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The Brief with Jim Sciutto

CNN International: Trump Plans to Meet Putin in Hungary; U.S. and Russian Officials to Meet Next Week; Zelenskyy and Trump Set to Meet at WH on Friday; "Drone Wall" to be Fully Operational by End of 2027; John Boltin Indicted; Netanyahu Warns Israel's Struggle with Hamas Not Over; Aid Begins to Flow into Gaza; Adm. Alvin Holsey Stepping Down. Aired 6-7p ET

Aired October 16, 2025 - 18:00   ET

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

[18:00:00]

JIM SCIUTTO, CNN ANCHOR: Hello and welcome to our viewers joining us from all around the world. I'm Jim Sciutto here at the IMF headquarters in

Washington, and you're watching "The Brief."

Just ahead this hour, President Trump says he is now planning to meet Vladimir Putin in person in Budapest. I'll discuss the security situation

in Europe with Poland's finance minister. John Bolton, a former Trump advisor turned critic, is indicted by a grand jury. And the governor of the

Bank of Israel joins me as Prime Minister Netanyahu warns his country's struggle with Hamas is not over.

We do begin though with the war in Ukraine and plans now for a face-to-face meeting between U.S. President Donald Trump and his Russian counterpart

Vladimir Putin in Hungary. Today the pair held a lengthy phone call, some two and a half hours, as the White House prepares to host the Ukrainian

president tomorrow, Volodymyr Zelenskyy, who arrived here in Washington earlier today.

Zelenskyy says that Moscow is, quote, "rushing" to resume dialogue as the U.S. and Ukraine discuss potential shipments of U.S.-made Tomahawk missiles

to Ukraine. Though President Trump says the U.S. may need those missiles too and that it may not be the perfect time as well to pass a new Russia

sanctions bill.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESIDENT: We're going to be meeting in Hungary. Viktor Orban is going to be hosting. And it's really something that's time. Last

week over 7,000 people were killed. That's ridiculous. And, you know, it doesn't affect our country. We're not losing people. We're not losing,

Bobby. We're not losing Americans. But they're losing Russians, Ukrainians, mostly soldiers, for the most part soldiers. And we think we're going to

get -- we hope we're going to get it stopped.

(END VIDEO CLIP)

SCIUTTO: New reporting today from myself and my colleague, Zachary Cohen, a strategic shift has occurred in President Trump's mindset and approach to

the war. That meeting with President Putin in Anchorage back in August ended, of course, without an agreement to end the war. And sources tell me

and Zachary Cohen that the Trump administration since then told Kyiv to begin hitting Russian oil, gas and energy infrastructure using U.S. intel,

the U.S. giving a green light to resume those attacks and that U.S. intelligence helping those attacks deep inside Russian territory. They say

the U.S. has increased intelligence sharing with Ukraine on those targets deep inside Russia.

Joining me now from the White House, Kristen Holmes. And, Kristen, I wonder, is the administration telling you that Putin offered any

concessions regarding the war? Because one might say that President Trump is already offering two concessions himself if he's taking Tomahawks off

the table and if he is further delaying this new U.S. sanctions bill on Russia.

KRISTEN HOLMES, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes, they wouldn't answer that question. I mean, I specifically asked President Trump whether

or not or why he thought that a second meeting with Putin would yield different results. And he said essentially that Alaska had set the table.

But when it came to those Tomahawks, you know, on Sunday he was threatening to put out these Tomahawks, to give these Tomahawks to Ukraine. No mention

of that today. And then, when asked about it specifically, I asked, did Putin ask you not to give Tomahawks to Ukraine? And he said, well, wouldn't

you do the same?

Well, it seemed pretty clear that he's not going to be giving Tomahawks at that point to Zelenskyy tomorrow, which is what we know is going to be on

the table as part of this discussion. So, it's still really unclear here how we got from after the Alaska summit in which the next steps were going

to be Zelenskyy and Putin meeting face-to-face. I was told by White House officials that they believe that this was Trump kind of extricating

himself. He thought these two leaders had to have this face-to-face meeting. Never happened.

And now, we're in a whole different position in which President Trump is now traveling across the world again to meet with Vladimir Putin. Of

course, it's not surprising that they chose Hungary. That was on the list originally of places that they would go. Viktor Orban is a friend of both

of theirs. We know President Trump spoke to Orban after he spoke to Vladimir Putin about this summit.

[18:05:00]

But it's still very unclear why he believes that another sit-down with just him and Putin will yield anything different than what we saw come out of

Alaska, which really seemed to be, at least, a lot of stalling.

