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Quest Means Business

U.S. Hits Russia with New Sanctions over Ukraine Escalation; Oil Prices Surge as Putin Orders Troops to Eastern Ukraine; Putin Says Minsk Agreement No Longer Exists; Oil Prices Surge as Putin Orders Troops to Eastern Ukraine; Germany Halts Nord Stream 2 Pipeline Because of Russia's Actions; World Stock Markets React to Ukraine Crisis Escalation; Ukrainian President Volodymyr Zelensky Addresses Nation, Prepared to Continue Negotiations. Aired 3-4p ET

Aired February 22, 2022 - 15:00   ET



ANNOUNCER: This is CNN Breaking News.

RICHARD QUEST, CNN BUSINESS ANCHOR: Good evening, I'm Richard Quest in New York, and the news to bring you at this hour.

President Biden, in the last hour has announced a raft of new sanctions aimed at Russia's political and economic elite and the banking system, as

Western nations are mounting a joint response to Moscow's aggression towards Ukraine.

President Biden said the first tranche of U.S. sanctions would cut Russia off from Western financing for its sovereign debt. And also, Mr. Biden

promised sanctions targeting Russian elites and their families, as he condemned Vladimir Putin's recognition of independence for two separatist-

held regions in Ukraine.


JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: Who in the Lord's named does Putin think gives him the right to declare new so-called countries on

territory that belong to his neighbors.

This is a flagrant violation of international law and demands a firm response from the international community.

Over the last few months, we've coordinated closely with our NATO allies and partners in Europe, and around the world to prepare that response.

We've said all along, and I've told Putin to his face more than a month ago, that we would act together, and the moment Russia moved against

Ukraine, Russia is now undeniably --


QUEST: So, CNN's Kevin Liptak is in Washington with me now. The sanctions are designed to send a message, and that there are more, if he continues

further, these sanctions on their own won't have much effect.

KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Well, I think the White House is casting this as kind of a first salvo in what the President has promised as

swift and severe sanctions regime against Russia. But you're right, some of these sanctions won't have as much effect as some of the other sanctions

that the President is potentially considering.

So these two banks that the President said that he was taking action against today, The White House says they have $80 million in assets, and

that we will freeze those assets in the United States, prohibit U.S. persons and businesses from doing business with them, but we should note

that at least one of those banks has been sanctioned previously by the United States for Russia's invasion in Ukraine. Doing the full blocking

action is a step further, but it's not the full sort of raft of things like export controls, sanctions on Putin himself, potentially cutting Russia off

from the SWIFT banking system -- all things that have been put on the table before, this stops short of that.

And I think that's an indication that President Biden still clearly believes he can use some of those harsher sanctions, both as a deterrent to

prevent Putin from going further from carrying out this bloody incursion into Ukraine, a more full scale war, if you will, that U.S. officials have

been worrying about for weeks, but also so he has these sanctions in reserve, should Putin do that..

If he had put everything on the table now, announced all of these sanctions now, he wouldn't necessarily have anything to announce if this invasion


QUEST: So the mood in Washington is very much one of something has to be done, and the allies need to stay together.

LIPTAK: Yes, that's absolutely right and I think one of the things that the White House was doing overnight and early this morning was trying and

coordinating with leaders in Europe, leaders in the United Kingdom, to try and ensure that everyone is on the same page here.

And as you know, Richard, leaders in Europe have been somewhat wary of doing the harshest sanctions, particularly on Russia's energy sector that

would have a real dire effect on gas prices, not only in Europe, but all around the world, of course, and you heard President Biden say today that

the steps he was taking, he was taking every precaution to try and avoid pain in the United States.

So the U.S. is trying to coordinate. You saw similar moves from the European Union, from Boris Johnson in the United Kingdom, from Germany, who

say that they won't certify that Nord Stream 2 pipeline.

But all of this, we still have yet to see sort of the full load sanctions, the full weight of punishment that President Biden has vowed should this go


QUEST: Kevin in Washington, thank you.

Let me follow up with -- talking about the sanctions that others have done, and Kevin was just referring to them.


The E.U. and the U.K., perhaps the most significant today, Germany has halted the certification of the Nord Stream 2 pipeline, which the Russian

says is regrettable.

The E.U. says it will sanction the Russian lawmakers who voted to recognize the separatist regions and 27 people or entities are accused of undermining

Ukraine sovereignty, and the U.K. is sanctioning five Russian banks and three Russian oligarchs.

