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Microsoft & Skype; Crisis in Libya; Complex Relationship Between Pakistan and Washington

Aired May 10, 2011 - 08:00:00   ET

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


KRISTIE LU STOUT, HOST: Welcome to NEWS STREAM, where news and technology meet.

I'm Kristie Lu Stout, in Hong Kong.

Now, "Fortune" confirms Skype is about to be snapped up by Microsoft in what would be Microsoft's biggest-ever purchase.

Libya's capital is rocked by a series of NATO missile strikes as the U.N. calls the humanitarian situation inside the country "grave."

And we meet a Bangladeshi boy who has turned against the gangs that forced him to beg, as we continue our look at modern day slavery in the "Freedom Project."

Now, Microsoft is on the cusp of a very big deal. "Fortune" confirms that the software giant is set to acquire Skype for $8.5 billion, its biggest acquisition ever.

Now, Skype is of course the service that connects people via Internet-based telephony and video. It has over 600 million users. But despite its popularity, Skype is not a money spinner. It's produced little net profit since it was launched eight years ago.

So why would Microsoft plunk down so much money for it?

(BEGIN VIDEO CLIP)

RICHARD LAI, ENGADGET: They bought this, clearly, to compete with the likes of Google Voice and maybe Apple Face Time. So that's probably the consumer side. But in terms of enterprise, that's also an advantage because a lot of companies use Skype for their day-to-day conference calls as well.

(END VIDEO CLIP)

STOUT: So Skype could give Microsoft a boost in the consumer and professional market. For instance, have you ever heard of Lync? No? you're not alone.

Well, Lync is Microsoft's voice-over Internet protocol offering. It combines e-mail, instant messaging and voice into a single program. It is not well known, but Skype's visibility and user base of 663 million could change that. But how would the deal change Skype?

Well, Microsoft's history with big purchases is not an impressive one. From the phone company, Danger, who came up with the Hiptop and Sidekick devices, to the video game advertiser Massive, there are plenty of firms snapped up by Microsoft that failed to make an impact, so much so that Massive doesn't exist anymore. The Web site redirects to Microsoft's advertising hub. But some think that Skype's size makes it different.

(BEGIN VIDEO CLIP)

LAI: For Skype users, well, they definitely won't be seeing the service go away anytime soon, because Skype is a huge project around the world. But maybe Microsoft's acquisition will speed up the development to integrate this technology into their other products. So, say, like, Xbox Kinect or even Windows Phone 7.

(END VIDEO CLIP)

STOUT: Now, Microsoft's size means that it has plenty of products that could integrate with Skype. There's also Xbox Kinect, Microsoft Messenger. Even weaving (ph) specs (ph) video conference capabilities directly into Office. But Engadget's Richard Lai speculates that Microsoft may have other projects in the works.

(BEGIN VIDEO CLIP)

LAI: So I think Microsoft will be focusing heavily on developing mobile communication solutions. So, say maybe it's some sort of tablet that will based on a low-powered operating system like Windows Phone. And by acquiring Skype, they'll be able to help speed up development much quicker, and also adding unique features and putting (ph) integration with their existing products like Windows Messenger. So, to me, it's a win-win situation for both Windows and the customers.

(END VIDEO CLIP)

STOUT: But one online humorist put it this way: "Microsoft buying Skype. Prepare for need to hang up and start all over again at random times."

Now, for $8 billion, this is a deal that will be talked about for a very long time.

Now, the United Nations says its humanitarian assessment team has been prevented from entering Syria despite earlier permission from authorities. The mission was set to visit Daraa. Now, residents of the city say it is still under siege by government forces despite a pullout pledge from Damascus.

Now, this video is said to show the military moving around Homs. A doctor there says security forces have set up checkpoints. Another witness says residents are being prevented from burying their dead out of fear the funerals will trigger more demonstrations.

Other new videos are tripling out of Syria, and they are the closest link to developments inside the country. Damascus has repeatedly denied CNN requests for access. This video is said to show protests in an area of the capital, and human rights groups, they report that raids and arrests are taking place in Damascus, Baniyas, and Daraa.

Now, the European Union has implemented travel and financial sanctions on 13 top Syrian officials, including President Bashar al-Assad's brother. The EU calls Maher al-Assad the principal overseer of the crackdown against protesters.

Now, he is the youngest of the al-Assad brothers and considered the country's second most powerful man. Maher commands the elite Republican Guard and the army's 4th Division. He has a reputation as a strongman, and media reports say he persuaded his older brother to end the liberalization he initiated when he first took office known as "Damascus Spring."

Now, let's turn to Libya now. And NATO has confirmed it conducted three strikes in the vicinity of Tripoli. And our team on the ground calls it the most intense allied attacks in a week.

Libyan TV is playing these images of the aftermath. The government says the strikes hit administrative buildings and indirectly affected a nearby hospital in the city's center.

CNN has not been allowed to verify the claim. NATO says it targeted command and control facilities.

Now, Libyan civilians are becoming increasingly desperate to flee the fighting. One large boat overloaded with asylum seekers has capsized in the Mediterranean.

