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Armed Men Order U.N. Envoy Out of Crimea; U.S. Intelligence Didn't Know What Russia Would Do in Ukraine; How Will Sanctions Against Russia Affect World Markets; Goldman Sachs to Partner with World Bank to Help Women; Germany's Angela Merkel Plays Pivotal Role in Solving Ukraine Crisis; Issa, Cummings Clash at House IRS Hearing.

Aired March 5, 2014 - 13:30   ET

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


(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

WOLF BLITZER, CNN ANCHOR: Once again, I'm Wolf Blitzer in Washington.

We're following breaking news out of Ukraine. Armed gunmen apparently have ordered a United Nations special envoy out of Crimea. This is a photo of the special envoy, Robert Serry, taking refuge -- refuge in a cafe with a TV reporter after gunmen tried to force him to abandon his mission and leave the region. He has agreed to leave Ukraine immediately.

In Paris, meantime, the secretary of state, John Kerry, has postponed a news conference following his meeting with the Russian foreign minister, Sergey Lavrov. He rushed over to meet with France's foreign minister, possibly, repeat possibly, a sign of progress in his talks with Lavrov. We're watching that very, very closely.

Back here in Washington, lawmakers are asking why the U.S. apparently didn't know that Putin was planning to intervene in Ukraine ahead of time.

Our chief national security correspondent, Jim Sciutto, once again, with us.

What do we know about this? There seems to be some serious back and forth, what the U.S. knew and didn't know.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: No question. You remember last week, administration officials were telling CNN it was not their assessment that the Russians were going to go in in numbers. And then, lo and behold, we see Russian troops on the ground there.

And this has sparked an angry reaction from, typically Republican lawmakers, Mike Rogers, chairman of the House Intelligence Committee, calling for an inquiry.

Today, you saw Senator John McCain taking it to Defense Secretary Chuck Hagel. Here's what he had to say.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R), ARIZONA: The fact is, Mr. Secretary, it was not predicted by our intelligence, and it's already been well-known, which is another massive failure, because of our misreading, total misreading of the intentions of Vladimir Putin.

CHUCK HAGEL, DEFENSE SECRETARY: 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. So this wasn't sudden or new that we didn't know what was going on.

(END VIDEO CLIP)

SCIUTTO: Another thing you'll hear from officials is that, at the end of the day, Vladimir Putin is unpredictable. So it might be impossible to have known exactly what he was going to do.

BLITZER: Apparently, they misread in 2008 when he moved troops into Georgia under similar circumstances.

So what's the CIA saying about this?

SCIUTTO: Well, I've talked to the CIA and also members of the House Intelligence Committee who read that intelligence last week, read the reports. What the CIA says is, listen, we presented a number of scenarios in this. And they released a statement, pushing -- they're pushing back hard on this saying, "Since the beginning of political unrest in Ukraine, the CIA has regularly updated policy makers to ensure they have an accurately and timely picture of the crisis. These updates have included warnings of possible scenarios for Russian military intervention in Ukraine, Any suggestion otherwise is flat wrong." So very strong pushback there.

Now, other sources have told me that among the scenarios that were discussed were things like we saw there. Not necessarily a massive movement of troops across the border, but the ideas of troops that were already in those bases, in Crimea, moving off the base and out into Ukrainian territory, as well as the use of these uniformed, unofficial armed gas tax gangs as a tool of power and that's what we saw in action today, forcing the U.N. official out.

The other point I would make is this. In my old job, when I had a security clearance, that I've read classified reports, I think that people have this impression they're black and white. They say X is going to happen tomorrow in Y location. Very rarely or never are they really that way. They're dealing with imperfect intelligence that they pieced together, kind of like we do as reporters, though with much better tools. Which they piece together and say here is our best assessment of possible things that might happen. In this situation, you throw in the wild card, which is Vladimir Putin.

And Representative Adam Schiff, on the House Intelligence Committee, saying, listen, with him, he could have made that decision last minute so no one could have predicted it. That's their defense. But listen, the bottom line is, they were caught off guard. BLITZER: I read an interesting report on this in the "Wall Street Journal" today. They said -- and we're going to double-check. But the "Wall Street Journal" said, "The DOD got it wrong, CIA got to right -- got it more right than wrong. DOD got it more wrong than right." There seemed to be a split between the Department of Defense analysis and CIA's analysis. It's worth checking out.

SCIUTTO: That's one read. I did ask someone about that and they said, in actuality, the two reports were not vastly different. But, you know, you read two intelligence reports, they're always going to be a little different.

