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Isa Soares Tonight
U.S. Fed Set To Raise Benchmark Interest Rate Again; Ukraine Strikes Key Bridge In Russian-Occupied Kherson; Tensions High Amid Rumors Pelosi Will Visit Taiwan; Taiwan Tensions; Blinken: Ukraine Will Remain Sovereign And Independent; Biden Administration Offers Russian Arms Dealer In Swap For Brittney Griner And Paul Whelan. Aired 2-3p ET
Aired July 27, 2022 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ISA SOARES, HOST, ISA SOARES TONIGHT: Hello and a very warm welcome to the show everyone, I'm Isa Soares. We have a busy hour of news ahead. We are
expecting to hear from the U.S. Secretary of State, Antony Blinken and from the Federal Reserve Chairman Jerome Powell. We'll get to those as soon as
they start talking. But first, let's go straight to our top story because America's Central Bank is once again bringing out its most powerful weapon
in the battle against soaring inflation.
Now, that's a big interest rate hike. The U.S. Federal Reserve is expected just within minutes in fact to raise interest rates by three-quarters of 1
percent, but it could do more, it could do less. Markets are expecting roughly that. And of course, we'll have that number for you as soon as it
And hear how the major markets are really reacting, was a weighty word from the Fed. You see the Dow Jones, the Nasdaq, the S&P all -- S&P 500, all in
the green. They have been doing very well for most of the day. I think -- I think it's fair to say that most of the stock markets in the U.S. have
already priced in a hike -- a 3 percentage point hike from the Fed.
The question then becomes, what is next? That's what investors, what economists want to hear, not so much what happens today, is what happens in
that -- its next meeting in September. We've just confirmed that interest rates have been raised to 75-basis points. This is the Dow reacting to the
news. But of course, it's not so much the news of the hike, but the fact, you know, what the Fed might do later, because it's a very delicate
They are, of course, trying to contain the soaring inflation, which is what now at 9.1 percent without impacting growth, the growth of the economy. So
trying to get that balance is very important. But it is, of course, the Fed's fourth rate hike since March. And if you're just joining us, let me
bring you up-to-date in the last few minutes. The U.S. Federal Reserve has raised interest rates by three-quarters of 1 percentage point.
The question then becomes what is next? This is the fourth rate hike since March, and we've seen consecutive rate hikes in fact. But of course, a fine
balancing act for the Fed, but what investors will want to hear today is where does the Fed go from here? Because some would say the Fed is being
too aggressive, others may say, actually, the Fed was too late to the game. Let's get more on this, Rahel Solomon joins me now for the very latest.
Look, Rahel, this is a very much priced in markets really as we've seen with the Dow Jones liking what they are seeing. First of all, explain what
this means for Americans.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: So, quite simply, Isa, borrowing rates have gone up, right? As the Fed has been trying to get a
handle on inflation. It is increasing its benchmark rate which then sort of funnels through all sorts of borrowing costs. So, to your point, this was
largely expected, about three-quarters of the market expected 75-basis points or three-quarters of a percent.
The worst expected, perhaps even stronger than that, a 100. So this is the Fed signaling that it is doing what it feels like it must, being more
aggressive, doing more rather than less to try to get a handle on inflation. And Isa, what's really important here is to understand sort of
why raising the benchmark interest rate sort of hopefully lowers inflation.
When the Federal Reserve and central banks around the world raise interest rates, that essentially makes borrowing more expensive, and that hopefully
cools demand, right, it sort of cools spending. And the hope is that it cools demand and spending enough that it creates a bit of balance, a bit
more equilibrium of the supply of goods and services and a demand for those goods and services.
That's part of the reason why prices have been so inflated, 9.1 percent according to that last consumer price index report here in the U.S. So,
this is the Fed signaling yet again that it will do what we must to get inflation under control, put a lid on inflation. And so, your very valid
point, Isa, the market is clearly liking --
SOARES: Yes --
SOLOMON: What they see.
SOARES: And of course, everyone will be listening in to Jerome Powell, I think he's due to speaking in what? Twenty five minutes or so. And often,
when he speaks, we all try to read between the lines. What should we be listening to? Because I know they're meeting again in September, Rahel, but
between now, you've got more data coming in, we've got jobs and inflation reports, and that's key crucially.
SOLOMON: Well, guidance, I mean, that's what we're all sort of going to be listening for. But it will be perhaps harder than most to --
SOARES: Yes --
SOLOMON: Try to understand what they are leaning towards. Because there are more data points to come, there are two more jobs reports, and the jobs
part of this is very important. There are several more inflation reports including the one that we get on Friday. And so, there is a lot of data
between now and the September meeting. And the Fed and Federal Reserve Chairman Jay Powell have said all along, and for quite some time now, that
they will be data dependant.
They're waiting to see as they raise rates, Isa, how the market respond, right? How does inflation respond? Are we starting to see some cooling in
inflation? Are we starting to see some weakening in the job market? So, it's very hard to know how much they will signal, but I can -- I can safely
say that Powell will probably try to be a bit more guarded than usual because the reality is, they may not know yet what they will do in
But that is not stopping forecasts, it is not stopping predictions. We are already seeing Citigroup by the way, weighing in this morning, saying that
it is unlikely, the Fed unlikely to pivot to a more dovish strategy, we continue to expect further aggressive hikes including 75-basis points or
three-quarters of a percent in September. Isa?
