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CONNECT THE WORLD

Portugal Asks for E.U. Help; Gadhafi's Options; Libyan Rebels' Frustration; NATO Spokesperson Responds to Rebels; Ivory Coast Turmoil

Aired April 6, 2011 - 16:00:00   ET

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


BECKY ANDERSON, HOST: Welcome to London.

And as John said just moments ago, Portugal's caretaker prime minister, Jose Socrates, has admitted that his country is asking the European Union for financial help. Well, his comments come just hours after his finance minister said that the country would need a bailout. Well, Filipe Garcia is a Portuguese economist.

He joins us now on the line Porto in Portugal.

Your reaction?

FILIPE GARCIA, PORTUGUESE ECONOMIST: Hello. I think Portugal is now facing the reality. For some time now, we have been saying that, well, the Portuguese government was somehow on a denial position, because it was clear to everyone that the country was not able to finance itself at sustainable rates or maturities.

So at this point is what is expected. It was only a matter of time. It's only needs -- it's -- it's needed to say this is probably a temporary bailout request. I mean we will have elections very soon. A new government will step up in June. So I think this request for a bailout is for June only.

Then, with a new government with more power, let's say, we'll be able to negotiate a complete package for the longer-term.

ANDERSON: Filipe, let's just have a listen to exactly what the caretaker prime minister said just earlier.

(BEGIN VIDEO CLIP)

JOSE SOCRATES, INTERIM PRIME MINISTER, PORTUGAL (through translator): The situation is extremely grave for our country. I'm firmly convinced, having gone through every single alternative and after all the contacts that I've made, especially today, that the situation will get worse is nothing else is done.

(END VIDEO CLIP)

ANDERSON: He didn't make it clear at that point whether he was referring to a short-term loan until the country's snap election in June or a fully fledged bailout like the ones Ireland and Greece received.

Filipe, you believe that this is a short-term loan, do you?

GARCIA: Yes, I do, because this is a caretaker government. And our constitution does not allow that long-term measures are taken by the caretaker government. So -- and he mentioned, in a subtle way in this speech, that it would be something in the limits of our constitution.

So my reading at this point is that it will be some kind of a bridge loan until June, a month in which we will have a big -- a big standing because some of our bonds will mature also at that date. And then, with a new government, a complete package might be negotiated.

ANDERSON: OK, Filipe, stay with me.

I want to bring Richard Quest in for some comment on this, as well -- Richard, we just are explaining this story as we get it in here to CNN.

we're looking at a short-term loan for Portugal from the European Union as they hit crisis point there in that country.

Your reaction?

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": The inevitability of today, Becky, came when they had their six month auction today and the rate wasn't over 5 percent. Suddenly, it was simply no longer sustainable for Portugal to continue its financing as it had been.

But frankly, Becky, the length of time it's taken the Portuguese to come to this position is bordering on disgrace. They will blame -- as, indeed, they are -- the prime minister of Portugal, the finance minister, is blaming the irresponsible market for having driven them to this.

The reality is that everybody in the markets has said that Portugal has needed this for a lot longer. Yes, they will get a short-term loan. But the fact is, as your previous guest was just saying, Becky, who's going to negotiate it?

Under what terms?

What austerity measures will they agree to?

It's one thing to say we need help, but Portugal, until now, has refused to necessarily take the measures that the rest of the world is demanding.

ANDERSON: Stay with me, Richard.

Filipe, the rising rates on Portuguese borrowing just adding to the sense of crisis in the eurozone at this point.

How do you expect markets to cope with this news on opening tomorrow?

GARCIA: Well, I think with some relief, at least in Portuguese markets. You see, there was a growing -- a growing risk day by day of a liquidity crisis, a payment crisis. And that was the thing that people were more -- most fearing. You see, not that it was a huge move, but there are reports of some people making banking runs to withdraw their deposits. And this is a -- a sign of despair and fear.

And I think that knowing that the European Union is going to help the country, that will be some -- that will give some relief to the people. So it's a good sign.

ANDERSON: Richard, what does it say about the wider European picture at this point?

QUEST: It's a calamitous situation. Just think, Becky, in the next few hours, the ECB is going to meet in Frankfurt and the first rate rise is expected. You have growth rates of 2 point something percent for Germany. You have Ireland virtually in recession. The measures that Greece is taking has pushed it into recession. And I suspect once the full scale Portuguese government is reaffirmed, then they will also have to take strong measures that could well push Portugal back into a recession.

The core question that people are asking -- and they're asking openly -- is when there will be a dose of realism.

When will these countries recognize that there has to be a restructuring of their debt, however it's dressed up?

That's the big unknown at the moment -- Becky, whether it's Greece, Ireland or Portugal, pouring money into those countries is not sustainable.

ANDERSON: Filipe, tough times ahead?

GARCIA: Well, in a way. But at this point, we have to balance the pros and cons of getting help. Of course it's not good for growth, because these austerity measures that are lying ahead will be hard. It will be in -- imposed. And they -- they won't promote growth.

And, actually, it will be difficult to us to return to the markets again. And, of course, there is some reputation issue around here.

But let's face it, at this point, the most important thing is to avoid a liquidity crisis, a bank run and a contagion to the rest of the eurozone.

So not speaking on a broader perspective, only on a -- on a narrow perspective, these are the news that can relieve the market -- relieve the markets for the short-term.

ANDERSON: Richard, what sort of message does this send investors outside of the European zone about what's going on here?

