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Security Tight at Times Square; "Russian" Malware Found of Vermont Utility Company Laptop; White House Responds to Trump, Putin; Lawmakers: Retaliation Against Russian Hacking Must Go Further; Top-10 Political Moments of 2016; Top-10 Political Moments of 2016; Trump's New Year's Message to His "Enemies"; Top-10 Entertainment Stories of 2016. Aired 1-2p ET

Aired December 31, 2016 - 13:00   ET



[13:00:03] FREDRICKA WHITFIELD, CNN ANCHOR: And this morning, Hong Kong and Taiwan also with dazzling fireworks to celebrate the New Year.


WHITFIELD: While parts of the world are already celebrating the New Year, cities in the U.S. still preparing for their big parties. Live pictures of New York's Times Square where people are lining up waiting for some of the barricades to be lifted so they can, too, end up right there in the pen. Security is very tight.

CNN correspondent, Jessica Schneider, is there.

Jessica, just describe all of the measures that can be made public about security there in Times Square tonight.

JESSICA SCHNEIDER, CNN CORRSPONDENT: A lot of security out here, Fredricka. It's the count down to the count down. The crowds are rushing into time squares slowly as they go through security. You can see that this is the way things are done. This is very carefully coordinated. You can see NYPD counterterrorism right there. They are screening each and every one of the expected two million people who will be filtering in here to Times Square. They're going through bag checks, security checks, metal detectors, radiation detectors, canines surveying this area. This is a huge operation.

This year, there are enhanced measures. There are about 65 sanitation trucks that will be out around the perimeter of Times Square. They'll be filled with sand. And they're acting as a barrier to any possible terrorist attack. There is no threat here in Times Square, no credible threat to New York City, but they are just taking precautions because of what we've seen over in Europe. Also, there will be 100 blockade cars that will be used, 7,000 police officers all over the city, as well as 65 of these pens.

You are looking at the pens right now. These people have been waiting out here.

How long have you been waiting out here?

UNIDENTIFIED FEMALE: 11:00 a.m. this morning.

SCHNEIDER: 11:00 a.m. I talked to some people this morning who were waiting in line since 7:00 a.m. They may be farther down here.

You can see the people who will be waiting about 11 hours until the big count down. A lot of excitement here.

Also, a lot of security. Counterterrorism teams will be at 14 different check points around Times Square here. They take this very seriously, Fred, what do they say and the mayor of this city as well as the commissioner of the NYPD saying this will be the safest place in New York City tonight.

WHITFIELD: Fantastic.

Jessica, while you were talking, initially, you were looking at the one young lady in a red coat being checked, and police cleared her, and she and her friend were like running, leaping with joy because they were among the first to actually get into that pen area after waiting all that time. So, the idea is, all those people behind you still have to go through security before they get into that open pen area?

SCHNEIDER: This -- say that one more time?

WHITFIELD: All the folks behind you, they have yet to go through personal security and get in the pen area, or they have already been through security?

SCHNEIDER: No - yes, these people are in.

You went through the security.


SCHNEIDER: They checked all your bags. Tell us what they did.

UNIDENTIFIED FEMALE: So, they wanded us to make sure we didn't have anything and they looked through every pocket and asked if we had cell phones and things like that.

SCHNEIDER: Now you are in for the long haul.


SCHNEIDER: Yes, waiting for that count down at midnight.

But they have a pretty good spot.

You guys have a great spot here, yes.

So, all these people have gotten through. They tick people through and fill up all the way to 59th Street. WHITFIELD: OK. They have a long way to go. I'm sure they have lots

of snacks in their pockets or something. That is what I would be thinking, food, how am I going to get through, how many hours without food and a backpack.

Jessica, thank you. Appreciate it. We'll check back with you.

Let's now turn to another developing story this New Year's Eve. A Vermont utility company says the same malware used by Russian hackers to meddle in the election has been found on a company laptop. Burlington Electric says the laptop was not connected to the power grid. But did call this an attempt to infiltrate utility systems. Vermont Governor Peter Schumlin lashing out at Russian President Putin saying, quote, "Vermonters and all Americans should be both alarmed and outraged that one of the world's leading thugs, Vladimir Putin, has been attempting to hack our electric grid, which we rely upon to support our quality of life, economy, health and safety."

Our team covering this story is joining us from all angels. We begin with CNN's Polo Sandoval.