SOARES: And that would be quite something. But, look, I think some will say it's been very aggressive, others will say, Rahel, and you and I have
talked about this, that perhaps they've been a bit too late to the game. But do we know, Rahel, at what point, what the key inflation number is they
want to hear. So is there a guide here for us? In terms of, at what point is too -- are they done or too much really?
SOLOMON: Well, it's a great point, and it's probably something that central bankers and policy makers are going to be asking much more moving
forward, right? You can argue that there was a much more consensus heading into this meeting, that the Fed had to be more aggressive to get a handle
on inflation. But then the question becomes, well, how much is too much?
One thing I can tell you that we know the Fed is looking for is month-over- month core inflation to start to decline. We haven't seen that yet. So that will be the first sign that the medicine is working, that the monetary
policy medicine is working. But we haven't seen that yet. What interest rate that we'll require, well, that's --
SOARES: Yes --
SOLOMON: Anyone's guess. And you could argue, the Fed doesn't know it either, which is why they're taking such a sort of wait-and-see approach,
to see how the economy reacts to their interest rate hikes.
SOARES: And as you were talking, Rahel, we are still keeping an eye on the Dow Jones, it is coming down slightly from the top of the show in the last
seven minutes or so, when we saw a what? The Fed Reserve announce a 75- basis point hike, here. But very much priced in, you would say, but now it's all about what Jerome Powell says in 20 minutes or so.
SOLOMON: It's all about what he says, but it's also about -- Mohammed El- Erian said this on our air yesterday, which I think is really interesting, that we have seen signs that inflation is sort of peaking because we've
seen crude oil prices come down, we've seen energy prices come down, we have seen commodities come down, in terms of wheat, grain, corn, soybeans.
So, we have seen raw materials costs start to come down. So, the conversation almost shifts to, have we reached peak inflation to now are we
heading toward a recession? And the more aggressive central banks have to be, including the Federal Reserve. But increase likelihood that, that
happens. And so, it's sort of really strange place we find ourselves in --
SOARES: Yes --
SOLOMON: Because the Fed finds himself in a -- between a rock and a hard place. You have inflation on one hand, you have recession on the other. And
so aggressive rate hikes are certainly better for inflation, but then that raises the risk of recession, which is perhaps one reason why you're seeing
the markets take a dip down a little bit.
SOARES: And we will be talking to Mohamed El-Erian in about 25 minutes or so. But you know --
SOLOMON: I'll be there to watch --
SOARES: But back to America, it's also -- I shall ask him that -- the Bank of America is also talking about a mild recession. So, very different of
views. But to your point, a very fine balancing act. Rahel Solomon, thank you very much, of course, we will take that press conference from Jerome
Powell -- from the Federal Reserve as soon as it happens. I suspect in about 20 minutes.
We're also expecting, as you can see, to hear from U.S. Secretary of State Antony Blinken. That's the shot of the podium, the State Department, and as
soon as that gets underway, of course, we shall bring it to you. Now, to a setback for Russian forces in southern Ukraine. Ukrainian troops have
damaged a strategic bridge in the occupied Kherson region, aiming to disrupt Russia's supply lines.
CNN's Jason Carroll has more on this development and other news from the battlefield.
JASON CARROLL, CNN CORRESPONDENT (voice-over): These images, the Ukrainians say, are their strategy at work. Ukrainian long-range rockets
struck a bridge in Kherson and the Russian-occupied southern part of the country Tuesday night, targeting Russia's supply lines.
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
CARROLL: By day, the damage done all too clear. The Antonivskyi Bridge not destroyed, still crossable, but the Ukrainian government say it's damaged
enough to prevent Russians from using it to send in more heavy armor and other reinforcements.
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
CARROLL: The Russians admit the bridge is closed off, but downplayed the bombing. Local pro-Russian officials saying the attack will ultimately have
no effect on the outcome of the war. This, as Ukrainian authorities say Russians are sending additional troops to the south. Analysts say Russia is
preparing for a Ukrainian counter-offensive that is slowly gathering strength in that part of the country.
But in the eastern Donetsk region, it's the Russians on the front foot. These scenes from the town of Bakhmut under relentless shelling by Russian
forces. One man recorded the aftermath of strikes on nearby Toretsk and surveyed the damage. He says "missile attack, everything is completely
The State of Emergency Service in Donetsk says, as a result of the Russian shelling, at least, one person was killed at a nearby hotel. Russian forces
are trying to push further into the Donetsk region that captured a power station that had become a battlefield for weeks. But amidst stiff Ukrainian
resistance, they're making very slow progress. Jason Carroll, CNN, Kyiv, Ukraine.
SOARES: Well, Ukraine is a step closer today to resuming grain exports that will help ease the global food crisis. It's really started work at
Black Sea port to prepare for shipments under a deal with Russia that was signed if you remember in Turkey last week. Our Nada Bashir is following
this story for us from Istanbul. And Nada, I believe you were there at the coordination center that was opened in Istanbul today. How will it work?
Talk us through kind of the logistical, as well as diplomatic challenges here, Nada.
NADA BASHIR, CNN REPORTER: Well, there are some significant challenges ahead, Isa, but as we saw all today, Turkey and the United Nations have
managed to bring delegations from both Russia and Ukraine around one table here in Istanbul as part of that joint coordination center, which is being
held at Turkey's Defense University in the city.
