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CONNECT THE WORLD

Crisis Call; Euro Bonds; Inside the Siege; Pakistan Flood Disaster; Jackie Kennedy Tapes; A Proud Day for Canadians

Aired September 14, 2011 - 16:00   ET

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


MAX FOSTER, CNN ANCHOR: A message of unity from France and Germany -- the future of the Eurozone includes Greece. But despite opposition from within, Greece is told to keep its promises or lose its bailout.

Plus, Israel warns of harsh consequences if Palestinians pursue the road to statehood.

And a trying time for Tonga, as Canada stomps to victory in the Rugby World Cup.

These stories and more tonight, as we connect the world.

"Your future is with us" -- debt-slammed Greece gets some good news and a warning. France and Germany are reassuring Athens that it can count on them for more crucial bailout money.

But just a short time ago, German Chancellor Angela Merkel and French President Nikolas Sarkozy also talked tough to Athens. Greece, make austerity a part of life and you'll have the money you need to avoid a default.

The German and French leaders also stressed they want Greece to stay in the Eurozone fold.

Right now, we have team coverage for you from New York, London and from Berlin.

The U.S. has been weighing in on the European debt crisis and Wall Street has just wrapped up trading.

Let's bring in Felicia Taylor to find out how much Greece really played into that the trading day -- Felicia.

FELICIA TAYLOR, CNN CORRESPONDENT: Very much so. As you can see, toward the end of the session, there was a pretty strong rally on word that we got after that conference call that took place just a short time ago between French President Nikolas Sarkozy, the German chancellor, Angela Merkel and the Greek Prime Minister George Papandreou.

That was -- they -- they gave the message that exactly the markets wanted to hear -- they are going to stand behind Greece. They will -- they will do everything they can for it to not have a disorderly default and also keep it in the Eurozone.

The other thing that's interesting is they've -- they've referenced the meeting that took place back in July -- on July 21s, when it was agreed upon that they should get a $109 billion tranche. And that is something that they are going to continue to stand by. That was very significant, because that was what was going to help them make it through this first period.

That still needs to be voted on. It's not a done deal yet, but they referred to that again in this meeting, saying that, yes, indeed, that was something that they wanted to do. And Wall Street liked it. There was a significant rally right when we got that news.

But it didn't last. You know, the -- the sellers came back in the marketplace. And we still ended an up day, but not as up as we -- as much as we were. We were up about 270 points.

But as you pointed out, the Greek prime minister also, you know, got a -- a little slap and the wrist and had to acknowledge that he was going to keep the promises that he, too, has made. And we got a statement from him saying that the Greek prime minister has confirmed with absolutely certainty of his government to take all the necessary measures to implement the conditions in its totality.

So he understands the austerity measures. That must be continued and must take place and is adhering to them. So that was a very significant for the marketplace.

And -- and like I said, this is what Wall Street wants to hear. This is unity amongst European leaders. It's something that we don't necessarily have in the United States yet. But at least in Europe, they're coming together and saying, you know what, we're going to stand behind Greece and make sure that there isn't a default.

The market doesn't necessarily believe it. That's part of the problem. We -- we have to see how this plays out. Like I said, they still have to vote on that $109 billion tranche. It's not a done deal.

To other problem for the marketplace today happened with Moody's downgrading two of the French banks. And these are the -- these are the banks the have the most exposure to Greek debt. And that was Societe Generale and Credit Agricole.

They were downgraded just one -- one level, but still, that's enough to signal that, you know, there's a problem with these banks and whether or not they're going to be able to withstand the Greek debt that they -- they do have. They have come forward and said that, indeed, they will. And, as you can see -- and BNP Paribas is on there. That was not downgraded, but it is still under review.

There was a mixed reaction to this, because some of it's already been priced in, into these French banks. And we don't know exactly how much exposure they do have to that Greek debt. Many of the -- a number of them have come out and said that they do have enough liquidity and that they will be absolutely fine.

So that's why you see that -- the kind of odd reaction in the stock price. And some of it's already been -- had been priced in, like I said -- Max.

FOSTER: OK, Felicia, thank you very much, indeed, for that.

So that's the U.S. stock reaction.

Let's return to the continent and especially Germany, which feels it's been shouldering most of the load since the crisis began around 18 months ago.

CNN's Diana Magnay is checking sentiments for us from Berlin.

But first, let's get to grips with Euro bonds. The markets like them, but they're controversial.

Earlier, Jim Boulden explained all.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN CORRESPONDENT: Even though we have a single currency in the Eurozone, each country actually has its own bonds that it sells into the markets. So the idea of a Eurobond would be that all the countries' debt would be pooled together and then a bond would be sold into the markets.

So Germany, basically, the taxpayers would be on the hook for the Greek debt, the Italy debt, Ireland, etc.

Now, they're already on the hook in one way, that they've been helping to bailout some of these countries. But this idea of one big Eurobond is very unpopular in Germany. And some of the people in the market say it actually wouldn't have a very good rating because you'd have in there all that stuff from Greece, as well.

But at least we've heard someone in Europe say that this is an idea the needs to go forward.

And earlier today, the commissioner for The European Commission, Jose Manuel Barroso, brought this up in the -- in the parliament. And let's hear how he described it.

(BEGIN VIDEO CLIP)

JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: There has been much debate on the need for Eurobonds. Today, I want to confirm that the Commission will soon present options for the introduction of Eurobonds. Some of these options...

