updated 7/21/2014 9:08:21 AM ET 2014-07-21T13:08:21

ALL IN with CHRIS HAYES
July 17, 2014

Guest: Simon Ostrovsky, Amir Tibon, Julia Ioffe, Andrij Dobriansky,
Michael McFaul, William Taylor

(BEGIN VIDEOTAPE)

CHRIS HAYES, MSNBC HOST (voice-over): Tonight, we are ALL IN.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The world is watching
reports of a downed passenger jet near the Russia/Ukraine border.

HAYES: Malaysian Airlines plane was shot down over Ukraine near the border
with Russia.

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: Shot down. Not an
accident. Blown out of the sky.

HAYES: Now the question is, who has the military hardware capable of
hitting a plane at 33,000 feet? Ukraine, Russia, and the separatists all
deny responsibility. So what happens next?

SEN. JOHN MCCAIN (R), ARIZONA: I think there`s going to be hell to pay and
there should be.

HAYES: Plus, ground invasion. Ten days after Israel began its offensive
against Hamas, Israeli troops move into Gaza.

ALL IN starts right now.

(END VIDEOTAPE)

HAYES: Good evening from New York. I`m Chris Hayes.

Malaysian Airlines Flight 17 flying from Amsterdam to Kuala Lumpur was shot
out of the sky today on the border of Russia and Ukraine. All 298 people
on board were killed. Senior U.S. officials telling NBC News tonight the
airliner was shot down by a surface-to-air missile.

Ukraine says Russia and Russian-backed separatists are responsible. They
have denied responsibility.

Here`s what we know so far about what happened. At 7:30 a.m. Eastern Time
this morning, MH-17 left Amsterdam bound for Kuala Lumpur. At 11:35
Eastern Time, around four hours later, Malaysia airlines tweeted out it
lost contact with the flight over Ukraine.

Ten minutes later, an adviser to Ukraine`s interior minister posted on
Facebook that the plane was flying at 33,000 feet when it was hit by a
missile. He blamed rebels for the attack immediately.

By 12:55 p.m. Eastern, "Reuters" released the first news photos from the
crash site 31 miles from the border with Russia in an area now controlled
by rebel separatists. In 3 1/2 hours later, U.S. officials confirmed to
NBC News what Ukraine had alleged. The plane was, indeed, brought down by
a surface-to-air missile.

News of the crash first broke while President Obama was on the phone with
Russian President Vladimir Putin talking about new U.S. sanctions against
Russia that were announced yesterday.

Both President Obama and the vice president addressed the tragedy this
afternoon.

(BEGIN VIDEO CLIP)

OBAMA: Obviously, the world is watching reports of a downed passenger jet
near the Russia/Ukraine border.

BIDEN: Apparently had been shot down. Shot down. Not an accident. Blown
out of the sky.

(END VIDEO CLIP)

HAYES: Ukraine`s president is calling what happened, quote, "neither an
accident nor a catastrophe. It`s a terrorist attack."

President Obama spoke with him this afternoon to offer help and emphasize
the crash site should remain intact until international investigators can
get there.

Just hours ago, President Putin said that Ukraine is responsible as the
plane was shot down in that country`s airspace and implied, it wouldn`t
have happened if Ukraine hadn`t started a new offensive against pro-Russian
separatists.

Senator John McCain disagreed.

(BEGIN VIDEO CLIP)

MCCAIN: The separatists could only have gotten that capability from
Russia. And so, therefore, the culpable party here is Vladimir Putin.

(END VIDEO CLIP)

HAYES: Tonight, Malaysian Airlines is going through the list of passengers
onboard flight 17. So far no Americans were found on that list, but the
plane was carrying at least 154 Dutch, 45 Malaysians, 27 Australians, 12
Indonesians, nine Britons, four Germans, four Belgian, three Filipinos, and
one Canadian.

Joining me now, NBC News correspondent Tom Costello.

Tom, what`s the latest?

TOM COSTELLO, NBC NEWS CORRESPONDENT: Well, I`ve been talking to U.S.
sources who say at this point -- at this point, now, things could change,
there are no plans to send U.S. investigators to the Ukraine to assist in
the investigation.

A number of reasons for this. Number one, if our sources are correct, and
U.S. military, intelligence sources and military -- let me say that again,
U.S. intelligence sources and the military both say that this plane was
shot out of the sky by a missile, then this is an active war zone. It is
down in Ukrainian rebel territory. It is not in territory held by
Ukrainian government authorities.

And we are told Ukrainian rebels may actually have the black boxes. So if
this is now a case in which the military and the intelligence community are
in agreement, it was shot out of the sky with a missile, and if the
Ukrainian rebels are the ones who have the plane and they have the black
boxes, there may not be a role for U.S. investigators on the NTSB site, for
example, especially going into a hot war zone. That`s point number one.

