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Hala Gorani Tonight

Volodymyr Zelensky: Future Of European Security Being Decided Right Now; Biden Announces Nord Stream 2 Pipeline Sanctions; U.S. State Department Holds Briefing As U.S. Intel Warns Ukraine That A Full-Scale Russian Attack Is Imminent; U.S. State Department "Ready To Engage But Need A Partner" In Diplomacy; CNN On The Ground In Eastern Ukraine; Russia Faces Host Of Western Sanctions; Ukrainian Military Reports Cease-Fire Violations In Donbas; World Leaders Fear Sanctions Won't Deter Russia. Aired 2-3p ET

Aired February 23, 2022 - 14:00   ET



ANNOUNCER: This is CNN Breaking News.

ELENI GIOKOS, CNN INTERNATIONAL HOST: Hello, and welcome, I am Eleni Giokos in Dubai, I'm in for Hala Gorani. This hour, we're expecting the

U.S. State Department to hold a briefing on the crisis in Ukraine. We'll be watching for that when it happens. But we begin with breaking news. And

Ukraine is set to declare a state of emergency within hours as the United States issues a new warning, that a full scale Russian invasion is


Of course, we've heard similar warnings before, but the situation on the ground is different today. A senior U.S. defense official says Russian

forces amassed on Ukraine's border are as ready as they can be for an invasion, saying 80 percent are now in forward positions. And Latvia's

prime minister tells CNN, Russian troops have now moved into the Ukrainian regions that Moscow recognized as independents.

That matches reports from sources familiar with U.S. Intelligence. Ukrainian President Volodymyr Zelensky warns the future of European

security is being decided on right now, as he mobilizes some 200,000 reservists, key government websites were hit by cyber attacks today,

Ukraine's foreign minister told the United Nations that no country can set out this crisis.


DMYTRO KULEBA, FOREIGN MINISTER, UKRAINE: The beginning of a large scale war in Ukraine will be the end of the world order as we know it. If Russia

does not get a severe, swift, and decisive response now, this will mean a total bankruptcy of the international security system and international

institutions which are tasked with maintaining the global security order. This is a grave scenario which will throw us back to the darkest times of

the 20th century.


GIOKOS: Russia's U.N. ambassador followed that speech with some ominous words. So we've got Nick Paton Walsh in Odesa, Ukraine, for us as well as

Nic Robertson in Moscow. Nick in Ukraine, I'd like to start with you, and look, we've heard the imminent attack lines from the United States for

quite some time, in fact, since the beginning of the week.

But there's a new sense of urgency that we're hearing, and it seems that the Intel is showing really specific issues that could mean we're perhaps

what we hear in hours or even days away. What are you seeing on the ground?

NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: Yes, I mean, it's unfortunate that the U.S. used the word imminent quite so early on in this

crisis. But now, it seems as though that is matching up with what they say they are seeing on the ground, which is pretty much all of the forces that

they believe Vladimir Putin needs to have in place to do this are there. And 80 percent of those are in forward tactical positions.

That essentially suggests that according to another western official I spoke to, they may have a matter of days in which they have to either get

on with this or start thinking about pulling back. You can't have these troops sort of essentially sat in their vehicles a matter of kilometers

from the border that long. Added to this as well, the increasingly, I think at times a hostile, worrying rhetoric we've heard from Vladimir Putin over

the last 48 to 72 hours.

Dressing down as unofficial, an hour-long speech about how Ukraine didn't really have the right to exist and was essentially a NATO platform to

attack Russia. Then these odd comments about Ukraine trying to get nuclear weapons and then the strange comments today on the defender of the

motherland day in Russia that Russia has pretty much the best weapons around that are unparalleled. That all speaks to a man heading in a

specific direction.

The diplomatic paths are, it's fair to say, pretty much frozen at this point, because as you heard from Dmytro Kuleba there in the U.N., he is

appealing for a diplomatic path, but there isn't really one readily available. U.S. Secretary of State Antony Blinken --

GIOKOS: Yes --

WALSH: And Sergey Lavrov are not meeting tomorrow. And so, it is a dark moment where essentially, it seems the clock is ticking down on when Russia

can act, and this rhetoric suggests that it will.

GIOKOS: OK, Nic in Moscow, jump in here for me, and I want to cast our minds back, and of course, we mustn't forget that Russia was saying that

the world was inflating the military build-up, that over that time, they were just doing, you know, normal exercises.


