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Unfreezing Gadhafi's Assets; High Frequency Trading; Half a Heineken; Inside the Gadhafi Compound; Mean Irene; Gadhafi Vows Martyrdom Or Freedom; Rebel Leaders Offer A Bounty For His Death Or Capture

Aired August 24, 2011 - 14:00:00   ET


RICHARD QUEST, CNN HOST: Gadhafi vows martyrdom or freedom. Rebel leaders offer a bounty and an amnesty on anyone who captures or kills him.

Journalists held captive in a Tripoli hotel are freed after five days of being held by armed guards.

And on the business agenda, where there is more income there is more to tax.

I'm Richard Quest. We have an hour together and I mean business.

Good evening to you. Our coverage tonight, obviously, the battle for Tripoli and the future of Libya; Moammar Gadhafi is a hunted man, even as rebels get on with building a new Libya without him. The rebels are offering $1.5 million for the former leader dead or alive. And they say the war won't be over until Libya's former ruler is captured.

Today it was gunfire in Tripoli that was mostly celebratory. Now, you can hear our own Sara Sidner attempting to deliver her report earlier.


SARA SIDNER, CNN INTERNATIONAL CORRESPONDENT: There's guys here with Kalashnikov rifles. They are blowing off rounds. There are cars, now, if you'll notice in just a few seconds, you will see a car filled with children sitting on the outside, holding the flag.


QUEST: Rebels say they control most of the capital. They are still facing pockets of resistance. There is speculation that more intense fighting around the airport is linked to Gadhafi's whereabouts.

The rebels now say his supporters may be trying to clear an escape route. The White House says there is no evidence Gadhafi has left Libya. In an audio message a man purporting to be Gadhafi vowed martyrdom or victory and issued threats to the rebels.


MOAMMAR GADHAFI (through translator): I call to all Libyans, tribesmen, youth, seniors, women, and loyal fighters to clear the city of Tripoli and eliminate the criminals, traitors and rats.


QUEST: On the political front the opposition National Transitional Council is planning to move its headquarters into Tripoli soon. The chairman, Mustafa Abdul Jalil, says he wants elections to be held within eight months. And he wants to put Gadhafi and his associates on trail in Libya.

The group of international journalists who were effectively held hostage in their hotel are now free. The group included our own CNN crew, negotiated their way out with pro-Gadhafi guards. The group had been trapped in the Rixos Hotel for five days in fearful conditions. Our Senior International Correspondent Matthew Chance described what happened.


MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: It has been a very complicated, a very frightening, a very, you know, emotional roller coaster of the past five days. But I can tell you, we're sitting in vehicles of the ICRC, the International Committee of the Red Cross. We managed to negotiate the Red Cross to get in, through the checkpoint of the Gadhafi loyalists, perhaps the only Gadhafi loyalists checkpoint in Tripoli, if the reports that we heard inside the hotel are to be believed.

And we have got all the journalists into these four cars, plus a civilian car and we are now driving out of the Rixos. We are driving through the deserted streets, perhaps, say of Tripoli, to our freedom, essentially. It has been an absolutely-it has been an absolute nightmare for all of us. You know, there are journalists who have been, as a result of this, emotional release. The fact that we have got out of the hotel, are crying. Emotions are running very high.

We went through a rebel checkpoint, the rebel checkpoint, all along was just about 150 meters down the road from the Rixos Hotel. They hadn't approached the hotel, presumably because they didn't want a big gunfight to take place, where all those international journalists have been hold up over the course of the past five days.

Hold on for the moment.

UNIDENTIFIED FEMALE: That's OK, Matthew, and you let me know if it is not safe to talk. I mean, this is the-you've finally been able get out of this hotel. I want to ask you though, were you ever threatened. Were you ever told to say or not say anything? Give us a feel for what was being said to you. And also a feel for your safety?

CHANCE: Well, we've been in, frankly, we've been-hah, we've been living in fear for the past five days. Because we've been, you know, really being held against our will by these crazy gunmen, who were in the lobby of our hotel, wearing green bandanas, waving Gadhafi flags, wielding around their Kalashnikov assault rifles. They have been very hostile towards us at times. They have often told us about how they think we're spies, NATO spies, you know, set up bent on destroying Libya. One of them shouted up to me, just yesterday-we all corralled ourselves away from them, because we didn't want to, you know, make too much contact with them, because there was such hostility.

You know, one of them shouted up to me, yesterday, I suppose you are happy now aren't you? Now that Libyans are killing Libyans. Once again underlining that idea that Gadhafi loyalists who were in control of that pocket of the Rixos Hotel, you know, really held the international media, for some reason, responsible for the crisis in Libya.

So, I can't tell you how pleased we all are and how relieved we all are. And how relieved are families will all be, that we have finally managed to get out of that place.


QUEST: Matthew Chance, there in Tripoli.

The focus of the fighting, now, is in the area around Tripoli's international airport. Arwa Damon has been reporting from that location in recent days. Arwa is with me now.

And I'm wondering, is there a delay as we talk to Arwa Damon, on the satellite.

