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EARLY START

Report: Israel Spying On Iran Talks; Will Alleged Israeli Spying Affect Talks?; Yemen On "Edge Of Civil War"; "Brainwashed" Into Working For ISIS?; Stocks Take A Breath; Boston Marathon Bombing Trial; The Ted Cruz Economy. Aired 5:30-6a ET

Aired March 24, 2015 - 05:30   ET

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


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[05:30:00] CHRISTINE ROMANS, CNN ANCHOR: Breaking overnight, Israel accused of spying on the nuclear talks between the U.S. and Iran, using that information to pit Congress against the White House. With one week before the deadline in those negotiations, could this report derail any progress? We are live with the very latest ahead.

Welcome back to EARLY START this Tuesday morning. I'm Christine Romans. John Berman is in Washington, D.C. for the week. It is 30 minutes past the hour.

Let's start with the big story overnight breaking, accusations emerging that Israel has been spying on negotiations with Iran over a nuclear deal, spying almost from the beginning. The "Wall Street Journal" report that Israel eavesdropped on negotiations in addition to getting information from confidential U.S. briefings, informants and European diplomatic contacts.

Israeli officials denied directly spying on U.S. negotiators. The "Journal" says it spoke to more than a dozen current and former U.S. and Israeli diplomats, lawmakers and intelligence officials for its story.

I want to bring in CNN's Oren Liebermann live for us in Jerusalem with the latest. Oren, we have been hearing from Benjamin Netanyahu and the Israeli government for some weeks now saying that they had their understanding of the negotiations. They did not like what they were hearing. Did they get that understanding from stolen information?

OREN LIEBERMANN, CNN CORRESPONDENT: Well, they deny the allegations in this article. They deny they spied on the U.S. or other allies. But that, of course, is the central allegation of the story. First, the story that "The Wall Street Journal" alleges that Israel spied on the negotiations and then used that information to undermine negotiations, to undermine the White House by feeding that information to Congress.

Here is the very strongly worded denial from the prime minister's office. I'm going to read this to you. "These allegations are utterly false. The state of Israel does not conduct espionage against the United States or Israel's other allies. The false allegations are clearly intended to undermine the strong ties between the United States and Israel and the security and intelligence relationship we share."

And yet at the same time, you're absolutely right, Christine, that we've heard from Netanyahu's government, our understanding is they have inside information on these deals.

They are being vague where they got the information. They have tried to use that information to influence Congress or at least make their concerns known to Congress.

ROMANS: All right, so how could this all hurt what is already a strained relationship between the White House and Israel, Oren?

LIEBERMANN: Well, Christine, it certainly won't help. We've heard a number of times over the last few weeks that this relationship between Netanyahu and Obama is at an all-time low. Yet, as we see this play out, as we this continued back and forth between the White House and prime minister's office, it keeps getting lower.

Christine, the relationship here is getting worse. We know that House Speaker John Boehner is on his way perhaps next week. So that certainly will not help the relations between these two leaders.

ROMANS: No, it won't. All right, Oren Liebermann, watching it all for us in Jerusalem this morning. Thank you, Oren.

Now that report of Israeli spying comes with one week left before the deadline to reach the framework for a nuclear deal with Iran. The State Department is announcing that Secretary Kerry returns Thursday to Switzerland where negotiations with Iran are currently out of break. So what does he face when he gets there and how does this bombshell in the "Wall Street Journal" affect all of that?

Joining us now is senior international correspondent, Nic Robertson -- Nic.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Christine, it is not the relationship between Israel and the United States that is affected in this and how pressure is effectively brought on the decision making of Secretary Kerry's team maybe by this pressure.

You also have a component here of the talks outside of the United States, of course, it's a P-5 plus 1 negotiating with Iran, France, Germany, Britain, Russia and China. We know that an Israeli delegation including the intelligence minister and the national security adviser to the prime minister were meeting with French officials in Paris yesterday.

The French Foreign Ministry said this didn't involve the French foreign minister. This wasn't the Israelis trying to persuade their position, but talk through and broaden the debate on Iran. That same delegation we understand is heading to Britain today for a similar series of talks to broaden the discussion on Iran. So when all parties get around the table there in Lausanne, Switzerland, which ultimately they will, Israel which have been able to use the information it has that perhaps try to persuade others at the table of the importance of the position, and therefore increase their voice.

