On this “Face the Nation” broadcast moderated by Margaret Brennan:
- White House national security adviser Jake Sullivan
- Ukrainian Foreign Minister Dmytro Kuleba
- Kristalina Georgieva, managing director of the International Monetary Fund
- Mohamed El-Erian, chief economic adviser for Allianz
- Pfizer CEO Albert Bourla
Click here to browse full transcripts of “Face the Nation.”
MARGARET BRENNAN: I’m Margaret Brennan in Washington. And today on Face the Nation: The war in Ukraine takes a turn for the worse, and leaders around the world desperately search for a way to end the death and devastation.
On day 18, the crisis in Ukraine is intensifying. Overnight, Russian forces fired missiles for the first time into Lviv, a city in Western Ukraine dangerously close to the Polish border. The relentless bombing, shelling, missile attacks and atrocities in other key regions of Ukraine have increased.
And there are serious concerns in the intelligence community about Vladimir Putin introducing chemical weapons into Russia’s blitz on the devastated country of 44 million citizens.
(Begin VT)
JOE BIDEN (President of the United States): I’m not going to speak about the intelligence, but Russia would pay a severe price if they used chemical weapons.
(End VT)
MARGARET BRENNAN: What would that severe price be? President Biden maintains that the U.S. will not send troops, but will continue to defend NATO’s interests in the region.
(Begin VT)
PRESIDENT JOE BIDEN: Direct confrontation between NATO and Russia is World War III, something we must strive to prevent.
(End VT)
MARGARET BRENNAN: We will have the latest reporting from Ukraine and hear from its foreign minister, Dmytro Kuleba. Plus, we will ask White House National Security Adviser Jake Sullivan what our options are at this critical time.
We will also look at the worldwide economic impact of the war in Ukraine. Inflation in the United States, already high, leaps yet again, as Russia’s invasion sends the global oil market into turmoil. Is the president correct when he says it’s due to the Putin price hike?
(Begin VT)
PRESIDENT JOE BIDEN: Make no mistake, inflation is largely the fault of Putin.
(End VT)
MARGARET BRENNAN: We will talk with the head of the International Monetary Fund, Kristalina Georgieva, and Mohamed El-Erian, the top economist at Allianz Capital. All that and more is just ahead on Face the Nation.
Good morning, and welcome to Face the Nation. There is no end in sight to Russia’s rampage on Ukraine. The Ukrainian government says the civilian death toll alone is in the thousands. Ukraine’s president said today that 13,000 Russians are dead in the conflict. The U.S. cannot confirm that death toll.
Today, news about the death of an American journalist, Brent Renaud, killed in a Russian attack on the capital city of Kyiv. Our Charlie D’Agata has been reporting from Kyiv since the invasion nearly three weeks ago — Charlie.
CHARLIE D’AGATA: Good morning, Margaret. The regional governor said more than 30 cruise missiles struck that base less than 20 miles from the Polish border. It’s a military base that’s been used by the U.S. and NATO partners for training exercises, drawing the West and U.S. allies closer to the fight.
(Begin VT)
CHARLIE D’AGATA (voice-over): The overnight aerial assault in Lviv is the latest attack in a Russian offensive that has widened and intensified by the hour. Russian tanks rumble down the street in the besieged port city of Mariupol. There’s been no letup in Russia’s relentless bombardment.
(PROTESTERS SPEAKING IN FOREIGN LANGUAGE)
CHARLIE D’AGATA: To the west, in Russian-occupied Melitopol, thousands of residents protested in the streets after video emerged appearing to show Russian troops kidnapping its mayor. And the Ukrainian government says a second mayor has been abducted from the city of Dniprorudne. There is now growing evidence that the airstrike that destroyed the maternity hospital in Mariupol may be part of a systematic campaign.
(WOMAN CRYING) CHARLIE D’AGATA: The World Health Organization has verified 24 attacks on medical facilities since the invasion began. After taking fire at this hospital in Kyiv, they covered the windows and work with the lights out at night.
MAN: And this building, look.
CHARLIE D’AGATA: OK.
(CROSSTALK)
MAN: … building.
CHARLIE D’AGATA: Yes. MAN: In the highest floor…
CHARLIE D’AGATA: Right.
MAN: … work sniper.
CHARLIE D’AGATA: A sniper?
MAN: Sniper.
CHARLIE D’AGATA: While we were there doctors were saving the life of a first responder torn apart by shrapnel even while trying to rescue the wounded. With the Russian advance now bearing down, Ukrainian President Volodymyr Zelenskyy rallied residents to defend the capital in an overnight address.
(PRESIDENT VOLODYMYR ZELENSKYY SPEAKING IN FOREIGN LANGUAGE)
CHARLIE D’AGATA: “If they kill all of us, then they will enter Kyiv,” he said. “If this is the goal, then let them enter, but they will not find friends among us.” It is already a reality in the suburb of Bucha, where they’re burying the dead in mass graves, a terrifying prelude of what may be to come.