And now, of course, this center will be charged with the responsibility of overseeing the safe passage of vessels carrying grain and other agriculture
goods from Ukraine's southern Black Sea ports, through the Black Sea, through the Turkey's straits safely, through these corridors that are going
to be established and identified by the Ukrainian armed forces.
And this is of course, a significant challenge. We saw that attack on the port of Odessa just a day after that deal was signed. And there are real
questions around the viability of this agreement in the long term. But as we heard today from both Turkish officials and from the United Nations,
they believe this deal has what it takes to be a successful option for getting that grain out of Ukraine. Take a listen.
BASHIR (voice-over): A landmark agreement now ready to be enacted. Delegations from both Russia and Ukraine brought together again in
Istanbul, this time to mark the inaugural meeting of the Joint Coordination Center.
HULUSI AKAR, DEFENSE MINISTER, TURKEY (through translator): The duty of the center is to ensure the safe sea transportation of grain and other
supplies to be exported from Ukraine. It has become necessary to establish a sea corridor for the safe delivery of more than 25 million tons of
grain leaving the Ukrainian port to the countries in need in a short period of time.
BASHIR: It's a deal which has taken weeks of negotiation to secure. And with the framework set to remain in place for at least four months, the
work of this unprecedented collaboration could prove decisive in alleviating some of the pressures of the global food crisis.
(on camera): Where you can see the media storm behind me, and that's because this center here, the Joint Coordination Center is set to be the
heartbeat of the grain export initiative. Bring together representatives from Turkey and the United Nations, but crucially, from both Russia and
Ukraine to oversee the export of grain and other vital agriculture goods through the Black Sea.
The real question now is whether all-four proceeds and in particular, whether the Russian federation will commit to the framework outlined in
(voice-over): But trust in Russia's intentions on the Black Sea is tenuous.
Just a day after the deal was signed in Istanbul on Friday, Russian forces launched an attack on the southern Ukrainian port of Odessa, raising
concerns over the viability of the agreement. Now Ukraine says it's placing its trust in Turkey and the United Nations.
FREDERICK KENNEY, U.N. INTERIM COORDINATOR, BLACK SEA GRAIN INITIATIVE: Well, I can say that, we'll -- all parties here have expressed their
commitment to making this initiative a reality and getting it operational. And I think that's demonstrated by the fact that all parties had a very
senior person arrive here on an extremely short notice.
BASHIR (on camera): Are you confident that Russia will commit, given the fact that we've already seen an attack?
KENNEY: I am confident that we will -- this will be a successful initiative, yes. And we're going to work very hard to make sure that it
BASHIR (voice-over): According to the Ukrainian government, work is now underway to finalize safe corridors from three of Ukraine's Black Sea
ports. And with no shortage of urgency around this initiative, officials say the first shipments could leave Ukraine by the end of this week.
BASHIR: And look, Isa, there have been concerns raised from the United States government, we've heard from British Foreign Secretary Liz Truss,
both expressing concern around creating these negotiations with Russia, whether or not that is a viable solution to this food crisis, and perhaps,
suggesting an alternative option. For now though, the Turkish government and the United Nations both remain confident that this deal can work.
President Erdogan says he believes that all four parties will remain committed to this deal going forward. And in fact, he is due to meet with
President Putin next week in Sochi to discuss further military cooperation. So, there's still ongoing work from the Turkish government over the coming
days and weeks to try and make this deal work.
And of course, as you heard there, we are expecting to see the developments in the actual application of this deal, coming into the works over the
coming days, too. Isa?
SOARES: Thanks very much, Nada Bashir there from Istanbul, Turkey. Well, a good part of the world's current economic trouble stem from Russia's war on
Ukraine. And one example, natural gas prices which has soared 30 percent in just two days. As well as electricity prices in Europe shot Wednesday to a
new record high as Russia slash natural gas deliveries through the Nord Stream pipeline.
This comes a day after EU energy ministers agreed to a voluntary 15 percent cut in gas use, worried they could run short come Winter. The EU's Energy
Commissioner told CNN exemptions for some countries in Europe as a whole should be able to weather the cold months. Have a listen.
(BEGIN VIDEO CLIP)
KADRI SIMSON, ENERGY COMMISSIONER, EUROPEAN UNION: That 15 percent is achievable despite how big gas consumption you do have. But many pointed
out yesterday that it doesn't take into account the different circumstances. So yesterday. we added some flexibility to this framework to
make sure these circumstances are reflected. But even if all of those exemptions and derivations would be used, which is not likely, we would be
able to cut to the consumption enough.
(END VIDEO CLIP)
SOARES: European Energy Minister there. Well, still to come tonight, Brittney Griner reveals information we hadn't heard before about her drug-
smuggling arrest in Russia. What she said today in her defense when she took the stand. And of course, a reminder that we are expecting a press
conference with the U.S. Secretary of State Antony Blinken any moment. You can see the live shot there, as soon as that happens, we will of course
bring that to you.
SOARES: U.S. basketball star Brittney Griner told her side of the story today at her drug-smuggling trial in Russia. She testified that when
authorities searched her luggage at a Moscow airport back in February, she wasn't read her rights. Her phone was taken away, and she said she was made
to sign documents she didn't fully understand. Our Fred Pleitgen joins me now for more on this. So, Fred, what more did she say? What did we learn
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, there were a lot of things. And you could -- you could really tell, Isa, this was a
very important day for Brittney Griner, she was very much aware of the fact that it was a very important day for her. She did say that there was no
translator present for the majority of the time that she was being held there at Sheremetyevo Airport on February 17th.