We know the talks have made some progress. Secretary Kerry and the Iranians have said that. But at the moment, the Iranian position is that the United States is already putting too much pressure on Iran bullying is how Ayatollah Khomeini, the spiritual leader of Iran, put it over weekend.

So there are still gaps to close. At this late hour, Israel is still in effect discussing and broadening the dialogue about Iran in these talks with others who will be around that table -- Christine.

[05:35:10] ROMANS: All right, Nic Robertson, thank you so much for that. Those negotiations resume again on Thursday. No doubt, you, Nic, will be in Lausanne.

With U.S. officials and U.N. officials declaring Yemen on the brink of civil war, the elected government of President President Abdo Rabo Mansour Hadi is calling on other Persian Gulf states to intervene to stop Houthi rebels advancing across Yemen and to help bring President Hadi back to power.

This as we learn Britain has now also pulled out the last of its forces out of Yemen. The U.S. evacuated more than 100 special operations troops over the weekend. Security experts say the developments are crippling American counterterror efforts in that region raising the possibility that Yemen could become a fertile staging ground for global terror.

We are learning new details this morning about the 11 medical students suspected of traveling to Syria to work in ISIS-controlled hospitals. The group includes seven Britains, an American and a Canadian. A Turkish lawmaker says he believes they were, quote, "brainwashed."

The students' families are now saying the students went to the border between Syria and Turkey to offer voluntary medical help to refugees and have since simply disappeared.

For the latest, I want to bring in CNN's Atika Shubert. She is near Turkey's border with Syria. Now Atika, are the students communicating with their families at all?

ATIKA SHUBERT, CNN CORRESPONDENT: Well, Christine, we had a chance to speak with the families yesterday. They told CNN that yes, there has been some communication, but they did not say more than that. We know text messages have been exchanged between some of the children and their parents, but they have not said exactly where they are.

Only that they are fine and that they are working and helping with refugees presumably in a clinic or hospital, but they won't say specifically where. The big question is have they crossed over into Syria. The parents are here on the Turkish side on the border. They say they won't leave without their children. They don't know where exactly their children might be. They could be across the border in Syria. The big question is are they in ISIS-controlled area or in an area controlled by other militant groups.

That's what will really determine what happens next. Now we've heard from an MP helping them saying that they are working with Turkish, British, and Sudanese authorities to try and get them back, but at this point, they really don't know where they are.

ROMANS: They just don't know where they are or what their motives were. That is so frightening I'm sure for so many of those parents. Thank you so much for that, Atika Shubert.

Developing this morning, word that ISIS militants are skimming tens of millions of dollars in Iraqi government funds. The "Wall Street Journal" reports the money is payroll for government workers in Mosul and other areas that are occupied by ISIS.

This puts Iraqi officials in awkward position. If they cut off the money depriving ISIS of cash, they also cut off pay to hundreds of thousands of government employees potentially sparking a humanitarian crisis. The U.S. provides hundreds of millions of dollars in assistance to the Iraqi government. It's not clear whether any of that is getting skimmed by ISIS.

Afghanistan's new president, Ashaf Ghani, meets with President Obama. Ghani's number one mission is convincing the president to slow the planned withdraw of U.S. troops. The Afghan president warns that pulling out all American troops in his country by the end of 2016 would as planned would have devastating consequences for the security situation there.

A House panel investigating the Secret Service is warning the head of that agency not to come to today's hearing alone. The Secret Service is under scrutiny, of course, after a series of missteps including the White House fence jumper and top agents driving through a crime scene.

Investigators have asked Director Joseph Clancy and four other Secret Service officials to testify later this morning. Clancy has already advised he will be the only one attending. The panel members fired back with a letter warning the director that is simply not acceptable. So far no response from the Secret Service on how many people will be going to that hearing.

Let's get an EARLY START on your money this morning. CNN Money correspondent, Alison Kosik, joins me now. What are futures doing this Tuesday morning?

ALISON KOSIK, CNN MONEY CORRESPONDENT: Good morning to you. We are seeing green arrows. U.S. stock futures are up slightly. We could be in for more gains today if that holds. Now yesterday, we did see stocks take a bit of a breath. The Dow and the S&P 500 are pulling back just a little bit. The Nasdaq closed lower as well, although, it is still above 5,000 near that high from March of 2000. We want to see just when, if and when the Nasdaq hits its first milestone in 15 years.

ROMANS: Bring us up to speed on overseas markets right now.

KOSIK: China is a concern, big concerns about growth in China. Asian shares are mostly lower after China factory activity slumped in March to the lowest level in 11 months. It's the latest disappointment for China. There are more and more signs that growth is only OK and not stellar.

