'Your World' on what's next for world amid Russia-Ukraine war

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Putin seeking to inflict as much punishment as possible on Ukraine: Former DNI

Former Director of National Intelligence John Negroponte reveals which countries Putin could retaliate against on 'Your World.'

This is a rush transcript from "Your World," February 28, 2022. This copy may not be in its final form and may be updated.

NEIL CAVUTO, FOX NEWS ANCHOR: No one wants anything to do with Vladimir Putin. They don't want to play soccer with him. They don't want to go to entertainment venues with him. They don't want to do anything with him.

They're piling on the sanctions and the financial pressures. And yet the leader of Russia is doubling up the ante and threatening the very folks imposing those sanctions.

Welcome, everybody. I'm Neil Cavuto. and this is your, well, rather obstinate world of a Russian leader who not only won't give up, but is increasingly isolating himself. Some interpret it as a wounded animal, but you know what they say about wounded animals trapped in a corner? They can get very violent and very scary, and, for the world today, very curious what his next moves will be.

And we have got team coverage for you with Trey Yingst with the latest from Kyiv, Jennifer Griffin, with the latest from the Pentagon, and Peter Doocy at the White House on how the president plans to respond to all of this in his State of the Union address tomorrow.

We begin with Trey in Kyiv -- Trey.

TREY YINGST, FOX NEWS FOREIGN CORRESPONDENT: Neil, good afternoon.

The Russian Defense Ministry says they have hit more than 1,000 Ukrainian military targets, but they're not talking about the civilian infrastructure that is being affected by this war. And it comes as we're getting some new satellite images from Maxar Technologies indicating there is a 17-mile-long convoy of Russian troops, armored vehicles and logistics personnel on their way to this capital city of Kyiv, currently just 15 miles outside of the city limit.

It's extremely concerning, as this capital continues to get hit by both ground and air forces. We have seen gun battles in the streets taking place in recent days. And the air campaign, as you heard earlier today, Neil, sounding those sirens across the city.

It's sending all the civilians here underground. During the day, they're out to get supplies, lining up at grocery stores and banks, and, at night, in bomb shelters, some hiding in hospitals. You can see in these images here women and children doing anything they can to get away from the Russian bombings, and the words of this mother standing out amid the rest.

Take a listen.

(BEGIN VIDEO CLIP)

MARYNA, RESIDENT OF UKRAINE (through translator): We receive all medicine we need, though we are running out of food. Local charity funds promised to bring some. We're waiting that they will come and bring us bread, essential and some juice for children.

(END VIDEO CLIP)

YINGST: Now, there were talks today between the Russians and the Ukrainians along the border in Belarus.

And you could really see how the two sides are preparing, the Russians showing up in ties and suits, and the Ukrainians showing up in military fatigues. No major breakthroughs from those conversations, also a talk today between Russian President Vladimir Putin and French President Emmanuel Macron.

But the Russians have laid out really unreasonable demands for this conflict. They want Ukraine to recognize an area of land called Crimea that they took from the Ukrainians in 2014. And they'd also like Ukraine to give up all of their weapons, two things that simply aren't going to happen amid this war -- Neil.

CAVUTO: Trey, thank you very, very much.

To Jennifer Griffin at the Pentagon right now and how they are responding to these latest developments and, indeed, threats from Vladimir Putin -- Jennifer.

JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT: Hi, Neil.

Well, U.S. defense officials say the U.S. and its NATO allies are still analyzing and reviewing Putin's announcement that he has put his nuclear weapons on high alert, adding the wording Putin used does not fall under Russian military doctrine. He said they have been moved to -- quote -- "special combat duty alert."

Experts aren't sure what that means.

(BEGIN VIDEO CLIP)

JOHN KIRBY, PENTAGON PRESS SECRETARY: I have nothing to confirm these reports that they have changed their staffing.

What I would tell you is, we have seen Mr. Putin's announcement. We believe it's as unnecessary as it is escalatory. But we're reviewing and analyzing that -- that announcement.

(END VIDEO CLIP)

GRIFFIN: Video shows Ukrainian forces fighting back.

This drone footage shows a Ukrainian missile taking out a Russian missile system northeast of the capital. The Russians have not been able to establish air superiority yet, which is significant. Our team in Kyiv saw an outgoing Ukrainian air defense missile fired earlier today. And U.S. defense officials tell us Ukraine still has war planes that are operational.

Then there are those Russian military forces, like this 3.5-mile-long convoy snaking toward the capital, which have been stymied and only moved just three miles overnight due to fuel shortages, that according to a U.S. official. The fuel issues, we're told, show they either ran out -- outran their supply lines, didn't plan properly or didn't execute that plan very well.

They have been slowed from taking any cities like Kharkiv, where columns of military vehicles have been successfully targeted by those shoulder-fired anti-tank Javelin and NLAW missiles that the U.S. and NATO have provided the Ukrainian military.