Polo, a government, a U.S. government officials, Vermont officials, still unsure of the scope or intent of this intrusion.

[13:05:10] POLO SANDOVAL, CNN CORRESPONDENT: That's a great point, Fred. One U.S. government official tells my colleague, Jim Sciutto, they trying to determine that scope, the intent, and if this was an isolated incident.

While they continue with that investigation, there's a few things we do know for sure. This is some of it. We understand that Burlington Electric, as part of this advisory issued to several of these companies across the country to check their online security vulnerabilities, detected Grizzly, a malicious software, on one of the computers. If that sounds familiar, that is the software, malware that was reportedly used by Russian hackers to attempt to effect or sway the November elections. So, that is what is begging a closer look.

Officials with this electric company say that this laptop computer was not directly hooked into the rest of the network, which means they can speak with a fair degree of confidence in saying that the customer information and also the rest of the system itself, the power grid was not compromised.

Nonetheless, this is provoking a response from several elected officials. You showed one from the governor of Vermont a few moments ago. Some of the Vermont lawmakers speaking out, including Patrick Leahy, the Senator from Vermont, saying, quote, "This is beyond hackers have electronic joyrides. This is about trying to access utilities to potentially manipulate the grid and shut it down in the middle of winter. This is a direct threat to Vermont and we do not take it lightly. "

Just a bit of context here, Fred. This utility company, the power grid, it serves about 20 thousand customers, so you can imagine what the concern is when anybody would have possible access to that, to shut off certain parts of the network. Again, the company in a brief statement saying that is not anything that was compromised. We do expect to hear from them in the coming hours -- Fred?

WHITFIELD: Keep us posted, Polo Sandoval. Thank you so much.

Meantime, Putin is looking ahead to when Donald Trump takes office. In a statement to foreign heads of state yesterday, he offered congratulations to the president-elect. Also, writing, quote, "Acting in a constructive and pragmatic manner, we'll be able to take real steps to restore the mechanism of bilateral cooperation in various areas and take their interaction in the international arena to a whole new level," end quote.

Donald Trump is reciprocating that kind of praise, applauding Putin's decision to not expel American diplomats in Russia in response to U.S. sanctions against Russia. Trump tweeting, quote, "Great move on delay by V. Putin. I always knew he was very smart."

I will go live to Athena Jones, who is with President Obama in Honolulu.

Athena, has there been any more response coming from the White House as it pertains to, I guess, this affectation between Putin and Trump and the tone being sent?

ATHENA JONES, CNN CORRESPONDENT: No, no response from the White House to this conversation going on between President-elect Trump and the Russian president. And no response from the White House to this non- response from President Putin when it comes to these sanctions.

I can tell you that the White House does expect Russia to react in some way. And they also expect Russia to continue these same activities, or at least trying to conduct, carry out these same cyberattacks going forward.

But when it comes to these sanctions, and several other issues, several other moves this administration has made, just in the last couple of weeks that we've been here in Hawaii covering the president's working vacation, all of it points -- drives home the point that President Obama has been making for a while, which is he wanted to run through the tape on his administration, he wants to work up until the very end to get as much done as he can, as much of his agenda done as we can. Also, take some steps to try to protect his legacy. So you are seeing him employee these sanctions. He is going to be heading up to Capitol Hill next week for a meeting with House and Senate Democrats to strategize how to push back against GOP efforts to repeal his signature achievement, Obamacare, or the Affordable Care Act. They'll be talking about that. But also, other measures, like the steps to bar offshore drilling, the steps to continue drawing down the population of inmates at Guantanamo Bay. He announced plans to transfer several more detainees to other countries. So, those are among several steps the president is making in these final weeks, making sure he gets as much done as he can -- Fred?

[13:09:52] WHITFIELD: Still a very long list with 20 days until the swearing in of the next president.

Thank you so much, Athena Jones, in Honolulu, traveling with President Obama.

Straight ahead in the CNN NEWSROOM, John McCain says Russia must pay for hacking the U.S. election.


SEN. JOHN MCCAIN, (R), ARIZONA: When you attack a country, it's an act of war.


WHITFIELD: The political fallout and Vladimir Putin's message to the U.S.