And then, we fast-forward to where we are today, and you heard the Russian ambassador to the U.N. saying that they can't just sit back and be

indifferent to what they call Ukraine attacking the Donbas region. And you've seen -- when you take a stand back and you look at the messaging,

you realize that this was tactical. This was premeditated, and this was absolutely strategic. But I guess, the question now is, what is going to be

the next move?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: I think when you step back, you also see that President Putin thought that he was going to get

something. That he thought he was going to get something from NATO that he could at least take as some sort of semi victory out of all of this. He had

a phone call today with President Erdogan in Turkey, most recent world leader to speak with President Erdogan -- to speak with President Putin.

The take-away from Erdogan was that Putin was disappointed that his security concerns have been rejected. The tone I think that we heard at the

U.N. Security Council today from the U.S. ambassador there was particularly -- you know, it really gave you the feel that this -- that these people,

these ambassadors at the U.N. really get a sense that things are coming down to the wire. It was a very impassioned speech.

Ambassador Greenfield has given some impassioned speeches at the U.N. over recent weeks, but this really stood out, and she was telling everyone that

this is now the moment to stand up and take action and call Russia to account. Not to equivocate, but to take a position, and take a position

such that Russia understood its responsibility -- its global responsibility. That was very impassioned. But we also learned something

listening to the Russian ambassador today.

Those -- that the decrees that President Putin signed a couple of days ago recognizing those separatist regions, and at the same time making way for

Russian peacekeepers as they were called to go into those separatist areas. Those -- he then followed it up yesterday by getting the legal authority,

you know, dotting the "i"s, crossing the "t"s as President Putin likes to do to allow Russian forces to go into that area.

But what we heard from the Russian ambassador today told us something else about those forces. It told us very much the intent that they're going in

there with. He described them as ceasefire monitors. But that they weren't going in softly-softly. Listen to his words.


VASILY NEBENZYA, RUSSIAN AMBASSADOR TO THE U.N. (through translator): We warned you that since upon the request of Donetsk and Luhansk, the

ceasefire will be monitored by the Russian armed forces, no one intends to go softly-softly with any violators. Therefore, we urge you to take focused

effort on reigning in Kyiv and deterring it from conducting a new military adventure that might cost the whole of Ukraine very dearly.


ROBERTSON: That language, we warned you, and ceasefire monitors and all other context that I think the world, in particular, the U.N. is aware of

because often they are ceasefire monitors, is to sit there and count the shells that fly one way and fly the other and try to figure out who fired

them and at what time, and then appeal to both sides for calm. The Russian ambassador implying that they're going in to shoot back. They're not going

in softly-softly.

This speaks to Russian forces going in to those areas that will lead to an escalation in the violence, not a diminution, which is what you would

expect ceasefire monitors to try to achieve elsewhere.

GIOKOS: All right. Thank you very much, Nic Robertson in Moscow and Nick Paton Walsh in Ukraine for us. And we've just heard some breaking news as

well that President Joe Biden has announced new sanctions against Nord Stream 2, that is the gas pipeline that is set to go to Germany, and they

have just confirmed those sanctions will be implemented against Russia. Just one of many sanctions.

One of many packages that have been in place not only from the West, but you're also seeing other countries around the world following a similar

route, and hope to squeeze out President Putin's intentions to further invade Ukraine. Of course, the big word is that an invasion, a full-out

invasion is imminent. Now, months and months of diplomacy failed to stop what's happening on the ground today.

But the West isn't ready to give up on it just yet. Let's bring in Philippe Etienne; the French Ambassador to the United States. Ambassador, thank you

very much for your time, and really good to see you. I want to go back to the start of the week where there was a window of hope of a diplomatic

solution. It was brokered by President Macron in the hope that you'd get Putin and President Biden speaking. I guess the question is here, are those

hopes completely dashed at this point?


PHILIPPE ETIENNE, FRENCH AMBASSADOR TO THE U.S.: Thank you for your invitation. Indeed, our president together with the American president and

other leaders, other allied leaders have deployed a lot of efforts, and entered a dialogue -- a substantial dialogue with Russia and with the

Russian president on the substantial issue --

GIOKOS: All right, ambassador, I apologize, I have to interject. We have to go to the State Department -- I apologize, ambassador, we're going to

continue with you later. A State Department spokesman here.

NED PRICE, SPOKESPERSON, U.S. STATE DEPARTMENT: Within less than a day, we had announced the first trench of sanctions with our allies and partners

including those in the European Union, United Kingdom, Canada, Japan, and Australia. Our German allies yesterday took resolute action to ensure that

the Nord Stream 2 Pipeline, what had been a prized $11 billion investment on the part of the Russian federation, is suspended indefinitely.

