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First Move with Julia Chatterley
Xi: China will Never Renounce Right to use Force over Taiwan; UK Finance Minister Reverses Virtually all Planned Tax Cuts; Sharma: The Dollar is in Many Ways a Proxy for Global Quality; UK Finance Minister Scraps Truss' Planned Tax Measures; Anti-Government Protests Hit One-Month Mark with no end in Sight; BTS Members to Embark Mandatory Military Service. Aired 9-10a ET
Aired October 17, 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: A warm welcome to "First Move". It's great to be back with you lots to discuss this Monday, as ever as the new U.K.
Chancellor Jeremy Hunt gets blunt. Prime Minister Liz Truss's fiscal fumble led to a serious U.K. market stumble.
But Hunt's underlying message today, I think is we've been humbled. The Finance Minister today delivering an emergency statement designed to steady
government finances and financial markets. Promising fiscal prudence and rolling back virtually all the tax measures the government so recently
announced to try and boost growth.
Today's outline rolled out weeks earlier than scheduled to a nod I think to the fragile state of U.K. assets particularly, since the Bank of England
wrapped up its emergency bond buying program on Friday a hurried response, of course, to protect teetering pension funds.
Hunt therefore getting out in front and his message is having its intended effect. Investors who rejected earlier unpaid for stimulus plans and our
welcoming hunts more austere approach. The pound today as you can see firmer against the U.S. dollar borrowing costs in the U.K. also falling to
U.K. 10 year yields back below 4 percent after rising to some four and a half percent.
If you remember last week, investors could ultimately I think cast the deciding vote on Prime Minister Truss's survival. Today she looks like
she's in office. But out of power more on all this in just a few moments time.
In the meantime, the favorite picture in equity markets overall U.S. stocks set to rise after last week's extreme volatility that sent the NASDAQ the
tech heavy sector down some 3 percent on Friday alone. Europe as you can see also higher too, that including U.K. stocks as well.
We might just give you a quick glimpse of that if we can or move over to Asia. In the meantime, a mixed picture there to the Nikkei softer by more
than 1 percent. China rising as the week long Communist Party Congress continues, that's the Asian picture.
President Xi set to win term number three doubling down on hardline decrees and that is where we begin today's show consolidating power President Xi
Jinping reaffirming his commitment to Beijing's existing policies including zero COVID as he said to claim an unprecedented third term as Chinese
Leader.
(BEGIN VIDEO CLIP)
XI JINPING, CHINESE PRESIDENT: And responding to the sudden outbreak of COVID-19 we prioritize the people in your lives above all else. And
tenaciously pursue dynamics policy in launching all our peoples who are against the virus. We have protected the people's health and safety to the
greatest extent possible and made tremendous encouraging achievements in both epidemic response and economic and social developments.
(END VIDEO CLIP)
CHATTERLEY: Selina Wang joins us now on this Selina, great to have you with us. It was a two-hour speech at that party congress no mention I saw of
challenges like high youth unemployment of the real estate crisis that they're currently dealing with but strong firm stance on zero COVID on Hong
Kong and on Taiwan as well. And that caught my attention. And there's clearly some disquiet listening to what he said.
SELINA WANG, CNN CORRESPONDENT: Yes, Julia? Well, I mean, this two-hour speech was essentially this long glowing report card of how Xi Jinping's
leadership has helped China achieve this historic victory. So it was all about the successes. Of course, this dramatic picture of progress that he's
painting does come into sharp contrast with the severe challenges that he's facing at home and abroad.
The economic damage from his zero COVID policy, which he reaffirmed isn't going anywhere. The record high youth unemployment rate, this property
sector in crisis we did hear Xi Jinping emphasize this idea of common prosperity, which is the idea of increasing middle incomes as well as
trying to reduce that income gap in China.
But what we're actually seeing in China is people from all walks of life struggling to make ends meet because of that zero COVID policy. We also
heard reaffirmation about Taiwan. What really struck me when I was listening to his speech live?
That there was the loudest and longest applause from the more than 2000 Communist party delegates in that room. At the moment when Xi Jinping said
we will aim to reunify Taiwan peacefully, but we will never renounce using force Julia.
CHATTERLEY: As with all these things, the choreography is important to consider at the same time too. You know, it's interesting to see what some
of the analysts out there were listening to. And even adding up in terms of the words that we use just to compare it to what we saw today versus five
years ago back in 2017.
[09:05:00]
CHATTERLEY: The frequency this time around of the words security people and socialism far higher than we saw five years ago then compare it to the
words that we saw back then when there was so much hope, economy market reform, a lot less than. It gives you a sense of perhaps what we already
knew, but a confirmation of some of the biggest concerns about where China's heading particularly relative to the rest of the world.