WHITFIELD: Live pictures outside the Russian embassy in Washington, D.C. Just hours after the U.S. hit Russia with tough sanctions for hacking the presidential election, Vladimir Putin did what few anticipated -- nothing. Take a look at these headlines: "Putin's response now posing questions of what the last 20 days of Obama's presidency will look like," and if the U.S. relationship with Russia will change after Trump takes office.

Although Trump has dismissed the hacking claims, many Republicans support the sanctions against Russia. And some lawmakers, including John McCain, feel the retaliation should go even further.


MCCAIN: When you attack a country, it's an act of war. And so, we have to make sure that there is a price to pay so that we can perhaps persuade the Russians to stop this kind of attacks on our very fundamentals of democracy.


WHITFIELD: Let's talk more about all of this. Lynn Sweet with me, the Washington bureau chief with the "Chicago Sun Times"; and Tim Naftali, CNN presidential historian, here in New York with me.

Good to see both of you. Happy New Year.


WHITFIELD: We'll start it like that.

So, Lynn, you first.

You know, do you agree with McCain that this is an act of war, it should be treated as such? Does he have a very good number of Republicans on the Hill who are in agreement with him? LYNN SWEET, WASHINGTON BUREAU CHIEF, CHICAGO SUN TIMES: The answer

is, yes, he has a lot of Republicans and, yes, the last chapter of hacking, I think brings to mind perhaps we were late to just talk about this as an act of war. As much as if there had been some physical manifestation of an attack by Russia, in which case everybody would have understood the need for a reaction. The cyberattack that the U.S. went under, if you think about this in terms of an act of war, I think will be a different construct for people going forward, it will help understand why Republicans in Congress take this so seriously, why McCain is calling for even deeper retaliation, and why this puts a very tricky political situation for incoming President Trump, who is trying to minimize the hack attack and the Obama response.

[13:15:15] WHITFIELD: And House Intel committee member, Adam Schiff, talked to Jim Sciutto. Listen.



ADAM SCHIFF, (D), CALIFORNIA: I think he did. This would have been more powerful had it come earlier and in combination with our allies. That would be tough to put together in the last weeks of your office. These are significant steps, nonetheless. I don't think it's superficial. And I hope what the administration is doing covertly is more significant than what it is doing overtly.


WHITFIELD: So, Tim, you know, the stage is set, as Lynn said, and it's going to be very tricky, you know, with the start of this new presidency. Is that an understatement?

TIM NAFTALI, CNN PRESIDENTIAL HISTORIAN: No, it's not an understatement. President Obama and President Putin are playing chess and President-elect Trump is playing checkers. This is serious matter, when -- I wouldn't say act of war, but it's an attack on American sovereignty. Do you reward that behavior in American policy? That's dangerous. In 1990, Bush felt that Hussein's invasion of Kuwait couldn't be rewarded and that dictator had to pay a price. By acting the way he has acted so far, President-elect Trump is giving Putin a pass for violating sovereignty this year. That is going to weaken U.S. Initial security. Trump is in a bind. Because if he now says when he looks at the intelligence, oh, my goodness, this is real, then he looks foolish.

WHITFIELD: So far, he's been dismissing a lot of what has come from 17 intelligence agencies. It's interesting you word the Trump is playing "checkers," Putin is playing "chess." When you look at the tweet from Trump, great move, "Great move on the delay, I always knew he was very smart," it appears as though Donald Trump feels like he is playing -- he is in the same game as Putin.

NAFTALI: He is not in the same game. Here is the problem. The United States had its sovereignty compromised. The U.S. intelligence community believes that. Maybe there is a debate whether Putin did it to hurt Clinton or help Trump. It doesn't matter. If you respond to that by embracing the man who did it, you are saying that the United States is vulnerable to this kind of attack in the future and that we will respond in a weak way. Trump, in an odd way, someone who campaigned on being a great nationalist, he is adopting a strategy to weaken our power. He is in a bit of a box. He should have said nothing and let Obama and Putin fight and just say we have one president at a time and that would have given him options. He foreclosed options because of his tweets.

WHITFIELD: Interesting, Lynn, how complicated has this gotten. Tim used the word of "weakening" leadership as Donald Trump is to be sworn in, in 20 days. The whole mantra he has been running on is making America great again. Has he weakened himself as foreign policy as a whole or to the U.S./Russian relations.