QUEST: It tells them that Europe still has not got to grips with this sovereign debt crisis. Your guest is right, it's a liquidity crisis. But it's also a solvency crisis in some of these countries. And the fact is, there is a transference of wealth now taking place from the rich Northern countries to the Southern countries, that those have to reform.

And, Becky, when interest rates go up tomorrow, as most people expect, from Jean-Claude Trichet, then that debt becomes bigger, the pain becomes greater and the countries like Germany and those wealthy northern countries of Europe will have to foot the bill.

ANDERSON: Richard Quest, we thank you for that.

Filipe, we thank you from Portugal this evening.

CNN's John Defterios joins me now in the studio for more on the situation in Portugal and what it means for Europe, and, indeed, the world at this point.

Let's just bring you up to date.

I know you've just walked in, in order to have this discussion with me.

This is a short-term loan, not exactly what we saw for Greece and Ireland, which was a full scale bailout, of course. This is a short-term loan ahead of these snap elections on June the 5th. But it's a loan all the same.

JOHN DEFTERIOS, HOST, "MARKETPLACE MIDDLE EAST": Well, it is the -- the third hurdle to cross here, because we went through Greece first, then Ireland right after that, Becky. And they're trying to buy time between April, when the first payment is due, and then the next one in June. And, hopefully, as the caretaker government moves into a full-time government, to buy some time.

I mean it's fair to say, we've been calling, you know, basically crawling this wall of debt since the Greek crisis. And it's a box, because they're dealing with a very strong euro vis-a-vis the British pound right now and the U.S. dollar. So these economies can't get out of the pinch very quickly.

I just did an interview with the Greek finance minister, Papaconstantinou, last weekend. And he's trying to say that we're going to mark the bottom of the economic cycle by the end of 2011 and hopefully move into a growth period in 2012, which will pick up the revenues. But it's not an easy game to play right now, because the euro is so strong and the recovery in the West is not that strong, as well.

So Portugal is trying to buy this time near-term with the government collapsing and hopefully they can get a -- a loan now.

And you call it a bailout for the month of June before the ECB steps in.

ANDERSON: I just checked the euro before I came in. It is about .75 of 1 percentage point up against the dollar today. You know, we know that traders tend to sort of sell on the rumor and buy on the fact.

DEFTERIOS: Sure.

ANDERSON: The fact that they know this is now going to happen may -- may have affected it. But as you say, it's a very, very strong currency at the moment, not doing anybody any favors.

What can we learn from the Greek and Irish bailout and post-bailout austerity plans that a country like Portugal might pick up on at this point?

DEFTERIOS: Well, it's quite interesting, because the package that was put together by the -- the European members of the European Union recently, at the meeting -- the summit in Brussels, immediately was rejected by the financial markets. So they were saying basically after 2013 -- so we're going to get through this crunch between 2011 and 2013 with the existing mechanism. After 2013, the private sector will have to play a bigger role.

And that was interpreted near-term in the markets as that the private investors were going to have to take a hair cut and bailout countries like Portugal, near-term; Greece, recently; and, of course, Ireland more recently than Greece.

So it raises the big question mark, is the long-term strategy for the Europeans right now on par, because most didn't interpret this 700 billion euro bailout package that was put up at the European Summit as a valid one long-term, because the debt load is so heavy.

So the lessons learned here is where is the growth going to come for the periphery of Europe and that we're looking here now at Portugal, obviously; Ireland; Greece; potentially Italy; and Spain in the near-term.

ANDERSON: The ECB won't have wanted to take this call tonight.

DEFTERIOS: That's for sure.

ANDERSON: They're looking at (INAUDIBLE)...

DEFTERIOS: I'm on my way to Frankfurt tomorrow so.

ANDERSON: Well, ask them about it.

DEFTERIOS: Yes.

ANDERSON: I mean they're looking to raise rates tomorrow. The euro already strong. And raising rates to fight off inflation, of course, is -- is going to kick the euro even higher at this point, not doing anybody any good.

DEFTERIOS: Yes, this is always the discussion, as you know, about the two speed Europe, is it German-French monetary policy that's driving its way here or the collective members of -- of the euro right now?

ANDERSON: Right.

DEFTERIOS: And this is the big debate. If you're raising interest rates in this sort of environment, it does one thing. It's going to strengthen the euro. But it's going to slow down growth, because we see the inflationary numbers. And with oil in the range of $100 to $120 a barrel, this range we've been for the last three months, putting additional pressure, not only on energy prices right now, but food prices, because it feeds right into that.

So for countries like Portugal, asking for a break April and June; for countries like Greece, who have gone through this in the last 12 months; and Ireland; this is the last thing they need, is higher interest rates.

ANDERSON: If you're wondering why John Defterios is with me here in the studio, I'll explain if you weren't with us at the top of the hour.

John, thank you very much, indeed.

DEFTERIOS: Thank you.

ANDERSON: Breaking news for you this hour out of Portugal.

Just moments ago, Portugal's caretaker prime minister, Jose Socrates, has admitted that his country is asking for the European Union -- he asked the European Union for financial help. His comments come just hours after his finance minister admitted that the country would need a short-term bailout.

John, thank you for that.

DEFTERIOS: Um-hmm.

ANDERSON: Back here with us in the studio after this short break.

(COMMERCIAL BREAK)

ANDERSON: You're back with the normal programming here on CNN and CONNECT THE WORLD.