WANG: Exactly, I think it's important to remember that under Xi Jinping. His vision is that in order to make China great again, you've got to have
increasing communist party control in every part of Chinese business, economics and society. So we are definitely going to see in this third term
increasing party control and more control over that private sector.
In that speech, you heard him talk about innovation underpinning growth, well, we can be sure that is going to be more state led innovation, as we
have seen over the past year, market value being wiped out of top Chinese tech firms because of that increasing regulatory regulations on their big
tech companies or big private companies. You also heard discussions about increasing self-reliance.
That's going to be a huge challenge for China, especially in their chip making sector, as you're seeing the U.S. increase its sanctions. It's
difficulty for these exports of critical technologies to China in that chip making sector. The other point that we also heard him talk about, which
doesn't get talked about enough Julia, is demographics in China. He talked about trying to ease this problem of an aging population.
China is dealing with this looming demographic crisis, but unfortunately, their efforts to get couples to have more babies isn't working. I've been
interviewing young couples who say the financial difficulties that they're dealing with because of the economic downturn, all the restrictions from
zero COVID. Well, it doesn't exactly make them want to have more kids, Julia.
CHATTERLEY: Yes, some of those policies, exacerbating some of the biggest issues and longer term issues that they face. Selina Wang, great job. Thank
you so much for that.
In the meantime, British police are investigating an apparent assault on a protester at a Chinese consulate in the north of England. It happens during
a demonstration by a Hong Kong pro-democracy group against Xi Jinping. China's Foreign Ministry said it was not aware of the incident.
And sticking in the United Kingdom and other U-turn in British Prime Minister Liz Truss's so called mini budget newly appointed Chancellor or
Finance Minister Jeremy Hunt says they are essentially ripping it up.
(BEGIN VIDEO CLIP)
JEREMY HUNT, BRITISH FINANCE MINISTER: We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started
parliamentary legislation.
(END VIDEO CLIP)
CHATTERLEY: And also said more tough decisions on tax and spending are coming. Bianca Nobilo joins us now. On this Bianca, I was going to say to
you what remains. Because I think it's easier to say what remains and actually what's been stripped back. And the underlying concern here is
there's more to come. Its real prudency compared to what we saw a couple of weeks ago.
BIANCA NOBILO, CNN CORRESPONDENT: It is I think we need another term other than U-turn now. Because that was Jeremy Hunt the new chancellor completely
dismantling what was the Prime Minister's mini budget. And this presents a number of issues because not only did Liz Truss campaign.
Almost exclusively on an economic mandate to become Prime Minister on cutting taxes to stimulate growth on less redistribution of a small state
but this is Jeremy Hunt now taking over because he obviously took this role on his own terms, saying that the priority of this government on this
country will be stability.
Which is a marked contrast from the language we were hearing from the Prime Minister over recent weeks, who said we have to have a change from the
status quo. It can't continue that's the most important thing. And Jeremy Hunt did announce that there will be more pain to come.
He said to departments, you're going to have to start looking at areas to cut, to fund the public spending that we do want to do. So now the Prime
Minister is in a very difficult position as Jeremy Hunt addresses the House of Commons later today Julia, in about an hour and a half because he is
leading at the moment.
You know, political power in Westminster has to go somewhere. And it's definitely not with the Prime Minister. It's been drained away from her and
Jeremy Hunt, addressing the markets first thing on a Monday being the representative from government to try and steady the ship is all optics
that I think the Prime Minister is probably not altogether welcoming.
CHATTERLEY: Yes, I mean, trade wait makes it almost sound like it happened over a period of time. It felt like a complete vacuum quite frankly, for
the last for the last couple of weeks in office but not in power. It feels like the financial markets for investors to be specific will ultimately
decide if this does study the ships then perhaps Prime Minister Truss couldn't can remain. What's your sense from what you're hearing because the
danger now is within the party and their own stability within themselves?
[09:10:00]
CHATTERLEY: And not looking even more ludicrous quite frankly, if they throw out another Prime Minister.
NOBILO: That's such a good way of putting it because there is such instability. And it's also an existential issue now, not just for the
Conservative Party, but for these lawmakers who had assumed after winning a stonking majority in 2019. That they'd be safe in their jobs that they'd be
able to pay their school fees and mortgages.
And we have a life plan for the next decade or so. But that isn't the case anymore. Looking at the polling, Liz Truss is putting the party in a
position where if there was an election tomorrow, most of them would lose their seats.