SWEET: I think that does remain to be seen. Here is what now is on the front burner of the incoming Trump presidency, is a development of protocols for a new -- as the professionals call it, a new domain of war, as much as we had been attacked on land or air or internally. What is clear here is under the Trump administration, a cyberattack threat is not going to go away and he will have to deal with this in the future. So, you can't take this attack and the response in isolation. I think his incoming -- that is the complexity. You can separate the issues. Yes, no, we can more or not. We don't know that. We do know that it is now on his watch that perhaps will be the development of our approach to cyberattacks and cyber warfare.

WHITFIELD: So it's one thing, the relationship between Putin and Trump, also, Tim, it's the relationship between Donald Trump and a Republican-controlled Congress, especially when you have John McCain, who says next week, hearings, other Republicans, Lindsey Graham, you know, Paul Ryan, all of them saying even more should be done.

[13:19:58] NAFTALI: A lot of analysts are wondering why did Donald Trump take on the U.S. intelligence community, what was the advantage to him. Because the Congress has access to that material, too. And if Donald Trump is putting pressure, I mean, implicitly on Congress to actually say that the intelligence community is wrong. Lindsey Graham and Senator McCain at the very least are going to use their own judgment to determine whether they agree with the intelligence community. If they find that Obama was right -- and I suspect they will -- that puts Trump again in a box. It's unclear why he has felt that he needed to tweet this way.

WHITFIELD: Trump is claiming it's the Obama White House that put him in a box.


NAFTALI: Well --

WHITFIELD: You and perhaps others have said he is putting himself in a box.

NATFALI: I feel he is in a box because of the sanctions. As you heard from Congressman Schiff, a lot of people wanted something done, on both sides of the aisle. The box Trump put himself in is, does he admit there was a cyberattack when the intelligence is overwhelming. And we'll see if it's overwhelming. Many people feel it is. If he admits it, he is admitting he was wrong. He doesn't like to do that.

WHITFIELD: Lynn, quickly, on Trump versus the intelligence community?

SWEET: Well, he so far has not shown that he is a user of the intelligence that is available to him. He's going to have a briefing Monday. If you give him a benefit of the doubt that he just needs time, a little more time, then you -- one needs to give it to him to let the administration get up and running. But the intelligence community will brief him in the way he wants to. They will do what they can to accommodate him.

WHITFIELD: Tailor it.

SWEET: But at a certain point, the facts will be the facts.

WHITFIELD: Lynn Sweet, Tim Naftali, thank you so much. Happy New Year.

NAFTALI: Happy New Year.

SWEET: Happy New Year.

WHITFIELD: Coming up, it was an election year for the history books, indeed. Next, the top-10 political moments of 2016.







[13:24:49] WHITFIELD: Welcome back now for a look at the most memorable political stories of the year.

Here is Jake Tapper.


JAKE TAPPER, CNN CHIEF WASHINGTON CORRESPONDENT: This year, everything we thought we knew about politics was turned on its head. Political attacks, e-mails hacks and several cracks in the glass ceiling made for an unparalleled race between the first female party nomination and a billionaire political outsider. President-elect Trump will soon take office.

But first, look back at the top-10 political stories of 2016.

(voice-over): Number 10 --


TAPPER: -- conservative Supreme Court Justice Antonin Scalia died suddenly in February.

REP. PAUL RYAN, (R-WI), SPEAKER OF THE HOUSE: Everything is on the line.

TAPPER: Republicans vowed to block any high court appointments until after the presidential election.

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: Simply to turn your back, before the president even names a nominee, is not an option the Constitution leaves open.

TAPPER: Judge Merritt Garland was nominated in March but never even had a hearing.

Number nine --

OBAMA: You want to give me a good sendoff, go vote.

TAPPER: In their final presidential year, the Obamas hit the campaign trail.

MICHELLE OBAMA: When they go low, we go high.

TAPPER: With more catch phrases.

OBAMA: Come on, man.

TAPPER: And less restraints.

OBAMA: Donald Trump is uniquely unqualified to be president.

TAPPER: But a different tone after the Democratic defeat.

OBAMA: If you succeed, then the country succeeds.

JAKE TAPPER, CNN ANCHOR: Number eight --

TRUMP: I beat everybody. I beat the hell out of them.

TAPPER: Donald Trump won the Republican nomination but struggled to win over the party. Republican leaders distanced themselves.

(on camera): Will you support him?

PAUL RYAN, (R-WI), SPEAKER OF THE HOUSE: I'm just not ready to do that.

TAPPER: Will the party now unify around President Trump?