Now the Kremlin says anyone providing weapons to the Ukrainians will be held accountable if those weapons are used in Ukraine -- Neil.

CAVUTO: All right, Jennifer Griffin at the Pentagon, thank you very much.

Peter Doocy at the White House now on how the president responded to this upping the nuclear ante from Vladimir Putin -- Peter.

PETER DOOCY, FOX NEWS WHITE HOUSE CORRESPONDENT: Yes, somebody shouted out to President Biden earlier, should Americans be worried about nuclear war? And he said no. So, apparently, that's that.

But we also have hot off the presses fresh Jen Psaki reaction to what Jennifer was just talking about, the Russian decision to seemingly elevate their nuclear readiness. Listen to this.

(BEGIN VIDEO CLIP)

JEN PSAKI, WHITE HOUSE PRESS SECRETARY: I think provocative rhetoric like this regarding nuclear weapons is dangerous, adds to the risk of miscalculation, should be avoided, and we will not indulge in it.

We are assessing President Putin's directive and, at this time, we see no reason to change our own alert levels.

(END VIDEO CLIP)

DOOCY: Jen Psaki is also saying that under no circumstance will the United States do what President Zelensky is reportedly asking, and that is enforce a no-fly zone over Ukraine, because they see that as amounting to U.S. pilots shooting at Russian pilots.

That is not going to happen at this point. The primary mechanism for punishing Putin is going to be financial with sanctions, something that Europe is doing and then the U.S. is following.

(BEGIN VIDEO CLIP)

SEN. CHARLES GRASSLEY (R-IA): I am very pleased by it. And the United States is following once again, because I think countries in Europe decided that they ought to move on SWIFT. But I'm glad the United States is moving ahead. And I think that's one of the biggest sanctions that could be put to bring Russia to heal.

(END VIDEO CLIP)

DOOCY: We do expect to hear a little bit more emphasis on foreign policy tomorrow and on defending democracy in the State of the Union.

But there's a lot of other things that this president is going to talk about, including the economy. Jen Psaki just said he will use the word inflation and COVID, because we have just learned that tomorrow, shortly before the president takes the microphone to give his most viewed speech of the year, White House staffers are going to have the mask requirement here on campus dropped -- Neil.

CAVUTO: Wow, that's a big deal. All right, thank you very, very much, Peter Doocy, following that on how the White House plans to address all of the above.

I want to go to General Dana Pittard right now, also the author of the bestseller "The Caliphate."

General, help me with what you see Vladimir Putin doing. I caught this shot of him with his top two generals. They didn't look too thrilled to be there. He didn't look too thrilled for them to be there either. And I'm just wondering what you think is going on inside Russia.

MAJ. GEN. DANA PITTARD (RET.), U.S. ARMY: Well, good afternoon, Neil.

Obviously, the Russian forces have lost operational momentum. And what I believe Vladimir Putin and his generals are going to try to do is regain that operational momentum and initiative.

What they didn't expect was the Ukrainian soldiers and the Ukrainian people to resist like they're resisting and defending their country. They have the will to fight -- that is, the Ukrainians -- but the Russian troops have lower morale. However, they do have capability. They still have lethality.

So I think what we will see from Putin and the Russian forces will be an escalation of more blunt type of tactics. They had hoped, I believe, to take the major cities of Ukraine without much of a fight. So they did something that was different from normal Russian tactics. They tried to enter lightly.

They may now go back to traditional Russian tactics of using blunt force, more civilian casualties, more bombing, more shelling.

CAVUTO: You know, General, I referred to that meeting that Putin was having with his top two generals.

I don't know if it's possible to get a close-up look at the generals. I'd seen that earlier.

And, Sam, I don't know if you're able to do that. I'm talking to my producer here.

But they looked concerned. Obviously, this is not going well. They're the guys who are leading that charge for Vladimir Putin. Vladimir Putin isn't too thrilled, I'm sure, with the way this is unfolding.

Do you think, General, he is ignoring his top military brass, or he's putting the pressure on them, to your point, sir, doubling the ante and raising it, and, all right, if we're not doing well trying to play nice -- it's hardly saying he's playing nice -- and getting a little bit more violent, throwing discretion away, then what? What do you make of that?

PITTARD: Well, first of all, I think those generals aren't having a very good day. That's pretty obvious, I think, by the photo.

(LAUGHTER)

CAVUTO: Right. Right. Right.

PITTARD: But, as an autocrat -- and he has been in charge of Russia for over 20 years -- after a while, when you're an autocrat, you surround yourself yes-men and -women.

So I'm not sure that he either got the right military advice or even listened to the right military advice. The number of forces that the Russians are using is not even close to what is necessary to take over all of Ukraine. My guess is that his Russian generals may have suggested more limited objectives. He may have overridden their advice. Who knows?

But the forces that is using are not enough to take all of Ukraine.

