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Russia over alleged cyber-attacks on the United States. One hour to go
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[16:00:00] ELENI GIOKOS, CNN ANCHOR: The closing bell has rung on the trading session of the year. It is Thursday, December the 29th. Tonight, the White House strikes back. President Obama slaps unprecedented sanctions on Russia over alleged cyber-attacks. There is just one hour to go before a crucial cease fire begins in Syria. And Donald Trump says he has convinced a start up to create thousands of jobs in the United States. The company's founder is live on this program later. I'm Eleni Giokos. This is QUEST MEANS BUSINESS.
Tonight, two major breaking news stories to bring you with one common thread. In Washington, President Obama has just rolled out major new sanctions against Russia over alleged cyber-attacks on the United States. While in Syria, we're less than an hour away from a cease fire brokered by Syria as well as Turkey. At the heart of both stories the Kremlin where Russian influence on the world is being felt from the computer servers of the DNC to the war-torn streets of Aleppo. Will begin with the United States.
In the dwindling days of the Obama presidency the White House has issued an executive order with new and unprecedented sanctions against Russia. Six individuals and five Russian entities, including the country's security service and its main intelligence agency are the target. It comes in response to reports from U.S. intelligence that the Kremlin was behind hacks made to affect the U.S. presidential election. Standing by in Washington we have Evan Perez to give us a few more details. Evan, thank you very much for joining us. Unprecedented moves but looking deeper into the sanctions, it has nothing to do with the economy. These are about naming and shaming. Take us through what we heard today.
EVAN PEREZ, CNN JUSTICE CORRESPONDENT: That's right, it is about naming and shaming and it's really extraordinary if you look at the list of the sanctions that the United States has announced today. We're talking about the four senior top officials of the GRU, which is the Russian Military Intelligence Agency, which is one of the two agencies that breach the Democratic National Committee, as well as other Democratic Party organizations in the past year. And which has played a center focus frankly for the U.S. intelligence agencies as they have been looking at who was behind both the hacking of the Democratic Party organizations, as well as trying to disseminate that information to WikiLeaks and other websites in a bid to embarrass the Hillary Clinton campaign and embarrass the Democrats. And in that way also help Donald Trump. That is one of the more controversial aspects of this action. Because we expected Donald Trump is going to have a reaction in which he disputes, frankly, that this had anything to do with this election. But that said, we now have these actions by Obama administration that goes not only sanctioning the FSB, which is the other intelligence agency, the GRU. But also, expelling 35 diplomats that the United States says are actually spies. They are also cutting off access to two compounds here in the United States. One in Maryland about an hour away from where I'm standing, and another one in New York. These are both compounds that the United States is declaring to be essentially spy outposts.
What I think is important to keep in mind about all of these actions is the concern, and I think the proportional response here that the United States was trying to take. The Obama administration has many concerns about making sure that this doesn't start a cyberwar, or perhaps even a shooting war with the Russians. If you notice, we're talking sanctions, we're talking diplomats being expelled, these are things the United States and Russia have done to each other over the decades during the Cold War. And I think that's the sphere under which the United States and the Obama administration is trying to keep this action.
GIOKOS: Yes, and we heard earlier today before the sanctions were announced that there will be a response from Russia. That there could be a tit-for-tat. But in the same breath we're also hearing there could be covert sanctions, ones that will not be announced. What do we know about this? I mean, there are so many dynamics that are playing out at this point.
PEREZ: Right, and I think that's exactly the intention from the Obama administration, which is to say that there are things you're not to know about. That the Russians aren't necessarily going to get any notice about that the United States may be doing. And here is where that gets more complicated. Because I think part of the picture here, the bigger picture here, is if you talk to the Russians, I think the Russian government would say that what they -- what has been happening, frankly, between the United States and Russia, is simply a response to activities that the Russians believe the Americans have been doing for years. That the CIA, the NSA, other spy agencies of the United States have been meddling, have been interfering with the internal affairs of the Russians.
[16:05:00] They certainly believe that during the last election there in Russia, that the United States State Department and the spy agencies were funding some of the groups that were highly critical of Vladimir Putin. They believe whatever was happening in the past year was a proportional response to what United States has been doing. Obviously, the United States would dispute all of that, but that's again part of the game, the long game, that has been played between these two countries.
GIOKOS: Evan, thanks so much for that update. Evan Perez, live from Washington for us.