And as you already noted, she also said that her rights were not read to her even as she signed a bunch of documents, and was told to sign a bunch
of documents that she didn't understand because they were in Russian, and she used Google Translate at certain points. It was quite interesting
because her lawyer, after this trial, they came out and said that he also believes that things were done improperly there, and it's certainly
something he says he's going to make an issue of when the closing statements in these trial come.
But there were other things as well. She did acknowledge that obviously, it was a mistake to have those cartridges in her luggage with the vaping oil.
She said she still has no idea how they got there. She says she packed in a frenzy, in a hurry because she had to get to Russia very quickly, she was
very tired, she's just recovered from COVID. But she wanted to be there for her teammates in Yekaterinburg in Russia where she plays, and so made that
transcontinental journey -- Trans-Atlantic journey which obviously is something that made her very tired as well.
So she says that it was a mistake, that she didn't know that she had those cartridges in her luggage, and that she was aware that having those with
her was illegal in Russia. She obviously also said that it's something that she's very sorry for, that she did not want it to happen. So certainly,
Brittney Griner really, I think you can tell that the defense is trying to build a case to get leniency from the Russian court of course. We do always
have to point out, Isa, that leniency is definitely not something Russian courts are known for.
SOARES: Yes, and you know because you've covered several of these cases as well, Fred. And Fred, do we know how she's doing, how Brittney Griner is
doing mentally here?
PLEITGEN: Well, so, the U.S. Embassy on these occasions does have staff there, and name the charge d'affaires of the U.S. Embassy in Moscow. And
the charge d'affaires did say that usually on these occasions, and yesterday certainly, there was a trial date as well. They had the chance to
speak to Brittney Griner, and that given the circumstances she was doing as well as could be. She also apparently told the charge d'affaires to tell
all of her supporters in the United States to keep the faith.
But of course, it is a very difficult and very uncertain time that she is - - she is going through. And in that very difficult and uncertain time, her lawyer today after the trial date said that she did perform very well, as
she sort of laid out her version of what happened to her, why this happened, how this happened. And obviously is looking for leniency from
that court. But very difficult times for her to go through. And she says she is doing as well as can be, even though of course, she does have that
uncertainty to deal with. Isa.
SOARES: Yes, and someone says a very highly politicized trial as well, that is being really decided in many ways, in the front of the -- the glare
of the cameras and the public. Fred Pleitgen for us there, thanks very much, Fred, good to see you. Now, Taiwan carried out its largest annual
defense drill, which the military says was aimed at boosting overall defense capabilities as well as providing solid protection to the national
It comes amid rumors that U.S. House Speaker Nancy Pelosi will visit Taipei, risking making U.S.-China relations even more difficult. Our Selina
Wang has this report.
SELINA WANG, CNN CORRESPONDENT (voice-over): Fire and fury from Beijing in response to House Speaker Nancy Pelosi's potential visit to Taiwan. China
threatening to take resolute and powerful measures. A U.S. official told CNN China could impose a no-fly zone around Taiwan.
A prominent hawkish voice in China says Beijing's reaction would involve a shocking military response, even suggesting that PLA military aircraft will
accompany Pelosi's plane to enter the island, making a historic crossing of the island by military aircraft from the mainland. But the Chinese
government hasn't announced details about how it could retaliate.
DREW THOMPSON, SCHOLAR, NATIONAL UNIVERSITY OF SINGAPORE: Beijing believes that this uncertainty will lead to deterrence, and that Washington and
Taipei will effectively talk themselves out of this. But I don't think Beijing really wants to risk a military conflict.
WANG: China sees the self-ruled island as a breakaway province that must be reunified with the mainland, even by force, if necessary. There have
been recent U.S. congressional visits, but if Pelosi goes to Taiwan, she would be the highest ranking U.S. official to travel there, since then
House Speaker Newt Gingrich in 1997.
(on camera): This potential visit comes at an extremely sensitive time. China's military is celebrating its founding anniversary on August 1st, and
we are just months away from a key political meeting when Xi Jinping is expected to see an unprecedented third term. From Beijing's perspective, a
potential visit by Pelosi to Taiwan would be a reckless act that provokes Beijing at a time it's supposed to be projecting strength, control and
THOMPSON: I think military action on China's part in response to a Pelosi visit is very risky for Xi Jinping.
WANG (voice-over): Officially, Washington and most governments around the world only acknowledge Beijing as a legal government of China, yet,
unofficial ties between Washington and Taipei have been growing closer, and the U.S. continues to sell weapons to the island. All of that infuriates
In response, last year, Beijing flew a record number of war planes into airspace near Taiwan. For decades, the U.S. has been purposefully vague
about whether it will defend the island, should the Chinese invade.
JOE BIDEN, PRESIDENT OF THE UNITED STATES: That's the commitment we made.
WANG: Biden has said several times that the U.S. would intervene militarily if China were to attack Taiwan.
BIDEN: Yes, we have a commitment to do that.
WANG: Only to have the White House walk back those remarks each time. But as China's military might grows, more are calling for the Biden
administration to end this so-called strategic ambiguity. It's impossible to overstate how important Taiwan is to the Communist Party, and its
Beijing is against any move that appears to acknowledge Taiwan as an independent country or makes the U.S. relationship more formal. And a visit
from one of America's most powerful politicians does just that. Selina Wang, CNN, Beijing.