CAVUTO: So, General, stepping back from this and what's next, there were these peace talks that started today on the veterans border that were unproductive, but they went on for five hours. We're told they're going to revisit things.

We are told that among some of the demands of Russia is that -- not that Zelensky leave, but that it disavow any interest in ever becoming a NATO member, this on the same day that the E.U. is apparently considering letting Ukraine become a member. Now, there are no -- that's not a defense organization there. But it could be a step.

Do you think right now that is something that is of a concern?

PITTARD: A concern to Ukraine or Russia?

CAVUTO: All right, I'm sorry, General.

We're just getting some developments going on in Kyiv to this very point.

Trey Yingst is there -- Trey.

YINGST: Yes, Neil, sirens are sounding right now in the Ukrainian capital of Kyiv once again, telling those people across the city they need to get underground immediately, a significant development amid the ground forces by Russia that are making their way to this capital city.

We do know, according to U.S. defense officials, they want to try and surround the capital. There's a concern in the international community too that there will not be a corridor for civilians to leave. That's why you see so many trying to encourage President Putin to at least stop targeting civilian infrastructure and allow for the evacuation of civilians, not only in this city, but across the country of Ukraine -- Neil

CAVUTO: Trey, when you get the sirens -- and you have seen and heard these multiple times -- what do people do in the city? What do you do?

YINGST: Initially, people ran for shelters, but many of those people are now just living in shelters.

We were at the metro system in Kyiv over the weekend Maidan Square. And there are people living there. They have grabbed one bag and their pets and children. And they are just sleeping in the metro system of this city. Similar scenes in different bomb shelters across the city, not only here in Kyiv, but also Lviv.

We're simply out reporting. We have a job to do and tell people this story. So we take the precautions that we can. And if the bombardment gets too heavy, we also go underground. -- Neil.

CAVUTO: All right, just interesting procedure there, and a justified one.

Thank you, Trey, very much.

Back with General Dana Pittard on all of these fast-moving developments.

Obviously, Kyiv is the grand prize in all of this, General, for the Russians. And they're not going to lighten the fight. They want to obviously force the fight. We're told as well that there's growing frustration that this has gotten to be such a battle here on day five. What do you think?

PITTARD: Well, obviously, Kyiv is the capital, but the Ukrainians have the will to fight.

Even if Kyiv were to fall, Ukrainians will still be fighting for their country. And I think the Russian leadership doesn't fully understand that. They think that by taking the capital that they suddenly will have Ukraine. They will not.

In fact, just looking at the Russian forces as they're trying to encircle Kyiv, they are such vulnerable targets to aircraft. I wish the Ukrainians had more aircraft, that they could deal with those undisciplined Russian military convoys and columns.

And there's some things that we certainly should be looking at. One is being relentless in our economic, informational, and diplomatic pressure on Putin and Russia. We should be opening up a massive logistical airlift, if possible or ground convoys of weapons, of munitions, of middle aid that Ukraine can use.

Now, there's been a lot of promises, but it's getting it there. They can use more Stinger missiles against helicopters, Russian helicopters, and Russian aircraft. They can use more Javelin anti-tank missiles against the Russian armored forces. There's more things we can be doing.

The same thing with regaining the initiative in the Black Sea, more we can do.

CAVUTO: General, thank you very, very much, and for your indulgence and insight into this breaking news.

Speaking of which, I do want to go back to Trey right now in Kyiv, sirens still sounding -- Trey.

YINGST: Yes, Neil, I want you to just listen here.

This is the sound piercing the air of the Ukrainian capital tonight...

(SIRENS BLARING)

YINGST: ... an indicator to the civilians here, if they're not already in bomb shelters, they need to get there immediately.

Oftentimes, these sirens can give some advance notice. Other times, they start sounding after we hear the explosions. Earlier tonight, we caught one of those explosions on camera, when the Russians targeted a radar system just southeast of our position here in the Ukrainian capital.

Clearly, the Russians are trying to take out as much military infrastructure around this area as they can before they make that ground advance on the city. But, remember, for the past few days, there have been Russian troops inside this capital fighting with Ukrainian forces. We have come across some of those scenes, very bloody battle scenes in the streets of this capital, one car totally riddled with bullet holes and blood on the sidewalk soaking the streets of Kyiv.

Tonight, though, again, this warning telling people they must get underground immediately, as the air campaign against Ukraine continues -- Neil.

CAVUTO: All right, Trey, thank you. Keep us posted on all of these fast- moving developments.

Well, no surprise that things are still skidding in the Russian markets. They were closed today. The Central Bank there -- this is very unusual, when a central bank closes the stock market. But it has that power in Russia.

The Central Bank there also hiking the interest rate to 20 percent, more than doubling it. It did little to stall the cascading ruble, which hit another all-time low. We should point out that, when a central bank does that sort of thing, it lifts interest rates, in this case to 20 percent, the idea is, well, maybe people who are predisposed to not liking anything Russian investment-related, maybe they will like more if it has a 20 percent rate attached to it.

