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First Move with Julia Chatterley
First Visit to Taiwan by a U.S. House Speaker in 25 Years; U.S. Futures Lower, Escalating U.S.-China Tensions in Focus; Nauseda asks Biden for Increased U.S. Military Presence; White House Watching Pelosi's Taiwan Visit Closely; Railroad Bottlenecks Mean Container Backlog at Port; BP Profit Jumps to 14-Year High as Energy Prices Surge. Aired 9-10a ET
Aired August 02, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: A warm welcome to "First Move" in a packed show for you today as always. We're standing by for some breaking
news from Asia, a plane carrying U.S. House Speaker Nancy Pelosi expected to touch down soon in Taiwan. Pelosi set to become the highest ranking U.S.
official to visit Taiwan in a quarter of a century.
China warning that the U.S. will "Pay the price" if the visit goes ahead Russia calling the visit pure provocation we'll take you live to Taipei,
Beijing and Washington D.C. for the latest on that. Also this Tuesday too reaction to the U.S. drone strike in Afghanistan that killed the world's
most wanted terrorist. Al Qaeda Chief Ayman Al-Zawahiri, one of the masterminds of the 9/11 attacks more than 20 years ago.
But first uncertainty over Nancy Pelosi's Taiwan trip and the impact on already tense U.S. China relations triggering what we can see there a
pullback in Asian stock markets today with China and Hong Kong closing down more than 2 percent U.S. futures and Europe under a bit of pressure too.
I can show you that but I call that resilience in the face of deep uncertainty over the rift between two of the world's superpowers. As you
can see NASDAQ Futures down almost 1 percent this follows a softer start to August trading on Monday too, a risk off day across many asset classes, in
fact, with global bond yields pulling back oil however, a touch higher ahead of tomorrow's closely watched OPEC meeting.
Tied to OPEC supply and energy uncertainties resulting from the war in Ukraine mean record quarterly earnings for some of those all majors the
U.K.'s BP the latest reporting its highest profits in 14 years a Q2 haul of almost $8.5 billion, that's more than triple last year's results though
shares as you would expect up 3 percent in U.K.
Trade later in the show an exclusive interview coming up with the Lithuanian President on NATO's response to Russia attacking Ukraine as well
as heating Europe's relations with China.
But first U.S. House Speaker Nancy Pelosi expected to land in Taiwan tonight despite warnings from China and from officials in the Biden
Administration. She will be the most senior U.S. figure to visit the island in 25 years and comes as we've discussed, his relations between the U.S.
and China are at a critically low point.
Will Ripley, joins us now from Taipei. Will, huge anticipation also uncertainty over quite when the House Speaker, is expect to land a very
broad window given plenty of uncertainty. And I think that points to how contentious overall this visit is and will be?
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Let's make a bet Julia; I'm going to guess within the next 90 minutes from now. I don't know
what you want to bet. I don't know what I can even - what I can even award you other than maybe some more information about Pelosi's trip because it
has been in such short supply official information anyway.
This is the trip that everybody had to stop on Pelosi's Asia trip that everybody's talking about. And yet, it's never been put on the official
calendar. Here in Taiwan, one of the most transparent governments that I've ever covered. They have been very uncharacteristically quiet today, whether
it's the Ministry of Defense or the Foreign Ministry.
The only people who are actually publicly saying anything on social media would be you know, people who used to work for the government, like the
President's Former Spokesperson, Kolas Yotaka, who put out a tweet saying that Pelosi should be allowed to visit and shouldn't feel threatened,
because she wants to visit Taiwan.
You know, also saying that the Taiwanese people feel less isolated, frankly, when people from other countries come here to learn about their
way of life. Because you know, the government, the communist rulers in Beijing essentially have been working very hard to isolate Taiwan
diplomatically as much as possible.
So even though they don't have a formal diplomatic relationship with a lot of these powerful democracies, they do have friendships with these
countries and Pelosi as the second in line to the U.S. presidency, just after the vice president.
You know, if there was ever anything to happen to President Biden, I mean, she's an incredibly high profile figure the highest level U.S. official
that has visited this island since - back in 97. So it's been a quarter century. And this is a really, really important moment, probably for her
political career.
Let's be honest, you know, she might not be House Speaker forever, certainly. But also for the Taiwanese government, to even if they can't
publicly express, you know, gratitude for the visit or support for the visit. You know, President saying when undoubtedly, we'll probably be
meeting with her.
I'm sure she'll be meeting with some lawmakers in terms of the rest of her schedule, how long she's going to be on the ground here, what other
meetings she might take? What other sites she might visit, because we just don't have anything official.