And as you have just seen, President Biden today authorized sanctions on Nord Stream 2 AG, and its corporate office holders. We have now taken

complementary action using our own authorities to ensure that Nord Stream 2 is off the table just as we said it would be. In lockstep with our allies,

we are blocking from the global financial system two large banks that are connected to the Kremlin and Russian military and Russian sovereign wealth

can no longer trade on U.S. or European financial markets.

As you all know, we additionally sanctioned Russian elites. Those elites who are in many ways, complicit. This is the beginning of our response. If

Putin escalates further, we will escalate further, using additional sanctions and export controls which we've yet to unveil, but are fully

prepared to implement with allies and partners across the globe. The sequence of events that Secretary Blinken laid out at the U.N. Security

Council last week appears to be proceeding exactly as he laid out.

We've seen false flags. We've seen provocations. We've seen theatrically- staged meetings at the Kremlin. We've seen cyber operations, and the list goes on. So where do we go from here? Moscow needs to demonstrate that it's

serious about diplomacy. Russia's actions over the last 48 hours have, in fact, demonstrated the opposite. If Moscow's approach changes, we remain

ready to engage. The United States and our allies and partners remain open to diplomacy.

We are eager to engage, to avert what would be a brutal and costly conflict, but as we have said, diplomacy cannot succeed unless Russia

changes course. As we have said, we are prepared. We are prepared for any contingency going forward. Matt?

UNIDENTIFIED MALE: Thanks. I have a question about the Houthi sanctions, but it's largely semantics, so I'll leave it until later. On Nord Stream 2,

you guys have been saying for months, indeed, for over a year since the waivers were first granted, that, in fact, this gave you additional

leverage withholding those sanctions did.

And would serve as a deterrent. Clearly, that didn't -- they didn't provide you with any leverage at all that we can tell, because of what you just

said in your opening statement about the invasion beginning. So, you know, how do you explain to people why you didn't impose these sanctions earlier?

PRICE: So Matt, it's important and let's just rewind the tape and remember what has happened in recent hours. Yesterday, within a short time frame of

the Russian invasion beginning, Germany took decisive, resolute action to take Nord Stream 2 off the table. Today, we followed with our own

complementary authorities, using the powers and capabilities that we have. We have always said in the context of Nord Stream 2 and the context of the

steps that we are taking with partners and allies around the world, that one of the most important tools we have in our arsenal is Trans-Atlantic


The fact that Germany acted so quickly, so decisively is in many ways a product of the coordination of the consultation. We have done now with two

successive German governments. Of course, it started with Chancellor Merkel and her government, and in more recent months, we have had concerted

discussions with Chancellor Scholz in his government. The fact that we are acting in unison immediately to take these steps that essentially remove

Nord Stream 2 from the equation, that is a by-product.


That is a result of the work that we have done together with the German government over the course of these last several months, over the course of

the last year or so.

UNIDENTIFIED MALE: So, it sounds to me, correct me if I'm wrong, that your argument -- that your argument is that if you had imposed the sanctions

earlier, the Germans wouldn't have suspended -- done what -- the Germans wouldn't have done what they did yesterday, or it would have been a much

bigger lift to get them to -- to get them to do that.

PRICE: What we have said -- and what our strategy has been predicated on the knowledge that Trans-Atlantic unity is the most powerful instrument we


UNIDENTIFIED MALE: That's fine, I don't -- but the pipeline has already been built, OK? Now, whether it gets turned on or not is another --

PRICE: Well --


PRICE: Right, so you --

UNIDENTIFIED MALE: But presumably, you had more leverage, and I don't understand why you don't think that you would have had more leverage if it

hadn't been -- if the sanctions had been imposed before the pipeline was finished.

PRICE: So Matt, you also raise a good point. The pipeline, when this administration came into office, was more than 90 percent complete. We have

imposed sanctions under PISA(ph) on a number of targets associated with this pipeline, persons and entities. But the fact is that, had we

sanctioned Nord Stream 2 AG, had we sanctioned its corporate office holders, it is far from clear that, that would have kept the pipeline from

going into operation.

What the Germans did yesterday was to ensure that the pipeline is no longer part of the equation.


PRICE: So, by acting together with the Germans, how we did, when we did, and the way in which we did, we have ensured that this is an $11 billion

prize investment, that is now a hunk of steel, sitting at the bottom of the sea.

UNIDENTIFIED MALE: All right, well, I don't think you, though, can prove - - and the converse --

GIOKOS: OK, well, that was Ned Price. He is the spokesman of the State Department, and reiterating that they stand behind Germany in halting Nord

Stream 2 as part of the sanctions that will then complement the sanctions against financial institutions. Against some of the elite in Russia which

he says are complicit to what we're seeing coming through from the decisions that President Vladimir Putin is making.

