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@THISHOUR WITH BERMAN AND MICHAELA

Crisis in Ukraine; Kerry Face-to-Face with Lavrov; The Streets in Kiev; Threats and Options -- Carrots and Sticks, Good Cops and Bad; Congress Prepares Nonbinding Sanctions Resolution; Don't Trade Geopolitics in the Stock Market; Tension Between Hagel and McCain on the Hill; Putin & Obama's Relationship

Aired March 5, 2014 - 11:00   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: Happening right now, face to face with Russia, Secretary of State John Kerry sits down with the Russian foreign minister.

High stakes, high drama, but are there hopes this can do anything to ease the crisis in Ukraine.

Explosive words, reportedly from Hillary Clinton, comparing Vladimir Putin and Russia to Hitler and Nazis, does the former secretary of state have her own Ukraine problem?

And hold on tight. And asteroid just hours away from a close drive-by of Earth, what you need to know right now.

Hello, everyone. I'm John Berman. Michaela Pereira is off today. We would like to welcome our viewers here in the United States and around the world.

Those stories and more, right now, @ THIS HOUR.

And it is high-stakes diplomacy and tit-for-tat threats happening right now as the world looks for ways to respond to Russia's military intervention in Ukraine.

Secretary of State John Kerry, face to face with his Russian counterpart, Sergei Lavrov, they're both in Paris for talks that have been planned before the Russian takeover of Crimea.

Now, these talks are so much more urgent, perhaps the most important test yet as to whether dialogue can be used to resolve the crisis in Ukraine.

In some ways today, there have been setbacks. The Kremlin is drafting a law to seize assets belonging to American and European companies if the U.S. and E.U. impose sanctions on Russia.

Washington is looking at a series of punitive steps including economic and diplomatic sanctions designed to isolate Moscow.

And on the frontlines of the crisis, no sign either side is backing down from a somewhat polite standoff between Russian and Ukrainian troops in Crimea, polite so far, but these troops are all armed and the Russian forces do remain in effective control of the Crimean Peninsula.

We are covering all the angles for you @ THIS HOUR. Our foreign affairs reporter Elise Labott joins us from Paris where she is traveling with Secretary of State John Kerry.

Plus, we have Michael Holmes with us from Ukraine's capital, Kiev, and our chief national security correspondent, Jim Sciutto, joins us from Washington.

First, Elise, I want to speak with you. I understand that John Kerry has already had a brief meeting with the Russian foreign minister, Sergei Lavrov, a pull-aside with some other foreign ministers, as well.

They have had a somewhat decent relationship in the past. They are set to have a one-on-one meeting any minute now. What's the realistic goal of this meeting?

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: The goal, John, is really to get Russian Prime Minister Lavrov to sit down with the Ukrainian foreign minister.

That minister flew on Secretary Kerry's plane last night with us from Kiev to Paris, and he says he is really eager to sit down with the Russian foreign minister.

And that's what all this diplomacy is about today, trying to give Russia that -- why we've been calling this "diplomatic off-ramp."

They want Russia and Ukraine to sit down, have a dialogue along with the U.S., U.K., France, Germany, members of the international community with an interest in this, to sit down.

They want to get monitors on the ground in Ukraine, acknowledging that Russia does have these concerns in Ukraine, particularly in the Crimea, and said, Listen, we can address those concerns shall if only you'd stand back and have this dialogue. Let's get those monitors on the ground, John.

So, that's what Secretary Kerry will be urging Russian Foreign Minister Lavrov, again, so the pressure really on Foreign Minister Lavrov, today.

BERMAN: It does seem like a somewhat high bar. It just illustrates just how crucial this meeting is.

I want to bring in Michael Holmes in Kiev. Michael, you have such an interesting perspective, because in some ways, you have the United States and Russia talking over you Ukraine @ THIS HOUR.

What does it feel like on the streets of Kiev? What are Ukrainians saying about all this?

MICHAEL HOLMES, CNN INTERNATIONAL CORRESPONDENT: Yeah, it is. It is a very interesting point to make, John.

We were down in the square most of the day today. And I think it is fair to say that people down there are hopeful, but skeptical. They are a little bit wary of what's going on around them and all this noise that's happening in terms of the talking, but not much in the way of talking.

