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Quest Means Business

Ukrainian Troops Claim To Reach Russian Border Near Kharkiv; Sweden And Finland To Apply For NATO Membership; Western Brands Abandon Russia Over Ukraine War; E.U. Cuts 2022 Growth Forecast From 47 Percent To 2.7 Percent; U.N.: Staple Foods Will Start Running Out In 2023; Cubans Flee Severe Shortages, Surging Prices. Aired 3-4p ET

Aired May 16, 2022 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:00:34]

LYNDA KINKADE, CNN HOST: A mix down Wall Street as stock struggle to find direction with one hour left to trade, the Dow and the S&P 500 are both

slightly up, tech stocks are falling and those are the markets.

These are the main events: Sweden joins neighboring Finland announcing a plan to join NATO. Turkey could stand in the way.

McDonald's is quitting Russia. The company plans to sell its restaurants and remove all use of its name and branding.

COVID lockdowns wreak havoc on China's economy. New data is showing a worse impact than expected.

Live from the CNN Center. It is Monday, May 16th, Lynda Kinkade, in for Richard Quest and this means business.

Good evening.

"We made it, Mr. President," the message to Volodymyr Zelenskyy from Ukrainian troops who say they've pushed through Russia's border north of

the city of Kharkiv.

The unit released this video, soldiers posing with a blue and yellow stake they've planted to mark their gains. Kyiv says the focus of Russia's

offensive is now in the city of Severodonetsk in Luhansk. Officials there say houses, a school, and a chemical plant and a hospital were all hit by

shelling on Sunday.

Well further south in Mariupol, Russia says it is evacuating wounded Ukrainian fighters from the Azovstal. CNN has not yet been able to verify

that.

Well, Sam Kiley joins me now live.

Good to have you with us, Sam. So, I want to start with those images we saw of a battalion of Ukrainian troops celebrating the fact that they have

pushed Russian forces back across the border on the outskirts of Kharkiv. Just how significant is that?

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think it's very significant symbolically, because of course, it's from that border

that the Russian troops invaded back on February the 24th, with the aim clearly, of either encircling or capturing Kharkiv, as they went to try to

topple the government in Kyiv.

Neither of those two objectives have been achieved. And indeed, the Ukrainians have driven the Russians back to their own base land, if you

like, back to the Motherland. Now, it doesn't mean that they're not vulnerable to shelling from inside Russian territory. We've seen some of

that conducted in that area and further west, around Sumy, which is west of Kharkiv on the same kind of line of latitude.

But the I think, ultimately, this is also a sign combined with the fact that the Russians in retreat blew up a lot of bridges, northeast of

Kharkiv, as the Ukrainians were pushing towards that border crossing area that the Russians have given up entirely on that front.

I think you were going to anticipate, though, that they will maintain some degree of pressure on the Ukrainians because they want the Ukrainians to be

focused as much of their troops there necessarily fighting or defending themselves against the Russians, rather than in Severodonetsk, which I

think is clearly now the main tactical, if not strategic prize for the Russians over the next few weeks -- Lynda.

KINKADE: And Sam, I want to focus more on that Donbas region, because it seems that there have been a significant number of Russian troops lost.

Just explain what is happening in that region, particularly when we hear from the U.K. Defense Secretary talking about potentially a third of

Russian troops lost.

KILEY: Yes, I mean, I think first of all, a health warning. The British are probably using the sort of statistics that they're getting from the

Ukrainians. The Ukrainians are a belligerent in this war. I don't think anybody has got remotely accurate figures for Russian troop losses except

for those bodies that they find on the battlefield. And we can assume that the Ukrainians will, of course, exaggerate the levels of Ukrainian losses.

But if we look at what's going on, on the ground, Lynda, you can see very clearly that there is effectively something of a stalemate, particularly if

you think that the Russians have been under orders to punch through Ukrainian lines, and they've been unsuccessful in that across pretty much

the whole of this front.

Yes, here and there, they have captured some towns, mostly in a sense, the wrong side of the Donetsk River, Rubizhne, for example, next door to

Severodonetsk has almost certainly fallen into Russian hands although it is frequently contested on the fringes.

There has been an attempt by the Russians to cross the river using pontoons, that we know led to a military disaster, and we know from

satellite imagery that they lost a lot, possibly 70 or 80 armored vehicles, among them many tanks, and therefore one can assume large amounts of

personnel were also killed in that action.