(APPLAUSE)

BARROSO: Some of these options could be implemented within the terms of the current treaty. Others would require treaty change.

(END VIDEO CLIP)

BOULDEN: Now, this would be a long-term solution and certainly not a solution to all the problems. It would take some time to do this. And then you'd also, of course, still have the normal bond market functioning as well.

FOSTER: As you've suggested, it's all about what Germany thinks of this, though, really, isn't it, because they have to finance it. They're the big economy behind it -- Diana, what is the appetite for these ebbs there?

DIANA MAGNAY, CNN CORRESPONDENT: Well, Angela Merkel, the German chancellor, has made it very clear that she thinks the Eurobond is a bad idea. She said that it's pretty much a surefire way to a debt union and not suitable union, that a Eurobond is not a substitute for greater fiscal interrogation and -- and greater sort of interrogation economically across the Eurozone.

And you can understand why, because a common interest rate on a commonly helped bond would mean that Germany pays more interest on its bonds. And it would also remove the obligation of the poorer countries in the south, considered by many Germans to be poor and more profligate, to get their fiscal house in order.

So Germany would basically be carrying the can for everybody else. And the pressure on them would be removed to really try and get and a grip on their own finances.

So that's why it's so unpopular here -- Max.

FOSTER: And they've got their own internal issues there in Germany.

Are they fed up with this whole crisis?

MAGNAY: I went out today to ask people whether they thought Greece should just leave the union or whether they felt that they should, as Germans, as the biggest economy in the Eurozone, show some solidarity and continue to support the Greeks and the other countries in trouble.

This is what they said.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): It's an economic structure, this euro union. And I think we should keep the Greeks within it. But since Germany is the biggest lender, they should have a bit more say in where the money goes.

UNIDENTIFIED FEMALE (through translator): I don't think it's good that we support the Greeks. We have enough problems in our own country and it's not OK to continue throwing money away for other countries.

UNIDENTIFIED FEMALE (through translator): I can't really answer where the limit should be, but I'm convinced that given the fact we're a union, we should show solidarity.

(END VIDEO CLIP)

MAGNAY: Add to that the fact that the German chancellor, for the last few days, has really been firefighting problems that her own coalition partners have thrown up and you'll see that at a moment when the German government is meant to be looking at its strongest, it's actually appearing weak.

Basically, the head of the FDP, which is a coalition -- the junior coalition partner with Angela Merkel, said earlier that there should be no more taboos and that orderly insolvency for Greece should be discussed, should be on the table.

So I'll just show you, as you can see, a couple of these newspaper headlines -- "Rebellion in the FDP Against Euro Politics."

And then this cartoon in the left-leaning "Taz die Tageszeitun," which basically shows a mother and a young child around the table, where the young child is basically pulling all the dishes off the table. And it's pretty fair to guess who the young child is referring to.

So this is also, Max, a difficult time for the coalition, in any case, because the FDP is losing popularity across the country. You have this vote in the Bundestag coming up in two weeks time on whether to expand the European Financial Stability Fund, this interim mechanism. And many in the FDP have already said they're not going to support it. So you have big problems within Angela Merkel's ruing -- ruling coalition right now.

FOSTER: A German view from Diana Magnay.

Well, with the whole Eurozone looking to Friday's meeting in Poland, the euro's very future seems to be coming to a head.

Professor Charles Goodhart is a former member of the Bank of England's Monetary Policy Committee.

He spoke to my colleague, Richard Quest, who asked him why Europe's alarm bells have been ringing so much louder recently.

(BEGIN VIDEOTAPE)

CHARLES GOODHART, FORMER MEMBER, BANK OF ENGLAND MPC: It's actually been getting worse since July. The thing that really triggered it was when Berlusconi appeared to tell Tremonti that he wasn't going to go through with the austerity in Italy. And then suddenly the market turned on Italy and Spain. And that was the major change.

Since then, the only thing one can say is, like most of the rest of this crisis, it's been getting steadily worst a bit at a time. And what has got worse most recently is that the crisis has moved from countries like Italy and Spain to France and the French banks.

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": What's the fear?

If every Greek bond went south, it's still less than 5 percent of the Euro -- of the total Eurozone GDP. It's still manageable for the banks with a recapitalization from national support.

So what's the fuss?

GOODHART: The fear is contagion. The fear is that the crisis goes from the Greek sovereign to the Greek banks, that there would be difficulties in keeping the Greek banks afloat under these circumstances and people might get fearful about their deposits not only in Greece, but in other countries under pressure.

QUEST: We know that Greece is going to have a selective default under the July 21st agreement. That much we already know. So default, per se, is already on the table.

What are we really frightened of where that's concerned?

GOODHART: Well, it's a question of how far the default will go and whether it's an orderly default, a disorderly default. We really don't know how this is going to play out. And in particular, we don't know how this is going to affect the Greek banks.

QUEST: So when we hear President Barroso saying today, he -- enough time of words, time now for action, and we hear Angela Merkel saying, we must all be very careful with our words, what does -- what's got to be done?

Because we've been at this now for nearly two years.

What do we need to do?

GOODHART: Well, one of the problems is the there are very different views about what the ultimate development in Europe ought to be. And Martin Wolf has got a -- an excellent column in "The Financial Times" today.

So there are at least two views about where Europe will go. One view is that the Eurozone, as a single monetary union, ought to be restricted to a much smaller group of northern countries, and that the southern countries ought actually be encouraged to pick up their bags and leave gently.

Another view is that the present existing euro ought to be protected.