They didn't. It was garbage when the rate was lower. It was garbage by the end of the day.

We will have more after this.

(COMMERCIAL BREAK)

CAVUTO: All right, welcome back, everybody.

Right now, the great exodus out of Ukraine, and a good many of them finding their way to neighboring Poland.

And that is where you will find our Connell McShane.

Connell, what's the latest from there?

CONNELL MCSHANE, FOX NEWS CORRESPONDENT: Well, I know the numbers probably don't tell the whole story, because I'm sure they need to be updated.

But from what we heard of the United Nations earlier today, Neil, over 500,000 people have already fled Ukraine, and more than half of them ending up here in Poland, 280,000-plus.And we expect that to continue in the days ahead.

I mean, we're actually at a crowded train station. We have been to a number of border crossings today. And we came out on the platform because we were told, this platform right behind me, that a train from Ukraine is going to arrive any minute. I know they're getting ready for it.

There's a family here. I was just speaking to this young lady who is on the phone. She's here with her two children. They arrived a number of hours ago. They're waiting to get picked up and being brought to another part of Poland.

But, behind them, you see officials getting ready for the trains to arrive. And after they do, they're processed through customs in the building just to the left. And then they come out. Usually, somebody picks them up, takes them somewhere else here in Poland or maybe somewhere else in Europe. And there are all kinds of volunteers that are standing by here, and also people here in Poland who are volunteering literally to take people into their homes.

I was talking to this young lady inside the terminal a short time ago who was telling me about her trip, taken a number of days. And I talked to her about not only her ordeal, but whether she was prepared for this whole thing to begin with. Take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I used train, and it was a little bit more than 24 hours.

MCSHANE: OK. And it's interesting, because you -- we heard all for weeks in the news how this might happen.

Did you -- were you surprised that it actually did happen, that the war actually...

UNIDENTIFIED FEMALE: So much, yes. And it was very ugly surprise, if we're honest.

Of course, we saw news. We understand that Russia prepare something. But no one -- trust me, no believe at all that it will be -- happen.

(END VIDEO CLIP)

MCSHANE: We hear stories like that all the time.

And whether it's this family that you're looking at now live at the train station to that other young woman, you would be surprised to hear how surprised people are, Neil, that many of them, they just didn't believe it. Yes, they heard about it. But they didn't think that Putin would go ahead and actually do it.

And then, when he did, they were scrambling to get out of the country. And they're still scrambling to get out of the country. Now, I will point out, as I say, that, as much as we have seen that, we have seen the other side of it.

And it's remarkable in person, when we went to the pedestrian border crossing not far from here, to see men, many of them, dozens of military age who've been living comfortably here in Poland, many times for years, choosing to go back in to Ukraine.

CAVUTO: Wow.

MCSHANE: And they said they love their country, and they want to go fight for their country. And they were willingly choosing to do that. We spoke to many of them earlier today -- Neil.

CAVUTO: That's incredible. It says so much about them.

MCSHANE: Yes.

CAVUTO: Thank you very much, Connell. Your reporting from there has been stunning.

We are following all of these developments, of course, and this latest siren activity we're hearing in Kyiv right now, the capital of Ukraine.

Want to get a read on that from a Ukraine Parliament member taking up arms to help defend Ukraine. Kind enough to join us right now.

And she is there.

I thought you were going to be on the phone. So I'm very happy to see you, Kira Rudik.

Let me ask you about how you feel about this when you hear news, what's going on in the capital and the sirens going off, I mean, your knee-jerk reaction is, obviously, the Russians are there. They're probably very frustrated. They might be getting very desperate.

How do you feel about all that?

KIRA RUDIK, UKRAINIAN PARLIAMENT MEMBER: I feel angry.

So I feel angry for the last five days, since the war started, because the normal lives that we used to have, like and fight for, and fight for in Ukrainian Parliament, now it's all gone for us, for our children, for our families, and we have to stand up and fight Russian army, who just wants to attack us, because Putin decided that we don't deserve to live.

And he was pretty adamant about that. He said that there is no Ukrainian nation. There is no Ukraine, all we know. And, right now, we want to prove him wrong. We decided that we will stay. And I decided to bear arms and protect my family, my house, my city, and my country to make sure that no Russian aggressor is coming and deciding what's best for us, that no aggressor is coming and taking over our cities.

And, you see, for the last five days, Putin didn't have like a good victory that he could be proud of. None of the large Ukrainian cities is taken. There is not even a picture that he controlled to Russian citizens to prove like why did he start this war, because it's -- every single step of the way, Ukrainian resistance is kicking his ass and, doing it very, very well.