[09:05:00]
RIPLEY: It's a lot of guesswork and a lot of passing around possibilities and then you just got to get out there and try to figure out where she's
going to be? Where she's going to spend the night? Which hotel she'll be at?
So we're looking at the airport very closely for that U.S. military plane to see when it lands. And we're also looking very closely at what the
response is going to be from Mainland, China. So far, it has been, I would say, pretty muted response, even though the propaganda video that was put
out.
You know, they put out propaganda videos about, you know, special military operations targeting Taiwan independence before a propaganda video showing
planes and tanks and everything. That's one thing and actual buildup of weapons or a buildup in the Taiwan Strait would be something very different
altogether.
And that's definitely not something that we're seeing right now. And we're not expecting to see that, because Xi Jinping is looking for a stable next
few months as he tries to coast in and get that unprecedented third term at a party congress.
Is he happy that a high level U.S. official is landing on an island that he believes in his heart is part of, you know, his territory, his country's
territory, so much. So that China even puts Taiwan as a page in their passport as a province, Taiwan that has had its own government and its own
military for more than 70 years.
And Beijing's communist rulers still claim this place? And have said Julia, they'll take it back by force if they need to. But it's not very likely
going to start with Nancy Pelosi's visit here. It's a - this is something that they're set. You know, people are looking at analysts looking at
China's motivations, their military build - military expansion, down the road people, a lot of people believe it is a matter of when China does it,
not if.
CHATTERLEY: But as you point out, not sort of consequence of this, but it does come at a very difficult delicate time, both for President Biden and
of course for President Xi too. The better we'll take with you is perhaps Will, if this does happen, as we expect it to then not much sleep for you
tonight. And thank you for joining us on that.
RIPLEY: Yes.
CHATTERLEY: All our eyes will, be on China is that Will was mentioning there in the coming hours and its reaction to the Speaker's visit. Selina
Wang is in Beijing for us. Selina not only how the Chinese government chooses to respond, given already fiery rhetoric as a result of this but
also how the Chinese people choose to respond because there's been plenty of vitriol on some of the biggest social media platforms in China too?
SELINA WANG, CNN CORRESPONDENT: Yes, Julia, we've seen a lot of propaganda actually whipping up this nationalism. So we have seen this Pelosi trip
potential Pelosi trip that's happening any moment now it has been trending across social media platforms on China.
And the threats we're hearing from Beijing. That's as much directed to the domestic audience as it is to the international audience because Xi Jinping
cannot look weak at this moment. There had even been some concern from experts that Xi Jinping might take an overreaction as a way to distract
from all of the problems at home when you have the economy devastated by the pandemic.
You have continuing locked down snap lock downs because of zero COVID. So we are hearing this extremely fiery rhetoric that is playing into this
nationalism that Xi Jinping wants, especially leading up into this party congress, but at the same time, this is rhetoric that we've heard before.
The problem is it is starting to reach a fever pitch. It is starting to get to a point where even a lot of Chinese people on social media are pointing
out that at this point, China can't really back down without losing face. So the question really is what China does in a way that saves face shows
that China isn't just a paper tiger but also at the same time prevents this from all spiraling into a risky escalation.
(BEGIN VIDEOTAPE)
WANG (voice over): Destroyers open fire missiles launched warships shoot into the sea. It's a show of force ahead of China's military anniversary
training for war in the East China and Yellow Seas. Soldiers also recently ran drills around Pingtan Island, China's closest point to Taiwan just over
77 miles away. Renewing fears of a cross strait crisis triggered by House Speaker Nancy Pelosi's trip to the island.
In a call with President Joe Biden last week, Chinese Leader Xi Jinping warned those who play with fire will perish by it. A prominent hawkish
voice in China even suggested that if U.S. fighter jets escort Pelosi's plane into Taiwan, China's military should forcibly dispel Pelosi's plane
if ineffective, then shoot them down. The tweet has now been banned.
He doesn't represent the official government stance but state media had been promoting his threat. It's not just that Pelosi is the most powerful
U.S. official to visit in 25 years. But Beijing also sees her as a hostile figure. She's been a staunch critic of China for decades. In 1991, two
years after China's military brutally crackdown on student protesters around Tiananmen Square Pelosi traveled there and held a banner that read
to those who died for democracy in China. U.S. President Joe Biden has raised concerns over Pelosi's trip.
[09:10:00]
JOE BIDEN, PRESIDENT OF THE UNITED STATES OF AMERICA: The military thinks it's not a good idea right now.