SOARES: Let's get more on this, for more, as CNN political analyst Josh Rogan. And Josh, great to have you on the show. And just to say that we are
expecting, Josh, to hear from the U.S. Secretary of State Anthony Blinken, so if I have to interrupt, apologies in advance. But let me start really
with the obvious question following from that report. Do you think that Pelosi would go? I mean, I know she's facing pressure from the White House
not to go. What's the best thing here?
JOSH ROGAN, CNN POLITICAL ANALYST: If I had to place money on it, I think that Nancy Pelosi will -- and her delegation will go to Taipei at the end
of their trip next week, that will also include stops in South Korea and Japan. For the simple reason that, now it's very public that the Biden
administration doesn't want her to go.
And now that the Chinese government has raised its threats and its bluster to a point where if she backs down, she will look like they got the better
of her. I think all the politics point to the fact that she will go. Also, you have to remember that Nancy Pelosi won't be house speaker likely for
much longer. There is a very good chance the Democrats are going to lose control of the house.
There is a good chance if they do that she will retire. So she may see this as the last chance to place a capstone in her long career of being a self-
proclaimed expert on U.S.-China relations. And for all those reasons, I think we should expect this to happen. And I think the government in
Washington, Taipei and Beijing will just have to lump it. And you realize that starting a crisis over doesn't really make any sense.
SOARES: They might have to lump it. I mean, look, the fear is of course, that it may rattle Xi Jinping at a critical time. What -- so explain,
really, the benefit of her visit at this point?
ROGAN: Right, well, from her perspective, she is running out of time as speaker in her career. So that's the timing from her perspective. From the
Biden administration's perspective, they would rather she just postpone until after the election when she is essentially a lame duck and tensions
might be lower.
I mean, they're guessing that tensions will be lower, we don't actually know that. And you know, the bottom line is that there is never a time when
U.S. lawmakers can go to Taiwan where the Chinese Communist Party won't complain and threaten. But there is a risk there. And that is a risk that
is causing U.S. military planners to be nervous.
We cannot ignore that risk. At the same time, I think at the end of the day, once you start delaying, you just end up giving the Chinese Communist
Party a veto over these kinds of trips. And then we're just living in a world of endless bullying.
That's a real downside of delaying it for now.
SOARES: I mean, this is, as you well know, Josh, a critical time for Xi Jinping. He is seeking a second term in autumn and he won't want to face
any criticism. He will want to appease, of course, China's Communist Party elders.
Isn't it all risky for Taiwan?
Could it do more harm than good for Taiwan, here?
ROGIN: Actually, yes, I think that's a really good point. The more likely response by Beijing will be on the weaker partner, Taiwan, not on the
United States. It is much more likely that they will punish Taiwan, rather than start a crisis with the United States.
Again, that is something that the Taiwanese can't ignore but all signs point to that the Taiwanese government wants Pelosi to visit.
SOARES: I'm going to interrupt. I'm sorry to interrupt. Federal Reserve chairman Jerome Powell is about to speak, let's listen in.
(JOINED IN PROGRESS)
JEROME POWELL, CHAIRMAN, FEDERAL RESERVE: -- have through a lot over the past 2.5 years and have proved resilient. It is essential that we bring
inflation down to our 2 percent goal, if we are to have a sustained period of strong labor market conditions that benefit all.
From the standpoint of our congressional mandate to promote maximum employment and price stability, the current picture is plain to see. The
labor market is extremely tight and inflation is much too high.
Against this backdrop, today, the FOMC raised its policy interest rate by 0.75 percentage point and anticipates that ongoing increases in the target
range for the federal funds rate will be appropriate.
In addition, we are continuing the process of significantly reducing the size of our balance sheet and I will have more to say about today's
monetary policy actions after briefly reviewing economic developments. Recent indicators --
SOARES: Stop there, because we want to take you to Secretary Antony Blinken, speaking now, let's listen then.
ANTONY BLINKEN, U.S. SECRETARY OF STATE: All this because President Putin is determined to conquer another country. He has failed in that goal.
Ukraine has not and will not be conquered. It will remain sovereign and independent.
As this war stretches on, the courage and the strength of Ukraine's military and its people become even more evident. And even more
extraordinary, they will do whatever it takes to protect their homes, their families, their fellow citizens, their country.
The United States and our allies and partners will continue to stand with them and help provide precisely what they need to defend their freedom.
In the coming days, I expect to speak with Russian foreign minister Lavrov for the first time since the war began. I plan to raise an issue that is a
top priority for us, the release of Americans Paul Whelan and Brittney Griner, who have been wrongfully detained and must be allowed to come home.
We put a substantial proposal on the table weeks ago to facilitate their release. Our governments have communicated, repeatedly and directly, on
that proposal. I will use the conversation to follow up personally and I hope move us toward a resolution.
Also raised the matter of the tentative deal on grain exports that Ukraine, Turkiye, Russia and the United Nations reached last week. We hope that this
deal will swiftly lead to Ukrainian grain being shipped again through the Black Sea and that Russia will follow through on its pledge to allow those
ships to pass.
This has been the focus of the world's attention for months, including a few weeks ago at the meeting of the G20 foreign ministers in (INAUDIBLE),
where one foreign minister after another urged foreign minister Lavrov and Russia to stop blocking the grain.