(END VIDEO TAPE)

FOSTER: There you go.

Well, You're watching CONNECT THE WORLD.

Coming up, streets turned into rivers, croplands into swamps -- heavy rains devastate parts of Pakistan, affecting more than five million people. And then, a stunner at the Rugby World Cup. We'll show you the Canadian come from behind win.

And later, Palestinians go on a P.R. blitz, as they proper to take their case for statehood to the United Nations.

(COMMERCIAL BREAK)

FOSTER: I'm Max Foster in London.

You're watching CONNECT THE WORLD.

And here's a look at other stories we're following this hour.

The smoke has finally cleared from a -- the brazen Taliban assault on the capital of Afghanistan. It took 19 hours for Afghan and NATO troops to kill the militants who attacked the U.S. Embassy and NATO command center in Kabul. And now we're seeing just how ferocious the gun battle really was.

A NATO commander says 11 civilians and five police officers were killed in the attack. Militants used a high rise building to stage their assault.

Our Suzanne Malveaux was allowed inside shortly after the siege.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Six guys in a vehicle pulled up. Five of them were wearing burkas to try to disguise themselves as women to bypass security. They took the burkas off, brandished their weapons and then they all entered this building.

Six police officers guarded this building. You can see this is where they stayed. You have the television, the remote control. You also see the bedding here.

This is where the terrorists, on the second floor, first confronted the police. They shot one officer and then they threw him over the ledge.

This is the sixth floor. And when the terrorists got up here, you can see they cut all the power lines, the phones, the lights to make sure that it was dark, that they didn't have any communication with the outside world. Also, we're told one of them was injured here and tended to his wounds while waiting for help.

Here on the 12th floor is where the final showdown was. There's evidence of it everywhere. You've got these spent shell casings. You have got pieces from explosive grenades. And if you take a look around, there are hundreds and hundred of holes on the wall here. Clearly, a fierce firefight that went on here for hours, well into the morning, to get the terrorists.

Now, I want to give you some perspective. We are in the building on the 12th floor on the east side. Here's what the terrorists saw.

If you take a look and you go beyond, about a half-mile, you see that orange building?

That is the U.S. Embassy. If you go over to the left, the white building, that's the NATO compound. This essentially gave them a clear shot to continue firing throughout the evening.

(END VIDEOTAPE)

FOSTER: Well, there's more uncertainty about the fate of two Americans held in Iran for the last two years. Iran's judiciary says it's considering their bail request. But a Western diplomat has told CNN an Omani plane is en route to Tehran. It's not clear yet if they're free to leave.

Iran's president earlier said Shane Bauer and Josh Fattal would be released. They had been sentenced to eight years in prison for spying.

Six people have been killed in an ax attack in Central China. A 30 - year-old man allegedly started hacking people on the street of Gongyi City. Two children are among the dead. Four people died at the scene, whilst an adult and a child died in hospital.

More than 230 people have been killed in weeks of heavy rains and flooding in Pakistan. Forecasters say rain in the area has been lessening. But the U.N. says more than five million people have been affected and hundreds of thousands are now living in camps.

CNN's Nick Paton Walsh has been assessing the damage and he sent us this report.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN CORRESPONDENT (voice-over): Before the rains came, they had little. Now, they've moved onto the roads to save even less. We're heading into an area devastated by weeks of monsoon rain toward some of the five million Pakistanis who've been affected by floods. The village of Shabek Glul (ph) lost the houses once here when the rains began, the mud raising this high up on the mosque. And now, at the end of the rains, the village lost these -- some lives broken, others lost.

(on camera): It was in the collapse of this house that a man died at the start of the rains. But the recovery that's already beginning here is people coping for themselves. They say they have not seen a single government official since the rains began.

(voice-over): During our visit, no sign of help from outside. The government and aid agencies say they're doing all they can. But here, the fear is simple. "With our crops submerged, how will we eat?"

"Nobody has come to our village," she says. "We're starving to death. We've been catching diseases. No one has come to treat us."

UNIDENTIFIED FEMALE: All my crops are finished. We'll died of hunger. My kids don't have a home and we're living in a school nearby.

UNIDENTIFIED MALE (through translator): I'm scared, because our houses have fallen and everything has been washed away.

WALSH: In last year's floods, their village was largely spared, never imagining the same rains could come again and take everything.

Nick Paton Walsh, CNN, Shabek Glul.

(END VIDEO TAPE)

FOSTER: An interview with America's former first lady, Jacqueline Kennedy, has been released 47 years after it was taped. In the recordings, the window of the American president, John F. Kennedy, reveals her dislike for Indira Gandhi, criticism of Charles De Gaulle and suspicions of Martin Luther King, whom she describes as phony.

But she also is critical of herself, saying she apologized to her husband for being a dud.

(BEGIN AUDIO CLIP)

JACQUELINE KENNEDY: I was always a liability to him until we got to the White House. And he never asked me to change or said anything about it. Everyone thought I was a snob from Newport who had bouffant hair and had French clothes and hated politics.

(END VIDEO CLIP)

FOSTER: Fascinating stuff.

You're watching CONNECT THE WORLD.

Coming up this hour, a force from the north sweeps through the Pacific. Canada upsets Tonga at the Rugby World Cup in New Zealand.

And the Palestinian statehood push at the U.N. -- Israel warns of harsh consequences if the bid goes ahead.