I'm Becky Anderson in London.

Well, a former U.S. congressman has arrived in Libya and says that he hopes that he'll meet with Moammar Gadhafi later today in an attempt to break the deadly stalemate between government forces there and opposition fighters.

Well, Curt Weldon has been to Tripoli before. He led a Congressional delegation there in 2004 to meet privately with Gadhafi and support his decision to give up his nuclear weapons program.

But this time, the stakes could be higher.

Libyan rebels are suffering setbacks on the battlefield and growing increasingly critical of NATO, urging the organization to do more to protect civilians from Gadhafi's forces.

Meanwhile, the NATO campaign does appear to be having at least some effect on Gadhafi himself. The Libyan leader has written a letter to U.S. President Obama, begging him to stop the NATO bombing. He, though, did not offer to step down or negotiate.

So, if Gadhafi is not willing to compromise, what options does he have?

CNN's Nic Robertson is in Tripoli and he joins us now live -- Nic, what have you got this hour?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Becky, Gadhafi and his regime still think they have a lot of options at their disposal on the battlefield here. They're not being beaten back by the rebels. Quite the opposite. They've taken territory and they are perceiving, as the rebels are, that the NATO bombing campaign against their military isn't going on as full force and hard force as it could be right now.

But, this government is desperate for international contacts, for international -- some kind of international diplomacy right now. So Curt Weldon, the former U.S. congressman, arrives at a time when the government here has, A, invited him in, but is, B, desperate to meet people like him and build some international contacts.

And what Mr. Walden is saying that he will do here, number one, is tell Mr. Gadhafi he has to step aside.

(BEGIN VIDEO CLIP)

CURT WELDON, FORMER U.S. CONGRESSMAN: I think I'm one that can tell him that because he knows the work that I've put into building a stable relationship with Libya. It's not been a perfect effort and there are many things that we should have done and could have done better over the past six years that I regret and things I could have done when I was in the Congress.

But it is what it is. And now is the time to -- to basically put the word directly to him, which no American has done. And I'm prepared to do that face the fact and say, leader, it's time that you step aside.

(END VIDEO CLIP)

ROBERTSON: But he's doing more than that, as well. He said he's come with a list of proposals -- proposals that include a cease-fire, that the Gadhafi government pulls its troops out of key cities, that the rebels stop their advances, proposals that include the possibility of some kind of interim administration that shares power between the prime minister here and the -- and opposition leader Jalil on the -- on the east of the country and other proposals, as well.

But there is absolutely no indication that he will have the political ability to make those carry through in the United States, that Moammar Gadhafi will accept any of this or that the rebels would sign up for any part of it -- Becky.

ANDERSON: And as far as I understand, it's unclear at this stage -- Nic, thank you for that -- whether the former U.S. congressman has actually been in touch and has seen Gadhafi.

As we get more information on that trip, of course, we will bring it to you, an important one this hour in Libya.

Well, we just want to bring you up to date on who is controlling the major cities in Libya right now.

This is how things stand.

As you can see from this map, Gadhafi's regime controls the western part of Libya, including the capital of Tripoli. The rebels are holding onto the cities of Ajdabiya and Benghazi in the east.

But what's interesting is the rebels actually had a stronger position last week. They weren't able to push further west and on March the 28th, they controlled El Brega, Ras Lanuf and Sirte.

But Gadhafi's forces have since battled back and retaken those cities.

Well, opposition leaders in Libya have set up their criticism of NATO in recent days, saying it's not doing enough to protect civilians and warning the city of Misrata will soon be destroyed if NATO doesn't act.

CNN's Ben Wedeman reports on their growing frustration.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Anti-Gadhafi forces continue to take a pounding in Eastern Libya. Yesterday, we saw them being pushed back 40 kilometers, 25 miles, from Brega to about halfway between Brega and Ajdabiya.

They say it's been days now since there was any sort of coalition or NATO air strike against Gadhafi's forces. This, despite the fact that Abdel Fatah Younis, the head of the opposition army, says that they give NATO regular updates on the positions of Libyan forces in this part of the country.

NATO says one of the problems is the weather is not ideal for air strikes. But even though today is cloudy, by and large, visibility is good.

Another worry of NATO is that many forces are hiding among civilians. But the opposition argues there's still the supply lines that are easy targets for those aircraft.

And, of course, they'll point to things like this. This is a tank outside of the town of Ajdabiya that was hit two and a half weeks ago by French aircraft.

And this area is scattered with similar examples of what NATO could do if it had the will to do it. But the Libyan opposition is saying they're worried that will just isn't there.

I'm Ben Wedeman reporting from outside Ajdabiya in Eastern Libya.

(END VIDEOTAPE)

ANDERSON: Well, you heard what Ben said.

NATO responding to those claims.

And here's what the spokesperson told me when I spoke with her earlier by phone today.

(BEGIN VIDEOTAPE)

DANA LUNGESCU, NATO SPOKESPERSON: There is no reason for the people of Misrata to lack confidence in NATO operations, because we very well know that they are in a -- in a desperate situation under attack systematically by the Gadhafi forces.

ANDERSON: What's next?

LUNGESCU: Well, we will continue to intensify that campaign over Libya. We will continue to do our mission, to fulfill that U.N. mandate, which is to protect the people of Libya from attacks.

But, of course, NATO is not alone. This is not just a military campaign. There is not just a military solution to the crisis. There has to be a political solution at the end of the day. And we all want it to be sooner rather than later.

