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CONNECT THE WORLD

Italy's Credit Rating Downgraded; Afghanistan Assassination; Violent Crackdown in Yemen; Terror Attack in Turkey

Aired September 20, 2011 - 16:00   ET

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


BECKY ANDERSON, HOST: A dire warning from the IMF. The global economy is entering a dangerous new phase.

Live from London, I'm Becky Anderson. Also tonight, a standing ovation at the United Nations as a new Libyan leadership takes center stage.

And putting the truly bizarre into "Harper's Bazaar." The editor-in- chief on ten years as a top in what's hot in the world of fashion.

Well, plummeting growth, unacceptably high unemployment, there was little to cheer about in the IMF's global health check of the global economy. At best, Europe and the US face an anemic and bumpy recovery. At worst, the face slipping back into recession.

The IMF says that only bold, collective action can prevent economies stalling altogether.

(BEGIN VIDEO CLIP)

OLIVIER BLANCHARD, CHIEF ECONOMIST, IMF: The second factor is what we have called the crisis of confidence, crisis of confidence in policymakers. We sense that they are just only -- always one step behind the events and that Europe really needs to get its act together.

(END VIDEO CLIP)

ANDERSON: Well, a grim assessment from the IMF wasn't the only bad news for the euro zone today. Standard & Poor's announcing it was downgrading Italy's credit rating, citing the country's weak growth, poor response to the crisis, and political uncertainty.

So, how did the markets react to all of this? Let's bring in Felicia Taylor from New York. The markets always do things that we don't expect them to do. How did they react today?

FELICIA TAYLOR, CNN CORRESPONDENT: Well, that's for sure. Basically, they reacted very surprisingly. We saw about a 1.5 percent gain on the Dow and the S&P, but I have to tell you, in the last few minutes, that has pretty much been erased. I'll get to that in a second.

So, what the Dow and the markets overall were really looking at is the FOMC meeting, which is taking place both today -- Tuesday -- and Wednesday. We'll get the minutes of that meeting on Wednesday.

They're expecting to hear what was called Operation Twist. And, so, what is that? That is where, literally, the Federal Reserve will go in and start selling off their shorter-term treasuries and buying longer-term treasuries in order to bring the yield curve down.

To bring the sort of 10-year note to more of around a 2 percent level, which is kind of where it is already, and have it dip even further below that, hopefully to stimulate borrowing.

The concern is that this won't actually work, but the market itself has already priced it in, that we are going to see this Operation Twist coming on Wednesday.

But what's happened in the last few minutes is uncertainty has come back into the marketplace. There is talk amongst traders that possibly the officials are going to go -- go back to Greece in October to make sure that they've actually implemented these austerity measures that we've been talking about.

And also, the German parliament is meeting to vote on the Greek bailout on September 29th. So, that put the uncertainty back in the marketplace, and you literally saw, in the last 30 minutes of trading, basically those -- all those gains go completely out the window.

The NASDAQ was off about one percent, the S&P is down about a third of one percent, and the Dow is up fractionally, about seven points.

So, that's the kind of market this is. It's a very nervous rally, literally driven by headlines every single hour to hour.

ANDERSON: Would it be fair, Felicia, to say that this is a classic case of "sell on the rumor, buy on the fact," as it were? We've seen that across the European markets, at least, as well.

TAYLOR: Yes.

ANDERSON: I mean, the IMF urging European governments to do, and I quote, "whatever it takes to preserve trust in their policies and in the euro." And as I say, and yet, perversely, we see these markets up or at least level.

TAYLOR: Yes. I wouldn't be surprised if "buy on the rumor, sell on the news." So, the market was buying on the rumor, today, that it's expecting to see Operation Twist.

It wouldn't surprise me at all if we do get that announcement from the FOMC tomorrow, or from Ben Bernanke, that it was sell off on that news, because it's already priced it into the marketplace.

And like I said, this is a headline-driven market. There were housing starts today that were dismal, and the market completely overlooked it because it already knows that the housing market is terrible in the United States.

ANDERSON: Yes. Strange days. Felicia Taylor is --

TAYLOR: And they'll continue.

ANDERSON: -- in New York for you this evening. Absolutely, Felicia, than you for that.

Let's find out what's going on here in Europe. Italy's prime minister reacting angrily to what was an S&P downgrade today, claiming that it was influenced by politics and newspaper reports rather than by economic reality.

But with those reports increasingly centering on Silvio Berlusconi's private life, is he really the man to help Italy stay afloat? Matthew Chance hit the streets of Rome to find out.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, here in the center of the Italian capital, there's a place where, for centuries, disgruntled citizens have complained about their politicians.

It's called the Piazza di Pasquino, named after this ancient statue over here where, as you can see, even today, Romans post scathing anonymous messages about their leaders.

And of course, with a controversial figure, like Silvio Berlusconi is prime minister, there's no shortage of comments.

Take a look at what some people have written. This one says "St. Silvio, thanks to the dwarf in command. We only make blood, and the only ones doing well here are the tax evaders."

This one says, "They destroyed our country. They destroyed the jobs. Who could possibly like the Cavalier," a man -- a name that's often called Berlusconi.

This one, here, much more simple and direct. "Berlusconi muori," it says. Berlusconi die.

