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First Move with Julia Chatterley

G7 Leaders to Announce New Support for Ukraine; Biden: We're Helping Ukraine Build a Capable Defense; Gapen: New Evidence U.S. Inflation Gradually Dissipating; Floods, Landslides, Heat Waves Slam Asia; Britney Spears to Release Memoir in October. Aired 9-10a ET

Aired July 24, 2023 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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MAX FOSTER, CNNI HOST: And a warm welcome to "First Move". I'm Max foster in London. Recapping our top story the second day of the NATO Summit

underway in Vilnius President Volodymyr Zelenskyy met with several leaders including British Prime Minister Rishi Sunak and Canadian Prime Minister

Justin Trudeau as his push for Ukraine's membership into the alliance continues.

During a press conference, NATO Secretary General Jens Stoltenberg said its allies will continue to support Ukraine and affirmed it will become a

member at a later date.

(BEGIN VIDEO CLIP)

JENS STOLTENBERG, NATO SECRETARY GENERAL: The decisions made here in Vilnius marked the beginning of a new chapter in the relationship between

NATO and Ukraine. Today, we meet as equals. I look forward to the day we meet as allies.

(END VIDEO CLIP)

FOSTER: We're waiting for an announcement from U.S. President Joe Biden and G7 Leaders on new efforts to bolster Ukraine's military capabilities. We're

going to keep crossed out for you. Melissa this is probably the big development, isn't it? Certainly from Zelenskyy's point of view, what might

be contained in terms of guarantees within the statement from the G7 in particular?

MELISSA BELL, CNN PARIS CORRESPONDENT: I think that might be one of the biggest deliverables he actually walks away with and what we're expecting

on the part of the G7, when they meet and emerge from their meeting with that press conference.

And the announcement of those long term security guarantees Max, is that essentially, they're going to be looking not just at military capabilities

that they can continue to add, but perhaps more importantly the political economic investments that they can make in the country to try and ensure

not just its independent future, but the fact it should be more closely integrated with the West that should provide some long of those long term

guarantees that President Zelenskyy has been looking for.

As well as so many of those short term military deliverables that we've been hearing about. And yet we just show you just showed Max, a moment from

that press conference. And Jens Stoltenberg, explaining very clearly there that they were now equals, if not yet allies. And really what you heard

from President Zelenskyy very clearly was that was all well and good.

But being on the road to membership, getting pledges of aid from NATO was not the same as being a member again, repeating that sense of frustration.

It's something we've been hearing about here on the sidelines of this meeting with the UK Defense Minister speaking at a briefing here at the

main NATO event.

Saying, look, he's told the Ukrainians, you need to be showing a little more gratitude for what's been done already. We're not Amazon. We cannot be

given shopping lists. And then these kinds of demands speaking to the tone, that so many have found surprising, and there was expressed again today,

but a lot of focus clearly on what's to come next.

First of all, the bilateral between Joe Biden and President Zelenskyy, we've been hearing from Jake Sullivan Max, who said that the American

President intends to be plain speaking with his Ukrainian counterpart, even though he will be there to listen to what President Zelenskyy has to say as

well.

We will, of course, also be looking towards that package of measures much broader than simply military aid to be announced by the G7 with an eye on

the political future, the economic future of Ukraine. And again its integration within the west with an eye on what Jens Stoltenberg explained

earlier, which is that the point is to prevent this kind of conflict from ever happening again, to make it absolutely clear to Moscow where the

future of Ukraine lies, Max.

FOSTER: Melissa, thank you back with you for those updates when they come in. The terrible images we see daily out of Ukraine and underlying the huge

financial support that's needed to help the country rebuild.

According to the Ministry of Finance Ukraine has already received nearly $24 billion from international partners so far this year including close to

$10 billion from the EU and $7 billion from the U.S. reconstruction and recovery in Ukraine will cost a minimum of $411 billion according to the

World Bank

[09:20:00]

European Commission and the United Nations, earlier this month, Ukraine's Finance Minister urged other nations to follow the example of the EU and

make a four year commitment of financial aid. Ukrainian Finance Minister Sergii Marchenko joins me now.

Thank you so much for joining the Minister. Positive news coming out of NATO in terms of support, if not exactly what your President wanted to hear

in terms of accession to NATO?

SERGII MARCHENKO, UKRAINIAN FINANCE MINISTER: Yes, I think that any positive news from the Vilnius is good for us. But of course, we haven't

achieved our main goal, at least or -- some clear signals when and what videos. Ukraine can be part of NATO and but anyway, I think the discussion

will continue. And we will see that a lot of countries will support Ukraine to be part of NATO.