[15:05:25]

KILEY: And we also know that Severodonetsk remains in Ukrainian hands, notwithstanding, and I was there more than two weeks ago now, extremely

heavy bombardment focused on areas such as the hospital and elsewhere, with the small numbers of civilians carrying in underground bunkers.

So that's been in the picture now for some time with the Ukrainians, holding their ground, hoping that the new NATO weapons that they're going

to get will allow them to get on the front foot and start pushing the Russians back, and I think the Russian calculation will be to try to get

some kind of battlefield breakthrough before those NATO weapons can be put to best effect because when they do come, they must be concerned that they

will be starting to get rolled back.

But the Russians do have a numerical advantage. They have a vast potential source of soldiers, the Ukrainians have a finite resource of soldiers. And

that I think, is why the timing, the pace of this conflict is so important. Ukrainians needed to go fast, and the Russians need to get their

reinforcements together if they're ever going to have a breakthrough -- Lynda.

KINKADE: Such a great perspective from you. Sam Kiley for us in Kramatorsk, Ukraine, thanks so much.

Well, after decades of military neutrality, Finland and Sweden are on the verge of applying to join the NATO alliance. Today, the Swedish government

formally announced its decision to seek membership just a day after Finland did the same. The move was sparked by Russia's invasion of Ukraine and has

been condemned by Moscow.

Sweden's Prime Minister says it's the best way to ensure her country's security.

(BEGIN VIDEO CLIP)

MAGDALENA ANDERSSON, SWEDISH PRIME MINISTER (through translator): Sweden will be very exposed during the time our application is being handled. Russia has said that it will undertake countermeasures if we join

NATO. We can't rule out that Sweden will be the subject of disinformation and attempts at scaring and dividing us, but it is also clear that Sweden

does not stand alone.

(END VIDEO CLIP)

KINKADE: Well, Turkey meantime says it might oppose membership for both Finland and Sweden, accusing both countries have hosting Kurdish

terrorists. CNN's Nina dos Santos joins us now from Stockholm with more.

And Nina, let's just start on that because we did hear earlier from the Secretary of State saying he believed there would be consensus when it

comes to approving NATO membership for both Sweden and Finland, but Turkey has come up opposed to their applications. Explain why.

NINA DOS SANTOS, CNN CORRESPONDENT: Yes, that's right.

Well, first of all, what we saw was on Friday, Recep Tayyip Erdogan, the Turkish President, voicing some misgivings he had about the plans to allow

Sweden and Finland into NATO. Remember that this has to be a unanimous agreement. All 30 NATO members have to agree and Turkey has one of the

biggest armies in NATO. So it has a big voice around the table here.

It appeared as though after a weekend informal meeting of NATO diplomats in Berlin that some of those concerns have been assuaged. And then just today,

as Sweden formally said that it would announce its plan to join NATO in tandem with Finland, Mr. Erdogan -- President Erdogan has yet again voiced

his concerns in stronger fashion.

What are his concerns? Well, he says that countries like Sweden and Finland, in particular Sweden have given asylum to members of Kurdish

separatist movements that he deems to be terrorist organizations. He also hasn't forgiven a country like Sweden for back in 2019, having pushed E.U.

member states towards an embargo, an arms embargo on Turkey after it moved into northern parts of Syria occupied by the PKK, and the Syrian arm of the

PKK, which is the YPG that Turkey deems to be a terrorist organization.

So for these reasons, Turkey seems to believe it has some diplomatic leverage here. Remember, this is a very tense time for these countries that

are turning their back on decades of neutrality and military nonalignment because they know that at some point, they will be vulnerable over the

course of the next year, as that application to NATO goes in and has to be debated by all 30 of these countries. They are poised for Russian

retaliation, and also as you can see here, Turkey exercising some diplomatic leverage. The question is to what end at this point -- Lynda.

KINKADE: Yes, exactly. We will be watching this closely. Nina dos Santos for us in Stockholm, good to have you on the story. Thank you.

Well, two major companies, McDonald's and Renault are pulling out of Russia over the war in Ukraine. Their exit shows how fully the West is turning its

back on Moscow.

McDonald's was one of the first Western brands to cross the Iron Curtain. Its arrival in Moscow marked the end of the Cold War isolation. Cheering

crowds welcomed its opening on January 30th, 1990.

[15:10:10]

[VIDEO CLIP PLAYS]

KINKADE: McDonald's says it served more than 30,000 Russians that day. The flagship stayed open late to satisfy the crowds.