The question is, is it going to be enough? I'm going to go back to our guest. We've got Ambassador Etienne -- Philippe Etienne standing by for us.

Ambassador, you just heard Ned Price there saying that they're going to stand behind Germany and Europeans regarding Nord Stream 2. And of course,

this is all in an effort to try and put pressure on President Vladimir Putin. I know that France has reiterated that should gas supplies or energy

supplies be halted, that would be coming from Russia into France, that you will still be OK.

But are you behind the halting of Nord Stream 2 as France, and also the fact that Russia is such an important energy supplier to the entire

European region. This, of course, is going to create such a huge supply constraint. And I know, countries are scrambling to find solutions, but

this is going to be a very harsh reality for the next few months.

ETIENNE: Well, thank you. Of course, we support the German decision. And it's part of the reaction of collective reaction to the decisions taken by

the president of Russia last Monday. The European Union as such, and France, you know, halts right now the presidency of the Council of the EU,

has in a record delayed 24 hours, actually, taken a range of sanctions including against financing institutions in Russia and against the

financing possibility for the Russian state and government.

Those sanctions which include now the decision by Germany on Nord Stream 2 have been closely coordinated with the United States. And on the energy

supply, of course, we had a EU-U.S. Energy Council recently in Washington here two weeks ago. We will coordinate. We will continue to coordinate. We

have been coordinating with the U.S. and other partners for weeks. A true meeting --

GIOKOS: Yes --

ETIENNE: It's the effects of the situation on our own people, on our own economies.

GIOKOS: Ambassador, we know that the meeting between Antony Blinken and Lavrov has been cancelled. The meeting between your foreign minister and

Lavrov also cancelled. And before we went to the press briefing, we were talking about whether there's still a diplomatic solution. And this is

such a critical point. Is this the right time to stop talking?

ETIENNE: We have really made a lot of efforts to talk and to -- not only for the sake of talking, but to engage in a substantial dialogue on

European security.


On finding ways to provide all European countries with security guarantees that we all need. But to negotiate, you must be true partners, and the

decision taken by Russia on Monday has led to a firm reaction on our side. It doesn't mean that we don't want anymore to -- we refuse a dialogue. We

have even made substantial proposals, and as Ned Price has recalled, we remain open to this dialogue, but the situation which has been created has

not been created by us.

GIOKOS: OK, but what is it going to take to get back to the talking and to the negotiating table? Because there's a small window of opportunity, and

if we're talking about an imminent threat, we're talking about a dangerous point in time which has been reiterated by the NATO chief, and we've heard

from the U.S. ambassador to the U.N. as well of the warning signs. Now is the time for aversion as opposed to standing by and waiting for Vladimir

Putin to knock on your door. Is that what you're waiting for?

ETIENNE: No, we first -- I have to handle the priority. What is a priority? The priority was first to answer firmly to the decisions taken by

Russia, and we have been doing this very quickly, and we have been doing this in a unity. We have reaffirmed our unity, our solidarity, including

with Ukraine. This was the priority. Now, of course, we want to deter to prevent any other further aggression. And this is the reason why we also

have announced we would be ready to take another package of massive sanctions.

But of course, everybody knows we are ready also for the dialogue, and I repeat for a substantial dialogue. We have been doing that. We have made a

lot of proposals.

GIOKOS: All right, ambassador, thank you very much for your time, really good to have you on the show. I'm going to head back to the State

Department where spokesman Ned Price is still briefing media. Let's take a listen.

UNIDENTIFIED FEMALE: So, how can you then justify discussions about diplomacy when this is underway? I mean, you keep on saying that the

Russians have to show that they're serious. They have to de-escalate. But could they pause things right now and possibly engage in talks with the

U.S. or do significant sort of scale-back have to happen? Do we have to see troops pulling back before that's discussed. Is Donbas being regarded

differently from the rest of the country.

PRICE: So, you heard from our colleagues at the White House and others here over the course of the day yesterday including the secretary, that the

invasion is beginning. And when we spoke about the beginning of the invasion, we talked about several developments over the course of that 24-

hour period. Vladimir Putin's recognition of the so-called DNR and LNR. The order that he conveyed to the Ministry of Defense to deploy forces into the


The authorization that he sought to send Russian service members in to service extra-territorially. The rhetorical assault essentially that we saw

President Putin deliver against Ukraine, denying Ukraine its sovereignty and essentially its right to exist. Those are what we've seen. Those are

what we've heard, but as I just mentioned, there are some things, many things, in fact, that Russia is poised to do at a moment's notice that we

have not yet seen.

