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Quest Means Business
Horrific Scenes Emerge Of Russian Atrocities Near Kyiv; White House Reacts To Atrocities In Ukraine; Bucha Images Spur Call For More Sanctions; E.U. Leaders Call For Further Sanctions On Russia; Elon Musk Buys Big On Twitter. Aired 3-4p ET
Aired April 04, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:13]
RICHARD QUEST, CNN BUSINESS ANCHOR: There is an hour left on today's trading day, start of a new week. It is a Monday.
The Dow is in the green. It started lower, but it's gathered steam throughout the course of the session, not huge numbers, but 35,000 is on
the horizon. The markets and today, the markets take very much, a back seat to the main events that we're going to tell you about.
The atrocities in the Ukrainian town of Bucha sparks calls for action. Western leaders are prepared to ratchet up the sanctions on Russia.
The Binance Chief Executive tells me it is a myth that countries use crypto to avoid sanctions.
And Twitter's stock surges, Elon Musk has bought nearly 10 percent of the shares.
Good day to you, live from New York, Monday, April the 4th, new week together. I am Richard Quest and I mean business.
Good evening.
The West is tonight vowing stiffer sanctions against Russia after seeing the horrific images of civilians who have been slaughtered in a city near
Kyiv. Ukrainian officials are telling CNN they are recovering dead bodies numbered in the hundreds after Russian forces were forced and left the
area.
The Ukrainian President Volodymyr Zelenskyy visited the suburb of Bucha, he says what happened there is genocide, and President Biden is calling the
atrocities a war crime.
CNN's Fred Pleitgen is one of the first journalists to enter the city after the Russian withdrawal. He filed this report, and please a warning, it does
have disturbing images.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): As Russian forces retreat from the area north of Kyiv, in their wake, scenes
of utter destruction. Whole blocks of houses flattened, Ukrainian authorities saying they believe dead bodies are still lying underneath, but
hear, the dead also lay in the open.
Ukrainian National Police showed us this mass grave in Bucha, saying they believe, up to 150 civilians might be buried here, but no one knows the
exact number, people killed while the Russian army occupied this town.
This is what it looks like when the hope is crushed. Vladimir has been searching for his younger brother, Dimitri. Now, he is convinced Dimitri
lies here even though he can't be a hundred percent sure.
The neighbor accompanying him with strong words for the Russians.
(UNIDENTIFIED FEMALE speaking in foreign language.)
PLEITGEN (voice over): "Why do you hate us so much?" She asks. "Since the 1930s, you've been abusing Ukraine. You just want to destroy us. You want
us gone. But we will be, everything will be okay. I believe it."
Video from Bucha shows bodies in the streets after Russian forces left the area. Some images even show bodies with hands tied behind their backs. The
Russian Defense Ministry denies killing civilians and claims images of dead civilians are quote "fake."
But we met a family just returning to their house in Borodyanka, which they say was occupied by Russian soldiers. They show us the body of a dead man
in civilian clothes they had found in the backyard, his hands and feet tied with severe bruises and a shell casing still laying nearby.
Russia's military appears to have suffered heavy losses before being driven out of the area around Kyiv. This column of armored vehicles in Bucha
completely destroyed.
PLEITGEN (on camera): The way the Ukrainians tell us is that the Russians were trying to go towards Kyiv and they were then intercepted by Ukrainian
drones, artillery and also the javelin anti-tank weapons. It's not clear how many Russians were killed here, but they say many were and others fled
the scene.
PLEITGEN (voice over): A National Police officer says the Russian troops were simply too arrogant.
(UNIDENTIFIED MALE speaking in foreign language.)
PLEITGEN (voice over): "They thought they could drive on the streets and just to go through," he says, "That they would be greeted as though it's
all right. Maybe they think it is normal to drive around looting, to destroy buildings, and to mock people, but our people didn't allow it."
And now it appears all the Russians have withdrawn from here, Ukraine says it is now in full control of the entire region around Kyiv. But it is only
now that the full extent of the civilian suffering is truly coming to light.
(END VIDEOTAPE)
QUEST: After those appalling scenes, we are waiting for the White House press briefing to begin. We're on a two-minute warning, which means that --
we're about a minute into it, so it tends to happen fairly, fairly on time.
[15:05:13]
We are expecting to hear from the White House further reaction to those atrocities. Obviously, President Biden has already said that they are war
crimes, but I guess saying that and knowing what they're going to do about it is something completely different.
President Zelenskyy continues to call upon the international community to offer greater support and help, and of course, whilst we focus on what is
happening in Bucha and the withdrawal from Kyiv, it is important to reflect and remember that all that is happening is they are withdrawing, is a
transference, if your will, of Russian firepower to the east of the country to the Donbas and the Luhansk region, which of course, ultimately might
prove to be what the what the Russians awful phrase, but take it, the consolation prize, if you will, in any negotiations, not if President
Zelenskyy has anything to say about it.