CAVUTO: You know, Kira, I'm wondering, as I see you with your Kalashnikov, and the fact that you and so many Ukrainians are armed and ready for anything and everything Russia can throw at you, and I'm thinking of that against Vladimir Putin today meeting with his top two generals.

They're seated far apart at a table. Those generals don't look happy. Vladimir Putin doesn't look exactly thrilled. Do you worry that Putin has become so unstable that now he throws whatever caution he's shown, which is very little, to the wind, and he goes crazy in an all-out attack on civilians as well, and that this -- this gets desperate for him and unhinged for him?

RUDIK: Well, a couple of things.

First of all, Putin was always crazy. It just that now world sees him as crazy. We knew that he was crazy for the last eight years, when there was a war on the east of Ukraine.

Second, is he going to regroup and he is going to attack with all of his forces? Yes, definitely. There has not been one hour since that peace negotiations, when there was the most vicious and the most aggressive attack on Kyiv, in terms of the firearms and in terms of the airstrikes, than we experienced in five days.

But you know what we learned in eight years? That Putin is lying all the time. When he says peace, it means war, when he says, OK, I'm withdrawing my troops, it means I'm grouping my troops. He said, my army is not there. It means, my army is here to kill you.

And that's why we learned not to trust him. And that's why we are fighting so hard, because we know exactly what's going to happen if he wins. We know exactly what's the Russian army going to do to ourselves, our children, our cities. And that's why this is a desperate fight. This is a David-vs.- Goliath situation.

And this is with the high hopes we are going to win. This is where we need the help and support from international community, because we know what's going to happen if he wins. And we will not let him do that to ourselves, to our families, our cities, and our country.

CAVUTO: Kira Rudik, thank you very, very much. Be safe. My best for your family.

RUDIK: Thank you.

CAVUTO: You and your fellow Ukrainians have inspired the world. I think that's an understatement.

Stay safe. Stay well.

In the meantime here, I did want to let you in on something else that happened today in the financial world that bears watching. We have gone ahead and frozen all financial transactions having anything to do with Russian Central Bank assets.

Now, I know that sounds like a little bit of in-the-weeds money stuff, but here's what that means. It effectively means that Russia is not going to be able to access funds in U.S. dollars, and they will be unable to use dollars in other countries to turn to other banks, so that they can go to them.

It has been echoed by the European Union and Japan and the United Kingdom and Canada, but the latest entrant is probably the most surprising of all. Switzerland, which has a long, long reputation for being neutral in virtually all major conflicts, global conflicts, over the last century, has said that it is putting its lot with Western powers that are trying to freeze Russian assets, and that the Swiss are saying, enough is enough.

We will have more after this.

(COMMERCIAL BREAK)

CAVUTO: All right, it's one thing to have your financial assets frozen, but, all of a sudden, you can't play with other countries when it comes to soccer, you can't do joint ventures with U.S. colleges and institutions, you can't do anything.

Getting isolated -- after this.

(COMMERCIAL BREAK)

CAVUTO: All right, well, it's not only Vladimir Putin who's going to feel the effects of much higher energy prices.

Generally, that would not be bad for him, as oil advanced today, but he won't be able to sell it the most anywhere. Of course, he will find some markets.

What is going to be a pain is for others that are inflicting the pain, well, like you, when you see it at the pump, where prices could climb still higher. We have plenty of oil and we have plenty of energy. The issue is whether we will be able to tap it and refine it and get it out.

And, for that, we go right now to Jeff Flock at a New Jersey refinery, where that is just the goal -- Jeff.

JEFF FLOCK, FOX BUSINESS NETWORK CORRESPONDENT: That is indeed, Neil, the message from big oil today: Yes, we can do much more than we're doing right now.

Take a look at the close, oil today, as you point out, up again. We're at $95.72 at the close. That's up over $4 on the day. Got as high as $99 at one point. Why is that? Because the screws are tightening on Russia, as you have reported. In addition to all of the other sanctions and arrest, the Central Bank, the BP deal with Rosneft, which is the big Russian oil company, they had a 20 percent stake in Rosneft.

And it is now, in a Russian term, kaput. They say they're pulling out to the tune of $25 billion. That's a big hit for BP. They don't say how they're going to do it. But a half of their proven reserves and a third of their production comes from Russia. So where now is that oil going to come from? That's the big question, and one that's driving up gasoline prices.

Take a look, today, $3.61 the average gallon a regular. That's up almost a dime in the last week. It continues to rise, and everyone says it's going much higher.

And that lack of investment in oil production also reflects a lack of investment in oil refining, like the refinery where I stand here today, the PBF refinery in South Jersey.

Listen to what they say about that.

(BEGIN VIDEO CLIP)

BRENDAN WILLIAMS, PBF ENERGY: The U.S. has lost about 1.2 million barrels of refining capacity over the last two years. That capacity has shut. Most of that capacity has not come back online. And most of that capacity will not come back online, because it's a very challenging environment.