PAUL: We're going to hit the ground running.

TAPPER (voice-over): Number seven, Trump's unvarnished campaign attracted extremist support.

TRUMP: I don't know anything about what you're even talking about with white supremacy.

TAPPER: He was slow to denounce white supremacists.

TRUMP: David Duke endorsed me? OK. I disavow. OK?

TAPPER: And controversial rhetoric on race continued.

TRUMP: This judge is of Mexican heritage, I'm building a wall.

TAPPER: Even targeting the judge in his university fraud case.

(on camera): If you are saying he can't do his job because of his race, is that not the definition of racism?

TRUMP: No. I don't think so at all.

TAPPER (voice-over): Number six, the conventions.

HILLARY CLINTON, (D), FORMER SECRETARY OF STATE & FORMER PRESIDENTIAL CANDIDATE: The first time that a major party has nominated a woman for president.

TAPPER: Hillary Clinton made history in Philadelphia, and a Gold Star family made Trump an offer.

UNIDENTIFIED MALE: Have you even read the United States constitution? I will gladly lend you my copy.


TAPPER: In Cleveland, Melania Trump's speech was -- familiar.

MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: You work hard for what you want in life.

MELANIA TRUMP, INCOMING FIRST LADY OF THE UNITED STATES: That you work hard for what you want in life.

TAPPER: And Senator Ted Cruz refused to endorse the nominee.


TAPPER: Number five, Trump's past went public. There was a former Miss Universe feud.

UNIDENTIFIED FEMALE: He called her Miss Piggy.

TAPPER: He responded with a link to her past.

ANDERSON COOPER, CNN ANCHOR, A.C. 360: You sent out a series tweet, including one to check out a sex tape.

TAPPER: Then a crude video of Trump.

TRUMP: You grab them by the (EXPLETIVE DELETED).

TAPPER: He brushed it aside.

TRUMP: This was locker room talk.

TAPPER: But nearly a dozen assault accusers said it went further than words.

UNIDENTIFIED FEMALE: His hands started going towards my knee and up my skirt.

TAPPER: Trump denied the allegations and said he would sue.

Number four, Senator Bernie Sanders built a huge movement.

SEN. BERIE SANDERS, (I), VERMONT & FORMER DEMOCRATIC PRESIDENTAIL CANDIDATE: We are actually listening to the American people, not the 1 percent.


TAPPER: But was the system rigged against outsiders?

SANDERS: Secretary Clinton received about 450 super delegates before anybody else was in the race.

TAPPER: "Bernie or bust" protestors crowded the convention --

UNIDENTIFIED FEMALE: You're being ridiculous.

TAPPER: -- and refused to vote for Clinton.

Number three, Democrats were hacked.


TAPPER: Stolen e-mails from the DNC revealed bias against Sanders forcing the party chair to resign.

SANDERS: There's no question to my mind the DNC was at opposition to our campaign.

TAPPER: U.S. intelligence points to Russian cyberattacks.

OBAMA: Our goal continues to be to send a clear message to Russia or others not to do this to us, because we can do stuff to you.

TAPPER: Number two --

JIM COMEY, FBI DIRECTOR: There is evidence they were extremely careless in their handling of very sensitive highly classified information.

TAPPER: -- the FBI recommended no charges for Clinton's use of a private e-mail server. Still, the issue was gold for Republicans.

TRUMP: She's guilty as hell.


TAPPER: She tried to quell concerns.

CLINTON: My e-mails are so boring.

TAPPER: But the FBI announced they discovered new ones just before Election Day.

CLINTON: It's imperative the bureau explain this issue.

TAPPER: The trove contained nothing new but the damage was done.

[13:30:00] Number one --

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Hillary Clinton has called Donald Trump to concede the race.

TAPPER: Donald Trump won the White House.

WOLF BLITZER, CNN ANCHOR: The campaign, unlike anything we've seen in our lifetime.



TAPPER: As protestors took to the streets, Secretary Clinton bowed out.

HILLARY CLINTON, (D), FORMER SECRETARY OF STATE & FORMER PRESIDENTIAL CANDIDATE: We have seen that our nation is more deeply divided than we thought.

TAPPER: Now, a cabinet of billionaires, outsiders and military men will join Trump for an era of, who knows what.

(on camera): Those were the top-10 political stories of this year. The question is who and what will top the list next year.