NATO is part of the broader international effort for -- to achieve the protection of the people of Libya and a quick transition to democracy, which is what they want.

ANDERSON: Your message to the people of Misrata tonight, and, indeed, the Gadhafi regime?

LUNGESCU: Our message to the people of Misrata is you are not alone. You are our number one priority. We are doing our utmost to help protect you against the systemic and now traitorous attacks from the Gadhafi regime.

(END VIDEO TAPE)

ANDERSON: All right. Here's the message from NATO tonight.

Just a short time ago, I spoke with the Libyan opposition spokesman here in London, Guma El-Gamaty.

And I asked him if that message was enough to satisfy the opposition.

(BEGIN VIDEOTAPE)

GUMA EL-GAMATY, LIBYAN OPPOSITION SPOKESMAN: Well, that sounds good. But what we really need is action on the ground. These Gadhafi tanks and multi-rocket launchers and heavy artillery are not minute things. They are very easy to spot. And we've seen very -- quite a precision targeting recently in Ajdabiya and Benghazi.

So those heavy armor really need to be taken out to prevent them from shelling the city of Misrata and killing civilians in tens and hundreds.

ANDERSON: Guma, do the opposition feel slightly let down by NATO at present?

EL-GAMATY: We do over the last few days. We've noticed a dramatic downgrading of attacks. We've -- we've noticed a lull. We've noticed that Gadhafi's forces have been allowed to get away with shelling Misrata, shelling Zintan and Kikla and other places in the western mountains. And even going to attack oil fields yesterday. These oil fields have had hundreds of -- of people working there. And they -- and one of them have been put -- put on fire.

So they have not been quick to respond at all.

ANDERSON: What are you hearing on the ground this hour?

EL-GAMATY: Becky, just before I came into the studio tonight, I had a call from Tripoli. And I could hear it myself. There is very heavy firing going on in Tripoli near the seaside. And there are no aerial attacks. But this heavy firing looks like people are firing at each other in Tripoli. We don't know whether it's two armed groups are turning against each other, whether there's some sort of a small rebellion in Tripoli against Gadhafi's forces.

But I'm sure the following few hours will make it clear.

ANDERSON: OK. Well, the fighting continues.

Meanwhile, I know that you have appealed to the British government to free up what are some frozen assets here.

EL-GAMATY: Yes, we have, because in the east region of Libya now, when we have a new Libya central bank. And we have a lot of people, nearly two million population, who need to be paid wages, salaries to be paid, basic amenities to be paid for. And yet we have about a billion dinars worth of Libyan currency held here in Britain. The British government stopped it from being shipped back to Gadhafi.

We are asking the British government to release some of that to be used by the new Libya central bank.

ANDERSON: We've got a reaction to that from the FCO (ph) here today.

They said -- and I quote -- "We are aware of statements made by the opposition that they are running out of money and we are looking into all options with international partners to meet the humanitarian needs of the Libyan people."

It's not everybody has recognized the National Council as the representative of Libya today and going forward.

EL-GAMATY: Well, maybe officially. But in reality, they are. Britain now has got a diplomat based in Benghazi who is engaged with the interim council. So -- so that is -- to us, that is an effective recognition. So there is an open channel, a diplomatic channel. And -- and there has been a lot of engagement recently at the highest levels.

So we don't see any problem with that.

(END VIDEO TAPE)

ANDERSON: Well, the very latest on Libya for you here on CNN.

You're watching CONNECT THE WORLD.

I'm Becky Anderson in London at 25 minutes past 9:00.

When we come back, defiance and desperation -- we're going to look at the battle to expel Laurent Gbagbo from the Ivory Coast. The forces loyal to this internationally recognized reveal storm his stronghold.

And a Koran burning in the U.S. ignites outrage on the other side of the world. Why Afghanis are so upset at the actions of the pastor of a tiny group in Florida.

(COMMERCIAL BREAK)

ANDERSON: Welcome back.

Now, a so-called final assault to capture the self-declared president of Ivory Coast has apparently failed. Laurent Gbagbo's troops have reportedly repelled an attack on his residence in Abidjan today. Forces loyal to his rival, Alassane Ouattara, stormed the compound but came up empty-handed.

Gbagbo is believed holed up in a bunker inside.

Well, fighting is still underway elsewhere in the city between supporters of Gbagbo and Ouattara, the internationally recognized president of the country.

The U.N. says its attack helicopters could soon resume operations there.

Well, the United Nations says the crisis is threatening the stability of the entire region of West Africa.

Valerie Amos, U.N. undersecretary-general for humanitarian affairs, has just visited Ivory Coast.

And she joins us now on the line from New York to tell us what she saw.

Valerie, what is the situation on the ground as you saw it?

VALERIE AMOS, U.N. HUMANITARIAN AFFAIRS: Well, thousands of people are fleeing for their lives. I was in the west, where I saw homes burned, evidence of huge amounts of looting, people extremely fearful. I visited a site where over 200 bodies have been found in a very tiny grave where I was visiting.

So, clearly, there is a huge humanitarian crisis. We need to support people with food, with water, with shelter. But we also have to deal with the fact that the violence is being perpetrated against innocent civilians. It's absolutely critical that this violence stop.

ANDERSON: How concerned are you about revenge killings going forward?

AMOS: This is something that was raised with me. I don't have evidence of that. The U.N. is investigating these actions of mass killings. As I mentioned, I saw the site where 200 bodies have already been found. And there are other sites where there are more bodies.