Point number two, I think that there is this mounting case that the
Ukrainians, and it now looks like the Americans, are making, or building,
against the rebels. Late today, the Ukrainian government released
recordings of audio communications between rebels and who they identify as
a Russian intelligence officer, discussing the shoot-down after the fact.
The conversation includes references to whether there were any weapons
onboard the plane. And then they discuss, oh, this is actually a civilian
aircraft, and one of these individuals in the conversation says, "This is a
major F-up."

So, it appears here Ukrainians are building a case that, in fact, this is
an incident that was all the result of rebel action, Russian-backed rebel
action, that brought down this plane and now the question is going to be
whether they can prove this to the international community.

But I got to say, Chris, I personally would not be expecting to see FAA or
NTSB investigators on scene in a war zone.

HAYES: Tom, I think a lot of people have the thought this morning when
they first saw the news, and saw that it was Malaysia Airlines, a kind of
just disbelief, like could it possibly be Malaysia Airlines again,
obviously, famously Flight 370 en route to Beijing disappeared, has yet to
be recovered.

Are you hearing anything from Malaysia Airlines tonight?

COSTELLO: Well, the prime minister of Malaysia today said, you know, in a
news conference that was just heavy with emotion, and with anguish, that,
again, they are standing in front of the international community discussing
a tragedy involving a Malaysia Airlines 777.

There is no suggestion -- I want to underscore that -- no suggestion that
there`s any connection whatsoever between this plane being shot out of sky
allegedly by Ukrainian rebels and Flight 370 which had been missing for 4
1/2 months, and the investigation is focused still on this notion that the
plane was taken by probably a cockpit crew member on a ride, on a U-turn,
then flown deep into the southern Indian Ocean where it crashed.

The trouble is that 4 1/2 months later, not a single piece of wreckage has
turned up. Nothing has floated ashore anywhere. And by now, it`s entirely
possible that some of that would have floated ashore either to Australia or
even been caught in the southern Indian Ocean currents and made its way all
the way to South America. But so far, nothing.

And so, it is -- it seems to be just a horrific set of circumstances and
coincidences.

HAYES: NBC News correspondent Tom Costello, thank you.

COSTELLO: All right.

HAYES: Joining me now, NBC News chief Pentagon correspondent, Jim
Miklaszewski.

Jim, what are you hearing from your sources about what U.S. officials have
been able to determine about what happened?

JIM MIKLASZEWSKI, NBC NEWS CHIEF PENTAGON CORRESPONDENT: Well, Chris, you
know, it was really fortuitous because ever since February when the
Russians appeared to be prepared to invade Ukraine, U.S. spy satellites
have been trained on that Russia/Ukraine border for about 24/7 and it was
at least one of those satellites, infrared satellite, that detected the
launch of the missile and then detected the impact as the missile slammed
into the airplane.

The big question here tonight is, who fired that shot? Were they Russian
separatists? Because intelligence over the past couple of weeks has shown
that the Russians have been shipping these advanced mid-range missile
systems from Russia into Ukraine to the separatists. Or was it the
Russians?

And officials here say they haven`t yet determined that, but, you know,
ultimately officials here also come to the conclusion, look, no matter who
pulled the trigger, it was clearly a Russian weapon that did the damage.

HAYES: So, the officials there are ruling out the possibility that Ukraine
could have accidentally interpreted this as a Russian spy plane or some
other kind of Russian plane and shot it down, themselves.

MIKLASZEWSKI: It`s highly unlikely because in one respect, the missiles,
the same kind of missiles, those BUK surface-to-air missiles that the
Ukrainians have are held over from the Soviet era, and these missiles have
to be maintained. Their batteries have to be replaced. It`s a complicated
maintenance system that the Ukrainians are unlikely to have kept up. So,
it`s not -- nobody thinks that the missiles they have are that reliable
anyway.

And then the question is, why on earth would they try to shoot something
down? Because the separatists certainly don`t have aircraft, and the idea
that they thought it was a Russian plane that was headed toward Russia, and
they were forced to shoot it down, it just does not appear to be likely,
and quite frankly, that theory has been pretty much dismissed by officials
here in Pentagon.

HAYES: Officials are focused on whether or not it was an actual Russian
surface-to-air missile or Russian-backed separatist. That`s their
determination at this point.

MIKLASZEWSKI: It was definitely a Russian missile, but was it launched
specifically by the separatists or by the Russian military? And, again,
either way, it`s still a Russian missile.

HAYES: There were some reports, I believe, in June, actually, in the
Russian state press that the rebels had actually captured a BUK system from
the Ukrainian army. My understanding is the Ukrainian army is denying that
as of now, that they say they didn`t have anything stolen from them.

Any clarity on that?

