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Hegseth Tells Ukraine Allies that Returning to Its Pre-2014 Borders Is Unrealistic, that NATO Membership for Ukraine is Doubtful as Part of Settlement; Russia Continues to Pound Kyiv with Drones, Missiles; Trump Hosts King of Jordan, Reiterates Gaza Takeover Plan; Impact of USAID Cuts on Thai Refugee Camp; Interview with Montenegro PM on U.S.-E.U. Relations; U.S. Inflation Heats Up; Millions in U.S. Brace for More Storms. Aired 10- 10:45a ET
Aired February 12, 2025 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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ELENI GIOKOS, CNN ANCHOR AND CORRESPONDENT (voice-over): Welcome to our second hour of CONNECT THE WORLD here from the World Governments Summit.
I'm Eleni Giokos in Dubai.
Right now, NATO defense ministers meeting in Brussels as the future of Ukraine hangs in the balance with U.S. Defense Secretary Pete Hegseth
pressuring the E.U. to shoulder more of the burden of helping Kyiv. A live report coming up.
Three weeks into a fragile ceasefire between Israel and Hamas, each side is accusing the other of violating the deal. Israel's prime minister has
issued an ultimatum.
What is the U.S.' role in all of this?
And we are here at the World Governments Summit, where leaders are keeping a very close eye on developments in the Trump White House. I spoke with
prime minister of Montenegro on Trump's tariffs on Europe and his take on the U.S. presidency.
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GIOKOS: America's new Defense Secretary had sobering words for Kyiv's allies a short time ago, as they met at NATO headquarters to discuss the
nearly three year long war. In opening comments, Pete Hegseth pressed up Europe to step up in terms of Ukraine's defense.
And he said the U.S. believes that returning to Ukraine's pre 2014 borders is unrealistic. His comments came just hours after Moscow launched another
early morning round of strikes on Kyiv, killing one. CNN's Natasha Bertrand is in Brussels for us.
Natasha, good to see you. We knew ahead of Hegseth's trip that he was likely to tell Europe to do more in regards to Ukraine's defense needs.
Were there any comments today that were basically a surprise?
NATASHA BERTRAND, CNN NATIONAL SECURITY CORRESPONDENT: If you're asking NATO and E.U. officials whether they are surprised by this, the answer is
no.
They were anticipating that the U.S. would step back pretty forcefully from the conflict in Ukraine, try to wash their hands of that and really place
more of the burden on Europe to handle what the Trump administration and Trump officials believe is primarily a European problem and that they
should bear the cost of.
But still, it is very stark to hear the Secretary of Defense breaking with so starkly with, of course, a policy that was the cornerstone, really, of
the previous administration, which was that the U.S. will stand with Europe and support Ukraine for as long as it takes.
Now secretary Hegseth, he emphasized that this is not the U.S. stepping away from NATO. It is not stepping away from the E.U. They are still
committed to the alliance. But he said that the U.S. does not want to be essentially taken advantage of anymore and pay an unfair share of this
burden.
Here's a little bit of what he told the Ukraine Defense Contact Group earlier today.
(BEGIN VIDEO CLIP)
PETE HEGSETH, U.S. SECRETARY OF DEFENSE: The United States remains committed to the NATO alliance and to the defense partnership with Europe,
full stop.
But the United States will no longer tolerate an imbalanced relationship which encourages -- which encourages dependency; rather, our relationship
will prioritize empowering Europe to own responsibility for its own security.
(END VIDEO CLIP)
BERTRAND: Now one of the most stark things that Hegseth said was that the U.S., under president Trump, does not believe that Ukrainian membership in
NATO is a realistic outcome of a negotiated settlement between Ukraine and Russia.
And I'm already seeing several Biden administration officials who worked this issue weigh in on this statement on social media, saying, essentially,
that Hegseth has given away all of the U.S. and Europe's negotiating leverage with the Russians before these talks have even begun.
But you know, it is primarily, you know, the consensus as well among NATO allies that Ukraine was never going to join NATO anytime soon.
The problem with saying that out loud, right, that emboldens Russia. That allows Russia to believe that they can dictate who can and can't join NATO.
And that is what many former officials are taking issue with here.