WANG (voice over): This Chinese state media video says Pelosi is only going to Taiwan to boost her political career. And that America's fragmented
government cannot agree on what to do about Taiwan. Neither side can afford to look weak. If Pelosi didn't go, it could look like the U.S. is caving to
China's bullying. Whereas Xi Jinping is just months away from a key political meeting, where he's expected to seek an unprecedented third term.
SUSAN SHIRK, FORMER DEPUTY ASSISTANT SECRETARY: Given the overreaching that Xi Jinping has been doing. I don't believe we can count on his good
judgment.
WANG (voice over): For now, he's keeping the world guessing as to whether the threats are just bluffing. Or if Beijing is actually ready for a crisis
that could escalate into a war that no one wants.
(END VIDEOTAPE)
WANG: And look, both sides don't want to look weak, but at the same time, neither side wants a conflict. So as we look for this possible China
reaction include things like flying more war planes into China's air defense zone, which China already regularly does. It could also include
economic and diplomatic backlash.
But as we wait for this meeting, and we look out for that response, we'll have to Xi Jinping has to calculate very carefully how to minimize the risk
that as you have more of this hardware, military hardware in the region, how you try to minimize the risk of an accident or a miscalculation that
could lead to a real conflict?
There was, of course, a house speaker who had gone to Taiwan 25 years ago, but the China of today is far more powerful in every guard economically,
militarily. And of course, Xi Jinping is the most powerful leader China has had in decades, Julia.
CHATTERLEY: Yes, and you raised a very important question. At the heart of this Taiwan how does this help Taiwan? If that's what the aim is? Selina
Wang, thank you for that, we shouldn't wait.
OK, on to major news, other news story now the al Qaeda leader removed. U.S. drone strikes successfully targeted to Ayman Al-Zawahiri, in his safe
house in Kabul, Afghanistan, President Biden saying Justice had been delivered.
(BEGIN VIDEO CLIP)
BIDEN: We make it clear again tonight, that no matter how long it takes, no matter where you hide, if you are a threat to our people, the United States
will find you and take you out.
(END VIDEO CLIP)
CHATTERLEY: Nick Paton Walsh joins us now. Nick, among the messages sent here by the United States that they may have pulled out of Afghanistan, but
they're still capable of seeking and killing the nation's enemies. Also big questions for the Taliban, what they knew and who they're harboring, which
else they may be harboring?
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: Yes, look, I mean, there's very little DOW that can be had here that somebody gives away who
is important, the leader of Al Qaeda would be finding he able to hide out in a neighborhood like that in Kabul without some pretty senior, Taliban
knowing about it. That could be the Haqqani Network who has always been accused of being close to Al Qaeda.
But you know this would have happened with the acquiescence of certainly some Taliban officials. So it's an immediate question to the Taliban to
explain, essentially, the promises made in the Doha agreement that foreigners would not be allowed to take up residence in Afghanistan in
terms of extremism, and that there were no al Qaeda in Afghanistan, either.
I mean, frankly, realist thought that this was something that was quite likely to happen once the United States left on a simple note for the
United States, though, after the abject humiliation, frankly, of August last year where they were forced to leave Afghanistan under very difficult
circumstances.
This is a remarkable strike, frankly, to find the most wanted man in the world on a balcony in a city that you've not had boots on the ground in
properly for over a year. And to conduct an operation that seems with this kind of precision with that kind of confidence.
I think it shows quite how fast counterterrorism has developed over the last two decades and the new era of frankly, that we're in where the ISIS
case they seem to have a little time to put their new leader in place before he's again killed by the Americans so great advances by the United
States, certainly, but also the old Taliban who sheltered al Qaeda before 9/11 clearly doing that again.
CHATTERLEY: Yes, big questions to your point over the Doha agreement and the future of that, Nick, great to have your context as always, thank you
Nick Paton Walsh there.
OK, straight ahead, NATO needs to do more say Lithuania. The President speaks to us about his recent visit to Ukraine and cyberattacks, congestion
and China the Port of Los Angeles chief supply chain stream. That's all coming up, stay with us.
(COMMERCIAL BREAK)
[09:15:00]
CHATTERLEY: Welcome back to "First Move", a cautious state across global markets avoid escalating rhetoric from Beijing over House Speaker Nancy
Pelosi's expected visit to Taiwan.
U.S. futures are softer amid the rising geopolitical uncertainties there I'd call that resilient after closing a touch lower on Monday Nancy
Pelosi's jet reportedly en-route to Taipei at this hour and China of course threatening retaliatory action we'll be bringing you a live update on the
situation in just a few moments time.