Nima Elbagir joins us now with more on the line from Tripoli.

And Nima, can you tell us more on this boat that capsized? Are you getting a clear picture of this tragedy?

NIMA ELBAGIR, CNN INTERNATIONAL CORRESPONDENT: Well, Kristie, we have just been speaking to the Somali ambassador in Tripoli, and he has told us that this is the second such boat to capsize in the last 10 days. He, of course, can only speak about the Somalis who were on board, but he said in the first boat, two children and a young Somali man were killed. These are only the Somali victims of this tragedy. We can't verify how many people from other nationalities drowned in this incident as well.

And then the second boat, which was on Friday evening, we spoke to a survivor from one of those boats. And they told us that -- he told us, sorry -- that he had been on the first boat. But they are so desperate to leave Libya. You have to understand that many of these people, their families, completely rely for their survival by some in Somalia on the money that these people are able to send back.

So he said he then got on the second boat which was overloaded. It only had the capacity to carry 400 people, and there were 750 people on board.

He said when they came close to the Tripoli shoreline that, actually, the captain of the boat said to them that, "It's better for me to capsize the boat now, rather than go into deeper sea, and at least some of you will be able to survive." So he was able to swim ashore. But what was so incredible, Kristie, is that even after having survived twice, he still told us that he will be trying to escape again -- Kristie.

STOUT: They're so desperate to leave the violence in Libya that, no doubt, there'll be more ships to take out more asylum seekers out of the country.

Now, is there any international assistance there to help them with the journey and to avoid another disaster?

ELBAGIR: Well, many of these people had actually traveled back into Libya from the camps that are being manned by the international community. The gentleman I had spoken to had come in from Shusha (ph) camp in Tunisia. Other asylum seekers are making their way in, the ambassador told us, from the eastern Egyptian border.

So these people have already been trying to seek international assistance, and many of the people we spoke to told us that they feel that they're being failed by the international community, that many of them had been sitting in those camps since the beginning of the violence. You know, two to three months, and that they were not able to receive any help or not able to continue working. And so they willingly traveled back into Libya.

For those coming in from the eastern border, they traveled through the front line between the Libyan rebels and the government to try and leave and go on to a better life in Europe. So they really feel that the international community is utterly failing them -- Kristie.

STOUT: And while we have you on the line, Monita asked you about those airstrikes earlier today in Tripoli. NATO aircraft, they were seen flying across the city. There were several loud explosions.

What happened? And were you able to ascertain which buildings were targeted?

ELBAGIR: Well, we actually are just coming back in from our trip out to the strike site. It looks to be some sort of a public building. Obviously, you know, I'm not able to ascertain what was going on in that building, but we spoke to people at the scene, and one of them told us that this had been a research facility that housed a charitable organization run by the government that tended to orphans and older people.

And of course we can't verify these things, but the fact that the Libyan people believe that this was a civilian target, that's what's so important here, Kristie. We spoke to people at the scene, and they were very emotional and very angry. One woman said that she had done her Master's degree researching at the library housed in that building, and she asked me, you know, "We've been told that the targets will purely be military targets. Does this look like a military target to you?"

I mean, and that's what -- there's really a sense here that's growing that there's a lot of anger towards NATO, even though if you weren't originally pro-Gadhafi. And you have to bear in mind that in Libya, colonialism was incredibly a motive. They managed to get reparations from the Italians for their colonial history here. So when Colonel Gadhafi and when state media goes on and says this is a colonialist agenda, this is a crusader agenda, it runs the risk, as far as NATO is concerned, of drawing more and more support for Colonel Gadhafi -- Kristie.

STOUT: Nima, thank you so much for giving us an update, a clearer picture of what's happening inside Libya.

Nima Elbagir, joining us on the line, live from Tripoli.

Now, you're watching NEWS STREAM.

And still to come, the Mississippi swallows neighborhoods in Memphis Tennessee. Residents are on high alert as the mighty river approaches a near-record peak.

And we meet a boy whose survival story has helped expose a child slave labor gang on the streets of Bangladesh.

(COMMERCIAL BREAK)

STOUT: Welcome back.

Now, about this time on Monday, we brought you the Pakistani prime minister's speech to parliament. Yousuf Raza Gilani rejected allegations that his country was complicit in hiding Osama bin Laden, and he also blasted the U.S. for violating Pakistan's sovereignty.

Jill Dougherty examines the complex ties that bind Islamabad and Washington.

(BEGIN VIDEOTAPE)

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT (voice-over): Pakistan's prime minister lashes out at the mission that killed Osama bin Laden.

YOUSUF RAZA GILANI, PAKISTANI PRIME MINISTER: Pakistan is not the birthplace of al Qaeda. We did not invite Osama bin Laden to Pakistan or even to Afghanistan.

DOUGHERTY: Another operation like that, he warns, and Pakistan will retaliate with full force. But the White House says, no regrets.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: But we also do not apologize for the actions that we took.

DOUGHERTY: But neither country is willing to pull the plug on the relationship.

