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@THISHOUR WITH BERMAN AND MICHAELA

Russia Says Will "Storm Crimea"; Biden, Medvedev Talk on Phone; Ukraine Situation Affects Stock Market; McCain Blasts Obama's Foreign Affairs.

Aired March 3, 2014 - 11:30   ET

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


(COMMERCIAL BREAK)

JOHN BERMAN, CNN ANCHOR: We are covering the crisis in Ukraine. There appears to be an ultimatum from the Russians to Ukrainian troops still stationed in Crimea. The Russians are telling Ukrainian troops to leave their bases, leave their posts by 5:00 a.m. tomorrow morning, else the Russians will take them by force. They will storm them. That appears to be the word from Russia.

I want to go to Moscow right now. Our Phil Black who is there.

Phil, what can you tell us about this?

PHIL BLACK, CNN CORRESPONDENT: John, this is coming from a Russian news agency, citing sources within the Ukrainian ministry of defense. That is kind of a crucial point. The extraordinary thing in Moscow is, although it is waging military action in a sovereign country, the Russian government and officials, they are not giving any sort of ongoing public commentary just yet about their actions, have still not officially recognized these are Russian soldiers on the ground in Ukraine.

But now we have this report from a Russian news agency from the Ukrainian defense ministry saying an ultimatum has been given, 5:00 a.m. local time tomorrow. Otherwise, a storm will be brought down upon Ukrainian forces.

Our CNN colleagues have spoken to the Ukrainian defense ministry. They say they have been receiving lots of ultimatums from Russian forces on the ground. Some of them had gone and past without effect. They believe it is a tactic that is being used by those Russian forces to apply psychological pressure to the remaining Ukrainian forces to try to get them to give up, drop their weapons and ensure that there is undisputed control by those Russian forces on the Crimea -- John?

BERMAN: So many are talking about Vladimir Putin, the Russian president, what is he after, what are his motives. We were just talking to Christiane Amanpour moments ago and she points out, no one has heard him say anything about this out loud for days. What is the situation right now with him?

(CROSSTALK)

BLACK: This is the extraordinary situation I was touching on. There is very little public comment from the very top. We're getting the odd version from the Kremlin of President Putin's conversations with world leaders, like Barack Obama, the German Chancellor Angela Merkel, and so forth. Other than that, we have not heard from President Putin clearly outlining precisely what his intentions are in carry willing out this action, even as I say, acknowledging the bear minimum, that these are, in fact, Russian forces on the ground in Crimea. Common sense certainly suggests that. There would seem to be very little doubt about that whatsoever now. We only know from these leaked lines here and there.

At the moment, it would seem to indicate that the Kremlin, President Putin's intentions are still pretty open. It would seem they are certainly holding on to Crimea. Very little chance of them giving it out to the central authorities in Kiev. Now, this very open-ended question of what that means for the eastern portion of Ukraine. President Putin told President Obama that Russia reserves the right to protect people that identify culturally, ethnically with Russia if it feels the need to do so. So at the very least, Russia is still keeping its options open about a further military incursion into that part of the country as well.

BERMAN: Phil Black in Russia.

One thing is clear, as Phil was saying, the Russians do maintain operational control right now of the Crimean peninsula no matter what uniforms they are wearing or what insignia they might have on their arms. Phil also mentioned a phone call about President Obama and Vladimir Putin over the weekend, attempts at diplomacy, attempts at discussions.

There were more today from Vice President Biden and the Russian prime minister, Dmitry Medvedev. They spoke on the phone.

Let's go to Michelle Kosinski at the White House.

Michelle, what can you tell us about this discussion between the vice president and the Russian number two?

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: We just got a summary from the administration. There's not a lot of detail right now, initially. We haven't had a chance to press them for more.

But it covers three points, that the vice president urged Russia to pull back troops, and allow for the immediate deployment of international monitors in Ukraine which the administration and others have been calling for now for days, and to start a meaningful political discussion with Ukraine, which the new Ukrainian government says it is more than willing to do.

Now, what the Russian response on this call was, what their attitude has been, that's what we are waiting to find out. Yesterday, there was a call, a press call with senior administration officials where they were talking about that phone call between President Obama and Vladimir Putin. It was asked repeatedly, how did Russia respond to the president's urging in a similar way to the way this Biden call was described. They said, well, Putin insisted he had a right to be in Ukraine but acknowledged there were diplomatic options available. That's about as much as they would say.

So we would like to know how this call today was received, if not by Putin, then by the prime minister.

BERMAN: Right now, the United States trying to explore these Democratic options. At least, right now, Russian leaders seem to be opening the door a very little bit too.

Michelle Kosinski, at the White House, great to have you here at CNN, great to see you today. We'll check back in with you in a little bit.

This is happening half a world away right now on the Crimean peninsula. But it is having a very real effect today on people right here in the United States on American's finances, in fact. The stock market taking a big, big hit today.

That's why I am joined by CNN's chief business correspondent, my friend, Christine Romans.