But another country that understands the sensitivity of relations over Taiwan is Lithuania. In November last year, it became the first European
country to allow self-ruled Taiwan to open a de facto embassy under the name Taiwan rather than Taipei. The move infuriated the government in
Beijing, which sort is a direct challenge to the one China principle that insists Taiwan remains part of China.
Lithuania stance over Taiwan may also be a message to Moscow. The Baltic nation, which has a border with Poland, has long warned that Russia is a
threat, calling on Joe Biden to increase America's military presence on NATO's eastern flank.
Last month, Lithuania's President Gitanas Nauseda, said he doesn't believe NATO is doing enough to help Ukraine and admitted that his own country is
unprepared Nauseda a Russian invasion. And Lithuanian President Gitanas Nauseda joins us now. President Nauseda fantastic to have you on the show,
thank you.
We have much to discuss. But I do want to just get your thoughts on the situation over Taiwan at this moment. Do you understand why China is
arguing that this is provocation? And do you believe it's right that the trip goes ahead to so that it doesn't look as if that threat from China is
being heard?
GITANAS NAUSEDA, LITHUANIAN PRESIDENT: First of all, I would like to correct a little bit your statement, because we didn't challenge one China
policy they just established or in Lithuania there was established Taiwanese representative office, which is not diplomatic representation.
This is just trade, economically targeted oriented organization entity.
And of course, the reaction by Chinese authorities was exaggerated and we have some consequences. But we defend our rights to choose the countries,
the regions, we would like to establish economic social cultural relations, and Taiwan is one of them.
CHATTERLEY: I understand and I also hear your correction, sir. But I'll repeat that it was China's sense, that this was in some way the
contravening the one China principle. I appreciate your point that as you said it isn't.
[09:20:00]
CHATTERLEY: But to today's events and what we're seeing currently it's a delicate moment for the global economy. It's a delicate moment for
President Xi ahead of the party Congress later this year. Do you think this visit helps Taiwan, ultimately?
NAUSEDA: You know it's very important to defend some rules and to rule based order in the world. And sometimes the principles and values are even
more important than economic interests. So this is a reason why I think we should defend those values, not only in front of events in China, but also
having in mind the war in Ukraine.
Because sometimes I get the impression that we get tired gradually from the war in Ukraine, and the attention to the war in Ukraine could be reduced in
the future. And it would be the worst mistake we could make. Because Russia would very welcome some such trend, and probably will try to occupy even a
bigger part, larger part of Ukraine. So we have to keep in mind and in the center of our attention, all these events, not only what is happening in
Taiwan, or the relations of United States, with Taiwan and other countries with Taiwan, but also the war in Ukraine. And this is the issue I would
like to discuss with you in more detailed way.
CHATTERLEY: Let's please do so sir, I know you just came back, the first lady of Lithuania went with you. You were both in Ukraine and your message
coming back was that NATO needs to do more. I know you directly appealed to President Biden and said that the eastern flank of NATO also needs
strengthening and there can't be gaps.
Have you had a response and to your point about some exhaustion setting in? Do you feel that that's what's happening here that NATO needs to not get
tired and needs to continue to provide more not less?
NAUSEDA: Yes, we by the way, we are celebrating 100 years, anniversary of the establishment of diplomatic relations between United States and
Lithuania. And on this occasion, together with all Presidents, other Presidents of Baltic countries, Latvian and Estonian presidents we sent the
common letter to President Biden, and one of the key elements of this letter was a tension we have to pay to the security of eastern flank of
NATO.
Yes, we are very satisfied with the result, which was achieved in the moderate NATO summit. For about defense principle, also accept exception of
Sweden and Finland, as a member in NATO. I also very clear statement on Russia as a long term threat to NATO. All these issues were very important
to both the countries, but we have to do more and first of all, to do more in practical sense. Declarations are important declarations send very
important signals to international community.
But unfortunately, this is not enough. And we have to implement the declarations and one of the principles are one of the key elements is that
we need more how to say boots on the ground in the Baltic States. It means that we need more forward presence of NATO allies and as you know the
leading country of EFP, in Lithuania's Germany. Germany took the responsibility to scale up the forward presence in Lithuania, up to brigade
size level. And we hope very much that our largest ally in NATO, United States will contribute to our security and the security of the whole region
even more.
CHATTERLEY: You've been taking measures and pushing parliament to try and do more. You were trying to raise defense spending to 3 percent I believe
it went to 2.5 percent of the budget you also were talking about perhaps introducing conscription, it didn't happen. What threat are you seeing
perhaps that some of those parliamentary members aren't? Because you've said we're not prepared for a Russian invasion.