MARK TONER, STATE DEPARTMENT SPOKESMAN: We are clear-eyed in our assessment that this counterterrorism cooperation has been worthwhile. And again it's in our national security interest that it continue.

DOUGHERTY: For Pakistan, it means money, $1.5 billion from the U.S. a year. For Washington, it's an insurance policy on a nuclear- armed Muslim country too important to fail.

Pakistan has quietly allowed the U.S. to run drone strikes to go after insurgents hiding out in northwest Pakistan and crossing the border to attack U.S. and NATO troops in Afghanistan. Pakistan also is NATO's main supply route for fuel, food, munitions, and construction materials for its troops in Afghanistan. And it's locked in a volatile relationship with a major U.S. ally, India, itself a nuclear-armed country.

MALOU INNOCENT, CATO INSTITUTE: Pakistanis want to have their cake and eat it, too. They assist various jihadist elements within the region, while at the same time receiving billions of dollars in U.S. aid.

DOUGHERTY (on camera): As if tensions weren't high enough, someone leaked the name of a CIA station chief in Islamabad to a Pakistani newspaper. That follows a rift over another CIA operative who killed two Pakistanis and had to come home. But a U.S. official tells CNN there's no plan to bring the station chief home.

Jill Dougherty, CNN, the State Department.

(END VIDEOTAPE)

STOUT: And we have new information about what the U.S. military recovered from Osama bin Laden's secret compound in Pakistan.

Right now, a special taskforce is poring over a series of audio and video files, as well as hard-copy material, all found here within these walls. One official tells CNN they have not found any evidence of an imminent al Qaeda plot, but they have gathered real intelligence on the terror group. Now, the official says intelligence experts hope the information will help them better understand how al Qaeda operates.

Has the White House provided too much information on the raid and the intelligence it gathered from bin Laden's hideout? Now, the former U.S. defense secretary Donald Rumsfeld expressed that view earlier on "PIERS MORGAN TONIGHT."

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, FMR. DEFENSE SECRETARY: if I were in the Pentagon, I' be concerned about the White House talking so much about the intelligence take.

The goal is to get the intelligence and to look at it, figure out what you can use, and then use it as rapidly as possible. Instead, the White House made a number of comments about it, talking about how valuable it was. And even some of the specifics of what's there, which I think no one in the Pentagon would have done. They would recognize that our lives can be lost by too much discussion about things like that.

PIERS MORGAN, HOST, "PIERS MORGAN TONIGHT": I mean, do you believe there's been a bit of a rush to publish here possibly because of their decision not to release the picture of a dead bin Laden to state public appetite? They have decided to release, perhaps in your view, too much intelligence, and should now desist from releasing anymore? Would you like to see them stop now and say no more about this?

RUMSFELD: Well, it was pretty clear the White House -- most of all of this information came out of the White House. Practically none of it came out of the Department of Defense. And it seems to me that the very fact that they had to correct 10 or 15 different statements that were made out of the White House, which proved to be inaccurate, is an indication that they rushed out with a lot of things.

And they would have been better off turning it over to the Department of Defense and letting them manage what was said about it in a way that could create the greatest advantage for our country.

(END VIDEO CLIP)

STOUT: Now, the U.S. now wants to question some of the people found inside the compound with bin Laden, mainly his three widows.

Now, today, Pakistan's interior minister told CNN the U.S. will be given access to the women, though he did not clarify when.

Our Brian Todd tells us more about the women and the insights they may be able to provide.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): Part of the treasure trove of intelligence taken from this compound, three wives of Osama bin Laden. And CNN has now confirmed their identities with a U.S. official.

(on camera): One of them is Amal al-Sadah, who married bin Laden in 2000. Officials believe this passport photo found at the compound is her. She had a daughter with Osama bin Laden, Safiyah, who was born shortly after 9/11.

And Safiyah has told Pakistani officials she saw her father being shot. Amal al-Sadah is Yemeni and is bin Laden's youngest wife. Another wife who was in the compound, Khairiah Sabar, also known as "Umm Hamza," because she is the mother of bin Laden's son Hamza. They were married in 1985. She is a Saudi national who stayed with bin Laden in Afghanistan after 9/11.

And a wife named Siham Sabar was with bin Laden. She is also known as "Umm Khalid," because she is the mother of the son of bin Laden's son Khalid, who was also killed in the raid. She is also a Saudi national who was also with bin Laden in Afghanistan after 9/11.

I asked CNN national security analyst Peter Bergen more about the two Saudi wives.

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: They're pretty well- educated. One has a doctorate in Islamic legal law. Another one has a degree in Arabic studies of some kind. So -- and they have had a number of kids with bin Laden.

TODD (voice-over): The wives and several of those children are now in Pakistani custody, and U.S. officials are eager to speak to the wives.

TOM DONILON, U.S. NATIONAL SECURITY ADVISER: And we have asked for access both to the people, including three wives, who they now have in custody from the compound.

TODD: Pakistani officials tell CNN they will allow U.S. officials access to the wives only if their country of origin has been asked for permission. It's not clear if that has happened yet.

(on camera): What could these women offer U.S. or Pakistani intelligence about the operations at the compound?