This is a prime minister beset by scandal. The 74-year-old leader is accused of paying for sex with a girl of just 17. He's on trial for tax evasion and abuse of power. Even his wife of more than 20 years is divorcing him on the grounds that he cavorted with minors.

For his part, Berlusconi denies any wrongdoing, but opinion polls suggest that his once stellar popularity is finally slipping away.

UNIDENTIFIED MALE: As he promised to the Italians --

CHANCE: Do you think that with all the legal cases he's fighting and all the scandals, do you think he's got time to focus on the economy? To give it the time it needs?

UNIDENTIFIED MALE: No, I think his focus is just on his company, that's it, and he uses the power to manage as well as he can his troubles.

CHANCE: Do you think that, given all the problems that he's facing, it's time for the prime minister to step aside?

UNIDENTIFIED FEMALE: Well, I think -- I think he should quit, of course. I think everyone thinks he should quit.

CHANCE: So, there you have it. Criticism is undoubtedly growing as Silvio Berlusconi's legal, political, and economic problems deepen by the day.

Matthew Chance, CNN, Rome.

(END VIDEOTAPE)

ANDERSON: All right. We've often been told, haven't we, that Italy is too big to bail out. Well, this graph shows you why.

Take a look at Italy's government debt in 2010. According to euro stat, it is around $2.5 trillion, almost three times as much as Greece, Ireland, and Portugal put together.

Yet, even those that have been bailed out are far from safe. Greece held yet another conference call with its lenders today as it desperately tries to persuade them that it deserves its next payment. Without that, the country will default.

To discuss that, I'm joined in the studio by Greek financial journalist Matina Stevis, a regular on this show these days. And from Berlin, let's bring in Peter Altmaier. He's the chief whip from Chancellor Angela Merkel's Christian Democratic Union.

And Sir, this IMF report kind of made good bedtime reading for Angela Merkel. In fact, 2012 looks as if Germany may be the only country in this region to actually see some growth.

And yet, things are tough. She's stuck between a rock and a hard place, convincing the Germans that she won't bail out everyone at no cost to them and still, of course, trying to prop up Europe at the same time. What's the answer here?

PETER ALTMAIER, CHIEF WHIP, GERMAN CHRISTIAN DEMOCRATIC UNION PARTY: Well, the answer is that we have to do two things at a time in Europe. One is we have to enshrine a stability culture.

What we are seeing is not a euro crisis, it's a debt crisis, an international debt crisis. We see it in the US, we see it in the UK, we see it in Italy, and in other countries as well.

That means these countries have to do the homework, they have to undergo serious economic and social reform. This is something that is in the interest of all of us in the Western world.

And the second point is that Germany is, of course, prepared to provide solidarity --

ANDERSON: Sure.

ALTMAIER: -- and to help countries like Greece, like Portugal, like Ireland, to overcome the problems.

ANDERSON: How do you react to this IMF report today that suggests that we might be looking at a lost decade of growth without concerted efforts from governments around the globe.

Angela Merkel's doing her best at this point, and you're her whip. You're currying favor with your coalition partners. But at this point, my question is this, what is the answer? Because there's been a dire warning from the IMF, get your house in order or things are really going to be tough going forward.

ALTMAIER: Yes. Exactly, that is twofold answer. The one -- the first part is, we have to do what we have to do at home.

Germany was suffering from low growth for almost a decade, and then we have reformed our markets, our structures, our labor markets, and the result has been an impressive economic growth over the last couple of years, and even this year, we will see a growth of about 2 percent per annum.

The second part of the answer is, this has to be implemented in other European countries as well. We have to avoid worldwide recession. We have to avoid the period of stagnation and low economic growth.

But it is something that cannot be done by financial support or solidarity alone. It has to be done by measures to be taken in Italy, in the UK, in Germany, in the US --

ANDERSON: And in Greece, of course.

ALTMAIER: -- in a coordinated and controlled way.

ANDERSON: Peter, we're looking -- let me stop you there. We're looking -- we're looking at a precipice of the dark side at this point.

You've got a prime minister in Greece who's decided not to join his colleagues in Washington this week because he's got to work out a deal whereby he gets the next trench of that money for Greece. Otherwise, effectively, you're going to default.

MATINA STEVIS, GREEK FINANCIAL JOURNALIST: Quite right. And it was just very dramatic and this decision by Prime Minister Papandreou to essentially return to Greece while he was on his way to Washington underscores just how difficult the situation is, under how much pressure he and his government are, and how close Greece is looking into the abyss.

ANDERSON: Austerity measures, no doubt. Will he get them through? Will he get the money? If he doesn't, what happens?

STEVIS: Actually, to be fair, it's no longer certain that he can get those measures through. You and I were in Athens when he got the big chunk of measures through on June 29th. He got his government, his cabinet behind him, and they got those through.

But the measures, the additional, new measures we're looking at now, are just too onerous. Too painful. He might step back. Some of his ministers might rebel and say, "Wait a minute, I'm not putting my name on this."

And even if they do pass, again, it's legislation, that's fine. It's not implementation.

ANDERSON: Peter, the euro zone and the single currency will surely dominate the IMF agenda in Washington this week, along with the downgrade, of course, of the Italian sovereign debt, as well.