So this agreement represents a positive stop forward. That said, there's a difference between a deal on paper and a deal in practice. Hundreds of
millions of people around the world are waiting for these ships to set forth from Ukraine's ports and for millions of tons of grain and other
crops to reach world markets.
If Kremlin signed this deal to look reasonable to the world without any intention of following through, we'll know that soon enough. My call with
Foreign Minister Lavrov will not be a negotiation about Ukraine; any negotiation regarding Ukraine is for its government and people to
As we've said from the beginning, nothing about Ukraine, without Ukraine. Now these developments, now that we have reached the half year mark.
Let's take a step back and consider the state of the war and what we expect to come next.
In the Donbas region, where Russia concentrated its forces after failing to take Kyiv in the spring, the fighting remains intense. The modest progress
that Russian troops have made there has come at huge costs of both lives and materiel.
Meanwhile, Ukraine is using all its defensive capabilities to hit back hard, bolstered by the more than $8 billion in security systems from the
United States since the beginning of this administration.
As we look ahead, what the world has heard recently from Russia's leaders is raising new alarms. Last week, foreign minister Lavrov said that the
Kremlin's goals in Ukraine had expanded. Now they seek to claim more of Ukrainian territory beyond the Donbas.
This is the latest in a series of evolving justifications and ever shifting goals. In the beginning, Russians said that the purpose of the war was to
de-Nazify Ukraine, a false charge aimed at delegitimizing Ukraine's democracy.
They said the real threat was somehow posed by NATO, a purely defensive alliance that made efforts to engage Russia for years but was rejected and
to help safeguard peace, stability and prosperity across Europe for decades, to the benefit of Russia among many other nations.
Then they said the war was to protect ethnic Russians living in Donbas from genocide before relentlessly targeting the largest Russian speaking city
in Ukraine, Kharkiv. The only one responsible for killing ethnic Russians in Ukraine is President Putin.
What this is about and has always been about, is President Putin's conviction that Ukraine is not an independent state and belongs to Russia.
He said it flat out to President Bush in 2008, and I quote, "Ukraine is not a real country," end quote.
He said it in 2020, and I quote, "Ukrainians and Russians are one and the same people," end quote.
Last month he said that when Peter the Great waged war on Sweden, he was simply taking back what belonged to Russia and now Russia is again looking
to take back what is theirs.
President Putin has been foiled in his efforts to erase Ukrainian sovereignty and independence. But now Moscow is laying the groundwork to
annex more Ukrainian territory, from downgraded U.S. intelligence as well is information available in the public domain.
We can see that they are following the same playbook that they used back in 2014. They are installing illegitimate proxy officials and working to
establish branches of Russian banks in areas they control, set the removals of local currency, take over broadcasting towers, force residents to apply
for Russian citizenship, sabotage internet access for local residents as well, all of this to consolidate their power over these regions.
Our intelligence also shows that Russia is using filtration centers in Eastern Ukraine and Western Russia to detain, interrogate and in some cases
abuse thousands of Ukrainians. Some are allowed to remain in Russian occupied Ukraine. Some are forcefully deported to Russia.
Some are sent to prisons. Some simply vanish. Here's what we expect to see next.
Russia-installed leaders will hold sham referenda to manufacture the fiction that the people in those places want to join Russia. They will then
use those false votes to claim that the annexation of these regions is legitimate.
We must and we will act quickly to make clear to Russia, that these tactics will not work. Annexation by force, the territory of the sovereign and
independent country is a gross violation of the United Nations charter.
Members of the international community that have committed to uphold the charter and international law have a responsibility to denounce these plans
by the Russian government and to make clear they will never recognize these illegal acts.
Otherwise, no one can claim to be surprised when Russia follows through on its plans or if other countries follow suit in the future.
A few days ago, Foreign Minister Lavrov said, I quote, "We are determined to help the people of Eastern Ukraine to liberate themselves from the
burden of this absolutely unacceptable regime," end quote.
By what right can Russia claim this?
Ukraine is not their country. The people of Ukraine democratically elect their own leaders. The government of Russia has no say in that whatsoever.
The right belongs to the Ukrainian people and the Ukrainian people alone.
Despite these deeply troubling developments, we should not lose sight of the broader picture. NATO, a stronger, more united and poised to grow.
Nearly one third of NATO members have already ratified Sweden and Finland's accession protocols.
BLINKEN: We appreciate the Senate Foreign Relations Committee's swift action to advance the protocols. We hope the full Senate will act quickly
to do the same. Many countries beyond Europe have condemned Russia's aggression and are holding Moscow to account.
The Ukrainian people are more determined than ever to defend their homeland, preserve their culture. All of these developments refute the
Economically, the sanctions we have imposed on Russia to end this aggression are having a powerful and also growing effect. Moscow has been
cherry-picking economic data to support President Putin's insistence that everything is fine and the Russian economy is going strong.
It simply is not true. The Kremlin says that global businesses haven't really pulled out of Russia. In fact, more than 1,000 foreign companies,
representing assets and revenue equal to more than a third of Russia's GDP, have stopped operations in Russia.
Many of Russia's best and brightest have left, as well, including highly educated professionals in critical fields like energy and technology. They
say that Russia is replacing lost imports from the West, with imports from Asia.
In fact, imports into Russia have dropped more than 50 percent this year. Imports from China, for example, aren't making up the difference in
quantity or quality, especially for high-end components.
What that also means is that Russia can't manufacture products for Russian citizens or for export and will increasingly lose markets overseas. They
say that the government is running a budget surplus because of high energy prices.