What is the-let's begin with the current position, the current situation, Arwa.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, there has been a pretty intense barrage of artillery and grad (ph) rockets being fired by Gadhafi loyalists, Gadhafi fighters at the international airport complex, much of it coming from the east where there are two military bases stationed. The rebel fighters are telling us that the Gadhafi forces have managed to position themselves inside a number of villages that are located just to the east and they are using that as their base to launch these attacks. Oftentimes these attacks happening simultaneously from multiple locations.

Now, senior commander there, the rebel military commander, says that he believes that the intensity of the assault on this airport complex are directly linked to Gadhafi's whereabouts. He was telling us that he believes that Gadhafi loyalists are trying to clear a route, either from Tripoli, or somehow through this area to eventually get Gadhafi, and perhaps his family, to safety, possibly to the south of the country, or to loop around and then head back up to Sirka (ph), which is located to the east of Tripoli and is still a Gadhafi stronghold, Richard.

QUEST: The-wherever we look now, it is starting to be come clear- well, very unclear one thing is how much the Gadhafi loyalists and those supporting Gadhafi, can hope to gain from this. What do you believe the end game is for them? Because even if they clear this pathway and get Gadhafi away, what happens to the rest of them?

DAMON: I think the end game for those die-hard fighters and for Gadhafi, himself, is quite simply survival. And according to what the rebel fighters are telling us, they intend on wreaking as much destruction as they possibly can. We were also yesterday, though, speaking to a top aid of Gadhafi who had recently switched sides and he was saying that Gadhafi, in his last days, he had spoken to him just four days prior, was absolutely adamant that he was not going to be leaving Libya. But he said the had reached a point where he was beginning to be willing to negotiate.


You can hear the incoming artillery, right there, these rounds still coming in fairly regularly as they do try-Gadhafi forces do try to maintain control, especially to the east of this airport complex. But most certainly it also seems as if there possibly is some sort of a believe that perhaps Gadhafi could continue to somehow regain power, regain control over this country, even though it most certainly seems as if he has lost control large parts of it. If we look at the type of fighting that we are seeing taking place here, there are those who are out there, who continue to try to fight for the man who they believe is their beloved leader, Richard.

QUEST: We can certainly hear the situation and hear what you are going through at the moment. We'll leave it there for you to get maybe, to get to a position of safety.

Now, the National Transitional Council's number two, Mahmoud Jibril, says the has resonance. He has been meeting with French President Nicolas Sarkozy in Paris. France was the first Western power to recognize Libya's rebels. Atika Shubert is in Paris tonight.

One assumes, besides recognition, now of course, they are going to be looking for the practical help and that obviously means donor conferences and the like?

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Well, exactly. In fact, earlier in the day, Jibril was in Qatar, where they are having their own conference discussing about freeing up about $2.5 billion immediately if possible. But he was here, really for two reasons. To talk about some of the more concrete things like raising funds and getting the sort of international technical help to rebuild, basically a transitional government, but also essentially to say thank you to President Sarkozy.

You know, not was he the first to officially recognize the rebel council, but of course he was the first to push for military action in Libya. So a lot of today's press conference was devoted to President Sarkozy, talking about the risks France has taken and how that has paid off, but also Jibril thanking France for its support.

One of the things that Jibril actually did mention were some more specifics about the transition saying a commission would be formed shortly that would draft a constitution that would then be referendum to adopt that constitution and once it had been adopted, four months later there would be an election. So, some sort of a time frame there for how the transition will be handled, Richard.

QUEST: All right, Atika Shubert who is in Paris for us. Fred Pleitgen is in Benghazi and we want to go straight to Fred, and put a bit of perspective into this.

As the fighting, Fred, takes place in Tripoli, Benghazi, which has been the scene if you like, of the National Transitional Council's ability to run this campaign. Now they have to move from rebel fighters to something approaching government or transitional government. How are they going to make that transition?

FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Well, the reason-the way, Richard, they want to do that is they want to first of all move their entire operation that they have going right here, in Benghazi, from Benghazi to Tripoli. Now, we've asked them when exactly they plan to do that, because you do know that the situation in Tripoli is still somewhat uncertain, there is still some fighting going on there of course, as well. They say they want to wait for the security situation to calm down to then move their leadership over there. They say that could happen sometime around Friday, maybe Saturday.

But as you said, the most important thing right now is to getting some sort of national reconciliation going. You not only have had a six- month civil war here in this country, with pro and anti- Gadhafi forces facing off against each other. But also the anti- Gadhafi forces themselves are very factionalized. There is a lot of different groups who have very different agendas. Including different religious agendas, different political agendas, all sorts of things that could come to the fore right now.

One of the things that the Transitional National Council says is it wants to get that unification going, especially also with the areas that followed Moammar Gadhafi, that were under Gadhafi control for the longest period of time. One of those areas is actually Sirte, which is the hometown of Moammar Gadhafi. There is still fighting going on in that area. I was very close to that front line today. Rebel fighters say they are currently in negotiations with Gadhafi's own tribe, to get that tribe to lay down their arms, Richard.