One currency trader quoted today as saying this, "The euro zone has essentially become a noose around the global economy's neck, and one that is getting tighter by the day." Do you agree?

ALTMAIER: No, not at all. The truth is, the euro zone has been a region of stability for more than ten years. We have managed to shape a new currency, and this currency was competitive and successful on the world scale. We have almost doubled the value vis-a-vis the dollar and other currencies.

And what we have to do now is to reassure the rest of the world of the commitment of the Europeans --

ANDERSON: No, what you've got to do now, Peter, is --

ALTMAIER: -- to preserve the euro.

ANDERSON: -- you've got to say you're going to bail out Europe. You going to do that?

ALTMAIER: No, we are not talking about a bailout of Europe, we are talking about tailor-made programs for countries in need, like Greece, like Portugal, like Ireland. And we are talking about better controlling the process, avoiding domino effects.

So the reassurance we can give to the financial market is that we are in control of the process. We will do everything we can to preserve the euro, and we want to keep Greece inside the euro zone, and all the other countries as well.

This is a strong commitment and strong message to the markets.

ANDERSON: Peter Altmaier out of Germany this evening, and Matina Stevis in the studio. We thank you very much, indeed, for joining us.

Well, our top story tonight, the growing fears for the global economy as the IMF warns we are now entering a dangerous new phase. It's a story we'll be closely following for you throughout the week as financial leaders throughout the world's 20 biggest economies converge on Washington.

While the talking continues, what the markets are really looking for, of course, is action.

You're watching CONNECT THE WORLD. When we come back, Afghanistan's former leader and current peace advocate is killed in a suicide blast in Kabul.

Then in the next ten minutes, we'll take a look at some controversial rugby ramblings and why it's more about the man than the match.

Then later in the show, as Libya's government fighters battle for the last towns under loyalist control, its new leaders hit the world stage at the United Nations in New York. You're watching CONNECT THE WORLD. Stay with us.

(COMMERCIAL BREAK)

ANDERSON: I'm Becky Anderson in London, you're watching CONNECT THE WORLD, welcome back. A look at -- a brief look at some of the other stories that we are following for you this hour.

And a new blow to peace efforts in Afghanistan. The leader of the Afghan Peace Council has been killed in a suicide attack at his home. He was a former president who was working to bring the Taliban leaders into the reconciliation process. Nick Paton Walsh joins us from CNN Islamabad with more. Nick?

NICK PATON WALSH, CNN CORRESPONDENT: Well, this blast appears to have happened when one of the fellow negotiators assisting Mr. Rabbani in bringing the Taliban into these talks brought with him who purported to be Taliban seeking some kind of peace talk.

We're told that he actually escorted them inside the house, where one of the men detonated a device that was hidden inside his turban.

Now, clearly a huge psychological impact of this attack, hitting right at the heart of the securest part of Kabul, where Mr. Rabbani was living.

Secondly, the other psychological blow is going to be for those insurgents perhaps thinking about talking to NATO or the Afghan government. It's clear that, frankly, even the top officials involved in this process aren't safe from the insurgents striking, Becky.

ANDERSON: Nick Paton Walsh in Islamabad for you this evening. Thanks, Nick.

Well, medics in Yemen say security forces have killed two protesters and wounded 11 after government rockets landed in the capital, Sanaa. Now, the latest deaths come after a violent crackdown by Yemen authorities on Sunday and on Monday, which left dozens dead.

Well, this video reportedly shows water canons being used on demonstrators in the city of Taizz. Yemen's government hasn't granted us a visa to report from inside the country. Our Mohammed Jamjoom is covering the latest developments from neighboring Oman.

(BEGIN VIDEOTAPE)

MOHAMMED JAMJOOM, CNN INTERNATIONAL CORRESPONDENT: A relative calm on the streets of Yemen's capital, Sanaa, Tuesday night, after the country's vice president called for opposing factions to stop the clashes that have killed dozens and wounded hundreds since fierce fighting broke out on Sunday.

A Yemeni government official told me that the warring parties had come to a, quote, "gentlemen's agreement," but many residents don't believe a cease-fire has taken effect, and have described being able to hear sporadic gunfire and loud explosions well into the evening.

Meanwhile, dramatic and graphic video continues to be posted on social media sites like YouTube. Although CNN cannot independently verify the authenticity of this particular clip, it purports the tragic human cost that these clashes have taken. A victim's brother weeping as he clings to his sibling's bloody corpse.

And while diplomatic pressure is still being put on Yemeni President Saleh to sign a power transfer agreement, fear and pessimism seem to be setting in once more. Many activists who have been out in the streets for months, if the embattled leader finally does put pen to paper, they don't believe it will change a thing.

Mohammed Jamjoom, CNN, Muscat, Oman.

(END VIDEOTAPE)

ANDERSON: Turkish officials say three people have been killed in an apparent terror attack in Ankara. They say a parked car exploded on a crowded street in the center of the capital on Tuesday. No one has claimed responsibility, but suspicion immediately fell on Kurdish separatists.

After years of contentious debate, US military personnel will no longer be outed and ousted. Openly gay people can now serve in the military after the 18-year-old "Don't Ask, Don't Tell" law was abolished. It comes almost nine months after President Barack Obama signed its landmark repeal.