MIKLASZEWSKI: Well, you know, actually that sounds perfectly like
preemptive propaganda, because as soon as it would be detected that these
missile systems were inside Ukraine in the hands of separatists, the
fingers would point directly across the border at the Russian forces, and
the U.S. military and U.S. military intelligence confirms that the Russians
have, in fact, delivered these missile systems to the separatists.
Including, not only that, but heavy artillery pieces and tanks, which,
again, is one of the reasons why President Obama this week slapped even
tougher sanctions on the Russians.

HAYES: The question now is what is next? Are you hearing about how U.S.
officials are gaming this out?

MIKLASZEWSKI: That`s a real head scratcher. I mean, we have been told
that what may likely happen is that the U.S. will slap even additional
sanctions on the Russians, perhaps some kind of diplomatic demarche. But
there`s no hint, no consideration whatsoever that the U.S. military is
going to get involved in any kind of counter or any kind of reaction to
what happened today.

HAYES: Jim Miklaszewski from the Pentagon, thank you so much. Really
appreciate it.

MIKLASZEWSKI: OK, Chris. Thank you.

HAYES: Joining me by phone from the Kharkiv region of Ukraine, Simon
Ostrovsky, reporter for Vice News.

Simon, you`re in eastern Ukraine not controlled by rebels. It`s controlled
by the Ukrainian government. How are people reacting to the news there?

SIMON OSTROVSKY, VICE NEWS (via telephone): I`m actually where the
Ukrainian military has its headquarters in eastern Ukraine, and the
Ukrainian military has been telling us they believe the jet was shot down
by a BUK missile that was produced in Russia. It`s not clear how the
rebels got this contraption that can shoot up to 15 kilometers into the
air, apparently. But they`re blaming -- they`re blaming the pro-Russian
separatists for shooting down the plane.

HAYES: Do they think it was actually the separatists, themselves, who
fired it or the Russians who fired it?

OSTROVSKY: The Ukrainians have been saying all along that there are a lot
of Russian citizens and special forces among the rebels. They believe that
the entire rebel movement is controlled from Moscow.

It`s confirmed that many of the leaders of the separatists are Russian
citizens, self-admittedly one of them, Igor Girkin, recently said he was an
FSB, Russian state security services, he said he was a colonel of the FSB
up until 2013. He`s not even hiding that.

But whether this is -- the Russians, they deny that they`re involved on an
official level. I think they conceded that there`s some Russian citizens
here, but they say they don`t control the rebels and it`s up to Ukraine to
control what`s happening on its territory and that`s why Moscow has put the
blame in Ukraine`s court which the Ukrainians see as a very cynical move on
Moscow`s part.

HAYES: The amount of armed tension between the rebel separatists and the
Ukrainian military has increased particularly over the past month,
particularly in the last week in which a number of airplanes have been shot
down. Is this understood as an escalation by the Ukrainian military? And
what are they talking about in terms of their response?

HAYES: Well, it`s interesting that you mentioned that they`ve been
shooting planes down because up until this very latest incident where it
seems like they accidentally shot down a civilian aircraft, they`ve been
very proud to parade their anti-aircraft weaponry, all the Ukrainian
military and cargo jets, or rather planes they`ve been able to shoot down
previously. In fact, there seem to have been reports from earlier today
where they were boasting of having shot down an Antonov 26 aircraft and
those reports quickly disappeared from all of their pages and it looks like
it may have been a mistaken identity that they thought they were targeting
an Antonov, but they actually hit the Boeing.

HAYES: This is a post by a Russian -- sorry, I just want to clarify, it`s
a post by Russian separatists who goes by the name Strelkov who posted to a
Russian social networking site around the time the plane went down
apparently bragging about taking down a cargo plane. That post since
disappeared and we`ve been unable to definitively verify or confirm that he
actually did post that, just to make that clear.

OSTROVSKY: That`s right. Strelkov is Igor Girkin, the same man that says
he was an FSB colonel up until 2013.

The Ukrainians I don`t think are changing their military strategy. The big
change for the Ukrainians is the fact that the conflict is suddenly being
thrust into the international arena and everybody is suddenly looking at
Ukraine after having forgotten about it for a few weeks. And, you know,
Ukrainians and rebel fighters and civilians have been dying day in, day out
here. And now, Ukraine sees this as their big international political
moment for when they can draw attention to what they say they`ve been
fighting all along, which is Russian aggression in eastern Ukraine,
according to Kiev.

HAYES: This has been, I think, over the past month, I mean, this has
developed into a war, right? There is -- there is fire being exchanged. I
mean, there are casualties. It has developed into a pretty active war over
the last several weeks. Is that correct?

OSTROVSKY: Definitely. I mean, there`s no question in my mind that this
is a war. I think the only question that some people have been arguing
over is whether it`s a civil war or a war between Ukraine and Russia. But,
you know, there`s heavy machinery, heavy artillery, mobile rocket launchers
being used by both sides. Ukraine is accusing Russia, actually, firing
from very close to the border from its side.