BERGEN: Well, I think they can offer some atmospherics about what it was like to live there when they moved in, but in terms of like operational details about al Qaeda, very little, because, first off, they wouldn't be able to meet any men. So they're not -- if Ayman al-Zawahri was coming back and forth, the number two in al Qaeda, that's something they simply would not have seen.

TODD (voice-over): The wives have already apparently given some of those atmospheric details. When asked what the wives have told Pakistani authorities, Pakistan's ambassador to the U.S. said one of the wives never left the same floor as bin Laden because they were paranoid about physical movement. He said they didn't go near windows and didn't have any kind of fresh air.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

STOUT: Now, up next, the "CNN Freedom Project" continues as we take you to the streets of Dhaka, Bangladesh, where at least one criminal gang has been kidnapping and maiming children for profit.

Stay with us.

(COMMERCIAL BREAK)

STOUT: The numbers are staggering and the stories, heartbreaking. The United Nations tells us that more than a million children become victims of human trafficking ever year.

Now, children as young as 8 or 9 are forced to become soldiers, work as prostitutes, and become bonded laborers. It's like this scene out of the movie "Slumdog Millionaire," a criminal gang snatching children off the streets, deliberately inflicting crippling wounds on their bodies, and forcing them to beg for money. Investigators say that is exactly what had been happening in the capital of Bangladesh.

Our Sara Sidner traveled to Dhaka, where she managed to speak with a boy who has helped to bring this crime to justice. I want to caution you, while the content is not graphic, it may be disturbing.

(BEGIN VIDEOTAPE)

SARA SIDNER, CNN INTERNATIONAL CORRESPONDENT (voice-over): A father pulls his son close, guilt-ridden he couldn't protect his boy from a crime that scarred him for life.

"Pain. I felt pain," he says. Just 7 years old, he is in police protection. He is the star witness against his alleged attackers, a criminal gang that relies on children for profit. The boy was almost killed for what he knows, so we have to conceal his identity.

(on camera): What did these bad men do to you?

(voice-over): "They took me into an alley. I didn't want to go, but they snatched me up. And then four people tied my hands and legs. They said they would make me beg. I threatened to tell my father and police on them.

He says he recognized his captors from the neighborhood. When he refused to beg, the men responded by bashing his head with a brick, slitting his throat and stomach. And the family wants the world to know the men also cut off most of the boy's penis.

His frantic mother found him outside in the middle of the night.

(on camera): What did you think when you first saw your son after this incident?

(voice-over): "I could hardly recognize him because he was so stained with blood," she says.

The family went to local police, but the police refused to file a case, saying the dispute was little more than an argument over the father's unpaid bill to a tea seller.

(on camera): It turned out to be much, much more. Investigators say the 7-year-old boy became the key to exposing the inner workings of a criminal gang that, for years, had been snapping children off the street, crippling them publicly, and then forcing them to beg.

(voice-over): Authorities say the tea seller was associated with that gang.

The case was ignored until his father found human rights activist and attorney Alina Khan (ph). Khan (ph) agreed to represent the boy and says she has now faced death threats herself. "They are terrorists, because this is not a small group," she says.

Khan (ph) went to the courts, and the courts ordered a full investigation. That is when the Rapid Action Battalion began investigating. And within weeks, Bangladesh's elite police force had made arrests.

And in front of local media, two suspects confessed. "That boy started quarreling with us, and I hit him on his head with a brick. Then my brother said to cut his penis, and immediately I cut it. After that, he cut his chest and belly, then we held his head and cut his throat," he says.

The suspect said the gang routinely disfigured children to increase profits because pity pays. Police say people give more to maimed children.

"Sometimes after kidnapping the children they hide them inside vessels for five, six months, and give them very little food and water. Because of the nutrition deficiency, they become lean and sick. Then they send them out to beg," he says.

In the confession, the suspects said each child brings in about $7 a day. Of that, the handler takes about $3 and the ringleader almost $4, leaving pennies for the child to buy food.

(on camera): This just sounds evil.

M. SOHAIL, BANGLADESHI RAPID ACTION BATTALION: Oh, this is really cruel. In fact, I have no word to explain or express my feelings about -- with this small little boy, 7 years. This is really, really unbelievable, and that is the way we're sourcing (ph) some of these mattress.

SIDNER (voice-over): Authorities say there are several other children still in the remaining gang members possession who have not been found.

In 2009, the government banned begging, and a year later, added three years jail for those caught forcing anyone to beg. But human rights activists say enforcement is lax.

On our trip, we saw many children in the streets begging, some disabled and clearly afraid of being filmed. In South Asia, it's a common belief that child beggars you see on the streets are run by gangs. But a authorities say because of one brave little boy, they now have proof in Bangladesh.

(on camera): What should happen to these men?

(voice-over): "I want them to be hanged. I demand they be hanged," he says.

A demand from a little boy who, at just 7 years old, has the scars to remind him just how cruel the world can be.

Sara Sidner, CNN, Dhaka, Bangladesh.