SCIUTTO: Yes. No question. Kind of similar to the pattern we saw in the first administration, which was when he met with Kim Jong-un, the leader of

North Korea, three times and did not manage to move the ball forward on nuclear program. Kristen Holmes at the White House, thanks so much.

Well, the E.U. and NATO are now scrambling to respond to the widening threat posed by Russian drones and aircraft over its airspace. The E.U.

said today a planned anti-drone wall will be fully operational by the end of 2027. Many in Europe suspect that Russia was involved in a wave of drone

sightings that shut down airports. The Kremlin says it was not responsible for sightings such as this one over Denmark. It cannot, however, deny that

its drones crossed into Poland and Romania last month.

And Sweden has now shared these images. NATO says three armed MiG warplanes violated Estonia's airspace for more than 10 minutes. Poland's foreign

minister wants NATO to consider a no-fly zone now over Ukraine to protect not just Ukraine but Europe from that threat.

Joining me now is the finance minister of Poland, Andrzej Domanski. Thanks so much for taking the time.

ANDRZEJ DOMANSKI, POLISH MINISTER OF FINANCE AND THE ECONOMY: Thanks for having me.

SCIUTTO: First, I'm curious what the effect is on the economic outlook in Europe of these repeated air incursions. I mean, there's a real effect in

that it shuts down airports and that's, of course, business traffic, it's passenger traffic, but does it also cast a pall over business sentiment

there to feel that the threat from Russia is expanding?

DOMANSKI: To some extent, for sure. The high level of uncertainty is not good for business, it's not good for investment, not good for markets.

Having said that, Polish economy is doing very well.

SCIUTTO: Tell me about the effect of tariffs so far on the Polish economy, because when I speak to ministers and business leaders from a number of

countries, they tell me that there has been an effect that is not necessarily reflected in the headline economic numbers yet. Do you think

the economic effects of tariffs will, over time, be reflected?

DOMANSKI: Yes, of course, they could appear later on. We know that the macroeconomic process takes time. Fortunately, Polish economy is not that

much exposed to tariffs, but again, the high level of uncertainty, very visible in the markets, is not helping economy. We need to wait to properly

assess the impact of tariffs on economy.

SCIUTTO: The relationship between Poland and the U.S., I think one can say, is good, and the relationship between the Polish leadership and

President Trump is good. Can you describe the reaction from U.S. officials and the Trump administration when you communicate that tariffs are not good

for business? How do they respond?

DOMANSKI: Well, we are repeating that tariffs are not -- are bad for business, even worse for consumers. We understand that U.S. has its trade

policy. We believe that it would be better for both U.S. and European Union to keep tariffs lower, but I do believe that in Europe we need to focus on

ourselves. There is such a lot of job that has to be done in European Union to accelerate growth, to bring back competitiveness, to ensure lower energy

prices in Europe, that I don't want to lose too much time for the discussion about tariffs.

I think that here -- that in Europe we can -- we must actually focus on cutting red tape, on kind of simplification of European law to bring

investments back to Europe. We just cannot afford the industrialization of Europe, and this is, I believe, the common way of thinking in Europe.

I had a very good meeting with Secretary Wright yesterday here in Washington, and actually we share the view that we need to focus on

cooperation in energy sector. Poland is investing heavily in nuclear energy together with our U.S. partners. We believe there is room for buying more

LNG from U.S. So, there is lots of room for cooperation.

SCIUTTO: In a national security context, there is a great deal of talk, not just about Europe buying more weapons and defense spending, which of

course Poland leads the way quite close to that 5 percent of GDP benchmark, but in terms of the industry itself being able to serve those needs. Is

Europe making progress?

[18:10:00]

DOMANSKI: Absolutely, we need to spend that money wisely. Poland is spending close, as you said, close to 5 percent of GDP, and our goal is to

build, to create a strong defense industry in Poland and of course in Europe. I believe it's not only about money, it's also about security. We'd

like those -- to shorten the time to develop weapons, develop new technologies.

SCIUTTO: Yes, and bring them to market, which of course the U.S. is struggling with itself. These long-term systems are trying to shorten the

timeline. I wonder, big picture, is part of the message that Poland and the E.U. and NATO are receiving that their security will be more of their own

responsibility, more of your own responsibility going forward, that the U.S. will remain a partner, perhaps a leader, but that Europe will have to

do more on its own?

DOMANSKI: The U.S. is our strongest ally and will remain so. Having said that, definitely Europe needs to take more responsibility for its own

security. And this is why we invest so heavily in Poland in defense. This is why we are convincing our European partners to increase their spending

on defense. This is also why the European Commission has decided to launch this SAFE program, 150 billion euro of loans that will be spent to

modernize armies in Europe. That's really, really needed right now.