Well, meanwhile, carmaker Renault is controlling stake in the iconic Soviet-era, Lada, came to symbolize the integration of Russia into the

West's economy. Now, Renault has reportedly sold its Russia unit, once valued at over $2 billion for the symbolic sum of one ruble.

Anna Stewart joins me now for more on all of this. Huge developments, Anna, let's just start with McDonald's. It suspended operations back in March,

but now it is leaving Russia for good and it's taking a big financial hit.

ANNA STEWART, CNN REPORTER: A huge hit. I mean, Russia is an important market for both of these companies and as you mentioned there in your read,

this is really symbolic because McDonald's open just before the fall of the Soviet era. And it feels like it's really being bookended here with another

big moment in Russian history where it almost hits reverse.

Now, McDonald's had a very strong statement to say that certainly, it suggested it's not making a comeback in that market, it is that it is

selling down all of its restaurant portfolio to a local player and it says the company intends to initiate the process of de-arching those restaurants

which entails no longer using the McDonald's name, the logo, the branding, and the menu.

And the statement goes on essentially to say that their commitment to the community around the world and their values just simply don't align with

Russia's at this stage. They do not want their brand in Russia. That feels pretty final.

The Renault statement was really quite interesting. They have decided to exit Russia as a market right now. They've sold down its huge stake in the

Russian owner of Lada. They had a nearly 70 percent stake in that, but they have left their options on the table. They have got a six-year buyback

scheme, essentially where they can buy back into that investment within the next six years, lots of different windows, they could do that.

It is a really important market for Renault, it is about 10 percent of their sales last year. And that's what businesses are really struggling

with right now. So in March, we had the spate of companies one after another saying they were hitting pause in all of their operations, they may

be temporarily closing their doors, but now they're looking to exit and they're taking hefty charges for McDonald's between $1.2 billion and $1.4

billion -- Lynda.

KINKADE: Wow. That is a huge sum. And then, of course, a big week for the E.U. We may finally see the approval of that sixth round of sanctions, but

I'm wondering will the much debated oil embargo be on it?

STEWART: I think even the E.U. is wondering that right now. We've actually just had comment from the E.U.'s top diplomat Josep Borrell, he says,

"unhappily," that was his use of term, they've not been able to reach an agreement today. I'm not sure that's particularly a surprise, but he did

underline the fact that this Russian oil embargo is very much the sticking point.

We had some optimistic tones from some other Foreign Ministers, including Germany's earlier this morning saying a deal is likely to be done this week

in the coming days. But then we also had comments from Lithuania's Foreign Minister who said, and I'll quote this one, he said, "The whole of the E.U.

is being held hostage by one member state," which I believe is hungry.

So this sixth round of sanctions may get approved in the coming days, but I start to wonder whether the oil embargo will be honest, and if it's not,

well, removing the biggest bank from SWIFT is something, removing some Russian state broadcasters from E.U. airwaves is another, but really none

of that hits nearly as hard as a Russian oil embargo would -- Lynda.

KINKADE: Exactly. Exactly. All right, Anna Stewart, we will leave it there for now, live for us from London, thanks so much.

Well, the exodus of Western brands is ramping up the pressure on Russia's economy. The new isolation, however, is very different -- has very

different risks to the Soviet era self-reliance. Our Clare Sebastian reports.

(BEGIN VIDEOTAPE)

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT (voice over): They are often unreliable and always foxy.

Lada in the 1970s was a potent symbol of the Soviet Union's economic self- reliance. By 2022, a majority stake in the brand now owned by Renault, it was a symbol of Russia's global integration. That integration now

unraveling because of the war in Ukraine and Western sanctions.

Renault has announced it is selling its stake in Lada maker AvtoVAZ to a Russian State Research Institute with an option to buy it back within six

years.

AvtoVAZ announced in March, it would have to redesign some of its cars to make do without foreign parts. Initially, that will mean no special

features like anti-lock brake systems according to one expert and that's just the beginning/

[15:15:05]

EVGENY ESKOV, EDITOR-IN-CHIEF, AUTO BUSINESS REVIEW: That will be with us in future, we will have not new cars. We will be with just only used cars

in my opinion.

SEBASTIAN (voice over): And it's not just the car industry in reverse.