(END VIDEOTAPE)

STOUT: Now, the Bangladeshi government says the case of that 7-year-old boy is not a general phenomenon, but says it is looking into possibly other cases to ensure that offenders are punished.

You can find additional resources on our Web site. Just go to CNN.com/freedom. You can learn more about modern day slavery. We have stories and video, facts and statistics on human trafficking. And you can also take a stand by participating in our iReport "Freedom Project" challenge.

Again, that's all at CNN.com/freedom.

Now, the Mississippi River rises to near-record levels as thousands are told to prepare for the worst in Tennessee. We'll have the very latest from Memphis.

But it's a lack of rain that is causing problems in Cuba. We'll hear from Havana residents who are running out of water as the country copes with a severe drought.

Stay with us.

(COMMERCIAL BREAK)

STOUT: I'm Kristie Lu Stout in Hong Kong. You're watching NEWS STREAM. And these are your world headlines.

Microsoft confirms it will by Skype for $8.5 billion. Now the deal means that Skype will be supported on a range of Microsoft products from Xbox, Kinect, to Hotmail, even Microsoft little known communications suite Link.

A large boat carrying more than 600 people fleeing the violence in Libya has capsized in the Mediterranean Sea. It is not known how many lives were lost, but dozens have been reported dead or missing.

Now European Union sanctions on 13 top Syrian officials including the brother of President Bahsar al Assad are now in effect. The EU says the sanctions are being imposed for what it calls violence against demonstrators. It comes amid reports of mass arrests in several cities.

Japan's prime minister says he will give up his premier salary until the country's nuclear crisis ends. Naoto Kan receives more than $20,000 a month. Now he will continue to get his lawmakers paycheck.

Now separately, about 100 people who lived near the crippled Fukushima Daiichi plant have been allowed to gather belongings from their homes.

Now Memphis, Tennessee is bracing for potentially historic floods. The Mississippi River has begun cresting some four meters above flood stage. Now hundreds of residents have been evacuated from their homes. And President Barack Obama has declared the southern U.S. state a disaster area.

Now David Mattingly is closely watching the flood water rise to that near record level in Memphis, Tennessee. And filed this report from the flooded banks of the Mississippi.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT: Look at this tremendous amount of water. This has not been seen in generations along the Mississippi River, especially here in Memphis. Normally here in Memphis, the river is only about a half mile wide. But I want to show you something, this is what it looks like with all the flood water, it is now six time that size -- six times that size. And we are looking at this water being out of its banks possibly until June. It will take weeks for this water to recede even though it's just now peaking in Memphis..

And of course all of this water is going to combine with other sources of water, other tributaries, and continue to move down the Mississippi, threatening Mississippi, and then the state of Louisiana where we see Baton Rouge and again New Orleans.

Right now, the Corps of Engineers is looking for ways to relieve pressure down in Louisiana. They opened spillways today to allow a tremendous amount of water to drain into Lake Pontchartrain away from the Mississippi River. That's an attempt to keep flooding away from New Orleans. They may have to do something even more drastic, but that decision coming later this week.

As for here in Memphis, the greatest problem they've had in spite of all of this water right here on the waterfront, they have seen a tributaries around this city backing up. These tributaries are the water that normally drains in the Mississippi, has nowhere to go. So we've seen pockets of flooding all around Memphis where people are having to move out of their homes.

Fortunately, this has been a very slow moving disaster. Authorities have been out in front of these flood waters all along knowing where these waters would hit, knowing where the problem areas would be, getting everyone to safety in time.

But these waters are going to be here so long, for weeks possibly, that once people are able to go back to their homes, they may have nothing to go back to.

Back to you.

(END VIDEOTAPE)

STOUT: Now from deluge to drought. Now Cuba, just about 2 hours by plane south of the U.S. flood zone, is suffering its worst drought in 50 years. Now Cubans are facing major water shortages after two years of low rainfall. Shasta Darlington reports from Havana.

(BEGIN VIDEOTAPE)

SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Every day Carlos fills buckets at a nearby water truck and carries them back to his apartment in the center of Havana. He and his family haven't had running water for weeks.

"It's the only way we can get all of the chores in the house done," he says.

Cuba is facing its worst drought in 50 years. In Havana alone more than 100,000 people rely entirely on water trucks for their drinking water and to cook and clean. For many, a truck comes once a week to fill underground cisterns, for others they have to break out the buckets and bottles on a daily basis.

Jorge Domingez (ph) rents rooms to tourists in old Havana. "There are times that we've been left without a drop of water," he says. "We've always figured out how to get some before anyone notices."

After two years of extremely low rainfall many of Cuba's reservoirs are nearly dry affecting over 1 million people across the country according to state media.

Add to that the country's decrepit network of pipes which leak huge amounts of water every day. According to the government here in Havana 70 percent of the pipes need repair.

In the meantime, the cash strapped state says it deploys up to 126 trucks every day to make sure at least basic needs are met.

Rainy season officially starts in May, but here in Havana we haven't had a drop of water yet. And the government has warned that even if we do get normal levels of rainfall over the next couple of months, it won't be enough to fill those reservoirs.