So there you have the White House. I'm not going to get involved in anything else in just a moment because we do -- Jen Psaki will be out
fairly soon as we continue in our hour.
As we continue hour, we will be looking at the sanctions regimes that have been put in place. We told you, of course last week that as far as many
Western leaders believe, there is an economic war underway against Russia. Here is the White House Press Secretary.
JEN PSAKI, WHITE HOUSE PRESS SECRETARY: ... questions and then we will do a briefing from there, with that, I'll turn over to you.
JAKE SULLIVAN, U.S. NATIONAL SECURITY ADVISER: Hi, everyone. I hope you guys are doing well with apologies to Jen and to you. My remarks are not
going to be so brief, because I have a number of points I want to get through before opening it to questions.
First, you heard the President today condemn in powerful terms the atrocities committed by Russian forces retreating from Bucha and other
towns in Ukraine. The images that we see are tragic. They're shocking. But unfortunately, they're not surprising.
We released information even before Russia's invasion, showing that Russia would engage in acts of brutality against civilians including targeted
killings of dissidents, and others they deemed a threat to their occupation.
And as the horrific images that have emerged from Bucha have shown, that's exactly what they have done. We had already concluded that Russia committed
war crimes in Ukraine, and the information from Bucha appears to show further evidence of war crimes. And as the President said, we will work
with the world to ensure there is full accountability for these crimes.
We are also working intensively with our European allies on further sanctions, to raise the pressure and raise the cost on Putin and on Russia.
Today, I'd like to take a step back and talk about where we are and where we think we are going. Russia wants its invasion of Ukraine more than a
month ago. When Russia started this war, its initial aims were to seize the capital of Kyiv, replaced the Zelenskyy government and take control of
much, if not all, of Ukraine.
Russia believed that it could accomplish these objectives swiftly and efficiently. But Russia did not account for the strength of the Ukrainian
military and the Ukrainian people, or the amount or effectiveness of military assistance provided by the United States and its allies and
partners.
The Ukrainian people backed resolutely by the United States and other nations have held firm, Kyiv and other cities still stand. The Ukrainian
military has performed exceptionally well, and many Ukrainian civilians have joined local militias, in addition to using nonviolent means to
resist.
Vladimir Putin also believed that the West would not hold together in support of Ukraine. Russia was surprised that President Biden and the
United States were so effective in rallying the world to prepare for and respond to the invasion.
And after President Biden reinforced and reinvigorated Western unity at a series of Summits in Brussels just 11 days ago, the Russians have now
realized that the West will not break.
At this juncture, we believe that Russia is revising its war aims. Russia is repositioning its forces to concentrate its offensive operations in
Eastern and parts of Southern Ukraine, rather than target most of the territory. All indications are that Russia will seek to surround and
overwhelm Ukrainian forces in Eastern Ukraine.
We anticipate that Russian Commanders are now executing their redeployment from Northern Ukraine to the region around the Donbas in Eastern Ukraine.
Russian forces are already well on their way of retreating from Kyiv to Belarus as Russia likely to prepares to deploy dozens of additional
battalion tactical groups constituting tens of thousands of soldiers to the frontline in Ukraine's East.
[15:10:08]
We assess Russia will focus on defeating Ukrainian forces in the broader Luhansk and Donetsk provinces, which encompasses significantly more
territory than Russian proxies already controlled before the new invasion began in late February. Russia could then use any tactical successes it
achieves to propagate a narrative of progress and mask or try to discount or downplay prior military failures.
In order to protect any territory it seizes in the East, we expect that Russia could potentially extend its force, projection and presence even
deeper into Ukraine beyond Luhansk and Donetsk Provinces, at least, that is their intention and their plan. In the South, we also expect that Russian
military forces will do what they can to try to hold the City of Kherson to enable their control of the water flow to Crimea, and try to block Mykolaiv
so that Ukrainian forces cannot proceed to retake Kherson. In the North, Russia will likely keep pressure on Kharkiv.
During this renewed ground offensive in Eastern Ukraine, Moscow will likely continue to launch air and missile strikes across the rest of the country
to cause military and economic damage, and frankly, to cause terror, including against cities like Kyiv, Odessa, Kharkiv and Lviv. Russia's goal
in the end is to weaken Ukraine as much as possible.
Russia still has forces available to outnumber Ukraine's and Russia is now concentrating its military power on fewer lines of attack, but this does
not mean that Russia will succeed in the East. So far, Russia's military has struggled to achieve its war aims. While Ukraine's military has done an
extraordinary and courageous job, demonstrating its will to fight and putting its considerable capabilities to use.
The next stage of this conflict may very well be protracted. We should be under no illusions that Russia will adjust its tactics, which have included
and will likely continue to include wanton and brazen attacks on civilian targets.
And while Moscow may be interested now in using military pressure to find a political settlement, if this offensive in the East proves to gain some
traction, Russia could regenerate forces for additional goals, including trying to gain control of yet more territory within Ukraine.