The Russian embassy in the U.K. has tweeted from its verified accounts slamming President Obama's move as cold war deja vu. They posted a picture of a lame duck and said they'll be glad to see the last of this hapless administration. Joining us now, we have Bob Hormats, the former U.S. Undersecretary for Economic Energy as well as agricultural affairs, to take us through some of the dynamics that are going to be playing out between the U.S. and Russia in the few weeks to come. So, thank you very much for joining us. Great to have you on. I mean, looking at the sanctions, these are not going to hurt the country economically, but we just heard from Evan the ins and outs. Would you make of these announcements?
BOB HORMATS, FORMER U.S. UNDERSECRETARY FOR ECONOMIC AFFAIRS: I think when you have 17 intelligence agencies telling you that the Russians were in various ways responsible for this hacking. It would be impossible for the president to not do something. He's tried to keep this proportional. It's not the Cold War. The Cold War was a standoff with a threat of military action on both sides. But this is a new kind of cyber warfare or cyber skirmishing. It's really not even quite at the point of warfare or it can get to that point.
But it's essentially the United States taking action that will eliminate a number of people, 35 people from the Russian embassies in the U.S., various parts of the U.S., and second, put a number of people and entities on the so-called designated national list, or special designated national list. But it won't have a huge amount of impact.
GIOKOS: Do you think that Russia is going to do the same to the United States?
HORMATS: I think Russia will probably expel diplomats and I think they will go after some of our intelligence operatives if they can identify them in Russia or various parts of the world. But I think the Russians will talk tough and probably act tough, but they will probably want to keep this in proportion.
GIOKOS: you know, just a few weeks left of the Obama administration, but as you said, they had no choice, they had so much evidence. What do you think President-elect Trump is going to do come January 20th?
HORMATS: He has to listen to the intelligence services. One of the things that is troubling to me is the fact that you need intelligence services in order to deal with a lot of these issues. They're the one that's have done a lot of the work to figure out who has done the hacking. So, you can't ignore them. And you can't ignore the fact that if these intelligence services are correct, and 17 are in unity on this issue, that there was hacking and there was in attempt to interfere in some way with the American electoral process. This goes deep to the heart of American democracy. You can't have this without some reaction on the part of the United States.
GIOKOS: While we know that the hack was towards the DNC, I mean do you think that it questions the integrity of the U.S. electoral system and the way that is conducted. Does that create a concern for you?
HORMATS: I don't think it undermined the integrity of the electoral process in this country. There was really no evidence that ballot boxes were meddled with by the Russians. But it was meant to cause confusion and was meant to undermine the credibility in a broader sense of saying that you could not trust certain information. There was a lot of information that was hacked, and then released. It was mainly designed to cause confusion, and a misunderstanding of various parties of what the other was doing. But it was not a decisive factor in the elections. Nonetheless, you don't want to have foreign parties intervening, hacking, and interfering in the American electoral process. Because over a period of time it could cause confusion. It could undermine credibility. And the Russians, if they have it here, could do it elsewhere to undermine credibility of elections elsewhere.
GIOKOS: What's your prognosis of what U.S./Russian relationship will look like in the next four years.
HORMATS: In the next several weeks it will look very disrupted and disruptive. In the next several years, it depends. I think it is very important for president Trump when he is inaugurated to take a look at this.
[16:10:00] He doesn't want under his presidency a lot of Russian intervention in the political process, either. At some point, he has to sit down with Putin and say, all right, I haven't really said very much about this, and more or less he's dismissed this, but he can't have this go on to have a major foreign power interfering, hacking, and trying to cause disruption in the American political process. He's got has to raise this issue with Putin. Along with a lot of other issues. If he has such a good relationship with Putin, as he plans to have, then he has to go to Putin and say, this is very important. The heart of our democracy cannot be penetrated by a foreign power. You can't do it and try to work out some understandings, some rules of the game here.
GIOKOS: Bob Hormats, thank you for your time, much appreciated.
HORMATS: Thank you.
GIOKOS: Previous sanctions from the United States have tried to put pressure on Russian companies and the Russian economy. This year, it hasn't worked. Moscow's MICEX has proved to be resilient, moving in lockstep with the Dow and Russians are even feeling the Trump bump. The MICEX has soared nearly 10 percent since the U.S. election back in November. The recent surge in oil prices have certainly helped as well as Donald Trump signals that he wants a friendlier relationship with Vladimir Putin. A spokesman for Putin says the Russian president will take reciprocal actions against the U.S., but that he will not rush this. CNN's Matthew Chance is live now in Moscow for us. Matthew, tell us about the reaction at this point in time. We heard earlier today that there will be similar response. What can we price in at this stage?