ELINA RIBAKOVA, DEPUTY CHIEF ECONOMIST, INSTITUTE FOR INTERNATIONAL FINANCE: Metals and mining will go to chemical production, paper,

textiles, even foods. Every industry is now either cutting their production by half or at least looking for new ways to import and new ways to export.

SEBASTIAN (voice over): Westernizing the economy was one of the hallmarks of Vladimir Putin's Russia. In the wake of the chaos and confusion of the

1990s, this policy helped bring prosperity, hope, and a real taste of something new.

Now shutters and plastic sheets barely obscuring the remains of what was. Even McDonald's, which opened its first restaurant in Russia in 1990 says

it is now starting the process of selling its business and quote, "de- arching" its restaurants.

Putin himself has played down the idea that his war and the resulting sanctions have undone 30 years of progress.

The Soviet Union lived under sanctions he said in March and achieved colossal success, rhetoric designed to strengthen his grip on power as he

prepares Russia for a potentially painful economic transition.

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): The economy will adapt to the new situation. If we can't find one ship, we'll try

another. If we can't go to one country, we'll go to a third country. If we can't buy it here, we'll buy it in a fourth country.

SEBASTIAN (voice over): In the Soviet Union and the decade that followed its collapse, economic isolation meant regular shortages of consumer goods

and food, queuing for things a part of life.

So far, Russia is not seeing this on a wide scale, but experts say it will if the war drags on.

SEBASTIAN (on camera): How much of a mess is this going to be, do you think?

RIBAKOVA: I think this is the worst crisis that most people in Russia is going to experience in their recent history. So we invented the time

machine and it is the pain of the 90s, but the other way. We're going towards darkness.

SEBASTIAN (voice over): The Cold War didn't just cement the Soviet Union's isolation, it also required ever increasing defense spending. The true

scale of which only emerged in its final years.

Russia's Hot War in Ukraine could deal a similar double economic blow.

Clare Sebastian, CNN, London.

(END VIDEOTAPE)

KINKADE: Well, Shanghai's government says things in the city will be back to normal soon. New economic data is casting doubt on that claim. The state

of China's Zero COVID Policy, next.

(COMMERCIAL BREAK)

[15:20:17]

KINKADE: Well, new economic numbers in China showed just how much damage was caused by the country's COVID lockdowns last month. Retail sales were

down 11 percent compared to April last year.

Economists were expecting a six percent drop, but unemployment rose to 6.1 percent. Industrial production was down nearly three percent after growing

in March. Some analysts now expect China's economy to shrink during the second quarter.

Well, Shanghai's government says that city will return to normal by mid- June. Some people there are skeptical after enduring seven weeks of lockdowns.

CNN's Selina Wang tells us how far the economy has to go to get back to normal.

(BEGIN VIDEOTAPE)

SELINA WANG, CNN CORRESPONDENT (voice over): When the world's factory shuts down, it ripples around the globe. China's COVID lockdowns are jamming

ports, choking off supply chains, increasing costs for companies that leaves American and global consumers waiting longer to get their goods and

paying more for them.

RICHARD MARTIN, MANAGING DIRECTOR, IMA ASIA: It is going to be a painful time on prices from goods that come into America from China, and that's a

lot of goods.

WANG (voice over): Shanghai, China's manufacturing and financial powerhouse, now a ghost town. Unused factories have been turned into

quarantine centers. This one at the outskirts of Shanghai, medical trash bags are used to protect their beds from the rain. Some offices, now

makeshift hospitals.

The world's largest container port in Shanghai has been running at about half its capacity for more than a month. One in five container ships are

now stuck at ports worldwide according to Windward, and about 28 percent of the backlog is coming from China.

Shipments from China to the U.S. are taking 74 days longer than usual according to the Royal Bank of Canada with no end to the delays in sight.

MARTIN: Well, this will take a lot longer. If you thought it was bad and 2021, it is going to get worse in 2022.

WANG (voice over): At least 31 cities in China are under full or partial lockdown impacting up to 214 million people. American companies from Apple

to Amazon, Starbucks, Coca-Cola, and General Electric have blamed China's lockdowns for squeezing earnings.

Foxconn, a major Apple supplier temporarily halted production at its Shenzhen factory for a few days in March. Pegatron, an iPhone assembler

suspended operations in Shanghai and Kunshan plants in April.

CEO Tim Cook said last month that China's lockdowns along with the global chip shortage could reduce quarterly sales by as much as $8 billion.

But for small businesses, this is make or break it.

