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Quest Means Business
U.S. Appeals Court Pauses Ruling That Blocked Tariffs; Small Businesses Make Case Against U.S. Tariffs; Class Of 2025 Graduates As Harvard Battles Trump Administration; Interview With Israeli Ambassador Yechiel Leiter. Aired 4-5p ET
Aired May 29, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:11]
JIM SCIUTTO CNN HOST: That's the closing bell on Wall Street. Stocks as you can see, up a bit on the Dow. Those are the markets and these are the main
events.
An appeals court is pressing pause on last night's ruling that temporarily blocked Trump's tariffs.
Israel approves a massive expansion of Jewish settlements in the West Bank. The country's ambassador to Washington is going to join me in just a short
time.
And CNN goes inside a flight simulator to explain how pilots adapt if air traffic control goes down.
Live from Washington. It is Thursday, May 29th. I am Jim Sciutto, in Washington, and this is QUEST MEANS BUSINESS.
We are watching a number of headlines today, but we begin with breaking news in the U.S., a federal appeals court has paused a ruling that would
block temporarily President Trump's sweeping reciprocal tariffs on trade. The lower court said President Trump overstepped his authority by imposing
emergency tariffs on nearly every country in the world. The White House had called that ruling judicial overreach.
Press Secretary Karoline Leavitt predicted the tariffs will withstand any legal challenge.
(BEGIN VIDEO CLIP)
KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: Other countries around the world have faith in the negotiator-in-chief, President Donald J. Trump and
they also probably see how ridiculous this ruling is and they understand that the administration is going to win and we intend to win. We already
filed an emergency appeal. We expect to fight this battle all the way to the Supreme Court.
These other countries should also know, and they do know that the President reserves other tariff authorities.
(END VIDEO CLIP)
SCIUTTO: Well, Wall Street has been taking all this back and forth relatively in stride. As you can see there, all three major indices are up
a bit on the session. Investors are well aware that this appeals process, like so many we've witnessed over the last months and years, still needs to
play out.
Kevin Liptak is with me here in Washington, Anna Stewart from London. Kevin, if I could begin with you, with how the White House has been
reacting not just to the temporary loss last night, but to a -- well, a temporary victory, perhaps in the last several minutes.
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yes, and it has been something of a whiplash. And you heard Karoline Leavitt there really going
harshly after these courts, insisting that they were not going to have any role in how these tariffs are rolled out.
You also hear advisers, and we just heard from Peter Navarro over at the White House driveway, say that they are still continuing to look at what
options they have, if in the end, they are not successful at the Supreme Court.
And so you really do see this flurry of effort on the part of the President and his aides to try and resuscitate this tariff agenda. I think that all
goes to show just how central these tariffs are, not only to the President's trade agenda, but to his entire economic agenda.
When you think about, you know, the big beautiful bill, this tax and domestic spending package that the President is trying to push through
Congress right now, so much of it depends on revenue from these tariffs. He doesn't want to explode the federal deficit, I think that's part of why you
have seen such a vehement reaction from the President and his team at this court's ruling today.
I think the issue that they have, if they are not successful in the courts, is that their options are not great. One is to try and go to Congress and
get these tariffs approved in law. There has been lukewarm support in Congress, even among Republicans for these tariffs. The other is to try and
use some of these investigative techniques, you know, Section 232, which would require National Security investigations into certain imports. That
takes time. The President clearly in a hurry to try and use these tariffs to execute new trade deals.
SCIUTTO: The thing is, they are stretching the National Security justification far beyond what any President has done and the Constitution
does say quite clearly that Congress has the power to impose duties.
Anna Stewart joining me now from London. And, Anna, listen, you know, we were going to talk about how there was a block, at least for now. Now that
block has been stayed while the appeals played out.
We should note that the court has not made any decisions. The appeals court has not made any decisions on the merits of this case. It is just staying
that block while the appeals process plays out. But I wonder how countries around the world are currently negotiating trade deals with the U.S., how
they are absorbing all this back and forth.
ANNA STEWART, CNN REPORTER: So it is more confusion and this is just a temporary pause from what we learned last night. And I think for investors,
for companies who export to the U.S., for countries looking to make trade negotiations and potentially deals, this is just adding more confusion to
the picture, really.
So I think you can separate those countries in terms of those doing trade deals between the ones that have been slightly reluctant and maybe even
reticent to negotiate their tariffs to the U.S. now, to negotiate their non-tariff barriers.
[16:05:05]
For instance, Australia would be a great example. They are probably not going to be jumping at the chance right now to do a trade deal with the
U.S. However, there are those countries or those blocs like the E.U. who are actively trying to work on something, and that will likely continue
because at this stage there is no change. You have the appeals process already in play, but also there is this big fear that even if it went to
the Supreme Court, even if President Trump was told he cannot use emergency laws to implement tariffs against countries broadly, as he has done, he
could use potentially other sections of the Trade Act to impose more tariffs another way.
So for many countries it doesn't change much, but it has made the White House look pretty weak in these trade negotiations.