A large scale invasion, an assault on urban centers. The human rights abuses, the potential war crimes, the atrocities that we have great concern

could take place. These are all things that we want to prevent. So, you asked the question, why would we engage in diplomacy? Well, we're going to

engage in diplomacy to save lives. We would engage in diplomacy to prevent an all-out war. This is a war that would be brutal. It would be costly.

It would be in many ways, devastating for the Russian federation, of course, for the Ukrainian people. And the way in which the Russian

federation would wage this war -- you heard from the national security adviser, it would not be a type of conflict that you might imagine over

territory or over concrete ends.


You heard the National Security adviser make the case that, this would be a war waged against the Ukrainian people to subjugate them, to crush them, to

exact in many ways, revenge. This is what we want to prevent. So we are ready to engage, but we need a partner. We need a negotiating counterpart

that demonstrates seriousness of purpose. We have not seen that from the Russian federation. In fact, we have seen the opposite at every turn.


UNIDENTIFIED FEMALE: Do we have diplomats right now in Lviv? Or are they spending the night and following and going back and forth? Have we made any

kind of commitment to the safe passage to any kind of extraction, if you will, for key members of the Zelensky government if necessary? And what

would be your commitment to any insurgency that developed, given if it were a full scale invasion, if any? I mean, there was training, there was

support. And one final question.

PRICE: I should write these down.

UNIDENTIFIED FEMALE: Sorry. Your reaction to former Secretary of State Pompeo and former President Trump praising Putin's cleverness, strength,

and smartness in over the last --

PRICE: I'll start with that one. I have no response. In fact, I have no words. To move on to Lviv, I think what you heard from us on Sunday is that

the secretary had determined that it was in the best interest and the best interest of the safety and security of our team on the ground for them to

temporarily relocate into Poland. They have been spending the night in Poland, but they have been regularly, essentially commuting back into Lviv.

Our charge, Kristina Kvien has been leading the team back on the ground in Lviv. We have every expectation that they will continue to do so as long as

the security environment remains permissive. When they are on the ground in Lviv, they're able to undertake emergency consular services to help

Americans who may be seeking to leave the country. They are engaging with our Ukrainian partners, and they have important missions that they're able

to fulfill in Lviv.

But regardless of whether they're in Lviv, whether they are in Poland, that in no way changes the commitment we have to our Ukrainian partners, in no

way diminishes the partnership we have with Kyiv. We've remained in constant contact with our partners in the Ukrainian government. And that

takes me to your question about any advice we may have passed on to the Zelensky government. The fact is that we are in contact with our friends

and counterparts in Kyiv on a daily basis.

So, as you know, Foreign Minister Kuleba was here yesterday, the president had an opportunity to speak to President Zelensky over the weekend. The

secretary was in the Oval Office for that call. The president, President Zelensky and his team know that they have the steadfast and unwavering

support of the United States. Of course, our goal in all of this is to avert that worst case scenario, the worst case scenario that we've already

talked about in the course of this briefing.

The fact is that the president and his team will make decisions in the coming days best -- based on the best interests of their country and their

people. The foreign minister was asked a question about this just yesterday, he provided an insight into their thinking, but these will be

decisions that our Ukrainian counterparts will make based on their own determinations and their own calculus. In terms of our -- let me put it

this way.

In terms of our continued assistance to our Ukrainian partners, the president has made very clear that in the event of a Russian invasion,

which as we have said is beginning, we will not only continue our defensive security assistance to our Ukrainian partners, but we will double down on


So, on top of the unprecedented level of defensive security assistance that we provided to our Ukrainian partners over the last year, $650 million

including a $200 million draw-down that the president signed in December, deliveries of which continue to flow into Kyiv, flow into Ukraine, I should


We will continue, not only continue to provide that support, but we will look to further that defensive security assistance for our Ukrainian

partners. Kylie(ph)?


GIOKOS: OK. That was Ned Price, spokesman from the State Department, and really talking about the sanctions and how they have more in store for

Russia, should there be further escalation.

Importantly, he also said that Moscow needs to demonstrate that they are serious about diplomacy and open to diplomacy. And that's going to be

really vital in determining what happens in the next few days.

We've got to keep in mind that the U.S.' latest intel shows that an imminent invasion is about to occur and, of course, there's the Russian

position on the military side at the Ukrainian border that's showing that they might be invading in the next few hours.