The conflict is also having an impact on the region. I visited Liberia. Over 120,000 people displaced there and others displaced into Ghana and elsewhere.

So, clearly, reconciliation will be a huge issue, making sure that people have access to humanitarian aid. And I'm talking to my colleagues about really ramping up our efforts in this regard, talking to our donors. We'll need more money.

But crucially, the people of Ivory Coast want peace, they want stability and they haven't got it.

ANDERSON: On the brink, but peace seems still some distance away. Gbagbo is still holed up in his presidential palace and troops loyal to this reveal appear to be trying to oust him from there.

Valerie Amos, we thank you for joining us this evening with the very latest on the ground there in Ivory Coast.

Coming up here on the show, the actions of one American have outraged millions of Afghans, triggering deadly riots. Terry Jones didn't represent the U.S. government when he burned the Koran or even the American people, but for many Afghans fed up with a US-led war, it was simply the final straw.

(COMMERCIAL BREAK)

ANDERSON: Well, you're back with CONNECT THE WORLD here on CNN. I'm Becky Anderson in London for you. Coming up, an act that got very little attention in the US but has aggravated the Muslim world, and thousands of people are voicing their outrage on the streets of Afghanistan.

A well-known place with a little-known problem. Singapore has no source of drinking water it can call its own, but now it's come up with a create solution to reuse its own waste. It's part of a special series of reports for you this week.

Plus, the honeymoon from Hell. If you think the worst travel experience you've ever had was bad enough, it won't come close to this. We're going to speak to the couple who lived through -- well, it was a nightmare -- a little later in the show.

Those stories ahead in the next 30 minutes here on CNN. First, a quick wrap of the headlines for you.

Portugal's caretaker prime minister says he's asking the European Union for financial help. Jose Socrates said the government had no choice. He said the political crisis that prompted him to call snap elections two weeks ago had weakened the country even further. If granted a bailout, Portugal would become the third European country to do so after Greece and Ireland.

Well, questions over whether the self-declared Ivorian president will surrender and where he is. Forces loyal to the country's internationally- recognized president have stormed Laurent Gbagbo's palace, but he came up - - they came up empty-handed.

Libyan rebels suffered setbacks on the battlefield on Wednesday as a former US congressman arrives in Tripoli expecting to meet with Moammar Gadhafi. Curt Weldon says he will tell the Libyan leader to his face that it is time to leave.

A desperate search continues for survivors of a capsized boat in the Mediterranean. Forty-eight people have been rescued, but about 150 are missing. The boat capsized near the island of Lampedusa. The passengers are believed to be of Tunisian descent.

And Tokyo Electric officials say radiation levels are dropping off in the seawater around the Fukushima Daiichi nuclear plant, and it happened even before workers plugged a leak of radioactive water at one of the reactors.

And finally, the highly-anticipated trial of Italian prime minister Silvio Berlusconi began on Wednesday. It lasted all of ten minutes before being adjourned until the end of May. Mr. Berlusconi is accused of having sex with an underage prostitute and abuse of power.

Those are your headlines this hour.

Condemning an explosion of violence and the act that triggered it. The leaders of the US and Afghanistan spoke out today about the burning of a Koran that led to a wave of deadly protests. Barack Obama and Hamid Karzai held a video conference saying now is the time to come together after the desecration of a Koran by a US pastor ignited anti-American rage.

At least 24 people have been killed in Afghanistan in recent days, including seven United Nations employees, killed when angry demonstrators stormed a compound in Mazar-i-Sharif.

Terry Jones, the pastor of a small Florida church, who burned the Koran last month says he regrets the deaths but not his actions. He says he put the Koran on trial and found it guilty of inciting terrorism and violence.

Well, it took a while for news of the Koran burning to filter to Afghanistan, but many ordinary Afghans were still unaware of the incident until President Karzai publicly condemned it, some say fanning the flames of a potentially explosive situation. Nick Paton Walsh is following the story from Kabul. Nick?

NICK PATON WALSH, CNN CORRESPONDENT: Yes, good evening, Becky. We are expecting more protests tomorrow. Hearing organizers talking, they have up to a thousand students gathering at a pretty significant mosque here in Kabul, really a sign of how this anger here is continuing.

We've been speaking to some of the Afghans here about generally how they feel about this situation.

(BEGIN VIDEOTAPE)

(CROWD SHOUTING)

WALSH (voice-over): Flames of anger in Afghanistan engulf a Christian cross. The effigy also burnt here in Nangarhar was that of Florida pastor Terry Jones, torched, just like the Koran he put on mock trial. Various insults exchanged as the fury still rages.

At Kabul University, these students gathered to make Tuesday the fifth straight day of protest. Among those urging them along was this senior cleric. He told us Muslims deplored violence and it was America who'd brought violence here.

MAULVI HABIBULLAH, FORMER LOCAL COUNCIL CHIEF (through translator): "Maybe Terry Jones is not the main reason for this action," he says, "but the Americans are using him as a tool."

WALSH (voice-over): Jones was condemned by Afghan president Karzai last Thursday. The next day, protesters in Mazar-i-Sharif besieged the United Nations compound, attacking foreigners, none of them Americans, and killing 12 people.

And then, in Kandahar, they clashed with the police for two days, and still it goes on.