SCIUTTO: Kevin, I wonder weak is not a word the President Trump likes to be associated with him, but already the administration has failed to deliver
on the many trade deals that it said. You know, you've heard this from President and others, oh, everybody is knocking on our door to get a trade
deal done.
Now they have, as Anna was saying, this added uncertainty as they don't even know whether the tariffs would stand that they are negotiating
against. Is the White House absorbing that or are they concerned that trade deals that haven't come to be might not come to be for even longer?
LIPTAK: I mean, they haven't said that explicitly, but I think the fact that they were so quick to appeal these decisions to come out and criticize
the courts does give you a sense that if they don't have sort of this weight hanging over U.S. trading partners, they don't necessarily think
that these trade deals will be executed at least as quickly as they had hoped they wanted them to be.
There has been one trade deal with the United Kingdom. It was more of a framework. It wasn't sort of the nitty-gritty you know, intensive trade
deals that I think people associate with that term. You've also seen the E.U., those trade talks just sort of began in earnest last week. They say
that they will continue.
The President also on the phone this morning with the Japanese Prime Minister talking about tariffs. So, in some ways these conversations are
continuing. But I think these trading partners are going to want to see how this plays out in court before they agree to anything.
SCIUTTO: And the U.K., of course, what distinguishes that is that that's a country that the U.S. has a trade surplus with, as opposed to a trade
deficit like so many.
Kevin Liptak, Anna Stewart in London, thanks so much to both of you.
Well, the lawsuit filed with the U.S. Court of International Trade was brought by five small businesses. This is the one that the court blocked
Trump's tariffs last night. They were represented by a libertarian advocacy group called Liberty Justice Center, and the complaint argued that the
plaintiffs would face "increased costs for the goods they sell, less demand for their higher priced products, and disrupted supply chains, among other
threats to their livelihood, up to and including potentially bankrupting otherwise solvent companies."
Well, Mischief Toys is a small toy company that's involved in a separate lawsuit against Trump's tariffs. Co-owners Dan Marshall and Abigail
Adelsheim-Marshall join me now. Thanks so much. Good to have you both.
ABIGAIL ADELSHEIM-MARSHALL, CO-OWNER, MISCHIEF TOY STORE: Thanks for having us.
SCIUTTO: So first I just want to ask you a question because it is -- you know, last night it was blocked. Now, that blockage has been stayed. How do
you run a business with all this back and forth, with all this uncertainty?
ADELSHEIM-MARSHALL: That has been our life for the last few months, is that you never know what tomorrow is going to bring. So were just trying to
order as much as we can now so that we have everything at pre-tariff prices and stockpiles for the future as much as we can.
DAN MARSHALL, CO-OWNER, MISCHIEF TOY STORE: Yes, I mean it has been crazy. Since Trump took office, it has been like 20 percent, 50 percent, 145
percent, 30 percent. You can't plan around that. It is impossible.
SCIUTTO: As a toy store, I am certain you had quite a reaction to Trump's comments about dolls costing, you know, just a couple more or maybe that
young kids should just have a couple dolls as opposed to 30 dolls. Tell us what your reaction is to that thinking? I mean, is this policy anti-
business, in your view?
ADELSHEIM-MARSHALL: I mean, the doll comments are a little odd. There are a lot of toys people play with. I don't know any children that have 30 dolls.
Two is a very normal amount. But yes, I say it is an anti-business and an anti-consumer policy.
Tariffs are fundamentally taxes that are going to raise prices across the board, or even on things that are made in the U.S. because all of their
prices along their production line are going to go up. It is a tax on everyday consumers.
MARSHALL: And even worse, as consumer products go up in price, we have inflation and we have a recession that could be sparked at the same time by
a loss of revenue and people letting go of workers. So the tariff policy was going to drag us right into a 1930s style stagnation that could go on
for years and years.
ADELSHEIM-MARSHALL: And we are a toy store, but it is not fundamentally about toys. It is about the livelihoods of everyday Americans and the fact
that these tariffs are illegal.
[16:10:04]
SCIUTTO: I wonder regarding your decision to join this lawsuit, as you know, this is not a President, not an administration that takes too kindly
to folks who stand up to it, right, and they often seek retribution. We are seeing that on a number of fronts, whether it be universities, law firms,
et cetera, businesses.
Are you concerned at all that you might be targeted in some way?
ADELSHEIM-MARSHALL: Yes, we knew that was a possibility from the moment we decided to join in. We are a very liberal store. We are really outspoken
about our values. We are really progressive. So we were never going to be on that side of things, but it is definitely -- it has brought a lot of
people out of the woodwork. We've had to turn off comments on a lot of our social medias, but we think everyone needs to do what they can to fight
this and that we have law and order for a reason, and we can't ignore -- allow the President to just ignore that.
MARSHALL: Yes and Trump is a bully and the way that you fight bullies is you stand up to them. This is what every American needs to be doing right
now and we are hoping that we can at least provide an example in that regard.