I don`t know -- that`s not actually confirmed, but the point is that the
heavy armaments being used here, and a lot of destruction.

HAYES: Simon Ostrovsky of vice news in Ukraine near Kharkiv, thank you so
much.

Just as news seemed to be reaching its peak, Israel began a ground
operation in Gaza. A live report from Tel Aviv, next.

(COMMERCIAL BREAK)

HAYES: More on Malaysian Airlines Flight 17, including the ongoing
conflict in the days leading up to the plane apparently being shot down.

And ahead, Israel`s ground operation in Gaza which began just hours ago.

(COMMERCIAL BREAK)

HAYES: After days of threatening it, today, the Israeli government
launched a ground invasion into Gaza just after 10:00 p.m. local time. The
Israeli military said the ground operation is aimed at, quote, "taking over
targets in Gaza, operating against tunnels and terror activists and
infrastructure."

A spokesman for Hamas said, quote, "Hamas is ready for a confrontation."

Foreign journalists in Gaza have reported electricity outages across Gaza
City and artillery fire from Israeli ground troops as well as fire from
naval gun boats and continued air strikes. Director of a Gaza hospital
reported the hospital was being shelled Thursday. According to AFP, the
hospital had 14 patients, some of whom are paralyzed or in a coma.

The ground invasion came after a five-hour humanitarian cease-fire
agreement expired. Just as that temporary cease-fire ended, the Israeli
military says a Hamas rocket struck a city in southern Israel.

Hours before the ground invasion got under way, Israel says it intercepted
a group of Hamas fighters trying to sneak into Israel through a tunnel
under the border with Gaza.

Israeli military launched an air strike at the mouth of the tunnel. Hamas
denies any of its fighters were killed in the operation.

Joining me by phone in Tel Aviv is Amir Tibon. He`s a diplomatic
correspondent for "Walla News" in Israel.

Amir, what is the reaction in Israel to this latest escalation?

AMIR TIBON, WALLA NEWS (via telephone): Well, I have to say, right now in
Israel not many people are surprised by this ground incursion into Gaza.
It`s something we were expecting, because over the last days there were
just endless attacks coming here from Gaza. But also attempt after attempt
by Hamas militants to enter tunnels that they`re digging underground into
Israel, in the side of the border, in order to carry out attacks in Israeli
villages and towns.

The real -- I think many people are just saying that this was expected.
That it was just a matter of time before it took such a position (ph). So,
not anybody`s surprised.

Of course, you know, people are worried because now we have our soldiers
inside Gaza fighting the Hamas terrorists and people are worried about it.
But it didn`t come as a big surprise to anybody.

HAYES: There is a question -- you`re looking at live pictures of Gaza --
of what kind effect this will have on Gazan civilians. There are not a lot
of places to go. We`ve been hearing reports out of Gaza, children,
noncombatants don`t have many places to go. There were leaflets from the
government, and warnings on Hamas television to evacuate.

But it`s unclear how any kind of ground incursion, any kind of shelling can
spare the lives of noncombatants.

TIBON: Absolutely. This is a big worry also for Israel because, you know,
the more civilians get hurt, the less legitimacy Israel will to have to
continue the operation which is really aimed at terrorists and not at
civilians. It`s something I know the Israeli military is also very
concerned about.

Right now, the plan that has been presented by the government of the
military is not to go deep into Gaza and get into the city centers and
fight in the alleys of the streets, but it`s actually to stay more on the
border, to really take care of the tunnel switch which is just the craziest
thing, you know, because some -- these are tunnels that are dug deep
underground with a lot of expertise, a lot of money poured into it, only in
order to carry out terrorist attacks.

So I think right now there`s not going to be any kind of big move into the
city center, but obviously civilians, they are suffering. I have friends
who are there, also civilian people. I talk to them. I hear very sad
reports coming in from there and definitely very disturbing.

HAYES: There is also a question -- Avigdor Lieberman, the former minister
in the Netanyahu government, had basically said Gaza needed to be
reoccupied. The Israeli defense fires have stated they have this
essentially limited goal in terms of the tunnels but there`s a real
question of what is day two, what is day three here?

What is the understanding of what that looks like?

TIBON: Yes, actually the statement where a foreign minister, Lieberman,
which you mentioned, I think it doesn`t represent right now the line of our
government. There was a big political debate in the last days in Israel
over Prime Minister Netanyahu, over his decision to show some kind of
restraint.

I know it`s hard. It sounds weird when you see the pictures from Gaza
which are terrible. You know, the damage and the civilians and children
who are killed and the Israelis are saying, no, we are showing restraint.