[09:25:00]
CHATTERLEY: Do you believe that's a possibility that even being a member of NATO doesn't protect you enough?
NAUSEDA: We strongly believe in the article five, and it was many times repeated and mentioned by the highest officials of NATO allies, that is a
sacred Sankt. And this is rockets, solid and so one. But of course, we understand very well that we need to do more.
First of all, we have to do our homework. Those this was the reason why we increased in one step defense spending up to 2.5 percent of our GDP in this
year. And we have still ambition to do more and to increase the spending, maybe up to 3 percent of GDP in the nearest years.
So I will say that there is broad political consensus in my country and in neighboring countries, because we understand very well that we need to do
more ourselves. And because of many reasons, first of all, we talk about modernization of our military troops.
And the second reason in order to accommodate and to receive the forward troops in Lithuania, and as I mentioned, we need larger number of troops,
more equipment also, air defense principal instead of current principal air policing, in order to do to receive those additional capabilities. We have
to improve our infrastructure and this cost some money, of course, and we are ready to provide this money for this purpose.
CHATTERLEY: You're talking about a larger deterrent effect. I want to ask you about Kaliningrad and what took place there? Because you decided to
adhere to E.U. sanctions and prevent the flow of sanction goods between Kaliningrad and Mainland Russia.
The Russians, of course, were furious and I know passenger's people could still go through and obviously Kaliningrad was still accessible via sea.
But now the U.S. turned around and said OK, actually sanction goods can pass. Do you see that as a weakening to your earlier point?
NAUSEDA: No, no. It was never the case that Lithuania blocked the movement of passenger's movement of --.
CHATTERLEY: Absolutely, but I'm asking about the EU, the decision for them from the E.U. to allow sanctioned goods to pass. Do you see that?
NAUSEDA: That's not a sanctions because I would like to make it more concrete the transit of some goods at that final destination of this
movement of the schools is Kaliningrad. So the goods are moving from one part of Russian Federation, the mainland of Russian Federation to enclave
Kaliningrad region without any purpose to sell it in the third countries in order to generate hard currency.
So yes, the hat received the guidance produced by European Commission. And according to this guidance, yes, if certain limits, it's possible that this
translate from one part of Russian Federation is allowed to go to the second part Kaliningrad region, I wouldn't call it how to say, to make that
this decision made our policy sanctions, policy weaker, just they it was refined a little bit in order to explain some concrete details of movement
of goods and services.
CHATTERLEY: So you don't see it as a softening on the part of the E.U. because this was something that angered Russia.
NAUSEDA: OK, but, you know European Commission is responsible to save the common guidance, because this is not in the hands of concrete member
States. If it would be the case, then we would have 27 policies of implementation of sanctions.
We have to have one policy on the implementation of sanctions, and of course, European institutions and together all member states are
responsible for setting of sanctions. And Lithuania is one of the keenest supporters of top policy sanctions policy on Russia. And we welcome the
seven package of sanctions which we imposed recently.
[09:30:00]
NAUSEDA: But I think even those seven packages are not enough. In order to stop Russia, we need more decisive actions, first of all, on reducing
dependence from Russian energy resources.
And as you'll know Lithuania is a leading country in this area. And because recently, we stopped to buy any kind of energy resources from Russia,
including oil, including gas and including electricity.
CHATTERLEY: So and you've been doing that since 2014, unlike other European nations, I know and now we're completely independent Mr. President,
fantastic to have you on the show.
NAUSEDA: --independence and, you know in the spike of these recent turbulences, Russia wanted to punish us because of these transit issues,
but they recognize that some measures they were planning to impose on us even more painful for them, not for us.
And this is the reason why Lithuania invested a lot invested political will invested money in order to become fruit in a totally independent from
Russian energy policy. Because we have a lot of experiences and examples that this dependence was used just for manipulation and blackmailing and
now we see that Russia is doing the same to our partners in European Union, especially Germany.
CHATTERLEY: I know. If only they'd have followed your example back in 2014, and beginning the process of independence, then we will be in a very
different position today. Sir thank you for your time, the Lithuanian President they're Gitanas Nauseda great to chat to you sir thank you! More
"First Move" after the break stay with us.
(COMMERCIAL BREAK)
[09:35:00]
CHATTERLEY: Welcome back to "First Move". And recapping one of our top stories today the expected arrival of U.S. House Speaker Nancy Pelosi in
Taiwan, and the possible response from China to that trip White House officials are worried about Beijing's reaction to such a high profile
visit.