QUEST: If we take the totality of the country, Fred, how easy will it be for the National Transitional Council to pull it together and to stop the rebels from being in war mode, to start to becoming into civil governance. Basically to tell them it is time to stop the fighting. We now have got to get to running the country.

PLEITGEN: Well, that is going to be very difficult. It is going to be very difficult especially in the next sort of period or the next couple of weeks. Especially if you consider the situation in places like Tripoli where there is actually still fighting going on. One of the things that the Transitional National Council said that it would do, before hand, is put in a civilian protection force for Tripoli, because that is really the most important place here in this country. It is a city of 2 million. It holds about a third of the entire population here in this country and does still have a lot of Moammar Gadhafi supporters inside it, even those who are not uprising, or rising up at this point in time.

So their main thing, as they say, is they want to disarm all the people with weapons inside Tripoli. Get them to lay down their arms. Then they want to get national reconciliation going. And also with the outlying areas, such as Sirte, to try and keep this country together. Now the big question in all of that is how many people will actually follow the National Transitional Council? As I said, a lot of these groups have very different agendas. Have their own loyalties, have their own tribal loyalties. So it is going to be a very difficult feat.

QUEST: Right.

PLEITGEN: I have been talking to the leadership of the Transitional National Council and they say they believe that they are going to be able to pull that together now matter what, Richard.

QUEST: So, for those of us who maybe haven't-are not as familiar with the minutia of the Libyan tribal positions, what you are saying is there is a very real risk that the country does splinter and there end up parts who go their own way?

PLEITGEN: Certainly, that risk is there. I mean, Libya has always been a country that has had a lot of turmoil. Has always had more sort of tribal loyalties than loyalties to Libya as a whole. Now a lot of those tribal loyalties actually under Gadhafi have sort of gone away somewhat. Tribes have been somewhat weakened over the past couple of decades. And the tribes really aren't as coherent as many people think.

However, it is still a very difficult place to put together. If you look at the places in the Western mountains, where you have the Amazig (ph) Tribe; they have a whole different agenda, for instance, than the people in Misrata, who again, in some cases have a whole different agenda than the folks here in Benghazi. One of the things that experts say has been putting all of these forces together, of course, has been their opposition to Moammar Gadhafi. What happens when he is no longer a fugitive, when he is captured? Are these tribes then going to turn on each other? And then you have the question on top of that. What is going to happen to all the people who were loyal to Moammar Gadhafi? Such as the Gadhafa (ph) Tribe, but also people in places like Tarhuna (ph), people in places like Sirte.

It is a very difficult situation, however, the Transitional National Council says they can pull it off, especially if they get help from the international community. Of course one of the big aspects of all of this is getting the economy up and running again, getting oil up and running again, the gas flow up and running again, to put this country on a somewhat secure footing to make sure that these people get something like the dividend of the revolution paid out to them as fast as possible, Richard.

QUEST: Fred Pleitgen who is in Benghazi for us tonight. Fred, many thanks.

Now, in a moment we'll turn our attention to the stock markets, more of our perhaps normal diet and agenda. We'll be back, QUEST MEANS BUSINESS, after the break.


QUEST: Now the breaks have been well and truly slammed on Germany's economy. A new survey is painting a pessimistic picture of the business climate here, the business confidence, the fastest fall since Lehman Brothers. The EFO survey, it is one of the most important indicators, says that German business confidence hasn't fallen this fast since Lehman, of course, back in '08. So business confidence is at the lowest level since (UNINTELLIGIBLE). Analysts aren't expecting Germany to slip back into recession. What seems to be happening here is the sovereign debt crisis and the stock market turmoil has taken its effect on business confidence.

The Xetra DAX, there was still a great deal of optimism on the equities markets. And we think that perhaps this is the fact. Even though business confidence has fallen so sharply, you might think it a little bit perverse, but if the fear is-or at least the optimism is-that the economy is not going to go back into recession, a double-dip, then you do end up with this strong rise in the DAX. It rose more than 2 percent. Carmakers were among the strongest performers. A 4 percent increase in durable goods in the U.S. That is a really important number that we'll talk about in just a moment. The other major markets also showed good gains. The best gains there, obviously, the Zurich SMI, and the Milan MIBTEL. But of course, the MIBTEL has fallen back quite sharply.

On Wall Street today, well, Europe is taking its cues from what's happening in New York. And yet, to some extent, New York is looking for its own direction, having giving back the best gains of the session for far.

Carter Evans is at the New York Stock Exchange, joins me now.

Good triple-digit gains, which have evaporated, but interesting economic news?

CARTER EVANS, CNN BUSINESS CORRESPONDENT: You know, here is the thing about this durable goods orders report that came in; OK, durable goods up 4 percent in July. Now this is a huge jump and really unexpected. It follows a drop in June. It was the main reason stocks rallied at the opening bell here. But here's the thing, if you take out aircraft orders out of this durable goods order report, Richard, it actually fell in July.