More on that in around 15 minutes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CHRIS MOLDER, CANADIAN RUGBY FAN:

As your probably aware, most -- most Canadians are born with a hockey stick in their hand. So to -- to excel on the world stage against such a great team as Tonga is a -- is a real treat for Canadians and a matter of pride for us.

(END VIDEO CLIP)

FOSTER: And a surprise. As you've just heard, it's a proud day for Canadians, adding Rugby Union to their nation's sporting repertoire. They beat Tonga, 35 points to 20 in their World Cup opener in New Zealand. Two tries in the last 15 minutes handed Canada the win. They took on two time World Cup finalist France on Sunday and Tonga is up against Japan on Wednesday.

For more on the rugby, we're joined by Mark McKay at the CNN Center.

Who would have thought it, Canada?

MARK MCKAY, ANCHOR, "WORLD SPORT": Yes. And I think the fan put it right there, Max, that the number one sport in that North American nation is ice hockey. But I think rugby maybe moved up a few notches.

The Canadians have been playing rugby, believe it or not, since the 1860s. But they've never been able to get past the big guns of the sport. They've actually had modest success, as well, in Rugby World Cups in the past, back in 1991. They actually reached the quarterfinal round before losing to New Zealand.

Max, they're ranked fourteenth in the world. But after today's win, I think they feel number one after that big victory against Tonga today.

FOSTER: OK, you've convinced us on Canada.

What about Russia then?

MCKAY: Well, they're ranked even lower than Canada, Max. They're 19th in the world. But they, like Canada would love to make an impact on this World Cup. On Thursday, Russia will play their first ever World Cup match. That's when they meet the United States.

Now, is expected to be the best chance for either one of these sides to pick up a victory. Neither expected to move past the group stage.

"WORLD SPORT'S" Alex Thomas has more.

(BEGIN VIDEOTAPE)

ALEX THOMAS, CNN SPORTS CORRESPONDENT (voice-over): Russia's World Cup chances are as shaky as this amateur video of their warm-up game against English Premiership club, Northampton Saints. They lost 54-19, which explains why a country of 140 million people is simply grateful to qualify for the sport's biggest tournament.

YURY KUSHNAREY, RUSSIAN FLY-HALF: It's (INAUDIBLE) sport, but I think they're lucky. Sometimes they're lucky.

VASILY ARTEMYEV, RUSSIAN WING: Oh, it thrills. I mean totally for the last 10 or 11 months since we've qualified, it's been just a roller coaster and just all the preparation camps and training camps and all the traveling we've been -- we have done in the last 11 months, it was just crazy. Yes.

THOMAS: Picked the host the 2013 Rugby Sevens World Cup, Russia is taking the sport more seriously than ever before. It has a professional 15 aside league. And the national team has recruited top coaches, like Kingsley Jones, who used to play for Wales and was in charge of English Premiership Club, Sales Sharks, and former England International, Henry Paul.

HENRY PAUL, RUSSIAN ASSISTANT COACH: Their promotion to the World Cup was -- was a massive achievement. And now we want to go there and show that, you know, Russian rugby has got some talent. We've got some (INAUDIBLE), a lot of things combined.

THOMAS: Although the IRB, rugby's governing body, has 118 members, Russia will be only the 24th different country to play at a World Cup and only four nations have ever won the tournament. There's a large gap between the big teams and the small ones. Russia, with a population of around 140 million, has less than 18,000 registered players. England, population 52 million, has more than two-and-a-half million players.

BERNARD LAPASSET, CHAIRMAN, INTERNATIONAL RUGBY BOARD: Rugby now is a sport for this century. We are opening a new vision for this Rugby Union around the world. And we have the representation from -- from all continents and there in this work, that's a fantastic moment for rugby.

SEAN FITZPATRICK, FORMER ALL-BLACKS RUGBY CAPTAIN: There's probably only five teams that can win the World Cup. And that's not what we want. As fans, we want to see 10 teams that are capable of winning the World Cup and -- so, you know, I mean when you look back at the last World Cup in '97, the only plays (INAUDIBLE) for me, was the Portugals of the world, the Georgia almost beating Ireland. You know, I -- I saw that as a real positive step in terms of world rugby.

UNIDENTIFIED MALE: Go that way slightly (INAUDIBLE).

THOMAS: Samoa is also a smaller nation, but one that is knocking on the door of the top tier. And they could well spring a surprise in what is almost their home World Cup.

SEILALA MAPUSUA, SAMOA CENTRE: Auckland and the greater Auckland region is -- is the Polynesian capital of the world. And there's so many Polynesians so it's -- I think it's going to be real exciting for us.

FILIPO LAVEA LEVI, SAMOA BACK ROW: We're going to have a lot fans, you know, watching us. And so it's going to be like, you know, sort of a way home, you know, a home away from home. So it's going to be, hopefully, you can come out in numbers and support us.

THOMAS: Whether it's a country making its debut or World Cup dark forces (ph), rugby's smaller nations are crucial to the sport's future. And as the game expands, more minnows will grow to challenge the big fish.

(END VIDEO TAPE)

FOSTER: It's a great tournament, isn't it, Mark?

Take us through some of the other wins as well. Samoa, Alex mentioned there in his report.

MCKAY: Yes, Samoa. No problem in their first match out of the gate today, Max. Inspired by their pre-match Haka, the highest ranked team of the Pacific Island nation, shot to top of their pool, Pool D, with a 49-12 demolition of Namibia. The first of Samoa's six tries, something of a solo effort here from strong half Kahn Fotuali'i. He collects a poor clearance kit from Namibia, charges back along the right, speeding over for the opening minute.