CNN's Chief Congressional Correspondent Manu Raju joins us now from Washington. Manu, I think one of the big questions a lot of people are
asking is why now for someone who's been in Congress for 35 years, we know a great deal about her. She's what second in line to the presidency, why
now it's such a contentious time?
MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: So Pelosi has long been a very China Hawk, someone who has criticized the human rights record of
China, someone who has been long, critical about some of the actions by the country.
And once news leaked, that she might have was considering a trip to Taiwan, she was in a bit of an untenable position, because if you were backed away
from the plan of going to Taiwan, she would look like she was cow-towing to the regime in China, but if she went forward with it, she would be
antagonizing.
The Chinese leadership there, which is warning of retaliation if she does carry through with this but it appears from what we are hearing that she is
in fact, going to Taiwan now to show the U.S. commitments to the islands, right to self-defense.
And we do expect her along with the congressional delegation to arrive there later today. But there's all caps, as you mentioned a long career in
Congress, one of which this could potentially be her last full term in Congress and potentially her last term as Speaker of the House.
And dropping by Taiwan, the first U.S. House Speaker to go to the island in 25 years since Newt Gingrich, the Republican Speaker made a trip back 25
years ago, would be a cap for her - capstone in a career in which she has gone after China for its human rights records. And no doubt will spotlight
that when she's on the ground, which is expected later today.
CHATTERLEY: I just wonder behind the scenes Manu as well, how much sympathy President Biden does have for her? He's got himself into various degrees of
hot water defending Taiwan, in some ways, deliberately or otherwise.
So whether we talk about the President himself on a personal level, or the executive branch and the White House, I just wonder whether there are
differing views there and whether or not actually behind the scenes as well, the difference between this branch of Congress and the executive
branch is being made clear to China?
RAJU: Yes, that is one of the big question, because China seems to view what Congress was doing with what the executive branch is doing. Of course,
as you mentioned, the Congress is a separate branch of government as the White House, but does it doesn't seem to matter much to the Chinese
government.
And one of the reasons why that Pelosi is going forward with this, she does not want to look like she is that China can dictate where U.S. House
Speaker can go and travel. But no doubt Biden has expressed sympathy for Taiwan.
But at the same time has expressed concerns that this visit will only exacerbate tensions at a time when the U.S. is pushing China to stay out of
the Russia, Ukraine war, for instance, and a whole host of other geopolitical issues involving the U.S. and China that he does not want to
exacerbate the tensions.
Which is why the White House initially was concerned about the possibility of this trip but when it became clear that the speaker was going, they have
shown support and said that China should not retaliate in any way for this visit. We'll see if the China leadership agrees.
CHATTERLEY: Yes, no one wants to look weak at this moment. But as I've been asking all show how does this help Taiwan ultimately? Yes, Manu Raju great
to have you with us. Thank you.
RAJU: Thanks.
CHATTERLEY: Up next, any escalation in U.S. China tensions bad news for trade potentially the Head of the U.S.'s busiest port joins us next.
(COMMERCIAL BREAK)
[09:40:00]
CHATTERLEY: Welcome back to "First Move". A cautious tone on Wall Street today as Investors await U.S. House Speaker Nancy Pelosi's expected arrival
in Taiwan a trip that China has strongly condemned and a second day of losses for the United States U.S. majors overall.
But some positive earnings related action in early trading too. Uber shares higher by 13 percent as revenue numbers beat expectations. Double digit
gains the social media giant Pinterest too after reporting positive user growth numbers.
But Blue Chip firm Caterpillar under pressure after reporting a bit of sales softness, as supply chain issues continue to weigh. So much needed
relief over major manufacturers like Caterpillar may soon becoming new data yesterday shows the prices that companies are paying for supplies are
easing a bit as demand slows and supply chain bottlenecks improve.
That said mounting tensions between the United States and China could put fresh strain on those international chains. The Port of Los Angeles is the
top container port in the United States and the busiest in the Western Hemisphere.
That makes it the most important gateway for international trade into the United States. It handles $250 billion worth of cargo every year and more
than 50 percent of that originates in China.
Joining us now is Gene Seroka Executive Director of the Port of Los Angeles. Gene, always great to have you on the show! Those statistics say
at all I'm sure you can give me more accurate ones. How closely are you following the trip by Nancy Pelosi potentially, let's say that to Taiwan?