And, you know, fundamentally, we are not afraid of Trump. He doesn't have a lot of power except for, you know, what he chooses to say in the media.
What we guide ourselves by is our community and our customers and they have been a hundred percent supportive.
SCIUTTO: Well, Dan Marshall and Abigail Adelsheim-Marshall, we wish you the best of luck. We hope your business gets to go forward and thrive despite
all of these uncertainties.
ADELSHEIM-MARSHALL: Thank you.
MARSHALL: Thank you very much.
SCIUTTO: Well, President Trump met with Federal Reserve Chairman Jerome Powell at the White House today and again pressured him to lower interest
rates. The Fed released a statement saying that Powell met with Trump at the President's invitation.
The White House Press Secretary explained what Trump said to Powell.
(BEGIN VIDEO CLIP)
LEAVITT: The President did say that he believes the Fed Chair is making a mistake by not lowering interest rates, which is putting us at an economic
disadvantage to China and other countries and the President has been very vocal about that, both publicly, and now I can reveal privately as well.
(END VIDEO CLIP)
SCIUTTO: Joining me now is Allison Morrow.
So tell me about -- I mean, this pressure we've seen before, right, and this is a president who to some degree wants the Fed to rescue -- to rescue
Trump from the apparent damage that the trade war is doing to the economy. We are already seeing that in some of the economic numbers coming out, and,
by the way, in the Federal Reserve's read of where the economy is going.
But Powell has held firm, independent.
ALLISON MORROW, CNN BUSINESS SENIOR EDITOR: Yes, so Jay Powell is not the type of guy who is going to get pulled into a political fight. You know
every time he has a public appearance, he wears a purple tie because he doesn't want to seem politically oriented toward red or blue.
So you know, we've seen Trump take a very public pressure campaign from social media. He called Powell a major loser and threatened to fire him.
And, you know, that really unsettled investors all around the world at a time when there is already a lot of uncertainty. So Trump has been kind of
undermining the power of the Fed to be an independent body that can neutrally assess the economy, which is fundamental.
And so we are seeing that kind of public pressure campaign move into the private sector. We don't know exactly what was said in that meeting. But,
you know, they've said Trump is unhappy with interest rates and pressuring Powell to lower them. But yes.
SCIUTTO: Yes, that's a phrase Trump uses a lot. He has even used that with Vladimir Putin regarding the war in Ukraine.
Allison Morrow, thanks so much.
MORROW: Thanks.
SCIUTTO: Well, Harvard University is celebrating a temporary win in its ongoing battle with the Trump administration. It comes on the very same day
the university celebrates the Class of 2025. What a year to graduate. We will have the latest developments next.
(COMMERCIAL BREAK)
[16:16:43 ]
SCIUTTO: Well today, Harvard is celebrating both a win in its ongoing legal battle over, among other things, whether it could admit and how many
international students and its Class of 2025.
(VIDEO CLIP PLAYS)
SCIUTTO: University President Alan Garber, who has become the face of Harvard's defense against Trump administration attacks, received a minute
long standing ovation after taking the podium earlier today, and the school's commencement speaker began by acknowledging the weight of this
moment.
(BEGIN VIDEO CLIP)
DR. ABRAHAM VERGHESE, HARVARD COMMENCEMENT SPEAKER: I don't have to tell you that this is also an unprecedented moment for Harvard University.
Honestly, in coming to your campus, I feel very much like a medieval messenger who had to sneak through the encircling forces and slip into your
besieged community.
(END VIDEO CLIP)
SCIUTTO: Quite a comparison.
Just a few miles away in a Boston courtroom, came a legal victory for Harvard. A judge announced that she will order the Trump administration not
to make any changes to Harvard's student visa program. Katelyn Polantz is near Harvard's campus in Cambridge.
This was quite a ruling here. I wonder what happens now.
KATELYN POLANTZ, CNN CRIME AND JUSTICE SENIOR REPORTER: Well, Jim, Harvard is winning this battle, but the war between Harvard University and the
Trump administration, it will continue on, on a lot of fronts. But right now, the impact on international students coming to Harvard on student
visas issued through the U.S. government, issued through a program the government allows Harvard to have, that's going to stay in place.
The judge here, Allison Burroughs she doesn't want any harm to come to Harvard or the international students coming to study here in the coming
days, some who are already on campus, the ones who are planning to come in the fall semester or this summer semester.
Judge Burroughs says, "I want to maintain the status quo." Whatever the order is that is still being hashed out on the sidelines. Harvard
University's lawyers are talking to lawyers from the Trump administration, and they are hashing out the legal language. Judge Burroughs says it
doesn't need to be draconian, but I want to make sure it is worded in such a way that nothing changes, meaning international students have no fear and
can still come to Harvard University to study.
All of this comes because the Trump administration tried to pull the entire program to allow international students on this campus very abruptly last
week, and the judge had temporarily stepped in. They were gearing toward a very big, meaty major hearing today. It ended up being only about 30
minutes long. That's because the administration tried to defuse the situation. They tried to unwind it, and they tried to tell the judge, we
don't need to be in court. We are going to give 30 days to Harvard to talk through some of the administrative compliance here.