More aggressive measures, like cutting Russia off from the SWIFT global payment system are not yet on the table, and the estimate of the most

drastic sanctions could cut Russia's economy by five percent or more.

Brian O'Toole was the senior adviser to the U.S. Office of Foreign Assets Control which enforces sanctions for the Treasury. I've just been looking

at the OFAC website that the today's sanctions are not yet detailed. They're not yet there.

But I was also looking Brian, at the recent op-ed that you wrote, where you basically speculated and went into all that there has been done. Now, where

would you put today's actions on the continuum?

BRIAN O'TOOLE, FORMER SENIOR ADVISER TO THE U.S. OFFICE OF FOREIGN ASSETS CONTROL: This is still pretty low on the continuum. It's a measured

response from the West and the White House in particular, and there is some logic to that, although I think the danger is that there's a

miscommunication between what the West is saying they're going to do, and Vladimir Putin who may think that this is pulling punches and gives him a

little bit more leeway to move on to the rest of Ukraine.

I think, there is a real danger that there is a miscommunication happening now.

QUEST: Right. And the sanctions are -- pardon the phrase, since I know the area you're doing -- but sanctions are not sexy, in the sense that you put

them together, and they look highly esoteric, and they certainly don't have the Big Bang effect, but you're telling me over time, they work.

O'TOOLE: So are you saying that OFAC's website isn't sexy, Richard? You would be exactly right about that.

Look, if they imposed major blocking sanctions on the largest Russian financial institutions that will have immediate effect, this measure that

they took on today, which seems to be something that they consider, as Biden said, a first salvo, right, I think there is the anticipation that

there is more to come perhaps even within the next 48 hours or 72 hours.

You know, this action, yes, is much more esoteric. The VTB is essentially a slush fund for Putin, and combined Western action may undermine its capital

position and force the Russians to bail it out.

That's a reasonable outcome from the U.S.'s perspective. The sovereign debt thing, yes, it's wonky, but it has some effect. Major impact is going to be

something like an SDN-type action against Vneshtorgbank, VTB, which is the second largest bank in Russia.

QUEST: So when I was in Russia, earlier this year, I was talking to the Chairman of VTB, Kostin, who you will be familiar. They've prepared for

this. Russia is already -- I mean, there's a large domestic banks to start with. Russia is already providing their domestic financing requirements.

So, why don't we just -- the West -- why doesn't it just go for it, cut Russia off from SWIFT, which would have a dramatic overnight effect.

O'TOOLE: So cutting them off from SWIFT is less severe than putting SDN or blocking sanctions, as they're no more colloquially on the major Russian

banks. SWIFT is a messaging system. It doesn't actually prevent transactions. Preventing transactions via blocking sanctions is what

prevents transactions.

And so that's really the big impact here, but in terms of your question on the timing of this, I think there is a hope, or at least some glimmer of a

hope in Washington and the West that they may be able to, with the threat of sanctions limit Putin's incursion to just these areas that they already

de facto have control for the past eight years.

I think Putin is clear in his intention to go beyond that, but I don't think it's irresponsible of the West to try to hang on to that hope as long

as they can, and then impose those big, impactful sanctions once he steps beyond those borders.

QUEST: Is it at all feasible or is this just pub talk, as we'd say, in Britain, is it at all feasible to basically hit the oligarchs where it

hurts? I mean, I was thinking of this as I was flying back on a flight.

Yes, I don't notice the oligarchs are going to buy their foreign homes in China, no, they choose London, they choose Paris, they choose New York. Is

it possible to design a structure that basically says to the oligarchs, who are behind Putin, no, you're not going to continue to enjoy living the life

in the capitals of the world that you like?


O'TOOLE: Well, I think, you know, the U.K. sanctions today were an attempt to take a swipe at that, and Biden has promised sanctions on oligarchs.

Given the way his comments came out, I'd rather suspect that he and his Cabinet have decided minutes before that address that they, you know, on

the list of who was going to be sanctioned.

But I mean, sanctioning those oligarchs has effect. There are spillover, that -- you know, spillover consequences that the West will have to deal

with, for, you know, Roman Abramovich is among the popular names discussed. He is the controlling owner of Everett Steel Company, and it is not

necessarily in the West's best interest to spike steel prices. So there has got to be some allowances made.