SCIUTTO: No question, and some would say quite fast. Andrzej Domanski, the finance minister of Poland, thanks so much for joining us.

DOMANSKI: Thank you. Thank you for having me.

SCIUTTO: Appreciate having you. To another developing story now, a federal grand jury has just indicted former national security adviser to President

Trump, John Bolton. He has been charged with 18 criminal counts related to the mishandling and transmission of national defense information. Bolton's

lawyer says he did nothing wrong. The former Trump adviser from the first administration is expected to surrender to federal authorities as soon as

tomorrow, Friday.

Bolton is the third of President Trump's perceived political foes. Two now face federal charges. The other two, New York Attorney General Letitia

James and the former director of the FBI, James Comey. Democratic Senator Adam Schiff and former special counsel Jack Smith are also said to be under

investigation.

Joining me now, Gene Rossi, former U.S. federal prosecutor, also former assistant U.S. attorney in the Eastern District of Virginia. Good to have

you back, Gene. Thank you.

GENE ROSSI, FORMER U.S. FEDERAL PROSECUTOR AND FORMER ASSISTANT U.S. ATTORNEY, EASTERN DISTRICT OF VIRGINIA: Good to be back.

SCIUTTO: So, based on what we know of this case, said to be some 1,000 instances of messages being sent that contain classified information, and

at CNN's reporting that two of the people who received this via e-mail were members of Bolton's family, comparing this to the charges you've seen

already against, well, Letitia James, but also James Comey, is this a more substantial case legally, in your view?

ROSSI: Well, based on the allegations, I would say a resounding yes. And let me give you my reasons. The indictment, first off, is not a bare bones

indictment, unlike the indictment in the Eastern District of Virginia against Attorney General James and Director Comey. Those indictments were

bare bones, as they say, and they were done on the fly, almost like a fast- food restaurant. This one has been investigated before, number one.

And number two, the indictment covers many years of alleged illegal activity on the part of former National Security Director John Bolton. The

second thing I want to stress, though, Jim, is this. Who signed this indictment? In Eastern District of Virginia, I live a mile away from that

courthouse, one person signed it. Here, we have six people who signed the indictment, and the six people are very important.

At the top of the list of six is Kelly Hayes, a U.S. attorney who is a prosecutor's prosecutor. She has a tremendous moral and ethical compass.

She's a career person, tremendous experience. She signed it, and that tells me a lot. But below her name are five significant individuals. They appear

to be career lawyers with the National Security Division of Maine Justice, and that they were involved in the presentation of this indictment tells me

this is a very serious case.

[18:15:00]

And I think what tipped the scale, if I had to read the tea leaves, I think the search warrant, Jim, was a treasure trove of information for the

federal prosecutors. Maybe before that search warrant, it was sort of an equipoise as to whether you would go forward, but I think that search

warrant, Jim, brought out a lot of information, a lot of documents that really added meat to this very, very detailed indictment. But to answer

your question, it is very serious.

SCIUTTO: Given the number of counts and given that seriousness and the evidence as we know it so far, is this the kind of case that perhaps if

John Bolton was your client you might be now at least considering a plea deal of some sort?

ROSSI: I'm a defense attorney, so I'm not going to give anybody else advice. I will say this. John Bolton has a tremendous defense attorney in

Abbey Law. He's extremely gifted. He doesn't need my advice. I don't want to give him advice.

I will say this. The allegations and their allegations, they have to be proven, not just by probable cause, they appear to be extremely serious,

and they're a lot different than James Comey's indictment and A.G. James.

The only concern I have is this. It troubles me that this indictment was preceded by a series of suggestions, text messages, things like that,

verbal statements by the president, that hurts this case. If Donald Trump had kept his mouth shut, this standing alone would be a very significant

indictment. And based on the allegations, it appears to be fully justified.

SCIUTTO: I imagine his defense attorney will bring up those comments from the president. Gene Rossi, thanks so much, as always.

ROSSI: Thank you.

SCIUTTO: Just ahead, aid is finally beginning to flow into Gaza, where the need is tremendous. Will it continue, though? We're going to have the

latest on the ceasefire next.

(COMMERCIAL BREAK)

[18:20:00]

SCIUTTO: Tonight, there is growing anger inside Israel, a country desperate for the return of all of the deceased hostages. Sources say that

the Israeli prime minister, Benjamin Netanyahu, promises to act if Hamas does not hand over more remains. Hamas says it has returned everyone that

it can find, that is, nine of the 28 captives believed to be dead.

However, Israel believes Hamas has access to at least six other bodies. Despite the standoff over hostages, aid is finally moving into Gaza, and

Israel's foreign minister says the Rafah Crossing will likely open this weekend. That's a key access point for aid.