(End VT)
CHARLIE D’AGATA: Now, the outskirts are really getting hit hard now. And, as Russian forces move in to more densely populated areas, the civilian death toll is rising dramatically, and residents are now risking their lives just to get away — Margaret.
MARGARET BRENNAN: Charlie D’Agata in Kyiv, thank you. We turn now to Odessa in the south of Ukraine and our Chris Livesay for a look at how the Ukrainians are coping.
(Begin VT)
CHRIS LIVESAY (voice-over): It’s the pendulum of war, first deathly loud, then, at once, a deafening silence. In the Black Sea port city of Mykolaiv, the morgues are full, mostly with civilians, these victims laid out in the freezing cold.
(WOMAN SPEAKING IN FOREIGN LANGUAGE)
CHRIS LIVESAY: Among those spared gather here, below an abandoned market, their childhood interrupted by an invading army, even though these are Russian speakers, the very people Putin says he wants to protect, says the mayor, Oleksandr Syenkevych.
OLEKSANDR SYENKEVYCH (Mayor of Mykolaiv, Ukraine): I think the main idea is to kill Ukrainians as much as they can. It’s complete liar when they say that they want to protect us. They want to kill as much Ukrainians as they can.
CHRIS LIVESAY: Human obstacles on the road to Odessa, the former crown jewel of the Russian empire, and, today, Ukraine’s biggest port. It’s a city half-deserted. The half that is still here steels itself with anti- tank defenses and optimism, like this soldier, who calls himself Snake.
“Fifteen days, we have stood up against the second biggest army in the world,” he says. “It’s weaker than us.” Others fill sandbags where a Russian fleet could float ashore any day. Sergey, a plastic surgeon, is ready to stitch up combat wounds, even take up arms.
SERGEY (Plastic Surgeon): Russian nation, look at us. We were a peaceful nation. But we all have the brave heart.
(End VT)
CHRIS LIVESAY: Today, British military intelligence says Russian forces are advancing from Crimea in an effort to sidestep Mykolaiv and come straight here to Odessa — Margaret.
MARGARET BRENNAN: Chris Livesay in Odessa, thank you. And here with us now is national security correspondent David Martin. David, great to have you here. This attack overnight in the west, this is the farthest Russia has gone towards NATO territory. Why are they doing that?
DAVID MARTIN: Well, this is an air base out there. They hit hangars on the air base. It’s the base where American troops used to train Ukrainian forces, but all the Americans were pulled out before the invasion. But it is still where much of the Ukrainian air force is based, particularly those MiG-29s we have been hearing so much about. So now the Russians have struck three airfields in the west, which is where the predominance of the Ukrainian air force is. So, clearly, they are trying to destroy the Ukrainian air force on the ground.
MARGARET BRENNAN: For about two — more than two weeks now, the Ukrainians have kept Russia at bay from the capital. Are they close to encircling it?
DAVID MARTIN: They get a little closer every day. I mean, you still have to call it a creep or a crawl. And, actually, the latest today is that they got reversed a little bit. The Russians got reversed a little bit in the — one of the towns northeast of Kyiv which had been isolated. And the Ukrainians were able to reopen the resupply route into that city. So it’s grind them out. But you heard what Charlie D’Agata said, that they — you can hear the shelling getting closer and closer.
MARGARET BRENNAN: Russia, though, is willing to use munitions that have been banned under international law. We know that. We heard President Biden warn about chemical weapons use. Are we seeing movement of those kinds of weapons into Ukraine?
DAVID MARTIN: A Pentagon official I talked to you this morning said there is no movement of chemical weapons into Ukraine. At least they’re not seeing the signs of it. The concern is that the Russians will seize one of these biomedical research facilities that Ukraine has, where they do research on deadly pathogens like botulism and anthrax, seize one of those facilities, weaponize the pathogen, and then blame it on Ukraine and the U.S., because the U.S. has been providing support for some of the research being done in those facilities. But it appears the Ukrainians have gotten most of those pathogens destroyed.
MARGARET BRENNAN: And the World Health Organization reportedly had been warning about some of that. What you’re describing sounds like increased acts of desperation, but then Russia still has considerable combat power here. They have lost three generals, reportedly. I mean, how do we judge what they have left?
DAVID MARTIN: Well, they still have something like 90 percent of their combat power that they started in the war with still available. But they’re starting to run out of things. They’re starting to run out particularly of precision-guided weapons. And sometime in the near future, maybe this week, Putin is going to have to make a decision about starting to bring reinforcements in from the interior of Russia, certainly more munitions, maybe more troops. And that will obviously be a sign that he continues to go ahead and double down on this grind-them-out type of warfare that he’s adopted.
MARGARET BRENNAN: David Martin, thank you for your reporting.
DAVID MARTIN: Sure thing.
MARGARET BRENNAN: We go now to White House National Security Adviser Jake Sullivan. Good morning to you, Jake.
JAKE SULLIVAN (U.S. National Security Adviser): Good morning.