And you may remember, American Airlines had huge, huge orders with Boeing at the end of July. In fact, it was 100 737s. Boeing had 115 commercial plane orders in the month of July that is more than double June. So that really accounted for a whole lot of this, but what it does say is that some businesses are feeling a little more confident about the economy. And you know, these numbers are certainly good news for manufacturing and the aircraft industry. But we're not back as far as manufacturing goes, this durable goods orders showed that. We're not back by a long shot.

And the volatility is still here. You can see that in the markets today. But it looks like we could end on a positive note today; some investors trying to run with the optimism and good news from this report.

QUEST: Carter Evans, who is at the New York Stock Exchange. Many thanks, Carter, for that.

Dominique Strauss-Khan has had a life changing three months. Now that he's free to leave the U.S. and return home to France, we'll look at what the future could hold for him there. QUEST MEANS BUSINESS, after the break.


QUEST: Now some news coming into CNN. Apparently Italian journalists have been abducted near Zawiya, in Libya, on Wednesday morning. We're only just getting details now from the Italian foreign ministry, of that. When we have more we'll obviously bring you about that. But it does appear a very serious development. Italian journalists abducted near Zawiya. Details only just coming out from the foreign ministry.

On the economic front, France is taking action to trim its deficit and hold onto its AAA credit rating. This evening the prime minister Francois Fillon outlined plans to increase taxes on the rich to meet a deficit target of 4.5 percent next year. As well as closing various loopholes, earnings above $720,000 will be taxed an extra 3 percent. Soak the rich, to some extent. Taxes on the profits from stocks and sales, of property, will also rise. The measure follows an open letter signed by some of France's wealthiest citizens that call for top earners to contribute more.

France's economy needs the extra help. The prime minister is warning the country's GDP will grow just 1.75 percent this year. That is just down a fraction from the 2 percent originally forecast.

As Dominique Strauss-Kahn enjoys his first full day of freedom in months, how he plans to spend his time is less than certain. Mr. Strauss- Kahn is expected to reclaim his passport on Wednesday and that will allow him to return to France. But there is no word yet on whether the man picked to be made to become France's next president still harbors political ambitions.

All criminal charges against him were dropped on Tuesday. The hotel maid who accuses him of sexual assault has vowed that she will continue suit as a civil claim. Mr. Strauss-Kahn says he's glad the ordeal is over and he won't be returning to France just yet.


DOMINIQUE STRAUSS-KAHN, FORMER DIRECTOR GENERAL, IMF (through translator): This is the end of an unjust and terrible test. I am relieved for my wife, my children, my friends, and all those who supported us during this period. And also by sending letters and e-mails. They need to know that their support was very important.

I can hardly wait to return to my country. But first I still have a few things to do before being able to leave. And I will explain myself more fully once I return. Thank you.


QUEST: Dominique Strauss-Kahn, he no longer faces criminal charges but the question of public opinion in France is still very much on the agenda. Lucky for us, TV3's Christian Malard joins us live from Paris.

Christian, there is a practical, practical question to get us underway. Is it practically possible and feasible for Strauss-Kahn to stand in the presidency now, or is it too late?

CHRISTIAN MALARD, TV3 JOURNALIST: Too late, Richard, too late. I think the political game is over for him. When you talk to his friends, even his closest friends, in side the Socialist Party, everybody will tell you we are relieved, we are happy, sometimes very hypocritical that Dominique will not be back to France. So, but everybody acknowledges, privately, that the man won't be a top contender for the next presidential election. It will be a problem between Mr. Holland, a former secretary- general of the Socialist Party, and the incumbent Secretary-General Madame Aubry. So, it is a whole hypocritical game.

And the people are not-they are happy, but they are not so in a rush, in a hurry to have him come back here. I'll tell you why. Because the next Friday, Friday, Saturday, Sunday, the Socialists are having a huge pre-primary meeting in the southwest of France, and the message underground, which has been conveyed to Mr. Strauss-Kahn, is Dominique, you get back to France whenever you want, but please don't come back before the weekend. Don't ruin our big meeting, because everybody will be focused on you. So come back next week if you want. This is the key message which has been sent. So, he should be back probably next week.

QUEST: But what is the opposition now, to him? Is it a straightforward embarrassment because of what happened? We now know the sexual scandal and we now know the details of it, clearly there was a-to quote the case, "a hurried sexual encounter", that he did have with the maid?

MALARD: Yes, there is embarrassment, no doubt, Richard. But at the same time everybody has to take into account the fact that Dominique Strauss-Kahn is a brilliant, brainy man on the economy, former IMF number one. And at the same time, a lot of people have the feeling that it will be a call of referee or sort of godfather behind the scenes advising the party, the top contenders, and probably Martine Aubry, the incumbent secretary general, whom he had a pact, a political pact with. Because Martine Aubry rated what she said. She said, Had Dominique Strauss-Kahn not had this affair, had he run for presidency, I would have been putting myself aside. But he will be a top advisor behind the scenes. No doubt about that.

QUEST: Right.

MALARD: To try to have Sarkozy beaten on the next presidential election.

QUEST: Let's just finally talk about this tax business. So, not only Warren Buffet, but the rich of France also believe they should be paying more money, more taxes. How is that going down on the street? Does it have an air of, let them eat cake?

