important signal.
What comes then of this meeting? As you point out the top plan simply doesn't work from Ukraine's perspective? The relationship between President
Putin and Xi Jinping is very different from the relationship between Xi Jinping and President Zelenskyy even if there is the potential for some
kind of conversation, at least? A weapon--
BREMMER: They haven't even announced yet Julia, when that conversation between Xi Jinping and Zelenskyy is going to be. And that's just a video at
some point to be determined while Xi Jinping is there with Putin, so no one is pretending that the Chinese President is an honest broker here.
I think that what will come out at a minimum is the Chinese President and Putin will call for negotiations with the Ukrainians, and they may well
intimate that we should have a ceasefire, with the Russians occupying present territory.
And I'll say one interesting thing is that the Russians over the last week have been talking to Europeans at a senior level, and saying that if a
negotiations process that the Chinese are willing to broker isn't accepted by NATO isn't accepted by Zelenskyy.
But the Chinese have said that they're willing to start providing weapons directly to the Russians. Now, I think that that is overstated. I think
that's Russian bluster. I don't believe the Chinese would have made that commitment, given the sanctions that would engender from the U.S. and
Europe.
But it's interesting the level of confidence that the Russians are projecting with the Chinese President coming to see them for three days
right now. You couldn't be more right about how important this visit. It is the geopolitically most significant summit that we have seen since this
invasion has started. It is by far the most problematic.
CHATTERLEY: The peace brokering for Xi Jinping, though, is far broader and it's not just about the Ukraine, Russia conflict, which is quite
fascinating to me. It is an operation elsewhere, in an area where the West and the United States have failed to achieve so far.
And I'm talking about bringing the Saudis and the Iranians together to the table for the first time. What in seven years, it's something that the West
didn't achieve. And Xi Jinping, the global diplomat, perhaps we can call him in this part did.
BREMMER: Sure, sure. He's played the role of principal diplomat in the middle least. If you look at the most significant peace deals that have
been brokered over the past decade, you've got Obama and the Iranian nuclear deal.
[09:40:00]
You've got Trump and the Abraham Accords. And now you've got Xi Jinping and Iran, Saudi Arabia, something looks very, very different here. And
apparently, it was the Chinese getting the Iranians to commit not to send for the weapons to Yemen that made the Saudis willing to spend to actually
get the deal done.
The White House thinks this is a big deal. The Europeans think it's a big deal. But it's very interesting. All this comes in the backdrop of a
President Biden, who has described the world as a battle between democracies and autocracies.
Now, that may not sound so controversial, when you and I are discussing it on CNN. But if you're in the Middle East, where there aren't exactly many
democracies right now, what you hear Biden saying is, this part of the world is not aligned with us not relevant to us long term.
The Chinese are saying something very different. We need you. We want you. We want to engage with you. We're inviting you all to Beijing; Xi Jinping
is intending to host a summit of all the GCC, the Gulf leaders, and the Iranians later in the year.
The Americans don't even talk to the Iranians, the relationship with the Saudis problematic, by the way, this also comes on the back of Saudi Arabia
and Qatar, getting their shares wiped out by the Swiss government over the last few days.
That was an investment that they were making in Europe that was meant to be a prestige investment. The Chinese are also quietly telling the Gulf States
you can trust and believe in China and your investments in China over the longer term. It's deeply problematic. What the geopolitics of the region
are looking like right now.
CHATTERLEY: Yes, and we're just showing pictures actually, it actually - it's an actual picture of that meeting between Xi Jinping and President
Vladimir Putin on your screen there any further details of that conversation we will bring them to you.
Ian the other thing that connects many of these leaders in that region the Chinese, of course, President Putin is the fact that they get to hang
around for a long time and U.S. Presidents at least face elections every four years. I wanted to get your take on President Trump.
And his announcement that he believes he will be arrested this week. And a lot of commentators coming out and saying this will provide sympathy. He's
already campaign fundraising off the back of this; do you think he gets arrested this week? And what are the implications?
BREMMER: First, I think it's appropriate that it's the third thing we're talking about, not the first. I mean the fact that he puts out his posts in
all caps screaming at you, does imply that we should take them a little less seriously than other posts that we hear these days.
He's not on Twitter, why Elon Musk is getting a lot more, you know; sort of play a lot more attention and daily engagement in social media than Trump
does. I think that's significant. But still, most Republicans that I know, believe that Trump is not just the front runner, but increasingly likely to
get the nomination.
And I think that the Europeans, others that engage with the Americans on the global stage, aren't yet really prepared for that what it would mean,
certainly if you think about Russia, Ukraine, Trump would have a very radically different position than the Biden Administration or the
Republican leadership has had over the course of the past year.
Trump would be calling it if the Chinese are promoting a peace plan, Trump would probably be supporting that peace plan. He's much more aligned with
the Chinese position here than the Europeans or the American government's presently are.
This puts a spanner in the ability of the United States to lead a consolidated NATO or G7, or West. And I think that's perhaps the most
significant thing that a Trump nomination, if it comes would be and yes, the country we'll be talking more about Trump as we get further into this
Republican nomination process.
And as we see whether he is or is not detained tomorrow, his ability to drive headlines continues to surprise compared to his level of capable
capabilities as President.
CHATTERLEY: Ian, can I just keep you there for two seconds. We're just going to listen in because we can now see images of President Xi and
President Putin speaking I'm just going to see if we can get a sense of what they're saying.
(BEGIN VIDEO CLIP)
(SPEAKING FOREIGN LANGUAGE)
(END VIDEO CLIP)
[09:45:00]
CHATTERLEY: Ian, I think you're there. How's your Russian or your Chinese - -?