So the position for the Prime Minister is perilous and the market reaction will determine a lot. What's interesting is the removal of Kwasi Kwarteng
as Chancellor. Board has some time, but the implication being now that if markets rally, it's because of Jeremy Hunt, and not because of the Prime
Minister, she's almost incidental and has faded into the background a little bit as has become more of a liability.
And that is exactly why we're hearing these open questions and plotting in Westminster about how she could be ousted. Most people I speak to Julia
said that the Prime Minister is simply in an unrecoverable position. There is no clawing her way back from this, you know, when you've lost that
trust, and confidence and credibility, when in politics, do you ever get it back in a democracy?
So it's an issue of time for most, whether it's one week, two weeks, until Christmas. One of the priorities for the Conservative Party is to have a
plan. Because when Boris Johnson was ultimately pushed out through all those resignations, there wasn't a plan in place.
And look what happened. This is what happened. So the grandees within the party feel like there needs to be some kind of coherence in terms of the
strategy, a unity of purpose about who would replace Liz Truss. And they want to avoid the vote having to go to the membership. So there's a lot of
fiddling to be done behind the scenes. But by and large, the question is not if it's just when will Liz Truss? --.
CHATTERLEY: Yes, Time will tell. How much time, that is the question? Bianca Nobilo, thank you so much for that. OK, let's move on rescue
operations are underway in Kyiv.
After Kamikaze drone attacks, according to Ukrainian officials. The Prime Minister says, the Russian attacks hit critical infrastructure cutting
power supplies in some areas in Downtown Kyiv normally bustling with students and people socializing, exclusion set buildings on fire. And some
people running for cover at least three are reported to have been killed.
Clarissa Ward joins us now. Clarissa, what can you tell us about the aftermath of these latest attacks? And what are people saying to you about
their fears now more?
CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, this definitely feels like a grim new chapter after several months of relative peace and
quiet here in Kyiv. It has very much been at the forefront again last Monday with that barrage of missiles. And today with these Kamikaze drone
attacks.
We just returned recently, from the scene of one of those explosions a residential building. We're now hearing from Ukrainian authorities; at
least four people were killed, including an elderly woman, a young couple. The wife was reportedly six months pregnant.
And the target appears to have been a sort of power plant in the neighborhood that was also targeted in last week's barrage of missiles. And
so far, it's unclear as to how much if any damage has actually been sustained to that particular plant. But clearly the goal here is very much
to try to take out crucial civilian infrastructure such as electricity, heat power plants.
We spoke to the Mayor of the City, Vitali Klitschko, Julia who said to us essentially, that while the goal appears to be to intimidate and depress
people here in Kyiv. That actually these attacks are having the reverse effect that they are making people angrier and more resolved to try to win
this war once and for all. But certainly a very grim day with at least four people killed here in the city and rescue attempts ongoing at various
locations, Julia.
CHATTERLEY: Another grim day, Clarissa Ward, thank you so much for that. OK, straight ahead, as the government hits the brakes on tax cuts, who's in
the driving seat of Great Britain, the Prime Minister, or the Chancellor plus, a month into protests for women's rights in Iran? What's the end game
dissident activist Masih Alinejad ways in?
(COMMERCIAL BREAK)
[09:15:00]
CHATTERLEY: Welcome back to "First Move", it's been called one of the biggest U-turns in British economic history. The conservative government's
ill-timed fiscal stimulus flings no longer thing.
U.K. Finance Minister or Chancellor Jeremy Hunt announcing in an emergency statement today that some $50 billion equivalent of planned tax cuts are
now off the table after this month's financial market revolt Hunch channeling his inner Mario Draghi perhaps saying that the government will
"Do what is necessary for economic stability".
(BEGIN VIDEO CLIP)
HUNT: It is a deeply held conservative value; a value that I share that people should keep more of the money they earn. But at a time when markets
are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut. So I've decided that the basic rate
of income tax will remain at 20 percent. And it will do so indefinitely until economic circumstances allow for it to be cut.
(END VIDEO CLIP)
CHATTERLEY: Hunt also warning that more difficult decisions will have to be made on tax and spending in the weeks and months ahead. Ruchir Sharma joins
us now he's the author of "The 10 Rules of Successful Nations". He is also contributing Editor at the Financial Times and the Chair of Rockefeller
International. "The 10 Rules of Successful Nations", how is the U.K. Government doing in that regard? I shouldn't smile; it's quite appalling,
really. But what do you make of this latest U-turn? And is this enough? Do you think to stabilize financial markets and the economy?