Jake Tapper, CNN, Washington.


WHITFIELD: All right. What a look at 2016 politics. Our special New Year's Eve coverage tonight with a little levity. How about a lot of levity? Tonight, 8:00 eastern time, live from Times Square, ring in the New Year with CNN, Anderson and Kathy.

We'll be right back.


WHITFIELD: Hello, everyone. Thank you so much for joining me. I'm Fredricka Whitfield, in New York.

A Vermont electric company says it found malware linked to Russian hackers on a company laptop. Burlington Electric says it's the same code that government officials believe was used to meddle in the U.S. Election. A government source telling CNN the full scope and intent of the intrusion is still unclear. Vermont officials outraged. The governor issuing a statement saying, "Vermonters and all Americans should be alarmed and outrages that Putin has been attempting to hack our electric grid." Putin didn't address the allegations in Russia in his annual New Year's message.

CNN international correspondent, Matthew Chance, joining me from Moscow.

Matthew, will these ongoing claims about Russia and possibly the same malware being used with the Vermont utility company computer, might that impact the relationship between Russia and the U.S.?

[13:35:07] MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I mean, if hacking into the election hasn't impacted it as far as Donald Trump is concerned, it's hard to see how hacking into this electricity company might. I suppose it does build a case, doesn't it, against Russia. But I think we have to focus on a couple of things, first of all, the hacking of the election is not about hacking, it's about the dumping of the data. Everybody hacks each other, Americans hack the Russians, Chinese hack everyone. It's about dumping the data and using that in a politicized way, trying to influence the outcome of the poll. That is what was controversial.

The other thing we have to remember is that whatever is happening now, Vladimir Putin, and to a certain extent, Donald Trump appear to be sweeping it to one side and putting their eye on the future, the not- too-distant future, the future about three weeks from now when Donald Trump takes office in the White House.

Already Putin has issued his formal New Year's congratulations to other world leaders, the prime minister of Britain, queen of England, president of France, people like that. He missed out President Obama. He did though, congratulate President-elect Trump, showing once again that he is finished with the Obama administration as far as Putin is concerned. And he said this, he actually articulated this, he says, "The future of U.S./ Russian relations will be formed on the basis of the policy of Donald Trump." And obviously, Donald Trump is happy to hear that, tweeting that message yesterday, saying he knew Vladimir Putin was "very smart."

WHITFIELD: Matthew Chance, thank you, from Moscow.

Still ahead, spying, malware, hacking, covert ops, how they have always been in play between the U.S. and Russia. Next.


[13:39:58] WHITFIELD: Welcome back. I'm Fredricka Whitfield.

It's a mansion sitting on 45 acres, with a pool and tennis court, and a long-time retreat for Russian diplomats and their families in Maryland. The Obama administration says the Maryland beachside compound and luxury estate in New York are spy nests. Both compounds have been shut down as part of the U.S. sanctions against Russia.

CNN Barbara Starr reports on the U.S. and Russia's long history of spying on each other.


BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): FBI cameras captured Russian operative, Anna Chapman, and a federal undercover agent meeting in a New York coffee shop in June 2010. 17 days later, Chapman and nine other Russian sleeper agents were arrested in New York, New Jersey and Virginia, charged with conspiracy to act as unlawful agents of Russia. Spies, who had burrowed deep into American society for years trying to steal secrets and recruit agents.


STARR: The FBI had watched Chapman and the others for months, recording drop-offs of packages, meetings on staircases, even one meeting just yards from CNN's offices in New York. The U.S. believes the group never got its hands on classified information. But the Russian infiltration into the U.S., a classic Moscow move.

STEVE HALL, FORMER CIA AGENT: What they do is more than collect, they actually try to influence events to the benefit of Russia, all over the world. And this is something that they have done for decades.

STARR: Within days, at the airport in Vienna, an elaborate choreographed transfer. The 10 Russians traded back for four other Russians charged with being in touch with Western intelligence services.

Now, the State Department is expelling 35 Russian officials it says violated their diplomatic status. This, after the U.S. claim of interference in the presidential election and harassment of U.S. diplomats overseas.


STARR: Vladimir Putin, of course, a former Russian intelligence officer, well-acquainted with the so-called illegals program, putting agents into U.S. society.

HALL: The fact they would continue to do that to establish these American legends and cover story for the people that were trying to pose as Americans in the United States shows how serious they are.