Some of the residents here in old Havana say they would even welcome a hurricane this season if it brought some relief from the drought and running water to their homes.

Shasta Darlington, CNN, Havana.

(END VIDEOTAPE)

STOUT: Now let's get more on the drought in Cuba. Again, the worst there in 50 years. Mari Ramos is standing by at the world weather center -- Mari.

MARI RAMOS, CNN WEATHER CORRESPONDENT: And Kristie that rain that is expected to come between May and October, which is the rainy season for Cuba does have a lot to do with tropical cyclones, tropical waves that may form and actually move through that area and bring the rain. We haven't had any of that.

And actually, the weather service in Cuba, the Instituto Nationale de Metrolojia (ph) is seeing that what's going to happen, or what they're expecting is actually below average rainfall as we head through this first half of the rainy season. And that's significant, because that means no real relief in sight for this area.

Right now, the area of high pressure across much of the southeastern U.S. and also here as we head into the Caribbean, beautiful weather if you're enjoying the beaches, but of course very difficult for people in those areas.

Now significant, though, in the last three months of the year, which are the driest months of the year, the drought has been even worse. And you can see right over here, the areas in the darkest colors are either severe or in extreme drought. In the last three months of the year -- or the first -- February through March, those three months of the year, that trimester, 84 percent of the country was actually in drought conditions. And that's very significant.

And one of the hardest hit provinces is Havana Province, and that is the most densely populated area of the country as well, some of the agricultural areas such as here toward the west, toward Pinal del Rio (ph), those areas are also being affected severely by drought. And that is significant, because it could take -- or play a longer-term role in Havana as of course it begins to affect their crops, not just the livelihood of peoples in cities.

Right now 20 degrees in Havana, 23 in Miami. As we head north, the temperature is expected to rise significantly here across the southern portion of the U.S. The same areas that are of course are battling those floods. Temperatures are going to be between 30 to 40 degrees Celsius, well above the average for this time of year. That is one story that people are having to deal with in this part of the world. The other one, the tornadoes, of course, the cleanup from that and the flooding from the Mississippi River.

As we heard earlier, it's not just the flooding right along the river, but so many of those tributaries have also been affected by the flooding. And you can see right over here how widespread those flood warnings actually extend. All the way down along the Mississippi even as we head into New Orleans, even though the crest there is not expected to happen until at least -- at least May 23. And that's if no other spillways are open. And if there are no levee breaches.

Let's go ahead and check out your city by city forecast now.

There are different types of levee breaches and one of them is erosion like what we saw during Hurricane Katrina in the New Orleans area. That's when portions of the levees are actually washed out and it over tops the levee. They are monitoring all of these different situations as far as the potential for levee breaches and that is why they've done all of those different things.

The sand boil situation is actually looks like the sand is boiling. The pressure builds up on one side of the levee, Kristie, the water seeps through the bottom. It weakens the levee. And you begin to see that sand or that dirt boiling on the other side. Eventually the levee breaks.

So these are the things that they hoping won't happen in and along the Mississippi River. Back to you.

STOUT: Yeah. Here's hoping that that won't be happening. Thank you very much indeed Mari Ramos there.

And still ahead here on NEWS STREAM, a surprising separation on California's power couple announces they are spending time apart. What does it mean for the future of their 25 year marriage?

(COMMERCIAL BREAK)

STOUT: Welcome back.

Now actor turned governor now ex-governor of California Arnold Schwarzenegger and his wife Maria Shriver has split up. Now a separation was confirmed just two weeks after their 25th wedding anniversary and four months after he left the California governor's office.

Now CNN's Thelma Gutierrez is standing by in Los Angeles with the latest. And Thelma, they issued a statement. Can you give us the details on that?

THELMA GUTIERREZ, CNN CORRESPONDENT: Yes, Kristie.

Now that couple released a statement late last night. Now for many, the news is shocking after all, they spent a quarter of a century together as man and wife. From the beginning they were an unlikely pair. She's the member of the Kennedy dynasty and he's an international movie star who calls Hollywood home. They have four children together. They ran two successful campaigns for the California governorship. And after celebrating their 25th anniversary just last month. But late yesterday came the unexpected news that California's former first couple has split.

And in an emotional joint statement they said this has been a time of great personal and professional transition for each of us. After a great deal of thought, reflection, discussion and prayer we came to this decision together. At this time, we are living apart while we work on the future of our relationship. And many are asking if there were signs pointing to a need for change at home.

Well, just six weeks ago, Shriver posted this video on YouTube where she talks about turning over a new leaf.

(BEGIN VIDEO CLIP)

MARIA SHRIVER: Like a lot of you I'm in transition. And people come up to me all the time and go what are you doing next? What are you going to do? What have you come with? Oh, I hope you're getting time to relax and think and take a break. It is so stressful to not know what you're doing next.

(END VIDEO CLIP)

GUTIERREZ: Since leaving office in January, the couple has spent time apart. Schwarzenegger is reviving his acting career by signing movie deals. And Shriver is out championing causes close to her heart -- female empowerment, and Alzheimer's disease. But for now they say they'll continue parenting their four children together. And they consider this a private matter and have asked for compassion and respect from the public -- Kristie.