MALARD: Well, Sarkozy is very embarrassed, because he knows that if he taxes too much, his friends of the right wing, the rich families, there are about 30,000 of them in this country. He might loose part of his electorate. This is a problem for him. But at the same time, he wants together a lot of goats, in the center, in the middle classes, he has to do that. He is obliged to do it. To show signs that everybody-nobody will escape the taxes, because France will have problems like Italy, Spain, and other countries. So, Sarkozy has no choice.

QUEST: Christian, wonderful to have you on the program. Have a good summer. Nice to see you there in Paris.

MALARD: Thank you.

QUEST: That is Christian Malard, always making-helping us understand what is happened.

He rule with an iron fist, now Moammar Gadhafi, has a price on his head. His search is intensifying and we will update you on the latest in Libya, in a moment. Good evening.


QUEST: Hello. I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN and the news here always comes first.

We're hearing reports that four Italian journalists have been kidnapped in Libya. Reuters reporting the story, quoting ANSA, which is the Italian news agency. And as soon as we get more details on it, we'll let you know.

But the fighting is continuing in several spots across Tripoli, as rebels are trying to dislodge the remaining pro-Gadhafi forces. A NATO official says they're getting help on the ground from Special Forces from Britain, France, Jordan and Qatar.

International journalists, including our own reporter, Matthew Chance, and our producer, Jomana Karadsheh, are now free after being held captive at Tripoli's Rixos Hotel for some five days. Guards loyal to Gadhafi armed with Kalashnikov rifles finally agreed to let them go after the journalists told them Tripoli is a changed city now.

The Syrian government's violent crackdown on protesters has prompted U.S. and European members of the U.N. Security Council to push for tighter sanctions. A draft resolution is calling for an arms embargo, a travel ban and an asset freeze on Syrian companies and individuals who have violated human rights.

The hunt for Moammar Gadhafi continues in Libya, where it has been another dramatic and hectic day of developments. And this is what you need to know to bring you up to speed.

Rebels have called on Gadhafi's inner circle to turn their leader in. He's wanted dead or alive and there's a bounty of $1.5 million on his head. Rebels have promised amnesty to any Gadhafi loyalist who gives up the former dictator.

Meanwhile, the deputy leader of Libya's National Transitional Council has met with French President Nicolas Sarkozy in Paris. President Sarkozy has called an international conference for Libya which will be held on September the 1st.

Rebels in Libya may win a vital injection of funding within hours, which will come from the United Nations, as the Security Council is calling for a meeting for a half hour from now. The purpose is to discuss plans to send billions of dollars in aid and Gadhafi's frozen assets to the rebels.

Richard Roth is at U.N. headquarters in New York -- Richard, one thing does seem to be clear, that there's no shortage, if you like, of -- of frozen assets or potential -- potential oil revenues in the future, is there?

So these aid conferences know that there will be plenty of money coming down the line.

RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT: That's true. The Security Council can take away and can then give back, depending on who's in power and who they like. And the Security Council, which has had a lengthy history of putting sanctions on the Gadhafi regime after Lockerbie and after other incidents. Well, now, the Security Council is poised to give back to the Libyan government and people $1.5 billion in humanitarian aid, urgently needed, the Libyan authorities say, for fuel and other humanitarian services.

Now, the United Nations is also going to be helping the people of Libya with elections and other stability measures following the -- what seems to be the take over from Colonel Gadhafi.

Mahmoud Jibril, the leader of the Transitional National Council, you just referred to him meeting with President Sarkozy, talked about what he's discussed with Secretary-General Ban.


MAHMOUD JIBRIL, EXECUTIVE CHAIRMAN, LIBYAN NATIONAL TRANSITIONAL COUNCIL (THROUGH TRANSLATOR): I've asked the technical committee within the United Nations to assist and a number of these observers with -- we're talking about 10 -- between 10 to 100. But we haven't decided the exact number.

But these issues have to take place after the agreement of the National Transitional Council.


ROTH: So whether it's peace monitors, which could be a dozen to 100, Richard, or the billions of dollars in financial aid, the U.N. and all of these countries want to come to the aid of Libya. Of course, that doesn't mean everything is going to be hunky dory and everything is going to be settled there.

And even here at the U.N., Richard, South Africa is objecting to the release of this money. They're not exactly specifying why, but there are some concerns South Africa always had about why the Security Council let NATO bomb while the African Union wasn't really in favor of that. There's also some past history between Gadhafi and the African National Council.

So the U.N. is ready to meet now. And this resolution won't be really agreed to, I don't think, today, maybe tomorrow, releasing the funds.

QUEST: All right, Richard, fundamentally, when you put your ear to the ground at the U.N., what are they terrified about happening in this Libya situation now?

ROTH: Well, there's always concern that you have a post-Iraq situation, where the strongman is toppled and then you have so many different groups -- tribes. They want to try to get it right. Libya is certainly not necessarily Iraq. You don't have an occupation army.

I don't know if you hear much talk about terrified yet. It may be too soon. Maybe there's a little bit of weariness about what's happening in the region there.