JOSH VAUGHN, CEO, BLACK SHADES: My last order that shipped to the United States took about four to five months. We've went over a month without

making like any money as a business.

We've also lost money from people wanting to place orders and not be able to ship them, so I'm terrified. I'm literally -- I'm terrified that that

Black Shades could be over.

WANG (voice over): Some factories have remained open by putting workers in a bubble with staff working and living in the factory.

Social media video show workers at Apple and Tesla supplier, Quanta, jumping over factory gates and massive workers protesting COVID prevention

measures in the factory, underscoring how hard it is to keep factories open.

For decades, relying on China has kept prices for American consumers low. Now, that might be changing.

MARTIN: There will be short term and long term decoupling, things like COVID that could knock you over. So you've got to move some production out

of China.

WANG (voice over): China's leadership is doubling down on it Zero COVID strategy despite the devastating impact on the country's economy, and a

slowdown in China will be felt around the world.

Selina Wang, CNN, Kunming, China.

(END VIDEOTAPE)

KINKADE: Well, it is Biden versus Bezos in a Twitter feud over tax policy. The U.S. President tweeted that wealthy corporations should pay their fair

share of taxes to help bring down inflation, but Jeff Bezos says corporate taxes and inflation are separate issues.

The Amazon founder accused the U.S. President of misdirection. Mr. Biden has in the past accused Amazon of not paying taxes. Amazon says its Federal

income tax bill in 2020 came out at $1.7 billion. That's roughly a third of the corporate rate.

Rahel Solomon is following the story and joins us from New York. Good to see you, Rahel.

So this war of words began over the weekend and it hasn't stopped.

[15:25:01]

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: It has not stopped. Good to be with you, Lynda. Yes, in one corner you have one of the world's richest men

and the other corner you have arguably one of the most powerful men, and at issue here is inflation and that is because it is the "the" economic issue

in the U.S. right now as prices remain at 40-year highs.

So let's start with a tweet just a few hours ago from Jeff Bezos tweeting, "Look, a squirrel. This is the White House's statement about my recent

tweets. They understandably want to muddy the topic. They know inflation hurts the neediest the most, but unions aren't causing inflation, and

neither are wealthy people. Remember, the administration tried their best to add another $3.5 trillion to Federal spending, they failed. But if they

had succeeded, inflation would be even higher than it is today and inflation today is at a 40-year high."

So that was in response to a statement from the White House this morning that said in part, "It doesn't require a huge leap to figure out why one of

the wealthiest individuals on Earth opposes an economic agenda for the Middle Class that cuts in the biggest cost that families face and fights

inflation."

So Lynda, this war of words, if you can call it that started over the weekend on Friday, and it again started with inflation and what raising the

corporate tax help lower inflation. It has turned today, more so into the stimulus measures that Congress enacted here in the U.S., and whether that

contributed to inflation, made inflation worse. And there is research to suggest that some of the stimulus measures we saw did add about three

percentage points to inflation here in the U.S. That's according to, among other research, a report from the Federal Reserve Bank of San Francisco.

So this war of words has escalated last week, just a few hours ago, it remains to be seen sort of how it will end -- Lynda.

KINKADE: Yes, exactly. And just quickly, Rahel, what is the reality in terms of how much the President can do to bring down inflation in the short

term?

SOLOMON: You know, I asked an economist just a little bit earlier this morning who said this. Bill Gassen of Brookings saying that it's important

to note that essentially, President Biden can't do much in the short term to fight inflation that this is essentially a job for the Federal Reserve.

There's relatively little Bill Gassen tells me that either the President or Congress can do to affect the rate of inflation over the next six months.

To that end, Fed Chair Powell knows that he has said that it is his top priority, but Lynda, he has also said that it will likely include some

short term pain.

KINKADE: Yes, no doubt and nothing anyone wants.

Rahel Solomon, good to have you with us. Thanks so much.

Well, still to come, in Ukraine, Russian blockades are preventing around 25 million tons of grains from making it to international markets. The United

Nations warns a global food shortage may be imminent.

We'll have more on this story next.

(COMMERCIAL BREAK)

[15:30:56]

KINKADE: Go. Well, Europe's economic growth is expected to slow down amid Russia's invasion of Ukraine. Before the war, Eurozone GDP was expected to

grow at four percent this year. Now the E.U. is lowering that to just 2.7 percent. It also admits that inflation is set to spike as the war drives up

energy prices and disrupts supply chains.