But yes, there's a great thread on Twitter today about Abramovich's yacht going in and out of Port Barcelona. And, you know, those are the kinds of

things that when you lock those up, it can be, you know, disconcerting to those oligarchs, and you certainly have a bait.

QUEST: Brian, just a quick question before I leave you. Just to give me a bit of a flavor for when these things are being discussed. I mean, do you

all sit -- when you're at the office, do you all sit around saying: Well, we could do this. Well, no, I think we should do that. Ah, this would

really hurt them.

O'TOOLE: I mean, it's not too far afield from that. There are lists that people draw up of potential targets. There are reasons why people are

included, whether it is kind of, you know, concentric circles away from Putin, for the oligarchs, and how you conceive of the inner circle, and

then, you know, kind of getting farther afield from the Timchenko's and Rotenburg's of the world.

But yes, I mean, it is essentially -- these are the targets that we can go after. These are the effects, you know, on Russia and in the West, and how

do we balance those out to achieve the policy goals.

QUEST: Ryan, will talk to you more as this continues, because obviously, there's more sanctions in your post OFAC life. You have -- we will be

talking to you.

Thank you, sir. I appreciate it.

Stock markets are lower over the tensions that are taking place. That is the way markets have come back quite a bit.

Eleni Giokos is with me. Eleni, the market had been down about 700 at one point. We've got oil that's also rocketed near to a hundred.

I'm not sure I fully understand why the market has come back. I mean, is it sell on the rumor, buy on the -- I don't know. But the market has come back

even though oil remains elevated?

ELENI GIOKOS, CNN CORRESPONDENT: Look, I think the risks are really enormous. I think market participants are starting to weigh up what that

would mean for inflation with regards to a much higher oil price. And then, of course, what the Fed's next move will be with the fact that you've got

so much uncertainty coming in.

You've got a rush to gold, which means that there is absolute risk that is looming in the market, and of course we know that market starts to price in

the future, and it is going to be really telling what we'll see coming through in the next few days.

But I just want to focus on this oil price. Because you know, I was hearing your conversation about what would really hurt Russia. If you really want

to hurt a country, you've got to stop, you know, foreign currency coming in. And that's to stop selling oil and gas on the international market. But

the U.S. will be shooting itself in the foot because it imports oil from Russia. It's an important supplier globally, and you don't want prices to

rise significantly, because then that also hurts the United States. It's going to hurt consumer spending. It is going to be a real sore point.

And this way, Putin was really clever in terms of gaining these really strong economic ties around the world, specifically with one of the most

important commodities, Richard, and I think it's going to be fascinating to see how that plays out.

QUEST: Eleni Giokos with the markets. The markets have come back. Somewhat, we will talk to Matt Egan before the hour is up, as we continue

our pipeline politics.

Now Germany has halted Nord Stream 2. One Russian official says its European consumers who will pay for that decision. Oil prices in a moment.



QUEST: We've looked at the sanctions and the latest measures being taken. Now, I want to take us through the various military action that has

happened and that's on the cards.

President Biden says he has now authorized additional U.S. troops and equipment to the Baltic States as the escalation continues. NATO Secretary

General says Russia has moved from covert attempts to destabilize to overt military action.

The Kremlin claims troops are heading to two breakaway regions. It's calling them as you know, a peacekeeping mission, what the U.S. Ambassador

to the U.N. called nonsense.

Putin told Russian journalists today there is no specific timeline for the troop deployments. Russia announced it was pulling its diplomatic staff

from Ukraine and cited threats of physical violence.

CNN's Alex Marquardt is in Ukraine with me now. So Alex, there is a lot of confusion, isn't it, because of those overnight videos that sort of

suggested the Russian troops were already crossing the borders of one sort or another. What do you believe the situation is tonight?

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, Richard, it is not clear because we have not seen a lot of evidence that Russians

are going in en masse with their uniforms, with the Russian, white, blue, and red flag on their sleeves.

We heard a very hesitant White House not coming out immediately and using the I-word "invasion." They did today, the White House is now clearly

saying that they do believe that this is an invasion. But whether it is NATO or the E.U. or the United States, they are all saying that this is a

further invasion.

This is, you know, a continuation of what we've seen for the past eight years that for the past eight years on this Russian backed territory, in

eastern Ukraine and the Donbas, in these two separatist held enclaves, there have already been Russian backed forces.