There was a hat trick of tries for Alessandre Dugoi (ph). This was his second of the match in the 34th minute. The powerful winger knocking down two Namibian players, crashing over the line. Dugoi has to wait until the second half to claim his third try of the match, benefiting from a break and a deft pass here, sprints over unchallenged. A win and a bonus point at the Rugby World Cup for Samoa.

And another big match on Wednesday, Georgia's opening game in the tournament against Scotland. No tries for it in this one. It's only the sixth time in Washington, DC history. But Kiri Kashvili (ph) kicked Georgia into the lead in the 18th minute. The Scots, they struggled to beat Romania last weekend, but they were better on this day. By the time Dan Parks drop kicked his goal, they were 9-3 up against the best of Europe's second tier nations.

Georgia scored another penalty kick themselves. Scotland, though, was able to find victory, 15-6.

Hey, there's also a football and a full night of European Champions League action going on now. Results next hour, Max, on "WORLD SPORT".

I'll see you then.

FOSTER: Thank you.

Good stuff, Mark.

Thank you very much, indeed.

Coming up on CONNECT THE WORLD, meanwhile, a new warning from Israel over the Palestinian bid at the United Nations. Will have special coverage for you in five minute's time.

Then, one of Ireland's most senior clerics wants to change a fundamental rule on the -- in the Catholic Church. We'll bring you both sides of the celibacy debate in 15 minutes.

And in 25, we've got rare access. We'll take you up close in one of the world's most films aircraft. It's part of our special Eye on Poland.

(COMMERCIAL BREAK)

FOSTER: You are back with CONNECT THE WORLD on CNN, the world's news leader. Let's check the headlines for you this hour.

France and Germany want Greece to stay in the euro zone. A few hours ago, they told the debt-stricken country it has to get its financial act together or risk losing further bailout money. Greece says it's committed to reforms.

A coordinated Taliban assault on Kabul finally ended on Wednesday morning when the last of six attackers were killed. A NATO commander says 11 civilians and 5 Afghan police officers died in the attacks.

A pro-Gadhafi TV station based in Syria has read out what it says is a new message from Libya's ousted leader. It quotes Moammar Gadhafi saying that NATO is using indescribable terrorism and aggression in his hometown of Sirte.

The firms BP, Transocean, and Halliburton all violated a number of federal offshore safety regulations leading to last year's Gulf of Mexico oil spill. That's the conclusion of the final US government report on the disaster. The rig explosion killed 11 people. It also sent nearly five million barrels of oil into the Gulf.

Turkey's prime minister is moving onto Tunisia after a hero's welcome in Egypt. Recep Tayyip Erdogan is on a tour of Arab Spring states. He used his stop in Cairo to support UN recognition of a Palestinian state.

And those are the headlines.

Israel's foreign minister warns there will be harsh and grave consequences if Palestinians go ahead with their historic bid for statehood at the United Nations next week.

Avigdor Lieberman met with EU foreign policy chief, Catherine Ashton, in Jerusalem today. He didn't elaborate on his warning, but in the past, he suggested Israel could sever ties with the Palestinian Authority.

The Israeli government says Palestinians can achieve true statehood only through direct peace talks, calling the UN bid a distraction and attempt to delegitimize Israel.

(BEGIN VIDEO CLIP)

DANNY AYALON, ISRAELI DEPUTY FOREIGN MINISTER: This is just another - - another step in an ongoing process of delegitimization. Even through the supposedly good ears of negotiations, they still were bashing Israel, they were still delegitimizing it.

They still try to do it now by just misrepresenting the truth, by trying to put this conflict into the context of apartheid and racism, which has nothing to do with it.

(END VIDEO CLIP)

FOSTER: Well, Palestinians say the statehood bid is not an attempt to delegitimize Israel, but rather its occupation of Palestinian lands. They also say negotiations with Israel are impossible whilst it continues to build settlements, thereby changing the reality on the ground before any agreement on final borders.

As Kevin Flower now reports, Palestinians are now taking to the airwaves to drum up support for their statehood bid.

(BEGIN VIDEOTAPE)

KEVIN FLOWER, CNN CORRESPONDENT (voice-over): This is a young girl's daydream. A mother and daughter make their way to the immigration desk of an international airport. They are greeted by a friendly customs official who bids them safe travels from the independent state of Palestine.

Awakening from the dream, the girl finds herself back in the grim reality of life in the occupied West Bank, where checkpoints, Israeli soldiers, and security inspections are the norm.

This spot is part of a new Palestinian Authority media campaign in support of its bid to win international recognition for a Palestinian state and one of dozens of different promos airing on government-run television.

And at the Voice of Palestine radio network in Ramallah, the campaign is making use of a familiar and unlikely voice.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When we come back here next year, we can have an agreement that will lead to a new member of the United Nations.

FLOWER: The English clip from a United Nations speech given by US president Barack Obama last year is just one of the many languages being used.

"We wanted to address and target those who speak different languages, like the consulates and the foreigners," says Voice of Palestine manager Ahmad Zaki. "Our signal is reaching, also, Israel, and we have spots in Hebrew and Russian, and we hope to target Israeli public opinion."

Efforts to publicize the push to make Palestine the 194th member of the UN have extended to the grass roots as well. A group of activists recently put this chair on a world tour, marking it as a place for their state's future UN ambassador.

WALID NASSAR, PALESTINIAN ACTIVIST: The idea came from a group of people, normal Palestinians, who always heard the expression, "the seat in the United Nations."