He also mentioned that they continue to support Kyiv and remain in constant contact. We have Stephen Collinson following developments for us in


Stephen, things have changed dramatically since we spoke on Monday, where we heard there was an imminent invasion. That was the messaging from the

United States. There's a new sense of urgency. There's new intel.

What does that intel tell us?

And what more did we learn now from Ned Price about the U.S.' position and what Russia is about to do?

STEPHEN COLLINSON, CNN WHITE HOUSE CORRESPONDENT: Well, the U.S. has been saying for several weeks that an invasion was imminent. And they had

actually stopped using that word when an invasion didn't occur.

The fact that they're now going ahead and saying it leads us to believe they think in the next hours or days Russia has taken steps to upgrade the

readiness of its forces that it would need to carry out an invasion. So that's a worrying sign.

In terms of Ned Price, you heard him say that the U.S. was always willing to engage in diplomacy to save lives. The problem here is that this is an

escalating crisis with no diplomatic off-ramp. He is saying the Russians need to be serious about talking.

Everything that President Putin has done in the last three days, escalating the situation, suggests he's not serious about talking.

His speech the other day, the move into those two separatist enclaves in Eastern Ukraine, getting authorization to operate his troops on a wider

field outside Russia, this isn't the action of someone that's looking for diplomacy.

Indeed, Russia had the chance to have an in-principle agreement for a summit between President Putin and President Biden. And talks were supposed

to take place tomorrow between foreign minister Lavrov and the secretary of state in Europe. So they can talk about diplomacy. There is no diplomatic

track here.

And that seems to be -- that seems to be behind a lot of this U.S. assessment.

GIOKOS: Yes. I mean, what I find really interesting is they say Moscow needs to demonstrate that they're serious about diplomacy. I think a lot of

analysts are saying they don't see President Putin knocking on Biden's door to talk further.

I mean, he has set out what he wants and so, too, has the West.

And I guess the question is, is there any common ground at this point?

COLLINSON: Well, I mean, this would be, in terms, from the point of view of the United States, Europe and Ukraine, you've been negotiating with a

gun against your head. President Putin is holding Ukraine hostage.

What President Putin wants is a rollback of NATO forces to a position where they were shortly after the Cold War, getting troops and weapons out of

Eastern European signatories to NATO, places like Hungary, Romania, the Baltic states. That is not negotiable as far as the United States.

Even if there were talks, these talks are unlikely at this point to make any progress on the core issues. You could have talks about talks, to try

and stop a military incursion. But whatever Russia is doing seems to make that very unlikely to succeed.

GIOKOS: All right. Stephen, thank you very much for that insight. Great to see you.

All right. We're going to a short break. Stay with CNN.





GIOKOS: Russian president Vladimir Putin says his country's recognition of Donetsk and Luhansk regions includes not only separatist controlled areas

but the entire provinces. About two-thirds of those provinces are still under Ukrainian government control.

But as Alex Marquardt shows us, even for those who live near the dividing line, the conflict has already come home.


ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: The situation here in Eastern Ukraine, right near the line of contact, which is just over

a mile that way, just under two kilometers, has been fragile at best and it is deteriorating significantly in just the past few moments.

We've been able to hear rounds of artillery fire not too far away. You can see the damage that some of that artillery has done to this tiny village.

You can see how random it is, hitting something like this farmhouse; the roof falling in; this door, which is metal, shredded by shrapnel.

There's a field just behind here, which is covered in craters. We're told that 16 shells fell on a very small field over the course of just two days

last week.

Now one of the residents who we spoke with, who has a son in one of the separatist-held areas and family in Russia, says he doesn't believe that a

war is going to start. He says he's not going to leave, that the violence we're seeing is just a provocation.

But there is a real fear among NATO members that, soon, Russian troops could be right here. President Putin recognizing not just those two

breakaway Russian-backed enclaves but the provinces, these areas that they are in, which, for now, are still controlled by Ukraine -- Alex Marquardt,

CNN, in Eastern Ukraine near the line of contact.


GIOKOS: The West is reacting to Russia's military and political moves in Ukraine by slapping economic sanctions on some of the country's most

prominent financial and energy institutions and wealthy individuals.

The latest is U.S. President's Joe Biden announcing sanctions on the border of the controversial Nord Stream 2 natural gas pipeline. The idea is to

inflict economic pain on some of the backbones of the Russian economy and some individuals very close to Vladimir Putin.


DALEEP SINGH, U.S. DEPUTY NATIONAL SECURITY ADVISOR: Look at the baseline conditions in Russia. Inflation is already 8.7 percent.


SINGH: Government borrowing rates are above 10 percent. The ruble, the Russian ruble, is the worst-performing among any emerging market

currencies. As we implement sanctions and export controls, Russia will take a major hit.