RUCHIR SHARMA, CONTRIBUTING EDITOR AT FINANCIAL TIMES: Yes, hi, Julia. I think that the basic problem that was revealed by what the U.K.
policymakers did over the last couple of weeks, is how the global regime has shifted, which is that policymakers. I'd say even asset allocators and
investors had been so used to living in a world where you had free money, easy money, and also where there was no real check on how much deficit
spending that you did.
I mean, remember that even the U.S. Government and the Federal Reserve was under the impression till probably even a year ago, that deficits didn't
matter. And I think that what's happening across the world is that as this era of free money has come to an end, a lot of policymakers are being
forced to adjust to that new reality which is that you cannot do what you could do even three to four years ago, and possibly get away with it.
So I think it's this big regime shift that is taking place around the world. And we should see the events in U.K. as Exhibit A of how
policymakers are just lagging internalizing this regime shift that's underway across the world.
[09:20:00]
CHATTERLEY: Suddenly investors are punishing governments for making mistakes and it's instant. Is this a good thing?
SHARMA: You know looking at daily market reaction is never a good thing. Because markets can change on a dime, they can turn on a dime. So I don't
think that's the right thing. But I do feel the fact that some sort of monetary and fiscal responsibility is creeping back into the system. I
think that's a good thing.
Now, of course, on the fiscal side, it's so interesting to see that tax cuts have been rejected, because they're unfunded. But you know, the really
big problem if I step back, and the big picture problem across governments, especially in the developed world. Is that the government role just keeps
getting bigger and bigger?
And I think that's the fundamental problem with what we still call capitalism, that we have capitalism. But if you look at the trajectory of
government spending across the world, you can include it. And this includes even the 1980s, the role of government, especially government spending, as
a share of the economy has just gone up and up.
And I think that there's no control on that, and very little discussion is still taking place. That what do you do to cut back on government spending,
especially with, you know, the, all the pension liabilities and all the debt that keeps building up because the demographics are also turning
against the fiscal situation?
So I think that is really at the heart of a lot of problems we had, that the role of government keeps on increasing undermines productivity, and
also makes very little room to do any experimentation with tax cuts, just because there's government spending is up significantly.
CHATTERLEY: Yes, I couldn't agree more with you. Actually, I feel like you missed a part of that, which is, how do we get the house in order, cut back
spending and get reelected? Because this is part of the problem of populism when you make promises in order to get elected, and then you have to
fulfill them.
You just end up creating bigger and bigger government and spending. But that takes us off in a whole different direction. And I want to rein myself
in, and bring it back to an article that you wrote, which I loved recently, for the Financial Times, and you called the U.S. dollar and the rising
strength that we're seeing in the U.S. dollar, a wrecking ball.
Explain why, in light of what you're saying, with, with Central Banks around the world all raising rates but the U.S. dollar in particular
benefiting from this. How dangerous this moment is, and how out of whack even that strength is relative to interest rates and other interest rates
around the world?
SHARMA: Yes, if you look at the dollar's path over the last few months, it's become totally disconnected from the typical fundamentals that drive
currency values. What are those fundamentals? As you said, interest rate differentials, general valuation metrics, current account balances, this is
what drives currency values over the normal course.
But what's happened is that the dollar's rise over the last few months has been just a safe haven trade which has become more and more speculative
that people are buying the U.S. dollar just because they think the dollar is about to go up. And it is totally disconnected from these underlying
fundamental realities.
And this has grave consequences for the global economy. Because the dollar is in many ways a proxy for global liquidity, that everyone trades off the
dollar, how much the dollar is falling, and rising? Dictates the Central Bank's liquidity across various countries from Brazil to U.K. to Japan
everywhere really, this has a major consequence.
And the point that I was making in that article is that something needs to be done about this, rather than everybody's saying, oh, the dollar has to
go up because the Fed is increasing interest rates. That's true, but that's just not the simple logic that drives currency values, because other
Central Banks, too, are increasing interest rates.
So it's disconnected from fundamentals such as interest rate differentials, it's become unhinged; it's become a massive speculative trade around the
world. And I think that this, the time is there now for some sort of a coordinated Central Bank intervention led by the U.S. Where in fact, the
Treasury makes such decisions to try and stabilize the dollar's value or weaken it somewhat.
And I think that Central Bank intervention, when done in a coordinated way can be very effective. So that's one policy tool that policymakers have to
try and stabilize the global financial conditions at a time that they have no choice but to increase interest rates to target inflation. So these are
thought of as two spread policy tools.
CHATTERLEY: And just to be clear, I mean, two thirds of emerging market Central Banks are already selling U.S. dollars and buying their own
currency to support it.