So, we've decided to take the seat with us, made in Palestine, manufactured in Palestine, has the world "Palestine" on it, to be handed over after the world tour to the Secretary General of the United Nations in New York.

FLOWER: And on the streets of Ramallah, several dozen young college activists have begun handing out flags and fliers to spread the word about the UN strategy.

ABDULLAH ABU RAHMA, PALESTINIAN ACTIVIST: We are now serious on this bid, and we are working on the ground, preparing ourselves as a people.

FLOWER: Palestinian Authority officials and activists are hoping that the media and grassroots campaigns will result in a record turnout for scheduled rallies of support. But just how many people are actively willing to get engaged in that effort remains an open question.

Kevin Flower, CNN, Ramallah, in the West Bank.

(END VIDEOTAPE)

FOSTER: Well, with their statehood bid just days away, Palestinians still have to resolve a major dilemma. Which UN body should they petition? The decision could mean the difference between victory and defeat, and yet, it's not quite that simple.

If they do go to the General Assembly, they're virtually guaranteed support. As you can see here, 127 countries have already recognized a Palestinian state.

But the Assembly can grant only observer status, meaning Palestinians would have no voting rights. They would, however have greater access to UN agencies, including the International Criminal Court, where they could pursue complaints against Israel.

If Palestinians want a state with full privileges, though, they have to come here, to the UN Security Council. But that bid seems dead on arrival, as the United States has already promised a veto. The Palestinians' representative to the UN explain their options.

(BEGIN VIDEO CLIP)

RIYAD MANSOUR, PALESTINIAN OBSERVER TO THE UNITED NATIONS: We hope, if the environment is right, to join the community of nations as a full member.

But if that is not right, what is available to us is to become a non- member state and recognition of the state of Palestine, and these are very important contributions to advancing the cause of peace, investing in peace, and maybe convincing our neighbors, the Israelis, to negotiate with us in good faith.

(END VIDEO CLIP)

FOSTER: Well, the US promise to veto a Palestinian state has angered people across the Arab world, as some question why Washington supports self-determination for Arabs in places like Syria and Libya, but not the Palestinian territories.

Let's bring in Aaron David Miller into our discussion, here. He's a former US negotiator on the Middle East, currently a public policy fellow at the Woodrow Wilson International Center for Scholars. Thank you so much for joining us.

One rule for Libya, it seems, and another for the Palestinian areas. Why is that?

AARON DAVID MILLER, WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS: Well, they're different problems, first of all. But great powers, and the US is a great power, great powers traditionally behave inconsistently, at times, hypocritically.

I mean, there's no -- there's no --

FOSTER: Are they hypocritical now?

MILLER: -- universal rule --

FOSTER: Are they hypocritical on this?

MILLER: Are they hypocritical now? Look. I think if the issue is admission of Palestine as a member state, I think the Americans are acting quite consistently, in line with deeply-held principles with respect to the importance of negotiations.

And by the way, there aren't -- there's almost zero chance of successful negotiation now.

But nonetheless, the Americans will uphold this principle that admitting Palestine as a member state right now, in advance of an agreement -- and the president was very clear here last year at the UN General Assembly, that he hoped to see next year an agreement and a new member state.

But the word "agreement" was mentioned. So, no. I think the Americans quite appropriately ought to veto an effort to -- by the Palestinians to become a member state.

Now, a UN General Assembly resolution, over which they cannot veto -- they have no veto power, that's another matter.

I think the president would be in a very difficult position to oppose a resolution that supports a principle that he, in fact, does uphold, and that he's worked very hard to achieve, which is Palestinian statehood. Two states, Israel and the state of Palestinian living side-by-side in peace and security.

The problem, of course, is that the chances of producing an agreement to achieve that result are slim to none.

FOSTER: Whilst these negotiations are meant to have taken place, or are due to take place, the Palestinians are suggesting that they're impossible whilst Israel continues to build the settlements. So, they're just going along one track, Israel's going along on the other whilst there are no negotiations. So, that's their rationale.

MILLER: I think that there is an argument that a deeply despairing and frustrated Palestinian population under occupation, facing the reality that the arms struggle, violence, is never going to get them a state, facing the assumption that negotiations are at an impasse, and they are correct.

Negotiations between Israelis and Palestinians are at an impasse because the gaps between Benjamin Netanyahu and Mahmoud Abbas on the core issues that drive this conflict: Jerusalem, borders, security, and refugees. Those gaps cannot be bridged right now.

So, the Palestinian explanation is, fine. We will then put our currency, our game, into the international arena where we have more leverage and support.

The problem is, and it's apparent to everyone, including Mahmoud Abbas, who is a wise, moderate, and judicious man, is that the day after, whatever is achieved at the UN, the day after, the problem will remain the same.

Two peoples caught up in a tragic, right now intractable conflict, with the only pathway forward being a negotiation that right now neither can consummate.

FOSTER: We're going to get some sort of idea about how -- how everyone's feelings from Tony Blair. He's the Quartet envoy, isn't he? He's part of the company going into the Middle East to try to get some sort of agreement between the Israelis and the Palestinians on a statement ahead of the UN event.

And the State Department is sending a couple of people over there to support him. Are they even going to be able to get any sort of statement together?

MILLER: Well, you know, it's a fascinating question. Sometimes in the heat of the last moment, the so-called five minutes to midnight, or the 11th hour, whatever expression you want to use, a degree of urgency is produced that sometimes can be used with great effect to draw parties back from the brink.