STARR: But the U.S. has also been caught in the act. In 2013, Ryan Fogel, a political secretary at the U.S. embassy in Moscow, was arrested. The Russians claim they caught him with wigs, dark glasses and cash, trying to recruit a Russian agent. He was expelled. It was never clear if he was set up by the Russians.

Earlier this year, a U.S. diplomat was tackled and beaten by a uniformed Russian police officer as he tried to enter the American embassy in Moscow.

JOHN KIRBY, STATE DEPARTMENT SPOKESMAN: The action was unprovoked and it endangered the safety of our employee.

STARR (on camera): And in that latest incident, the U.S. wound up expelling two Russian diplomats.

This type of cat-and-mouse spy activity has been immortalized in TV and movies for years, but the reality can be vicious and very dangerous.

Barbara Starr, CNN, the Pentagon.


WHITFIELD: Straight ahead, President-elect Donald Trump, how he is ringing in the New Year and this holiday message to his, quote, "enemies."


[13:46:29] WHITFIELD: Welcome back. I'm Fredricka Whitfield, in New York.

President-elect Donald Trump is issuing a New Year's greeting, but it seems to be directed at his adversaries, tweeting, quote, "Happy New Year to all, including to all my many enemies, and those who have fought me and lost so badly they just don't know what to do. Love."

Trump will celebrate the holiday tonight at a party at his Mar-a-Lago resort in Florida.

Let's bring in CNN Ryan Nobles.

So, Ryan, what more do we know about how the president-elect spent his day and perhaps almost solo?

RYAN NOBLES, CNN CORRESPONDENT: I guess he probably never travels solo anymore. We're told about 25 Secret Service agents were with Donald Trump this morning. But the press was not, when he made an unannounced trip to his golf club in Jupiter, Florida, which is about a half hour away from the resort for a morning round of golf. Now, this is something that has become a bit of a pattern, where he takes off and goes somewhere without the pool accompanying him. That may not seem like a major detail, but it is a precedent. Any time a president or president-elect goes anywhere, there is a small group of journalists in case something happens, or be sure we know where the president-elect is at any time.

His -- he is expected to be back for this big party he has planned at the Mar-a-Lago resort. There will be some 800 guests in attendance at this event.

Here is some of the details of what we can expect at this party. This is something that you have to pay for. This is that addition that goes back several years. These prices not very much different than what they've been in the past $525 for members.

There will be celebrities in attendance, Stallone will be there, Regis Philbin and Vanessa Williams. We're not sure how many different celebrities will be there.

His big ballroom he built after purchasing Mar-a-Lago will be decorated in what they're describing as an explosion of green and white flowers. So, a pretty big celebration planned for the president-elect, and he will return back to New York tomorrow -- Fred?

WHITFIELD: OK. Ryan Nobles, in Washington, thank you so much.

NOBLES: Thank you.

WHITFIELD: Before we go to break, we want to look back at some of the musical icons that we lost in 2016.






[13:49:58] (SINGING)


WHITFIELD: It has been a particularly busy year in the entertainment world. We witnessed ground-breaking musical performances, a high- profile celebrity divorce, and said good-bye to many top performers.

CNN contributor and "Entertainment Tonight" host, Nischelle Turner, breaks down the 10 biggest entertainment stories of 2016.


NISCHELLE TURNER, CNN CONTRIBUTOR & HOST, ENTERTAINMENT TONIGHT (voice-over): From TV shakeups to relationship breakups, 2016 was a year full of scandals and tragedies.

No TV show makes noise like the "Walking Dead." sent Twitter into a frenzy with the seventh-season premier death of fan favorite Glen. The news had been teased for months and the big reveal left many viewers tuning out for good.


TURNER: Christina Grimmie's murder shocked the world when the former "The Voice" contestant was gunned down in June after a concert in Florida. Grimmie's unlikely death had all of Hollywood paying their condolences to the 22-year-old singer, a young talent taken way too soon.


TURNER: It only took a dash of "Lemonade" for Beyonce to get the world in "Formation." The queen bee kicked off the year with a new anthem and a super bowl performance that found the singer making a much bigger political statement than she ever has before. Beyonce got the entire industry talking when, for the second time in a row, she released a surprise visual album calling "Lemonade." Proving the music year belongs to her, Beyonce ended 2016 racking up nine Grammy nominations, including album of the year.