[09:25:00]
CHATTERLEY: It's just not happening in a coordinated manner so that the bang for the buck to user. It's sort of a colloquial term isn't great. But
Ruchir, part of the argument and I know you say that you don't believe that the Treasury the U.S. Treasury will agree to this. Is this perception that
if you allow your currency to weaken, and we're seeing it all over the world?
Prices of goods that you import get higher; you import inflation at a time when inflation is already too high. You say this is not the case for the
United States one because the sheer level of imports as a proportion of GDP is relatively lower compared to other countries but also that the U.S.
dollars used to set prices around the world. Can you just quickly explain why the argument that it will mean that the United States suffers higher
prices if they allow the dollar to weaken is wrong?
SHARMA: Yes, all the academic work has shown that so including the Federal Reserve's own work so first U.S. imports as a share of the U.S. economy is
as low as 12 percent. And the second point is that 95 percent of all the imports are anyway invoiced in U.S. dollars.
So the impact that a 1 percent rise on in the U.S. dollar has on U.S. inflation is statistically insignificant, it's virtually zero, right? So
there's hardly any impact whereas on the other countries, when the currencies are weakening, the impact is greater. In the developed world,
the impact is three times greater than what we have in the United States.
And in emerging markets, it's six times greater. So if you end up having a policy where governments around the world decide to weaken the dollar or
even stabilize it. That has really no impact on U.S. inflation, but it may actually help inflation come down in some of the other countries. Remember,
inflation is a global problem. It's not just a U.S. problem now.
So I just feel this policy intervention, where policymakers Central Banks around the world can come together in a coordinated way to try and
stabilize the value of the U.S. dollar can have a lot of positive effect when the global economy needs some. And everybody's meeting up in
Washington anyway.
So you know, for the IMF meetings, to speak, to get in the same room and come up with some sort of a solution. And it's been done before, coordinate
Central Bank intervention in varying forms, has been done from something as grand as the Plaza Accord to something as relatively smaller in the mid-
1990s. When in fact, Central Banks intervened I remember for the first time in my career, that I saw it live on our screens.
And that was done to prevent the dollar from falling. So Central Banks and policymakers have in the post Bretton Woods era intervened, often in a
coordinated way to try and stabilize currency values on the outside for the U.S. dollar. And the movement is there now for that to be done.
CHATTERLEY: It's sort of politically easier to support something there rather than to push something down, especially one month out from the
midterm elections. And to your point, the Fed knows this, because they've done the research. Janet Yellen, Former Fed chair and now also U.S.
Treasury Secretary. So just to be clear, yes or no, do you think the United States will support this?
SHARMA: Well, the odds are very low just now. But I'm hoping against hope, because one of the key elements of coordinated Central Bank intervention
and is that it needs to come as a surprise. That's what the research shows. So I hope to keep this a well-guarded secret, and that we will all be
pleasantly surprised.
CHATTERLEY: I love that you're almost saying that with a straight face, Ruchir. And you know what, I'm so naughty. I've run out of time. But I
wanted to talk to you about the fact in your pointing this out those countries like probably one as you would expect Saudi Arabia but ones that
you perhaps might not expect.
Portugal, Greece, Indonesia, also doing relatively well at this moment when we're spending a lot of time talking about the challenges but I have to get
you back to talk about that. So I'm just fixing our next interview. And I'm warning my team that you're coming back soon to discuss that because I have
to say goodbye.
Ruchir, thank you Ruchir Sharma there Author of "The 10 Rules of Successful Nations" and the Chair of Rockefeller International. I talked too much.
We're back after this.
(COMMERCIAL BREAK)
[09:30:00]
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CHATTERLEY: Welcome back to "First Move". Well, U.S. stocks are up and running on the first trading day of the U.S. week, a major average is
gaining ground after last week's volatility which pushed the NASDAQ into bear market territory once again, look at that spring higher 2.6 percent
higher in early trade so far this morning.
They admittedly just a couple of minutes of the session beginning investors rattled of course by September's discouraging consumer inflation numbers,
which showed core prices rising to fresh 40 year highs.
New numbers on Friday - showed U.S. consumer inflation expectations also on the rise again too, all this raising fears that the Federal Reserve will
raise interest rates by three quarters of a percent next month as well as in December.
In the meantime, earnings continue to roll in for major U.S. financial institutions. Bank of America reporting better than expected results amid
strength and its bond trading unit but the company like other major banks suffered large declines in Q3 investment banking revenues.
Also today reports that Goldman Sachs is set to announce a wide ranging reorganization that will merge its investment banking and trading business
units into one. Goldman's reports its quarterly results tomorrow before the opening bell, so we'll watch to see any announcements on that front.