And now as you just mentioned, they are being more overt so that the most certain we heard today was from the Secretary General Jens Stoltenberg of

NATO who said, yes, there are more Russian forces there.

We have some reporting that they are in more forward positions, but it is not like when Putin announced the recognition of these two breakaway

enclaves and that these peacekeeping forces would be going in under an agreement of mutual defense, that suddenly you had all these columns of

Russian troops and tanks and trucks going into these two breakaway regions.

What you're simply going to be seeing is Russia moving about in a more open way, but you're absolutely right, Richard, there is not a huge amount of

evidence for this just yet, but we certainly can expect to see that in the coming days and that is what is raising so much fear because we've already

seen Russia and the separatists blame Ukraine for attacks on them, which Ukraine denies.

But if Russia now claims that their own forces, their official forces are being attacked, then that could give them that pretext to cross the border

and head into the rest of Ukraine -- Richard.


QUEST: Alex, stay with me, I need to go to Moscow. I want to go to Moscow where Nic Robertson is there. And, Nic, good evening to you.

The issue now, we are entering this sort of weird phony war, if you like. It is a real war, the phony phase in a sense of positioning, how are things

being seen in Moscow today? Besides, by the way, that extraordinary dressing down that a member of the Russian Security Council got from the

President today?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, I think we got the third installment of President Putin's rationale for wanting to have

influence in Kyiv, if not take a greater degree of control in Ukraine. He laid out a number of things.

He said: Look, if we want peace, there's one easy way for that. That's for President Zelensky to say that, you know, he doesn't want to join NATO. But

of course, that's not going to happen. He wants Ukraine to join NATO. NATO says Ukraine is welcome to join, it's got an open door.

So President Putin when he said that, he knew that is not going to happen, but then he continued to lay out more of his agenda, and that is to say,

without foundation, that Ukraine wants to develop a nuclear weapon, and that would be a strategic threat to Moscow.

He has subsequently pulled his diplomats out of Ukraine, an indication that he is concerned for their safety and wellbeing. He has is indicated that

the area of Ukraine, the separatist area that he has now recognized as independent is not just controlled by separatists, part of it is controlled

by the Ukrainian government.

There are a number of steps that he has taken today that show and that has shown the Russian people that he very clearly wants to take huge influence

and control in what's happening in in Ukraine.

As we know, yesterday, this is just the narrative that I've laid out from today to just very quickly to recap yesterday. Ukraine, historically, part

of Russia, it is an illegitimate government, and they came to power in a coup. He has built the narrative more today is what I'm saying --- Richard.

QUEST: Okay, but he has built that narrative, Alex, and it might wash at home, it's potentially grist to the mill in eastern Ukraine. But where you

are, what are they thinking with that story that's been weaved of these poor people from Ukraine, who have never had a nation and have only been

cobbled together by others?

MARQUARDT: Yes, Richard, it's not like you're seeing suddenly these massive pro-Russian rallies that are taking place after this history lesson

that we heard from President Putin yesterday. In fact, quite the opposite.

The effect that Russia has had or that Putin has had on not just eastern Ukraine, but the rest of Ukraine over the course of the past eight years is

really fomenting a new brand of patriotism.

Take for example, the City of Mariupol, which we just spent a fair bit of time in over the course of the past few days, a city of half a million

people. What we've seen ever since, you know, since Putin's speech was a small rally where people where holding up the flags and signs saying

"Mariupol is Ukraine."

The people in the eastern part of the country, of course, many do are ethnic Russians, many do speak Russian as a first language. You will

certainly find a significant number of people who have sympathies and who may feel like they are part of Russia. But you know, there has been

fighting there for eight years, the sons and daughters of those areas have been fighting, have lost their lives, civilians have lost their lives and

the effect of that has been to push Ukrainians westwards, to push them towards Europe, to take more pride in their country, to take more pride in

their language.

Suddenly, a lot more young people are speaking Ukrainian when they might have initially spoken Russian. Of course, so many Ukrainians if not, I

mean, most are bilingual. But it has had an adverse effect, if you are Vladimir Putin, and the same can be said for NATO.

It has certainly brought NATO and the rest of Europe closer together. So Putin kind of shot himself in the foot on those two fronts -- Richard.

