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EARLY START

Headed to a Runoff; U.S. Show of Force... That Wasn't; Turkey's President Speaks After Referendum; World at the Crossroads. Aired 4:30-5a ET

Aired April 19, 2017 - 04:30   ET

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


(COMMERCIAL BREAK)

[04:30:24] DAVE BRIGGS, CNN ANCHOR: Oh, so close. A Democrat comes within points of flipping the Republican House seat in Georgia. Can Democrats stay energized enough to win a runoff? And what is President Trump saying that's leaving many scratching their heads this morning?

Welcome back to EARLY START, everybody. I'm Dave Briggs.

ALISON KOSIK, CNN ANCHOR: Good morning. I'm Alison Kosik. It's 30 minutes past the hour.

And breaking overnight from Georgia's sixth congressional district, the only thing settled there this morning is nothing is settled just yet. A special election to fill a seat held for decades by Republicans now headed to a June 20th runoff between 30-year-old Democratic first timer John Ossoff and Republican Karen Handel. This House seat is a widely Republican seat since the Carter administration.

BRIGGS: It's been held over the years by Newt Gingrich and Tom Price, whose departure to become HHS secretary set off this special election. Now in a race viewed as a bellwether for how Republicans are in Trump country, their standard bearer is already declaring last night's win a victory for the ages.

More now from CNN's Manu Raju at Ossoff's headquarters in Atlanta.

(BEGIN VIDEOTAPE)

MANU RAJU, CNN SENIOR CONGRESSIONAL REPORTER: Good morning, Alison and Dave.

Now, Jon Ossoff, the Democratic candidate here in the sixth district of Georgia, falling short of the 50 plus 1 percent that he needed to win this seat outright. Meaning that there's going to be now a runoff in two months against the Republican candidate Karen Handel, former Georgia secretary of state, is going to try to consolidate support in this conservative district.

Now, this district has not gone to a Democratic candidate since, for actually the last 37 years. So, the fact that Mr. Ossoff came close gave Democrats some reason to cheer last night even though he fell short.

This is what he said when he addressed supporters.

JON OSSOFF (D), GEORGIA CONGRESSIONAL CANDIDATE: We have defied the odds. We have shattered expectations. We will be ready to fight on and win in June if it is necessary. And there is no amount of dark money, super PAC, negative advertising that can overcome real grassroots energy like this.

RAJU: Now, the question for Ossoff is whether or not he can actually galvanize enough support on the left to get 51 percent and beat Handel. She's going to be able to get support from a lot of those supporters who backed her, the Republican opponents, and also the question, though, the impact that Donald Trump will have as they try to woo swing voters, people who may be disaffected by his presidency -- guys.

(END VIDEOTAPE)

ROMANS: All right. Manu Raju, thanks very much.

And for his part, President Trump sees the Georgia result as a victory for the GOP and he's even taking credit for it. Look at this. This is one of his midnight tweets, saying, "Despite major outside money, fake media support and 11 Republican candidates, big R win with runoff in Georgia. Glad to be of help."

John Ossoff did raise $8.3 million for his campaign, much of it from out of state donors. But President Trump spent a lot of political capital on the race over the last few days, even recording a robocall against Ossoff.

BRIGGS: We are learning that the U.S. force of show against North Korea wasn't everything it was cracked up to be. You remember that earlier this month, the White House responded to North Korean missile tests by sending what President Trump called an are armada to the Korean peninsula. But it turns out, those ships, the USS Carl Vinson and its strike group, were steaming in the opposite direction to join in military exercises in the Indian Ocean, some 3,500 miles away.

A senior administration official blaming the mix up on a miscommunication between the Pentagon and the White House.

KOSIK: Meantime, two major high stakes tests of a system aimed at shooting down North Korean missiles are planned for May. Pentagon officials say the long planned missile defense test will take place at a test range in the Pacific. Vice President Mike Pence continuing his Asian tour with a visit to USS Reagan docked in Japan.

Pence said the U.S. will always seek peace but, quote, "under President Trump, the shield stands guard and the sword stands ready."

BRIGGS: Secretary of State Rex Tillerson suggesting the U.S. may have to re-impose sanctions on Iran even though it is complying with the terms of a nuclear deal. In a quarterly letter to Congress required by the nuclear agreement, Tillerson says that Iran has continued to act as a state sponsor of terrorism and that returning to sanctions may be in America's national security interest.