A lot of them are very worried that their country or Crimea could end up being either in the hands of Russia or that they could lose it to a form of autonomy, a greater form of autonomy than already exists, and it would be run by a very pro-Russian local government, if you like, and, therefore, give Russia the breathing space that it wants and protect its interests in terms of that warm water port on the Black Sea.

But the Ukrainians here have been worried that it might extend further than Crimea, that it could go to other parts of eastern Ukraine which also have an ethnic Russian majority.

Down there today, it was a very sort of atmosphere, somber atmosphere. Those protesters are down there. The barricades are still there.

They say they are not going anywhere, because, quite frankly, they don't trust what's happening at the moment and they are going to stay put until they get some sort of a result, a democratic result.

There are those elections in May. They say they are not going to go anywhere until at least then.

And it was interesting also today, John, just quickly, that there were what we sort of called protest tourists, hundreds of people coming by with their cameras and cell phone videos and the like, just taking pictures of that protest camp and honoring those who have passed in these protests, been killed in these protests.

It was a very moving thing, John.

BERMAN: It does speak to the surreal calm in Kiev where armed troops are literally face to face in Crimea. Michael Holmes in Kiev, thank you so much.

Jim Sciutto, our chief national security correspondent, I want to discuss sort of the dual tracks that are going on right now.

On the one hand, the United States, as Elise has pointed out, is trying to offer some off-ramps to Vladimir Putin.

On the other hand, the United States, the European Union, NATO, talking about sanctions. The Russians responding with their own idea of sanctions, saying they would ban U.S. and Europe countries, seize assets if sanctions are imposed.

What does the United States see as the status, right now, of these threats and counter-threats?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: These are two sides of the same coins, right? It's the carrots and the stick.

They've got the off-ramp that they're presenting, which includes this idea of sending observers into eastern Ukraine to get at this Russian charge.

President Putin and others have said that ethnic Russians there are under threat. They are calling for our help. They're demanding rescue.

So, the offer is, OK, we will send observers in and they will take a look at the situation and see what can be done, in fact, back up this charge that you're making, in effect.

But at the same time, also saying that our patience is wearing thin, and If Russia does not pull back to its original positions, we are going to start imposing costs.

And you have two costs, in effect. One, on the financial front, you have language being drawn up to target certain Russian individuals. This would be Russian government officials, military officials involved with this invasion, freeze their assets, block them from traveling. That kind of thing.

It is a tactic that has worked with other countries like Iran, for instance.

And then you also have the military aspect. We have talked a lot -- you and I have talked, talked a lot on this program about how, in effect, military options are off the table. No one's talking about boots on the ground. No one's going to be firing any guns or missiles over the Ukraine.

But options in the military category are, in effect, on the table, and that's what Secretary of Defense Chuck Hagel delivered today. We're going to send an aircraft wing that's been in Poland, which is a NATO just ally to the west of Ukraine. That's going to be extended.

We're going to send more aircraft -- the U.S. is going to send more aircraft to the Baltic states, north of the Ukraine, but also NATO allies, also nervous about Russian intervention, more aircraft there, as well as he is going to convene NATO ministers to talk about next steps.

So, you have the carrot and the stick. You have the good cop/bad cop kind of strategy going on here, offering a way out, but saying, listen, if this doesn't change, if the situation on the ground doesn't change, costs are going to be imposed.

And at the same time, we are going to demonstrate our commitment to those NATO allies. You see them there, the ones in green all along Ukraine's western border.

BERMAN: We are going to talk much more about that a little bit ahead @ THIS HOUR, because military assets are on the move and that is very important.

But Jim Sciutto and Elise Labott, Michael Holmes, hang on for a second, thanks very much, because we do have some breaking news right now from Capitol Hill.

As Jim was saying, what is being most used right now, words and statements, diplomacy, in this crisis, and there are about to be some words and statements coming from the U.S. Congress.

Let's go to our senior congressional correspondent Dana Bash for us on Capitol Hill. Dana, what are you hearing?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Our Deirdre Walsh, our senior congressional producer, just spoke with Ed Royce, who's the chairman of the foreign committee in the House who said that tomorrow that committee will hold a vote on a nonbinding resolution with some sanctions for Russia.