FOSTER: How frustrating is it for you not to have an invitation at least to join NATO?

MARCHENKO: As a practical guy, it's a question of expectation, management of expectation. I have not truly -- I wasn't truly involved in this

discussion from our side. That's why I have not really able to discuss and may make our estimation on this context. So I am better to discuss

financial assistance for Ukraine in Arabia, no, then our NATO perspective.

FOSTER: OK, so in terms of the latest aid package, you see coming in from the west, how do you intend to spend that?

MARCHENKO: Of course, for us, it is crucial to have predictability for 2024. Because for 2023, we have fully agreed on the level of support which

different counties can provide for Ukraine. Now we're thinking farther, we're thinking about 2024 and at least we have lot of commitments from you.

And now we expect in other G7 nations also step in and help us to car other needs of Ukraine's budget. At least we expected that our budget deficit

will be no lower than this year budget deficit, because war will go on and on and continue on. And that's why we need sources to cover our expenses.

FOSTER: The IMF in May release growth forecasts of 1 to 3 percent for your economy, which a lot of people will be surprised that considering you're at

war, but what are your predictions?

MARCHENKO: Yes, I'm rather optimistic I seen that this year, quite achievable to get 3 percent GDP growth. Of course, we have a clear

explanation why is it so because our follow basis of last year. Last year, we lost 29 percent of our GDP.

This is why it's easier to start even minor growth when you have so drastic decline last year. Concerning our budget revenues now we met our

expectations and we can attract and we can collect as much revenues as we collected before the war.

Of course, the reason of that is inflation. Last year, inflation was 26.6. This year, we managed to decrease inflation to the level of 12.8. And we

still conduct wise and very clear monetary and fiscal policy.

FOSTER: OK, Sergii Marchenko, thank you very much indeed for joining us today. We're going to leave it there because you want to cross over to

Vilnius. We're expecting a statement from the G7 obviously a smaller group than NATO, but President Zelenskyy has high hopes for what they're about to

say.

FUMIO KISHIDA, JAPANESE PRIME MINISTER: I am pleased to be able to announce the Joint Declaration on support for Ukraine today.

[09:25:00]

At the G7 Hiroshima Summit by engaging in discussions that included a wide range of invited countries. We agreed that unilateral attempts to change

the status quo by force or coercion are unacceptable anywhere in the world and to safeguard a free and open international order based on the rule of

law.

I feel that it is a truly meaningful that we the G7 leaders and Volodymyr have gathered once again today. Going forward, this declaration will be

open to any country that shares the intention to support Ukraine; I hope many countries will choose to join. The G7 will continue to stand by

Ukraine, our solidarity will never waver. Thank you very much.

JOE BIDEN, PRESIDENT OF THE UNITED STATES OF AMERICA: Let me start off by saying something that I hadn't planned on saying. You know, I think there

are very few people in Europe or in Continental United States and North American Continent that thought this man would stand up and come to the aid

and assistance of Ukraine.

He increased his military budget. He stepped up Japan, because he understood that when any part of the world has 185,000 people, soldiers

crossing the border, stealing sovereignty from another nation that affects the whole world. I want to thank you again publicly.

The guest concluded the first meeting of NATO Ukraine Council, and we're -- all our allies agreed Ukraine's future lies in NATO. That's not a surprise

to any of us. I don't think I hope it's not a surprise to you who Mr. President.

Allies all agreed to lift the requirements for Membership Action Plan for Ukraine and to create a path to NATO membership, while Ukraine continues to

make progress on necessary forms. But we're not waiting for that process to be finished to make the long term commitments that we're making to

Ukraine's security.

Volodymyr and we should -- shouldn't be so familiar. Mr. Zelenskyy and I talked about the kind of guarantees we could make in the meantime, when I

was in Ukraine and when we met in other places. And so today, the long term commitments we're making are backed up by the notion that in the meantime,

we're going to provide security to Ukraine, for as to kind of against any aggression that may occur.

Today, the members of the G7 are launching a joint declaration of support for Ukraine to make it clear that our support will last long into the

future. This starts a process by which each of our nations and any other nation who wishes to participate will negotiate long term bilateral

security commitments with them to Ukraine.

We're going to help Ukraine build a strong capable defense across land, air and sea from which will force the -- will be a force of stability in the

region, and deter against any and all threats. I want to thank my fellow G7 Leaders and Presidents Zelenskyy for their work to make this happen.

I think it's a powerful statement of our commitment to Ukraine, as it defends its freedom today, and as it rebuilds the future for and we're

going to be there as long as that takes. And again, I thank all my colleagues for their support for this.