Certainly, Ukrainian President Zelenskyy, who has said repeatedly that Ukraine should be a member of NATO and that is the only security guarantee
that is going to deter Russia from attacking in the future, is going to be extremely concerned, to say the least, about Hegseth's comments.
[10:05:00]
GIOKOS: Natasha Bertrand, thank you so much for that update.
I want to stay on this. CNN's chief international security correspondent, Nick Paton Walsh, is following developments for us.
We'll touch on Pete Hegseth in just a moment. But you've just returned from Ukraine. How are Ukraine, Ukrainians reacting to Trump's presidency?
And importantly, Nick, we've just heard that NATO membership is something that doesn't seem very attainable right now, given what we've heard from
the U.S.
NICK PATON WALSH, CNN CHIEF INTERNATIONAL SECURITY CORRESPONDENT: Yes. Look, as Natasha was saying, what Hegseth is really saying out loud is what
has been kind of common acceptance of what's likely to be in Ukraine's NATO future imminently.
It's a country at war. It was never going to join NATO while that continued and after war, it would be probably too busy recovering from that to be a
stable new member of that NATO military advanced bloc.
Also, the 2015 borders, well, look, that's something they tried to retake in the 2023 summer counteroffensive. And they failed, despite significant
Western assistance there.
The general feeling around the Trump administration has been hope. Some hope amongst Zelenskyy, some hope amongst Ukrainians that the Trump
strongman approach would bring peace through strength, that Trump would be a good ally.
But I have to say, what we've seen emerge over the past 72 hours has been a bit of a window opening as to how far advanced, an entente or a
rapprochement between Trump and Putin has really got.
The negotiations that led to American prisoner Marc Fogel being released yesterday, a remarkable moment of Russia's rehabilitation, frankly, in
front of an American audience.
That was obviously the result of either a moment of spontaneous generosity from the Kremlin or more advanced negotiations in silence between the
United States and Moscow, perhaps hinted at when Trump at the weekend said he'd spoken to Putin and the Kremlin declined to confirm that.
That is all happening, it seems, without much involvement of Ukraine's president, Volodymyr Zelenskyy. He again today, in another interview, said
he didn't know what conversations Trump was having, that he only heard about that from open source media.
No longer is Zelenskyy in Ukraine the front and central part of all Western policy planning around this. And I think there's a growing sense of unease
in Kyiv about quite what is happening without them necessarily being in the room.
And you see that in the frequency in which Zelenskyy gives interviews and expresses his anxiety about Ukraine not necessarily being always involved
in this. One key thing he demanded in recent interviews, too, was the idea that the United States had to be involved in some kind of peacekeeping
force.
Now the other key plank we heard from Secretary of Defense Hegseth was, if there is a peacekeeping force that keeps the Ukrainian and the Russian side
apart, perhaps that will not involve U.S. troops.
I think it was potentially fanciful to suggest that the United States would voluntarily insert its forces in the largest land war in Europe since the
'40s but it had been a hope. That was definitely something Ukraine felt would only make security guarantees for it stick, if Americans were
involved.
The Kellogg plan that I refer to, the Ukraine envoy for president Trump, General Keith Kellogg, who's headed to Ukraine next week, was sort of
published back in April, when he was a private citizen at a think tank. And that suggested a similar European only peacekeeping force.
And it also called on Ukraine to accept a ceasefire, conditioning that for continued aid. The aid may potentially turn into loans so the U.S. could
get its money back. And I think we're seeing that Kellogg plan play out in action here.
It's direct; the sudden revelation of what America wants from this is deeply, I think, jarring for Ukrainians, who had hoped for more assistance
and support. I'm sure it's making many European states realize they have to very forcefully get their hands around this particular nettle. It's
increasingly becoming their problem.
And let's face it, they probably don't have the resources to do this entirely in the way they want to by themselves. And so the harsh realities
of what an end to this war are really hoving into view. And look behind all of this, there's one winner and that's Vladimir Putin.
Last night, a bit of a PR masterstroke of rapprochement with the United States. And at the moment, he's seeming to having all the conversations
with the United States. And it seems slowly, slowly getting themselves back into the negotiating fold with the White House.
GIOKOS: Yes. I mean, there's so many strands to this. And I mean, he did say that Europeans need to take more responsibility and step up.
The question is, can they?