Now as the images from Bucha so powerfully reinforce, now is not the time for complacency. The Ukrainians are defending their homeland courageously,
and the United States will continue to back them with military assistance, humanitarian aid, and economic support. We know that military assistance is
having a critical impact on this conflict. Ukrainians are effectively defending themselves with U.S.-produced air defense systems and anti-tank
systems such as stingers and javelins, as well as radar systems that give the Ukrainians early warning and target data, and multiple other forms of
arms and munitions.
The administration is working around the clock to fulfill Ukraine's main security assistance requests, delivering weapons from U.S. stocks where
they are available and facilitating the delivery of weapons by allies where allied systems better suit Ukraine's needs.
This is happening at what The Pentagon has described at an unprecedented pace.
Last Friday, we announced an additional $300 million in security assistance, bringing the U.S. commitment to $1.65 billion in weapons and
ammunition since Russia's invasion, and $2.3 billion since the beginning of the administration.
The latest package includes laser-guided rocket systems, Puma unmanned aerial systems, armored high mobility, multipurpose wheeled vehicles, and
more. Material is arriving every single day, including today from the United States and our allies and partners, and we will have further
announcements of additional military assistance in the coming days.
We are working with the Ukrainians, as I said, to identify solutions to their priority requests. In some cases, that means sourcing systems from
other countries because the U.S. either doesn't have the system or doesn't have a version that could effectively be integrated into the fight. Sorts
of systems like this include longer range anti-aircraft systems, artillery systems, and coastal defense systems.
So let's take coastal defense systems as an example. President Biden went to Brussels to talk to key allies 11 days ago about how to get coastal
defense systems to Ukraine because there is not at the moment a good U.S. option.
[15:15:07]
Last week, the U.K. announced at the close of its Donor Conference that coastal defense systems would be provided to the Ukrainians. It is a good
example how working with allies and partners, we are successfully responding to Ukraine's requests.
We expect additional new capabilities to be delivered in the near future. We can't always advertise what is being delivered out of deference to our
allies and partners or for operational sensitivities, but we are moving with speed and efficiency to deliver.
Let me close with this: Even as Russia acknowledges the failure of its initial plans and shifts its goals, three elements of this war remain
constant. First, Russia will continue to use its military to try to conquer and occupy sovereign Ukrainian territory. Second, the Ukrainian military
and people will continue to effectively and bravely defend their homeland. And third, the United States will stand by them for as long as it takes.
Russia has tried to subjugate the whole of Ukraine, and it has failed. Now, it will attempt to bring parts of the country under its rule, it may
succeed in taking some territory through sheer force and brutality. But no matter what happens over the coming weeks, it is clear that Russia will
never be welcomed by the Ukrainian people. Instead, its gains will be temporary as the brave Ukrainian people resist Russian occupation, and
carry on their fight for an independent, sovereign nation that they so richly deserved.
And with that, I'd be happy to take your questions. Yes.
QUESTION: Can I ask you about the President's call for war crimes trials for Vladimir Putin? What are the mechanics of how the President sees that
playing out? Would it be at the International Criminal Court or in some other venue?
SULLIVAN: So we have to consult with our allies and partners on what makes most sense as a mechanism moving forward. Obviously, the ICC is one venue
where war crimes have been tried in the past, but there have been other examples and other conflicts of other mechanisms being set up.
So there is work to be done to work out the specifics of that. And between now and then every day, what we are focused on is continuing to apply
pressure to the Russian economy and provide weapons to the Ukrainian people to be able to defend themselves.
QUESTION: Sorry, forgive me. Are there other forums where this might include something that the U.N. General -- the U.N. Security Council might
adopt? Is that what you're suggesting? It would go to Security Council?
SULLIVAN: Well, obviously, with Russia as a permanent member of the U.N. Security Council, it would be difficult to imagine that they would not
attempt to exercise their veto to block something. But there have been creative solutions to the question of accountability in the past, and I'm
not going to prejudge what solution would be applied here, or what forum or venue would be applied here.
What I will say is what the President said this morning. There has to be accountability for these war crimes, that accountability has to be felt at
every level of the Russian system and the United States will work with the international community to ensure that accountability is applied at the
appropriate time. Yes.
QUESTION: The President was careful to say he does not see this as genocide. Many Ukrainians believe that it is because their nation, their
people are being attacked. Where is the line in your view? And how have you counseled the President between genocide and war crimes?
SULLIVAN: So this is something we of course, continue to monitor every day. Based on what we have seen so far, we have seen atrocities. We have
seen war crimes. We have not yet seen a level of systematic deprivation of life of the Ukrainian people to rise to the level of genocide. But again,
that's something we will continue to monitor.