Now back to one of our top stories. Today UK's new Finance Minister or Chancellor Jeremy Hunt dropping almost all of the governments planned tax
cuts announced by Prime Minister Liz Truss. The move comes after the plan caused the British pound to hit a record low and UK government bond yields
to saw.
Joining us now to discuss, Douglas McNeill, he's one time adviser to former Finance Minister, Rishi Sunak, Douglas, great to have you on the show.
Speaking of Mr. Sunak, I wonder whether he's somewhere banging his head against the wall thinking I told you so because he was initially saying
when he was going to become the future leader prudency fiscal prudency is unfortunately what's required. What do you make of what we've seen today
and in the past few weeks?
DOUGLAS MCNEILL, FORMER ADVISER TO RISHI SUNAK: Well, yes, you're quite right, where she consistently warned against the policies advocated by Liz
Truss and then put into practice by Liz Truss. And so I think banging head against the wall is probably about right. Of course, no one can take any
pleasure from what has happened over the past few weeks.
Today's announcement seems to be a positive development, at least as far as the markets are concerned. And after all, keeping the markets on side or
winning back the confidence of the markets is the principal aim of the exercise. So I think it's good to see that bond yields were down a little
bit and the currency has firmed up a little bit that on the back of performance in both those markets on Friday afternoon which wasn't all that
encouraging that in the back of a press conference by Prime Minister Liz Truss which got a pretty mixed reception.
[09:35:00]
MCNEILL: So first step of the mission has been accomplished in the sense that the markets have given this a positive reception. Of course, it is
something of a political setback or humiliation, some would say, for the government. And we know wait to see how they will manage the political
consequences of that.
CHATTERLEY: I want to talk about that. But I just want to still ask you again. Do you think this is Truss who established or just the beginning of
it? So far, it's all just been words, one way or the other?
MCNEILL: Yes, well, that's true. And so I think there's probably is just the first of several steps and it will probably be a multi-month, perhaps a
multi-year process. Once you lose credibility, it takes a long time to get it back. But at least the rot has been stopped to some extent.
I think that the extra piece of that equation is however, the fact that your policy changes have to be credible. And that's perhaps what your
question is driving at. So when it comes to something like the scaling back of the energy price support package, which the chancellor has announced
this morning, that's all well and good that cuts the borrowing requirements, of course.
But markets will be thinking that probably he will have to put some form of support scheme in its place when it reaches its end, which will not be next
April. And they won't be you know, they won't be taking it at face value. The notion that no, no further support will be required at that point. To
be fair, the - hasn't said that. People will be wondering quite how he's going to develop that energy price to support package after next April.
CHATTERLEY: Inflation was already the highest among the g7 nations growth, already the weakest of the g7 nations. He's talking about potentially
cutting more. I struggled to see how you cut further in this kind of environment when they're still talking about growth policies, reforms,
infrastructure, investment, whatever it looks, look, Douglas, I think they've got a really tough job on their hands.
Does Liz Truss survive this, as you said, even as late as Friday, having seen her own former chancellor stepped down, and she still did manage to
galvanize confidence? In fact, it was a discomforting speech to watch. Does the party decide to replace her, in your view, given what you know, of the
politics of the Conservative Party? MCNEILL: Well, she's clearly under intense pressure, there's clearly great unhappiness across many sections of
the party with her performance. That said, to ditch another leader, so soon after ditching the previous one is clearly something that would be awkward,
which would not look good.
And it might well lead to a general election as well. And it's not clear that the party is in a fit state to face a general election just --. So
there is a powerful countervailing force that argues against making any change in the leadership.
I think as well, a lot of Conservative MPs will be inclined to give Jeremy Hunt a bit of a chance to show what he can do to show whether he can turn
things around steadied the ship and so on. But you are quite right, when it comes to cutting public expenditure or even reducing the rate of growth of
public expenditure, that's an extremely difficult thing to do.
One of the obvious traditional ways of finding savings if you need to find cash savings is to look to the investment budget capital budget, you
alluded to that in your question. And that is a place where you can find savings without disappointing people quite as much as when you cut day to
day spending. But of course, if you resort to that, then in the medium and long run, economic growth will suffer.
CHATTERLEY: So right now, Jeremy Hunt is Prime Minister in orbit name.
MCNEILL: It looks like he has an extremely powerful position. And that is very much the story of the weekend and the story of today. He's been
imposing himself on the situation, arguably going a little bit further and perhaps considerably further than Liz Truss indicated she wanted to go in
her press conference on Friday.
That was a relatively brief affair, so it was hard to get a sense that you were getting a full impression of her thinking. Today I think an important
task for her and him is to show that they are on the same page.