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VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: Thank you very much, Mr. President. President Biden, Prime Minister Kishida, Chancellor Scholz,

Prime Minister Sunak, President, Macron, Prime Minister Trudeau, Prime Minister Meloni, President Michel, President von der Leyen, great honor to

be here. The outcome of the NATO summit in Vilnius is a very much needed and meaningful success for Ukraine.

And I'm grateful to all leaders in NATO countries for very practical. And I'm presented this support considering the keys that our relations support

for Ukraine. Today, there are security guarantees for Ukraine on the way to NATO, an important package of security guarantees. Today, we are

coordinating with our g7 countries, that framework for security guarantee of that shall be further extended through arrangements with our key

partners, bilateral and multilateral agreements.

Ukrainian delegation is bringing home significant security victory for the Ukraine, for our country where our people for our children need opens for

us. Absolutely new security of the unit is and I thank everyone who made it possible. Thank you, dear colleagues. Thanks, you. Thanks for the venom and

Jens Stoltenberg. Thank you very much.

UNIDENTIFIED FEMALE: This concludes the speaking program; please remain seated for the family photo.

FOSTER: OK, with the, you got the g7 leaders have made their segment there or some of them have at least they often have their photo taken together or

is a key part of these events that big international events there. But we'll bring you that.

But the headline really there was the President Zelenskyy was looking for what he described as agreement sort of guarantees for Ukraine. As they make

their path towards NATO, they did want a formal invitation to NATO. They never got that. But this was the compromise to these security guarantees

that was going to come through the g7 and that was delivered according to President Zelenskyy.

So he says there has been something meaningful coming out of this for Ukraine. So that was the big development we've had really in the last hour.

So some positive news for Ukraine on his path towards NATO, we're back in just a moment.

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FOSTER: Welcome back. These are images of the family photo of the g7 that we've just received in after their statement publicly. They gave

declaration that we are, then we'll come together, it's always good to see these moments, isn't it? That doesn't happen, that often the real sort of

sign of the world powers.

The seven most powerful economies in the world are gathering together there and representatives from the EU as well. What we just heard from President

Biden was that the g7 have agreed to provide security to Ukraine against any aggression that may occur, clear support lasting long into the future.

And President Zelenskyy coming in after saying that was a meaningful success for Ukraine. The security guarantees are for NATO, as it makes a

part as for Ukraine, as it makes a path towards NATO. He didn't get what he ideally wanted, which was an invitation, a formal invitation to NATO, but

he is receiving formal guarantees of security as we approach that time, which will come one day President Biden said.

We'll continue to bring you live updates from the second and final day of NATO Summit in Lithuania here on CNN. But first and important and

encouraging you read on the path of U.S. prices. New data shows U.S. consumer inflation rising at a 3 percent rate year-over-year in June. This

is the first time in more than two years; their headline inflation has come in below 4 percent.

It also is the 12th straight month of easing inflation, the all-important core rates that factors out volatile food and energy prices is easing too,

to under 5 percent on a yearly basis, both the headline and core numbers came in lower than expected. The market reaction of course is positive.

All the major U.S. averages are rallying in early trading with tech stocks in the lead, U.S. bond yields are pulling back after the report too. For

more on today's inflation number, I'm joined by Michael Gapen, Head of U.S. Economics of Bank of America Securities. Thank you so much for joining us.

And we've seen the reaction from the markets; I guess it's this core figure that's really impressed them.

MICHAEL GAPEN, HEAD OF U.S. ECONOMICS, BANK OF AMERICA SECURITIES: That's right. So there was evidence another month of evidence that inflation is

gradually dissipating in the U.S. economy. And we saw a further moderation in services inflation, which is kind of a key consideration for the Federal

Reserve because in some ways reflects the strength of the domestic economy.

We do expect weakness in some goods prices. But there was a broad base softness in the report. And I think it's a very good report for the economy

and the outlook for disinflation, and the stabilization and inflation going forward.

FOSTER: With that particular sectors moving more than others.

GAPEN: Well, we did see for the first time in several months, used car prices began to fall again. They had been falling for a while; they were up

dramatically during the pandemic. They were up about 50 percent during the pandemic. And we have expected them to come back down as new auto supply

has come on board that was happening and then it stopped.

Now it appears to be happening again, I think that would be considered good news. Airline prices came down dramatically on the month. But a key

consideration for the Federal Reserve has been what we call shelter inflation or rents, rental inflation, housing inflation that actually

moderated further, it's still rising, but it rose 0.4 on the month versus 0.5 or 0.6.