BLITZER: Excellent point. Thanks very much.

Jim Sciutto, don't go too far away. When we hear from the secretary of state, I want you here to listen, together with our viewers.

Up next, if sanctions are imposed against Russia, how will world markets be affected? We're going to talk with the CEO of Goldman Sachs. Lloyd Blankfein is here. We will discuss Putin and Russia's money.

Later, the German Chancellor Angela Merkel emerges as a major player in resolving this crisis in Ukraine. We'll take a look at the dynamic between Angela Merkel and Vladimir Putin.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

BLITZER: And this just coming into CNN. NATO now saying its entire relationship with Russia is under review. This follows a meeting between the NATO and Russian top officials. In a statement, NATO secretary general said the organization has, quote, "the entire range of NATO/Russia cooperation under review." We'll see what happens on that front.

A sigh of relief for global markets today as some of the dust settles. The Dow barely budged out of the opening bell. It's down 37, almost 38 points. All this coming after two days of very volatile days when the market first plunged over the news out in Ukraine and then rebounded with its biggest gain of the year yesterday. We're watching Wall Street closely.

As the global markets are increasingly connected, what effects one could affect all. How would that affect financial markets around the world?

And Lloyd Blankfein is joining us now, the chairman and CEO of Goldman Sachs.

Lloyd, thanks very much for coming in.

LLOYD BLANKFEIN, CHAIRMAN & CEO, GOLDMAN SACHS: My pleasure.

BLITZER: How worried are you about the economic ramifications of this crisis right now between the Ukraine, the U.S. on one side, Russia on the other, over the Ukraine?

BLANKFEIN: Right now, it seems to be stabilizing, but it could get -- it could get severe. We saw an indication a couple days ago when you saw the consequences to the international markets when there was some idea that this could be spiraling out of hand. Now that it's calmed down, you saw the reaction of the markets was not only to stabilize, but to recover. I think that's an indication of where it could go from here, depending on how bad it gets.

BLITZER: Because if there were to be sanctions, economic sanctions, there is no -- certainty there will be, because a lot of the European countries are reluctant. But those sanctions, they could be pretty painful for Europe and for Russia.

BLANKFEIN: Well, sanctions -- you know, actions invite counter reactions. And so I'm sure if one side to this does something, domestic -- certainly domestic policy requires the other side to do something back. And you can get an accelerating, very vicious circle.

BLITZER: Because the Russian parliament over there already drafting legislation that would confiscate international businesses, G.M. has a big plant and Russia, Coca-Cola. There have a lot of American companies, European companies that have made major investments in Russia. And if that would happen, who knows what the next step would be.

BLANKFEIN: There are a lot of considerations driving people's activities here. And I'm not suggesting that markets and the economics should trump those other very, very important civil and social issues. I just want to make sure that people understand the context and how severe those economic issues would be.

BLITZER: Are we facing a little roller coaster now with the markets? One day, they really collapse. Next day, they make a dramatic rebound. Should we anticipate that over the next few days, weeks?

BLANKFEIN: I think so. The markets are always looking for a focus. They found a focus in this. Don't forget, there's a lot of fragility to the markets, even though we're in a recovery, the recovery is slow. It's a little bit -- has been ambiguous. You can see the economic numbers that have been coming out, have not really -- have been good, but not confirming the kind of trajectory we were hoping for this year. And so I think anything that causes it to go one way or the other across the tipping point can have an extreme effect.

BLITZER: Goldman Sachs -- I assume you have investments in -- you deal with Russia, too, right?

BLANKFEIN: Sure, we do.

BLITZER: So what are the impacts on Goldman Sachs?

BLANKFEIN: Well, we are always navigating situations that are going on like this. Our role at the end of the day, we don't make policy as experts. We are -- we always -- in fact, we have the duty to just advise people what the consequence of certain policies would be. And so, again, the economic -- the economic consequences of any policy decisions, vis-a-vis Russia, don't trump, but they will be -- they'll be important consequences, and we're advising what those would be.

BLITZER: Yeah, it's a tense situation.

Let's talk about why you're in Washington.

BLANKFEIN: Sure.

BLITZER: You've got an important project. For years, Goldman Sachs has been involved in a program called 10,000 Women. I'm very familiar with what 10,000 -- you help women in developing countries around the world. But now you're about to partner with the World Bank and help, what, 100,000 women in developing countries?

BLANKFEIN: Sure. Sure. Starting about six years ago, we embarked on a program that provided effectively business education, mentoring, really classroom work, reviewing business plans, on a very, very focused basis. The theme was 10,000 Women. At the time, it was very aspirational to get to 10,000 women.