STOUT: OK. They've announced their separation, but do we know whether divorce is in the picture?

GUTIERREZ: It's pretty immature to speculate at this point. The L.A. Times is reporting that Maria Shriver moved out of the couple's mansion in Brentwood, California several weeks ago. They just announced that separation now. But there was no mention at all, Kristie, about a divorce.

STOUT: All right. Thelma Gutierrez joining us live from Los Angeles. Thank you very much indeed for that.

Now celebrities are arriving at Cannes for Wednesday's opening of its 64th film festival. Not everyone is there to win awards, now some are primarily using Cannes 64 to showcase movies for the box office. Among them, DreamWorks.

Now Cat Deeley looks at the creative engine behind one of Hollywood's largest animation studios.

(BEGIN VIDEOTAPE)

CAT DEELEY, CNN CONTRIBUTOR: A lovable ogre, a talkative donkey...

EDDIE MURPHY, ACTOR: This must be one of those alternate realities.

DEELEY: And a fighting panda.

UNIDENTIFIED MALE: Looks impressive Kowalski (ph). But will it fly.

UNIDENTIFIED MALE: Yes.

DEELEY: They all began as ideas inside the heads of animators here at DreamWorks. The studio that uses the power of computer technology to unleash the power of dreams.

JEFFREY KATZENBERG, CEO, DREAMWORKS ANIMATION: Audiences, kids in particular, do find a stronger connection today with the CG characters. It has a dimensionality to it that actually makes the characters and the worlds themselves richer. And it makes it a more immersive experience.

DEELEY: Turning crazy ideas into movies that work is a long haul journey. But it's one that DreamWorks has repeatedly embarked on. In 2001, it's movie Shrek won the first ever academy award given to an animated feature.

Next month's Kung Fu Panda 2 will be its 16 computer generated movie. The tools may have changed from paint and acetate to keypad and mouse, but the heart of any great movie remains the same.

KATZENBERG: The hardest thing in the world is, you know, just telling a really, really good story. And it's why it takes us still four years to make these movies.

DEELEY: What's this stage called?

JENNIFER YUH NELSON, DIRECTOR, KUNG FU PANDA 2: That's called storyboards.

We will have a script and then we make the visual script and we add and change and change.

KATZENBERG: It's like having a play that you get to be in rehearsals, you get to do dress rehearsals, something's not working you go back, you rewrite a scene, that's what our process allows us is to get it right. And the last thing we do is actually animate it.

NELSON: I think the challenges of getting the animation really, really blazing (ph) is you don't do the obvious. You have to make sure that it's not the stereotypical expression for any given moment, because that would be just bad acting.

DAVE WEATHERLY, ANIMATOR: We also have mirrors that we'll just start just acting, making different faces in front of, to see all the different details. If you want to see exactly what happens when I go from a happy to a frown, I'll see that my brow has come down so then I'll jump into manipulating the brows.

DEELEY: Animation is an intensive process. Two weeks of an animator's work fills only three-and-a-half seconds of screen time.

The greatest challenge of all was presented by the movie's villain Shen (ph) the peacock. The realistic movement of his feathers and robe led animators into uncharted territory.

CHRISTIAN HATFELD, ANIMATOR: If you look closely you can see, and I'll step through so you can see these feathers on his arm -- of the covert feathers, the secondary feathers, are actually moving -- being influenced by the cloth as it moves. And time spent at the beginning hand placing positions for all these -- all of the feathers.

Then we have some kind of guides, or combs that define how these feathers move, where they bend. But there are times when we have to go in and manually, you know, animate and move some of these feathers ourselves.

NELSON: If we had asked for that on the first film I think we would have been laughed out the door or attacked.

KATZENBERG: Walt Disney had this great mission statement. And he said I make movies for children and the child that exists in all of us. 17 years later here at DreamWorks this is what we do. We make movies for adults and the adult that exists in every child. And I say that with a wink and a nod to Walt Disney. That's our true north.

DEELEY: Cat Deeley, CNN, Los Angeles.

(END VIDEOTAPE)

STOUT: Now he is a former football World Cup winner who has been embroiled in a race row (ph). Well, Laurent Blanc will be breathing easier today. Let's go live to London where Alex Thomas can tell us more -- Alex.

ALEX THOMAS, CNN SPORTS CORRESPONDENT: Yes, Kristie. France's sportsman has cleared national football coach Laurent Blanc of racial discrimination in the scandal that has rocked French football. Blanc, part of his country's World Cup winning team in 1998 was at a meeting last November where quoters for youngsters with dual nationality were discussed. The private conversation was revealed by a web site Media Park (ph) which received a recording of it.

It's been alleged the quoters (ph) were aimed specifically at players of African or Middle Eastern descent. France's sportsman insist that Blanc was neither the organizer nor the pilot at the discussion and so no action will be taken against him.