So again, it's showing signs of slowing. So I would point to those three categories housing inflation, airlines as well as used cars.

FOSTER: How will the important you know the only important thing obviously is how the Fed will react to this. Have you any sense do you think having

looked at -- you know, most recent decisions?

[09:40:00]

GAPEN: I do think what they're telling us. And I think what the data in totality supports not just the inflation data, but the labor market and

other activity data suggests the Fed will raise its policy rate, another 25 basis points or a quarter of a percent at its July meeting later this

month. But I think after that things are still very open ended.

We think that they will do one more 25 basis point increase after that. But if inflation continues to surprise to the downside, maybe they don't. So I

think the outlook is very data dependent. And certainly think more action in June is forthcoming. And we'll see what happens after that.

FOSTER: Energy and food prices obviously affecting people directly and they really, they haven't really feeling it, hadn't they. What you expect to

happen there?

GAPEN: Right. And as you mentioned, in the lead energy prices have been coming down very dramatically over the last year, but there's kind of big

bass effects here because they peaked in last June, July. So the headline rate of inflation has come down as energy prices have stabilized. But this

month, food prices were up a 10th or two, energy rebounded about a half a percent, gasoline prices were up 1 percent.

So I think most of the improvement there is in the rearview mirror. And we need to be watchful for signs that a still strong U.S. economy and global

economy pushes energy prices higher.

FOSTER: Michael Gapen of Bank of America Security. Thank you so much for joining us with your insight today. Now coming up, the U.S. is trying to

contain the damage after a serious cyber security breach, hackers targeting U.S. government agencies, details just ahead.

(COMMERCIAL BREAK)

FOSTER: North Korea fired what's thought to be another intercontinental ballistic missile; Japan says it would be more than 70 minutes before

coming down into the sea. It comes to the U.S. Japan and South Korea meet to discuss security issues at the NATO Summit.

Marc Stewart joins us from Tokyo. I mean, we get these sorts of reports quite often now. What makes this one different for you, Marc?

MARC STEWART, CNN CORRESPONDENT: Well, I think it's the time in Max as we have talked about many times before; North Korea always tries to stay

relevant. And it does so when often when other parts of the world are getting attention, in this case, the NATO summit in Lithuania. Early on in

that summit before this even happened, we heard condemnation about the North Korean program from the Secretary General of NATO.

And then we have this. And also comes at a time when the United States and South Korea are really beefing up their military relationship. We've even

seen a stronger alliance now between South Korea and Japan.

[09:45:00]

This is obviously drawing a lot of condemnation from around the world, including the Cabinet Secretary, the Chief Cabinet Secretary here in Japan,

take a listen to that.

(BEGIN VIDEO CLIP)

HIROKAZU MATSUNO, JAPANESE CHIEF CABINET SECRETARY: Such ballistic missile launches violate relevant United Nations Security Council resolutions and

are a serious security issue for our citizens. We have launched a strong protest against North Korea through our embassy in Beijing.

(END VIDEO CLIP)

STEWART: That is the reaction from Japan, South Korea also responding very strongly. There is a cabinet meeting involving the president who is now in

Lithuania and emergency cabinet meeting, if you will where there were warnings of consequences to North Korea, Max.

Finally, we should point out that not only was this missile in the air for a long time seeing it as a marked advancement, it also was an

intercontinental ballistic missile with the potential to hit U.S. soil.

FOSTER: Well, I mean, in terms of reactions, what sort of options are open to the authorities without, you know, the other countries without provoking

North Korea?

STEWART: Right. I mean, this is something that happens over and over again. I mean, it'll be interesting to see just how much of a diplomatic

discussion this becomes. You know, China, obviously has a relationship with North Korea. That's why Japan turned to the Beijing embassy to perhaps see

if China can perhaps put some pressure on this to kind of lower the temperature, if you will.

But right now, you know, the issue is this. The United States does not recognize North Korea in a diplomatic way. Under President Trump, there

were discussions under President Biden, there has been no conversation. So that's going to be a very difficult thing to balance and battle for that

reason, Max.

FOSTER: OK, Marc, thanks for joining us from Japan with that. The U.S. Microsoft is sounding the alarm on a serious new cybersecurity threat. They

say hackers have breached the email accounts of two dozen organizations, including U.S. government agencies.

Microsoft says the hackers are based in China. And they're focused on espionage. Sean Lyngaas joins me now. I mean, what more information are we

managing to get on this one, Shawn?