The United Nations says staple foods like wheat and corn may start running out next year. Russia's blockade of Ukrainian ports has prevented the

country's crops from getting to market. Ukrainian President and Volodymyr Zelenskyy says Russian officials are openly threatening the world with

famine. He stressed that instability and economic costs a global famine could bring.

With me now is Hosuk Lee-Makiyama. He's the director of the European Centre for International Political Economy. Good to have you with us.

HOSUK LEE-MAKIYAMA, DIRECTOR, EUROPEAN CENTER FOR INTERNATIONAL POLITICAL ECONOMY: Great to be here.

KINKADE: So Putin's war in Ukraine is now leading to a food and energy crisis. Major staples like wheat, or cooking oil, sunflower oil, much of

which comes from Ukraine and Russia is no longer being exported, and they account for one-tenth of all calories traded globally. How is this war

exacerbating a food crisis?

HOSUK: Well, first of all the direct effect of Ukraine and Russia as major exporters of foods and actually it's even more than 10 percent of all food

traded is measured in calories. We are looking closer to 12, 13 percent. And well, the directly impact from their production that has been either

seizing or subject to export ban is going to have a significant effect. Ukraine alone is actually feeding half a billion people accounted for 12

percent of global supply of wheat, 15 percent of its corn and 50 percent of sunflower oil.

And the secondary effect of this is of course, increased prices, that is affecting the commodity markets as well as forcing governments who are

afraid of either food shortages or inflation to take export restriction in turn exacerbating the -- already the bad situation across the board. So, we

are looking at countries like India, as well as Indonesia, Turkey, Argentina, in short, some of the largest food producers that are usually

called the regional bread baskets in the region are actually taking active measures in order to restrict food exports.

KINKADE: And so, what impact are those trade barriers having? And are we going to see other countries, more countries follow suit?

HOSUK: Well, we have already seen 20 countries now taking measures that is effectively raising the food prices by almost 50 percent. And if you look

at certain commodities, like food, oils, we are looking at even 150 percent. And in addition to that we have an impact on fertilizers because

there is now a global shortage of food and fertilizes that have actually led to another 30 percent of increases.

They will affect everything from your morning coffee to your late snack biscuit. So, in other words, we are looking at a very long term effect that

will perhaps impact the global supply chain of food. And the World Food Programme is now estimating that additional 40 percent -- I'm sorry, 14

million people are now at risk of in -- well, acute food shortages. So, which is now as the number of the 190 million people around the world could

be actually facing starvation.

KINKADE: Wow. And it's not just that impact, right? You know, when we see a food shortage, it also -- it can lead to civil unrest we saw in Sri Lanka

all those protests, the overthrow of the Sri Lankan leader.

[15:35:07]

KINKADE: Talk to us about those are the implications.

HOSUK: Well, this is the -- this is the impact that we are seeing from -- not just from food shortages, but also from inflation. We need to remember

that one-third of the consumer price index is actually made out or comes from food prices. And if we looked at the recent political crisis, we have

seen especially in the emerging markets, they have been caused by either farmers protest or food shortages, and usually they are interlinked.

We are looking at, for example, the Arab Spring, and as well as -- well, as you mentioned, the unrest in Sri Lanka. And the number one parameter, for

example, that the Chinese leaders are constantly looking at, it's not necessarily GDP growth or employment. It's actually food prices, because

that is the only thing that can lead to destabilization of the Chinese economy as a whole. So, it is indeed a serious situation we are looking at.

KINKADE: Yes. And one that is not going to end anytime soon. We'll have to leave it there for now. Hosuk Lee-Makiyama, good to have you with us.

Thanks for sharing some time with us.

Well, a mass exodus out of Cuba where people are desperate to leave economic misery behind. Cuban officials say U.S. sanctions are to blame for

power blackouts, higher prices and severe shortages of basic goods. Local people answer sure, though, some say they made the decision to leave last

summer after the government crackdown harshly on wide spread protests. Patrick Oppmann joins us now from Havana, Cuba.

Good to see you, Patrick. So, Cuba now dealing with runaway inflation, the worst shortage of food and medicine in decades.

PATRICK OPPMANN, CNN HAVANA-BASED CORRESPONDENT: That's correct, Lynda. And the numbers really are staggering. Some 80,000 Cubans who arrived since

October to the U.S. and that's only the U.S. You have thousands of Cubans that have traveled to other countries around the world or anywhere that can

really get a visa to and if this wave continues, it will be the largest Exodus that Cuba has seen in decades.