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, well, I mean the exact concrete measures that the Kremlin is going to take, and it will take some measures that he will identify yet. They have not spoken about them in any detail. But they said -- and they said this just a few minutes ago, in a conference call we were on with the Kremlin, just after the sanctions were announced in the United States. That there's no alternative to the principal of reciprocity. So, they're leaving very little doubt that when it comes to at least the 35 diplomats who been expelled from the United States and declared persona non-grata.
They're going to do something similar. That would be normal diplomatic practice as far as the Russians are concerned to expel 35 American diplomats. But, that would be the situation under normal circumstances. But of course, we're not in normal circumstances. This is obviously, normally this would be a major deterioration in the relationship between Washington and Moscow. But we can't necessarily take that step and see it in that way now. Because in just three weeks, Donald Trump, who is more sympathetic, it seems, to Russia is going to be taking up his position in the White House, and the Kremlin said they're not in any rush to make any measures, to make any decisions right now.
Vladimir Putin will decide when the right time is to decide what to do. You almost get the impression they will sit this out and wait for Donald Trump to take power in the United States before they launch into a reciprocal tit-for-tat expulsion situation with the United States that could actually harm our relationship, that they hope can be built upon in the coming years.
GIOKOS: Exactly. These executive orders that were signed, and as quickly as they were signed, is as quickly as they can be undone as well when Trump gets in office. You're saying that they probably will sit it out, but in the meantime, we've also heard of covert action taken. What is the stance right now of the Russian government?
CHANCE: We've heard the possibility of covert action. Because of its nature, we haven't heard that any covert action has been taken yet. But look, I just think is one possibility that the Russians may want to sit back a little bit and say, let's not take too much of a dramatic step in response to this, because we could potentially have, they would think, a president of the United States about to take office that is much more sympathetic to our cause.
And also, you mentioned an executive order. There have been many executive orders in terms of sanctions that President Obama has signed into force. When it comes to sanctions on Russia over its annexation of Crimea for instance, back in 2014. Punishing Russian for that annexation, and for their involvement in the conflict in Eastern Ukraine. At a stroke of a pen those sanctions can be lifted by Donald Trump if he chooses to do so. And remember, his preferred choice for Secretary of State, Rex Tillerson, the former CEO of Exxon, has gone on the record as saying, he does not believe that sanctions are a useful tool for American foreign policy, an effective tool I think is the word he used.
So, there's a body of thought, including Donald Trump and his potential Secretary of State, Rex Tillerson, that believe sanctions are not the right way to go when it comes to Russia. So, we could see in the days, in the weeks, in the months ahead, this sanctions regime, which has been bolstered today by the Obama administration, being diluted by Donald Trump.
[16:15:00] GIOKOS: All right, thank you very much Matthew, for that update.
The possibility of a lasting peace in Syria, the cease fire is set to begin in 45 minutes. It is not the first time an attempt to stop the bloodshed has been made. World leaders and beleaguered Syrians are hoping it is the last.
(COMMERCIAL BREAK)
GIOKOS: Tonight, peace in Syria. Less than an hour from now, a cease fire is set to go into effect in the war-ravaged nation, hoping to bring an end to 6 years of civil war and bloodshed that is left some 400,000-people dead. Russian President, Vladimir Putin announced the deal. Mr. Putin says, Syrian president Assad will begin peace talks with rebels. Russia and Turkey will be the guarantors of the agreement. Turkey's President says, it is imperative this becomes a lasting peace.
(BEGIN VIDEO CLIP)
RECEP TAYYIP ERDOGAN, PRESIDENT OF TURKEY (through translator): We have an opportunity to stop the bloodshed in Syria with a political solution. We must not squander this chance. This is a historic chance. This window of opportunity should not be wasted.