In the meantime, we've seen increasing strikes in Russia. We've seen -- in Ukraine. We've seen Kyiv targeted as well, Nick. And I wonder if President
Putin is viewing this as an opportunity, given that it almost feels like the ball in some way has been shifted to his court.
PATON: Yes, I think the issue really here is Trump has laid bare openly his desire for a very fast deal. He's tried to suggest that it's in
Russia's interest economically. But we haven't seen really, publicly, Putin respond to that with the sort of public meeting that Trump seems to suggest
he wants.
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They may have had a phone call, according to Trump. What we are seeing, though, is the United States laying out the parameters of what it's willing
to do in the future and it's pretty limited, frankly.
They seem to want to strike a deal quite fast but have nothing to do with the peacekeeping force. And it's unclear how much further aid they want to
supply. That's key, because, without U.S. support, Ukraine would have significantly folded on the front line a number of years ago.
What we're seeing separately is a victorious Russia on the front line. That's not big, sweeping, strategic advances but that's the slow and
horrifically costly grind they're using with their own troops, taking a slow toll on Ukrainian positions. That's been constant for months. But it
continues.
And so you have to ask yourself, with all of this separate back channeling between Moscow and Washington, where it seems Trump is getting a little bit
what he wants, Marc Fogel released yesterday, Putin may be getting something back that we don't know about entirely yet.
Why would Putin agree to a freezing of the front lines that are actually moving in his favor?
And so the clock ticks. Militarily, Ukraine is losing. Politically, Ukraine is perhaps seeing its support, certainly from the new White House, erode
slightly. This all appears to play in the Kremlin's favor.
And remember, too, the Kremlin, you know, view this in a much different timeframe. Putin is not restrained by elections. He could do this for five
more years, frankly, so long as he gets his final goal at the end.
Trump's got probably 18 months until the midterms are breathing down his neck. A lot is moving faster behind the scenes perhaps than we thought. And
at this point, it looks like Ukraine is more of an onlooker than a central participant.
GIOKOS: Nick Paton Walsh, always good to have you on. Thank you for the brilliant analysis.
Well, Israel's prime minister is warning Hamas to release hostages this weekend as originally agreed or fighting will resume in Gaza.
Benjamin Netanyahu's comments are similar to those made by U.S. president Donald Trump. But unlike the president, he did not specifically say Hamas
must release all remaining hostages to maintain the ceasefire.
Gaza's future front and center at the White House Tuesday as president Trump hosted Jordan's King Abdullah. The president reiterated that he wants
the U.S. to take control of Gaza and move the Palestinians who live there to neighboring countries.
Earlier today on CNN, Mr. Trump's Middle East envoy tried to explain the rationale behind that.
(BEGIN VIDEO CLIP)
STEVE WITKOFF, U.S. SPECIAL ENVOY TO THE MIDDLE EAST: And going back to a place that's going to take anywhere between 10 and 20 years to successfully
and correctly and efficiently redevelop makes no sense at this point in time. That is his policy.
And candidly, I agree with it and so do many responsible people. You would never, if there was this sort of destruction in any major city in the
United States, no one would be allowed to cross the dividing line and go back in. And because it's inherently dangerous there.
(END VIDEO CLIP)
GIOKOS: Well, King Abdullah restated Jordan's opposition to displacing any Palestinians from the Occupied Territories and said Arab nations will offer
an alternate plan. Jordan's foreign minister told CNN his country has the highest number of refugees per capita in the region and can't afford to
take more.
Stephen Collinson joins me now for more on that White House meeting and what could happen in the next days as well as weeks.
Stephen, thanks so much for joining us. Look, Jordan's king was very diplomatic during the meeting with president Trump but was blunt about his
opposition to the Gaza plan in a social media post.
How would you characterize the meeting from a White House perspective?
STEPHEN COLLINSON, CNN WHITE HOUSE CORRESPONDENT: Well, I think what we saw in that really awkward meeting was the humiliation of the king, who was
basically forced to sit there as Trump repeatedly rolled out this idea for displacing the Palestinians.
Which Jordan, Egypt and all of the Arab world has already said is a complete nonstarter.
So that was the diplomatic choreography here. It was quite interesting that that meeting was not originally supposed to be open to the press on the
White House schedule. Then it was opened up. So clearly the White House wanted to make a point.
The question now is, what's next?