(BEGIN VIDEOTAPE)

OPPMANN (voice over): Cubans cross the Rio Grande from Mexico into Texas. It's a dangerous journey and one happening more and more frequently, as

Cubans leave the island in the greatest exodus since the Mariel Boatlift. Over 32,000 Cubans reached the border just in March, according to the U.S.

Customs and Border Protection. For many, the odyssey starts here. In long lines at foreign embassies to apply for visa to depart the island by plane

and then make the trip overland to the United States.

Ever since Cuba's ally, Nicaragua waived their visa requirement last November, the number of travelers has skyrocketed. Some toll us the lack of

food and medicines are driving people to leave.

And why are so many people wanting to try?

KAILEN RODRIGUEZ, TRAVELING TO PANAMA: To buy things that we don't have here. We don't have the possibilities here to buy many things that there we

can buy all the things.

OPPMAN: The chronic scarcity has grown even more dire in recent months.

OPPMAN (on camera): The line behind me is for detergent to wash clothes, and increasingly hard to find item these days. Cubans certainly are no

strangers to long lines into shortages for the economic freefall that this country is experiencing right now. Many Cubans tell me leaves them no other

option but to try and leave.

OPPMAN (voice over): Cuban officials say the tanking economy is the fault of tougher U.S. sanctions.

JOSEFINA VIDAL, DEPUTY MINISTER OF FOREIGN AFFAIRS OF CUBA: Because in the case of Cuba is not -- it's not just a consequence of the pandemic, it's

the consequences of the reinforcement of the policy of maximum pressure, economic pressure of the U.S. towards Cuba.

OPPMAN: But many on this island blamed the exodus on the government's harsh crackdown, following last summer's unprecedented protests, demanding food,

medicine in greater liberties. While the majority of Cuban migrants reached the U.S. from Mexico and increasing number are also attempting the journey

on homemade boats across the Florida straits.

Duleydias says her husband lost his job during the pandemic and then lost hope.

He was going crazy, she says. He didn't have the means to support us and our small child. And I think that's what caused him the desperation to

throw himself into the sea.

Duleydias says her husband and nephew were on an overloaded boat heading to Florida that capsized. Their bodies were never found.

It's heartbreaking because you can't say I will move on or I will stop. You don't know anything she says.

Despite, the peril they face, this new wave of Cubans leaving their island is unlikely to subside anytime soon.

(END VIDEOTAPE)

OPPMANN: And Lynda, the U.S. and Cuba and government -- governments did meet last month to talk about migration, the first such meeting during the

Biden administration. And Cuba, of course, is pointing fingers at the U.S. saying that the U.S. will not issue more visas here in Havana. The U.S. is

asking Cuba to accept deportation flights, something the Cuban officials so far have resisted.

And while this fingerpointing goes on, you see thousands and thousands of young capable people choosing to go make their future somewhere else,

people that Cuba desperately needs that are deciding that they do not have a future here and are leaving despite the costs.

KINKADE: Yes, it's going to be a real brain drain. Patrick Oppmann for us in Havana. Thanks very much.

Well, that is QUEST MEANS BUSINESS. I'm Lynda Kincaid. I'll be back at the top of the hour as we make a dash for the closing bell. Stay with us. Up

next, Living Golf.

(COMMERCIAL BREAK)

[15:58:57]

KINKADE: Hello. I'm Lynda Kinkade. It's the dash to the closing bell and we're just two minutes away. Markets are mixed and mostly flat after late

selling. The Dow was trying to eke out a gain. Energy shares are helping. Chevron is up three percent while the S&P 500 has given up its gains. The

tech heavy NASDAQ has been lower all day. Alphabet and Amazon are also both down.

Well, the war in Ukraine is having repercussions far beyond the stock market. It's straining food supplies all over the world. Hosuk Lee-Makiyama

told me earlier that countries are putting up export barriers to protect themselves.

(BEGIN VIDEO CLIP)

HOSUK: Ukraine alone is actually feeding half a billion people accounted for 12 percent of global supply of wheat. 15 percent of its corn and 50

percent in sunflower oil. And the secondary effect of this is of course increased prices that is affecting the commodity markets as well as forcing

governments who are afraid of either food shortages or inflation to take export restriction in turn exacerbating the already the bad situation

across the board.

(END VIDEO CLIP)

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