BLITZER: And you did that.

BLANKFEIN: With he did. We operate in 40 countries around the world. And we're taking women who really have had -- people who were already in business. So these aren't people who were just aspiring to start a business, but people who were in a business, and we thought, if you add advice, if you ad business education, if you gave them access to capital, the ability to apply for capital, that they could drive their business. And it was a great place to invest a dollar, because the return from women, which generally are underinvested in, in the world economy, that return on a dollar investment in those kinds of businesses run by business would have the most dramatic effect in terms of economic growth, but also in terms of contribution to community, to family.

(CROSSTALK)

BLITZER: It would create a lot of jobs in their communities.

BLANKFEIN: Yes, it would. And it has.

BLITZER: And now you have taken the next step with the World Bank and heading over to the White House.

BLANKFEIN: Right. So having confirmed the value of the program and the effect -- and by the way, we measured the heck out of this investment, as we do any other investment that we make, and saw how much productivity, how much new jobs, how much GDP was contributed to. We're going to go way past 10,000 women in terms of the program, but we're also adding, in conjunction with a very important partner, a financing proposing whereby we help create a pool of capital that these women and other women who have businesses can apply for. And our partner, of course, is the World Bank. And we're putting in $50 million. The World Bank is putting in $100 million initially. We're going to go out and raise and have some confidence that this will occur, a total of $600 million. And it will become a pool of dollars that will be recycled into women's businesses around the world. And by the way, I say recycled, because they almost always paid back, because women have a great track record of returning their investments.

BLITZER: Good luck. And thanks very much for what you're doing. Really appreciate it.

BLANKFEIN: Thank you very much, Wolf.

BLITZER: Lloyd Blankfein, appreciate it.

BLANKFEIN: Thank you.

BLITZER: Up next, the woman between President Obama and President Putin. How Germany's Angela Merkel is playing a pivotal role right now, trying to resolve this Ukraine crisis. We're going to examine the dynamics of her relationship with the Russian president.

(COMMERCIAL BREAK)

BLITZER: There's a famous quote from the former British prime minister, Margaret Thatcher. The quote is this, "If you want something said, ask a man. If you want something done, ask a woman." And a woman is now emerging as a major player in the crisis in Ukraine. We're talking about the German chancellor, Angela Merkel.

Brian Todd is with us with more on this part of the story.

She is a very significant player.

BRIAN TODD, CNN CORRESPONDENT: Very significant, Wolf. She is seen now as increasingly maybe the person who could be the most central to resolving this crisis. Her diplomats are the ones pushing many of the diplomatic initiatives that are actually taking some traction right now with Ukraine. Germany has huge economic leverage with Russia. They are a huge trading partner with Russia. They buy about a third of their natural gas from Russia. They export technology in cars to Russia. It is a huge relationship. Vladimir Putin certainly does not want to see that, you know, take a bad turn at this point.

But also, there is a real personal dynamic between Angela Merkel and Vladimir Putin, where Putin really does respect her. She is a tough negotiator. She is a very pragmatic person. She also has a great dynamic. It's in her political DNA. She grew up in East Germany. Vladimir Putin was stationed in Russia as an officer. He speaks fluent German and she speaks Russian. They can talk directly where Obama and Putin can't do that. There is a strong dynamic and the official said if they are not friends, he respects her a great deal for her toughness.

BLITZER: There is a famous story about when he went to a meeting with her, Putin brought a big dog to the meeting.

TODD: He brought this big dog. It speaks to her toughness. She has a fear of dogs. She especially fears big dogs. An incident in her childhood. Putin knew that from his intelligence. And in a meeting several years ago, to test her measure, he brought this huge dog -- there you see the picture -- into the room. He kept the dog there. She was terrified. One analyst told me she couldn't concentrate, but kept negotiating with him for an hour or so. Didn't blink. Didn't blanch. Didn't want to show Vladimir Putin weakness. It could be the central moment and him taking her measure and thinking, wow, this is a tough woman, I can deal with her.

BLITZER: Angela Merkel --

(CROSSTALK)

TODD: A tough cookie.

BLITZER: -- a key player right now. Maybe the most powerful woman in the world.

TODD: Probably is.

BLITZER: Janet Yellen, the chair of the Federal Reserve is considered one of the most powerful, but Angela Merkel is clearly up there.

TODD: Yeah. Absolutely.

BLITZER: All right, thanks very much, Brian Todd. Good report.