Now the key thing to underscore here is it is a resolution, nonbinding, so it wouldn't actually put these sanctions into place, but it would, in the words of Chairman Royce, give Congress a start, a first step in making clear what it wants to do.

And it looks like it will be in a bipartisan way with regard to punishing Russia, sending a signal to Russia.

Royce told our Deirdre Walsh that it will be leverage and said that one of the big issues is that the oligarchs that are close to Putin have a tremendous amount of money, that also talking about the idea of sanctions, but perhaps freezing assets down the road.

But this is something that will happen, if all goes as planned, tomorrow in the foreign affairs committee. He also said that there is a hope that it will go to the full House, early next week.

John?

BERMAN: It is nonbinding, as you say, but it does have the effect of showing Russia and the world, including U.S. allies, that the United States is unified in its rejection of the Russian actions in Ukraine in Crimea.

And that's an important message to send, even as a nonbinding, as you say, resolution. And despite whatever criticism Republicans have had of President Obama's action up until this point, it does show some unity going forward.

All right, Dana Bash on Capitol Hill, keeping an eye on that for us, thanks very much.

Ahead for us @ THIS HOUR, the crisis in Ukraine driving huge swings in the markets, do you really want Vladimir Putin as your money manager?

That question, coming up next.

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BERMAN: So, how would you like Vladimir Putin as your financial planner? So, that sounds like an odd question, but what happens in the Ukraine doesn't necessarily stay in Ukraine. It is already affecting your wallet, the crisis there driving markets around the world in a big way, including here in the United States.

What can you and what should you do about all this? Let's bring in our Richard Quest and my friend, Christine Romans.

Christine, I spend a lot of time sitting next to you, and all morning you have been saying to me, we are one move away, we are one false step away from what could be a major market meltdown or, I suppose, the opposite.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Yeah, absolutely. One headline away, because this is a really serious question.

You've got a stock market in this country that's been up for five years in a row and people who are very nervous about what happens if you have the Europe, Russia and the U.S., altogether fighting over the prospects in Ukraine, very difficult.

But I say don't let Vladimir Putin be your financial manager. But here is why. Because if you sold stocks on Monday, then, when they rallied back, you lost all that.

You should not be -- regular people should not be -- regular investors like you and me should not be trading geopolitics. It is a fool's fool's game. We don't know what will happen next. You should be planning for retirement based on how old you are, what your goals are, stocks, bonds, asset allocation, all that kind of stuff, not on Vladimir Putin.

BERMAN: So don't let Vladimir Putin get under your skin right now, your message for your 401(k).

Richard Quest, Christine is talking about what effect this is having on Americans right now. This has a much bigger impact, much more direct on everyone in Europe.

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": Yes, of course, because not only is it on their doorstep but also if you take countries like Germany, for example, they have the biggest cross border flows between Europe and Russia.

And there's one other very important point to take. Which commodity is most at risk? Gas, oil -- gas lines go through Ukraine on to Europe. So not only is gas problems hiking the price of gas to Ukraine, but that could disrupt supplies to countries from as far north as Finland right the way down to the Mediterranean. Many countries, particularly in the Eastern Europe, get vast amounts of their fuel and energy from Russia. So this is a very complicated spider's web of financialese.

BERMAN: What's being discussed are sanctions, trade issues, which falls right into your court right there. Christine Romans, what kind of effect can this have on Russia?

ROMANS: Well, here's the thing -- Russia sells all the gas and oil, right? It gets paid for them. So if Russia's going to have some sort of dispute on oil and gas with Europe or is going to shut off oil and gas again to Ukraine, it hurts itself.

QUEST: It does. You would have thought so. But there are plenty of other places in the world where they can sell that. Look down towards the east. Look down towards Southeast Asia. And, don't forget, if there is disruption in the oil market, what happens to the price?

BERMAN: It goes up.

QUEST: And who gains if it goes up?

ROMANS: If you're a seller.

BERMAN: Russia.

QUEST: And the machinations and the permutations of this -- sanctions, for example. The U.K. supposedly not wanting to shut Russia out of the London financial markets; it's a good cause. They are big players in the London financial markets. Sanctions is always a beggar-thy-neighbor policy which ultimately turns into somebody refuses to join in.