GENE SEROKA, EXECUTIVE DIRECTOR OF THE PORT OF LOS ANGELES: Oh, we're following this very closely. And it's a delicate needle to thread on the
political side social. And for us in business, as you rightly say the majority of our imports come from China. And as we continue to focus on
ramping up exports, that will be a very, very key destination country for us.
CHATTERLEY: I remember you saying back in January 2022 to us that I think you had 109 containerships queuing for more than two days to get into the
port. How many are waiting to dock today just give us a flavor of what we're seeing in terms of the reduction in some of those blockages and
challenges that you were facing back then?
SEROKA: Julia we've done tremendous work since that peak of 109 vessels back in January. We're down to 19 as of last night, and those ships are
waiting less than two days to come in and begin their work all of this while we're matching container for container with our all-time record year
set just last in 2021. Here at the midway point, we continue to move a tremendous amount of cargo.
CHATTERLEY: What you were challenged by was not only the amount of cargo coming in and having space to contain it, but it was pushing that and those
goods onwards their transport links their lorry drivers, to what extent has that eased in a similar way or is it less so?
SEROKA: As the cargo has come off the ships in record numbers, we've moved two thirds of our boxes out by truck on average, and we've got the lowest
amount of agent cargo sitting at our port since we began measuring at the beginning of this surge.
Now we're focused on rail cargo while it's increased by six fold since February. We've got to have our American importers picking up that cargo at
locations like Chicago, Memphis Dallas so we could push out the next trains from here in Los Angeles.
[09:45:00]
CHATTERLEY: So does that mean that the costs of doing this are coming down too because broader measures in the United States now have transport costs
are coming down? And we're clearly seeing that with energy prices as well, to some degree? Do you - what impact is this having on things like freight
costs?
SEROKA: That fluidity means that there are fewer touches to a container, less extra handling costs. So we're trying to do our part our level best to
remove any waste from the system and increase efficiencies, having an impact on this is a key driver for what we do here.
CHATERLEY: Part of what drove their growth slowdown in the first quarter in the United States, there was inventory building. What's your sense heading
particularly into the third and fourth quarter as we head towards the holiday season?
Inventory levels up people because they're not going to be in the same position that they were this time last year where they were struggling to
get the goods then? Do you still expect to ramp up in imports into the Port of Los Angeles? Or do you expect it to be pretty steady? What's your
forecast now look?
SEROKA: The cargo that's coming in the weeks and months ahead looks different than what's on the ground right now. We've got seasonal goods
like back to school, Halloween and fall fashion on the way in addition to the all-important year end retail holidays.
And while some retailers have gone out and stated that their inventories are higher than they would like, and they may be discounting goods, with
the exception of a few commodities, we see a pretty steady run for the back half of the year.
Now, not everyone is going to buy appliances, kitchen, bathroom fixtures, and main furniture purchases every single year. So as those inventory
levels start to steady, we'll see that business taper a little bit, but imports in general will remain strong.
CHATTERLEY: The theme of this show actually has been that the risk of retaliation for certain behaviors and your sheer scale makes you a target
on the world stage particularly at times where trade is so vitally important and in the economy softening.
I saw a statistic that said that your port faces up to 14 million cyber- attacks on a monthly basis. And you're now working with the FBI to ensure that you have the structures in place to defend that. Gene what can you
tell us about what you're dealing with in addition to the challenges of just running the core business, some of the outside threats that you face
too?
SEROKA: This is a big part of supply chain resilience Julia, you're correct. We are stopping 40 million cyber intrusion attempts per month.
That's twice as much as pre COVID back in September of 2014 we set up the nation's first cybersecurity operations center at a port and it follows the
FBI's Neighborhood Cyber Hood Watch Framework that has been so strong that just last December co created with IBM.
We implemented one of the world's first cyber resilience centers to bring our private sector partners together, all done under a cloak of anonymity
to make sure we digitize and share cyber threats quickly. So our private sector companies can be on the watch.
CHATTERLEY: Quickly Gene, we have about 30 seconds. Do you know whether emanating from?
SEROKA: Eastern Europe, Russia, nation states that are familiar with this activity? We see all of this not only coming here to Los Angeles but
throughout the world, heightening our level of protection and information sharing.
CHATTERLEY: Gene brilliant to chat to you as always, thank you so much! Gene Seroka there Executive Director of the Port of Los Angeles sir thank
you! OK, let me bring you up to speed with some of the other stories making headlines around the world.
Ukraine says a mandatory evacuation of the Donetsk region is now underway, beginning with women, children and the elderly. It comes as Russian forces
continue their offensive the Head of Donetsk regional military administration says trains will depart every two days. Volunteers from
World Central Kitchen provided people on the first evacuation train with food.