SEAN LYNGAAS, CNN CYBERSECURITY REPORTER: Hi, Max. Well, this, this broke overnight here in the east coast. So it's been a fun several hours. But

what we know right now is CNN reported this morning that the State Department was effectively patient zero in this hack, meaning they were the

first to detect the intrusion into their email accounts.

And they in turn, alerted Microsoft. And that set off this sort of goose chase for the hackers and to try to evict them from networks. It's a much

targeted attack, meaning these alleged Chinese hackers are after very specific information from high level officials. And it's like you said it's

only a handful of federal agencies, and they're trying to pick out information from the unclassified email system.

So the Biden Administration is pointing out that they were first to detect this and not Microsoft. So there's some finger pointing going on. But this

is more of the same in terms of the long running, very challenging Chinese espionage threat facing U.S. government agencies and corporations,

according to outside experts, not just government sources, but outside experts and well documented activity from the Chinese.

Now that the Chinese typically deny this and point out that the U.S. government in turn conducts its own hacking, but the scale and

sophistication that we're seeing sometimes from the Chinese is something that really keeps U.S. officials up at night Max.

FOSTER: And I mean does the U.S. have the capability to deal with them you know, with these more sophisticated attacks?

LYNGAAS: They've invested; the U.S. government has invested billions in, in software and in personnel to try to detect these, these hacks. And the

challenges here is that the all's it takes is one, one opening for well- trained hackers to get in. So it's not like they need, they need to be right once and, you know, the U.S. government used to be right all the

time.

So it's very much on the defensive, so they are getting more capable, but the cards are in some ways stacked in favor of the attacker, Max.

FOSTER: OK, Sean, thank you very much bringing us that. More "First Move" after the break.

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FOSTER: Welcome back to "First Move". Extreme weather is throttling parts of Asia from Japan where heavy rain has triggered deadly flooding and

landslides and China suffocating amid an historic heat wave. India more than well, more and more people are dying after torrential monsoon rains as

well. Anna Coren is in Hong Kong with the very latest.

ANNA COREN, CNN CORRESPONDENT: Extreme weather across Asia has experts convinced the continent is bearing the brunt of climate change. In Japan,

unusually heavy rain in the country's mountainous southern island, Kyushu has caused extensive flooding and landslides. Homes have been washed away,

hospitals flooded, electricity and water cut off.

The Japan Meteorological Agency has described it as the heaviest rain ever on the island. Eight people are dead and four are missing. These are the

latest numbers from authorities. Rescue and recovery operations are underway and more rain and storms are forecast for the island and

southwestern Japan.

Let's turn our attention now to China, where dangerous heat is causing severe problems. Temperatures are in the mid-30s and are expected to climb

even higher in the coming week, possibly reaching 40 degrees in parts of South China. The China Energy Investment Corporation, the world's largest

coal fired power Generation Company.

So the volume of power generated on Monday reached a historic high, with energy loads continuing to rise in southern and eastern China. Even

zookeepers in Shanxi Province, northern China are trying to keep animals cool by giving them blocks of ice to hug and lick. While in other parts of

the country heavy rainfall is causing flooding.

The extreme weather across China comes as U.S. Climate Envoy John Kerry travels to Beijing this weekend for climate talks with Chinese officials.

Meanwhile, in India, heavy rainfall has caused flash floods and landslides in Himachal Pradesh with the death toll stands at 31 and more than 2000

people have been evacuated.

The government said relief efforts are underway and emergency crews are working to reopen roads affected by landslides. In neighboring Punjab

state, 10 people have been killed so far. Schools have been closed here and other affected areas to prevent further disasters.

The only good news is that rainfall in both states is expected to ease in the coming days. Anna Coren, CNN Hong Kong.

FOSTER: Members of the Screen Actors Guild could join members of the Writers Guild of America on the picket lines as soon as tonight if they're

unable to reach an agreement with movie studios. SAG-AFTRA agrees to mediation with the Alliance of Motion Picture and Television producers but

says it won't extend this deadline.

The contract between the two expired on July the first and comes at a time when studios are pinching pennies whilst performers are fighting for a

better and fairer compensation. If a strike goes through, it could be the first actor strike in more than 40 years in Hollywood.

And finally, Britney Spears is leaping into the literary world saying she's ready to tell her story "On her terms in a highly anticipated new memoir

called The Woman in Me". Set for release on October the 24th blockbuster publishers Simon and Schuster snapped up the rights for what said to be an

eye watering some.

[09:55:00]

Fans across the world are falling over themselves to hear about Spears's life after she successfully fought to end a 13 year court ordered

conservative ship. That is it for this show. "Connect the World" though is up next for you. Stay tuned.

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