(BEGIN VIDEO CLIP)

VICTOR FEHRENBACH, LIEUTENANT COLONEL, US AIR FORCE: When I first took on this battle and decided to fight publicly, I thought I'll do whatever I can to make a dent, to make any kind of impact I can. And honestly, I never dreamed that this day would come.

If you're constantly asked to lie every day, little things like, "What did you do this weekend?" "Who did I see you at the mall with?" You had to constantly make up stories, you had to constantly think of lies.

And integrity is the basis -- I mean, it's one of the core values of every military service. And to have to do that to the brothers and sisters that you fight with, to constantly lie to them, it is a burden that we should never ask brave Americans who just want to serve.

(END VIDEO CLIP)

ANDERSON: Lieutenant Colonel Victor Fehrenbach, there, who is one of the highest-ranking service members facing discharge under the old law.

Well, there have been more developments in the UK's phone-hacking scandal as News International looks set to compensate one of its most controversial victims, the family of murdered UK teenager Milly Dowler, whose voice mail was hacked when she went missing.

They've said to have been offered more than $3 million. That is according to a company source, at least. In addition, Rupert Murdoch would personally pay another $1.6 million to charity.

Parts of Japan are already dealing with serious flooding as Typhoon Roke approaches. There are fears of new landslides and ground weakened by Tropical Storm Talas a few weeks ago. Authorities are urging a million people to evacuate, but at last word, not many have done so.

Well, don't go away. We've got plenty more for you coming up on the show for you this evening. Next, it's all the big rugby action, including the off-field drama that landed one Samoan player in hot water.

And then, don't miss our Big Interview tonight featuring the bizarre vision of a fashion queen.

(COMMERCIAL BREAK)

ANDERSON: Well, upsets, off-field antics, and now shocking outbursts . We are barely a third of the way through the rugby World Cup, and so far it is not lacking in action.

Italy recorded its biggest tournament win ever on Tuesday, crushing Russia 53 to 17 in New Zealand. The Azzurri scored a total of nine tries, the first of which came after six minutes. Let's get more on the game and why the focus is shifting from match play to player behavior. "World Sport's" Pedro Pinto is with us.

That's probably more tries than they've ever scored in total, isn't it? Nine?

PEDRO PINTO, CNN SPORTS CORRESPONDENT: It is. First time they ever scored over 50 points.

ANDERSON: Right.

PINTO: It helps when you're taking on a nation that's --

ANDERSON: Doesn't play rugby.

PINTO: -- participating yes. Participating in a rugby World Cup for the first time. But still, it's impressive. A lot of northern hemisphere teams have been doing very well at the World Cup.

ANDERSON: Tell me about this -- what's going on on the field, which isn't sort of -- it's not rugby, is it, really? It's players misbehaving.

PINTO: This has really been one of the main talking points over the last 24 hours or so, Becky, because, I'll tell you what happened. Wales and Samoa faced off a couple of days ago, and leading up to this match, Wales had seven days rest after their first game, while Samoa had only three.

It didn't make the Samoans happy, and in particular, one player, and let me show you the tweet he sent out, because he got in trouble for what he said on social media. And this is very aggressive, he didn't pull any punches.

He said, "OK, it's obviously IRB -- " that's the governing body of rugby -- "are unjust. Wales gets seven days, we get three. Unfair treatment, like slavery, like the holocaust, like apartheid."

Now, the first time I read this, I thought, how could you go this far? And it's surprising -- we talk about this a lot, how players are using social media to communicate directly with the world and directly with the fans, but they need to be educated, they need to be coached, that whatever is on these sites is as if they are on the record, and they don't realize this.

ANDERSON: How did the officials react to that?

PINTO: Surprisingly, he wasn't suspended. He wasn't fined. He issued an official apology, as did the Samoan team. And the IRB, the tournament directors, as well, they have accepted this apology, so it's been a slap on the wrist. He's been warned, the team has been warned. But no real punishment.

ANDERSON: All right. Cracking tournament, and it continues, of course, down -- down under in New Zealand.

Let's talk about football, shall we?

PINTO: OK.

ANDERSON: The man of the moment is Arsene Wenger, for all the wrong reasons, at Arsenal. I mean, his team got thrashed again at the weekend. He's doing himself no favors at the moment, but it seems, at least, the club is backing him.

PINTO: It's curious, Becky, because he's been criticized by so many players and also by the fans, and people are running out of patience with Arsene Wenger, because he's won only one of the opening five league games in the Premier League.

However, according to his boss, who is the chief executive officer of Arsenal, Ivan Gazidis, his job is safe.

So, this is what Gazidis said on Tuesday about Wenger. "He's not broken. He did not suddenly become a bad manager, somebody who became out of touch with the game. It is complete nonsense, the idea of sacking him. And that is a route we are not going to go down."

It did surprise me, to be honest, Becky, because at this point in time, it's been six years without a trophy at Arsenal. He's just lost his two best players because he didn't match their ambition, and then he went out and signed a couple of players in the last hours of the transfer market that haven't really made an impact.

ANDERSON: We've had this conversation before, and in his defense, he says there are 20 people who are making decisions about who comes to the club and who leaves the club, and it's not just him. But of course, there's no surprise that the fans are reacting as they are.