BREMMER: --my Russian - I caught what he was saying in Russia.
CHATTERLEY: OK.
BREMMER: And this was talking about their relationship, the first visit that they had 10 years ago, the importance of Chinese power and influence,
the honor that the relationship bestows on both countries.
This was very, you know, sort of, I would say, symbolically charged, very strongly friendly, and powerful language from Putin saying that this feels
to me very much like the language that was used a year ago February 4, by Putin in Beijing, talking about these two leaders as friends without global
limits.
We've heard nothing like this from Putin during the war, since. There's no question that is what he is sharing with the Russian stage and with the
global stage today.
CHATTERLEY: Yes, I'm just watching even just their body languages. And you can't see this; the two chairs positioned either side of a fireplace, very
serious face to your point about the words. Thank you, that President Putin was speaking there. It's interesting to watch President Xi because he's
smiling.
It's a soft smile, but he's smiling throughout this, just the interaction between these two leaders very different even on the surface here. Even if
we couldn't understand what the individuals were saying very different from Xi's meetings with Western leaders. It's very evident.
BREMMER: Julia, I think we want to recognize that this comes on the back of Xi Jinping's public statements a couple of weeks ago, that were
unprecedented in their direct hostility towards the United States those two speeches, what we're seeing right now from Xi Jinping.
And the announcement we saw two weeks ago, are bookends of a shift in alignment, a China that believes that the United States is increasingly
implacably hostile towards it, and therefore it wants to ensure that the Russians do not lose this war in Ukraine.
And that, of course, means that they need to not just stop NATO, from continuing to escalate as they see it, the war on the ground, but they also
need to bolster and shore up Putin's position on the international stage more broadly. And Xi Jinping is doing his damnedest to put that into place
right now in Moscow.
CHATTERLEY: Ian always fantastic to have you on the show. Also fantastic to have a Russian speaker, which I didn't realize. Thank you so much.
President and Founder of G ZERO Media and Eurasia Group and Author of "The Power of Crisis: How three threats and our response will change the world".
Great to have you on as always! All right, up next is President Macron about to meet his Paris Match. The French government faces new competence
voters as anger rages over the pension reform changes. Stay with us.
(COMMERCIAL BREAK)
[09:50:00]
CHATTERLEY: Welcome back to "First Move"! And a major test for French President Emmanuel Macron in the coming hours, as his government faces no
confidence votes over its decision to rise the retirement age without a parliamentary vote.
Anger again spilled onto the streets of France over the weekend. You're looking at some of those scenes from Paris. Now despite the outrage
Macron's government is likely to survive. Melissa Bell is in Paris, Melissa, but at what cost?
MELISSA BELL, CNN PARIS CORREPONDENT: At what cost? This has gone on now for so many weeks of not just popular discontent, Julia but of course those
fractious arguments within the French Parliament that have led us to this point with this no confidence vote coming tonight.
Now the parliamentary arithmetic means that it is 287 votes that would be needed for it to pass forcing it is a bad bone, the Prime Minister's
government to fall as things stand tonight that looks unlikely to happen although not impossible, Julia, it is more what happens beyond parliament.
That we're keeping an eye on this afternoon because as we've seen these last few days, ever since the government announced on Thursday that it
would be forcing through this particularly unpopular and controversial attempted pension reform without a vote on Thursday using a parliamentary
device that allows it to be pushed through.
We've seen those spontaneous and unplanned and not permitted illegal protests taking place spontaneously in Paris and in other French cities. We
expect those to continue later today even though any kind of public gatherings have now been banned around the - right here from where I'm
speaking to you.
Still, the protesters are determined to make their voices heard well beyond the parliamentary walls. And of course, this picks up off something that
we've been seeing these last few weeks and coverings to air on CNN, Julia, which are the trade unions that are now preparing their ninth day of mass
protests on strike.
On Thursday, they'd begun at the start of the year ever since Emmanuel Macron announced that he was determined to get this retirement age pushed
through raise from 62 to 64. They've held these protests, these strike actions there will be more on Thursday when much of France will be
paralyzed again.
Still, and despite that a large proportion of the French public determined to remain against this particular move against the government's proposal
and behind what the trade unions and the protesters have been doing these last few weeks. So a remarkable sort of arm wrestle between the governments
and really the wider public and the parliament as well, Julia.
CHATTERLEY: Yes, the majority of the public, I understand the theory. It's just how do you pay for 20 or 30 years of retirement? That's the answer
they need to come up with. Melissa Bell, thank you so much for that! We're back after this stay with CNN.
(COMMERCIAL BREAK)
[09:55:00]
CHATTERLEY: Welcome back to a fast and furious "First Move" today. U.S. stocks are also up and running this Monday and it's a big start to the
trading week which has a major U.S. banks as well as many regional banks now are on the rise.
Look at the DOW there actually managing to eke out gains of 1 percent all of this coming after the emergency sale of Credit Suisse to UBS and the
move by global central banks to ensure access to U.S. dollars and make sure that these banks keep lending and feel secure.
Another positive development too, U.S. officials telling CNN that deposits at some of the U.S.'s small and midsized banks have stabilized in recent
days without flows either slowing, stopping or in some cases even reversing and that's going to be the key to broader stability I think in the U.S.
markets just people feeling secure enough particularly those uninsured deposits to leave their money where it is.
Now, that's it for the show. "Connect the World" with Becky Anderson is up next. I'll see you tomorrow.
(COMEMRCIAL BREAK)
[10:00:00]
END