And why would another senior member of the Arab world subject themselves to the same thing at the White House?
There's always a report -- already a report on Reuters that the Egyptian president al-Sisi, won't come to Washington until the displacement of
Palestinian from Gaza plan is off the table. So it's very difficult now that Trump has dug so deeply into this position that the Palestinians must
leave Gaza and the U.S. will take it over.
And the Arab world is basically saying, we cannot do this because it's an existential issue for Jordan and potentially a great security threat for
Egypt.
Where does it go?
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It seems like we're going to hit some kind of brick wall.
GIOKOS: Yes, a really important point there. And we just heard that the president's Middle East envoy saying that. He says he and others think that
the Trump takeover plan is a good idea. And we actually heard from president Trump yesterday that, you know, America is just going to take
Gaza.
And someone asked him, you know, on what authority?
And he said America's authority. So it seems that this is a plan that they really want to stick to.
The question is, are others going to come to the table in some way?
COLLINSON: Well, so far they're not. The issue here is that, if you look at everything in the world as a real estate deal, everything looks like a
real estate deal. So it's true that Gaza is in terrible condition. It's -- much of it has been razed to the ground in the Israeli onslaught against
Hamas.
But to then come to the conclusion, well, all the people would like to go from there and live somewhere else and we'll build them a nice house
doesn't really show much understanding of the forces that have shaped this Israeli-Palestinian conflict for 50 years, which is all about land and
dispossession.
When you get to the root of it, it doesn't take into account the political issues that Arab states will be facing with their own populations if this
was allowed to take place.
Indeed, it doesn't really take into account the fact that large numbers of Palestinian refugees going to Jordan, which could destabilize the kingdom,
that would create a real national security nightmare for Israel on its borders.
So it seems as though president Trump has been wedded to this idea. And everyone in his administration, therefore, has to get on board. But as soon
as you like, take one step beyond Trump saying that this has to happen, it's completely illogical.
Why would the Palestinians just leave?
The Israelis aren't going to go in there and force them out because they've tried to, you know, occupy Gaza in the past and it's been a disaster. So
just this idea that they're all going to leave and it will just go to the United States doesn't make much sense.
GIOKOS: All right. Stephen Collinson, great to see you. Thank you.
Well, Palestinians in Gaza are speaking out about president Trump's Gaza plan, some voicing extreme criticism. Take a listen to what they're saying.
(BEGIN VIDEO CLIP)
FATIMA ABU AL-AOUN, GAZA RESIDENT (through translator): I say to Trump that we will die in our country. We are not prepared to abandon our
country. Palestine is for Palestinians. We do not belong to any other country.
ABU SAEB, GAZA RESIDENT (through translator): I urge you, president Trump, leave us alone and let us live. Let us rebuild Gaza. We can make it better
and more beautiful than it used to be.
MOHAMMAD AL-RANTISI, GAZA RESIDENT (through translator): But Palestine is for Palestinians. This is well known. Palestine was here before Trump and
it will be here after Trump. No one has the right to divide Palestine or Gaza or the West Bank.
(END VIDEO CLIP)
GIOKOS: Well, the freezing of humanitarian aid will soon take center stage in a U.S. courtroom. Just ahead, we'll see the real impact of those cuts at
a refugee camp in Thailand. Stay with us.
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GIOKOS: Tomorrow, a judge in Washington is set to hear arguments on whether to indefinitely block the Trump administration's attempts to
dismantle USAID.
It comes after the Trump administration took aim at the agency, accusing it of wasteful spending. The sweeping changes are having a very real impact on
people across the world who desperately need help. Ivan Watson takes us inside a refugee camp in Thailand.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): This is what happens when the world's biggest aid donor suddenly stops sending
money. Families ordered to evacuate their sick loved ones from this hospital in the mountains of western Thailand. Days later, the hospital
deserted. Its front gate locked shut.
This is a refugee camp for tens of thousands of people who fled the Civil War across the nearby border in neighboring Myanmar. The hospital here
largely depended on U.S. government funding, which suddenly stopped and now nearly two weeks later, there isn't a single doctor on duty for this
community of more than 30,000 people.
It's a 30-minute drive from this sprawling refugee camp to the nearest Thai hospital. The director here shocked by the sudden closure of the camp
hospital.