In fact, the budget is in deficit. And Russia can't spend the oil revenues it has acquired on the imports it wants, because of sanctions.
They say that the Kremlin has plenty of sovereign wealth. In fact, half of that money, half of that money is frozen overseas. They say that domestic
consumption is still strong in Russia. In fact, consumer spending has plummeted.
They say that the ruble is the world's strongest performing currency. In fact, the currency market is controlled by the Kremlin. Russian households
are restricted from converting rubles to dollars. The ruble is trading at a much lower volume than before the war.
So though the Kremlin is working hard to paint a picture of economic stability, the facts show otherwise. The powerful impact of sanctions will
grow and compound over time. But President Putin will likely claim that this war was a resounding success. The world can see that it has weakened
President Zelenskyy has made clear that the war will end through diplomacy. We agree. The United States is ready to support any viable diplomatic
effort. Unfortunately, Moscow has given no indication that it's prepared to engage meaningfully and constructively.
And we are under no illusion that that's going to change anytime soon. If and when the time comes, we will bring the full weight of American
diplomacy to bear. In the meantime, we will continue to do all that we can to strengthen increase Ukraine's position on the battlefield so it has the
strongest possible position to negotiate from.
From here in Washington and in all of my travels, I will continue to discuss all of this with our partners and allies, supporting a sovereign,
independent Ukraine, resolving the food security crisis and how we can help create the conditions for diplomatic resolution.
Last week, as you know, I had the privilege of welcoming Ukraine's first lady, Olena Zelenskyy. She came to the State Department. I told her that
the United States will not waver in our support for the Ukrainian people.
That was true six months ago; it is true today; it will be true long after the war and this aggression is over. With that I will take some questions.
QUESTION: Secretary, there are reports that the administration has decided that this substantial offer is to trade convicted Russian arms dealer
Viktor Bout. That's a big offer. Just last week Bill Burns (ph) called him a creep (INAUDIBLE) but you want to get Griner and Paul Whelan out.
So what is the prospect of getting them out by making such a big trade, arguably over the opposition of the Justice Department?
He's serving a 25 year sentence.
And what can you accomplish in the conversation with Lavrov to try to get this grain deal locked in, since they bombed Odessa within 24 hours of
agreeing to the deal?
How can you trust anything that Lavrov and Russians agree to?
BLINKEN: Thank you.
BLINKEN: When it comes to our efforts to bring home Paul Whelan and Brittney Griner, you understand I can't and won't get into any of the
details of what we proposed to the Russians over the course of so many weeks now.
QUESTION: But can you talk about why you would make such an important -- why you would put what you call a substantial offer on the table?
BLINKEN: So here's what I can say about this.
First, as I mentioned, we've conveyed this on a number of occasions and directly to Russian officials. And my hope would be that, in speaking to
foreign minister Lavrov, I can advance the efforts to bring them home.
We have two imperatives when it comes to arbitrarily wrongfully detained Americans anywhere in the world, including Russia, including in the cases
of Brittney Griner and Paul Whelan. And I say this because, more than unfortunately, horrifically, this is a practice, as you know, that many
countries engage in and one that we are resolutely working to end.
And I will come back to that in a minute. But we have two objectives. We of course want to see those who are wrongfully detained be released and be
able to return home. At the same time, it is important that we work to reinforce the global norm against these arbitrary detentions, against what
is truly a horrific practice.
So we are working concertedly on both. We have demonstrated, with Trevor Reed, who came on a few months ago, that the president is prepared to make
tough decisions if it means the safe return of Americans.
At the same time, we are working with partners around the world to use all of the relevant tools at our disposal, including some that were announced
just recently, an executive order that the president released, to respond to and impose costs on those who engage in this practice.
And I believe we can actually fill both imperatives. Let me just say this, as well. I think you can expect to hear me in the weeks and months ahead to
speak more to the efforts that we are making to reinforce this global norm against arbitrary detention, to deter countries from doing this in the
QUESTION: Can you speak to the grain --
BLINKEN: Oh, I'm sorry; the grain. I apologize.
SOARES: You've been listening to U.S. secretary of state Antony Blinken there, who started off by talking about Ukraine, saying that Ukraine will
not be conquered, will remain sovereign and independent.
But he did say in the coming days he will be speaking to Russian foreign minister Lavrov and the priority of this discussion will be, of course, the
release of Paul Whelan, if you remember. He has been arrested on espionage charges since 2018 in Russia, as well as Brittney Griner, the WNBA star I
mentioned earlier this hour.
He will also talk about the grain, the grain that has to be exported but it will not be a negotiation about Ukraine. He went on to say that the U.S.,
on the case of both Griner and Paul Whelan, that the U.S. is putting a substantial offer for them to be released.
Let's get more on this. When he was asked whether, for more details on this big trade, he didn't say much more. But CNN exclusive reporting suggests
that they will offer in exchange a convicted Russian arms dealer. Let's get more on this, CNN international diplomatic editor Nic Robertson in Odessa,
Ukraine, this hour.
First, let's go to CNN security analyst Nick Paton Walsh in London. And we've got CNN global affairs analyst Susan Glasser in Washington.
Nick, first to, you talk us through this exchange that CNN has just confirmed between Viktor Bout and potentially the two U.S. prisoners.
What do we know?
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: There's something of an imbalance here, certainly. It is an offer. It is an offer that appears,
as senior U.S. officials are telling my colleagues in D.C., they have had it up for some time.