[04:35:11] Note that the nuclear deal does not cover terrorism and that reinstating sanctions would break the U.S. side of the bargain, not to mention infuriate America's partners and potentially invite Iran to restart its nuclear program.

KOSIK: The FBI used a controversial dossier compiled by a former British spy to help convinced the U.S. FISA court to approve surveillance last summer of Trump campaign associate Carter Page. Dossier alleges Page, a national security adviser to then-candidate Trump, met secretly with Russian officials on behalf of the campaign. According to U.S. officials, any information from the dossier that was presented to the FISA court had to be first corroborated by the FBI.

BRIGGS: The Pentagon down playing an aerial confrontation between two U.S. fighter jets and two Russian bombers off the coast of Alaska. The Russian planes were intercepted Monday after flying into Alaska's air defense identity zone. They retreated without incident. U.S. military officials describe the encounter as safe and professional and nothing out of the ordinary. But several lawmakers say the Kremlin is showing its teeth and testing the White House.

KOSIK: President Trump pushing his buy American agenda and taking a tour on the Snap-On tools factory in Wisconsin, but the alarming reality is Americans actually aren't spending much money on anything regardless of where it's made. Retail sales have slumped the past few months falling from a decent rise that we saw in January. And if it weren't for climbing gas prices, the losses would have been much steeper.

Shoppers haven't been this stingy since early 2015 and likely to hurt the economy. The Atlanta Federal Reserve forecasts GDP growth is to come in half a percent the first quarter. It's way below what Trump has been promising. He's been promising 4 percent growth.

While in Wisconsin, Trump signs an executive order that he says will protect American workers. It calls for a review of laws requiring the government to buy American made products, especially iron and steel. Some industry experts say this will drive up costs. Others say increased demand could curb that rise.

BRIGGS: A CNN worldwide exclusive, Turkey's president, one on one. Recep Erdogan defending the referendum that gives him sweeping powers and some say moves Turkey away from democracy. Becky Anderson spoke with Erdogan. She joins us next.

We'll also get insight from our chief international correspondent Christiane Amanpour.

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[04:41:56] BRIGGS: Four-forty-one Eastern Time. Now to a CNN world exclusive: Turkey's president insisting Sunday's

referendum vastly expanded his powers was not a step towards dictatorship. CNN's Becky Anderson spoke with Recep Erdogan. She joins us from Ankara with more.

Good morning to you, Becky.

How is President Erdogan reacting to worldwide calls that he's moving this country away from democracy towards dictatorship?

BECKY ANDERSON, CNN CORRESPONDENT: Well, not surprisingly, he's insistent that one this referendum was a democratic exercise and the result is the will of the people here in Turkey, and two, that the tectonic shift in the way that this country will be run going forward. He says has sufficient checks and balances to ensure that it's about more than just one man's rule. So, is this a march towards dictatorship? I put that to him.

(BEGIN VIDEO CLIP)

RECEP TAYYIP ERDOGAN, TURKISH PRESIDENT (through translator): A dictatorship, to exist, you don't necessarily have to have a presidential system. Here, we have an election, a ballot box. If you say ballot box produces a dictator, that would be unjust, unfair to the ballot box process and to those who cast their ballots in that box.

(END VIDEO CLIP)

ANDERSON: And this was a big defeat for the opposition parties here in Turkey. They ran one of their best campaigns ever, despite winning in big urban centers like here in Ankara. They still came up short. They insist there were irregularities during the voting process, stuffing ballots if you will to the tune of 2.5 million is the charge even before the first ballot was cast, they said the deck was stacked against them. They said given the crackdown on dissents since the military coup back in July last year and ongoing state of emergency, they say they were effectively muzzled and there was no level playing field -- guys.

BRIGGS: Becky Anderson live for us. Yes, the media, journalists jailed on a regular basis there. Not a lot of word from the opposition. Becky, thank you.

KOSIK: Let's go ahead and talk all about these global headlines, including what Becky just talked about, CNN's chief international correspondent Christiane Amanpour joining us live now from London.

Good morning to you.

So, I want to talk about Erdogan himself. I mean, it's hard to not see how this is a government that's moving away from the parliamentary system and seeing this concentration of power clearly in his lap. But there's this sort of fascination that this president seems to have with Erdogan, when I say this, President Trump called to congratulate him on this power grab, which in itself is unusual. But even President Obama was accused of being too nice to Erdogan. He

even called Erdogan one of the foreign leaders who he talked to the most. What is it about Erdogan where U.S. leaders go soft on him?