Has this been stressful, these last two weeks for you?
DR. TAWATCHAI TINGTAWEESAK, DIRECTOR, THA SONG YANG HOSPITAL: Yes. Yes. Yes. I think so. Very dangerous.
WATSON (voice-over): His facility has to suddenly absorb some of the refugee camp's patients and that includes 32-year-old Mary.
WATSON: Is this your first baby?
MARY: Yes.
WATSON: You're going to be a mama soon. You're going to be a mother.
MARY: Yes.
WATSON (voice-over): Suffering high blood pressure, she was rushed to this maternity ward this morning and is now in labor, far from her family and
home at the camp.
MARY (through translator): I just want to ask the U.S. government why they have to stop helping the refugees?
WATSON (voice-over): On January 20, President Donald Trump ordered an immediate 90-day pause in all U.S. foreign aid. He declared the USAID
industry is "not aligned with American interests" and claims it serves to destabilize world peace.
For years, Myanmar has been ripped apart by a brutal civil war. A military dictatorship that seized power in a coup in 2021 battling numerous
insurgent groups.
The conflict has forced more than 3 million people to flee their homes and now aid organizations tell CNN they only have a 1.5 months of funding left
to feed refugees along the Thai border with Myanmar, leaving smaller aid groups scrambling to fill the gap.
WATSON: You're going into Myanmar.
KANCHANA THORNTON, DIRECTOR, BURMA CHILDREN MEDICAL FUND: This will go across the border, yes.
WATSON (voice-over): Kanchana Thornton regularly takes food, infant formula and medicine across the border river to desperate people in the
conflict zone.
The U.S. funding cut made matters worse.
WATSON: Why is it affecting you?
You don't get money from Washington.
THORNTON: Well, patients come to us and asking us for help.
WATSON: Because they're not getting it from the original.
THORNTON: Yes, because they're not getting support that they should from the NGO that got the funding cut.
WATSON (voice-over): Everywhere we go in this poverty-stricken border region, we hear about basic services disrupted and aid workers being laid
off.
WATSON: This clinic treats nearly 500 patients a day. It receives nearly 20 percent of its funding from the U.S. government.
Washington has been sending money here for at least 20 years. But now all of that has stopped.
WATSON (voice-over): Uncertainty now felt by Rebecca and her 9-year- old daughter, Rosella.
WATSON: Yes. Can you show me your favorite pictures?
WATSON (voice-over): They're residents of the refugee camp who had to move out of the hospital when it shut down last month. Even though Rosella was
born with a bone condition. She needs oxygen around the clock.
"My daughter needs the hospital to be open," Rebecca says. "And so do I, because I'm pregnant."
The cut in U.S. funding means this pregnant mother no longer has access to a doctor and she doesn't know how much longer her daughter's oxygen will
last.
WATSON: The pause in U.S. funding has already become a matter of life and death here. The International Rescue Committee tells CNN that an elderly
woman who couldn't get access to supplemental oxygen died after the hospital in her refugee camp closed last month.
Life has never been easy for refugees in this porous border region.
[10:25:00]
And if the world's largest aid donor truly does pull out, I think it's fair to say life will get much, much harder -- Ivan Watson, CNN, on the
Thailand-Myanmar border.
(END VIDEOTAPE)
GIOKOS: Well, coming up after the break, I asked the prime minister of Montenegro, a NATO member, what he makes of U.S. president Donald Trump's
comments that Ukraine may someday be part of Russia. His answer may surprise you. Stick around.
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GIOKOS: Welcome back to CONNECT THE WORLD with me, Eleni Giokos. We're live at the World Governments Summit in Dubai. Here are your headlines.
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GIOKOS (voice-over): Israeli prime minister Benjamin Netanyahu is restating a warning to Hamas made by U.S. president Donald Trump to release
hostages this weekend as originally agreed or fighting will resume in Gaza. Unlike Mr. Trump, he did not specifically say Hamas must release all
remaining hostages to maintain the ceasefire.
Hamas says it's delaying the latest hostage release, claiming ceasefire violations by Israel.
America's new Defense Secretary has told Kyiv's European allies that they need to step up their responsibility for Ukraine and says that the country
returning to its pre-2014 borders is unrealistic. Pete Hegseth made these comments at NATO headquarters earlier.