Of course, what you have at the U.N., you know, it's still big power differences. China and Russia are still not willing to go with a resolution on Syria. And on Libya, they had to be reluctantly convinced -- and they're still upset, the -- the so-called Libyan hangover regarding how this take over of Libya by the rebels was achieved with NATO backing.

So we'll let you know on the terror fear scale sort of a Security Council VIX Index, I guess you'd say.

But it's not that high at the moment.

QUEST: All right. We thank you.

Richard Roth is in New York.

We'll turn back to the stock markets, maybe the VIX and others.

At a time of volatility, it's not rogue traders to blame, it's the electronic ones. We'll show you what a 21st century spectacular looks like -- high frequency spectacular, after the break.


QUEST: High frequency trading has been called a factor in the stock market turmoil we've seen in recent weeks, some which is fruitier language than that. Now, rather than men and women standing on trading floors in colored jackets shouting "buy" and "sell," high frequency trading is computers and they make untold thousands of tiny transactions to make big profits, speculating and taking advantage of minute differences in prices.

CNN's Maggie Lake visited one company to see how the recent criticism of the practice actually can be put into practice.


MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: This quiet, suburban Main Street is about an hour from Manhattan, home of the New York Stock Exchange and some of the biggest names in banking.

But don't let looks fool you. A lot of the trading these days happens in places like this -- on the second floor of this building is a high frequency trading firm, one of the few that will talk to the press.

(voice-over): For a company dealing in the fast-paced world of high frequency trading, where millions of shares change hands in seconds, the offices of Tradeworx in Red Bank, New Jersey are surprisingly laid back, a place where a handful of young programmers work on complex trading strategies. Firms like Tradeworx have been villainized for contributing to the recent wild volatility on Wall Street.

MANOJ NARANG, TRADEWORX INC.: This is an actual trade that we participate in, which is a -- which is a money maker for us.

LAKE: But founder Manoj Narang says nothing could be further from the truth.

NARANG: The thing about high frequency traders in particular is that their buying interests in any fixed time period generally is exactly identical to their selling interest, meaning...

LAKE: So you're doing both?

NARANG: Meaning we buy as many shares as we sell in, you know, a relatively short time period. So it's fairly easy to, just as a thought experiment, see that high frequency traders cannot impact prices of stocks.

LAKE: The -- some of the people saying this, though, a sort of long time Wall Street people...


LAKE: -- people who -- who, you know, presumably know a thing or two about this.

Why do you think that the attention keeps coming back to high frequency trading, if what you say is true?

NARANG: What you see in the financial industry is that lots and lots of firms, the asset management industry in particular, a multi-trillion dollar industry, is under pressure because managers initially underperformed their benchmarks.

LAKE: So this is sour grapes?

NARANG: It's sour grapes because, you know, look, it's the oldest trick on Wall Street to look for a scapegoat when you can't explain your own performance, right?

It's always the case that everyone -- everyone who's wrong thinks that they're right but the market is wrong.

LAKE: I understand that, when you say that. And yet when you see, you know, 600 points moves so quickly, so viciously, that don't seem to connect to fundamentals people are talking about, it feels like something that's spinning out of control.

Is that just our -- our lack of comfort with technology?

Is it just adjusting to the new reality?

The same thing with the flash crash. It seems that something -- something broke or something's not working right.

NARANG: So I think it's best to answer that as two separate questions, because the flash crash really was a peculiar case. Technology definitely played a role in the flash crash, but technology should not connote or imply high frequency trading. They're two completely separate things.

The vast majority of trades that are executed today by all kinds of players, whether they're, you know, algorithmic traders or not, are executed by computer. That's a panel that shows the state of our infrastructure.

What's happening in the financial industry is happening all over the economy. Technology is wreaking havoc with traditional business models. The way that happens is technology comes in and plays a role in reducing the costs and increasing the efficiency of services that are delivered to the public. Now, that's not always a great thing for the -- for the providers of those services, because it has a disruptive impact on their businesses and that leads to lots of finger-pointing and lots of defensive behavior. And that's kind of what we're seeing right now as computers play a bigger and bigger role on Wall Street.


QUEST: High frequency trading.

Bad weather and bad economic conditions have taken the foam out of Heineken's first half results. Net profits fell by 14 percent compared to last year. It was mainly due to one-off gains made in 2010. The company said it was expecting a tough year ahead in Europe and the U.S., partly because of high unemployment, which, of course, cuts back on the spend. It also is -- how about this -- the bad summer weather in Europe. Investors might have felt like drowning their sorrows on the news. In fact, they probably did. Heineken's shares were off 7.5 percent.

Jim Boulden spoke to the chief executive and asked him why the picture was so mixed for Europe's largest brewer.


JEAN-FRANCOIS VAN BOXMEER, CHAIRMAN & CEO, HEINEKEN: Over the first half year were pretty good. All regions grew in sales. And that's not all. Revenue growth of 3.3, profits grew 5.8. That's a pretty good result.

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: But not as good as expected. The market is not very happy this morning.