That is putting pressure on the central bank to act, funny, though, its growth recently was 7.4 percent, believe it or not, it's worse in 24 years. We would love to see growth here in the United States at 7.5 percent.

ROMANS: Absolutely. No question. Let's talk about the big baseball deal, Louisville Slugger, what's going on?

[05:40:05] KOSIK: Yes, some big news here. Wilson Sporting Goods is buying the Louisville Slugger brand of baseball bats for $70 million. So that will marry two of the leading baseball brands just before the season starts.

The 130-year-old family-owned business will keep on making those bats for Wilson at the Louisville factory. Wilson also makes the official NFL football made in Ohio.

ROMANS: Very good. Alison Kosik, thanks for that this morning, Alison.

It's 40 minutes past the hour. Drama unfolding inside the Boston marathon bombing trial, what investigators found on the accused computer, and why it could help the defense? That's next.

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ROMANS: The prosecution in the trial of accused Boston marathon bomber, Dzhokhar Tsarnaev, nearing the end of its case. In court, Monday, jurors heard more testimony about alleged militant materials found on his various communications devices. CNN's Alexandra Field has more.

ALEXANDRA FIELD, CNN CORRESPONDENT: Christine, Dzhokhar Tsarnaev's digital devices, including his cell phone and his laptop come under the microscope. Defense attorneys argue that prosecutors cherry picked showing the jury only the most incriminating files that they found on Dzhokhar's computer including an article with instructions on how to make a bomb and audio recordings from the terrorist, Anwar Al- Awlaki.

The defense grilling an FBI witness on cross exam asking whether or not investigators could tell with certainly who created specific files and whether a computer had more than one user.

[05:45:04] The defense suggesting that Tsarnaev's computer was used mostly for typical teenage activities. A top search in his internet history is Chechnya, the area near where he is from. Islam and Jihad is not on the list of top searches, the defense pointed out.

The two top search terms on Tsarnaev's computer were not revealed to the jury, but defense said they were typical for an adolescent boy -- Christine.

ROMANS: Nothing typical really about that adolescent as this trial is showing. Let's take a look at what is coming up on "NEW DAY." Alisyn Camerota joins us now. Alisyn, big story overnight, this bombshell from the "Wall Street Journal."

ALISYN CAMEROTA, CNN ANCHOR, "NEW DAY": It sure is. We are going to get more information on that "Wall Street Journal" report that Israel spied on the Iran nuclear talks and gave confidential information to the U.S. lawmakers. What impact does this have on the talks? How about relations with the White House and Israel? We will talk with the reporter who wrote that article.

Also, we will look at Angelina Jolie's decision to have her ovaries removed to reduce her chances of developing cancer. Should women consider this option? Are there alternatives? Dr. Sanjay Gupta will join us with the answers.

ROMANS: I cannot wait to hear what he has to say.

CAMEROTA: Me too.

ROMANS: A lot of women talking about that this morning. All right, thanks so much for that, Alisyn.

Accused killer and real estate heir, Robert Durst now linked to another crime. Details next.

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[05:50:05]

ROMANS: Welcome back. Real estate heir and accused killer, Robert Durst, is now being linked to a cold case in Vermont. Police is investigating a connection between Durst and the disappearance of Middle Burry College, Lynn Schultz in 1971.

Durst owned a health store there at that time. A judge in Louisiana denying bail for Durst citing what prosecutors he is a flight risk. The 71-year-old faces a murder charge in Los Angeles and lesser charges in New Orleans.

More testimony today in the case against former NFL star, Aaron Hernandez on trial for murder, prosecutors expected to present new evidence tracing movements of Hernandez and two alleged accomplices on the night Oden Lloyd was killed. Monday, the focus was on guns with a $15,000 payment Hernandez allegedly made to a Florida man for weapons.

There are new details concerning the arrest of University of Virginia student, Martese Johnson. The arrest that left him bloodied. Johnson will plead not guilty in court Thursday. The 20-year-old was arrested last week outside a bar in Charlottesville. He was charged with public intoxication and obstruction of justice.

The bar owner, though, says Johnson was quote "cordial" after he was denied entry. He was not belligerent as officers claim. Virginia State Police is investigating that incident.