He also said Ukraine's long sought after NATO membership was not a realistic outcome of a negotiated settlement.
And it's day two here at the World Governments Summit in Dubai. The opportunities and risks of artificial intelligence are front and center in
the discussions. And today it's all about how leaders can shape the future amid geopolitical challenges that are gripping the world from East to West.
And Donald Trump is looming large over the summit, not least because the tariffs he's unleashed threaten to upend global trade. Earlier, I spoke to
the prime minister of Montenegro, Milojko Spajic, about how Europe should navigate the Trump era. Take a listen.
(BEGIN VIDEOTAPE)
MILOJKO SPAJIC, PRIME MINISTER, MONTENEGRO: Between U.S. and E.U., I wouldn't call it confrontation yet. At least I think I'm actually pretty
confident that we'll find a way how to get out of this situation.
Tariffs are definitely not a pleasant topic. And trade war and nobody wants to be part of the trade war because it would pull other things in question
as well. And like security, defense, et cetera, might become like a hostage of something else.
So you know, nobody's looking forward to that. And I'm really hopeful that we will solve the things pretty soon. We understand our American partners
that they shared their, you know.
[10:30:00]
They feel unfair with the with the terms, trade terms that are actually on the table now. You know, technical people should work on it, should look
through the solutions. And I'm sure we will find the best way out.
GIOKOS: Are you recalibrating, you know, the state of things for Montenegro because of what we're seeing out of the United States right now?
SPAJIC: So it's definitely whatever impacts E.U. impacts directly us. You know, E.U. is our biggest trade partner. It's our biggest investor. And
it's absolutely important for us that we have the best possible relations between E.U. and the U.S. as a NATO member as well.
You know, we are all part of the same, same allied group. So it's key that we keep these relations intact.
GIOKOS: Absolutely.
In terms of what president Trump has said and wants to do with regards to solving the issue between Russia and Ukraine, he has fundamentally said
that Ukraine may be Russia, Russian someday.
What do you make of this?
And do you think that he's going to find a solution or do you think there's going to be concessions?
What does that mean for Montenegro?
SPAJIC: You know, I, I think, you know, I'm not going to -- it's difficult to comment like the day to day statements. But what I would say is that,
you know, nobody's looking forward to this. Russian aggression on Ukraine put a huge, obviously human toll first.
Like, we had so many deaths, so many wounded, so many refugees, broken lives and everything but also economic toll was enormous on not only
obviously Ukraine but whole Eastern and Central Europe suffered immensely because of it.
Montenegro's economy suffered immensely. We had our tourism, main driver of our economy, basically, had a big hit from this crisis. And refugees
obviously came to Montenegro in really large numbers. So obviously we are looking forward to some solution but not at the expense of Ukrainian
national interests, obviously.
GIOKOS: Yes. It's really important one, because we're seeing this playing out and we just don't know what president Trump's next move is going to be.
You have aspirations to join the E.U.
How are those conversations going?
How close are you to getting that?
SPAJIC: So we are first in line and we are actually working day and night these days.
(CROSSTALK)
GIOKOS: (INAUDIBLE) on that?
SPAJIC: We're hoping that we're going to close all the chapters by end of 2026, meaning like another year and almost two years that we have, that we
have negotiations, have adjustments, have very hard work that is ahead of us. But then we are hoping that in 2028 we become 28th member of the
European Union.
GIOKOS: In terms of NATO membership and president Trump also saying that NATO countries should be spending 5 percent on defense, what is going on
there in terms of your movement on that front and whether 5 percent makes sense to you?
SPAJIC: So for a long time, Montenegro was not spending enough for sure, since we became a NATO member in 2017. Our defense budget was never 2
percent until our government came in and we ramped it up to 2.1 percent. So we are now satisfying that minimum.
But, it's -- I see where is, where is president Trump headed and I think it makes sense, honestly, like Europe --
(CROSSTALK)
SPAJIC: -- Europe needs to spend absolutely more. I don't know if it's 5 percent or if it's some other number but I can tell you that we definitely
need to spend much more on defense.
And, you know, we took many things for granted. I think NATO is very important to Montenegro. It's very important to Montenegro national
interests. It's very important for all the investors.