There is not a mechanical formula for this. There is a process that we have run just recently at the State Department to ultimately determine that the
killing, the mass killing of Rohingya in Burma constitute a genocide. That was a lengthy process based on an amassing of evidence over a considerable
period of time, and involving, frankly, mass death, the mass incarceration of a significant portion of the Rohingya population, and we will look to a
series of indicators along those lines to ultimately make a determination in Ukraine.
But as the President said today, we have not arrived at that conclusion yet. Yes.
QUESTION: I just have three quick questions. When you say the next stage will be protracted, do you mean years? I mean, Russia has been in Crimea
and Donbas since 2014. What's protracted?
SULLIVAN: So we can't predict, but I would just say that so far, this conflict has lasted a little more than five weeks. And yet in that time,
we've seen an enormous amount of killing and death and also an enormous amount of bravery and success on the part of the Ukrainian forces.
What I'm saying when I say protracted is that it may not be just a matter of a few more weeks before all is said and done. That first, quote-unquote
"phase" of the conflict that the Russians put it was measured in weeks. This next phase could be measured in months or longer.
QUESTION: In the beginning the consensus seemed to be Russia was unstoppable. We just had to make the price as high as possible for them,
then the new thinking is maybe Ukraine can actually win. Do you agree with that? And what would winning look like?
[15:20:16]
SULLIVAN: So we believe that our job is to support the Ukrainians, they will set the military objectives, they will set the objectives at the
bargaining table, and I'm quite certain they are going to set those objectives at success and we are going to give them every tool we can to
help them achieve that success. But we are not going to define the outcome of this for the Ukrainians. That is up for them to define and us to support
them, and that's what we're going to do.
And we do have confidence in the bravery, skill, and capacity of the Ukrainian Armed Forces and the resilience of the Ukrainian people.
QUESTION: One quick thing on chemical weapons, the President and other allies have promised consequences without saying what they would be. The
last time Russia used chemical weapons, there were sanctions, but not very stiff ones. Are you ready to define consequences?
SULLIVAN: So I'm going to say the same thing I've said from this podium that the President has said from a podium down the hall in this same
building, which is that Russia will pay a severe price. We have communicated to them directly. We have coordinated with our allies and
partners, and I'm not going to go further in terms of the specifics here.
KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: The administration initially did not call these war crimes. Eventually, they did after what
they saw on the ground. Do you think that's going to be the case with calling it a genocide?
SULLIVAN: Well, so first, it's not just that we sit around and debate terms and then ultimately decide to apply a term based against static
circumstances. We watch as things unfold, we gather evidence, we continue to develop facts.
And as we gathered evidence, and as we got the facts together, we ultimately came to the conclusion that war crimes were committed. And in
fact, I would say on this front, President Biden was a leader. He went out and said, Putin is a war criminal. And many of you raised your eyebrows at
that. Many people out in the public raised their eyebrows at that. And now you see the scenes coming out of Bucha today.
And so he is not going to hesitate to call a spade a spade, to call it like he sees it and neither is the U.S. government. So as the facts develop,
could we see ourselves reaching a different conclusion on that question? Of course, we could. But it's going to be based on evidence and facts, as we
gather it along the way.
COLLINS: And two more quick ones for you, on the sanctions that the President was talking about today, should we expect those this week or
what's the timing?
SULLIVAN: You can expect further sanctions announcements this week, and we are coordinating with our allies and partners on what the exact parameters
of that will be. But yes, this week, we will have additional economic pressure elements to announce.
COLLINS: My last question quickly, you keep using the word "retreat" instead of "reposition." How much is that in part due to the spring
conditions, the muddy conditions that are on the ground in Ukraine.
SULLIVAN: The reason I use the phrase "retreat" is just kind of quite simple commonsense. It's not some fancy technical military term. It's a
term that all of us understand, which is if you run pell-mell for an objective, and you get stopped, and then you start to get beaten back, and
then you withdraw, you pull out, that's what I would call a retreat. That's what happened to the Russians in Kyiv.
They attacked Kyiv, they failed. They started to get beaten backwards by the Ukrainian military, and they ultimately retreated back across the
border into Belarus. Now, with those forces, as I said in my opening comments, they are not intending to stand pat, they are going to reposition
those forces to go after a different objective, a scaled down objective, but nonetheless a dangerous and disturbing objective, which is to conquer
and occupy territory in Eastern Ukraine.
And now, it's our job to help the Ukrainian people have the tools they need to be able to stymie that objective. That is what we're intent on doing at
this.
QUESTION: I know you're not willing to call it a genocide, but does the U.S. government have information that you can use to independently
corroborate Ukraine's allegations about atrocities in Bucha?
SULLIVAN: So we have obviously got access to a lot of the information that you all have. We also have information that the Ukrainians have provided us
directly, and we will also work with fact finders, independent fact finders as we go forward to get to a level of documentation that allows us to help
build very strong dossiers of evidence for war crimes prosecutions, and that is what we intend to do.
