You summed it up here:
"I have this feeling that as I am in a lower position than her she will not listen to anything that I say and I must keep to my rank. To me it feels like I am watching a car crash happening in slow motion. My attempts to stop it is being thwarted. "
Like many people who perceive that they have the advantage of seniority, your CW has a problem with controlling her ego. She lacks humility and the ability or desire to cooperate with other members of the team in order to maintain an amicable working environment. People like this are often deeply damaged having problems with self-worth that need to be assuaged by abusing others in order to feel more powerful.
Your situation is exacerbated by an apparently ineffectual manager/boss who either lacks the insight to see what is happening and/or the leadership ability and moral courage to do something about it. Since you're not in a position to effect change, it would seem that an exit strategy of some form is required for the sake of your own sanity.