It would be wonderful to hope that somehow our two envoys, both talented, dedicated individuals, Tony Blair, who has done extraordinary work on institution building and as an envoy can produce a last-minute fix to this. I just don't think the odds of that are very high.

The Palestinians need one of two things, it seems to me: a settlements freeze, which they will not get, or terms of reference to a negotiation -- terms of reference for a negotiation that will govern those negotiations. I'm not sure they're going to get that, either.

So, most likely, barring some last and late-minute intercession by someone, most likely you're going to end up with a General Assembly resolution elevating the PLO from a non-member entity to a non-member state and a very strong resolution supporting Palestinian statehood, which will pass with overwhelming numbers.

FOSTER: OK, Aaron David Miller, thank you very much, indeed. We'll watch with interest, of course, next week when all that takes place.

Now, you're watching CONNECT THE WORLD. I'm Max Foster. Is the celibacy rule driving priests away from the Catholic Church? A respected retired bishop says radical changes are needed. We'll have more on that after the break.

(COMMERCIAL BREAK)

FOSTER: For centuries, the Catholic Church has banned its priests from getting married. The debate about this is nothing new. But now, one of Ireland's most senior clerics has weighed in, saying the celibacy rule must go.

Retired bishop Edward Daly is worried the future of the Catholic Church is at stake. CNN's Richard Greene has more.

(BEGIN VIDEOTAPE)

RICHARD GREENE, CNN CORRESPONDENT (voice-over): One of Ireland's respected Catholic clerics is making a radical suggestion. Let Catholic priests get married.

It has nothing to do with priests who abuse children, retired bishop Edward Daly says.

EDWARD DALY, RETIRED IRISH BISHOP: I think they've brought great shame to the church and to themselves and to their calling. And above all, it's a betrayal of the Christ that they purport to serve.

GREENE: The abuse scandal and the subsequent Vatican cover-up is a separate issue, he says. The problem for him is that making priests stay celibate is hurting the church.

DALY: One of the most heartbreaking things I had to do as bishop was accept the resignation of priests who felt they could not live the vow of celibacy. We lost some wonderfully good men, friends of mine.

GREENE: Daly isn't just any bishop. He was on the streets during the Bloody Sunday massacre in 1972, when British troops opened fire on a civil right march, killing 14 people.

Waving a white handkerchief, Daly helped get the wounded out of harm's way and gave last rites to the dying. A mural in his hometown honors his bravery.

Now, in a new book, he's taking another brave stance, suggesting that the church consider dropping its ancient ban on married priests.

Pope Benedict XVI's spokesman rejected the idea. "The position on celibacy is clear," he said.

Edward Daly is arguably the most prominent and respected bishop to suggest radical changes, and he is taking the long view.

DALY: It possibly won't happen in my time, but I hope it will happen sooner rather than latter.

GREENE: Richard Greene, CNN.

(END VIDEOTAPE)

FOSTER: Well, that was retired Irish bishop Edward Daly, and restrictions on sex and marriage are not unique to the Catholic Church, but there are variations in other faiths.

Sex outside of marriage is forbidden to Muslims, but celibacy was never part of the religion's original practices. Most of the famous Islamic saints were, in fact, married.

Celibacy is not required for clergy in the Anglican communion. The Church of England abolished it in 1549.

In Buddhism, monks and nuns lead lives of total celibacy. Any kind of sexual behavior is forbidden.

And celibacy has played a little role in Judaism. Marriage and raising children are understood as holy obligations. Traditionally, unmarried males cannot assume leadership positions in the Jewish community.

One of Edward Daly's arguments is that as the Catholic clergy ages, fewer young priests are staying with the church, saying they can't stick to the celibacy vow.

So, is all this damaging the church? For more on this, we're joined by William Donohue in New York, he is the president of the Catholic League, and Richard Sipe, he's author of "Sex, Priests, and Secret Codes," and he joins me via Skype from San Diego.

First of all, William Donohue, it is a concern, isn't it, that this problem in recruiting members or priests, now? So, is the whole idea of celibacy dated by definition?

WILLIAM DONOHUE, PRESIDENT, CATHOLIC LEAGUE: No. As a matter of fact, what I find striking is the myth that the shortage of priests in the Catholic Church has anything to do with celibacy.

If you want to know where the mainline Protestant religion is going, it's collapsing. And yet, they can all get married.

Catholic Church is doing much better than the Episcopalians, the Lutherans, the Presbyterians, and the Methodists. But if you wanted to see the Catholic Church go into free fall, maybe they should copy the Protestants and let them get married.

I'm being somewhat facetious. But all I'm simply saying is this. It's a myth that you're going to resolve the question of a shortage, which I think there is, of Catholic priests by having them get married. If that were the case, the Protestants would be booming. Yet, they're collapsing.

FOSTER: Richard?

RICHARD SIPE, AUTHOR, "SEX, PRIESTS, AND SECRET CODES": The sociologist Dean Hoge from Catholic youth did a study some years ago and said that four times more candidates for the priesthood would sign up if it were not for celibacy.

Celibacy is an impediment to the growth of the church, and the problem is this. Celibacy is not practiced by the majority of Catholic priests. It's a rule --

DONOHUE: How would you now?

SIPE: -- that is not --

(AUDIO GAP)

SIPE: Who's talking?

FOSTER: Sorry, that was William, he's just asking you how do you know?

DONOHUE: I'm saying, how would you know that?