Now, on the question of the genocide determination. Obviously, we will continue on a daily basis to have consultations with the Ukrainians to
reach determinations. And if at some point, we reached the judgment, that there in fact, has been a level of atrocity, a level of killing, a level of
intentional activity that rises to meet our definition of genocide, we will call it for what it is.
We have never hesitated to call out the Russians for what they have done in Ukraine and we will not start now.
QUEST: So that is Jake Sullivan, the National Security Adviser talking at the White House.
John Harwood our White House correspondent joins me now.
[15:25:05]
Very serious issues under discussion here. The definitional aspects of genocide, war crimes, and how the U.S. is going to proceed. Particularly,
of course, what he says there, of course, is avoiding maybe the U.N. Security Council where the Russia would have a veto.
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: That's right. But the administration and the President have clearly decided, Richard, that
they're not going to be able to deflect direct attribution of war crimes, and once the images that we've seen out of Bucha emerged, and so the
President, when he got off Marine One today, he had said, emphatically, as he had done previously, but he reiterated that Vladimir Putin is a war
criminal, so he is going to prepare additional sanctions.
Jake Sullivan, just told us we'll see some of those sanctions this week. It's going to be interesting to see where they go with the sanctions
because the one area that they had shied away from because of potential economic blowback on Europe, more so than the United States, but also the
United States was to stop the purchase of Russian oil and gas, which will have economic consequences that echo around the world, but that may be on
the table now.
Because once you see the things that everyone around the world has seen, it is very difficult to look away and not to respond and Sullivan said, he
also thought that the Russians were preparing for a very long protracted campaign in which there will be more killing of this kind. So it's a pretty
grim message from the National Security Adviser.
QUEST: John Harwood who is at the White House in Washington for us. John, thank you.
Taking on what John has said, when we come back in just a moment, we are going to develop that further, the ramping up of sanctions on Ukraine,
where they will likely to go, and India continues to buy Russian crude at a rapid rate as the price is low, and they're getting a good bargain. But
where India stands on all of this could become crucial.
In a moment.
(COMMERCIAL BREAK)
[15:30:16]
QUEST: E.U. officials now discussing sanctions want thought difficult impossible as you heard that from the White House. A ban on Russian energy.
It would certainly damage key economies like Germany. However, President Macron of France said Europe must respond.
(BEGIN VIDEO CLIP)
EMANNUEL MACRON, PRESIDENT OF FRANCE(through translator): What happened in Bucha demands a new round of sanctions against Russia in very clear
measures. And so, we will coordinate with our European partners, especially in Germany and we will take our own additional measures. And I favor for us
to have a round of sanctions and for us to be able to act regarding coal and oil in particular, which we know are particularly painful for them.
(END VIDEO CLIP)
QUEST: So far, the west's blocked exports to Russia, and frozen its overseas bank assets and targeted the oligarchs. You can see the sort of
sanctions pyramid if you like. Banning oil, it's the next rung up. It will be a major escalation in the economic war. But it would still fall short of
the most extreme measure of full financial embargo, prohibiting all trade and trade transactions with Russia, say, for example, in the same situation
as Iran.
Adam Smith, is a former senior sanctions advisor to the U.S. Treasury and has helped us understand these things from a war crimes researcher. He
joins me now. As we go up this pyramid. What is the next measure in your view? Bearing in mind the atrocities we've seen and everybody's saying. We
need to ramp up sanctions. What is the next level?
ADAM M. SMITH, PARNER, GIBSON, DUNN AND CRUTCHER: Well, thanks for having me. I think I see two different options. On the one side are the targets of
specific sectors. So, that's where the energy sector comes in. Sanctioning or prohibiting the flow of oil and gas to Europe. On the other side is sort
of an implementation enforcement strategy. And here, coming from the Iran program, we know something called secondary sanctions are a possibility.
And that would be sanctions on jurisdictions that continue to trade with Russia, much as we saw in Iran context. So, either or going after the
energy sector or going after secondary sanctions seems to be a potential next step.
QUEST: Secondary sanctions. In other words, for example, going after India, because it's continuing to trade. Going after those countries that --
Turkey, arguably, but that -- that's really tricky, because that could fray and destroy your bilateral relationships. And you do still need those
countries.
SMITH: Indeed. And that's always been the challenge. Secondary sanctions from a U.S. perspective have almost always been forced on the president by
Congress, rather than the president doing it, him or herself. And the reason for that is exactly as you said that it phrase the diplomatic sort
of endeavor.
QUEST: Right.
SMITH: But I do think that's possible, especially after what we've seen today.
QUEST: Oil. So, assuming that the Europeans decide that it is time to eat the economic pain from that, would -- from your experience of sanctions
regimes, is that where we're heading?
SMITH: I think so. Again, the Iran program is the most -- sort of like this one in a way in the ramp up. And at the end of the day, what you saw with
Iran leading up to the nuclear deal back in 2015, 2016 was the -- was the Europeans finally turning the taps off and having an oil embargo, which
impacted the Europe for sure. Not as nearly as much as it would for Russia, because, of course, the need of Russian oil and gas, it's needed to be
greater than the need for Iranian oil and gas.