[04:45:00] CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, you have to distinguish between the timing because back in 2008, president at the time, Prime Minister Erdogan was a very close Western ally. Obviously, the west was very keen to keep him within their orbit because he had come in to office in the early 2000s and had really turned Turkey much, much closer towards a functioning democracy.

Turkey had seen many military coups over its many, many years since the fall of the Ottoman Empire. It's a long and complex history. And Erdogan did actually turn Turkey towards democracy.

But things started to go a little bit away from pure democracy the longer he stayed in power. Then, when he did sort of a Putin like swap and took the presidency and then had a prime minister installed, then, you know, people got more and more concerned that the longer he's in office, the longer this kind of power goes to his head.

So, while his own allies say this is -- you know, just like in America or French or South Korean presidential system, in fact, it's not really. He can, for instance, appoint the majority of the main judges, 12 out of 15 of the judiciary and as Becky was saying the press has been hammered over the last several years. I had many conversations with him over the past.

I will say, however, that the fact that he lost for the first time Istanbul, Ankara and the other big cities is very significant and it probably will make governing much more difficult and much more less likely than he can just railroad over the opposition. But it's very difficult. There's the opposition exists under a state of emergency since the failed coup last year and all those concentrated powers are essentially now in the hands of the presidency.

BRIGGS: And many hitting President Trump for being the one western leader that called to congratulate Erdogan on the victory, but let's move from that referendum to the surprising elections called for by Theresa May, the British prime minister, moving up elections from 2020 to June, shocking most, well all analysts for that fact.

How big of a gamble is this regarding her referendum, her power, and the future of Brexit negotiations?

AMANPOUR: Well, people here don't think it's a huge gamble. They think it's hers for the taking. As the polls stand right now, she's 21 percent ahead of her nearest rival which is the official Labour opposition, 21 points ahead. That's huge. And in 50 days, which is when the election will be held, people will feel it's unlikely that dynamic will change significantly enough for theory lose, they believe she's going to win.

The question is, does the opposition band together and make a real sort of opposition and try to define themselves as the sort of de facto referendum on what kind of Brexit this country actually wants, but also is she then going to sideline her own hard right opposition to her negotiations? They want a rapid exit, no questions asked, deal or no deal. And most people believe if that happens without a proper transition, without a proper set of trade deals and other important deals for the United Kingdom, it's like putting a one if to your head and shooting yourself because it's very, very difficult to see how Britain could be better off under a no deal Brexit with the E.U. than under a properly crafted deal.

KOSIK: OK. Let's switch gears to North Korea. You know, the U.S. show of force that we heard from President Trump, that was on its way to the Korean peninsula, not so much because we learned that the USS Carl Vinson was actually headed in the opposite direction to the Indian Ocean. Now, we're hearing yes it will go to the Korean peninsula at the end of April.

But what gives? I mean, President Trump made this big stand of an armada heading to the Korean peninsula. That didn't really happen.

AMANPOUR: Well, as you know, President Trump and the White House has talked about it and the Pentagon has talked about it, has given a lot more leeway to his military commanders. It is General Mattis who is the defense secretary. It's General McMaster who is the national security adviser. And they have much more leeway to conduct geostrategic policy, without necessarily being micromanaged by the White House. Who knows when the final story is written over how this, quote/unquote, "miscommunication" over the location of the Carl Vinson, when that's finally written who knows how that will come out.

But what people are concerned about and certainly those in the region and those that study North Korea very, very closely is provoking a miscalculation by North Korea because nobody quite knows how they are going to react and that is what some people say could cause a, quote, "blunder" into war. And Vice President Mike Pence has been in the region. He's been to South Korea. He's been to the DMZ between two Koreas.

[04:50:02] He's been to Japan. And he's heard directly from the allies there of their fear of a North Korea conventional strike which could easily happen if North Korea decides to lash out.

And when it comes to North Korea's nuclear possibility, they really appreciate that the White House, the U.S. administration is getting tougher with North Korea. They all say China also, along with the United States, has to be involved because North Korea, 90 percent of its trade is with China, closest ally and all of that. That has to happen.