MARGARET BRENNAN: There are a lot of developments to get through with you. I do want to ask you about these reports that a U.S. journalist has been killed in Ukraine by Russian forces. Do we know what the consequence would be for Russia killing an American?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: Well, this is obviously shocking and horrifying, and I have just learned about it as I came on to air here, so I will be consulting with my colleagues. We’ll be consulting with the Ukrainians to determine how this happened and then to measure and execute appropriate consequences as a result of it.
MARGARET BRENNAN: Jake, there are reports of white phosphorus being used in Ukraine, reports of chlorine gas. How imminent is a chemical weapons attack in Ukraine?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: We can’t predict a time or place. All we can say is that there is an escalating level of rhetoric on the Russian side, trying to accuse the Ukrainians and the United States of potentially using chemical or biological weapons. And that’s a tell, Margaret. That’s an indicator that, in fact, the Russians are getting ready to do it, and try and pin the blame elsewhere, and nobody should fall for that. That is why we’ve gone out so decisively at the United Nations Security Council and elsewhere to rob the Russians of the capacity to pin this on anyone other than themselves. And, as the president said on Friday, if, in fact, the Russians do use chemical weapons in Ukraine, they will pay a severe price.
MARGARET BRENNAN: Overnight, Poland’s president has said use of a weapon of mass destruction would be a game-changer for NATO. President Biden seemed to say military force is completely off the table in Ukraine, even if a weapon like this was used. Is that the case?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: We are consulting with our allies. And, collectively, we are communicating directly to the Russians. Sitting here before you today, I’m not going to go further than what President Biden said on Friday, which is that the Russians would pay a severe price if they were to move forward with chemical weapons.
MARGARET BRENNAN: But none of the sanctions you’ve imposed so far have stopped Putin. So, is there any red line for the administration here in terms of humanitarian catastrophe that would change the president’s calculus? Is this a game-changer?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: The use of weapons of mass destruction would be a shocking additional line that Putin is crossing in terms of his assault on international law and international norms, his assault on the human rights and human dignity of the people of Ukraine. But, bottom line, Margaret, the premise of your question, which is, well, sanctions haven’t stopped Putin, so are they not working, I think we have to look at this in two respects. One is, have we imposed severe costs on Russia for its invasion of Ukraine? And the answer is yes.
And the second is, have we been able to help the Ukrainians defend themselves against these attacks, to push back Russian forces from being able to take major cities, including the capital city, Kiev? And the answer to that is yes as well. And part of the reason why Putin is resorting to the possibility of extreme tactics like the use of chemical weapons is because he’s frustrated because his forces aren’t advancing.
MARGARET BRENNAN: You said that consequences have been communicated to Russia. But, from my reporting, I have heard there’s no presidential contact. There’s no secretary of state contact. The military leaders in Russia just aren’t picking up the phone. You personally have communicated this to someone in the Russian government?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: I’m not going to get specific about the nature of our communication with the Russians. I will also say that it’s not just the United States that has channels to the Russians, but many of our allies and partners, and we coordinate closely in terms of what we communicate to them, how and on what topics. And that will continue, but it will continue through private diplomatic channels.
MARGARET BRENNAN: The U.S. policy is to help Ukrainians defend themselves. How confident are you that you can keep those supply lines open?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: We believe in our capacity to continue to flow substantial amounts of military assistance, weapons, and supplies to the front in Ukraine. We have been successful in doing so thus far. And we believe that we have a system in place that will allow us to continue to do so, notwithstanding the Russian threats. And we believe that these weapons are making a significant difference in helping the Ukrainians defend themselves. Of course, we’re merely helping provide the tools.
MARGARET BRENNAN: This is getting very close to NATO territory. Is the U.S. policy that any strike into Polish territory or airspace, intentional or unintentional, is an attack on NATO?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: The president has been clear repeatedly that the United States will work with our allies to defend every inch of NATO territory, and that means every inch. And if there is a military attack on NATO territory, it would cause the invocation of Article 5, and we would bring the full force of the NATO alliance to bear in responding to it.
MARGARET BRENNAN: But that’s an accidental, errant shot?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: Look, all I will say is that, if Russia attacks, fires upon, takes a shot at NATO territory, the NATO alliance would respond to that.
MARGARET BRENNAN: It’s been a very busy few hours for you. I’m tracking what is happening overnight as well in Iraq. Iran’s Revolutionary Guard has now claimed responsibility for firing ballistic missiles into Northern Iraq towards a location where the U.S. Consulate is located. Are you condemning Iran for carrying out this attack?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: Of course. We condemn Iran for carrying out this attack. We’re still gathering information on what precisely the target was. What we know at this hour, Margaret, is that no U.S. facilities were hit, no U.S. persons were harmed. But the United States is absolutely clear, we will do whatever it takes to defend our people, our interests, and our allies, and we are in consultation with the Iraqi government and the government in Iraqi Kurdistan, in part to help them get the missile defense capabilities to be able to defend themselves in their cities.
MARGARET BRENNAN: So the nuclear deal is not dead?