KATE MCKINNON, COMEDIAN: He's either not that rich -


MCKINNON: -- not that charitable -


MCKINNON: -- or he has never paid taxes in his life.

BALDWIN: Wronger.

[13:55:12] TURNER: "SNL" takes on the election.

(on camera): Nothing got people talking more than the presidential election. "SNL" stand-ups had a life of their own.

UNIDENTIFIED FEMALE: And number four --


TURNER (voice-over): Alec Baldwin and Kate McKinnon's portrayal of Donald Trump and Hillary Clinton kept viewers tuning in and gave the sketch show its highest ratings in year.

"Hamilton" rocks Broadway and beyond --


TURNER: -- when Manuel Miranda's talking about the life of Alexander Hamilton became a national phenomenon. "Hamilton" has become the hottest ticket in town and set a Broadway box office record for the most money grossed in a single week in New York City.

ROSEMARY CHURCH, CNN ANCHOR: Legendary British singer, David Bowie, has died after a battle with cancer. He was 69 years old. (SINGING)

UNIDENTIFIED CORRESPONDENT: He was a giant of music, an icon of fashion, but more than anything else, David Bowie was an artist.

TURNER: The news of David Bowie's passing just two days after his 69th birthday. The music icon died from liver cancer at his New York apartment. Despite being diagnosed 18 months prior to his death, Bowie never made the news of his illness public. Devastated fans set up shrines across the world. He released his 25th studio album "Black Star" the week he died, and it was declared the musician's swan song.

TURNER (on camera): Well, it wouldn't be Hollywood without new antics from Kanye West.

(voice-over): Yezi himself kicked off the year with a new album and the latest collection in his fashion line before reuniting his feud with Taylor Swift. The pair had a spat of "he said, she said" over lyrics about their album. Later in the year, West cut his latest tour short after a series of confusing on-stage outbursts.


TURNER: The cancellations were immediately followed by a week-long hospitalization for exhaustion.

(on camera): Just when we thought Kanye had had a busy enough 2016, the rapper met with President-elect Donald Trump to discuss all of those issues on his mind.

(voice-over): Kanye wasn't the only family member making headlines. Kim Kardashian's harrowing robbery in Paris got everyone talking. The reality star was held at gunpoint and robbed by men dressed as police officers in a private apartment. A spokesperson for Kardashian West said she was badly shaken but physically unharmed from the incident.

The end for Brangelina. Angelina Jolie and Brad Pitt decided to call it quits after more than a decade together.

BROOKE BALDWIN, CNN ANCHOR: Jolie filed for divorce in Los Angeles. The reason? Court papers cite reconcilable differences.

TURNER: The two A-listers are in a heated custody battle over their children that involve the FBI. We will see how this former Hollywood love story comes to an end.

In a year of unexpected losses, including Glen Fry, Gene Wilder, Gary Marshall, Alan Thicke, Carrie Fisher and Prince.

BLITZER: We are getting the word out that Prince has died.

TURNER: He died in his Paisley Park home of what the medical examiner called a "self-administered overdose of the painkiller Fentanyl."

CNN POLITICAL COMMENTATOR: The world needs to know that it wasn't just the music. The music was one way he tried to help the world, but he was helping every single day of his life.


TURNER: Prince was a musical genius.


TURNER: The Minneapolis native's signature sound catapulting him to international superstardom.


TURNER (on camera): The music legend's passing inspired an outpouring of love from fans and celebrities worldwide with a massive vigil set up at Prince's home and studio at Paisley Park. Prince was 57 years old.



WHITFIELD: What a look at the year 2016.

The next hour of the CNN NEWSROOM starts right now.

Hello, again, everyone. Thanks for joining me. I'm Fredricka Whitfield.

We begin this hour in New York City where crowds are getting ready to usher in 2017. You are looking live right now at Times Square. Already past. The security there is also very tight as the city prepares for tonight's New Year's celebration.

That's where we find CNN's Jessica Schneider.

Jessica, what are authorities doing there to prepare for tonight?

[13:59:53] SCHNEIDER: A lot of preparation goes into this. This is highly choreographed, highly arranged by the NYPD.

I will first tell you about the crowds here. You did say the crackled crowds are already packing in. That is for sure. They stretch for blocks that way. And the ball drop isn't for 10 hours. And the ball drop is a few blocks this way. So, we have all of these people lined up here. These people camping out.