Actually Netanyahu waited for a long time while Israeli cities, you know,
from Tel Aviv, to any other city in the country, were bombarded. He waited
for a long time before he decided to do this ground operation, and he got a
lot of criticism over it from right-wing members of his coalition including
foreign minister who said -- no, we need to act more forcefully, more
decisively. And his attitude was no, let`s wait, let`s try to reach a
cease-fire.

You know, just two days ago, Israel agreed to enter a cease-fire agreement
brokered by Egypt.

So, he was criticized for it. But I think it was a smart move for him
because right now, it allows him to act and we don`t see a lot of
international criticism, at least not from foreign governments.

HAYES: Amir Tibon, thank you very much.

TIBON: Thank you.

HAYES: Ahead, more on Malaysian Airlines Flight 17 including the context
that shooting down Ukraine military aircraft has become almost routine in
recent days.

(COMMERCIAL BREAK)

HAYES: Malaysian Airlines passenger plane apparently shot down over
Eastern Ukraine today with 298 people aboard. It was not the first
aircraft to go down in the region.

This week, alone, at least four Ukrainian military aircraft have
reportedly been shot down over the skies of Eastern Ukraine. That includes
an AN-26 military transport plane shot down Monday.

Pro-Russian rebels took credit for downing the plane and tweeted they
had taken the crew prisoner.

The big question right now is this: if the pro-Russian rebels are, in
fact, shooting these aircraft out of sky, how are they doing it?

There have been some indications the rebels have accessed the Russian
surface-to-air missile system known as the Buk missile system. A launcher
similar to the Buk system was seen by an Associated Press journalist on
Thursday near a rebel-held Eastern Ukrainian town.

And in June Russian state media congratulated the rebels for acquiring
a set of Buk missile launchers from a Ukrainian air force base.

The Ukrainians deny the Buk was captured from their base, but they
don`t deny the rebels had access to it.

On its Facebook page today, an adviser to the Ukraine`s interior
minister claimed the rebels had shot down the Malaysia Airlines plane using
a Buk system which he said had been provided by Russia.

The Buk has the capacity to fire missiles at a altitude of more than
70,000 feet, far higher than the 33,000-foot level the Malaysia Airlines
flight was last measured at.

U.S. intelligence confirmed today that a surface-to-air missile was
fired at the plane.

All that said -- and this is important -- we know that both the
Russian and Ukrainian military have the firepower and capability to have
been responsible for this disaster. And the rebels are as of now denying
they shot down the plane.

Meanwhile, many are questioning why Malaysia Airlines chose to fly in
such contested airspace. In April, the Federal Aviation Administration
issued a warning against flying over areas of Eastern Ukraine.

Joining me now, MSNBC military analyst, Colonel Jack Jacobs.

Colonel, the first thought was the thought that this was flying too
high for a kind of shoulder-fired surface-to-air missile, which can`t get
up to 33,000 feet.

COL. JACK JACOBS, MSNBC MILITARY ANALYST: Well, and it`s true, it
can`t get up to 33,000 feet. And most people, when they think of anti-
aircraft missiles, they have in their minds all the pictures of guys
running around with shoulder-fired surface-to-air missiles, which have a
relatively short slant range.

This is an SA-6, modified SA-11 mid- to long-range anti-aircraft
missile with a fairly big payload with radar target acquisition, terminal
radar guidance, proximity fuse; very deadly, very deadly weapon.

HAYES: A sophisticated and complicated and expensive piece of heavy
weaponry that is not just floating around.

JACOBS: Yes. Not the latest in the Russian inventory, but -- and
goes back to the Soviet days. But still extremely effective.

HAYES: Part of this, it seems to me, just shows that if, in fact, it
is the rebels, again, it -- there have been -- we should set some context
here.

There have been other precedent of militaries accidentally shooting
down civilian airplanes. The USSR in 1983, a Korean Air Lines jet in 1988.
I believe the U.S. shot down an Iranian passenger jet. In both cases, all
civilians killed and dead. And these were the two superpowers at the time
with the most sophisticated presumably competent means --

JACOBS: And we couldn`t get it right.

HAYES: Exactly. So it doesn`t necessarily suggest that it had to be
the rebels because it was a mistake, right?

JACOBS: That`s correct. Although the target identification now is
much more sophisticated. There is sophisticated IFF, identify friend or
foe, systems now, in which the beacons in the aircraft talk directly to
anybody on the ground, and you can identify a civilian aircraft and
distinguish it from a military aircraft.

So in theory, there should be no reason today why a civilian aircraft
ought to be shot down with a missile.

HAYES: Is it the case that we can -- is there a way to determine
definitively, forensically, who shot it down?

Particularly if there`s no way to get to crash site, because it is, of
course --

JACOBS: Well, that`s a very interesting question and the short answer
is, yes, comma, you bet, exclamation point.

And the people who are going to tell you who shot it down is, perhaps,
ironically the United States government.