Joining me now is Amir Yaron. He's the governor of the Bank of Israel. Thanks so much for joining.

AMIR YARON, GOVERNOR, BANK OF ISRAEL: Thank you, Jim, for having me.

SCIUTTO: I wonder what the economic outlook is now with the ceasefire. I don't want to say the end of the war, because we don't know what the next

phases will be, but do you have a different outlook, and are you getting a different reception, for instance, having different conversations here at

the IMF than you would have had the war still been underway?

YARON: Let me give a little bit of background, but first of all, you're absolutely right, we're live hostages are back, but want to see all the

deceased ones also coming back to Israel. Maybe a bit of a perspective, Israel entered the 7th of October in a very good economic state. After the

7th of October, there was economic cost, we were like 5 percent away from where we would have been via GDP.

But if you look and you think of the event, just as a perspective, 30 times 9/11, two years of a war, lots of even internal dispute about how it goes.

Israel has -- the Israeli economy has shown remarkable resiliency in the way it has functioned.

Now, about your question going forward, obviously sustained security and stability helps the economy, and we hope this proves to be, in spite of

what you mentioned at the outset, that this will lead to a sustained, stable agreement. And I think if that happens, there's a lot of upside

opportunities for the region as a whole.

We're talking, this is, you know, we don't want to put the cart ahead of the horses, it's going to take probably some time. But if it does happen,

there's trade agreements and collaborations. Israel has high tech that can be used, agro-tech for some of the countries in the region. Indonesia was

mentioned as possibilities opening up Asia-Pacific channels. So, there's a lot of opportunities in that sense.

In the short run, our last estimates were that -- or forecast, basically said that the war was going to end at the beginning of 2026. So, in some

sense, we've gained a quarter relative to that. So, we said growth is going to be about two and a half percent. It's probably going to be slightly

higher due to that. The big issue is 2026. We estimated it was going to be, under that scenario, somewhere in the mid-fours, like 4.6, 4.7.

SCIUTTO: So, you move that timeline up? I imagine a big input is that you have military reservists returning to the workforce. Because, for instance,

when I've gone to Israel, that's one thing I hear frequently, is that the business is, the nature of the Israeli military, right, is you've got

working people who then go to fight, and now they're going to be going back to their jobs.

YARON: So, you hit an excellent point, because it has to do with the core of the inflation issue in Israel, which obviously the Bank of Israel is a

major element of what we do. So, the shortages in the workforce in Israel was a major thing impeding growth, but also generating supply constraints

relative to a solid demand, and that created inflation.

And so, now, if we're looking forward, what might happen, we've had better geopolitics, the markets are signaling better geopolitical stand for

Israel. You see that in our CDS market, you see it in our currency, you see it in the Israeli stock market that has done extremely well. So, the shekel

appreciating and the reservist coming back to work all help inflation come down.

The other factor -- the counter factor, is if there is optimism in the air, that can boost demand. And those two upsetting factors are -- you know, are

upsetting, and we will need to see as we go forward which one works and at what time frame.

[18:25:00]

SCIUTTO: Do you see potential with -- and again, this all depends on the ceasefire holding and the successive stages holding up as well. Do you see

interest from Arab partners? I mean, you mentioned Indonesia, perhaps a new entrant into the Abraham Accords in further trade with Israel? With the war

behind them?

YARON: I am sure if we can get to a stage where there's extension of Abraham Accord, they will bring about -- could bring about transformative

situation to trade around the region. And they will facilitate a lot of growth. They will unlock economic growth, not just for Israel, but I think

for the whole region, we can bring some of our high-tech know-how to some of these countries, our manufacturing know-how. And this could be

beneficial to all parties. But again, we need to get there in order for that to happen.

SCIUTTO: I speak to a lot of folks here at IMF and elsewhere, no one likes the tariffs. They all say tariffs are bad for business and bad for trade.

When you communicate that message to your U.S. counterparts, and of course, the relationship between the U.S. and Israel is quite strong. And the

relationship between the Trump administration and Israel is quite strong. What's their reaction?

YARON: Well, I think Israel is on the low end of the tariff scope, right? Right now, it's at -- we're at 15 percent. As long as pharmaceuticals and

other things are not in are not in there. And some of the chips that we are involved in, we have to take that as part of U.S. policy right now. And at

least at this point, we are on the low end of things. And I think, in some sense, it may even give us advantageous opportunity in this puzzle around

the world of relatively higher tariffs from other places. But we'll have to see how all the trading balances work themselves out.

Also, A, it's too early to tell. And, B, given that we were still in a war and that also affected our economy. Once and if we get to more sustained

situation, we can see how that works for us.