And they are concerned that nothing to be done to provoke North Korea. But this could be a moment of what people call in the diplomatic world coercive diplomacy, an opportunity for diplomacy by a shove coercive force. That needs to, they say that needs to happen. But, of course, people say diplomacy, serious diplomacy needs to be, needs to be enacted over this very, very crucial issue.

BRIGGS: Diplomacy, not yet worked with North Korea. Time will tell. Christiane Amanpour, always great to have your analysis. Thanks so

much.

KOSIK: OK, it is one of the most iconic banks on Wall Street and several alums have top posts in the Trump administration. But the firm posted its most disappointing earnings report ever. We're going to tell you why when we get a check on CNN Money Stream next.

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[04:55:38] KOSIK: There are increasing doubts Bill O'Reilly will ever return FOX News after his vacation. "The Wall Street Journal" reports the company is preparing to cut ties with O'Reilly and we should note, "The Journal" and FOX News do share the same parent company. "The Journal" reporting lines up with CNN's earlier reporting that to position and O'Reilly are talking exit, something the O'Reilly camp denies. His future is expected to be a focal point of a 21st Century Fox board meeting tomorrow.

We'd love to be a fly on the wall there.

BRIGGS: Indeed.

A final decision on O'Reilly's fate could come by week's end. Revelations of multiple sexual harassment settlements prompted an exodus of advertisers from O'Reilly's FOX News show. Wednesday, we learned another woman is accusing O'Reilly of sexual and racial harassment. Her attorney says she called the HR hotline FOX News set up to investigate claims against O'Reilly.

KOSIK: Even though he shouted "God is great" in Arabic when being arrested, police say the man who gunned down three people in Fresno, California, Tuesday was motivated by hate not terrorism. The suspect 39-year-old Kori Ali Muhammad faces multiple murder charges. The victims, three white men were apparently chosen at random. Muhammad had posted on social media his dislike for white people and government officials. Police say he was also wanted for the killing of a motel security guard in Fresno last week.

BRIGGS: The NCAA is returning to North Carolina, scheduling men's college basketball tournament games and other championship events after lawmakers made changes in the state's controversial bathroom law. There will be legislation passed to replace HB2 has been criticized for still failing to protect the LGBT community from discrimination. NCAA officials believe the law has changed enough to allow North Carolina back into the organization's good graces.

Sporting goods giant Adidas is apologizing after putting its foot in its mouth as some might say. The company sent a marketing e-mail to Boston marathon runners with the stunning subject line, "Congratulations, you survived the Boston marathon." This coming five years after the terror attack that killed three and left hundreds badly hurt near the finish line. The company expressing regret in the gaffe, saying in part, "We're incredibly sorry. Clearly, there was no thought given to the insensitive e-mail subject line we sent Tuesday. Every year, we're reminded of the hope and resiliency of the running community at this event."

KOSIK: Well, at least Adidas owned up to their mistake.

BRIGGS: Indeed. Yes, no firings yet. It looked like they've taken care of it.

KOSIK: All right. Let's get a check of CNN Money Stream this morning. Investors looking for a rebound this morning, following a drop on Tuesday. Dow futures pointing slightly higher. Stock market in Europe are rising and shares in Asia closing lower overnight. It looks like Wall Street has another round coming up of corporate earnings, all of that against the backdrop of geopolitical tensions in Asia and uncertainty over elections in France and the U.K.

Goldman Sachs, badly missing estimates for quarterly earnings. Investors not too happy at this point. The stock plunged 4.7 percent yesterday, losing using more than $10 a share and that marks the biggest one day drop following an earnings report since Goldman went public in 1994. That data coming from FactSet.

So, even if you don't own the stock straight up your portfolio may have taken a hit because it's the most heavily weighted stock in the Dow 30. It accounted for more than half of the Dow's 113 point drop on Tuesday.

So, why the slump? Goldman blames the big drop in trading revenue. That spooked investors, especially because rivals like Bank of America and J.P. Morgan Chase beat estimates with their reports.

The CEO of United Airline says no employees had been fired after a passenger was dragged off a plane last week. On a call with investors and reporters on Tuesday, Oscar Munoz said, quote, "It was a system failure. There was never a consideration for firing an employee or anyone around it."

He acknowledged there was some public speculation that he may lose his job but says he has spoken with United Continental's board of directors and received its backing. I have to say, I am shocked that no one was fired.