NATIONAL SECURITY ADVISER JAKE SULLIVAN: This is not the first time Iran has — as things stand right now, they’re — the various negotiators are back home in their capitals. And we will have to see what happens in the days ahead with respect to the diplomacy around the nuclear deal.
MARGARET BRENNAN: Jake, I have to let you go. Thank you for your time today. Face the Nation will be back in one minute. Stay with us.
(ANNOUNCEMENTS)
MARGARET BRENNAN: We’re back with the foreign minister of Ukraine, Dmytro Kuleba, who is in Kiev. Good morning to you, minister.
UKRAINIAN MINISTER OF FOREIGN AFFAIRS DMYTRO KULEBA: Good morning.
MARGARET BRENNAN: The Biden administration is warning of an impending chemical weapons attack in Ukraine. Do you have any further information about where or when or what the consequences would be? Would NATO defend you?
KULEBA: Well, we don’t know the details, but we do not exclude that option because we see that Russia is using one prohibited weapon after another to break us down, and United Nations have already confirmed that some of the internationally prohibited weapons have been used against Ukrainian civilians, against our cities. So we will work closely with the United States and other partners trying to identify where chemical weapons can or may be- may be used by Russia. And when you’re asking me whether NATO will defend us, well, we do not have- we do not expect that. What we are asking is very simple thing. We say arm Ukraine and we will do the rest. Give us all the weapons necessary and we will fight for our own land and for our people.
MARGARET BRENNAN: How reliable are those Western supply lines into Ukraine right now?
KULEBA: Well, they operate, they’re functioning, so this is a good sign, and we appreciate those partners who are involved in these supplies. However, of course, in the end, it’s all about the quantity and the quality of weapons that we receive, and we currently reach the stage we need- where we need some new advanced weapons to fight Russia, to fight against Russia, to defend ourselves, and we’re negotiating with partners including the United States. I hope that all decisions will be swift and we will get what we need because again, we are ready to fight, but we need to be properly equipped to do so.
MARGARET BRENNAN: Well, President Biden approved another two hundred million in weapons, but those are small arms, anti-aircraft as well. There is the promise that Congress will be sending more money your way. What specific types of weapons do you need? What kind of sophisticated systems?
KULEBA: Well, the highest demand is in planes, in fighting- fighting jets, in attack aircraft because unfortunately, the air force power of Russia and Ukraine are uncomparable. And yes, it’s true that we shoot them down, but they also- they also shoot us down. And if we lose control over the sky, we cannot prevent two things from happening. We cannot prevent- we cannot stop Russian bombers, destroy our cities and killing civilians. And we cannot destroy Russian columns heading towards our big cities on the roads. To achieve these two purposes, we need more planes. This is the- the most pressing issue. We- frankly speaking, we don’t understand all the explanations that we are given, why we should not be- why we should not be given those planes and we will continue putting pressure on our- and from all corners and requesting this assistance from the United States and other partners.
MARGARET BRENNAN: It was on this program last Sunday that the Secretary of State Antony Blinken said the decision by Poland to provide fighter jets to Ukraine gets a green light from the United States. Then, days later, President Biden spiked that. Do you have a sense that any country will give you fighter jets?
KULEBA: Well, it’s- frankly everything that happens over the fighting jets in the last week is kind of a diplomatic mystery. On the one hand, everyone is ready to do it- to do it, but nothing is happening and we are not getting the planes. It reminds me of other ping pong game where every side throws the ball to the other side and gets it back. We have no time for this kind of ping pong diplomacy. We need planes to save lives of our people and to stop Rus- to stop, to put an end to Russian domination in the sky. And I ask as foreign minister and I beg as Ukrainian to find common ground on this issue and provide Ukraine with what it needs to defend itself.
MARGARET BRENNAN: The United States argues giving these jets would be escalatory and a risk to NATO, a risk to United States, and that you have things like drones that work just fine.
KULEBA: I – to my view, this logic is flawed because the drones are not escalatory and planes are escalatory. What is the logic behind it? Anti-tank weapons are not escalatory and planes are escalatory. First, what else Russia has to do for everyone to understand that they already reached the peak of escalation? They used, as I mentioned in the beginning, weapons prohibited by the international conventions. Why are we so afraid of another- another escalation? We need- we need to defend ourselves. And then the second point that I’m hearing is that planes are offensive weapons, and therefore they can not be supplied because the partner is only supplying defensive weapons to Ukraine. I’m sorry, but all weapons given to us are defensive by definition, because they are being used to defend this country. And I don’t understand what else has to happen, what kind of atrocity has to be committed for foreigners to put all this flawed arguments aside and finally provide us with what we need.
MARGARET BRENNAN: The president of Poland said that what happened in the past week, specifically the bombing of that maternity hospital that got so much attention around the world, that it bears the features of genocide. Is that what you believe Russia’s intent is?