We`ve been looking at that area almost continuously for some time now.
We have real-time surveillance of the area for a wide variety of obvious
strategic reasons and we have both visual and infrared sensors, satellites
taking pictures real-time over the area.

The reason that the vice president could say that it was a missile
that shot this plane down --

HAYES: Right.

JACOBS: -- was because we`ve got the pictures. And at some juncture,
the American government is going to find the time to say, and the guys who
shot this down were fill in the blank.

HAYES: Because we have extremely sophisticated surveillance
satellites that are taking real-time high-resolution video of that entire
border area at all times.

JACOBS: Well, we have the capability with some of these overhead
platforms to look down at something and see resolution down to a foot or
less. So --

HAYES: This thing is much bigger than a foot, obviously.

JACOBS: So I`m convinced that the United States government knows who
shot it down, and now the question is when are they going to talk about it?

And it`s a problem for the United States government. It`s got to find
the time, the right time to say it.

HAYES: And obviously the Ukrainian government moved very quickly. It
was only 10 minutes after, as we said in the timeline this morning, 10
minutes after Malaysia Airlines tweets they have lost contact with this,
that the adviser to the interior minister of the Ukrainian government posts
on Facebook, it`s been shot down and shot down by the rebels.

They also released these recordings which they say are of a rebel
commander talking to a Russian general, I believe, essentially discussing
the flight.

JACOBS: Yes. And that`s the principle reason why they are absolutely
convinced that it was the rebels who did it.

Not only that, they also have battlefield surveillance. Not as
sophisticated as Russia, the United States. But they`re not totally -- I
mean, they`re not living in the Stone Age and they have some view of what`s
going on in the region.

HAYES: I should just say here, because obviously there are lots of
people making a circumstantial case this was the rebels. The rebels deny
it as of now, and there is precedent -- I should say this, again, there is
precedent for very sophisticated militaries accidentally shooting down
civilian planes.

We do not know as of this moment, but Colonel says that we will find
out soon.

JACOBS: We will find out as soon as the United States government --

HAYES: Decides to.

JACOBS: -- decides to let us know.

HAYES: Colonel Jack Jacobs, thank you so much.

JACOBS: Thank you, sir.

HAYES: All right.

Skirmishes between Ukrainian forces and Russian-backed separatists
have been ongoing and escalating. What this means going forward in light
of the downing of Malaysia Airlines Flight 17, next.

(COMMERCIAL BREAK)

HAYES: With the establishment of a cease-fire in June, there was a
tentative calm in Ukraine between government forces and pro-Russian
separatists holding large swaths of the east. But on July 1st, that cease-
fire expired.

And while much international attention turned away to pressing crises
in the Middle East, particularly in the last month, the crisis in Eastern
Ukraine has rapidly intensified.

Less than a week after the cease-fire ended, Ukrainian troops retook
the city of Sloviansk, forcing the separatist rebels to retreat to their
stronghold in the regional capital, Donetsk.

Skirmishes and shelling around Donetsk and Lugansk, another rebel-held
city, have continued over the past two weeks as government forces attempt
to seal off the separatist access to the Russian border, cutting their
supply lines.

But Russia has continued to provide heavy weaponry, military equipment
and other supplies to separatist forces, according to the State Department,
leading to President Obama`s announcement yesterday of steppe-up sanctions
against Russia`s financial and energy sectors.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I`ve repeatedly made it
clear that Russia must halt the flow of weapons and fighters across the
border into Ukraine, that Russia must urge separatists to release their
hostages and support a cease-fire, that Russia needs to pursue
internationally mediated talks and agree to meaningful monitors on the
border.

I`ve made this clear directly to Mr. Putin. So far, Russia has failed
to take any of the steps that I mentioned. In fact, Russia`s support for
the separatists and violations of Ukraine`s sovereignty has continued.

HAYES (voice-over): At least two Ukrainian military planes crashed
this week in separate incidents and one of them appears to have been shot
down by a surface-to-air missile, according to a senior Obama
administration official.

(END VIDEO CLIP)

HAYES: While no one has claimed responsibility, suspicion has fallen
squarely on the pro-Russian separatists.

Joining me now, former U.S. ambassador to Russia Michael McFaul and
the former U.S. Ambassador to Ukraine, William Taylor.

Gentlemen, and Ambassador McFaul, maybe I`ll start with you. This is
a disaster. Any way you look at it from any perspective, this is just an
absolute disaster.

MICHAEL MCFAUL, FORMER U.S. AMBASSADOR TO RUSSIA: Correct. I`m glad
you called it that. And I think, you know, it`s important for us to know
who shot the plane down, to locate exactly where it was. But at the end of
the day, the entire military operation in Eastern Ukraine, the so-called
separatists, is a Putin project.