Utah's governor signing a bill that gives the state a back-up plan for executions, firing squad. The lawmakers approved the measure earlier this month, it OKs death by firing squad if lethal injections drugs are not available. Those drugs are in short supply nationwide. Utah is the only state to allow firing squad as an alternative method of execution. Utah currently has eight inmates on death row.

A prediction from presidential hopeful Ted Cruz, the Texas senator says Jeb Bush will shatter every fundraising record in the upcoming campaign for the White House. Cruz believes everyone will be surprise by how much support his candidacy receives. So far that support is not materializing.

Listen to Cruz declaring yesterday and then listen to the harsh response from a fellow Republican Congressman Peter King of New York.

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SEN. TED CRUZ (R), TEXAS: Imagine in 2017, a new president signing legislation repealing every word of Obamacare. I believe in you. I believe in the power of millions of courageous conservatives rising up to reignite the promise of America.

REP. PETER KING (R), NEW YORK: Ted Cruz may be an intelligent person, but he doesn't carry out an intelligent debate, he oversimplifies. He exaggerates and he basically led the Republican Party over the cliff in the fall of 2013. He's shown no qualifications, no legislation being passed, doesn't provide leadership. He has no real experience. To me, he is just a guy with a big mouth and no results.

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MCDOWELL: He calls him a carnival barker. The 21-hour speech on the floor of the Senate when he was trying to shut down the government in fall of 2013 was not presidential. It was just chaotic.

Senator Rand Paul is expected to announce his candidacy in early April. The Kentucky Republican says he and Ted Cruz agree on most things, but Rand Paul believes he is more electable than Cruz and has a better chance of beating Hillary Clinton.

So what would the Ted Cruz economy look like? He is the first out of the gate. We fact check his talking points. That's next.

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[05:52:00]

ROMANS: So when Ted Cruz announced his candidacy for president, the first out of the gate for the Republicans, he outlined what the economy would look like if he's elected. Millions of new jobs he says. Four or five or six job offers for every new college graduate. Sounds like a great promise.

Fact check, President Obama has seen robust job growth on his watch. In 2014 was the best year for job growth since 1999. He would follow- up on THA performance. Cruz wants to abolish the IRS. You can do taxes on an index card, a simple flat tax.

His plans are not detailed enough yet to really assess. Of course, Ted Cruz's economy would mean no more Obamacare. Every bit of it trashed. He says it would make health care more affordable for everyone.

All right, 57 minutes past the hour, for more of the news, Alison Kosik is here -- Alison.

KOSIK: Good morning. We are seeing green arrows for futures. Yesterday, stocks took a breath. Dow and S&P are pulling back a bit from the rally. Nasdaq closed lower, but it is above 5,000 getting close to the march 2000 high. We will watch the Nasdaq.

ROMANS: I know a bit of a breather yesterday, but also this great report about the best places to retire. I was surprised that Florida is not on the list.

KOSIK: Well, it is on the list, but it's not the top state. The top state for retirement according to bank rate is Wyoming. It has the lowest tax rate in the country. It has a fifth lowest crime rate.

Next is Colorado thanks to the access to the mountains and great health care. In third place is Utah. Utah has hiking and skiing and low cost of living. If you are a retiree, warm weather matters.

ROMANS: Florida not in the top three, all right, Alison Kosik, nice to see you. Thank you.

Israel accused of spying on the U.S. nuclear negotiations with Iran. That is the big story this morning. "NEW DAY" picks it up right now.

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ROMANS: Israel accused of spying on the U.S. and Iran.

UNIDENTIFIED MALE: The prime minister's office here categorically denies any spying on the U.S. or any other of its allies.

UNIDENTIFIED MALE: President Obama had said he would slash the current number of U.S. troops in Afghanistan by half.

UNIDENTIFIED MALE: Ghani wants the president to reconsider how much flexibility is there in the draw-down.

UNIDENTIFIED FEMALE: The Islamic State hacking division calling on ISIS sympathizers to, quote, "kill the service members in their own lands." UNIDENTIFIED MALE: There's no way that all of these people could receive their own security detail.

UNIDENTIFIED MALE: This case is not closed.

UNIDENTIFIED FEMALE: There's no evidence of a brutal rape at any University of Virginia fraternity.

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CHRIS CUOMO, CNN ANCHOR: Good morning, welcome to your NEW DAY, it's Tuesday, March 24th, just before 6:00 in the east and we do have breaking news overnight. Israel spied on the U.S. nuclear talks with Iran. Eavesdropping on closed-door meetings to leak information to U.S. lawmakers. Why? In an effort to sink a possible deal.