But that's certainly something that they turn to right at the end, as they saw the pressure and you get to be ramped up quickly.
QUEST: I remember the beginning of the process, we were told, you don't put everything on the table at once. You go up slowly, but surely. But the
ultimate is, of course, a total ban on any form of transactions with Russia which is what you head towards. Do you think we'll get to that stage?
SMITH: I don't think so. I mean, it's certainly possible. And they -- I think what we saw today, the war crimes, whatever comes out from the
genocide discussions that we've heard. National security adviser talked about -- could lead to that. But I just think that what we're dealing with
Russia is a different circumstance. You're dealing with such a large economy to say they're going to shut the entire economy of Russia off for
the world.
That's a very different circumstances than Iran or Cuba in the U.S. context or North Korea. It's a very different set of consequences collaterally for
both the Russian people which I think is critical to remember, let alone the world economy.
QUEST: So, Adam Smith, thank you. We will talk more in the future because this is -- this is not going away, if you will, and so we will be back to
talk more with you. Thank you.
Cryptocurrency rules are facing renewed scrutiny as the west moves to cut off Russia. The U.S. Treasury has warned crypto can be used to dodge
Western sanctions.
[15:35:02]
And the E.U. lawmakers want tighter tracing rules. Major exchanges are pushing back. Binance and Coinbase say they comply with all government
sanctions. And unlike mainstream finance, they're not leaving Russia. Both reject an outright ban on Russian users. I asked the CEO of Binance to
explain the decisions.
(BEGIN VIDEO CLIP)
CHANGPENG ZHAO, CHIEF EXECUTIVE OFFICER, BINANCE: First of all, Binance follows all the sanction rules very strictly. So, we will block anyone
that's on the sanction list or even anyone that's remotely related to them. I mean, they're like no, the wife, the lawyers, and what people would call
with their muse, typically their friends. So, that's our position. And -- but we do not -- we also view that we do not have the ability to freeze
other normal Russian users assets because we view that illegal for us to do.
It's not for us to decide whose eyes are we can freeze and not freeze, that's for governments to decide. On the second point of using crypto to
avoid sanctions, I think that's a myth. If you look at the data, nobody's smart does that. Crypto is too traceable, the governments around the world
are increasingly very good at facing crypto transactions. So, crypto is not good for that.
QUEST: To be clear, have you and will you now take a stand on the wall? Because a lot of people feel that crypto, the new higher -- the new
distributed finance mechanisms. There are a lot of people seem unwilling to say right or wrong, yes or no, for or against.
ZHAO: Yes. We're totally against the war. We're totally against politicians, dictators that starts the wars. So, that part we're totally
against. We're not against the people. So, there are many --there are many people on both sides -- on both sides of Ukraine and Russia that are
suffering. And we want to help those people. In fact, I think we are the first companies to pledge 10 million U.S. dollars to help the Ukraine
refugees.
And we have already given most of that out already through U.N. International, a charity refugee organization. So yes, we have a very small
stand on that.
QUEST: Last question on this (INAUDIBLE) do you think a lot of people in the FinTech industry -- and I'm asking you this because you've taken a
strong stand yourself. Do you think too many people are going around saying, see no evil here, no evil, we're just -- it reminds me of the old
shared platforms arguments at the beginning on copyright issues were just a shared platform. Do you think that FinTech does need to come off -- as an
industry come off the fence more often?
ZHAO: I think FinTech -- if you include traditional finance, that is true. I think there's way more too many people focusing on crypto. Crypto is
actually not good for avoid sanctions. And, you know, if you look at the Bitfinix hackers, they hacked Bitfinex for billions of dollars in 2016.
They held on to the money until recently, the minute they started using it they got caught. So -- and if you look at chain analysis data, last year,
only 0.15 percent of the crypto transactions may be potentially related to illicit activities where the United Nations publishes data two to five
percent of fiat transactions or what we call the banking industry are associated with illicit activities.
So, the data shows that crypto is much, much safer yet. Everybody's focused on crypto essentials. Nobody talking about banks, cash or oil, et cetera.
QUEST: Because originally, crypto made a great virtue of anonymity. And, you know, our old friend Bitcoin came along and said, you won't be able to
trace or follow or know who's behind the transaction. And that gave the reputation and once studied, it's difficult to get rid of.
ZHAO: Yes. So, that's a bit unfortunate because that's very misleading right now. Because most transactions do need to go through a centralized
exchange. Any large transactions of value, because the decentralized exchanges don't have enough liquidity yet. And when they go through
centralized exchanges, like us, we KYC everybody. There's smaller exchanges who still do -- who still doesn't do that.