SCIUTTO: Amir Yaron, appreciate you joining us today.

YARON: Thank you very much.

SCIUTTO: Well, another top U.S. military commander is now set to leave his job early. What this could mean for the Pentagon's escalating military

action in Latin America, including strikes like that one in the Caribbean.

(COMMERCIAL BREAK)

[18:30:00]

SCIUTTO: Welcome back to "The Brief." I'm Jim Sciutto at IMF headquarters in Washington. Here are the international headlines we're watching today.

President Trump says he's now planning a new meeting with Russian President Vladimir Putin. The two leaders held a long phone call about the war in

Ukraine. Trump says their next meeting will take place in Budapest, Hungary in, he says, perhaps two weeks. He is set to host Ukraine's President

Volodymyr Zelenskyy at the White House on Friday. Zelenskyy has been pushing for U.S.-made Tomahawk missiles to strike deep inside Russia.

A grand jury has indicted President Trump's former National Security Adviser John Bolton. Bolton under investigation for the alleged unlawful

handling of classified information. Sources tell U.S. tell us the investigation centers around e-mails sent to his wife and daughter. Bolton

has now responded saying, quote, "I have become the latest target in weaponizing the Justice Department."

Hundreds of people in Alaska were forced to leave their homes and to be airlifted to safety by the military after a devastating storm ravaged tiny

coastal communities. Across the region more than 1,500 people were displaced. Some 300 residents transported on a C-17. You see it there. More

than 800 kilometers to Anchorage. Officials are calling it the most significant airlift in Alaska's history.

U.S. military commander overseeing the Pentagon's escalating attacks on boats in the Caribbean is stepping down before the end of this year.

Admiral Alvin Holsey is leaving his job as the head of U.S. Southern Command barely a year into his tenure. Typically, these jobs go for three

years. Did not give a reason nor did the White House or the Defense Department.

The U.S. has been ramping up its military presence and action in the Caribbean. Special operations forces have carried out at least five lethal

strikes, like that one there, on vessels off of Venezuela's coast. The U.S. claims the boats were smuggling drugs.

Joining me now is Max Boot. He's a senior fellow for national security studies at the Council on Foreign Relations. Max good to have you.

MAX BOOT, SENIOR FELLOW, COUNCIL ON FOREIGN RELATIONS AND AUTHOR, "REAGAN: HIS LIFE AND LEGEND": Great to be here, Jim.

SCIUTTO: First you just have a new essay out in foreign affairs titled "The Dilemma of Duty under Donald Trump," what his assault on the U.S.

military means for America. And I'm going to quote you here. You write, "It's easy to lose sight of how radical the MAGA military agenda is when

focusing on each action in isolation. Only by glancing at the entirety of what Trump and Hegseth have wrought can one see a far-reaching assault they

are mounting on the apolitical professionalism that has made the U.S. Armed Forces one of the most admired institutions in American society."

I wonder first if you see in Admiral Holsey's departure here perhaps someone who was not willing to abide by that new leadership and those new

rules as it were.

BOOT: Well, there is certainly some reporting, Jim, to suggest that Admiral Holsey had some concerns about the boat strikes that the Trump

administration has been undertaking in the Caribbean. And most legal scholars I talked to will tell you that those are unauthorized and

therefore illegal, that they're essentially extrajudicial killings because Congress has not authorized the use of lethal force. And this is contrary

to U.S. practice, U.S. law, and also international law. And so, it would make a lot of sense if the admiral who is in charge of that area may have

had concerns. Well, we just don't know.

It's also possible that he was fired for other reasons. One of the troubling things that's going on with the Trump administration is they keep

relieving a lot of senior commanders especially women and minorities. And they're not explaining why.

[18:35:00]

And of course, the president has the full authority to relieve any general officer. But you've never seen such a spate of firings of senior military

leaders for no stated reason. And that leads a lot of people to speculate that what President Trump and his secretary of defense, Pete Hegseth, are

doing is they're trying to create a more compliant officer corps to install leaders who will do what they say even when what they say is either unwise,

unethical, or illegal.

SCIUTTO: Yes. Listen, it's not an undue bit of speculation given that the Trump administration has quite openly applied that to other departments and

jobs including U.S. attorneys, right? Forcing them out if they don't listen to direction from the White House even when they don't believe that

direction is warranted. I wonder if to some degree the administration wants people like this to go of their own will if they're not forced out.

I mean, I remember when Hegseth was addressing the officers in Quantico and in that infamous speech, he said in effect, you know, if you're not on

board get out.