(END VIDEO CLIP)

FLOCK: A challenging environment for investment.

Neil, I want to leave you positively with two sets of numbers. This is with regard to natural gas. Look at what it was like for Europe in 2019. At that point, Russia was providing 41 percent of all natural gas imported into Europe, by far the largest.

Two years later, or three -- or two years later, yes -- in 2021, now it's the U.S. providing 26 percent of Europe's natural gas, Qatar and Russia now with just 20 percent. The message from oil and gas in the U.S. is, we can provide what Europe needs. We just need to have the chains taken off and be able to fully produce all that we can, because we can solve this problem -- Neil.

CAVUTO: Yes, you can stay green and still use the stuff that's traditional, go full-throttle.

Jeff Flock, great reporting.

I want to go to Gerry Baker right now, Gerry, of course, the host of The Wall Street Journal edit -- he's the editor at large there.

You know, Gerry, it's interesting, because I know we could concentrate on all these financial actions that have been taken, but if you're Vladimir Putin, and you're already seeing yourself ostracized, I wonder if you care more about being isolated from any of your countrymen playing soccer, or joining future Olympics, or going to business conferences, or attending other world summits, because you're now persona non grata.

It's one thing to take a financial hit. It's one thing to be forced to be invisible on the global stage. What do you think of that?

GERRY BAKER, HOST, "WALL STREET JOURNAL AT LARGE": Yes, Neil, it's great to be here. And great to see you back, by the way. Thank you very much for having me.

CAVUTO: Same here.

BAKER: Yes, I -- look, I agree it's -- look, Putin is not likely to be budged very much by the prospect of Russia being kicked out of the soccer World Cup.

And, indeed, the history of sanctions, even these tough economic sanctions -- and these are pretty brutal and justified, in my view, but pretty tough economic sanctions, that will inflict real harm on the Russian economy -- the history of sanctions, Neil, has not been very effective.

We have had sanctions on Cuba, remember. We had sanctions on Cuba for 50 years trying to change that regime. It didn't work. We had sanctions on Iran. We had sanction Iran for best part of a decade. That hasn't really been that effective either. So I'm a little skeptical.

The one thing I do think about, especially about these cultural bans, like soccer, like banning them from soccer tournament, is, it will draw the attention of the Russian public to what's going on. As I understand it -- I'm no Russia expert, but I have been talking to a lot of people who are there and who've been following what's going on -- this story, this war is being downplayed very heavily in Russia.

They -- it's clear that the Russian leadership knows that this is not likely to be a popular war. This is, after all, a war against people he's described as their own brothers. So a lot of Russians aren't going to be too happy about the idea that Russia is going to war with Ukraine.

And they're -- but they're sort of keeping it under the radar, and they're being told about these -- obviously, these economic sanctions. When you see cultural sanctions -- the Russians love soccer. They love -- they love to see their country do well on the world stage.

When they're banned from those kind of things, it will have more of an impact in terms of visibility.

CAVUTO: Right.

BAKER: But I agree with you completely. These aren't going to change Vladimir Putin's mind.

CAVUTO: You know, it depends on how much they know, right, Gerry?

And I'm thinking of these long lines we were showing a little while ago in St. Petersburg, Russia. They're all over the country right now. People are limited in how much money they can take out of banks. And that is if your bank is open, limited hours right now. The market was closed today, forcibly so.

It's been in a freefall. So has the ruble. That's one thing that Russians are aware of. And if they see on paper money that they thought they had that's been halved or cut by 90 percent at the rate things are going, that, they notice. And that, I would imagine, ticks them off.

And I'm just wondering how much that is festering here and how much that could boomerang on Putin?

BAKER: Look, I'm sure it will have some impact.

I think, however -- again, I don't want again -- I don't want to keep pouring cold water on this. It's very early days in this war.

CAVUTO: Absolutely.

BAKER: And when I keep reading about how the Russians are doing much worse than expected, we're on day five here. And I can recall, back in 2003, The New York Times, like on day three of the Iraq War, having a front-page story about how the United States was already in a quagmire in Iraq -- in Iraq.

(LAUGHTER)

BAKER: And I think we need to be a little bit careful about -- it doesn't look like the Russians -- you remember that?

It doesn't look like the Russians have really used their -- anything like their full military capability. So I'm skeptical of that.

And I'm also a little bit skeptical about how bite -- how deeply the sanctions will bite. Remember, as serious as they are -- and I'm not disputing that they are serious, nor am I challenging them. I think it's a good thing. And I think Russia should be absolutely isolated and condemned for what it's doing.

But as serious as they are, we actually haven't blocked their oil exports, their oil and natural gas exports.

CAVUTO: Yes.

BAKER: Now, there's going to be some complications because the -- because of banning some of those banks from SWIFT or blocking some of those banks from SWIFT, which means that some of those transactions may be hard to pull off.