VAN BOXMEER: I'm not in charge of the expectations. We did not give guidance to -- to -- to the markets. We give guidance traditionally in August to give an outlook, because we have the summer behind us now. And the summer was not good in Europe. And that has led us mainly to make a somewhat cooled down outlook for -- for the rest of the year that has been the main factor. But also unfolding a lack of weakening consumer confidence has played a role.

BOULDEN: In Europe specifically?

VAN BOXMEER: In Europe and the United States.


VAN BOXMEER: We see unfolding.

BOULDEN: All right.

VAN BOXMEER: And on the other hand, everything in the emerging markets are still thriving. We saw a good growth in -- in Africa, in -- in Asia and Latin America. And we see that continuing in -- in the second half of the year.

And the final part of it is we said we would put money where our mouth is, i.e. Support our brands. And we will continue to do that in the second half of the year.

BOULDEN: Does that mean more investing and less worry about profits right now?

VAN BOXMEER: Sure. Sure we are. And we have been launching a brand like Desperados, which is a Tequila flavored beer, which you don't have here at the moment. And we have been launching that in 10 countries now. That -- that needs for support. We have been launching Cyber (ph) in Italy. We have been launching the Heineken brand in Mexico, locally produced. We just launched it in -- now in -- in India.

This all calls for investment.

BOULDEN: Poor summer -- do you mean including the weather?

VAN BOXMEER: Yes, it's mainly the weather, the poor summer. We are a high fixed cost business and the -- and the summer months contribute disproportionately to the -- to the profits of a year.


VAN BOXMEER: So, yes, this year the summer, in Europe, particularly, has been kind of weak.

BOULDEN: When you say emerging markets, we hear that from all the CEOs of European companies now.

Does that mean the long-term trend is that you will focus much more on Asia, Africa, Latin America and Europe is pretty much going to be stagnant forever.

VAN BOXMEER: Yes, well, forever, I don't know. But for sure, we -- we do have already a number of years. Asia, Africa and Latin America are those geographies where demographic growth, economic growth and political stability are working hand in hand for the development of beer. It all participates to entering and being more overweight in -- in emerging markets. And today I would say good volume is coming two thirds out of these so-called emerging markets, still one third in mature markets...

BOULDEN: The other way to grow, of course, is acquisition. And we currently have the hostile bid for Foster's by FAB Miller.


BOULDEN: About $10 billion.


BOULDEN: I see there's, of course, a Foster's sign behind you because Heineken owns the rights to Foster in Europe.

VAN BOXMEER: That's correct.

BOULDEN: Honestly, are -- are you going to be looking at maybe possibly taking over all of Foster's?

You must be thinking about acquisitions. You must be looking at that deal anyway.

VAN BOXMEER: We always think about acquisitions. But then you have to look at where we look for, again, markets with a significant demographic potential and -- and economic growth potential.

BOULDEN: Is $10 billion a bit rich for Foster's?

VAN BOXMEER: I never comment on bids and...


VAN BOXMEER: -- and I will not start today...


VAN BOXMEER: -- commenting on bids. Other people might do (INAUDIBLE).


QUEST: Pour him more of his own beer and then see if he'll start commenting on bids. That should help lubricate the discussion a bit.

The weather forecast we wil have for you right after the break.


Good evening.


QUEST: As we head to the top of the hour, let me update you on the situation in Libya.

Tonight, there is fighting which is continuing in areas of Tripoli. The rebel commander, Mukhtar Al-Akhbar, said rockets are landing around Tripoli International Airport, as NATO jets are flying overhead.

Earlier, a group of journalists who had been effectively held hostage at the Rixos Hotel were free. And now we're getting reports that four Italian journalists have been abducted near Zawiya, in the west of the country.

Twenty-four hours ago, the world watched, as, indeed, we all did, as Libyan rebels broke through the walls of Gadhafi's fortress like compound. It was symbolic and it was historic.

And our correspondent, Sara Sidner, was there and followed the rebels inside -- the fighters -- where there was jubilation and, of course, chaos.



SARA SIDNER, CNN INTERNATIONAL CORRESPONDENT: This is the moment that they have broken the fence to Gadhafi's compound Bab al-Azizia. A major victory psychologically for them, they say, because this is where they believe that the family of Gadhafi and that Gadhafi himself spend much of his time. They said that they could actually swim in his swimming pool. They are taking his files out. We have seen files of his son, of his son's wife. And so we are sure that they were able to get inside there.

We're following behind rebels who are taking us into the compound. They say it's safe. We know that sometimes they are not sure exactly what they might encounter even inside of that large compound. But we were seeing amazing celebrations in the neighborhood right near Bab al-Azizia. And we're hoping to get into that compound in just a few moments here.

We are walking into Gadhafi's compound of Bab al-Azizia. The rebels have taken the compound. We're going in to see what we can see. So this is Bab al-Azizia. They now have people standing as security.

OK, they're telling us OK, OK. We can go inside to the compound.

So as everybody runs into this compound, you're seeing people go in and take out weapons. Look just over there, behind you is a huge box.

This box, can I look?