WALSH (on camera): This is really isn't the fundamentalist fringe. Ordinary Afghans are furious. They've already endured a very long NATO campaign, and the civilian casualties, of course, and the fact it hasn't really improved ordinary life much here at all.

And now, an American has burned their most sacred book. To many, it's really the final crude insult.

WALSH (voice-over): In makeshift dormitories live university students in Kabul to learn, to become the bright future NATO wants here. But in their dark, cramped home, to one, the violence in Mazar-i-Sharif is justified.

"Yes, it's good, as they want to destroy Islam," he says. "People should react so it doesn't happen again."

Another disagreed, but still blamed America. "The impression I get of America is a country that doesn't have control of itself," he says, "where people disrespect religion."

Here, President Obama's condemnation of Jones counts for little, many asking why America let this happen unless it was looking to offend.

(END VIDEOTAPE)

WALSH: Well, really, this couldn't have come at a worse time for the NATO campaign. Remember, in about three months, the US wants to start pulling its troops back. But instead of trumped in the successes they claimed they've had in handing the country back to the Afghans, they have this continuing protest on one side which, frankly, many officials just wish would go away. Becky?

ANDERSON: Nick Paton Walsh for you in Kabul, tonight. Thanks, Nick.

Well, the controversy comes at a critical juncture for the US-led mission in Afghanistan. The war has slipped from the headlines recently, eclipsed, of course, by the Middle East revolutions and disaster in Japan. But we want to take stock for you of where things stand ahead of that important transition.

The US makes up the majority of NATO-led forces in Afghanistan, which currently numbers about 130,000 troops from 48 nations. President Barack Obama has said he'll begin withdrawing some of the 100,000 US troops in July 2011. That same month, Afghan forces expected to begin taking over security in seven areas, including Kabul.

Well, US troops are now focusing much of their efforts on training Afghan soldiers and police, the goal, to have all foreign combat troops out of Afghanistan by 2014.

Some say the Koran-burning comes at the worst possible time for building the future of Afghanistan. For more on the implications of all of this, let's bring in your expert on the subject, tonight. Stephen Biddle is a senior fellow at the Council on Foreign Relations.

That's probably the understatement of the decade, in fact, isn't it?

STEPHEN BIDDLE, SENIOR FELLOW, COUNCIL ON FOREIGN RELATIONS: Well, the situation is volatile, yes, I think that's a safe assessment.

ANDERSON: How are things going in Afghanistan?

BIDDLE: Well, I think with respect to security, especially in the south and the east, where security has been worst, they're substantially improving. They're a long way from what most civilians would consider safe, but they're substantially more secure than they had been, for example, a year or two years ago.

There's been some deterioration in parts of the north and the west, but the scale of the deterioration there has been much more than offset by the scale of improvement in the south and the east.

Now, the security dimension of the campaign is only part of what we need to do if we're eventually going to get an acceptable outcome. There also has to be a substantial change in governance that will do a better job of aligning the public's preferences with what their government can do for them. That's lagging behind.

ANDERSON: What do you think, Stephen, that acceptable outcome is at this point? And is it much downgraded from that which the Americans would have hoped, say, two, three years ago?

BIDDLE: Well, the Bush administration had very, very ambitious goals for Afghanistan. They wanted what would, if it had been realized, had been the most centralized government, at least on paper, on the face of the Earth.

I think this administration is substantially less ambitious for what it wants out of Afghanistan. Nonetheless, it can't accept just anything. At a minimum, it needs an Afghanistan that cannot be a threat to its neighbors and cannot be a threat to the West. That doesn't require as much as President Bush wanted, but it does require something important.

ANDERSON: Talking about what the States wants out of Afghanistan will, frankly, insult many people who live in Afghanistan who say, "What about us? What about what we want, here?"

Nick's report really reflecting the fact that, even in an area like Kabul, in an urban area like Kabul, people will tell you things aren't getting better, they're getting worse. And that is where things are better than they are elsewhere.

BIDDLE: Well, I mean, in terms of assessing the trend and the situation, I think the view in Kabul has a certain hothouse quality of a lot of people listening to one another talk. I think in objective terms, security in the south and the east is better and the north and the west is mildly worse.

The more important question that you raise is the issue of, is what Afghans want for their country with what the West wants for their country? I think, in fact, it is, but the way we often talk about it in the West implies that, to many Afghans, that it isn't.

When they hear us talk about we don't want Afghanistan to be a base for al Qaeda to attack the West, many Afghanistans think that, therefore, all we want for Afghanistan is the ability to fly around at 10,000 feet and drop bombs on terrorists, which enables an ongoing, continuous, chronic war in their homes.

That's not, in fact, sufficient to meet Western interests in the country --

ANDERSON: Stephen, very briefly --

BIDDLE: -- it is not what I think the United States government wants for Afghanistan.

ANDERSON: Right. Very briefly, because we're running out of time. The US backed the wrong man, didn't they? They backed Karzai. He was the wrong man. Should we face that at this point?

BIDDLE: We want democratic rule in Afghanistan. If the people want Hamid Karzai and he wins an honest election, then it's Hamid Karzai. He's got term limits that he has to confront. We need to work within the Afghan constitution to get a solution that Afghans want.

ANDERSON: All right. With that, we're going to leave it there. We thank you very much, indeed, for joining us with the very latest on what's happening in Afghanistan, a story that has been slightly ignored, given the heavy news remit of late. Stephen, we thank you for that.