BOOT: Right. Which is certainly an option that all these officers have. I mean when you're at the four-star rank you can retire at any time, you'll

keep your pension and you can just leave. But it's a troubling precedent because essentially what seems to be happening is that Secretary Hegseth

seems to be trying to drive out strong independent leaders who will offer independent judgment and will not carry out orders that may violate the

law. That's my concern. And you're seeing a lot of that.

I mean, look at the deployments not just look at the boat strikes in the Caribbean but also look at the deployments of troops in U.S. cities. Court

after court has ruled that those deployments are illegal. Are generals objecting to that? Are we -- are they protesting behind closed doors and we

just don't know about it or are they just going along with it because they're afraid that if they say anything they're going to be fired? I mean,

this this to me is it's a very chilling thing that's going on that that's really challenging the apolitical professionalism of the U.S. officer

corps.

And remember, all these generals they don't swear a personal loyalty oath to President Trump or to Pete Hegseth, their oath is to protect and defend

the Constitution. And it would be a very chilling thing if I if an admiral or general decided the only way they could protect the Constitution would

be by resigning.

SCIUTTO: I wonder you spent a lot of time speaking to those in the military covering it writing about it. Do you believe that the military

today has the muscle and the numbers to push back against this pressure?

BOOT: That's a great question. I don't think we have any good answers to it, Jim, because I think the assault that we are seeing on the apolitical

professionalism of the military is unprecedented in modern U.S. history. And it certainly runs counter to centuries of tradition. And so, I you know

I don't think that the military is something going to turn into a mega militia. I think the vast majority of military personnel are firmly devoted

to the Constitution, firmly devoted to the ideals of service to the entire nation that they've been inculcated with since the start of their service.

But you know, there -- you get into a dangerous situation where the president and the secretary of defense seem to be installing people that

they think will be loyalist. Now, they could be wrong. I mean, remember in his first term, you know, Trump appointed General Mark Milley as chairman

the chief of staff. He thought Milley would be a loyalist. And then that didn't turn out to be the case. And then, he started denouncing Milley and

saying he ought to be executed for treason and so forth. So, you could see the same thing happening today.

But it's nevertheless sending a very disturbing message to the armed forces that they need to follow the president's political agenda instead of simply

defending and protecting the Constitution. And those two things are increasingly coming into conflict. And so, it'll be incredibly important to

see how senior officers resolve those disputes.

SCIUTTO: Well, it's certainly not an isolated phenomenon sadly. Max Booth, thanks so much for joining.

BOOT: Thank you.

SCIUTTO: Coming up, I sat down with Australia's top finance minister on the sidelines of the IMF meeting here. We'll share our conference

conversation right after the break.

(COMMERCIAL BREAK)

[18:40:00]

SCIUTTO: The IMF and the World Bank are holding their annual meetings here in Washington. Top of mind, President Trump's ongoing trade war. IMF Chief

Kristalina Georgieva walking the fine line of reassuring members while being clear-eyed about the challenges they are all facing.

(BEGIN VIDEO CLIP)

KRISTALINA GEORGIEVA, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Six months on, where do we stand? In a nutshell, better than feared, but worse

than needed. And uncertainty has continued to go up, up, up.

(END VIDEO CLIP)

SCIUTTO: It's a consistent message I've heard here. I sat down with Australian Treasurer Jim Chalmers earlier and asked him how the trade war

was affecting his country's economy.

(BEGIN VIDEOTAPE)

JIM CHALMERS, AUSTRALIAN TREASURER: Australia's interests are best served by more trade, not more trade barriers. And so, we've made that clear. We

see tariffs as ultimately self-defeating. And so, Australians are, by nature and by history, by inclination, very pro-trade. We've got a lot to

gain from free and open and fair markets for our goods and services.

We've done a lot of economic modelling following Liberation Day here in the U.S. on the effect on Australia. We've actually got the lowest tariff rate

of any country in the world, 10 percent in the general sphere. And our exposure to the American market is not the biggest part of our trade

offering. And so, we're faring relatively well, but our concerns are about the broader system.

SCIUTTO: Yes.

CHALMERS: And as a middle-sized, trade-exposed country, we want to see those markets free and open and fair as much as they can be.

SCIUTTO: Yes. You've said before just how the whole system effectively has been transformed in such a short period of time. What does that do to

Australia's relationship with the U.S.? You're close allies, both in terms of trade but also national security.

CHALMERS: Yes. Well, this is really the fourth big economic shock in the last decade and a half. And we've sort of become accustomed to going from

economic shock to economic shock in that period. And Australia has fared relatively well in the context of those economic shocks.