But that was not where the judge landed. She was very clear from the beginning of the courtroom arguments today that she was going to put an
order on the Trump administration, the international program for students could not be changed and she also expressed some concern, Jim, that there
are students abroad going to U.S. embassies trying to get their student visas in order to come to Harvard in the coming days, coming weeks, coming
months and they are running into trouble, potentially changing their plans and still being in fear.
[16:20:12]
So everything here stays in place, but the war, I mentioned, lots more from the Trump administration. They still want to pull billions of dollars in
grant funding for Harvard and there are other ongoing lawsuits that we are watching as well up here in Boston.
SCIUTTO: Yes, that word from the judge that students are terrified, quite strong language there and understandable in their position.
Katelyn Polantz in Cambridge, thanks so much.
Well, Beijing says the Trump administration's review of Chinese student visas is "politically motivated and discriminatory." Secretary of State
Marco Rubio announced Wednesday that the administration will "aggressively revoke visas for Chinese students, including those with connections to the
Chinese Communist Party or studying in critical fields."
China was the top source of U.S. international students for 15 straight years, sending more than 372,000 students to the U.S. just before the
pandemic.
Now, India leads the way.
Jennifer Hansler is with me now.
Can you explain exactly what the State Department is doing here? Suspending but not blocking, and what kind of standards are they talking about
imposing now on student visa applicants?
JENNIFER HANSLER, CNN STATE DEPARTMENT PRODUCER: Well, Jim, those are great questions and we don't have a lot of answers here. Secretary of State
Rubio's surprise announcement last night was very short on details. In fact, it was only two sentences long.
He said they were going to be aggressively revoking the visas of Chinese students, including those with connections to the Chinese Communist Party
or studying in critical fields.
However, he did not say what those critical fields are and how they are going to determine what constitutes a connection to the CCP. Of course,
that party has millions and millions of members in China, so it is unclear if that means the student themselves has to be a member, if a family member
is a member of the Communist Party there. There are a lot of unanswered questions here.
We pressed the State Department's spokesperson, Tammy Bruce, to give us some of those answers today at the briefing, and she would not elaborate.
But she did say that this is related to National Security concerns of the United States.
She said that there is clear -- there is an interest in making sure those who are here from China on a visa understand we are taking our National
Security seriously.
However, as we can see, this has already caused a stir in Beijing. This has already ratcheted up tensions between Washington and Beijing, and it also
is poised to be another blow to Higher Ed institutions here in the United States.
As you noted, Chinese students are a massive population in 2023-2024. They were the second biggest group. There are more than 275,000 students who
have studied here during that academic school year, and it comes amid a flurry of other moves by the Trump administration that are likely to deter
international students.
Of course, their attacks on Harvard, as well as a pause they have put in place effective Tuesday on all new appointments for student and exchange
visa applicants. That means these student visa exchange applicants cannot go and have their interviews to move forward on that visa process, that
remains at a standstill as the State Department works to expand its social media vetting policy.
Now, the State Department said they expected to roll that out in the coming days, but that too, may have an impact on the number of visas that are able
to be issued to students who want to come and study here.
So they are making a lot of moves here that are likely to increase the fear and the uncertainty among these students, Chinese and otherwise, and make
them less likely to come to the United States to study -- Jim.
SCIUTTO: No question. There is a financial factor here, too. They typically pay the full tuition, and that universities say, helps subsidize financial
assistance for U.S. students.
Jennifer Hansler, thanks so much.
Still to come, amid a deteriorating situation in Gaza, I will speak to the Israeli ambassador to the U.S. about the situation there. U.S.-Iran nuclear
talks and the latest U.S. proposal for a ceasefire.
(COMMERCIAL BREAK)
[16:27:17]
SCIUTTO: Hello, I'm Jim Sciutto. There is more quest means business in just a moment when I will be speaking to the Israeli ambassador to the U.S. as
the war in Gaza passes the 600-day mark and CNN takes a ride in a flight simulator to find out what happens when the cockpit loses communications
with air traffic control.
Before that, these are the headlines this hour.
Harvard University has won a big legal victory with the Trump administration. A U.S. judge says she will let the school continue to admit
international students. The Trump administration was moving to revoke Harvard's ability to enroll any international students. It has many
thousands of them. These details hashed out in a Boston courtroom just quite close to today's graduation ceremony.
The U.S. appeals court has now reinstated Trump's tariffs, at least while the administration fights a ruling just last night that would block them.
The White House slammed that lower court ruling, calling it an example of judicial overreach. The appeals court has ordered both sides to file
written arguments by early next month.
Israel has approved its biggest expansion of settlements in the occupied West Bank in decades. Israel's Security Cabinet is vowing to establish 22
new settlements across the West Bank. It is a move described as a continuation of what some call the de facto annexation of the West Bank.