But the larger exchanges, the more compliant exchanges, KYC everybody. And once you know -- once you know that one transaction is associated with
somebody on the blockchain, it's very easy to follow that along afterwards. So, that's a misconception that Bitcoin is anonymous. Bitcoin's anonymous
feature is very, very weak.
(END VIDEOTAPE)
QUEST: And talking about sanctions there but tomorrow, you'll hear much more of the interview with Changpeng Zhao as we discussed the wider issues
of crypto and regulation. It's on tomorrow night's QUEST MEANS BUSINESS. In a moment, Elon Musk is no longer one Twitter's biggest users. He's now one
of its owners as well. We'll discuss that in just a moment.
(COMMERCIAL BREAK)
[15:42:43]
QUEST: Some news to bring you. Russia's ambassador to the United Nations is holding a briefing at the moment just outside the E.U. And he says much of
the reporting concerning Bucha has been misinformation. And he says Russia has been blocked from telling its side of the story at the U.N. Security
Council. We're listening in and when there's more to bring you on what he says of course, we will bring it immediately to you. But it's the -- at the
moment this is entire classifying or clarifying it as misinformation.
India is ignoring western sanctions and buying Russian oil at a discount. Reuters says the country's bought at least $13 million of Russian crude oil
since late February. And about 16 million and all of last year (INAUDIBLE) reports 85 percent of its crude oil. Ravi Agarwal is the editor in chief of
foreign policy. And he was CNNs bureau chief in Delhi. But he joins me now. I guess, no, they can't I suppose be blamed and a sense of they're going to
get their oil on the cheap.
But they are not making any friends if you like and their studied neutrality is likely to only inflame matters worse.
RAVI AGRAWAL, EDITOR IN CHIEF, FOREIGN POLICY: Yes. That's a good way to put it, Richard. It is studied neutrality, India has yet to condemn Russia
by name. It's abstained at the United Nations every single time it could do so. But, you know, the thing to keep in mind about the oil purchases is
that India actually gets very little of its crude from Russia, just about one to two percent of its total amount.
India, of course, is a net importer. So, it needs to import about 75 percent of its needs. So, it needs cheap oil, obviously, with inflation.
Higher crude prices, that impacts India badly. So, where they can find a deal, they will find a deal, at least that's what they will say. But I
think where India has sort of upset the west more, where it has weathered more criticism is the fact that it is the world's largest democracy.
And I think countries like the United States have been expecting it or hoping that India would be a little bit tougher on Russia, at least,
rhetorically. I think that's where it probably hurts more rather than the very small numbers we're talking about when it comes to crude purchases.
QUEST: Right now, let's look at what the prime minister said recently when the foreign minister of Russia was there.
[15:45:04]
The prime minister says India is on the side of peace. Well, I don't think anybody will disagree with that. But the lily-livered language that India
has used, will there be at least embarrassed faces as the Bucha genocide becomes ever clearer?
AGRAWAL: Yes, that's a really good point. I think the recent atrocities that are emerging, just add ever more pressure on New Delhi. And I think
it's going to get harder and harder for it to continue the study neutrality, as you call it. Because the images are images that Indians are
seeing as well. I think there will be some domestic pressure at home. But all of that said, what Indian diplomats have been saying recently, as they
have to, a whole troop of foreign ministers who've been in New Delhi over the last few weeks is that, you know, Indians in general are more likely to
care about what's going on in Afghanistan, next door which -- let's not forget, also has a humanitarian disaster on its hands.
And Ukraine is Europe's problem. This is what the Indian Foreign Minister has been saying, citing Indian people. So, that might be their way of sort
of distancing themselves a little bit. But this is a stance that is going to be harder and harder to continue as you say.
QUEST: Ravi, you're the editor in chief of Foreign Policy. So, I make no apologies for just sort of moving around the world as we do. Viktor Orban
got reelected last night, fourth term, and then made some extraordinary comments even by Orban standing status claiming Zelenskyy is part of the
opposition. Now that's not going to go down very well in in Brussels, which, of course, is also part of the opposition in his view.
What was the -- what are you on about here? What's the end game for Orban now he's been reelected?
AGRAWAL: Well, I mean, for starters, he's just been reelected despite a track record of saying all of these things. So, in a sense, this says a lot
about Hungary as well. But then, you know, the election itself was not free and fair. And Orban has long been, you know, an autocratic leader who has
looked to, instead of to the west, he's looked to the east for inspiration. And so, in a sense, none of this is surprising.
But in as much as the last few years has become, you know, this sort of accelerated aligning of democracies against autocracies. And we're seeing
those lines get evermore deepened. Orban is sort of putting his line in the sand and making clear where he stands which for hungry is very troubling.
QUEST: If there's a part of the world that Ravi can't give us insight on we've yet to find it. Good to see you, sir. Thank you. (INAUDIBLE)
Elon Musk is shaking up the world of social media as the chief executive has bought a stake in Twitter. In a moment.