It is unclear at this point if Russia will accept that. I'll be very surprised if they did not, frankly. Viktor Bout, depending on whether
you're reading the book about his life or some fictionalized movie starring Nicolas Cage. He's a man accused of dealing arms, particularly in the '90s
all over Africa, around the world, often to bolster the geopolitical goals of Russia, as it was then.
And a big fish, frankly, one that the DEA, the Drug Enforcement Administration laid on quite an elaborate sting operation to detain in
Thailand. In fact, I interviewed him in a Thai jail back in 2009. A charming man, a dynamic man, very clear how he managed to get all those
deals and make those contacts around the world.
His arrest and eventual extradition to the U.S. where he has been in a maximum security prison for some time was a big steal, frankly, for the
WALSH: So the idea they're putting a man of this magnitude, who is coming to the end of his sentence, possibly in the United States, up as a swap for
these two Americans, whose charges against whom obviously don't have the same level of magnitude at all, and have been subject to much scrutiny
themselves, does suggest the Biden administration is very keen to see this happen.
And I will say, although it has always been unclear frankly exactly why to Moscow this man is so utterly important, I would be very surprised if the
Kremlin did not seize this opportunity.
SOARES: Susan, let me go to you.
What do you think about what CNN has just confirmed, that there are sources, exchange of Viktor Bout for Whelan and Griner?
What do you make of this, Susan?
SUSAN GLASSER, CNN GLOBAL AFFAIRS ANALYST: I do agree, absolutely, with Nick, he is a big fish. It would be a very significant deal if Russia were
to accept it. He is a much more significant international player.
It was seen as a major victory for the United States that they were able to bring him to justice and have a trial in which there was a conviction for
such a significant arms dealer. Not just because of his Russian ties but more significantly because he was essentially helping to fuel civil wars in
countries around the world.
You know, there is an imbalance here that speaks to, potentially, the success of Russia's tactic of holding Americans hostage, such as Brittney
Griner and Paul Whelan. So I do think that it is a good deal from the point of view of Russians, who would be getting back a more significant player.
On the other hand, I find it notable that this deal has apparently been on the table since June, reportedly, with the Russians. And the fact that
they're going public with it about having made the arrangements with Russia is interesting.
I would describe for you that it's significant that this will be the first conversation between Russian foreign minister Sergey Lavrov and American
Secretary of State Antony Blinken since the war began in February.
So clearly things are moving on the board, if you will. But it is not entirely clear, yet that it will mean release for these two Americans held
SOARES: Nic, to you in Odessa. Of course for Biden it is a fine balancing act, approving prisoner swaps represents a challenging diplomatic,
political as well as human calculus here.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Look, I'm struck by the fact that this is a reopening of a direct dialogue between Lavrov and
Blinken so many months after the war began.
That in of itself is important. If you add into that just a week ago, the Russians actually agreed a deal with the U.N. --
ROBERTSON: -- you get the sense that there was a little bit more diplomacy in the air, whether it will bear fruit of a successful resolution to
getting Ukraine's grain to the global markets and whether that will bring a resolution to getting Brittney Griner or Paul Whelan released from Russian
jail, that's not clear.
But it does seem to indicate this possible moment of diplomatic reengagement. I think when you take what secretary of state Antony Blinken
was saying, not only again outing basically the intelligence that they have and the way Russia will use its own playbook to try to annex areas in
Ukraine, which will never be internationally accepted, but beyond that, the idea that the Russians could engage on the international stage.
And I think let's not forget, in this grain deal, it was extortion by Russia, the part of the deal that they signed up to allowed them to export
food and fertilizer by the U.N. lifting some sanctions against them. That is significant.
That indicated that Moscow needed the money that it would get from selling the food and the fertilizer. And the cases that Blinken is laying out here,
that Moscow is in an economic tight spot.
Put all that together, it doesn't add up to anything more than the bits and pieces that we are laying out here right now. But it is an interesting
moment, the sense of diplomacy and Russia not admitting, of course, but actually having a harder economic time than it might appear on the surface.
SOARES: Blinken definitely not mincing words, saying that Russia is laying the groundwork to add more Ukrainian territory but also the sanctions are
having a powerful and grueling effect.
Susan, in an op-ed today by the man who helped capture Viktor Bout, and he said -- let me he is a Drug Enforcement Administration agent.
SOARES: He said an exchange would be misguided and naive, saying negotiating for Bout's release is a feckless and shortsighted foreign
What are the implications here?
GLASSER: I think the reason we are all just hearing about it now is there appears to have been a heated behind the scenes fight inside the U.S.
government. It does seem that the Justice Department was really objecting to the proposal of a trade for Viktor Bout.
He really is a much more significant actor than either of the two Americans that the United States is proposing to trade for. So they are offering not
only a good deal, for Vladimir Putin but they're rewarding a bad actor on the international scene, who has used blackmail against individuals,
Look at what he's doing to Ukraine. He is blackmailing the world with food. He is literally blackmailing the world, with supplies of crucial food and
energy. So there is this enormous risk here of encouraging Putin in his renegade ways.
SOARES: Susan, thank you for taking this time to speak with us.
Also CNN's international security editor Nick Paton Walsh and international diplomatic editor, Nic Robertson, thank you as well to you both.
That's for me tonight, please do stay here for CNN. "QUEST MEANS BUSINESS" is up next.