ROMANS: And Vladmir Putin has already said yesterday in that press conference that we watched, John, he said very simply, "We are all interconnected. If you try to hurt us, we're all going to get hurt." It's sort of like mutually-assured damage, and that is what is really scary, when especially Europe just coming out of recession. Europe has the most to lose.

QUEST: GDP numbers from Europe this morning. 0.3 percent growth in the last quarter. You're talking about something highly fragile and now at risk.

BERMAN: And Russia highly fragile also. All right, Richard Quest, Christine Romans, thank you very much. Sit tight because we have something just in to CNN.

Defense Secretary Chuck Hagel has been testifying on Capitol Hill at a Senate Armed Services Committee hearing talking about defense budgets, Pentagon budgets. But a few moments ago he did have an exchange with Republican senator John McCain. Now, these two men have a lot of history, some of it very good, some of it quite contentious, and this was a little bit of a contentious or at least challenging exchange over Ukraine. Let's listen.

(BEGIN VIDEO CLIP)

CHUCK HAGEL, U.S. SECRETARY OF DEFENSE: You would like a briefing your staff on the specifics of your question.

SEN. JOHN MCCAIN (R), ARIZONA: Well, how about commenting on news reports that say that?

HAGEL: Well, news reports are news reports. But that's not the same as real intelligence. MCCAIN: OK, in other words, the fact is, Mr. Secretary, it was not predicted by our intelligence and that's already been well-known, which is another massive failure because of our misreading, total misreading of the intentions of Vladimir Putin.

HAGEL: Senator, I said that we were --

MCCAIN: Let me read my statements, please, and that was that Mr. Putin was not going to see Sevastopol go into hands of a government that was not his client (ph). And that's just a fact. Now please go ahead.

HAGEL: I said that early last week, we were well aware of the threats when I was in NATO. Again, there was a meeting specifically about the threat with the NATO Ukraine commission. I have been speaking to the past -- over the past couple of weeks, more than that, to the Ukraine defense ministers. The two I spoke to are now gone. So this wasn't sudden or new that we didn't know what was going on.

MCCAIN: The president and the Secretary of State have said this is not the old East/West. This is not Cold War rhetoric. Do you agree with that statement, Cold War actions, when Mr. Putin denies that there are troops in Russia? When Mr. Lavrov says today that they can't withdraw Russian troops, because there are no Russian troops in Crimea? Does that have some echoes to you of Cold War?

(END VIDEO CLIP)

BERMAN: All right, you've been listening to Senator John McCain grilling Defense Secretary Chuck Hagel mostly over the issue of why U.S. intelligence sources did not know or did not warn that Vladimir Putin and the Russians would really roll into Crimea and take operational control of that. Why there were not earlier warnings. That is a question you are hearing from many Republicans today.

Chuck Hagel didn't have much of an answer. He was saying that the U.S. did say would happened mostly. That hearing right there was mostly notable again for the tension that did exist between the two men. I have to remind you, once again, that Chuck Hagel is one of the few people to endorse Senator John McCain, one of the few Republicans to endorse Senator John McCain, when he was running against George Bush in 2000. They were once friends. That did not sound friendly.

Ahead @ THIS HOUR, what can President Obama do to punish President Putin? There are three ways the White House is considering. We'll tell you those next.

And then later Hillary Clinton reportedly comparing what Russia is doing in Ukraine to what the Nazis did before World War II. What's she talking about? That's coming up.

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BERMAN: All right, welcome back. We're covering the crisis in Ukraine. The question is, if Vladimir Putin does not back down, President Obama has threatened to isolate Russia. But what exactly can the president do? And what does the White House really think might happen next.?

"New York Times" chief White House correspondent Peter Baker joins me. Peter has been pushing the envelope on reporting about what the U.S. really thinks Russia is doing in Ukraine, in Crimea right now. So Peter, let me ask you this. Does the White House believe the most likely outcome in Crimea is a freeze of the current situation, Russian troops staying, or do they think there is a chance of an actual roll back of Russian forces?