It does not look pretty here.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: It doesn't look good. The Dow extending its losses on the latest news of this apparent ultimatum from the Russian government. The Dow down more than 190 points. That's an extension of earlier losses. It's markets around the world that are moving here. We have corn up, wheat up, grain prices up. The Ukraine is a big producer of these things. This unrest, worry, spreading into the grain markets. Crude oil up 2 percent. Why Ukraine, a large country with a small economy. It is where it sits, its ties to Russia. It is the transport hub to so much of Russian energy supplies into Europe. It is incredibly important strategically where it is and the gas and oil that runs through it. This is what's so precarious about this ratcheting-up of concerns. There is that map we made for you.

BERMAN: It is literally the pipeline to the West.

ROMANS: It is.

BERMAN: All that gas from Russia goes right through Ukraine.

ROMANS: You look at Russian companies, right now, AVRs, as they're called, the Russian companies, the companies that are Russian but they trade on the New York Stock Exchange, the NASDAQ, all losing 6 to 7 percent. Russian oil companies losing 6 percent, 7 percent. An exchange traded fund, the RSX, that tracks Russia, down big. Russian stocks hammered, 13 percent. The ruble, tumbling. A record low to the Euro and the dollar. The central bank of Russia came in and jacked up interest rates in a surprise to try to buffer and help its economy with all of these head winds.

BERMAN: This matters not just to Americans and their 401K but it will matter diplomatically as well. These are the levers, if there are any, that U.S. negotiators can pull to get Russia to do anything.

ROMANS: I wonder if markets here are going to do the work of diplomats. That's what I wonder. If you're a business person in Russian, you're very concerned with what's happening here. If the saber rattling continues, that hurt markets for the week.

(CROSSTALK)

BERMAN: We are covering the crisis in the Ukraine. We will bring you the latest developments right after this break.

(COMMERCIAL BREAK)

BERMAN: Welcome back. We are covering breaking news. Russia has delivered an ultimatum to Ukrainian forces in Crimea saying they need to vacate their bases, leaves their posts by 5:00 a.m. tomorrow or face military storm. Those bases will be seized say the Russians.

We are covering every angle as the world faces what could be the most serious diplomatic crisis in more than a decade. President Obama faces a true test of his leadership. It doesn't seem like he has very many options. Military options are off the table. He could impose sanctions. That is being discussed a great deal. He could propose international monitors go to Crimea, go to parts of the Ukraine.

Whatever he does, he is already on the receiving end of a great deal of criticism. Just moments ago, John McCain blasted the White House foreign policy while talking to the American Israel Public Affairs Committee. Let's listen.

(BEGIN LIVE FEED)

SEN. JOHN MCCAIN, (R), ARIZONA: And I have to be very honest with you. There is not a military option that could be exercised now. But the most powerful and biggest and strongest nation in the world should have plenty and those options are many, ranging from identifying these cleptocrats, these corruption people and the people that ordered this, and the Magnitsky Act. Thank god for the Magnitsky Act. We could expand it and identify those people and it would be their last trip to Los Vegas. So we can enact our economic sanctions. We can -- there is a broad away of actions that we have.

Why do we care? Because this is the ultimate result of a feckless foreign policy where nobody believes in American's strength anymore.

(APPLAUSE)

(END LIVE FEED)

BERMAN: A feckless foreign policy where nobody believes in America's strength anymore.

On that note, let me bring in our guest, Andrew Kuchins, senior fellow and director of the Russia and Eurasian Program at the Center for Strategic and International Studies.

I think to an extent, you agree with Senator McCain. You say the White House has been caught flatfooted by the crisis in Ukraine. You say the White House response has been vague so far. So what should the strategy be?

ANDREW KUCHINS, SENIOR FELLOW & DIRECTOR, RUSSIA AND EURASIA PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: I agree to an extent with Senator McCain. But he, like everybody else I've heard, keeps on saying the military option is not on the table. I'm afraid that we need -- we cannot be engaged in this crisis in a serious way and get to a point where we can negotiate with Mr. Putin from a point of reasonable strength. And, by we, not only the United States but also our European allies, and the current Ukrainian government, unless there is somehow a credible military threat on the table in the event, in the event that the Russian military intervention were to go further into the Ukraine beyond the Crimean borders. We need to reposition some naval ships very close to the Ukrainian coast. I would hope that NATO defense ministers can find a way to redeploy some of the troops and military installations on those countries, countries bordering Ukraine, and get something close to an Article 5 security guarantee for Ukrainian sovereignty. Perhaps using the Budapest Memorandum of 1994 when Ukraine gave up its nuclear weapons.

I don't want to make myself sound like a warmonger. On the contrary. Mr. Putin looks to take advantage of opportunities where he sees them, where he perceives his adversary is weak. That's what he has done in Crimea. That's unfortunate. It's not disastrous at this point. But if Russian military intervention is to go beyond Crimea, that will be an absolute disaster for Ukrainians, Russians, Europeans, Americans, and especially for American credibility in the world. So I think --

(CROSSTALK)

BERMAN: We are almost out of time here. Let me just make sure I follow up. You say the United States has to issue a credible military threat. You mentioned moving ships, NATO forces being redeployed. Do you think there is any appetite in the United States for any kind of action that involves American boots on the ground anywhere near Ukraine?