KULEBA: Well, Russia, President Putin definitely believes that Ukraine has no right to exist as a country. He doesn’t recognize our identity. He says we are Russians, we are not Ukrainians. We are the same, which is obviously not the case. And from what we’ve been seeing in recent- in recent three weeks is a series of deliberately committed war crimes, crimes against humanity. And when they bomb hospitals, maternity houses, schools, when they kill civilians passing by trying to be evacuated from the war zone, that, of course, indicates that they are trying to break us down and to destroy us.
BRENNAN: Ukraine’s defense minister said that more civilians have been killed than Ukrainian military forces. Do you have any sense of the toll thus far of this war?
KULEBA: Well, it’s- unfortunately the death toll of civilians is more is in thousands. I don’t have the exact numbers in front of me, so I don’t want to speculate on this. But Minister of Defense is right. More civilians have been killed, more of them, more than soldiers and police officers and National Guard officers and soldiers fighting against the Russians. And this is mainly the result of the use of Russian Air Force to attack our cities. Only today as we speak, I had to go to to go down to the bomb shelter twice because of the air- air raid- potential air raid attack. In both cases, the Russian plane flew over us. We were not the target this time, but who knows, maybe the next time we will be the target. Civilians died because of the massive control of the skies by the Russians, and this is why we’re asking you to help us specifically with the planes.
MARGARET BRENNAN: Before I let you go one question. Russia has reportedly kidnapped at least two mayors of Ukrainian cities and is replacing them with pro-Russian individuals. What do you believe this indicates about the plans to occupy your country and what Putin’s endgame is here?
KULEBA: Well, first, it speaks for the fact that we resist. That even if Russia establishes control over a certain city or town in southern Ukraine, the local- local authorities, local citizens, they resist this occupation. They do not agree with it. They oppose the attempt to impose the Russian rule in these territories. So this forces the Russians to use terrorist tactics and kidnap- kidnap our mayors, our members of our city council to put pressure on them, intimidate them. The second is- the second fact is that yes, Russia tries to change the authorities in order to establish itself as an occupying power in this region. And this is why to all together with partners, Ukraine has to react in the strongest terms possible and impose the strongest measures on Russia so that everyone will know that this comes with a price.
MARGARET BRENNAN: Minister, thank you for your time and stay safe. We’ll be right back with a lot more. Face the nation. Stay with us.
(ANNOUNCEMENTS)
MARGARET BRENNAN: On Monday, Norah O’Donnell will be reporting from Poland with a look at the growing humanitarian crisis in the region. That’s starting tomorrow on the CBS Evening News.
(ANNOUNCEMENTS)
MARGARET BRENNAN: We will be right back with a lot more Face the Nation, including an interview with the CEO of Pfizer, as we mark the two-year anniversary of the COVID pandemic. Stay with us.
(ANNOUNCEMENTS)
MARGARET BRENNAN: Welcome back to FACE THE NATION. For a closer look at what Americans are thinking about the war in Ukraine, we go to CBS News elections and surveys director Anthony Salvanto. Good morning to you, Anthony.
ANTHONY SALVANTO: Good morning, Margaret.
MARGARET BRENNAN: You know some of the biggest news of the week was the Biden administration’s decision, finally, to put a block on imports of Russian petroleum products into the United States, though they admit it is going to make things more expensive for consumers. What did Americans think about that?
ANTHONY SALVANTO: Margaret, there is wide support for sanctions against Russia. And something we don’t get to say every day, it is bipartisan. In fact, really strong with both Democrats and Republicans. But, importantly, in a poll you want to follow up and ask people then, what if that means you’re going to pay more at the pumps? And when you do that, majority support remains at 63 percent.
Now, this is something we’ll have to watch. It might depend on just how much those prices rise. But you ask people why it is that they support the sanctions, and it’s not that they say they can readily afford it, it’s that they say they want to help Ukraine and punish Russia. Margaret.
MARGARET BRENNAN: But inflation is already at a new 40-year high. So just how tolerant are people going to be?
ANTHONY SALVANTO: Well, what happens is, people feel like Russia is not going to stop at Ukraine. There’s 69 percent who thinks that Russia is going to invade other countries. And they’re concerned about a wider war. They’re concerned about a global recession. And when you look at the folks who are most concerned about that, they’re even more likely to support the oil sanctions. So you read this sense that people might be willing to pay more now in order to try to stop or avoid something worse later, Margaret.
MARGARET BRENNAN: Anthony, how do Americans assess the president’s leadership during this crisis?
ANTHONY SALVANTO: Well, his handling of it is up over the last week, but it’s still not net positive. A couple of reasons for that. One is people say they still feel nervous about this. And, secondly, there’s half the country that says they want him to take stronger action towards Russia. So we followed up and we asked, what would be stronger action. And the things that pop out are even stronger sanctions and supplying more military weapons to Ukraine. We also looked at the idea of enforcing a no-fly zone. And here you see Americans real weariness about getting into a wider war because in the abstract, you get a majority that says, yes, they’d support a no-fly zone. But then you follow up and ask, what if Russia takes that as an act of war, what if that leads to a direct U.S.-Russia conflict, and then support really drops off, down to 38 percent. So, you see Americans wanting to do something, wanting to stop Russia but really concerned about being drawn into a conflict. Margaret.