QUEST: Alex, I'll let you get back to your duties. Alex Marquardt, thank you. I'll stay with Nic for the second.

Nic, look, the difference in the gap between the two sides is so huge. It would seem to the uninitiated that Putin is determined to rattle on


In your view, Nic, is there anything short of saying Ukraine will never go into NATO that can pull this back from the brink?


ROBERTSON: NATO would have to capitulate to what Putin is demanding is what it appears, and that is the impression that he wants to create, but he

has also painted himself into a corner where he has committed himself very public -- publicly to this vision.

We heard from the French Prime Minister today saying that, unfortunately, President Macron hadn't got everything he wanted out of that last minute

diplomacy. We heard from President Putin a couple of days ago saying after his phone conversation with President Macron that well, what is there in it

for me if I meet with President Biden? What's on the table for me? And he said, President Macron didn't know.

I think both sides now are recognizing that there is nothing that they can readily put on the diplomatic table that the other side wants to take. And

the Minsk Agreements, which had been something that people have thought might provide an avenue, at least to deal with some of the smaller issues,

President Putin has today said that's dead in the water.

In terms of what diplomacy is available, at the moment, it really just seems to be the idea that diplomacy is ultimately what will solve whatever

comes over the coming days, weeks, or months even. So let's just keep alive the idea of trying to find, trying to talk.

I mean, this is in essence, where we are at. It's rather less, what should we talk about, but let's talk and let's talk and let's see if we can find

something to talk about.

But it does seem that Putin is so committed that it's hard -- it is going to be hard for him to back out of this with his own people internationally,

and to save face with the position that he has carved out, which is Ukraine is a strategic, imminent threat, and that it is actually rightfully part of


These are hard pieces of rhetoric to walk back from particularly when there is nothing to walk back from them with, which would be a NATO climb down.

QUEST: Nic Robertson in Moscow. It is getting late there, sir, but I fear you've got many more hours ahead of you. Thank you.

It's QUEST MEANS BUSINESS as we continue, the economic fallout, oil is already nearly $100.00 a barrel, and Russia is warning that Europeans will

be digging deeper into the pockets for natural gas.

Remember, Russia is the largest producer of natural gas.




QUEST: Hello, I'm Richard Quest. Breaking news as we continue tonight. We'll be talking about suspending Russia's Nord Stream 2 gas pipeline and

what that will do for Europe's energy crisis.

Travel stock is amongst the worst affected tonight by the tensions. I'll speak to CEO of a major European cruise operator, which had just started

sailing to Russia. It'll come after I've updated you with the headlines. You'd expect nothing less. This is CNN and, here, the news always comes



(voice-over): Queen Elizabeth today canceled her virtual engagements as she recovers from COVID-19. The palace he says the queen is still

experiencing mild, cold-like symptoms and is continuing to perform light duties. Also announcing that the 95 year-old monarch had contracted the


Three white men convicted of murdering a Black jogger in the U.S. state of Georgia have now been found guilty of federal hate crimes, too. A jury

agreed with prosecutors, who argued that the men chased and gunned down 25- year-old Ahmaud Arbery, because he was Black.

His killers could now receive life sentences for the hate crime charges. Of course, they're already serving life in prison on state murder convictions.

The Canadian parliament has backed Prime Minister Justin Trudeau's position to invoke emergency powers in response to the crippling trucker protest. On

Monday, late in the evening the House of Commons passed a motion that approved the sweeping powers. The Emergencies Act will remain in force

until the middle of March.


It will come as no surprise, perhaps, that oil prices rose sharply with the Ukraine crisis escalating. We had crude at $99 a barrel, it's popped back a

bit, maybe even gone back up again, as you're now up at 4 percent. But you see where there are strong gains.

Now this is hardly surprising, then, because what we're seeing, of course, is Russia, which is the largest producer of natural gas and a major oil

provider, too, and now, Germany's halted the Nord Stream 2 project.

You can see the Nord Stream pipeline and now it'll go all the way down, right the way to Germany. It was set to flow oil and gas to Germany. Russia

supplies 40 percent of Europe's gas. And, at the moment, a third of it travels through pipelines in the Ukraine.

Russia's responded to the sanction with a stark warning. Its former president tweeted, "Welcome to the brave new world, where Europeans are

very soon going to pay two euros for 1,000 cubic meters of natural gas," it's about 20 percent higher than the record spike in December. Nina dos

Santos is with me.