PETER BAKER, NEW YORK TIMES WHITE HOUSE CORRESPONDENT: Well, they think there is a changes of a roll back. They certainly hope so. But they understand that that's not the likeliest outcome.

They see three different scenarios going forward -- one is Russia and Putin actually escalate this by moving troops or somehow otherwise destabilizing Eastern Ukraine. Also a lot of Russian speakers there. That could really fracture the country in half. That's one of the worst outcomes they can imagine.

The best outcome is that Putin takes one of these off ramps, that's what the White House calls them, and agrees to move his troops back into bases in Crimea, allow international monitors to come in to guard against any supposed attacks on Russian speakers there, not that there's been any real evidence of that.

But the more likely sort of outcome is kind of this middle, muddling, uncomfortable, unsatisfying status quo kind of situation where Russian troops remain on the ground in Crimea and the West has a hard time trying to dislodge them.

BERMAN: What does that mean going forward? How does the U.S. negotiate that reality moving forward as it deals with Syria, as it deals with Iran, as it deals with so many of these world issues? Will it be able to continue to talk to Russia, have Russia at the table, if its troops are still effectively occupying Crimea?

BAKER: Right, that's why this is such an important crisis actually for the White House. Because it's not just about one place or one country. It's not just about Ukraine; it is about Syria, it is about Iran, it is about the Middle East peace. Russia has a role in all of these different foreign policy items on President Obama's agenda. And without some form of cooperation, it only makes his job that much harder.

So the White House would say, look, we weren't getting that much cooperation from Russia on Syria anyway, that it's in Russia's interest to continue cooperating to some degree on Iran, perhaps, and continue the air quarter they provide for American troops heading to and from Afghanistan. But, you know, it is hard to imagine if this continues and develops into an even more hostile situation where there are sanctions being applied by the United States and counter sanctions being applied by Russia, as they have now threatened, that they could continue to do business on other fronts.

BERMAN: Peter, the president said something really, really interesting in his statement yesterday about Ukraine. He went out of his way to counter the perception that exists among many, including people on Twitter, including reporters, including I think some representatives from other countries, that Vladimir Putin's actions were clever strategically or that they were somehow a show of strength. President Obama made clear he doesn't believe they were clever strategically or a show of strength.

What's the White House argument and why do they seem defensive about this?

BAKER: Well, the White House argument is that it's not a show of strength because, in fact, Putin lost the larger question of who's going to run Ukraine. That his ally, Viktor Yanukovych, the president of Ukraine, has fled in the face of street protests, after shooting after protesters in the streets, and that the government now is pro- Western, not pro-Moscow, and is going to have elections in May which might not result in a pro-Moscow government.

So in their view, what their argument is, in fact, Putin lost the larger battle and this Crimea thing is a sign of desperation.

But you're right, you used the word defensive. I do think that there's a certain defensive quality, too, because they're under siege here at home. We lost Ukraine in effect? Who lost Crimea? It's a familiar argument and you're hearing a lot of Republicans and even some Democrats saying that the White House didn't foresee this adequately, that it didn't show enough strength, that the president is not perceived to be strong enough on the international stage and therefore opened the way toward this. The White House of course disputes that.

BERMAN: Peter, you have such a unique perspective covering the White House right now as the chief White House correspondent for "The New York Times". You've also written extensively on Russia. There are these two men now, two presidents, Barack Obama and flatVladimir Putin. So much has been written about their body language. So much has been written about their relationship? Do you have any sense that this is in any way personal for these two men yet?

BAKER: Well, I do think it's personal in the sense they do not get along. Neither one of them has enormous respect or any particular affection for the other. It goes back to July 2009 when they met for the first time in Moscow. President Obama went to see President Putin, he was then the prime minister. He sat down, he kind of opened the meeting with a generic observation that there had been some stress in the relationship recently. That kind of set Putin off for an hour- long monologue about all the different ways he thought the United States had tried to mishandle Russia. And it set a bad tone from the beginning. They're of different generations, they're of different mindsets. They do not correct, no question about it.

But on the other hand, when President Putin sends troops in to Crimea, it's not because he doesn't like President Obama, it's because he feels that there are national interests at stake there for him. Crimea, in specific, and Ukraine in general, very important to Russia, have been historically over time.