An Israeli official tells CNN that Israel has now accepted a new U.S. proposal for a ceasefire with Hamas. We are told that that proposal, which
was presented by U.S. envoy Steve Witkoff, includes the release of 10 hostages in exchange for a 60-day ceasefire. It also calls for the release
of the remains of 18 deceased hostages.
Hamas says that it has received the proposal and is "reviewing and responsibly studying it." Here is what White House Press Secretary Karoline
Leavitt said just a short time ago.
(BEGIN VIDEO CLIP)
LEAVITT: I can confirm that Special Envoy Witkoff and the President submitted a ceasefire proposal to Hamas that Israel backed and supported.
Israel, signed off on this proposal before it was sent to Hamas.
I can also confirm that those discussions are continuing, and we hope that a ceasefire in Gaza will take place so we can return all of the hostages
home and that has been a priority from this administration from the beginning.
I won't comment further, as we are in the midst of this right now.
(END VIDEO CLIP)
SCIUTTO: Well, the war inside Gaza rages on. Gaza has endured more than 600 days of conflict since the brutal attacks of October 7th.
Palestinians pushed towards famine after an 11-week Israeli blockade of aid. Lifesaving food and aid has now begun to trickle in, but as you see
there, the distribution sites have become chaotic.
Despite moves towards that ceasefire, an Israeli military official told CNN on Monday that Israel plans to occupy 75 percent of Gaza within two months
as part of this new military offensive.
[16:30:33]
Yechiel Leiter is the Israeli ambassador to the U.S. and he joins me now.
Ambassador, thanks so much for taking the time.
YECHIEL LEITER, ISRAELI AMBASSADOR TO THE U.S.: Thank you, Jim. Good to be with you.
SCIUTTO: First, if I could begin, it's been a week since just the shocking murder of those two young Israeli embassy staffers here in Washington. I
wonder, just quite simply, how are embassy staff and how are the families of the victims recovering?
LEITER: Well, thank you, Jim. We're all in mourning obviously, 150 members of the Israeli embassy in Washington. We're very close to both Sarah and
Yaron. We worked on the same floor together. We saw them every day. These are beautiful young kids about to be engaged. I flew out on Sunday to be
with Sarah's family out in Kansas City.
This was not a, you know, a Dorothy trip and the "Wizard of Oz" kind of experience. It was a very harsh experience, very difficult. But I was there
to embrace Bob and Nancy. I know what it means to lose a child. I lost my son in the war in Gaza. So I was able to convey heart to heart, consolation
to the parents of Sarah. And yesterday, in a phone call to Yaron, whose parents live just outside of Jerusalem.
SCIUTTO: Well, please pass on CNN's thoughts to their families in particular. And I was aware that you'd lost your son in Gaza.
LEITER: I appreciate that. I appreciate that. Thank you. Jim.
SCIUTTO: My thoughts go to you as well. If we can, a number of events in the news I do want to get through, let's begin with the ongoing military
offensive by Israel in Gaza. As I said just before, Israeli officials are saying the intent is to occupy 75 percent.
Can you clarify, is the intent of Israel to permanently reoccupy Gaza, and if not permanently, how long?
LEITER: The intent of Israel is, as the government decided on October 8th, the day after the massacre, to destroy Hamas, to free our hostages, and to
ensure that Gaza will never again be a Hamastan, be an area from which malicious and malevolent forces could attack our civilians. And we're going
to persist until those three objectives are complete. We hope right now that we're in the midst of another hostage negotiation through the good
services of President Trump's special envoy, Steve Witkoff, he's achieved a number of ceasefires and hostage releases until now.
We're hopeful that he'll achieve one now as well. We still have 20 live hostages in the hands of Hamas in their dungeons, underground, so we're
focused on that and we're focused on ensuring the safety of our people.
SCIUTTO: I've spoken to the relatives of hostages still held in Gaza, and they have questioned the Israeli prime minister's priorities with the war
there, that he has not placed the safety, the return of the hostages high enough. And as you're aware, the former Israeli prime minister, Ehud
Olmert, wrote this week in "Haaretz" newspaper the following, I believe the government of Israel is now the enemy from within. It has declared war on
the state and its inhabitants. No external foe we fought against over the past 77 years has caused greater damage to Israel than what the Itamar Ben-
Gvir, Netanyahu and Bezalel Smotrich led government has inflicted on us.
I wonder what your response is to that kind of criticism from inside Israel itself?
LEITER: Well, you've got criticism within the United States on an administration from one side or the other. One opposition criticizes the
president administration and the previous administration. And I wouldn't put too much stock into a small and relatively irrelevant commentary in the
newspaper.
The fact of the matter is that our government is democratically chosen. We have a democratically elected prime minister who's actually been elected
over the past 15 years I'd say five or six times. So it's representative of the people.
Let me just say this regarding the hostage families. I understand them. I understand to the very base of my heart, I understand them. But they are
focused on one aspect of this war, and that's getting their hostages out. There are other aspects to the war that we also have to take into account,
and that's ensuring that the state of Israel doesn't become hostage to another Hamastan at our border. We were hostage on October 7th, and we had
1200 of our people slaughtered.