CHATTERLEY: Yes.
MCNEILL: They will be making an appearance in Parliament. So this is a chance for them to show the - understanding, shoulder to shoulder.
CHATTERLEY: We shall see. Douglas, thank you so much for that. Douglas McNeill, former Adviser to Rishi Sunak, thank you. OK, coming up after the
break as Iran's leaders lay blame for protests at the door of the United States, what will it take to bring real change, we'll discuss next.
(COMMERCIAL BREAK)
[09:40:00]
CHATTERLEY: Welcome back. Battling on in Tehran and beyond, Iranian women continue to take to the streets in a show of defiance towards authorities.
CNN obtained all of these videos from the pro-reform outlet IranWire.
It's been a month since the death of 22 year-old Mahsa Amini in police custody. And demonstrations continue across Iran. Also ahead the weekend a
fire inside the notorious Evin prison, state media feeds eight prisoners died and dozens were injured in Saturday's Blaze. Tehran's prosecutors say
it wasn't linked to the protests. But so far CNN is unable to verify this claim.
My next guest says the battle for women's rights could be Iran's Berlin war moment "A tipping point for lasting change". Journalist, activist and
political dissident Masih Alinejad lives in exile in the United States. From there and with 8 million followers on Instagram, she uses her voice to
aid and amplify protests and the voice of Iran.
She's also the author of "The Wind in My Hair" and "My Fight for Freedom in Modern Iran". And she joins us now. Masih, great to have you on the show!
You're a powerful voice, both inside even from outside Iran. I just want to start with what we saw at the weekend and the fire that was started in this
prison. From those that you're speaking to and what you're hearing, is this tied to the protests?
MASIH ALINEJAD, IRANIAN JOURNALIST, DISSIDENT & ACTIVIST IN EXILE: Oh, definitely, it was very heartbreaking. And let me tell you, some of the
prisoners actually reach out to their family members. For them, it was clear that it was not just Evin prison in fire. Gunshot was hearing and
some of the prisoners were trying to save their lives.
They've been under attack by the security guard inside prison. They've been sprayed by tear gas. So definitely people of Iran they don't trust Islamic
Republic and they see this as a link to the ongoing protests inside Iran.
CHATTERLEY: I mean, for those that follow you on social media, you constantly re-tweet and post videos that people have sent you from inside
Iran doing your best despite the internet crackdown and blackout to provide people with evidence of what's taking place in Iran at this moment.
You compared your headscarf and I mentioned it in the introduction to the Berlin Wall. If that falls, if that breaks, it could ultimately be some
kind of catalyst for change. The Supreme Leader even mentioned the phrase that you used and this comparison with the Berlin Wall. How fearful do you
think the Supreme leader and the regime leaders are watching what's taking place in Iran at this moment and around the world?
[09:45:00]
ALINEJAD: I strongly believe that the Supreme Leader of Iran Ali Khamenei is losing control because he knows better than everyone that compulsory her
job is not only the Berlin Wall, it is the Achilles of the - Achilles heel of the regime.
It is the weakest pillar of the Islamic Republic; you know that there are three pillars Death to America, Death to Israel, compulsory hijab. Now
women are tearing this wall down. And that's why he got scared.
And he referred to, to me as well and putting the blame on the west, but women inside Iran shoulder to shoulder with men is leading this revolution.
CHATTERLEY: What is it take, Masih in your mind, for what you're calling a revolution to trigger regime change? If that's what the people decide the
women and the men that are joining them want?
ALINEJAD: That's a very good question. Look, Iranian people risked their lives did everything, to bring this regime down to end these gender
apartheid regime. What can actually survive this, like regime, this brutal regime is the West; let me make it clear now.
Everything that we have been seeing in one month, it's clear that Iranian people are asking the western countries stop saving the regime. First, we
want the western country to recall their ambassadors. It's not me saying those miles away from Iran. It's the demand of Iranian people that I'm
being in touch with them. Millions of people actually believe that it's enough is enough. They don't want to live with humiliation.
Many of them say that, clearly industry that we want an end for the Islamic Republic, they're not chanting against America, they're not - there's no
single slogan in the street saying that we want a nuclear deal. That's another demand.
The West must stop negotiating with the Islamic Republic, while they're killing teenagers in the streets. And the West actually should close down
the embassies or Iran's interest section, because that is going actually to help Iranian to see that the West is sending the right signal and
recognizing this revolution. Otherwise, there won't be any reason for the Islamic Republic to kill its innocent people.