It will go through a negative feedback loop, where inflation spikes, interest rates rise, economic growth slows and their ability to diversify

and modernize their economy gets shut down.


GIOKOS: Russia is already feeling the pinch, its largest exchange markets dropped more than 10 percent on Monday and is down some 20 percent this

year. Analysts also say Russia is in a far better place to absorb the hit than in the past.

The finance ministry says there are some $56 billion in cash reserves. Anna Stewart has been taking a close look at the sanctions.

And look, there's one thing we're discounting here. You still have a big foreign exchange revenue coming through from the sale of oil and gas.

I guess the question is, are these sanctions going to keep Vladimir Putin up at night, given that he's got a buffer in place?

ANNA STEWART, CNN CORRESPONDENT: I suspect not. I think what's really interesting, having that economic picture painted by the deputy national

security adviser -- and you can add to it.

Look at the financial market reaction just in the last few days, $40 billion wiped off the Russian stock market and that is just this week.

Extraordinary reaction there.

But how will these sanctions that have already been announced impact Russia's economy and how long will it take?

I feel like some of the impact, he was saying there, could take a long time.

What's the point of the sanctions?

Is it to punish Russia longer term or to try to stop further escalation?

Is it a deterrent?

And given this is the first tranche, we're told this is the first salvo, I would expect it really to be more about deterrence.

It's interesting when you do look at Russia's finances, particularly if you compare it to 2014, when we had the illegal annexation of Crimea. That's

when Russia got a flavor for sanctions.

And it was incredibly damaging. Ever since then they've been bolstering their finances; their debt is so much lower, the public debt. Their foreign

reserves are much bigger. And they are able to stomach, I think, many of these sanctions, at least in the initial round.

And the Russian government wants you to know that, today, the Russian finance ministry told us the reserves are more than double of the planned

net borrowing for this year, which is $27 billion. So I think it will take more.

We've already, recently in the last few hours, heard an additional element to the sanctions as you mentioned. Joe Biden has decided that he will

sanction Nord Stream AG. That's the Swiss company that built the pipeline, the parent company is gazprom.

So while Germany used what I think was its biggest stick really, which was to suspend the certification of that pipeline process, by sanctioning the

company, that really puts a more final end to it, I think. So that could be damaging for Russia. I don't think any of these things at this stage will

keep Putin up at night. But this is the first round.

GIOKOS: Absolutely. And, you know, we also know, history tells us, sanctions don't always work and there are a lot of loopholes. So I think

this is going to be an interesting one to see how it plays out. Thank you very much. Great to see you.

Now the U.S., Canada and Europe aren't the only places imposing sanctions on Russia. Japan's prime minister says his country will freeze the assets

of those involved in recognizing the independence of the breakaway regions in Ukraine.

He also says Japan will ban imports and exports to and from those areas as well as circulation of Russian bonds.

Australia is making similar moves. Prime minister Scott Morrison says Australia will impose sanctions on eight members of Russia's Security

Council as well as several Russian banks.

We'll be right back after this short break. Stay with us.





GIOKOS: All right. Ukraine accuses Russia of provoking violence and using it as an excuse to recognize rebel-held areas as independent. CNN's Sam

Kiley is in the Donbas region. He's going to show us what families there are having to deal with.


SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: About 500 meters in that direction is the front line, effectively. On the other side of that,

in the other part of the Donetsk oblast, are the Russian-backed separatists, possibly now supported with formerly recognized Russian


But in the last 48 hours, this town has been the scene of intense shelling. It has been the scene of at least one killing, a chap called Roman, who was

killed about 100 meters in that direction during a volley of fire that resulted here, the damage you can see, to a family's home.

Now this is a family and there -- I don't know if you can hear it but there was another shell landing in the distance there. It has been a steady

drumbeat, a kind of relentless thunder all day of shelling.

This one happened 48 hours ago. Mercifully, nobody was actually killed, which is, frankly, a miracle. Irayna (ph) and her daughter, Veronika (ph),

were actually hiding in here, in the kitchen. It's an outside kitchen. You can see the shrapnel blows -- strikes, rather -- that have torn into the

building. Didn't go through the walls.

Now take a look at what the sort of damage you can get when a single artillery shell hits a civilian home. That effectively is the exit wound.

That is the consequence. And there was another shell I just heard landing. These shells that are landing, they're not near us, they're about a half a

mile away.

This is a shell that has blown out the far side, that is the exit wound to a home. But when you see what high explosives can do when fired into a

civilian environment, it is quite terrifying.