MARGARET BRENNAN: Anthony Salvanto, thank you. We’ll be right back.
(ANNOUNCEMENTS)
MARGARET BRENNAN: Last week, harsh financial sanctions and trade restrictions were put in place to punish Russia and cripple its economy. Among them, the banning of all Russian imports of oil, gas, and coal, as well as goods like vodka and caviar. Joining us now is the managing director of the IMF, Kristalina Georgieva. Welcome to FACE THE NATION.
MANAGING DIRECTOR OF THE IMF KRISTALINA GEORGIEVA: Thank you very much for having me.
MARGARET BRENNAN: I wonder how you can calculate the total impact of all of these restrictions that have been put on Russia. I mean, it- will Russia default on its debts and what impact will that have to the global economy?
KRISTALINA GEORGIEVA: Let’s remember that the reason they’re unprecedented sanctions is because the unthinkable happened, a devastating war in Ukraine. And the impact of the sanctions is quite severe for the Russian economy. We expect a deep recession in Russia, and this abrupt contraction is affecting already how the Russian population is taking the heat on them. The ruble depreciated significantly. What does it mean? Real incomes have shrunk. Purchasing power of the Russian population has significantly diminished. In terms of servicing debt obligations, I can say that no longer we think of Russian default as improbable event. Russia has the money to service its debt, but cannot access it. What I’m more concerned is that there are consequences that go beyond Ukraine and Russia.
MARGARET BRENNAN: Right. I mean, you have said that the crisis in Ukraine could cause famine in Africa, for example, you look at the wheat imports and the price spikes there. Which countries around the world are you most concerned about? Is this going to destabilize other governments?
KRISTALINA GEORGIEVA: What we are mostly concerned about are the immediate neighbors of Russia and Ukraine, the Central Asian republics, the Caucasus, Moldova, because they have trade relations with both Russia and Ukraine more than the rest of the world, and because of this outflow of people refugee wave in Europe, that is of the order of magnitude of what happened in the Second World War. So there the impact is most significant. Beyond the immediate neighbors, there are two groups of countries we are very worried. The first group are countries that have yet to recover from the COVID-induced economic crisis. For them, this shock is particularly painful. And the second group of countries are those that are more dependent on energy imports from Russia, because there the impact on consumption, but also on inflation is going to be more prominent.
MARGARET BRENNAN: Are we looking, because of the debt levels you talk about, the vulnerability, are we looking at the potential of this becoming a financial crisis for the rest of the world?
KRISTALINA GEORGIEVA: For now, no. When you look at the total exposure of banks to Russia, it is about a hundred and twenty billion dollars. Not negligent, but definitely not systemically relevant. And to what we are also seeing is that while inevitably we are going to downgrade our growth projections for 2022, it is still going to be a positive growth rate. For countries that have been fast to recover from the COVID crisis, like the United States, growth is robust. It is those that were falling behind where the impact is more severe. And let me say this, yes, war in Ukraine means hunger in Africa, but war in Ukraine also has social implications for many, many countries through the three channels that are already demonstrably impactful. One, commodity prices, energy, grains, fertilizers, metals to the impact that has on inflation and in countries where inflation has already been high, this is dramatic–
MARGARET BRENNAN: –like the United States,
KRISTALINA GEORGIEVA: Like United States, like many emerging market countries, think of Brazil, Mexico and three, what do we do when we have to fight inflation? We tighten financial conditions.
MARGARET BRENNAN: I have a question for you. You’ve been working on emergency funding for Ukraine. If that government falls, can Russia seize that money? If Russia installs a puppet government in Ukraine, can they get access to that money?
KRISTALINA GEORGIEVA: We are thinking of our internal interactions with Ukraine as being very productive. We have provided 1.4 billion dollars in emergency financing into the Ukrainian special account with the IMF. In other words, it is being drone by the government of Ukraine and nobody else can touch it. And we see that the Ukrainian authorities have been remarkable. Margaret, we had negotiations on this 1.4 billion and my staff tells me they can hear the air raid sirens and yet works go on. I have family in Ukraine. They tell me they can still pull money from back home. That’s even in the city of Kharkiv that is the second-largest, heavily bombarded city. So bravo to the Ukrainian authorities for what they do.
MARGARET BRENNAN: Director, thank you for your time this morning.
KRISTALINA GEORGIEVA: Thank you.
MARGARET BRENNAN: We’ll be tracking that ongoing story.
We want to go now to the chief economic adviser to Allianz, and that’s Mohamed El-Erian, who joins us this morning from Cambridge, England. Good morning to you.
EL-ERIAN: Good morning, Margaret.
MARGARET BRENNAN: In this country, we saw yet another high, a 40 year high in inflation. It’s the Fed’s job to control that, and the Fed chief has some big decisions this week. What are you expecting from?