[16:35:01]
That's not a situation we're going to go back to. We're not going to allow jihadis to reconstitute themselves on our borders anywhere, whether it's in
Gaza or whether it's in the Golan Heights or whether it's in Judea and Samaria. We're not going to allow jihadis to sit on our border armed to the
teeth and then threaten to murder us once again. Even Hamas at this point continues to say that if we do not defeat them and they reconstitute
themselves, they'll repeat October 7th. We can't allow that to happen. And we're not going to.
SCIUTTO: The thing is, though, that Olmert is not just a small minority in Israel. A recent poll aired on Saturday by Channel 12 and Israel showed
that 55 percent of the Israeli public believes that Netanyahu's main goal is to remain in power. They question not the -- whether to prioritize
safety or, for instance, the humanitarian crisis in Gaza but they question whether Netanyahu is in this to protect himself more or the state of
Israel.
That's my question there. What's your response to that criticism?
LEITER: Well, criticism is simply, simply wrong. I think there are people in the opposition who -- and it's legitimate, by the way. I mean, we're a
very robust democracy. We have people representing all sides of the issue, and it's perfectly legitimate for the opposition to oppose the government.
But the fact of the matter is, again and again, if you're talking about surveys and polls, 70 percent of the population is insistent that the war
be prosecuted to the end and Hamas be destroyed.
So I wouldn't, you know, jump to conclusions from a particular poll and a particular station, a particular time. You have to see it over time. Every
time we call up our reserves, for example, they've been called up again and again and again over this past year and a half. All our young people who
are leaving their businesses, their law firms, their medical centers, and they're coming to report and fight against this enemy.
It's always 100 percent in the call up. So we have, you know, former officials making statements. You have that here. You have that around the
world. It's not really all that relevant to pay attention to. The people are committed to seeing that October 7th, it will never happen again and
that the people responsible for it will be brought to justice, will be removed from the perimeter of Israel. Hamas has to be defeated, and that's
what we're about to do.
SCIUTTO: I want to get on to U.S.-Iran talks because I know Israel is watching them closely. But before I do, I do want to touch on the
humanitarian situation in Gaza. As you know, there is a new aid distribution program which the U.S. is involved in, Israel is involved in,
but has received a good amount of criticism from the U.N. and other aid groups.
I want to show a scene of the distribution center as it began in recent days. You had people, hungry people, civilians, storming the site. They're
just trying to feed their families. And some of the scenes were even, well, here you go. What you're seeing now there on the screen. Should people have
to fight like that just to feed themselves? Is that an image of a successful aid distribution process?
LEITER: Well, first of all, I'm not sure that what you see, what you're screening right now are people fighting. I didn't see people fighting with
each other. I see --
SCIUTTO: Rushing.
LEITER: I see --
SCIUTTO: Desperately, desperately jumping the fence, et cetera.
LEITER: Well, this is a program -- well, give it a chance. This is a program that just got underway. What I did see for a year and a half, what
we all saw for anybody paying attention was food being distributed through the good services of Hamas, of a terror organization who actually hijacked
the trucks that were outfitted by money raised here in the United States by NGOs. People gave their 501(c)(3) tax exempt donations to NGOs to support
what they didn't understand was eventually Hamas.
Hamas took over these semi-trailers of humanitarian aid. They sold it to the people they wanted to favor and use that money to reconstitute their
domination of the Gaza Strip. We cannot allow the people shooting at our soldiers to be supported by NGOs. The U.N. is the problem. It's not the
solution. The U.N. was in cahoots with representatives of Hamas. Yes, yes, it's hard to stomach, isn't it? But the U.N. is the problem, not the
solution.
And what the humanitarian fund which has been established, the Gaza Humanitarian Foundation, is doing is circumventing what the U.N.
established. Look, you know, you cast doubt. But just last week, a U.N. representative maliciously, libelously, said that in two days, in 48 hours,
14,000 babies will starve to death. Everybody heard that. The 48 hours passed. Nobody starved to death. And yet there's no retraction. Not from
the media and not from the U.N.
So what we need to do is circumvent the U.N. who's creating this problem, who's creating this libelous slander. And we need to make sure that the
food gets directly to families in Gaza. And it's working.
[16:40:02]
SCIUTTO: Well, I should note that we've spoken on this program to a number of aid agencies, the U.N. included, but not just the U.N., who have said
they've seen evidence of malnutrition in enormous numbers in Gaza.
LEITER: Where is it? Where's the evidence?
SCIUTTO: Up to 40 percent.
LEITER: Where's the evidence? That's a libel.
SCIUTTO: Well, they've done --
LEITER: There's no evidence to that. There is evidence to Hamas taking over the food and selling it to the people that they're interested in. That's
where the evidence is.
SCIUTTO: Well, we spoke to a group called Aneira, who's been on the ground for a great amount of time, and they did. I mean, they did tests, right?