(COMMERCIAL BREAK)
[15:50:34]
QUEST: Elon Musk has bought nearly 10 percent of Twitter for an investment of around $3 billion. The Twitter share price reacted dramatically as you
can see up 27 percent on the news. It means Twitter, like many social medias has lagged not only with the general market, but also of course by
what's happened with Apple's new social media policy on disclosure, which of course has been very much a negative for Twitter and Snap.
You'll see the way the shares have all sorts of -- and Facebook of course, particularly, you can see it all there. And the Paul La Monica is with me.
Why is he boldest? What's behind it? What do we know?
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes. We really don't know a heck of a lot just yet, Richard. You know, we do know that Elon Musk has
taken shots at Twitter. He is a very vocal and active Twitter user. And he has been concerned about your crackdown on free speech as he sees it. You
know, and there have been a lot of comments, you know, from people wondering whether or not Musk would look to start his own social media
service or go elsewhere.
But I think clearly with this stake, he is presumably going to try and mold Twitter, maybe more in his own image with an, you know, nearly 10 percent
stake. He is by far the largest investor in Twitter. And, you know, he can now I think, you know, throw some weight around even more so than just
having, you know, pretty sharply honed tweets. He has the money to back it up now too.
QUEST: But it is strange to make this level of investment and not say what you want to do, what your goal is. I mean, yes, in the fullness of time,
yes. But you'd have thought you'd have done that before now.
LANDON: MONICA: Yes, it is a bit surprising since I think there is one thing that we can say about Elon Musk pretty definitively. And that is that
he is not one to be shy about his opinions or mince words or anything of that nature. So, he might be biding his time a little bit. This is billed
as a passive steak for now whether or not he looks to go more activist and try and really push for significant changes remains to be seen.
But I think based on the surface, this is a friendly investment and, you know, whether or not Musk looks to exert more control, get board seats.
That will be something that in the coming days and weeks we'll be watching very closely.
QUEST: The rising tide has lifted all boats. We were just looking. Even Facebook, which is up some four percent on the day, having been heavily
down. This Apple business, this Apple tightening of user privacy which really clobbered Facebook and indeed Snap. But the -- I can see there's no
direct correlation between the underlying issues of those social media companies and Musk's purchase but Musk's purchase has put them all on a bit
of a (INAUDIBLE)
LA MONICA: Yes. It could be perceived as a floor for social media stocks. You mentioned Facebook meta, your beloved Snapchat that we have talked
about obviously in the past on the show. Pinterest as well is another social media stock that is surging even more today as well. And there's an
ETF, SOCL that owns all these stocks. It is roaring today too. So, investors at least for now possibly viewing Musk is having the mightiest
touch for not just Twitter but all social media.
QUEST: I can feel your snigger on my snap. Regular viewers will know of course I bought at 28 at the height of the IPO suffered for many years.
Then our 39. I mean, let's leave stuff for tonight. All right. Thank you, sir. The markets, I want to show you where we stand at the end of trading
on Wall Street. Six minutes to go before the end. We're at 90 points, so, I think just off the tops of the day. But it's not a very impressive sort of
day considering it was it was lower.
Small gains, triple sack similarly shares. I think the NASDAQ is having a much better day. Tech stocks are doing considerably better where the Dow is
only up a third then of course the NASDAQ has roared ahead.
[15:55:05]
I can tell you in a second or two why the NASDAQ and why -- the Dow, yes. The Dow has got some big losers at the back end of it which is what's
pulling it down. And those that have gained are not the top ones. There you see it. It's Salesforce, it's Apple, it's not the number ones are the
biggest heavyweights. And if you're looking to see where Boeing is, it'll give you an also an idea of why Boeing is the largest single competitor.
It used to be anyway, in the down, that's just basically unchanged. Right. Salesforce, Apple, Intel over one percent. We will take a profitable moment
after the break. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. The generals and the experts always said that the way Russia fights its wars, remembering from Syria and from
Chechnya and Georgia that the way they fight the wars, there would be war crimes at the end of it. And that's exactly what we're seeing, of course in
Bucha.
But tonight, I need to talk to you about what the west is going to respond because whilst it might seem unpalatable that I put this in terms of
economics, that is the main weapon that the United States and allies and partners have gone for. Economic sanctions. And the only way forward for
them is to ratchet up those sanctions even more. So, if you have war crimes on the continent of Europe and your next sanctions ratcheting is to stop
oil and gas from Russia and Germany, the Netherlands and those other European countries are going to have to pay that price.
And you start to walk the tightrope towards even tighter sanctions against Russia, ultimately towards a full blockade on economic grounds. We're still
way somewhere of that.
It's not easy or quick and it won't have the immediate results that a war with weapons might expect. But the west now has to decide what is the
ratcheting up, the next leg of the ladder if you will of economic sanctions against Russia as a result of war crimes because specifically that is the
weapon of choice that the west has gone for.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead.
END