A lawyer for American Basketball Star Brittney Griner says she's quote focused and nervous after the seventh hearing and her trial ended earlier
today without a verdict. She's expected back in court on August the 4th. It comes as the U.S. attempts to negotiate a prisoner swap for her release.
Greiner was arrested in a Moscow airport in February for having cannabis oil in her luggage.
In the United States - State of Kentucky at least 37 people have lost their lives after floods swamped the state. Rescue workers there airlifting
people to safety, but efforts have been hampered by ongoing rain in some areas. Officials are forecasting dry conditions over the next few days
which could offer some relief.
And up next BP's stands for big profits today; the oil giant sees its best quarter in 14 years as prices spike. We've got all the details next.
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[09:50:00]
CHATTERLEY: Welcome back to "First Move". Profits at BP hit a 14 year high last quarter as the war in Ukraine drove up energy prices. The oil giant
says it expects prices to stay high. It boosted its dividend and says it plans to increase spending on new oil and gas projects. Clare Sebastian
joins me now plenty that's consensus if necessary about that too, walk us through the numbers first?
CLARE SEBASTIAN, CNN CORESPONDENT: Yes, Julia BP joining its rival energy companies in an absolutely blockbuster quarter as energy prices rose. Of
course, due to the disruption from Russia during the Ukraine war, the number was about $8.5 billion dollars that underlying replacement profits
the most closely watched indicator from BP.
That is more than triple the number we saw in the second quarter last year and way in excess of estimates. They say that it was driven by huge margins
in terms of refining; refining capacity, as we know is very much sort of at a shortage worldwide. So that probably contributed to that also, they call
it an exceptional quarter when it comes to trading.
So revenue they get from actually trading in commodities. So that was part of the drivers there. But this is going to be Julia and this is crucial a
pay day for shareholders. It has increased its dividend by 10 percent. And BP is also launching another round of share buybacks of $3.5 billion in the
next quarter in the third quarter that's on top of more than 4 billion that they've already done so far this year.
So that sort of adds fuel to the already heated debate that we're seeing around these bumper profits from energy companies because of course here in
the UK, you know, energy consumers are facing a historic cost of living crisis and energy bills are set to go up again significantly this autumn.
And we're seeing some pretty strongly worded reactions to this take a look at what Greenpeace UK has tweeted. There's something particularly obscene
and cruel about gas companies like Shell and BP making record profits while consumers are going to struggle to keep warm this winter.
Its way past time they say to implement a proper windfall tax on big oil and save the planet. Now the UK Government has already put a 25 percent
windfall tax on the profits of energy companies that's just about starting to kick in but critics are saying they need to do more.
And one more tweet Julia, from the General Secretary of the United to union, one of the biggest trade unions here in the UK. She's saying that
all of this is happening while household energy bills are raising to a calamitous 3600 a year. She finishes by saying Britain's real crisis isn't
raising prices. It's an epidemic of unfettered profiteering so big profits, but also a political problem for BP.
CHATTERLEY: Yes, fuel to the fire. I was just quickly doing the math on this for Exxon Mobil, Chevron, Shell and BP. I make that $50 billion of
profits between the four of them. Yes, fuel to the fire. Claire Sebastian, thank you so much for that. OK now staying with petrol heads did you know
the late Princess Diana drove a Ford Escort?
[09:55:00]
CHATTERLEY: Yes, apparently she did the car, which was specifically built for the Princess of Wales is about to be sold at auction. It was registered
in 1985, and it's done less than 25,000 miles. The model is believed to be one of a handful painted black. Ford's PR Department at the time suggested
making the call black for Princess Die when escort turbo were white at the time.
And finally, what could be the most expensive McDonald's breakfast in the world? A passenger arriving in Australia from Bali has been fined nearly
$1,900 for bringing in this. Two undeclared egg and beef sausage muffins and a ham cross on. It was discovered in the traveler's luggage at Darwin
Airport by a drug detector dog called "Zinta".
Australia has notoriously tough insecurity measures in place and that breakfast cost twice the price of the airfare from Bali. Also it's worth
noting there are nearly thousand McDonald's branches in Australia. I have to check that. So they're not exactly hard to find and they'll tell you
what the best eaten at the time. That does not look very appetizing. Ouch all round. That's it for the show.
If you've missed any of our interviews today they will be on my Twitter and Instagram pages search for @jchatterleycnn. In the meantime "Connect the
World" is up next. We'll see you tomorrow.
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[10:00:00]
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