Let's take this bit by bit. The Germans today withdrew a technical piece of paper that was the necessary certification for the pipeline to come into

force but, in doing so, will create problems in Europe.

NINA DOS SANTOS, CNNMONEY EUROPE EDITOR: Yes, well, except many geopolitical specialists may have said this pipeline was always designed to

try and cleave a distance between Germany and its other European partners who were dead against it because they were very concerned about Europe

becoming more and more beholden to Russia for its gas supplies.

But of course, Germany, about 10 years ago, decided to turn its back on Angela Merkel, on nuclear power; hence that energy deficit they've had to

make up for and hence the fact, since 2015, even since the inception of this project, Germany has so far not taken the tough stance that many other

European partners and the United States as well would have liked to have seen taken on Nord Stream 2.

It's got to the point where this pipeline is built, it's ready, filled with gas since September but right now, at the 11th hour, Germany has decided,

obviously, since everything that's happened in the last 24 hours and the sovereignty of Ukraine being impinged here, they say, well, they've had to

make a snap decision on this.

I want to point out, I was just talking to the CEO of Naftogaz, the main Ukrainian gas company.


DOS SANTOS: And he was saying that that price production by Dmitry Medvedev you were just pointing out before is bluffing.


YURIY VITRENKO, CEO, NAFTOGAZ: I don't think Gazprom and Russia in general, at this point, can decrease flows of gas to Europe. So that's a

bluff and somebody needs to call his bluff. And that's exactly what Germany is doing at the moment.


DOS SANTOS: So Nord Stream 2, obviously, the most stringent sanction so far for Russia but it comes amid a plethora of different economic packages,


QUEST: OK, but there's still a requirement, even summer's nearly around the corner, there's still a requirement by Europe for Russian energy.

So could Putin put his foot on the throat of that supply?

DOS SANTOS: That's an interesting question, one I also put to Mr. Vitrenko. You just heard a little bit snippet from that conversation

before. He was pointing out all the different gas contracts that you have in Western and Eastern Europe.

And his point was, if you do the maths on this, it's just too economically punishing for Russia to actually have to negate some of those contractual

obligations and pay the penalties for it.

So his thought was, no, it's unlikely that, from here, we'll see Russia really turning off the gas taps as Europe turns up the diplomatic heat.

But you know, again, this is partly about Europe having not planned properly in terms of its energy security and, in particular, Germany

allowing it to get to this late stage.

It's also about the fact that Europe, as we know, is particularly vulnerable to gas being used as a diplomatic weapon by Russia. And this is

something that you heard Ursula van der Leyen talk about today at the E.U. level, that we, as Europe, need to do more.

We need to invest in climate-neutral technologies, we need to try and unhook ourselves from gas in general and hydrocarbons and, in particular,

Russian gas, because, now, we have yet more evidence it can be used as a diplomatic lever.

QUEST: Nina dos Santos in London, thank you.

As we continue tonight, Russian moves in Ukraine are rattling investors. The markets demand our attention.





QUEST: A volatile day, one way or t'other. All the major indices are lower as we go into the close, this is the situation. But we pared the losses

quite considerably. It's not as bleak, particularly on the Nasdaq, which has come back quite a long way. Matt Egan's with me.

Matt, what happened?

I was watching the numbers very closely when President Biden was speaking. They were down 600-700 points but they've have rallied back up again.

Why is this?

MATT EGAN, CNN BUSINESS SENIOR WRITER: Richard, I think that's a good question. The markets have cut their losses in half. I think, going into

the speech by President Biden, there was a lot of uncertainty about what exactly he was going to say, how serious the sanctions he was going to

announce were going to be.

And I think markets have sort of pared those losses as the information has come out. I don't know that there was anything specifically that would have

led people to buy. I think when you take a step back, it's clear that markets are totally glued to this Russia-Ukraine situation.

It's dominating the mood of the market.

Just like anyone else, investors want to know, how far is this military incursion going to go by Vladimir Putin?

And how tough will these sanctions be?

And what does all that do to the already high inflation situation and the supply chain turmoil?

There's so much uncertainty. So against that, we see the Dow down 400 points, 1.1 percent, on track for its fourth straight losing day.