SIPE: I did a study, and I did a 29 -- 25-year ethnographic study that I published in 1990.

And by the way, the cardinal who was the secretary of the congregation for the clergy agreed with me. Well, actually, with the BBC, in 1993 when they -- they posed to him, there were two studies out that said that between 45 and 50 percent of Catholic priests didn't practice celibacy at any one time.

And Cardinal Sanchez said at that time, and I quote word for word, "I have no reason to doubt the accuracy of those figures."

FOSTER: William, is that --

(CROSSTALK)

DONOHUE: I have reason to doubt them, and I'm a sociologist, unlike you, who is not a psychologist. You've tried to pass yourself off that way. You do not have a PhD. I do, in sociology.

SIPE: Hey, that's not --

(AUDIO GAP)

DONOHUE: I've looked at your work, which is dated --

(CROSSTALK)

SIPE: It's --

DONOHUE: -- and I don't believe a word of it.

FOSTER: William, I just want to take it away from academia --

SIPE: This has nothing to do with --

FOSTER: -- and away from the debate within the church, William. There are people that are outside the church, they might look at it and just say, on a very, very basic level, in modern times, humans have needs, they have sexual needs. Why frustrate them? Why do that in the church? Surely it has a backlash in some sort of sense in your work?

DONOHUE: I want to make it clear, I'm not opposed. I don't care. This is not dogma. This is a discipline of the Catholic Church. They can change it if they want. The former archbishop of New York, Edward Cardinal Egan, said before he left office, before Dolan came in, said maybe we should reconsider it.

They can change it. All I'm simply saying is this. Stop with the nonsense that there's this great elixir, if you get rid of celibacy, you're going to get rid of the problem of the shortage of priests. I don't care about studies, if that were true, the Protestants would be doing well. They're going south.

Quite frankly, the problem is much more complicated and has to do with our culture in the West in general and why it's unattractive to come into any kind of religion.

SIPE: Well, if you discount any studies, then you discount everything. But here's the reality, that the sexual abuse of minors in the Catholic Church is at a very high rate, and it is a symptom. Celibacy and changing celibacy is not going to cure the problem, but there is a very serious problem about sex and celibacy --

FOSTER: OK, Richard, I need to allow William to come back on that just because, that was not everyone in the church involved in the pedophilia, of course, and William -- but that -- is it a symptom in any way?

DONOHUE: Well, that's -- not only that -- Homosexuals are responsible for almost all of the predatory behavior, so how would marriage resolve that issue?

FOSTER: OK, thank you both, indeed. OK -- OK -- we're going to leave it there. Richard, thank you very much, indeed, for joining us. William, as well. Thank you both. It's a hot debate, it's going to continue, and it's got a big voice backing it today, as we've been reporting.

You're watching CONNECT THE WORLD. Up next, the making of a famous combat machine. We bring you a rare look at a Black Hawk helicopter on the assembly line. That in sight in just two minutes as we turn our Eye on Poland.

(COMMERCIAL BREAK)

FOSTER: We are turning our Eye on Poland all this week, a country that is increasingly making a mark on the global stage. And football stadiums aren't the only building projects for which Poland is gaining renown. We were talking about that yesterday.

It's also home to the company that makes one of the world's most famous combat helicopters. Our Jim Boulden has been given a rare access to the plant.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Polish workers putting the finishing touches on the newest Black Hawk transport helicopter, the S70i. For security reasons, we aren't allowed a closer look, nor are we told which government ordered these.

One of the six helicopters so far assembled at Mielec, southwest Poland, made its debut here at the Paris air show in June as Sikorsky Aircraft Corporation touts its made in Poland Black Hawk for the international market.

The first three Polish-made Black Hawks were delivered in August.

Sikorsky is part of American defense giant United Technologies. It bought the local company and its helicopter family here in Mielec in 2007, when it was privatized by the Polish government.

Sikorsky then began building its international Black Hawk here. The factor also makes some of the cabins for the US Army version in a 70-year- old factory that once made Russian MiG fighters.

JANUSZ ZAKRECKI, PRESIDENT PZL MIELEC: Why Sikorsky came in? I think long history of aviation, tradition, and a lot of experienced people

BOULDEN: The first test flight was in November, 2010, and production is now ramping up.

BOULDEN (on camera): By 2013, management hopes to be producing some 20 of the S70i Black Hawks here. Now, they won't reveal how many customers they have, but more than 20 countries do currently use a Black Hawk.

BOULDEN (voice-over): Sikorsky's faith in this area's aviation heritage came with serious money, a $100 million investment and 30 percent more jobs at this famous plant. The factory now has 2,000 employees. But it's a far cry from the 7,000 that once worked in the factory during the Communist era.

Mielec is one of the 14 so-called special economic zones in Poland. That gives tax breaks to investors. Mielec was Poland's first, created in 1995. The tax incentives in the zones will end in 2020, so those who run the zones are now focused on the skills it offers.

WOJIECH DABROWSKI, PRESIDENT, INDUSTRIAL DEVELOPMENT AGENCY: Day by day, the quality of labor are more important than taxes.

BOULDEN: For its part, the Sikorsky factory works with local universities and has a plea to young Poles.

ZAKRECKI: If you want to get the job, good job, please be an engineer.

BOULDEN: Jim Boulden, CNN, Mielec, Poland.

(END VIDEOTAPE)

FOSTER: And I'm Max Foster. Thank you so much for watching CONNECT THE WORLD. The world headlines and "BackStory" follow this short break.

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END