Every investor that I talk to, everybody is delighted that Montenegro is part of NATO. And then, you know, we cannot, you know, it's difficult to
imagine a situation like Ukraine happening in Montenegro, for example, just to start from the basics.
So it's very important to be aware of that, what NATO membership brings. And then, if you get something, you're obviously -- you need to need to
have some contribution in that club. And Montenegro is ready to do that.
(END VIDEOTAPE)
GIOKOS: All right. I want to check in on the markets. We've been tracking the U.S. stock market since that release of the inflation report for the
month of January. Markets opened deep in the negative, as you can see. Continuing that trend, Dow Jones is down 0.75 percent, a loss of around 335
points.
Nasdaq as well as S&P 500 in the red. It's at 0.5 percent. January inflation rate that came through, annual rates rising to 3 percent. We've
got Vanessa Yurkevich watching all of this for us.
And basically Vanessa, this is sending a message that interest rate cuts, which is something that president Donald Trump wants to see imminently, is
not going to happen anytime soon if inflation continues on this track.
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Yes. These numbers are coming in hot. This is not the direction that we want to see
inflation going. And it's the opposite of the 2 percent target that the Fed is trying to reach.
But these numbers really paint a picture that inflation here in the U.S. is heating up across all categories month over month.
[10:35:00]
The inflation rate jumped by 0.5 percent and year over year jumping 3 percent. That is the first time we've seen that number since the summer.
And then you look across all categories: shelter; so rent, for example; food and energy prices rose month over month across all those categories,
shelter in particular. That's the most amount of money that Americans spend every single month. That accounted for 30 percent of the overall monthly
increase.
Energy prices, gas prices ticked up and then food prices ticked up, particularly in the grocery store. And I want to zero in on eggs here in
the U.S. because we have seen shortages of eggs and price increases of eggs. You see it right there. Look at the just month over month number,
15.2 percent.
The Bureau of Labor Statistics that puts out this CPI report has not seen a rise in price that quickly since June of 2015. And then look at that year
number, eggs up 53 percent on the year.
And that's because of the avian flu that is impacting so many egg laying birds here in the U.S.; 40 million birds killed alone last year. And just
in the month of November and December, 17 million birds were killed. That means that there's not enough eggs coming to market. There are shortages
and prices go up.
We just heard from Kevin Hassett, part of the economic council for president Trump's administration, and he said they have a plan to tackle
avian flu. Now the president cannot control prices but he could do something with the avian flu that could hopefully trickle down and help
stop the spread.
I know there's a lot of countries around the world that are also dealing with the avian flu. Kevin Hassett saying that they have a plan. They're not
unveiling it just yet.
But this would be welcome news for consumers because consumers here in the U.S. have really felt like prices of food, prices at the grocery store have
been just too high and eggs in particular, they are feeling it and we are seeing it in this inflation report.
GIOKOS: Yes, I mean, I know that it's connected to the avian flu but I tell you, eggs are always a really good barometer.
Are you cutting back, Vanessa, on eggs?
YURKEVICH: I can't find any. And just, you know, I want to point out that just, anecdotally, here in our newsroom, in our cafeteria, there was a sign
this morning that says "No fresh eggs." So it's hitting everywhere. I can't get an egg.
Can you?
GIOKOS: Wow. Well, I live in Dubai. I'm good. I've got all sorts of brands and all sorts of things coming my way. So I'm good for now but I can't
imagine what it must be like. Vanessa, good to have you on. Thank you for breaking those numbers down for us.
All right. Still to come, back to back winter storms in the U.S. are transforming some regions into a winter wonderland, while others are facing
flooding and possible tornadoes. We'll bring you an update after this. Stay with CNN.
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[10:40:00]
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GIOKOS: In the United States, more than 17 million people are at risk today of severe storms in parts of the Southeast. It comes on the heels of
a winter storm that hit the Mid-Atlantic states on Tuesday.
(BEGIN VIDEO CLIP)
GIOKOS (voice-over): Students at Virginia Tech tried to make the most of it with a snowball fight that you're seeing right now, that looks a lot of
fun. A tradition on their campus.
(END VIDEO CLIP)
(WEATHER REPORT)
GIOKOS: Thanks so much for watching this edition of CONNECT THE WORLD from the World Governments Summit. I'm Eleni Giokos. "MARKETPLACE ASIA" is up
next.
END