Some of the weapons inside of the Gadhafi compound, a handgun and a -- a rifle, more guns, more guns these guys have found. And so they've been taking some of these things out. The weapons that are coming out of this compound are just massive. There are so many of them, boxes of them, just people carrying them -- carrying them out. They're even taking some of the trucks that belonged to Gadhafi forces.

This is an important day, especially for the rebels, who Gadhafi said would never be able to break his spirit, would never be able to take the city. But they have taken Bab al-Azizia, Gadhafi's compound. And you can see now some of the press coming out. So, clearly, they had it. Clearly, they have taken this over and, clearly, there is extreme excitement here in Tripoli.


QUEST: Sara Sidner there in Tripoli.

Forecasters have upgraded Irene to a category three hurricane. It's getting more dangerous still. And the storm is whipping up and rain is across the Bahamas right now.

We need to find out from CNN's Jim Spellman.

He is in Nassau, in the Bahamas, getting ready to ride out the storm and sent us this dispatch.




The winds have begun to pick up here in Nassau and preparing for the arrival of Hurricane Irene, expected to pass close by as a category two or three storm.

Now, out here in the bay, there's normally a handful of large cruise ships with thousands of tourists on them. And this beach is usually full of tourists, as well.

But the cruise ships have pulled out of the bay to get out of the way of this storm. The beaches are closed. And most of the tourists have fled the island.

Those that have remained are hunkered down in large tourist hotels like this one.

For Bahamians, there are few evacuation options. The island is only about 40 kilometers long. So outrunning the storm isn't an option. Their best bet is to try to protect their property and hope for the best.

BRIAN NOTTAGE, BUSINESS OWNER: Basic shutters. And, you know, they strap down real quick. It takes a matter of, you know, 10 minutes to do a window, because we've done it so often. More often than not, we have to put them up for -- for near misses. But this one looks like we're going to get it.

SPELLMAN: And hope that when Irene passes, their homes and businesses remain and they and their families are safe and sound -- Hala.


QUEST: That, of course, was from the Bahamas before the hurricane has really got going.

The track at the moment -- Pedram is at the CNN World Weather Center.

Look, I know that it has this swirl around that it will go in -- into a sort of a -- a clockwise direction.

But do we know the landfall track yet of this?

Or is it still uncertain?

PEDRAM JAVAHERI, CNN METEOROLOGIST: You know what, the next 24 or so hours, we know were it's going to be, generally speaking. And then beyond that, it starts really fanning out. So we're going to follow this very closely out there, Richard.

But if you take a look at the satellite imagery, and, again, it's a gorgeous storm system when it comes to how organized it is. A category three. There it is just south of the Bahamas on the satellite imagery from the past couple of hours. And this is the kind of damage it's done across portions of the Dominican Republic.

We've got trees down. We've got those coastal huts down, storm surges up to three meters possible associated with the storm. Winds about 193 kilometers per hour right now.

Again, that is working its way toward Nassau and New Providence Island. We're going to see a destructive storm surge in this area, torrential rainfall over the next 24 hours.

But the big question is, when this storm goes back out over the open waters here, we think, now, it is going to strengthen even more, get up to over 200 kilometers per hour and eventually get in close to very, very high population area there along the Eastern Seaboard of the United States.

Now, the Outer Banks, some folks live out there. But you work your way toward New York City, you're talking about tens of millions of people within that vicinity. And this is what, Richard, you were asking about. The model tracks here, the spaghetti models, as we call them here -- and you can take a look -- every single model takes it all the way out toward the Carolina coastline and eventually veers it right offshore.

The dark red line there, that's the official National Hurricane Center track. And that gets it, again, uncomfortably close to New York City, to Newark, New Jersey, in that coastal area. And we think landfall around Long Island, New York is possible some time late Sunday into Monday if it stays on track as it is right now.

If that happens, we're talking about, of course, millions of people being exposed to very strong winds, over 100 kilometers per hour, not out of the question, and torrential rainfall also not out of the question. So that's a story we're going to be following.

And another story we're following is the...

QUEST: Pedram...

JAVAHERI: -- next storm system...

QUEST: -- Pedram, let me...

JAVAHERI: -- on...

QUEST: Can I just interrupt you, Pedram?

JAVAHERI: Oh, come on in.

QUEST: Pedram -- yes, I just want to go back to that -- to that track, as -- as you were just explaining, as it goes up the Eastern Seaboard.


QUEST: If it does go up the Eastern Seaboard like that, toward New York and New Jersey, does it re--- is it likely to remain a hurricane by the time it hits those much more heavily populated areas?

Or would it lose some of its power?

JAVAHERI: Yes. That's an excellent question. It looks like it is going to stay at a hurricane. Right now, it's a category three, winds around 200 kilometers per hour. At that point, it could possibly be weakened down to a category one. And, again, that happens, then we're talking about this storm system having winds closer to 120 or so kilometers per hour.

So it is still looking like it is going to be a hurricane even along the coast of the Northeastern U.S. -- Richard.

QUEST: All right, Pedram.

Apologies for butting in on that, but I just wanted to clarify that point.


QUEST: Many thanks, indeed.

And that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I do hope it's profitable.

"WORLD ONE" will continue in a moment.