Now earlier on, we were advised not to go upstairs but I think, having checked it out, I'm going to take the risk because it really is worth

showing just how horrific the results of a single shell can be.

These were stud walls; all gone. The structure is very wobbly. There is a limited amount of masonry holding this place together; the family study and

this is the bedroom of a 9-year-old. This is the bedroom of Veronika (ph). Luckily she was in the kitchen, lying on the floor, when these shells


But it could have been so much worse. Truly, almost a miraculous survival. All of the everyday manifestations of a young child's life being torn to

pieces, utterly shredded. It is absolutely extraordinary that this could have been done by a single artillery shell.

There were four that landed in this town; part of an exchange of fire, some locals have said; others are claiming that it is just the worst level of

shelling that they have seen in many years.


KILEY: Not since 2014, which is when this war was started.

And, indeed, this town actually fell then to the Russian-backed rebels. And the Russian-backed rebels are saying, with Putin's agreement, that this

territory is part of the land that they claim. They're not yet on it.

This territory where I'm standing is still controlled by the government, by government forces. They're here on the ground, many of them in a fairly

covert environment, apart from those that are holding those already established front lines.


GIOKOS: Sam Kiley there. It's chilling to see that report and the human cost, the potential human cost, in the coming days.

All right. Still to come tonight, stark warnings but Russia's aggression isn't just a threat to Ukraine or even to Europe but to the whole world.

That's next. Stay with us.




GIOKOS: We're seeing a swift and unified condemnation of Russian aggression from the U.S., NATO and European nations. They're responding in

part with aggressive sanctions against Moscow but there are fears those sanctions alone won't be enough to deter Vladimir Putin.

Poland and Lithuania's leaders spoke with the Ukrainian president today. And they are warning the world that the threat from Russia won't stop with



ANDRZEJ DUDA, POLISH PRESIDENT (through translator): And we have to say a clear stop to neoimperial policy of Russia. The struggle is not just for

the sovereignty of Ukraine but about the future of the whole structure of safety and security in the world.


GIOKOS: We have Scott McLean joining us live from Paris.

Scott, there isn't one person that I've spoken to that is really afraid that isn't afraid of what the future might look like, especially when you

speak to people in various parts of Europe.

And when you hear these calls from presidents, from the U.S. ambassador to the U.N., saying this nostalgia for a former empire, listening to Vladimir

Putin and how he's talking about history in a very nostalgic manner, gives you a sense of where we could be heading.


GIOKOS: The question comes, are sanctions enough to deter a mind like Vladimir Putin against clearly what he's decided as his next move, to take

back what he says belongs to him?

SCOTT MCLEAN, CNN CORRESPONDENT: Yes. And look, if you listen to Vladimir Putin's words, it doesn't seem like he's scared at this point. But it was

only today that the European Union actually formally adopted the package of sanctions they approved yesterday.

We don't even have the detailed list of exactly who is going to be sanctioned but we have some. According to an E.U. diplomat, we know the

Russian defense minister is included in the individuals and also a group called the Internet Research Agency, which the U.S. describes as a Russian

troll farm, which had already previously been sanctioned after accusations of U.S. election interference.

It also seems that Russia has been in some ways preparing for this. We know that the U.S., the U.K. and the E.U. have all cut Russia off from its

ability to access their markets to service its debt.

But the Russian central bank has set aside $56 billion, the equivalent of $56 billion, it seems, for a scenario just like this.

So the question is, has Europe gone far enough with its sanctions?

We know the Lithuanian foreign minister was questioning whether these sanctions, as they stand right now, will have really much of any impact at

all. And there are similar questions here in France as well.

GIOKOS: All right. Scott. Very quickly, Macron wanted to broker a conversation between Biden and Putin. That's not over.

Do you get a sense there might be a chance for diplomacy?

MCLEAN: So Macron's critics will say the French president was naive in thinking he could have brokered a peace agreement between the Russians and

Ukrainians. There were interesting comments he made to reporters, when he returned on the flight from the last meeting back from Moscow with Putin.

He said he'd changed since the last time he had seen him two years ago. He said specifically that he seemed stiffer and more isolated, more

ideological and security minded and perhaps that explains Putin's current posture right now.

Things obviously are not looking good. The latest forecast from Macron's office is that it is likely that this conflict will continue to escalate in

the days and weeks ahead.

GIOKOS: Yes. Not a very good outlook. But Scott, really good to see you.

Thank you for joining us and thank you for watching tonight. You can stay with CNN. "QUEST MEANS BUSINESS" is next. From me, Eleni Giokos, take care.