Now, when it comes to the relationship with the United States, this is a relationship of mutual benefit, mutual economic benefit, but in security

terms as well. We're very close with the Americans, and we work through the issues as they arise. Our prime minister will be here meeting with

President Trump next week in Washington, D.C. And we deal with all of the uncertainty in the world by working very closely with our partners, and

that will be the case with the U.S. as well.

SCIUTTO: Given that rare earths, and specifically China's restrictions on rare earths exports, have become a central front in the U.S.-China trade

war, is there a path forward for Australia to fill some of that gap, perhaps?

[18:45:00]

CHALMERS: Well, critical minerals are an enormous opportunity for Australia. We've got so much to offer the world when it comes to critical

minerals and rare earths. And that relies on there being markets which are reliable and robust for our critical minerals. And so, we will work with

our partners around the world, including here in the United States, to make sure that we maximize that opportunity for Australia, that we become a

reliable supplier of critical minerals into robust markets.

Now, I think anyone here would understand that the markets for critical minerals have, you know, from time to time been distorted, which is the

point that the Americans have made. And so, we will work closely with the Americans and with anyone who has an interest in our critical minerals, and

in, most of all, those markets for our critical minerals being the right kind of markets.

SCIUTTO: Australia's relationship with China has been through some tough periods, followed by brief periods of detente almost, and then followed by

more rough periods. Where does it stand today? And do you see a path forward, or is the new normal a less friendly trading relationship between

the two?

CHALMERS: Yes. Well, Australia's economic relationship with China is full of opportunity, but not short of complexity. It's a complex relationship.

And we're very proud to be able to say that over the course of the last three years or so in office, we have been able to stabilize the

relationship with China.

We've seen the removal of tens of billions of dollars' worth of trade restrictions, for example, and that's good for our workers and our

businesses and our investors back home. But we understand that that's a relationship that requires ongoing attention. There is a lot of complexity

in that relationship, but it's a very important one for Australia. It warrants and receives a lot of our time and attention for that reason.

SCIUTTO: Is it going to get better over time? I mean, this is a fundamental question for my own country as well, right? Can they reach some

sort of truce, or is confrontation the new normal?

CHALMERS: Well, clearly the relationship between the U.S. and China, the tensions have escalated this week because of developments in the trade

sphere. And so, the whole world is watching that very carefully, and obviously, Australia is very exposed to the Chinese market, very close to

the Americans. Obviously for us that's something we monitor very closely.

But our own relationship with China is better now than it was three years ago. There are still issues at play there. There are still areas that we

disagree. But overwhelmingly, the economic relationship is a positive one for us, and we'll continue to tend to it in that light.

SCIUTTO: On an issue that is, to some degree, both a trade and a national security issue, and that is the AUKUS agreement, as you know, the Trump

administration is reviewing that agreement. Do you believe it will survive?

CHALMERS: We haven't had any indications to the contrary, but we respect the process that the Americans are going through. It's not unusual for new

or new-ish administrations to review those kinds of arrangements. We saw it in the U.K. as well, and we're seeing it in the U.S. now. We're respectful

about that process. We're not preempting the outcomes of it. But what we are really confident about is we are really confident that the AUKUS

agreement is in the national interest of all three participants in the AUKUS arrangements. And for Australia, it's a very big industrial

opportunity as well, as it is for the other two countries.

And so, we'll wait and see what the review says. We're confident it's in everybody's interests. And from an Australian point of view, we're looking

forward to moving ahead.

SCIUTTO: It might be trade that wins the day, given that's central to so much of Donald Trump's decision-making. Finally, before we go, Australia

just announced a new tax agreement with Ukraine, part of the path, I imagine, going forward to help Ukraine to be able to recover economically

and to rebuild whenever this war, you know, hopefully comes to an end. What role does Australia hope to play?

CHALMERS: Well, I had another good conversation with my counterpart, Sergii Marchenko, Minister Marchenko from Ukraine, and I was able to convey

to him Australia's support for the extraordinary bravery and courage of the Ukrainian people in the face of this Russian aggression. But also, the tax

treaty, our efforts with the European Bank of Reconstruction and Development, we are ready and willing and able to play a helpful role in

the reconstruction of Ukraine whenever that is necessary. But for the time being, the war continues, and the Ukrainian people are under extraordinary

pressure.

And so, we are big supporters militarily, and with this tax treaty that we signed today, we're also big supporters economically of what needs to

happen in Ukraine to rebuild, to do justice to the sacrifices that the Ukrainian people have made.

SCIUTTO: Yes, no question. Continue to make. Jim Chalmers, thanks so much for joining us.

CHALMERS: Thanks so much.

SCIUTTO: Appreciate it.