Things got heated up on Capitol Hill in Washington. Lawmakers clashed during the hearing on whether the IRS targeted people based on their political beliefs. Ahead, we're going to break it down. Our senior Washington correspondent, Joe Johns, standing by.

(COMMERCIAL BREAK)

BLITZER: An extraordinary exchange on Capitol Hill and in the House hearing all about whether the IRS targeting conservative groups seeking tax exempt status for extra screening. Republicans claim it was politically motivated.

Our senior Washington correspondent, Joe Johns, is here to break it all down for us.

And you and I have covered Congress. It's not every day you see a chairman or a ranking member arguing like this.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: It isn't, and it got ugly. The battle over alleged IRS targeting of certain groups, including Tea Partiers, is an open wound between Republicans and Democrats. Today, the top two members of the House Committee on Oversight and Reform reopened the divide in public for all to see in the raw exchange that almost never happens in front of a camera.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): It was pure junk yard politics. Republican committee chairman, Darrell Issa, kicked it off --

REP. DARRELL ISSA, (R-CA), CHAIRMAN, HOUSE COMMITTEE ON OVERSIGHT AND REFORM: The committee will come to order.

JOHNS: -- by forcing former IRS official, Lois Learner, to come before the meeting and invoke her right to refuse to testify even though she had done it months before.

ISSA: Are you still seeking a one-week delay in order to testify?

LOIS LERNER, FORMER IRS EMPLOYEE: I respectfully exercise the Fifth Amendment rights and decline to answer the question.

JOHNS: Issa declined to adjourn the meeting.

ISSA: I see no point in going further. I have no expectation that Ms. Learner will cooperate with this committee. And, therefore, we stand adjourned.

JOHNS: But Congressman Elijah Cummings, the committee's top Democrats, was not having it.

REP. ELIJAH CUMNMINGS, (D), MARYLAND: You cannot run a committee like this. You cannot do this. We are better than that has a country and as a committee. I asked for a few minutes to ask--

JOHNS: What followed was a display on how much these guys don't like each other.

CUMMINGS: I wanted to ask a question.

JOHNS: Ugly.

ISSA: You are all free to leave. We've adjourned but the gentlemen may ask his question.

JOHNS: Issa trying to get people to leave the room, signaling for the microphones to be turned off. Cummings demanding to be heard.

CUMMINGS: What's the big deal?

JOHNS: And he was by the microphones attached to the cameras in the room.

(CROSSTALK)

CUMMINGS: If you will sit down and allow me to ask the question. I am a member of the Congress of the United States of America. I am tired of this.

JOHNS: In the end, Issa said this may mean the investigation has hit a brick wall.

ISSA: It may well be that we have gotten to the bottom of it. At this point, roads to Ms. Lerner, the witness that took the Fifth. She becomes one of the key characters at this point. Had she been willing to explain the e-mails, which were provided through separate subpoenas, then we could have perhaps brought this to a close. Without that, it may dead end with Ms. Lerner. (END VIDEOTAPE)

JOHNS: The only way we will find out for sure if Lois Lerner is still protected by the Fifth Amendment is if she is held in contempt of Congress and goes to a judge, who gets to decide that. Her attorneys think she is protected. Ad Chairman Issa is of the opinion that, because she gave a statement to committee asserting she didn't do anything wrong and refused to answer questions, Issa says she is no longer protected.

BLITZER: They knew she was not going to testify. She was going to plead her constitutional rights, the Fifth Amendment. Why did they even do this? Was it just theatrics? What was going on?

JOHNS: In law school -- I went to law school -- they teach in congressional investigations that bringing people out again and again and again to do this is basically humiliation and public theater. And so, it's one of those things that happens. But both parties do it, nonetheless --

BLITZER: So they just want to squeeze her, if you will, put pressure on her to cooperate to provide testimony and call her back and let her know it's pure theater.

JOHNS: It is pure theater and something to apply pressure.

BLITZER: Joe Johns, graduate of the American University here in Washington, D.C.

(LAUGHTER)

You liked that law school, right?

JOHN: Yeah. It's a great law school. I go back.

BLITZER: They train a lot of people there.

(LAUGHTER)

Joe Johns, thanks very much.

That's it for me. Thanks very much for watching. I will be back at 5:00 p.m. eastern in "The Situation Room." We will have a special report on the crisis that is unfolding in Ukraine. Stand by. Expected here shortly, the secretary of state, John Kerry.

In the meantime, NEWSROOM with Brianna Keilar starts right now.