QUEST: There was a note this morning from JPMorgan, that said if you just look at the technical reasons, U.S. companies and the U.S. market is not

that exposed to Russia per se. However, the contagion effect -- obviously, higher oil prices, dislocation of supply chains, all these sort of issues

could have quite a dramatic effect in terms of growth.

EGAN: That's right, Richard. You know, there's only a handful of companies that really have meaningful exposure in terms of revenue to Russia and

Ukraine. But virtually, all companies have a lot of exposure to energy prices.

And if you see an oil price shock, that is going to deal a blow to investor confidence and it's also going to hurt the economic recovery. That's what

JPMorgan is saying. It's also coming at a time when investors are already worried about high inflation and worried about the central bank response to

high inflation by raising interest rates.

One of the interesting points in that JPMorgan note, though, was that they were saying they still see the bigger risk, in the medium term, the chance

that the Federal Reserve or another central bank makes a policy mistake here by over-tightening, by raising interest rates higher than the economy

can actually handle.

And doing that in a situation where the economy is slowing down. And one last point here I thought was really interesting is JPMorgan is saying,

maybe this Russia-Ukraine situation can actually cause the Federal Reserve to be less hawkish; meaning they raise interest rates less aggressively.

And of course, that would be welcomed by the market. But Richard, you've got to wonder. If you already have inflation at the United States at 7.5

percent year over year, a near 40-year high, then you have oil prices and gasoline prices and home heating prices go higher, pushing inflation

higher, it's going to be hard for the Federal Reserve to, you know, suddenly get out of inflation-fighting mode.

So I don't know. I think that just this wrote debate speaks to the vast amount of uncertainty facing investors right now, Richard.

QUEST: Matt Egan, sir, I appreciate it. Thank you.

A U.S. trade group says Ukraine's standoff with Russia already left its economy seriously wounded. Michael Holmes spoke to small business owners in

Ukraine about the impact.


MICHAEL HOLMES, CNN ANCHOR AND CORRESPONDENT (voice-over): Lida Konukh manages a small clothing and souvenir business in Central Lviv, trying to

ignore the drumbeat of possible war, echoing around her country.

LIDA KONUKH, STORE MANAGER (through translator): The situation was much better after the new year. But now, you can feel the difference. Less

tourists means less business.

HOLMES: Small business operators, like Konukh, say these are tough times. No tourists and locals are hunkering down. First, it was COVID lockdowns.

Now it's the threat of war keeping the cash register quiet.

KONUKH (through translator): We don't know what will happen. No one knows it. The situation is difficult, for sure.

QUEST: OK, this is President Zelensky addressing the Ukrainian people.





VOLODYMYR ZELENSKY, UKRAINIAN PRESIDENT (through translator): And that puts on the highest political level, which clearly (INAUDIBLE) and who

speaks all kinds of delineations.

And this way, they've left Minsk agreements, which, as they used to say, have no other alternatives, as far as (INAUDIBLE) alternative. This

(INAUDIBLE) rather. And I am prepared to continue negotiations, rather, unilateral or in any other kind, formal, because we do seek sovereignty and

(INAUDIBLE) territorial integrity of Ukraine.

We continue our conversations with them, various countries -- U.K., Turkey, France. And Erdogan, just today, confirmed, that he is with us. And I'm

also happy that our partners do show that there are sanctions.

Just yesterday, I spoke to U.S. President Biden, who approved rolling out sanctions against so-called LNR and DNR as well as Russia. I also spoke to

U.K. prime minister, Johnson, who yesterday announced sanctions against Russian banks and oligarchs.

In addition to that chancellor of Germany, Olaf Scholz announced blocking Nord Stream 2. And Canadian Prime Minister Trudeau has also declared that

(INAUDIBLE) set in motion their sanctions.

We're also grateful to our partners for the financial assistance. We already received a decision from U.S., Canada, E.U., World Bank, with

regard to the resources. And those that needed resources to ensure stability of the Ukrainian economy with regard to the defensive potential

and stability. There is no need to talk today in a general mobilization. So we do need to continue in the urgent matter to continue contracting our


And as the commanding chief of Ukraine, I have issued the degree to recruit our reserved citizens. We are talking only about our (INAUDIBLE) only those

citizens, only in the operative reserves. So they would be prepared in the urgent situation.

And in the nearest time, we will also carry out training camps for the reserved warriors. And as long, while our wars are defending us, we have to

keep on going, investing in the Ukrainian economy and to work for our Ukrainian army.