They're playing Shrewsbury tonight, aren't they?

PINTO: Yes. They were a goal down.

ANDERSON: Right.

PINTO: They managed they managed to come back, they're leading 2-1, now.

ANDERSON: So, they should be.

PINTO: They should beat them. Of course, they're playing a sub-par side. But still, it's been pretty tough all around this season, and they need a win tonight, even if it's against a --

ANDERSON: You don't fancy his chances being there at the end of the season if this continues?

PINTO: If this continues, if he wins nothing this season, I don't see him staying past the summer.

ANDERSON: Interesting. All right, thank you for that.

PINTO: All right, just one final thing before I go --

ANDERSON: No.

PINTO: No?

ANDERSON: Go on, then.

(LAUGHTER)

ANDERSON: Quickly.

PINTO: We'll have more on that. I also want to say we have our man Patrick Snell at the tour championship, live on "World Sport" in about an hour's time. That's all.

ANDERSON: That's what I thought. I was going to say --

PINTO: What was that, 10 second?

ANDERSON: That's fine, I was going to tell them, that's fine, you do it.

PINTO: OK.

ANDERSON: We can move on. Straight ahead, Libya's new rulers -- thank you, Pedro -- get a warm welcome as the appear on the world stage. We're going to take you live to the United Nations where Libya's future dominated day two of what is a very busy week there.

Also, a report from the front lines you won't see anywhere else. A CNN exclusive as fighters enter one of Moammar Gadhafi's last remaining strongholds.

And later, we'll look at the keys to success in one of the busiest cargo hubs in the world. That's coming up here on CNN.

(COMMERCIALK BREAK)

ANDERSON: All right, you're back with CONNECT THE WORLD here on CNN, I'm Becky Anderson, this is the world's news leader. Let's get you a check of the headlines at this hour.

Italy's prime minister has reacted angrily after his country's credit rating was downgraded by Standard & Poor's. Silvio Berlusconi says the decision was based on newspaper reports rather than economic reality.

A former Afghan president, Burhanuddin Rabbani, was killed in a suicide attack on Tuesday. Police say he was hosting a meeting with Taliban representatives at the time. Rabbani was considered vital to peace efforts in the country.

Gunfire and shelling rocked Yemen's capital for a third straight day. As many as 60 people are reported to have died since Sunday, the violence hampering efforts to finalize a power transfer deal offered to President Ali Abdullah Saleh.

Turkish officials say three people have been killed in what is an apparent terror attack in Ankara. They say a parked car exploded on a crowded street in the center of the capital on Tuesday. Nobody has claimed responsibility as of yet.

And the US military's controversial "Don't Ask, Don't Tell" policy is coming to an end. Under new guidelines, sexual orientation can no longer be used as a reason to bar someone from military service.

Well, the United Nations is welcoming Libya's revolutionary leaders into its official ranks. The country's new flag flying at UN Headquarters, world leaders offered their congratulations and support today to the interim rulers who ousted Moammar Gadhafi.

Let's bring in Senior UN Correspondent Richard Roth for the details. And it's very much Libya's day at UN Headquarters today.

RICHARD ROTH, CNN SENIOR UN CORRESPONDENT: That's right. An historic day, said the UN Secretary General Ban Ki-moon, for Libya. Many months ago, maybe nobody expected that the Libyan representative would be the chairman of the National Transitional Council, and that Libya's flag would fly outside the building.

Mustafa Jalil met with UN Secretary General Ban, Ban telling him it's a big day for Libya and for the world. It was a UN Security Council resolution which prompted NATO attacks, which forced Gadhafi out of power, though he is still sending out audio tapes and his military is still fighting on in some pockets.

At this conference, an historic emotional moment at the beginning of a Friends of Libya meeting.

(BEGIN VIDEO CLIP)

(APPLAUSE)

(END VIDEO CLIP)

ROTH: The flag -- the flags of Libya, the new flag, not Gadhafi's green flag, brought in alongside the UN flag. It will be UN personnel already soon to be on the ground in numbers trying to assess how they can get Libya back started, whether -- check out how inclusive a government it will be.

For the new chairman, there, of the National Transitional Council, he says there are still challenges ahead, including the former leaders.

(BEGIN VIDEO CLIP)

MUSTAFA ABDUL JALIL, CHAIRMAN, LIBYAN NATIONAL TRANSITIONAL COUNCIL (through translator): The Libyan people have taken great strides in liberating its territories and in realizing its aspirations for which it -- rose up on the 17th of February.

The road before us is still long, and there are many challenges at many levels in the short and long term, either because of the presence of Gadhafi or -- because of -- challenges related to launching the developmental process to rebuild and reconstruct the state.

(END VIDEO CLIP)

ROTH: The Libyan representative thanked all the countries present, and others, for coming to the aid of the Libyan people. President Obama of the United States saying it's a new chapter in the history of the Libyan people.

But Obama and others are saying that the Libyan government, the new people in power, are going to have to show that they are running a new government that is worthy of its citizens.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For too long, Libya's vast riches were stolen and squandered. Now that wealth must serve its rightful owners, the Libyan people.