EL-ERIAN: Well, he doesn’t have an easy decision, as you said. Inflation is high and will go higher because of what’s happening in Ukraine. And basically, he’s got to make a choice, hit the brakes, regain credibility, but risk a recession or tap the brakes, and we have an inflation problem going into next year. We are here because the Fed is very late and has no good policy options available anymore.
MARGARET BRENNAN: No good policy options. You’re expecting what kind of rate hike and what is the risk of recession at this point? Goldman Sachs. I know they upped their forecast to at least a 20 percent chance of a recession in the United States.
EL-ERIAN: Yes, and they are thinking that we’re going to get seven hikes this year. I don’t think we’ll get seven hikes. I don’t think this economy can support seven hikes, and if we do get seven hikes, we will go into recession. That’s the cost of being late. I suspect that what we’ll hear on Wednesday, Margaret, is a 25 basis point rate hike. We will hear that more on the way, and we will hear that they will all also contract what has become a nine trillion balance sheet. We are in this absurd situation that last week, when we got the 7.9 percent inflation rate, the Fed was still putting liquidity into this economy. That just gives you a feel for how misaligned policy has been.
MARGARET BRENNAN: Well, Mohammed, you’ve been a critic for some time. You know, the White House this week is calling inflation “a Putin price hike.” But you were on this program back in December talking about how serious inflation was. Where does the responsibility for this lie exactly?
EL-ERIAN: So it lies in the circumstances, it lies in the Fed being late, and mischaracterizing inflation. Til’ the end of November they were calling it transitory, but also to be fair to the administration, there- there will be a Putin inflation component. I estimate that at 7.9 percent, we will probably get very close or above 10 percent before we come down. And that difference will be all because of the disruption that Putin’s war imply for commodity prices, supply chains and shipments.
MARGARET BRENNAN: Double digit inflation. When do you think we will see that? I mean, people are really feeling it now.
EL-ERIAN: Yeah, if it happens, it will happen in the summer and people will feel it, the worst thing for us would be not only do we feel the higher inflation, but we also feel income losses. That’s why it’s critical to avoid a recession. We-we can’t avoid stagflation–lower growth, higher prices, but we certainly can avoid a recession and we can bounce back quickly.
MARGARET BRENNAN: As we said–I mean–it is the Fed’s job to control inflation. The White House is saying both that it is not their fault, but that they’re doing something about it at the same time. Are there political measures here that actually can be taken?
EL-ERIAN: There are and they’re stuck in Congress, you can do more to increase labor force participation so that wage pressure comes down. That’s about childcare, that’s about easing people’s way back into the labor force. You can do more to enhance productivity, and you can do more to supply–to remove supply bottlenecks. The administration has policies. Lots of them are stuck in Congress right now.
MARGARET BRENNAN: You know, when you talk about supply chain bottlenecks, we have to remember we are coming out of this global pandemic. And just overnight, we’re seeing headlines that local authorities in Shenzhen, China, have imposed a new lockdown there due to a COVID outbreak. This is a major manufacturing hub for the rest of the world. I don’t want to overstate this, but how concerned should we be about this as a factor?
EL-ERIAN: We should because China is sticking to its zero corporate policy at a time when Omicron makes that policy very hard to implement. So they will have sequential lockdowns that will have spillovers to us. You know, we can be a good house, but we’re living right now in a really tough neighborhood. And that’s why it’s really important to respond quickly. We can’t fall behind again on policies.
MARGARET BRENNAN: –again on policies. OK, so that’s up to the Fed. But when we look ahead for the year, the Treasury secretary is already saying we should expect 12 months of inflation. When can we play catch up there and bring prices back down? Where are these tools really out of the hands of policymakers at this point?
EL-ERIAN: So Secretary Yellen is correct. We, unfortunately, are going to have at least 12 months of uncomfortable inflation, something that we haven’t had since the 70s and 80s, and that’s going to be especially problematic for the more vulnerable segments of our society. It hits food and gas particularly hot. As to what we can do, we have to be really careful that we don’t get another wave of inflation due to what economists call the anchored inflation expectations. Basically, Margaret, it’s a simple story. Right now, I will go in. I-being the American worker-and asked for compensation for past inflation. If I don’t have faith in my policymakers, I will also ask for compensation for future inflation. I want to protect myself, preemptively, that happens, then we have that awful price-wage-price-cycle.
MARGARET BRENNAN: Mohamed El-Erian, thank you very much for your analysis this morning, and we will track what happens in the coming days. We will be back in a moment.
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MARGARET BRENNAN: Today marks two years since the start of a national emergency in the U.S. due to Covid-19. Earlier, we spoke with the chairman and C.E.O. of Pfizer, Albert Bourla, about his book, “Moonshot: Inside Pfizer’s Nine Months Race to Make the Impossible, Possible.” Here’s part of our conversation.
(BEGIN VC)
MARGARET BRENNAN: Do you think that we will, every fall, have to prepare ourselves for a booster shot with Covid, just like we get a flu shot?