He`s responsible, ultimately, for this entire fight and now this is a
tragedy that has spun out of control of some low-level thing that he wanted
to do. So this is a tragedy in a major way and I think it`s a real
breaking point in U.S.-Russian relations at a time when, you know, I would
have thought we couldn`t get much worse.

HAYES: Ambassador Taylor, you were ambassador to Ukraine. I want to
-- I want to just be clear here because I feel like the story is all sort
of all signs pointing towards Russian-backed rebels and separatists in the
east.

But it also occurs to me that were this a -- that the Ukrainians
pointed the finger very early on before possibly they had the forensic
capability to know that it was the rebels. And, of course, everyone in
this story has an incentive to make it appear that they did not do it.

Is it conceivable the Ukrainian government isn`t giving us all the
facts here?

WILLIAM TAYLOR, FORMER U.S. AMBASSADOR TO UKRAINE: It`s conceivable
that we don`t have all the facts. It is also clear that very soon we will
have the facts.

We`ve been looking very intensively at that part of the world with
cameras from all over. We should know very soon exactly who it was and
we`ll have the facts. I think it will indicate what you suggested that it
was the Russian separatists who are responsible.

HAYES: And yet here`s -- Ambassador McFaul, here is where it appears
to me that we stand, which is the horror of this, as these were 300 people
murdered in the sky.

There is still the case that the status quo is the status quo. I
mean, at some level, it appears like this horrible incident changes
everything, and at the same time, maybe it doesn`t really change very much.

MCFAUL: Well, you`re quite right to think about that.

I mean, I think the two next moves we have to wait for are from Putin
and then from the west. Remember, if this is the separatists, and this is
the tragedy that we think it is, one thing Putin could do would be to
criticize it. He has on occasion hinted that he does not own the
separatists, that he`s not in cahoots with them.

Well, he could break with them and that would be a very positive
outcome from this very tragic moment.

I`m not predicting it, but I think that is an option that he has. If
he doesn`t do that, of course I think the president, President Obama, and
the rest of the European and, frankly, the rest of the world -- because
this is now an international incident, not just a West versus Russia
incident -- have to make the Russians pay.

And, of course, we`re not going to go to a military confrontation with
Russia about this, but I do think it means putting in place more serious
sanctions.

HAYES: Ambassador Taylor, the countries of the European Union have
been reluctant to step up sanctions and economic pressure on Russia for a
variety of reasons, from their judgment of its efficacy, to the implication
being they`re too dependent on Russian gas to want to essentially bite the
hand that feeds them, et cetera.

We`re looking at over 100 dead citizens of the Netherlands, we`re
looking at dead Germans and dead French citizens.

Do you think that`s going to change the calculation and the approach
of these E.U. countries?

TAYLOR: I do. I think it will bring it home to the governments and
the people in Europe that this is what they`re dealing with. They`re
dealing with an outlaw that is breaking the law, that has invaded a
country, that has violated the sovereignty, that has annexed part of a
neighboring country.

This will bring it home in a way that was very personal and very clear
to Europeans and I think they will follow the example that the United
States took yesterday of imposing sanctions and, as Mike says, additional
sanctions would be in order.

HAYES: We should also -- it strikes me, Ambassador McFaul, that
there`s two ways to interpret this. Let`s put aside the question of the
culpability for the plane. We have seen essentially a hot war in Eastern
Ukraine between Russian separatists, pro-Russia rebels, and the Ukrainian
government.

It strikes me that there`s an implication that Putin is the mastermind
behind this but also strikes me as possible that these are essentially
actors who are off the leash, as it were, that they are -- that whatever
support they once got from Russia, or whatever supplies they`re receiving,
they are acting essentially on their own volition.

I mean, how possible is that?

MCFAUL: Well, there`s no doubt that there are people that have come
to Eastern Ukraine on their own volition. There`s no doubt that there`s
tension, in fact, between Moscow and some of the separatists. I`ve watched
the video clips of it recently. That is true.

But there`s also no doubt that if Putin wanted to put an end to this,
he could do it in a heartbeat. He could go on national television and say,
I do not support these separatists; they need to lay down their guns and
negotiate with the government and Kiev and that would be the end of this
crisis.

So he may not control what they do in terms of, you know, individual
soldiers and mercenaries coming into Eastern Ukraine, but he most certainly
has a lot of leverage to play if he wants to end this conflict.

HAYES: Ambassador Taylor, is the Ukrainian government -- I mean,
Poroshenko had very strong words, of course, today. This is a very young
Ukrainian government. I mean, it`s two months old, essentially, since the
elections were held.

What is its status right now in the eyes of Ukrainian citizens post-
revolution who aren`t in the separatist East?

TAYLOR: Mr. Poroshenko was overwhelmingly elected; for the first time
in Ukraine`s history he was able to get all of the oblasts, plurality or
majority in every province of Ukraine, east and west.