KUCHINS: I am talking about military action that shows resoluteness. Mr. Putin basically thinks that President Obama and the Americans and the Europeans are kind of wimps and that he can roll them when he sees fit. We have to change his perception. One of the tools we have to have in our tool kit to change that perception is the perception, on his part, the concern that actually there could be close military support for the Ukrainian military forces in the event of violence outside of Crimea.

BERMAN: Andrew Kuchins. Russia's Vladimir Putin things the United States is wimps and NATO are wimps. I appreciate you being with us right now. That's a statement I'm sure that will get a lot of attention in the White House right now.

I appreciate it.

We are going to take a quick break and be right back with more on the crisis in Ukraine.

(COMMERCIAL BREAK) BERMAN: Welcome back, everyone. We are covering the crisis in Ukraine. The breaking news appears to be a military ultimatum from the Russians. We have some clarity on at least part of that ultimatum. CNN is reporting that the Ukrainian defense ministry has told CNN this is what happened. The commander of the Russian Black Sea fleet went onboard a launched Ukrainian warship in Sevastopol harbor today, on the tip of the Crimea peninsula, and issued an ultimatum to the personnel on board. He said, swear allegiance to the new Crimean authorities of surrender or face an attack. So swear allegiance to the new Crimea authorities. That means the Russia- backed people right now running from effectively the Russians. Swear allegiance or face an attack.

I'm joined now by "Spider" Marks, military analyst, former major general here with CNN; and also John Herbst, a former U.S. ambassador to Ukraine.

Spider, let me start with you here.

That's a military ultimatum, a commander saying surrender or swear allegiance or face an attack. What might that attack look like from a military standpoint?

MAJ. GEN. JAMES "SPIDER" MARKS, CNN MILITARY ANALYST: First of all, John, we don't really know the source of that comment. That could be whipped up out of Kiev or it could be coming from some Russian authorities. We really don't know.

Clearly, what is going on is Russia has isolated Crimea and is probably moving along the path to annex it. And what they're doing right now is, because of their presence on the peninsula, the Crimean peninsula, they have in essence taken control, completely, and this ultimatum to be prepared for a storm of military actions or be prepared for an attack, I think really is simply a threat that's not necessarily going to have to be followed up. Because if you can control a garrison location and if you can control activities in it a port, you don't have to follow up with any type of kinetic activity. It just takes some surveillance and presence on the part of the Russians.

BERMAN: The source of that right now, just to be clear, it's coming from the Ukrainian defense ministry, Spider, telling that to CNN.

Ambassador, let me ask you, what are the sense activities right now that the U.S., the United States has to be aware of when dealing with this situation. We're dealing with a new government just getting on its feet in Kiev, dealing with a government in Moscow and this Crimean peninsula right now, and it's not clear who is in charge there, except for the fact that it's not Ukraine.

JOHN HERBST, FORMER U.S. AMBASSADOR TO UKRAINE: The Russians have contributed to the formation of essentially a government in Crimea. The new leader in Crimea received only 4 percent of the vote in the parliament and elections last fall. So there is not a man of popular support, but obviously someone the Russians want to see in power. Spider is right. There is no reason for the Russians to issue this ultimatum, unless they're trying to provoke military action from Ukraine so they can do something else.

What we're seeing is blatant aggression, which President Obama and Secretary Kerry have noted. And we have spoken about the need for sanctions against Russia, unless it steps down from this effort to change the borders of Europe, change borders of Crimea and Ukraine. And if we can persuade our Western allies to join with us in levying economic sanctions against leaders in Russia responsible for this, kicking Russia out of the G-8, if we were to agree under NATO to deploy additional forces to countries in NATO who have ethnic Russian populations, because the Russians like to use this as an excuse to take action against countries, first Georgia and now Ukraine. These may give Russian leaders reason to think perhaps these actions are not in the national interests of Russia because they're certainly not in world interests of world peace and stability.

BERMAN: So, Spider, you say you don't believe this ultimatum. The ambassador doesn't believe there is much weight behind it either. So we've got just 20 seconds left. Secretary of state John Kerry lands in Kiev in just a little bit. What should his response be? What should the United States do now in the face of this ultimatum, or should the U.S. just ignore it completely?

MARKS: No. We're certainly not ignoring it, nor should we at all. And the presence of the secretary of state in Kiev is a good first move. The key is to deescalate. Clearly, there are military actions we can take right now in terms of our U.S. Navy and presence and ability to expand and have the ability to possibly build on to that, if necessary. But there are other elements of power that need to be directed right now. They're political, they're infrastructural, economic, and they're security measures.

BERMAN: Spider Marks and Ambassador John Herbst, thank you for being with us.

Thank you, everyone, for joining us @ THIS HOUR.

"LEGAL VIEW" with Ashleigh Banfield starts right after the break.

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