As sanctions are lifted, as the United States and the international community unfreeze more Libyan assets, and as the country's oil production is restored, the Libyan people deserve a government that is transparent and accountable.

(END VIDEO CLIP)

ROTH: British foreign secretary Hague saying six months ago, Moammar Gadhafi said he would be cornering people who were opposing him, cornering them like rats, and William Hague noted the situation has certainly changed, but there's still a lot of work to be done, Becky, to get Libya kick-started again. Back to you.

ANDERSON: Yes, Richard Roth at the United Nations for you this evening. Richard, thank you for that.

While the world has already moved past him, Libya's former leader struggling to remain relevant in hiding. Moammar Gadhafi issued an audio statement that was broadcast today on a Syrian-based television station.

He dismissed Libya's new government as a "charade," saying his own political system represented the will of the people and therefore cannot be overthrown.

Well, the message had no impact on Libyan fighters determined to take over Gadhafi's last remaining strongholds. Today they managed to enter Sabha in the far south, but after weeks of gearing up for battle, it wasn't quite what they'd been expecting.

CNN's Ben Wedeman was with the fighters and filed this exclusive report.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): I'm Ben Wedeman from the southern Libya city of Sabha. We are with troops of the National Transitional Council who have entered this city.

As you can see, they're encountering at this point no resistance from loyalist forces. There's a sparse presence of civilians on the street. These are all troops who've come into Sabha from all over the northern parts of Libya.

Sabha's traditionally thought of as a city loyal to Moammar Gadhafi, but what we're seeing so far is very little in the way of resistance.

A bit of celebration. I watched as one of the green flags of Gadhafi's Libya was brought down from a water tower and replaced by the red, black, and green banner of pre-Gadhafi Libya.

I see just up ahead, they are clearing away some of the barricades that were in the streets, but as I said, the only gunfire we have heard until this point has been celebratory fire.

We did see some smoke rising from the center of town but, surprisingly, there is not much in the way of resistance.

(END VIDEOTAPE)

ANDERSON: Well, you may have heard that while Gadhafi was still in power, he hired foreign mercenaries to help fight the rebels. Well, at least some of those mercenaries put their lives on the line unpaid. Nic Robertson visited a small town in Niger to meet one such volunteer. Have a look at this.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Dusk in a remote, dusty, African town on the edge of the Sahara. The man I've been waiting to meet all day is about to show up. A mercenary just back from fighting for Gadhafi, he spent time on the front lines in Misrata, where Gadhafi's forces were accused of killing civilians.

MOHAMMED WANIGHI, PRO-GADHAFI FIGHTER (through translator): We were given the order to cleanse the city street by street, road by road, so we were just following the streets. So, if someone fires at us, we just fire back. And if they hide behind a civilian, how can you say he's a civilian?

ROBERTSON: Mohammed Wanighi, a 33-year-old from Niger, tells me he drove over the border to Libya in March, direct to an army base.

WANIGHI (through translator): I had all the weapons I needed, like a fantasy.

ROBERTSON (on camera): You had AK-47, RPG --

WANIGHI (through translator): Everyone had a Kalashnikov. Some have rocket-propelled grenades. Others have portable recoilless rockets.

ROBERTSON (voice-over): The town where we meet, where he lives, Agadez, is poor. Dirt poor. Unemployment beyond calculation. Aspirations stunted.

ROBERTSON (on camera): That's the road to Libya. Several days' drive along dirt tracks over mountains and across deserts just to get to the border.

Agadez itself is 950 kilometers, 600 miles, 12 hours drive along sometimes torturous roads from the capital. It is on the fringes of government control, and the government admits there is little it can do to stop young men from here joining Gadhafi's forces.

ROBERTSON (voice-over): Wanighi tells me he signed up as an unpaid volunteer as a gesture of thanks to Gadhafi.

WANIGHI (through translator): He did for us what our leaders didn't do, built us a hospital, paved our roads, gave us streetlights. What are we supposed to do, sit with our arms folded while he's having problems?

ROBERTSON: He is no amateur fighter, a Tuareg, a minority with a history of rebellion here. Wanighi fought in one of those revolts against Niger's government, one widely rumored to be supported by Gadhafi.

WANIGHI (through translator): For me, he's not losing the war. He just left Tripoli, but it's not his hometown. Maybe the rebels get Sirte and Ben Walid, and yes, at that moment we can say the war is over.

(GUNFIRE)

ROBERTSON: But he doesn't think that's about to happen anytime soon, and even if it does, says the fighting will go on.

WANIGHI (through translator): Even if they get Gadhafi, it won't be over, because Libya will become like Somali or Iraq. There are weapons everywhere. Everyone has a gun.

ROBERTSON: He left as rebels flooded into Tripoli, but tells me he and his friends are considering going back to fight.

Nic Robertson, CNN, Agadez, Niger.

(END VIDEOTAPE)

ANDERSON: Fascinating. Coming up on CONNECT THE WORLD, a Gateway by air and sea, find out how a port is helping Incheon in South Korea become a global cargo center. You're watching CNN, live from London, I'm Becky Anderson. Stay with us, we are back in 90 seconds.

(COMMERCIAL BREAK)

ANDERSON: Incheon Airport, a truly ambitious transport hub, which ferried more than 33 million passengers around the world last year. Welcome back.