I'm talking about --
LEITER: Participating, participating in Hamas.
SCIUTTO: Urine tests where they developed -- where they saw signs of malnutrition in 40 percent of the samples. I'm quoting back folks on the
ground who've done this kind of testing. But listen, let's set that aside if we can, for a moment, because I do want to get to the Iran-U.S. talks.
President Trump, as you know, is speaking of progress in nuclear talks with Iran. I wonder what will Israel do if the U.S. signs a deal with Iran that
it finds unacceptable or unsafe for Israel's national security interests?
LEITER: Well, it's a hypothetical that I don't believe for one moment could actually materialize. We've been speaking very intensely with the Trump
administration from the moment President Trump came into office. President Trump has been very clear in the letter that he sent to the leader of Iran.
They have a limited amount of time to agree to what he called full dismantlement. There cannot be any road to enrichment because enrichment
means a nuclear bomb.
And if these lunatics in Tehran get a nuclear bomb, they're going to use it. For us this is existential. They call Israel the one-bomb country. OK,
so there's under no circumstance can Iran have a pathway to a nuclear bomb. And we're convinced, absolutely, the American administration is 100 percent
in lockstep with us on that.
Now, if that can be achieved through the negotiation process that Steve Witkoff is leading, if anybody can do it, it would be Mr. Witkoff. We
certainly hope he's successful in achieving the elimination of this nuclear bomb program through negotiations. If not obviously, I mean, the president
has said it, there's an alternative.
SCIUTTO: We reported last week that the U.S. assesses that Israel is making military preparations to strike Iranian nuclear facilities, at least
preparations for a potential attack. I wonder, do you believe Israel would strike Iran potentially over U.S. objections, if, again, it deemed that a
deal was not conducive to Israel's safety?
LEITER: You know, the narrative of, you know, militaristic Israel always preparing for a military operation, it's a narrative that everybody loves.
You know, big, bad Israel. But wherever we can avoid military confrontation, military operations, we'll do so. We live in the hope right
now that the United States will succeed in reaching an agreement with Iran in which their nuclear enrichment program will be dismantled.
I do not foresee the possibility of a situation where the U.S. and Israel are going to be in confrontation over what to do with Iran. We're in full
agreement. Iran has to be removed from the nuclear stage. They cannot have any pathway to a nuclear bomb. And if they have enrichment, that's the
pathway. So there's no enrichment and full dismantlement.
SCIUTTO: Final question before we go, and I do appreciate your time, because you've allowed me to ask you many questions on many topics. Are you
hopeful that an agreement will be reached perhaps in the coming days between the U.S., Israel and Hamas that would allow the return at least of
some of the remaining living hostages in Gaza?
LEITER: Well, here's an interesting thing which connects us to one of your previous questions, Jim. The proposal on the table is not very different
than what envoy Witkoff presented about a month ago. The only difference is that Hamas continues to be diminished. Their leader, Mohammed Sinwar, has
been eliminated. And now their political base of distribution of these social issues, the humanitarian funding, has been taken away from them.
So their power on the street has been completely diminished. And when you take military and political power away from a terrorist organization, they
begin to crumble. So if they're going to agree now, it's going to be because we have successfully diminished their military and political power.
SCIUTTO: Ambassador Yechiel Leiter, again, let me thank you for joining us and for giving us the time.
LEITER: Thank you, Jim.
SCIUTTO: And we'll be right back after this.
(COMMERCIAL BREAK)
[16:48:00]
SCIUTTO: Well, just in the last few moments, I spoke with the Israeli ambassador to the U.S. leader about, among other things, the controversial
new aid distribution program we've seen in Gaza of just the past three days. Chaotic scenes like this one unfolded earlier in the week. He said
that people must give these aid efforts a chance.
Joining me now is Firas Maksad. He's the managing director for the Middle East and North Africa at the Eurasia Group. Also a long diplomat himself.
First, you were listening to my interview with Ambassador Leiter there. Tell me your reaction to his answers regarding criticism of the aid
distribution program.
FIRAS MAKSAD, MANAGING DIRECTOR, MIDDLE EAST AND NORTH AFRICA, EURASIA GROUP: You know, Jim, I think --
SCIUTTO: Sufficient?
MAKSAD: I think the pictures speak for themselves. We saw thousands upon thousands of hungry Palestinians fighting to try and access that aid, which
clearly was not being distributed in any meaningful fashion. And that cannot be described as a successful operation. I understand what Israel is
trying to do here. They want to have control over that aid, and they want to be able to use that as a leverage, as a tool of leverage in their
negotiations. That I think contradicts much of international law and what international law has to say about this.
Now, that said, I do understand that the mechanisms that had been in place go through Hamas, and that's problematic. We have had similar situations
around the world. I recall Syria, where the U.N. and its agencies had to work with the Assad regime. That's just a hard fact of working in places as
difficult as Syria and Gaza. But the alternative that we saw unfold yesterday was clearly not a tenable one that works.