ALBERT BOURLA, AUTHOR, “MOONSHOT”: I think so. Many variants are coming. And omicron was the first one that was able to evade in a skillful way the immune protection that we were giving. But also, in all that the duration of the protection, it doesn’t last very long. So, what we are trying to do, and we are working very diligently, right now it is to make not only a vaccine that will protect against all variants, including omicron, but also something that can protect for at least a year.
MARGARET BRENNAN: So you’ve seen some of that data on — on a fourth dose, a second booster shot? You think it will be necessary?
ALBERT BOURLA: It is necessary, a fourth booster, right now. The protection what we are getting from the third, it is good enough — actually, quite good for hospitalizations and deaths. It’s not that good against infections, but it doesn’t last very long. But we are just submitting those data to the FDA and then we’re seeing what the experts also will say outside Pfizer.
MARGARET BRENNAN: So the question that was number one on my list, and I think for so many parents is, is when will the vaccine be available for those children five and under? The availability.
ALBERT BOURLA: Potentially May, if it works. They, I’m sure, will do their utmost to review them fast. So — and we will be ready with manufacturing.
MARGARET BRENNAN: You are a global corporation. How is the instability in Europe right now regarding Russia and Ukraine impacting you? Do you expect supply chain issues or pricing effects from this?
ALBERT BOURLA: No, I don’t think that we’ll have — we are very independent in terms of our supplying our ingredients from those parts of the world. We are not making over there medicines. We do make some medicines in Russia for Russia, but we do not export. We do not expect to see in the world any disruptions, right now at least, because of this war.
MARGARET BRENNAN: Do you — you don’t plan, then, to divest from Russia?
ALBERT BOURLA: Every time that you have bans or let’s say trade restrictions, typically they don’t apply to medicines because these are about lives. How can you say I’m not going to send to the cancer medicines to Russians because of what they did? Usually they are exempt from this, let’s say, situations, but, clearly, we are not planning to invest in Russia. And we have very little investments there, frankly.
MARGARET BRENNAN: What do you think, with the technology — the technology that Pfizer used, and Moderna, mRNA technology, it’s still new, and it seems like there are a lot of possibilities for where this could be used. What’s the next solution around the corner?
ALBERT BOURLA: I would say that the lowest hanging fruit is other vaccines, how to use this technology to bring vaccines that we don’t have right now, or we have and they are not good enough. Flu is a good example. The flu vaccines are not very good in general. And there are other and diseases that we don’t have good vaccines. So that would be, I think, the first.
The second is oncology, cancer. Right now a lot of research is happening by trying to use our — to train our immune system through mRNA not to attack the virus, as we do with coronavirus, but to attack our cancer cells, to recognize them as an enemy and try to attack them. Highly — that will revolutionize the field if we will be able to be successful with that.
MARGARET BRENNAN: How far are you from that?
ALBERT BOURLA: You know, I think there’s so much work happening, even before the vaccines. We started with cancer in RNA. We will know if we are successful, I think, in the next two, three years.
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MARGARET BRENNAN: Our full conversation is available on our website and our YouTube channel. We’ll be right back.
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MARGARET BRENNAN: Around the world, the moral outrage at the scenes and reports from Ukraine are deafening. But that outrage has not dented Vladimir Putin’s resolve.
(BEGIN VC)
MARGARET BRENNAN (voice over): Among the many atrocity last week, Russia bombed a maternity hospital. As pregnant women tried to bring life into the world, some lost theirs. Others defied the odds. Standing next to the American vice president, Poland’s leader said a line has been crossed, calling the attack an act of barbarity with the features of a genocide. Vladimir Putin has shown time and again that he does not believe rules apply to him. The U.S. now says he’s considering using chemical weapons.
JOE BIDEN, PRESIDENT OF THE UNITED STATES: But Russia will pay a severe price if they use chemical weapons.
MARGARET BRENNAN: But what is that consequence that could stop Putin? President Biden has drawn a bright line to say the U.S. will not use military force to stop Russia from killing Ukrainians. Is there a level of catastrophe that might change his mind? Vladimir Putin has terrified European leaders who admit their past complacency may have emboldened him. Britain’s top diplomat.
LIZ TRUSS, U.K. SECRETARY OF STATE FOR FOREIGN COMMONWEALTH AND DEVELOPMENT AFFAIRS: The invasion of Ukraine is a paradigm shift on the scale of 9/11. The era of complacency is over.
MARGARET BRENNAN: That new reality convinced Germany, a country that had disavowed the militant legacy of World War II, to send weapons to the war zone. But that makes little difference to the 2.5 million Ukrainians who fled their homes in the past two weeks and the more than 40 million still there.
As Ukrainians defy the odds on the battlefield, Russia is estimated to have lost more soldiers in two weeks than the U.S. did in two wars, in Iraq and Afghanistan. Now, western leaders say they want Russian mothers to stop Putin.
Perhaps by losing more of their own sons, they’ll protest, realizing that they no longer have anything else left to lose.
(END VC)
MARGARET BRENNAN: That’s it for us today. Thank you for watching. Until next week, for FACE THE NATION, I’m Margaret Brennan.
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