The latest in our series of behind-the-scenes reports on global gateways focuses on Incheon Airport, one of the largest hubs in the world, not only for passengers, let me tell you, but for cargo, too. And I found out, that is mainly thanks to its two huge neighbors. Have a look at this.

(BEGIN VIDEOTAPE)

ANDERSON (voice-over): Early morning at Incheon Airport. The staff at the cargo terminals are getting ready for a special delivery, 220 pigs on a 12-hour layover.

SUJIN CHOI, ASSISTANT MANAGER, KOREAN AIR CARGO: They arrived this morning, 7:30, and we watered them and cared for them. They will be going to the second destination, Hanoi in Vietnam.

ANDERSON (on camera): Well, goods come in and out of here at great speed. This is the Korean Air cargo terminal, and about a million and a half tons of cargo are handled here in what is the largest terminal operated by a single airline in the world.

ANDERSON (voice-over): South Korea is sandwiched between the world's second and third-largest economies, those of China and Japan.

North Korea makes it impossible for the South to have a land connection to Asia. Therefore, everything that comes in and out does so by boat or plane.

YEON-SEOP CHUNG, GENERAL MANAGER, KOREAN AIR CARGO: Incheon is the farthest station between Europe and Asia.

China is the global market manufacturing function. And the USA and the Europe is the consuming countries.

JOON JUNG, EXECUTIVE DIRECTOR OF CARGO MARKETING, INCHEON AIRPORT (through translator): Incheon has a geographical advantage, and currently, Chinese infrastructure is not developed enough. Japan has high logistics costs due to high land costs. Optimizing both time and costs is what we do with the sea and air concept.

ANDERSON: The service, these freights, coming into Incheon Airport via the local port just 30 minutes away.

This ferry coming in from China carries cargo such as electronics and clothing. Eighty percent of the freight is made up of mobile phones.

YUSEONG KIM, INCHEON PORT AUTHORITY: There are many branches in China's income port, such as Samsung, LG, Sony, and even Apple. So, they are manufactured in China and they are transferred to Incheon port.

ANDERSON: Trucks go in and out in a perfectly timed maneuver. In less than three hours, the containers are on their way to the logistics park on the airport grounds.

HOON PARK, DEPUTY GENERAL MANAGER, PANTOS LOGISTICS: We make our goal to process all sea and air cargo within one day.

ANDERSON: Fifteen hundred tons of sea and air cargo are handled here every month.

YOUNG-MYUNG JEONG, PANTOS LOGISTICS (through translator): These are sorted cargo. When I scan this, the bill number appears on the screen. This is going to Miami.

ANDERSON: Once checked and weighed, the boxes are loaded on ULD units, or Unit Load Devices.

JEONG: We put the cargo on the pallet so it can be loaded on the plane easily. The net is placed to prevent boxes moving or falling when the plane shifts.

ANDERSON: The cargo continues its journey onto Incheon Airport. The passage onwards could take it almost anywhere in the world.

ANDERSON (on camera): As a transport hub, Incheon Airport has driven the modernization of South Korea by opening up its port to the outside world and doing business with its powerful neighbor, China, has been key to that success.

(END VIDEOTAPE)

ANDERSON: One out of a series of reports for The Gateway this month focusing on the powerhouse Incheon Airport. Much more on the series on the Facebook page, that's facebook.com/CNNconnect.

Well, you're watching CONNECT THE WORLD here on CNN. In the next two minutes, I'm going to catch up with a woman with a knack for convincing celebrities to take part in what are bizarre fashion shoots. She's an icon of the industry, and she's got some great stories to tell. Tonight's Big Interview, up next.

(COMMERCIAL BREAK)

ANDERSON: Making a statement at London Fashion Week. We are seeing plenty of flare out there on the catwalk this year as designers do their best to impress the style gurus of the world. I'm talking about those who have the power to turn the spotlight.

Celebrities, yes. Magazine editors, absolutely. And these two fashion glossies effectively run the show. These are highly anticipated September issues of "Vogue" and "Harper's Bazaar," style Bibles, if you will, for what we'll be wearing next year.

There is fierce competition between the two. Just look -- look at the size of these. Wait until you get a load of this. Those are big. This is even bigger, though, isn't it?

This is a collection of "Harper's" most iconic fashion shoots. In tonight's Big Interview, we catch up with the editor-in-chief, Glenda Bailey, the woman who has well and truly put bizarre in "Harper's Bazaar."

(BEGIN VIDEOTAPE)

ALBER ELBAZ, FASHION DESIGNER: One time she put me actually in a lake on a chair with an umbrella. And I got all wet.

DONNA KARAN, FASHION DESIGNER: Glenda actually has the best picture I've ever taken. I was painted gold. I mean, there I was, paint on paint on paint on paint, and God only knows, I wish I could look like that again.

KARL LAGERFELD, FASHION DESIGNER: Crazy ideas are better than too- normal ideas, huh?

ANDERSON (voice-over): And that is what Glenda Bailey has banked on as editor-in-chief of "Harper's Bazaar."

GLENDA BAILEY, EDITOR-IN-CHIEF, "HARPER'S BAZAAR": Here is Naomi Campbell fighting an alligator.