You're watching CONNECT THE WORLD here on CNN. One of the most precious resources for human survival, of course, is clean water, but it's increasingly scarce. Up next, our Urban Planet week continues with a look at how Singapore is making sure that it doesn't run dry.

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ANDERSON: Cities around the world are bursting at the seams, and they're not slimming down any time soon. In fact, the United Nations says that by 2050, two thirds of us will live in urban areas.

A special series of reports this week on this show, Urban Planet, kicking off in Rio de Janeiro with a look at how the city there is looking after its elderly population. One center dubbed "granny daycare" is giving residents back their zest for life.

In Kibera, Nairobi, a new project helping the resident's of Africa's biggest slum, a community cooker turning rubbish into a resource, cleaning up the streets and providing food.

Water is a precious resource for any crowded city. For Singapore, it's even more important. The tiny city-state has no natural fresh water supply, but the government is working hard to change that. This report from Liz Neisloss.

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(CROWDS CHEERING)

LIZ NEISLOSS, CNN SENIOR CORRESPONDENT (voice-over): Greeted like a rock star, the father of modern Singapore, Lee Kuan Yew, makes fewer public appearances these days, but he came to open a new park on a local canal, a sign of the importance Singapore places on water.

A small, densely-packed urban island of 5 million people, Singapore has no native fresh water. Faced with that challenge, Singapore came up with a plan to integrate four other sources. Up to 250 million gallons a day can be piped in from neighboring Malaysia, but Singapore wants to reduce its dependence by raising other supplies.

So, it looks to the sea. Singapore currently gets 10 percent of its water through desalination, the most costly method of obtaining water, the government is experimenting with ways to reduce energy desalination requires.

It looks to the sky. Rain is caught and funneled into the water supply through a network of drains, canals, and reservoirs.

NEISLOSS (on camera): Right here in downtown Singapore, this recently-built reservoir brings the government's active approach to water management literally center stage. This is the most urbanized of Singapore's reservoirs, and it's part of an overall plan to have two thirds of the islands entire land area capturing rainwater.

NEISLOSS (voice-over): Bordered by skyscrapers, Singapore is transforming this reservoir into a major attraction for locals and tourists.

UNIDENTIFIED MALE: Water molecules, H2O, will pass through.

NEISLOSS (voice-over): And this touring school group came to learn about what could eventually be their biggest source of water, the water they've already consumed.

Singapore is turning sewage water into new water. A massive pipe system channels the flow of sewers into new water plants. Now, as much as 30 percent of the water supply, Singapore wants to make it 50 percent. For now, the majority of this water goes for industrial use.

But Singapore says the purity exceeds its own drinking water standard and is getting the word out drink by drink.

Whatever the source of water, Singapore wants to reduce demand, with no free water, a two-level tariff for both homes and businesses discourages high use.

YAP KHENG GUAN, SINGAPORE WATER AGENCY: We have ample supply of water because of the four different sources of water that we now have. We do want people to realize that this doesn't come easy. It comes at a price. And we do want people to understand the preciousness of water.

NEISLOSS (voice-over): Singapore says keep it clean, conserve it, but go ahead and splash in it.

YAP: If you don't squander it, you'll value it and cherish it. It actually offers a lot of value to every one of us, here. And that's the kind of thing that want, Singaporeans here to know water for what it is.

NEISLOSS (voice-over): Liz Neisloss, CNN, Singapore.

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ANDERSON: And tomorrow night, we're on to the heart of Mumbai, Asia's largest slum, to be precise. You may well recognize Dharavi as the place where the film "Slumdog Millionaire" was filmed. What you, perhaps, don't know is that it's the hub of Mumbai's recycling business.

Now, there are plans to raze the shantytown and build a city on the site. So, tomorrow, we look at the controversial plan as our Urban Planet week takes us to India.

You're watching CONNECT THE WORLD here on CNN. I'm Becky Anderson in London. It's Champions League quarter-finals at night -- second night in Europe. We're live at Stamford Bridge after the break, where Pedro Pinto is standing by to bring us the very latest from an all-England clash. It's Chelsea versus Manchester United after this.

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ANDERSON: All right, it's quarter-finals night in the Champions League, and we've just had a mammoth first-leg match between English rivals Man United and Chelsea. CNN's Pedro Pinto can tell us more about it. He's at Stamford Bridge, where the game was. It's here in London. What happened?

PEDRO PINTO, CNN SPORTS CORRESPONDENT: Well, Becky, I have to tell you, it's advantage United after they beat Chelsea here at Stamford Bridge one-nil.

It's the first victory from United over Chelsea here at the Bridge since April of 2002. And I guess you want me tell you whether they deserved it. I really don't think they did. I think a draw would've been a fair result.

There were chances on both ends, even though only one goal was scored, it was a very tense, a very intense, and a very close game, as you would expect, most of the matches between these two sides are.

This was a rematch of the 2008 final in Moscow. Chelsea was all about revenge, that was the talk leading up to this game, but they didn't get it. The only goal was scored by Wayne Rooney in the 24th minute after a great pass from the veteran Ryan Giggs. He keeps doing the business, even though he's nearing 40 years of age.

A big victory for Sir Alex Ferguson as he looks for his third European Cup. He won in 99, won in 2008, looking for a third one this season.

Becky, in the other game this evening, I have to tell you that Barcelona did what most of them -- what most of us expected them to do. They thrashed Shakhtar Donetsk five-one at the Camp Nou. They are still the favorites to win the trophy this year.