But that's their main source of revenue. And we haven't actually taken action against that so far. And that -- so that money is going to continue to flow. Look, I think Putin is determined to do this. I think he has made some miscalculations both about probably the strength of resistance he would meet in Ukraine and about the strength of opposition from the rest of the world and the unity of the rest of the world in imposing these sanctions.

But I think we're a long way from being able to make a judgment that that is somehow going to either make him change his mind, stay his hand or lead to some kind of popular uprising in Russia. It's a -- he's got a pretty tight grip on that country. And we can hope, but I wouldn't -- I wouldn't be expecting any major -- any -- another Russian revolution anytime soon.

CAVUTO: Yes, it depends on how long it drags on.

And you're quite were to point out, Gerry, that this is the fifth day. So we will watch it very, very closely.

The "Wall Street Journal At Large," Gerry Baker, you're looking at the host.

All right, in the meantime, as he was speaking, you notice right now we're down about 166 points on the Dow. Could have been a lot worse. Interesting development. We were talking about Vladimir Putin. You know how difficult the world is needed for him to get money. He flipped it around today and started talking about how difficult it's going to be for those in Russia to send or get money from abroad.

Now, the getting money from abroad is something over which he has little control, no control. That's being shut down for him. So, he came back with a threat to say, don't even think -- that is, Russian citizens -- of sending money abroad, or vice versa.

The vice versa part is, as if.

We have a lot more coming up -- after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OLENA GNES, RESIDENT OF UKRAINE: Military intervention. Russia violated all our legal system, all international laws, all possible international laws.

They just wanted to take us by force and control. Don't -- don't -- please, prevent the new genocide of Ukrainians here. And the only way how you can do this, only by force.

I never wanted anyone to kill anyone. I am the most peaceful person in the world. And Ukrainians are. But they are just coming, and they are just killing us. So, please stop them. Please come and save us.

(END VIDEO CLIP)

CAVUTO: All right, that woman has become sort of like an international rock star, she, of course, holed up in a shelter right now in Ukraine with her three children. And she's fighting the good fight and says that the Ukrainians will never give up that fight.

Joining me right now is our former U.N. ambassador, former director of national intelligence, so much more, John Negroponte.

Ambassador, good to have you.

The fight of the Ukrainian people is not in doubt here. That's for sure. But I'm wondering, the more they show it, and the more frustrated Vladimir Putin gets, what next?

JOHN NEGROPONTE, FORMER U.S. AMBASSADOR TO THE UNITED NATIONS: Yes, good afternoon. Thanks for having me on your show, Neil.

Yes, I mean, I wonder the next thing, because Putin having the kind of personality he does, it makes me wonder whether he's just going to throw more at it. The more resistance he gets, the more he will throw at it. And, of course, in the end, Russia is a larger, more powerful country, got a much stronger and bigger military and ultimately even has nuclear weapons, not that those are necessarily going to be contemplated by Mr. Putin, although he's made some unfortunate gestures, I think.

But, yes, I think there's a big risk out there that, ultimately, Putin is going to just inflict, seek to inflict as much punishment as he can on the country of Ukraine. But that's not to say that we haven't done a lot to help, I think both in terms of military assistance.

I think the response of Europe is really heartening and encouraging. You have seen a turnaround in a number of different countries, like Germany also now willing to export lethal weapons to another country and things like that.

And, of course, we have sent them...

CAVUTO: Ambassador, in fact, to that point, to that point, sir -- I'm sorry to jump on you, because I'm glad you mentioned it.

NEGROPONTE: No. no.

CAVUTO: Because Vladimir Putin responded to that.

He was stunned at Germany deciding to do that, especially now Germany breaks a long record of trying to avoid just this sort of thing. But he said that if those getting there use them -- I'm paraphrasing -- watch out.

NEGROPONTE: Yes.

CAVUTO: What can he do to Germany when he says, watch out?

NEGROPONTE: Well, I don't know, but it -- the question arises, well, what about all these countries that have decided to help the Ukrainians? Will Mr. Putin look for some way to retaliate against them?

I think that's harder to do. And he's got his hands full at the moment. But, I mean, the broader point, in a way, is, whatever happens in Ukraine, this series of events and this invasion, I think, has had a real crystallizing and unifying effect in Europe, in terms of their response.

Something that we could never do through our powers of persuasion, Mr. Putin has managed to accomplish in several days. It's really quite a startling and dramatic change. And I think you're going to see increased arms spending in Western Europe. You're going to see countries, some that are not members of NATO, contemplating a closer relationship with NATO, if not seeking to join it.

There's going to be a whole series of knock-on effects, not all of which we can yet anticipate. But the immediate question, as you said, is what next? And I would say, what's next -- and it's hard to see much farther than a day or two ahead of these things...

CAVUTO: Right.

NEGROPONTE: ... is more military pressure from the Russians.