It's Jennifer Aniston, but she's paying tribute to Barbara Streisand, and this came about because her hairdresser said she really loves Barbara. It would be great to do a fashion session. And I of course thought she'll never agree to do it.

ANDERSON: But the British-born icon-maker has a knack for getting celebrities to take part in the absurd.

BAILEY: Here we have Kate Winslet wearing a Ralph Lauren gown with the Chrysler in the background. And, of course, it looks like she's risking life and limb to be on the cover of "Harper's Bazaar," but in fact she's only three feet off the ground.

ANDERSON (on camera): There's cheating in that one.

ANDERSON (voice-over): There are no illusions about what Glenda has achieved at "Harper's Bazaar." Since taking over as chief ten years ago, she's turned around the magazine's fortunes.

BAILEY: I was very focused about the fact that I really wanted to produce a magazine which was like a party that everybody was invited to. And it became even more relevant because I showed my vision for the new "Bazaar" on September the 12th, 2001.

ANDERSON: Her first issue, five months after the terror attacks, boldly stated, "Fashion is back."

BAILEY: We had so much sorrow and loss and grief that it became even more important to have joy and hope. And that's what a fashion magazine should be about.

ANDERSON (on camera): You combine popular culture with fashion better, perhaps, than anybody else. Is that really important to you?

BAILEY: I feel fashion reflects what's going on in society, and so it's very important for us to reflect every aspect of popular culture. And so, you can find yourself producing something that is about hemlines and something that's about headlines.

ANDERSON: You've got an iconic cover with Demi Moore on the front. You get that because you're able to pick up the phone to Demi Moore and convince her to do something that I can't believe most people would agree to. Why do you think she did that?

BAILEY: I think that Demi understands the importance of producing imagery which will be timely but timeless. She, of course, thought I was a little crazy, but she was game, and she produced that image.

ANDERSON (voice-over): The iconic Demi Moore cover is among more than 300 photographs that make it into Glenda's glossy new book and an exhibition celebrating her decade at the helm.

And behind the pictures, equally bizarre tales. On the Barbara Streisand tribute shoot, she shares this.

BAILEY: Barbara's reaction to those pictures were, "I really love Jennifer Aniston. She's so beautiful in these images. But she'd look even better if she had a bump on her nose."

(LAUGHTER)

BAILEY: And then what was great about that was Barbara herself loved the pictures so much that she invited us around to her home three months later to talk about her fashion collection.

And this involved us going on a tour down in the basement of her house, where she had a shopping mall full of a shop dedicated to vintage clothes, a shop dedicated to sweets, a shop dedicated to shoes, and a beauty salon.

ANDERSON: Well connected and well-respected, Glenda Bailey is considered by the industry a visionary.

ANDERSON (on camera): What comes first, the fashion magazine or the fashion industry? Who leads who?

BAILEY: Well, I think I'm fortunate because I studied fashion at college, and then I went on to fashion forecasting, and I think fashion forecasting is so important, because it's a key to where the designers get influence before they design their collections.

And so, I think they are inspired by fashion magazines, they're inspired by popular culture, they're inspired by everything that's going on in the world.

It's like -- a prime example of this is, everybody's saying to me right now, "Why do you think there's a return of pantsuits?"

Well, it's very, very straightforward. It's because as this is a recession, and as people find it really, really difficult in this economy to find jobs, women find themselves competing with men in the workplace. Therefore, women tend to emulate the way that men dress.

In the same was as all of a sudden you're starting to see on the runway shoulder pads. Well, we haven't seen such shoulder pads since Margaret Thatcher's time. And yet, here we are again, looking at this really big silhouette, because we need to feel more powerful and more confident.

ANDERSON: What keeps you awake at night?

BAILEY: I don't really, I'm not going to answer that. I sleep very well, thank you.

ANDERSON: But it's a tough old industry. I mean -- and I know what's it like in my industry. There are things that keep me awake at night professionally. For example, how does a glossy survive in the world where consumers consume our information on so many different devices and things these days?

BAILEY: I think it's so important to produce something that is original, and it has integrity, and is something which feels inventive.

You want to have the best of all worlds. You want to have stories, which you've never read anywhere before. You want to see a designer like you've never seen him before. You want to feel like if you miss out on that magazine for that month, you missed out on what everybody's talking about.

(END VIDEOTAPE)

ANDERSON: Glenda Bailey's been at the top of "Harper's Bazaar" for a decade. What an achievement in that industry.

Well, every night here on CONNECT THE WORLD, we take you around the globe to bring you stories that matter to you, and in tonight's Parting Shots, we're going to help you fly all the way around the planet in 60 seconds. Take a look at this.

Science teacher James Drake put together this amazing time lapse video using 600 satellite images taken from the International Space Station about 350 kilometers above the Earth. The pictures are publicly available online, but only Mr. Drake has strung them together quite like this.

The journey starts over the Pacific Ocean, moving onto North and South America, and eventually entering daylight in Antarctica. If you look closely, you might recognize the city you live in and even might even catch a few lightning storms.

Amazing. I'm Becky Anderson, thank you for watching. Your world is connected. The world news headlines and "BackStory" will follow this short break. Don't go away.

END