SCIUTTO: You heard him say, accused the U.N., which of course was responsible for aid distribution prior of being, his words, in cahoots with
Hamas. What does the evidence show?
MAKSAD: I certainly haven't seen any evidence that the U.N. is purposely working hand in hand with Hamas. There might have been instances where
certain people, local staff working under U.N. agencies, had participated in Hamas activities. That's something that I would say U.N. cannot
completely account for, but there is no evidence of structural cooperation between the United Nations and Hamas.
[16:50:03]
SCIUTTO: Let's talk about the U.S.-Iran nuclear talks there because in answer to my questions, he said, listen, the U.S. and Israel, they're in
lockstep. Netanyahu, Trump. But the fact is, there's been a lot of reporting about daylight between Netanyahu and Trump on this and quite
recent reporting that Trump has even delivered messages to Israel, don't attack, which seems to indicate there's some concern that Israel might
attack. I mean, is there actual daylight between the two?
MAKSAD: Jim, I've been doing this for 25 years. I haven't seen that kind of daylight between an American president and Israeli prime minister, let
alone at a time of war in the Middle East. When it comes to Trump and Netanyahu, the difference is both personal and policy. The two are
strongmen. President Trump doesn't like being led on issues that are crucial for him and the interests of the United States, whether it's on
Iran or whether it's on normalization between Israel and the Arab states, something that the president wanted to pursue.
And clearly, Bibi is not there. We all recall the Zelenskyy-like moment in the White House when the prime minister was in the Oval Office. Trump said,
we're going to negotiate with Iran. He even went on to negotiate with Hamas, much to the chagrin of the prime minister. And he went for a
ceasefire with the Houthis in Yemen that caught the Israelis, you know, off guard.
So I think whether it's on personal issues or on policy issues, there's clearly daylight between the two. The American president doesn't want
another major war in the Middle East. He wants to go towards normalization and wants to be remembered for bringing peace between Arabs and Israelis.
The Israeli prime minister, driven much more by myopic personal interests, staying in power, keeping his governing coalition together, is unable to
end the war in Gaza for that reason.
SCIUTTO: Is there enough daylight that you could envision a scenario where Israel would override a red light from the U.S. and attack -- and calculate
that deal that Trump struck, you know, theoretically is just not in our interests and puts us at risk?
MAKSAD: The quick answer to that is no. But I do think that both sides have an interest in posturing and creating the illusion that there could be a
difference on this issue. I think for Israel to go ahead and strike, it would have to have at least an orange light from Washington to go ahead and
do so. But for purposes of being able to renew negotiations after such a strike, I think the American president would very much want to come across
as having been against it and to distance itself from the Israeli action, if only to increase the chances that Iran, having been weakened by a
military strike, would in fact come back to the negotiating table.
SCIUTTO: You heard me cite the criticism from inside Israel of Netanyahu and his priorities from Ehud Olmert. But as I said to the ambassador, Ehud
Olmert is not out on an island on this. I mean, you see this in public polling. You've heard it from some of the former military and intelligence
leaders as well, questioning his motives and his priorities here.
Does that internal criticism matter? Right? I mean, the truth is we've had it before, and to the ambassador's point, Netanyahu keeps winning
elections. And that's the ultimate decider here. But does that growing, if you want to call it a wave of criticism, have any impact?
MAKSAD: Well, I would say no. And I'll tell you why. We have the most right-wing government in the recent history of Israel. And everybody in
that coalition, whether it's Smotrich or Ben-Gvir, who keeps threatening to leave the coalition, have stuck together and are likely to be sticking
together because nobody wants to be responsible for bringing down the most right-wing government in Israel's history.
So we've seen that the prime minister's popularity has been in decline because of his inability to deliver on the war promises in Gaza, bringing
these hostages home. But the coalition nonetheless has stuck together. I think what really matters for any Israeli prime minister is outside
pressure emanating from the United States. Simply put, an Israeli prime minister cannot be seen as that much out of lockstep with an American
president. So what happens in Washington matters that much more.
SCIUTTO: And we'll see if that changes.
Firas Maksad, thanks so much for joining us.
MAKSAD: My pleasure.
SCIUTTO: And thanks so much to you. We'll be back right after a short break.
(COMMERCIAL BREAK)
[16:56:35]
SCIUTTO: U.S. markets ticked higher as the courts take up challenges to Donald Trump's sweeping tariffs. The Dow gained 117 points. S&P, Nasdaq up
0.4 percent.
And let's look at the Dow components. Boeing at the top. The CEO says he is confident the company can ramp up production of its 737 MAX jets. Nvidia
got a 3 percent bump, still riding a high from its impressive earnings on Wednesday. Salesforce down more than 3 percent despite beating on earnings.
It's buying a data management platform for $8 billion.
That is QUEST MEANS BUSINESS. I'm Jim Sciutto in today for Richard Quest. "THE LEAD WITH JAKE TAPPER" is next.
(COMMERCIAL BREAK)
END