CHATTERLEY: I mean, you've said this many times. Now, one of your big fears is that because of high energy prices, a new deal is signed. The Iranian
nuclear accord, it will unlock frozen financial funds for Iran, and they will receive payments for the oil that they send around the world.
And you see that as a way to help sustain this regime. I think that the counter to this would be into what you're asking for. And you're saying
that the Iranian people that you speak to is, is that the United States in particular, but other countries have been accused of forcing regime change
in the past? Why is this different Masih, why would this be different?
ALINEJAD: Look, right now that we are talking Putin's oil being sanctioned. And President Zelenskyy recently announced that many drones being provided
by the Islamic Republic to attack Ukrainians. So you see Iranian regime is actually acting in the current war in Ukraine.
So that is why many people demand the democratic countries to stick with their own values, and address the Islamic Republic the same way as they
address Putin's regime. You remember, for years and years, Garry Kasparov, a friend of mine was warning about the danger of Putin.
The western democratic countries were telling him, didn't take him serious, labeling him like war monger or saying that you're asking the western
countries to interfere, what happened, the war is in Euro.
And now this is us Iranians warning about the danger of the Islamic Republic. If the democratic countries do not get united the way the
dictators are united from Venezuela, to Russia to China to Iran, then believe me the western country must face dictators on their own soul.
CHATTERLEY: And that's the challenge with the United Nations because many of these countries are within the United Nations and have certain veto
power and oversight and it makes taking action so difficult. And I know you've spoken about this too in the past.
I want to ask you what ordinary people can do that are not in Iran. Many people that I speak to that are Iranians but they're living around the
world. They say what more can we do other than prayer and good wishes for people? What more can people do?
[09:50:00]
ALINEJAD: To be honest, this time, the sense of unity that we see among people across the globe is phenomenal. It's very heartwarming. I see that
many actors like Sharon Stone like Angela, Angelina Jolie and many, many actress J.K. Rowling, you know, the amazing woman of Harry Potter are keep
supporting Iranian women that gives hope to Iran and ordinary people inside Iran that finally we are being heard. But what I want it's clear I want the
democratic countries, especially female politicians, to take strong actions. This is the moment this is the time. This is the historical
revolution. This is the first time in the history that women are leading a revolution.
They can have an important role they can ask, you know, for International Women's March for Iranians, and that can be a huge help. Right now,
teenagers are getting killed. - was only 16 year old. - there was only 17 year old, Hadis Najafi was only 20 year old.
So there is no difference between these people. And like George Floyd moment, you remember, around the world people took to the streets, this is
a Berlin Wall moment for Iranians. And we want the western countries, ordinary people to push their local politicians to have international
women's march for Iranian women.
CHATTERLEY: Don't forget us. I think that's the underlying message and keep talking about it. Masih, great to have you on the show, come back soon,
please because as always much more to discuss with you, we'll continue this.
ALINEJAD: Thank you.
CHATTERLEY: Thank you, more on "First Move" after the break.
(COMMERCIAL BREAK)
CHATTERLEY: And finally on "First Move" the curtains falling on BTS now turning butter into tough guys. Korean pop sensation BTS are swapping the
music for the military as required, of course by law. CNN's Paula Hancocks has been following their every move. And every move in this regard, in
particular, Paula, a sigh of relief, I think for the government, a cry of distress from fans.
PAULA HANCOCKS, CNN CORRESPONDENT: Julia this has been going on for months. There has been speculation as to whether or not BTS was going to be granted
an exemption for mandatory military service. It turns out they have not been.
And so, Jin who is the oldest he will turn 30 in December, he will be the first to go into the military. Now what this is in this country this
mandatory military services any able bodied man between the ages of 18 and 28 must serve in the military for a period of time.
That was extended for two years for those who excelled in popular culture and art, so there was some breathing room for BTS. But they haven't got an
exemption.
[09:55:00]
HANCOCKS: Now there are some who do sports men, for example, who win Olympic medals that win Asian Games medals. Also classical musicians who
are award winning do receive exemptions. But Big Hit Music said that they are proud to announce that the boys will be carrying out to their mandatory
military service and say they respect the needs of the country. Now there was a concert in Pusan just on Saturday. It turns out there'll be the last
for several years, Julia.
CHATTERLEY: Yes, but BTS, B.B.S, Be Back Soon in 2025, we believe. So for the fans out there that are watching this and crying once more, they will
be back apparently. Paula Hancocks, thank you for that. And that's it for the show. If you've missed any of our interviews, today, they'll be on my
Twitter and Instagram pages; you can search for @jchatterleycnn. In the meantime, "Connect the World" with Becky Anderson is up next.
(COMMERCIAL BREAK)
[10:00:00]
END