ANDERSON: Good stuff, thank you for that. So, the first rounds are done. We look forward to the second leg. Thank you for that, Pedro.

Now, finally, we've got a story for you that you just couldn't make up this evening. It begins with the ultimate honeymoon. This Swedish couple, Erika Svanstrom and Stefan, together with their baby girl, Elinor, took this trip. Let me show you.

They started off on their honeymoon, it was a lifetime -- trip of a lifetime, starting off in the winter wonderland of Munich. From there, they traveled halfway across the world to here, to visit the Indonesian island of Bali for some sun, surf, and sand.

Well, of course, Australia isn't far away, so they planned a trip there. They thought they'd head, first, to the beaches of Perth, and then it was across the country to some of Australia's sunshine here in Brisbane. And then, from on -- from there, onto this little beauty in Cairns.

Now, they also thought, well, while they're at it, let's get down to New Zealand, see what's going on there. Part of the holiday was in Christchurch. And then, well, they thought, we're over in this part of the world, so we'll close out and get a real cultural experience. They set their sights on Tokyo in Japan.

Well, where am I headed with all of this? Let's speak to them, see how they did on this honeymoon. Because as you can imagine, the twist in all of this tale is that it didn't go according to plan. To tell us all about it, the Svanstroms are now with me from Stockholm. What happened?

STEFAN SVANSTROM, UNLUCKY HONEYMOONER: Well --

ERIKA SVANSTROM, UNLUCKY HONEYMOONER: What didn't happen?

STEFAN SVANSTROM: What didn't happen? Disasters followed us during the way. The first night, we got stuck in Munich because of the major snowstorm over central Europe, and that was just the start of it.

ANDERSON: So, snow, stuck in Munich, you think, oh, this is -- this isn't going well. But it's a honeymoon, so keep going. You got to Bali, what happened?

STEFAN SVANSTROM: Well, in Bali was the monsoon season, so we got stuck in the rain for a couple of days and it was just pouring down. It's the season, I guess. We could have looked it up better. But worse was yet to come.

ANDERSON: Elinor (sic), what happened?

ERIKA SVANSTROM: Well, we moved on to Perth. Everything was safe and sound, but then, signs started to come up that it was a cyclone warning, and also, the same day as we left, there were bush fires starting.

ANDERSON: All right. So, what happened after that?

ERIKA SVANSTROM: Well, we flew into Cairns, actually. We got there before we got to Brisbane, and everything was starting out fine, but we went to dive on the Great Barrier Reef, our big dream, and then, the day after, we were there for two days, and then, we got evacuated, actually, the whole family.

STEFAN SVANSTROM: Yes. That was --

ANDERSON: Were you still in love at this point?

(LAUGHTER)

ERIKA SVANSTROM: Yes, with each other, but not with the weather.

ANDERSON: All right, well, this honeymoon wasn't going well. I know there was a lot of planning in it. But that wasn't the end of it, of course, was it? It got worse.

STEFAN SVANSTROM: Yes, it got worse. We got a phone call just going to New Zealand from Erika's mom wondering, "Are you in Christchurch? Are you going to Christchurch? Are you alive?"

ERIKA SVANSTROM: This was on -- sitting on the flight, just leaving to go and take off for New Zealand.

ANDERSON: Because, of course, what happened there?

STEFAN SVANSTROM: Yes, that was that big earthquake in Christchurch at the same -- it just happened hours before we got to New Zealand, so, actually, we had to change our plans a bit. Couldn't go into Christchurch, obviously.

But that was not the end of it, because we still had Japan.

ERIKA SVANSTROM: Yes.

ANDERSON: What happened?

ERIKA SVANSTROM: What didn't happen? Japan -- we were there a couple of days. We went to Asaka, that's north part of Tokyo, and some elderly ladies in the restaurant started to speak in Japanese to us -- we don't speak Japanese -- pointing to the door and making moves to go out. And we just followed them because we had felt little shakes all day.

Five seconds later, everything started to shake really, really bad.

ANDERSON: We're looking at some video that you've sent us. Let's just -- let's just have a listen to this, or we'll certainly watch it. Where was this video shot?

STEFAN SVANSTROM: It was shot in the north of Tokyo. It's quite far from the epicenter, but obviously this was not a regular earthquake, and we pretty soon realized that the Japanese there looked actually very terrified in the video. So, we realized that this was something big. It was quite shaky, as I remember it.

ANDERSON: I mean, this is -- this has got to be the honeymoon from Hell, of course. Many of these places that you went to, frankly, people have suffered inordinately there from many of these natural disasters.

Has it made you feel like you're sort of -- you want to go out and do some humanitarian work in the future, possibly? That might be a honeymoon option going forward if you were to re-do this trip.

ERIKA SVANSTROM: We're just grateful we didn't have to do any humanitarian work on ourselves, but -- yes. You feel very much with the people living there, and so -- and you see them, and you see how the Japanese people feel for the people in the north and so on.

And so, in some ways, yes. And in another way, just being there and traveling around and so on makes things easier for the Japanese people, as well, because -- well, in some ways, it just helps them out to keep everyday life stay on.

ANDERSON: We're going to have to leave it there. We -- we're so sorry that the trip was so awful, but we are so pleased that you are safe and delighted you -- that you joined us this evening. Thank you very much, indeed, for that. My goodness.

I'm Becky Anderson, that is your world connected. Your headlines follow this short break.

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