(END VIDEOTAPE)

SCIUTTO: Coming up, the South Korean firms helping keep U.S. vessels ship- shape. We're going to tell you why they have become another flashpoint in the U.S.-China trade war.

(COMMERCIAL BREAK)

[18:50:00]

SCIUTTO: China is accusing Washington today of creating global panic over Beijing's new rare-earth trade restrictions. That after Beijing announced

sanctions against subsidiaries of South Korean shipbuilder Hanwha Ocean, alleging it is involved in a U.S. investigation. Hanwha is one of the South

Korean firms helping the U.S. play catch-up with China on the high seas, as Mike Valerio reports.

(BEGIN VIDEOTAPE)

MIKE VALERIO, CNN INTERNATIONAL CORRESPONDENT (voice-over): From the moment you step inside this cathedral of cranes, the planet's biggest

shipbuilding complex operated by HD Hyundai Heavy Industries in Ulsan, South Korea, and on nearby Geoje Island, a harbor where giants are born,

run by Hanwha Ocean, you get the feeling you're in a city of ships.

VALERIO: We're here at the world's largest shipyard, and it is wild. Colossal ships everywhere.

VALERIO (voice-over): This single site builds about ten times as many large commercial ocean vessels as the United States builds in a single

year.

And South Korea's president, Lee Jae Myung, says his country can help, quote, "make American shipbuilding great again." President Trump has taken

notice.

TRUMP: They build them very well in South Korea. They're also thinking about coming to our country with some shipyards to start us on the process

of building ships again.

VALERIO: What we're looking at right now are about 20 vessels that are under construction all at the same time. Hyundai tells us this year it's

expected to deliver 50 ships all from this colossal facility in Ulsan, South Korea.

VALERIO (voice-over): Why it matters, China now builds warships at a pace the U.S. cannot match. It has a navy that's larger, backed by a network of

sprawling shipyards. The U.S. has just four public shipyards left, down from 11 after World War II. Shipyards back in the U.S. are jammed. Too few

docks, too little capacity. So, now, the U.S. Navy is sending some of its ships here to South Korea for essential repairs.

VALERIO: What's the most difficult part of all of this?

JEON YU-SU, GENERAL MANAGER, HANWHA OCEAN: The propeller.

VALERIO: Propeller.

YU-SU: Propulsion system.

VALERIO (voice-over): This is the third navy cargo ship Han was repaired, the USNS Charles Drew. HD Hyundai just started work on another navy ship a

few weeks ago. Danny Buehler is the principal engineer on the Charles Drew.

DANNY BEELER, PRINCIPAL PORT ENGINEER, USNS CHARLES DREW: Me, as the person that's worried about all the maintenance on the ship and fixing

things, I can get a lot more done in a shorter time period in a shipyard like this as opposed to one back home.

VALERIO (voice-over): The before and after difference, rust to renewal. It's work to keep the U.S. fleet running overseas. Analysts say South

Korea's shipbuilders are known for finishing on time and on budget. One of their secrets, components from nearby supply chains.

[18:55:00]

LEE JIN, VICE PRESIDENT, HD HYUNDAI HEAVY INDUSTRIES: Here in Korea, we can get that in one day or one hour, next month, one week.

YU-SU (through translator): Hanwha Ocean also has a supply chain established within 50 kilometers of the shipyard, which enables us to get

necessary material or manpower from our established relations with companies to quickly repair a ship.

VALERIO (voice-over): A next step in the partnership could be South Korea building one of the world's largest shipyards, the Hanwha Ocean Shipyard.

It's a shipyard that's been in operation for over 50 years. Not just repairing U.S. Navy ships, but U.S. law would need to change. Foreign

companies are barred from constructing American warships. The Navy secretary says he is open to a change.

JOHN PHELAN, U.S. SECRETARY OF NAVY: In the short run, I have got to get holes in the water, and so that means all options are open. So, we have to

look at foreign and domestic.

VALERIO (voice-over): Hanwha already runs a shipyard in Philadelphia and wants to grow. Hyundai, too, is looking for a bigger U.S. foothold. The

question now, could parts of America's warships be built here in South Korea as the U.S. tries to revive a once-mighty shipbuilding industry with

South Korean help?

VALERIO (voice-over): What about construction of U.S. Navy ships? Is that the goal?

YU-SU: Yes.

VALERIO: Yes?

VALERIO (voice-over): Mike Valerio, CNN, Ulsan in Geoje, South Korea.

(END VIDEOTAPE)

SCIUTTO: That would be a big step. Thanks so much for joining us today. I'm Jim Sciutto at the IMF here in Washington. You've been watching "The

Brief." Please do stay with CNN.

(COMMERCIAL BREAK)

[19:00:00]

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