In other sports news, the NBA playoff series between the Memphis Grizzlies and the Oklahoma City Thunder is proving too close to call. Game four on Monday night was only decided after 3 overtime periods. A long night on the sidelines then for Memphis coach Lionel Hollins. His team trailing the fourth quarter here when Marc Gasol blocks Russell Westbrook. That leads to a Mike Conley 3-pointer for Memphis that ties the game with less than four seconds on the clock.

Westbrook still had a chance to beat the buzzer and win it for the Thunder, but he's off target and we're into overtime.

Again, Oklahoma were on top and heading for victory until Grieves Vasquez hits the 3 for the Grizzlies to tie the score at 109 apiece.

And we're into another overtime. Now Memphis have a two point lead, but Westbrook's jumper, part of his 40 points on the night, levels the score at 119. And this one goes to a third overtime period. And that's when the Thunder took control.

Kevin Durant scoring 6 of his 35 points in this final period. The Thunder win 131 to 123. And the series is in the square (ph).

Now 24 hours after the shock death of a Belgian cyclist, riders at the Giro d'Italia will pay tribute by not contesting Tuesday's fourth stage. They're expected to cover the route at a moderate pace before allowing the leopard Trek team to come to the front of the peloton.

Wouter Weylandt was killed on Monday. Medics unable to revive him after a high speed crash on a difficult descent. The 26-year-old dying from a fractured skull.

Weylandt was one of cyclings -- not one of cyclings star names, but he did record a stage victory in last year's Giro as well as the 2008 Tour of Spain. It's the first cycling death in a major tour for 16 years.

Well, Pedro Pinto will have more sport later, but for now Kristie, it's back to you in Hong Kong.

STOUT: And I will thank you for that. Speak of sports, more specifically fitness, judging by this picture being in the U.S. Congress doesn't have to be a sedentary exercise. And coming up, Jeanne Moos gets New Yorkers to weigh in on this.

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STOUT: And finally you might say our next story lays U.S. politics bare. Jeanne Moos introduces us to this man, the youngest member of the U.S. Congress and what is underneath that shirt.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT; It's a six pack that everyone can drink in.

UNIDENTIFIED FEMALE; The abs are fabulous.

UNIDENTIFIED FEMALE; Wow. I'll vote for him.

UNIDENTIFIED FEMALE; So he looks awesome, what's wrong with that?

MOOS: Nothing wrong with it. It's just that these exposed abs on the June cover of Men's Health don't belong to some male model.

He's a congressman.

UNIDENTIFIED FEMALE: Really?

UNIDENTIFIED MALE: You're kidding me. This guy here?

MOOS: Yeah.

UNIDENTIFIED MALE: Wow.

MOOS: Illinois Congressman Aaron Schock. At 29, he's the youngest member of Congress. Here's what he looks like fully clothed.

UNIDENTIFIED FEMALE; Is that appropriate to have a half-naked congressman on a magazine? I don't know.

MOOS: But he's half naked for a cause. It's a campaign to inspire Americans to get fit.

Though Schock is a Republican, he admires Michelle Obama's anti-obesity campaign. Schock himself wakes up at 5:30 so he spend an hour or two in the gym. He was asked on the Today Show if pictures of his exposed abs could come back to haunt his political career.

REP. AARON SCHOCK, (R) ILLINOIS: There is a risk with it, but I think it's a risk worth taking.

MOOS: Hey, away more naked centerfold of now Massachusetts Senator Scott Brown back when he was 22 doesn't seem to have damaged his career. And bare chested Barack Obama isn't doing so badly, though at the time he was annoyed by the photo and told reporters stop looking at it, it's embarrassing.

UNIDENTIFIED MALE: How did you become known for your abs?

SCHOCK: Don't ask me.

MOOS: TV types have been asking him for two years.

STEPHEN COLBERT, COLBERT REPORT: And I think your constituents deserve to know, do you or do you not have six pack abs?

MOOS: It goes back to when TMZ dug up a photo of Schock poolside in Peoria.

A professional trainer says Schock's abs could be tighter.

UNIDENTIFIED MALE: I would say like an 8.

MOOS: Now he's a congressman.

UNIDENTIFIED MALE: This is the guy I heard about.

MOOS: You like a well-defined six pack.

UNIDENTIFIED FEMALE: Who doesn't? I just hope it's real. I hope it's not Photo shopped.

MOOS: Definitely not, says Men's Health contributing editor Steve Perrine. Check out the scar.

STEVE PERRINE, MEN'S HEALTH MAGAZINE: That would be his appendicitis scar. And there was a little debate, should we take that out? And then we though, no, we want to make -- show that this is untouched and original.

MOOS: But not everyone liked what they saw in this congressman who is, by the way, still single.

UNIDENTIFIED FEMALE: Yeah, it's a little bulgy for me.

MOOS: A little bulgy?

UNIDENTIFIED FEMALE: A little bulgy.

MOOS: His abs may be hard, but there's something they lack.

UNIDENTIFIED FEMALE: I like these abs right here that he's got.

MOOS: Hairy ones.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

STOUT: Oh, didn't have to see that.

That is NEWS STREAM, but the news continues at CNN. "WORLD BUSINESS TODAY" is next.

END