It used to be that Ukrainian elections would have members of the
society from the East voting for one candidate and from the West another
candidate.

This is not the case this time. Mr. Poroshenko won overwhelmingly.
He has the support of the Ukrainians to follow this action.

HAYES: What the United States, Russia, and Europe do in response to
the crisis next?

Ambassador McFaul, ambassador Taylor, thank you gentlemen, both. Stay
with us.

(COMMERCIAL BREAK)

HAYES: So what`s the next move in Kiev, Moscow and Washington, D.C.?
More on that ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZ.: The separatists could have only gotten
that capability from Russia. And so, therefore, the culpable party here is
Vladimir Putin.

We must, we must react in a stringent fashion because Vladimir Putin
has clearly been fomenting this situation in Eastern Ukraine, even recently
sending in additional troops and additional equipment for the, quote,
"separatists."

(END VIDEO CLIP)

HAYES: Our coverage of Malaysia Airlines Flight 17 continues.

Let`s bring in Julia Ioffe, senior editor of "The New Republic" and
Andrij Dobriansky, executive board member of the Ukrainian Congress
Committee of America.

Julia, I`ll start with you. John McCain has obviously been banging
this drum from before this incident happened today, so it`s not surprising
to hear him say this now.

I just want to -- I do want to play devil`s advocate for a moment,
because there are a lot of people making the circumstantial case this had
to be the Russian rebels.

"The New York Times" reporting on the scene today in an area that is
rebel-controlled shows rebels in that area, essentially cleaning up the
wreckage and betraying at least in the reporting zero culpability or
knowledge of how the plane came down.

How plausible is it to you that this was not the rebels, it was not
the Russians, it was an accident by someone else?

JULIA IOFFE, "THE NEW REPUBLIC": I mean, I think until we know, we
don`t know, right? But I think that that`s really, I think the
possibilities of that are getting slim. Especially if you consider the
fact that the rebels have been bragging about this.

They`ve been bragging that they can bring down planes. And just
today, about an hour before we found out about this Malaysia Airlines plane
going down, the rebels were bragging that they had downed a Ukrainian
military carrier, a cargo plane. People said that no pieces of that plane
had been found; instead what we found was the downed Malaysia Airlines
flight.

HAYES: Is that confirmed?

IOFFE: Wait, and then one other thing is you have the rebels also
bragging that they captured one of these Buk surface-to-air missile
complexes --

HAYES: Right.

IOFFE: -- from the Ukrainian army. They put the statement out
themselves. It was June 29th, not that long ago. The Russian state media
ran with it.

So it`s not like they were -- it`s not like they were pretending that
they don`t have these capabilities. They were very much flaunting these
capabilities. And I`m saying it`s possible that they did this.

HAYES: Andrij, you have been working with folks who have been active
in the Ukraine revolution, now the Ukrainian government.

How do you understand what changed today?

ANDRIJ DOBRIANSKY, UKRAINIAN CONGRESS COMMITTEE OF AMERICA: Well, if
this wasn`t an international airliner, this would be just another Ukrainian
plane shot out of the sky and probably not on the news today, because this
is the third plane that was shot down.

We have a Ukrainian air force officer who`s being held in Russia on
charges of assaulting, attacking Russia and who`s not being given due
process under military law. This has been happening for a while. Even the
date that --

HAYES: Well, planes being shot down has been happening in the last
week, but not before then.

DOBRIANSKY: Well, even --

(CROSSTALK)

IOFFE: No, before that as well.

HAYES: Before that?

DOBRIANSKY: -- even the date that Julia cited, June 29th, if you`ll
recall, the cease-fire was for seven days and it was extended another three
by the president after Western leaders asked him specifically, President
Obama, so it was extended through June 30th.

That June 29th day is during the cease-fire. During that cease-fire
it wasn`t all calm. During the cease-fire there were constant attacks
coming on to the Ukrainian people. What happened after that was that the
Ukrainian people finally fought back.

IOFFE: There was also a plane downed in early June, I believe it was
June 4th. I think that was the first Ukrainian military plane that was
downed. It killed something like 49 Ukrainian soldiers. The rebels took
responsibility for that one.

DOBRIANSKY: Don`t forget May 29th, the Ukrainian general got shot
down in a helicopter with a rocket-propelled grenade. I was still in
country then. That was one of the generals who was training the national
guard at the time.

HAYES: So there is, prior to today, there has been -- and this has
been confirmed, the rebels have bragged about their capability, taking down
planes. They have claimed responsibility for this. They are as of now
denying it. The rebels on the ground are denying it. The rebels through
their spokespeople are denying it. They are saying this was not their
doing.

Andrij Dobriansky and Julia Ioffe, thank you both for joining us
tonight. Really appreciate it.

That is ALL IN for this evening. "THE RACHEL MADDOW SHOW" starts
right now.

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

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