(END VIDEO CLIP)
GIOKOS: This is the third time this year a cease fire has been attempted in Syria. The situation may never have been as dire. Aleppo lays in ruins, virtually destroyed. This month the Syrian army seized the city after more than four years of rebel control. The humanitarian crisis inside Syria worsens by the day. More than six million people have been displaced from their homes. And close to five million Syrians have escaped their homeland. They're now scattered all over Europe, and the Middle East, helping to create the worst refugee crisis since the end of the second world war. CNN's Hala Gorani, is now live for us in London. Hala, it's not a cease-fire that is pushed by the United Nations or the U.S. It is one that Vladimir Putin has been pushing forward. Can he succeed?
HALA GORANI, CNN, CORRESPONDENT: Well, this could be a significant agreement, because Turkey is also part of all of this, and of course, Turkey and Russia were never great friends. There was recent times, they're foreign ministers met in Moscow about 10 days ago, with the Iranian foreign minister. They hammered out this deal. They're on opposing sides of the conflict, Turkey and Russia, and it seems as though after the military victory in Eastern Aleppo for the government of president Assad, perhaps they thought this was the right time to come up with some sort of cease fire deal.
The question is going to be, what kind of cease fire are we talking about here. ISIS is obviously excluded, that's not controversial, but then you have other groups. Those associated with al-Qaeda, the Al-Nusra front, which rebranded itself recently. If there excluded as well, that means military operations will continue. But also, the flip side is that they're not excluded.
[16:20:00] So, the Al-Nusra front is allowed to operate and maintain control of the territories it holds now. It means an al-Qaeda linked group will have some level of control and a portion of Syria. Whatever way you look at it, this is not the end of the war, is the beginning of what might be probably a very long process. In a few weeks' time the parties to this agreement will meet in Kazakhstan, and they will hammer out more details.
And then there are more plans for a transitional -- a period of political transition. Whether or not that includes Bashar al-Assad through, is also an open question.
GIOKOS: Yes, and those peace talks that will take place, as you mentioned in Kazakhstan, bringing the parties to the table with so many different interests, and now that we have seen the rebels losing a significant post in Aleppo, who's got the upper hand? And what do you think is going to take the conversation forward so it can be turned it into action?
GORANI: I mean, obviously, militarily you have the government aided by not just Russia, Iranian fighters and militia. You have Hezbollah fighters as well. The significant military victory of recent weeks, is obviously, Eastern Aleppo and that went to the government. So clearly, there is a situation there where that side of the war has the upper hand.
That being said, I think there is a realization from all parties that a military resolution that would lead to the entirety of the country remaining Bashar al-Assad's hands, is not going to happen. So, either you come up with some sort of solution that would allow for zones to be -- to remain under the control of some rebel groups, perhaps a federal structure for Syria. That's one of the options. That potentially is what could be in the works. But this is a long way away.
Because in the meantime you have millions and millions and millions who fled the country, millions more who've lost their lost their homes, who are internally displaced, who might be concerned about coming back to areas, for instance East Aleppo that have been taken by the government. They might be concerned, fear of reprisals, fear of sectarian violence as well. You a humanitarian disaster to deal with before any of this can really happen. And in order for more extremist terrorist groups to be kept under control, and to be eliminated from having any influence, you need a political resolution and that is a long way into the future.
GIOKOS: All right, Hala, thank you for that insight.
While the cease fire is welcome news for some, for others on the ground in Syria, the future remains uncertain and dangerous. There was a mixed response to the announcement in one rebel held town. Let's take a look.
(BEGIN VIDEO CLIP)
AHMAD NAHEL, SYRIAN RESIDENT (through interpreter): We're are with the cease fire so the opposition can reorganize themselves after a difficult time. We hope it will benefit the opposition to reorganize themselves and begin a new phase, God willing.
MOHAMAD MALEK, SYRIA RESIDENT (through interpreter): We are against the cease fire that has been signed by the factions. On the contrary, the factions need to realign their ranks, so they can reenter Aleppo and continue with the revolution. We hope that the countries who have helped the factions, I consider it to be a failure, helping the factions to fail in Aleppo. For now, with what is going on in Ghouta, they need to return to be united in their ranks.
(END VIDEO CLIP)
GIOKOS: CNN contributor and senior editor at the "Daily Beast", Michael Weiss, joins us live. Michael, thank you for joining us in the studio today. The U.S. didn't really have a big role to play in this, you know, and the United Nations, really weren't present in this. What do you think is going to play out?
MICHAEL WEISS, CNN CONTRIBUTOR: This is a game of policy capture. The Russian intervention, which got under way in September 2015, was designed to prop up the Assad regime and also forestall any creeping or eventually U.S. intervention in Syria against the regime. Obviously, the U.S. is there fighting ISIS.