Patriot is the one who fight against them anyway and the one who creates jobs and employments. That's why we are rolling out the program of

economical patriotism. Those are additional incentives and other targeted programs with -- which often stipulate various kinds of stimulus for the

investments and for the banking system as well as decreasing VAT on petrol and diesel, to decrease the petrol crisis.

Our goal is to ensure economical independence, especially in the energy sector. And it is time for everyone, especially Ukrainian politicians, to

be true officials (ph) and to put aside personal ambitions.

And before this recording, I met all the leaders of the parliament factions and groups and everybody is clear and aware that, in the parliament, we do

need the unity. And we need to have quick decisions to ensure defensive potential of our country.

All politicians, all countries of all parties and all politicians of the same color today (INAUDIBLE). I will have the meeting, 150, with everyone

from our businesses. They all have to stay in Ukraine. Their businesses are in the Ukrainian land and our warriors are protecting and defending them.


ZELENSKY (through translator): Therefore business has to defend our economy and create new jobs and ensure employment and to bring up Ukraine

together on their front.

Dear citizens, dear Ukrainians, peaceful nation, we desire peace and calm. But if we are quiet today, then tomorrow we will disappear. Today and

tomorrow, we are expecting daily hard work. But we are prepared for this. Confidence in us, confidence in our country, confidence in victory, not to

cry but to work.

QUEST: So that was a recorded message, judging by what the president was saying, President Zelensky of Ukraine, addressing the Ukrainian people

tonight. It was a sort of a rallying call. At one point talking about the economic patriotism program, that everybody had to keep moving forward to

keep the economy and keep investment moving.

He said the sanctions that have been announced so far showed that the international partners support us and that the key was the sustainability

of the economy, now that things are moving forward.

He called up, he said he was calling up reserves, operational reserves, he said, those people who were already within that category, that there would

be training. And he described what he talked about the daily hard work that was now going to be required.

So arousing, in a sense but a deeply serious. And in no way minimizing that which was responsible and had to -- what he had to put forward to the


We'll take a short break. When we come back, we'll analyze what he said We'll put it into context and what we've heard today from President Putin,

who had his own press conference.




QUEST: Alex Marquardt is with me.

Alex -- he's in Ukraine.

Alex, I couldn't really hear too closely everything that President Zelensky was saying. It wasn't the most impressive of translations.

But what did you make of it?


ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, I think there were three distinct points he was making in this speech, Richard,

that he is ready to continue on the diplomatic path to try to find a solution.

President Zelensky has been firm that he really does want a voice in all these conversations about Ukraine, when so often it is Russia who is

speaking with Europe or Russia who is speaking with the United States. So he is still expressing optimism in the diplomatic path.

Secondly, Richard, he says that he is going to be calling up reservists, that the military will be calling up reservists because of the current

situation. So that is a new element to this potential conflict, to this crisis, President Zelensky announcing that the Ukrainian military will

calling up reservists.

And then thirdly, there was very much an emphasis on the economy. He noted that this has been very harmful to the Ukrainian economy. It is one of the

reasons we have heard in the past, him calling for calm, for people not to panic because he doesn't want capital to flee from the country.

He called for something he named as economic patriotism. And he also thanked allies for imposing the sanctions that we saw today on Russia. He

named the United States, he said he's spoken with President Joe Biden.

He talked about Great Britain and Canada and then, of course, singled out Germany because of their major announcement today, that they plan to halt

the Nord Stream 2 pipeline, that, of course, would connect Russia with Germany.

So really those three points -- diplomatic, military in terms of calling up reserves and then the economic, thanking the allies for their sanctions but

also calling for more help for Ukraine's economy, Richard.

QUEST: Alex, thanks for coming back to us so promptly to update us, Alex Marquardt there.

I'll update you with the markets in the final moments of trading, which will take place in just a moment or two after this short break. We're going

down again, as you can see. Nearly three minutes left to do much more damage. But let's see what happens in the last three minutes.




QUEST: Let me show you very quickly the way we end the day. Here's the big board, down 500 points, give or take some change. And the broader market,

this is the way it looks. You really don't need much interpretation.

The Nasdaq's gone down again. It had rallied quite sharply but we are now down again and that's the way it is at this hour. QUEST MEANS BUSINESS for

you tonight and, whatever you're up to, well, you get the idea, I hope it's profitable.