CAVUTO: All right, Ambassador, thank you very, very much.

I apologize for our truncated time here.

We're also hearing, as the ambassador was touching on, countries building up their defense. Mitch McConnell has indicated that the president should be indicating the same, that we should be beefing up our defense budget.

We will have more after this.

(COMMERCIAL BREAK)

CAVUTO: All right, I want you to look at this.

I know I obsess over these images. But, sometimes, I think an image can really tell you the state of affairs, we have been talking about whether Vladimir Putin appears to be slipping a little bit. He's lost the support of a lot of people. He's getting isolated in the world.

But these are a couple of his top generals.

Can we look, guys, a little closer at their faces? They're not too pleased with this situation. Maybe they're second-guessing a lot of what Vladimir Putin is up to. Maybe they're afraid for their own jobs and future and God knows what else. But a lot of top military advisers were saying that we're not keen on what he was orchestrating here, and still not.

Gillian Turner has been looking into this.

Gillian, I guess it comes back, has the guy lost it? Is he now unhinged?

GILLIAN TURNER, FOX NEWS CORRESPONDENT: Well, and, Neil, that moment you were just showing there in footage is when Putin told his intelligence chiefs to sort of reengage and reactivate and elevate the country's nuclear force posture. So, it was a very key moment for them to be looking less than thrilled.

So, that said, senior American officials who've been dealing with him for decades are really starting to ring alarm bells about his mental state. They're noting things like a stark change in his public behavior, his attitude, his decision-making, and they're worried his mental health has deteriorated very rapidly and very recently.

Listen.

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, FORMER U.S. SECRETARY OF STATE: Well, I met with him many times. And this is a different Putin.

He seems erratic. There is an ever-deepening delusional rendering of history. So, he's descending into something that I personally haven't seen before.

(END VIDEO CLIP)

TURNER: The concerns not just from Bush administration officials.

Take a look at what President Obama's ambassador to Russia said today: "When dictators rule for decades, they stop listening to advisers, become disconnected from reality, spend a lot of time alone, and overreach. This is exactly what's happened to Putin."

Lawmakers here on Capitol Hill are also worried. They're calling him delusional.

(BEGIN VIDEO CLIP)

REP. MICHAEL MCCAUL (R-TX): And now to hear him put the nuclear forces on high alert, I'm really starting to question the competency, mental fitness.

(END VIDEO CLIP)

TURNER: A senior Trump national security official tells me Putin seemed too paranoid and arrogant and unwilling to listen to reason while meeting with French President Emmanuel Macron last week.

And the intel community is also saying the same thing.

(BEGIN VIDEO CLIP)

JAMES CLAPPER, FORMER U.S. NATIONAL INTELLIGENCE DIRECTOR: I think he's a little unhinged. I really do. And that's why these statements bear watching.

(END VIDEO CLIP)

TURNER: An intel source tells me that Putin doesn't use a personal cell or the Internet.

So, if this is true, he really is cut off from the world beyond his compound walls -- Neil.

CAVUTO: All right, Gillian, I think I saw you at 3:00 or 4:00 in the morning. You're still going strong. Man. Ah, youth.

All right.

TURNER: I model myself after you.

CAVUTO: Oh, I wish. I wish.

Gillian, great job. Thank you very, very much.

Let's go to Lucas Tomlinson right now in Kyiv, Ukraine, how things are going on there. We heard sirens earlier.

How are things going right now, Lucas?

LUCAS TOMLINSON, FOX NEWS PENTAGON PRODUCER: Well, Neil, things have calmed down here, those air raid sirens, unfortunately, now becoming almost a daily occurrence here in Lviv, although many people taking cover underground at some of the shelters.

There's no metro station here. But there are some shopping centers underground, so that we did see people taking shelter there. It's very notable, Neil, that, just a week ago, many of the students here in this university town were doubting that there would be beat this full-scale Russian invasion.

So, a week ago, they were studying, they were out, they were drinking coffee, relaxing. Now they're making bombs in some cases. Yesterday, I walked by a group of students not just making small Molotov cocktails. They were making big jugs. Might have been roadside bombs to try to blow up Russian armor.

Now, speaking of that Russian armor, U.S. officials say that Russia is not nearly as far as they would have liked on day five of this full-scale invasion. But, right now, the capital, Kyiv, is surrounded. We have heard about that Russian convoy with hundreds of tanks, self-propelled artillery, armored personnel carriers and fuel, badly needed fuel.

We also have attacks in Mariupol in the southeast and also in the northeast to Kharkiv -- Neil.

CAVUTO: All right, Lucas, I apologize, of course, in Lviv, of course, the western part of that country.

We will be keeping you posted on these developments and how they're affecting our markets and your money. Gas prices go up, oil goes up. Our markets stabilized, Russia's anything but. They're free-falling. The question is how long Vladimir Putin can take it.

Here's "THE FIVE."

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