What you're hearing now, coming out of Moscow and Tehran and Damascus, is kind of a, a sort of new sites Picot of the 21st century, referring to the agreement that divvied up the Middle East after World War I. Russia, Iran, and Syria are thinking about allowing this kind of carve up of the zones of influence to be established throughout the country. Turkey his obviously got it sort of emerging protectorate in northern Syria, particularly in the Aleppo suburbs. Russia is now in control of Aleppo city in conjunction with Iran and the so-called Alawite Corridor, from central Syria and Damascus, all of the way to the coast.
And then of course there's the U.S. zone, which is being patrolled and bombarded on a daily basis, in eastern Syria, in the area known as the Jezeera (ph). So, I can well see a kind of de facto partitioning of the country, but as you point out, fact that all the negotiations have gone from Geneva to Astana. I mean, the symbolism of that, the U.S. is completely removed from any real decision making powers to how the war plays out.
[16:25:00] GIOKOS: In all fairness, I mean, Vladimir Putin said that the situation is relatively fragile. Right? There is a big chance that this might not work. We are hoping there could be a deal brokered.
WEISS: We're up to about a dozen cease-fires, so at the course of this conflict. And it's like every two months we have sort of a cease fire just for form sake. They never hold. And one of the reasons they don't hold, is you know, Russia has said, we exclude from this agreement all designated terror organizations. Depending on the day of the week and the mood of the Russian general staff, terrorists can include not just ISIS and Al-Qaeda and certain jihadist groups, but civilians, bakeries, hospitals, free Syrian army fighters, particularly those backed by -- at least until recently -- the CIA or the Pentagon. So, Russia doesn't really play by its own avowed rules when it comes to upholding the cease-fires.
GIOKOS: As we know, the cease-fire doesn't include the jihadist groups.
WEISS: Right.
GIOKOS: So, anything can play out a half an hour from now. But at the same time, we know hopefully there will be a deal on the table. Who do you think is going to be leading that deal? Do you think it's going to be Russia? Do you think it'll be Vladimir Putin?
WEISS: Russia and Iran are essentially holding the cards. I mean, as Hala pointed out, their retaking eastern Aleppo in name was on behalf of the Syrian government, but the units on the ground doing the heavy lifting were Hezbollah, Iraqi Shia militias that were accused by the United Nations of massacring like 90 civilians including women and children, and according to the Wall Street journal, Russian special forces. Who have a kind of invisible role to play on the ground. Obviously, Russian fighters jets are in the sky. This is not an Assad regime affair any longer. His security has been outsourced to two countries. The two patron saints of Syria right now.
GIOKOS: Looking at the dynamics of who is supporting who, so, Russia behind Assad. You've got Turkey behind the rebels. The U.S. behind the rebels, it almost seems like there is an international proxy war kind of playing out, right? But at the same time, we don't know what Trump is going to do, for President-elect Trump is going to do come January 20.
WEISS: It is becoming clear based on his cabinet appointees and his statements going back to the campaign period, and now the transition. He is not interested really in brokering a political solution, putting an end to the humanitarian crisis. He obviously not very fond of refugees. Doesn't want to allowed them into the United States, because their sleeper jihadists according to him. He just wants to escalate the war against ISIS. And to do that he is willing to lie down with Bashar al-Assad and Vladimir Putin, which is music to their ears frankly.
GIOKOS: Michael, thank you so much, appreciate it.
All right, still ahead, has Donald Trump really brought jobs back to the United States? We speak to the founder of OneWeb. It's a tech start up with high hopes for Donald Trump's America.
(COMMERCIAL BREAK)
[16:30:00] GIOKOS: Hello, I'm Eleni Giokos. Coming up on the next half hour of QUEST MEANS BUSINESS. I'll be speaking live to the founder of OneWeb after Donald Trump celebrated the company's pledge to bring thousands of jobs to the United States. And the CEO of one of Japan's biggest companies has quit after the death of one of his junior employees.
First though, these are the top headline stories that were following for you on CNN this hour.
U.S. President, Barack Obama has now issues sanctions against Russia for its alleged election meddling. The actions include sanctioning six Russian individuals and five Russian entities. In addition, 35 Russian diplomats have been order to leave the country. Russia now says it will take similar steps in response to the expulsions.