Return to Transcripts main page


France on Downgrade Watch; British Boxer Granted Rematch; Interview with Mohamed El Erian; Arab League Monitors Say No Civil War; Amir Khan Granted A Rematch; Day Five of Strikes in Nigeria; Nigeria Central Bank Governor Hopeful for Compromise; Myanmar Releases Political Prisoners; Reform in Myanmar; Daughter of Freed Prisoner Reacts; S&P Downgrades Five Eurozone Nations; Analysis of Downgrades; Downgrade Will Hurt Sarkozy Going Into French Presidential Elections; Italy Downgrades to Double-B-Plus; Greece One Step Closer to Default

Aired January 13, 2012 - 16:00   ET


BECKY ANDERSON, HOST: France's president braces for trouble as the Eurozone is dealt yet another significant blow. Tonight, live reaction and analysis from some of the best in the business.

Live from London, I'm Becky Anderson.

Also this hour, as protests in Nigeria threaten to paralyze its multi- billion dollar oil industry, the country's central bank governor tells me he's still confident to deal with (INAUDIBLE).

And after hundreds of political prisoners are set free in Myanmar, we'll ask whether the country's leaders are really serious about change.

That's the next hour.

First up tonight, though, we are on downgrade watch, waiting for official word from Standard & Poor's. Rumors flying all day. Now, at any moment, the rating agency is expected to drop its bombshell, officially cutting the rating -- the credit ratings of several Eurozone countries. And for some, we're talking the gold standard here, the AAA rating. Losing it makes it tougher to borrow money and more expensive.

Well, this is what we know so far.

France confirms it's been stripped of its cherished top tier rating. Reports say Austria has been downgrade from AAA and there are also reports that Standard & Poor's has decided not to change the AAA ratings of Germany, the Netherlands, Luxembourg and Finland.

Our senior international correspondent, then, Jim Bittermann, is live off the top of that in Paris for you this evening -- Jim, what's the official response to this news?

JIM BITTERMANN, CNN CORRESPONDENT: Well, in fact, we saw the finance minister himself come out on French television tonight at the principal newscast at 8:00 local time basically to say that the downgrade was taking place, that they've been notified of that even ahead of this confirmation from the ratings agency.

But I think that the government wanted to at least make a little bit of an effort at showing it was still in control of things. And then the finance minister said, well, in fact, it's the government that's setting financial policy in France, not the markets. It sounded a little disingenuous, though.

And all during the day today, as these rumors were swirling around, the government was trying to put the best spin on things. The spokesman for the government said investors can still have confidence in France.


VALERIE PECRESSE, FRENCH BUDGET MINISTER (through translator): Today, France is a safe bet. It can repay its debt and the news concerning our deficit is better than expected.


BITTERMANN: And, you know, banker, this wasn't altogether unanticipated. President Sarkozy said back in December that -- or at least hinted, anyway, that this could happen and said it would be difficult for France, but it wouldn't be insurmountable.

Nonetheless, it's a clear blow to the government -- Becky.

ANDERSON: Sure. And while this comes as no surprise to President Sarkozy and his struggling administration, who have been on notice, of course, as you say, for weeks that their membership of this elite AAA club was about to be revoked, just how humiliating is this for a president set to fight an election in April this year?

BITTERMANN: Well, Becky, we're 100 days away from the first round of that election. And there -- his opponents wasted no time this afternoon coming out of the woodwork and appearing on the level all over the place, basically saying it was an -- just a complete example of the failure of President Sarkozy's economic policies. And, clearly, they will make a lot of this during the campaign that's coming up -- that's, in fact, underway right now -- Becky.

ANDERSON: Jim Bittermann in Paris with you.

All right, well, Wall Street awash Friday with downgrade chatter. U.S. investors, of course, head into a three day holiday weekend.

Tonight, let's head to New York and CNN's Felicia Taylor.

Not such a happy holiday for traders who -- who certainly didn't see this coming.

FELICIA TAYLOR, CNN CORRESPONDENT: Well, you know, it's kind of an interesting trading day, because, you know, the markets started out down over 100 points. And what they were really looking at, though, was a poor earnings report JPMorgan Chase, because, obviously, that's the big -- big bank of -- of the week so far to -- to report. And earnings gets underway next week.

Yes, of course, they were taking a look at the rumor that was swirling around early -- earlier today about the S&P downgrade.

But as the day went on, the selling trimmed itself. And what they did is basically they bought on the news. Of course, we heard that France was, indeed, downgraded and the possibility of Austria and now those rumors of Italy -- and we are expecting to hear a longer list at some point throughout the rest of this evening -- the -- the losses were -- were taken off the table.

You've got to remember, also, in this market, this is a -- a long weekend for American investors. The U.S. markets are closed on Monday for Martin Luther King Day.

So the thing that's important for traders in -- in this market, is that they kind of already knew this was coming. It was already priced into the marketplace. We heard about it in December, the 15 countries that were put on notice, were put on the watch list. And so that was something else that obviously traders took a look at that and weren't really caught by surprise.

The real story that I think is told is when you take a look at the 10 year yield on some of the European bonds. And if you take a look at this graphic, it really does illustrate where things are going.

The Italian is at 6.6 percent. The French is at 3. -- excuse me. You can see -- OK, look at -- look at Greece. Greece is at 34 percent. Italy is at 6.6 percent. Spain, France and Germany, which is the healthiest country in the Eurozone, is just at 1.7 percent.

So that disparity tells you a lot about what each economy is actually going through and what the opinion is of investors willing to take a chance and buy into their debt markets.

So I think that's almost more -- more important today, as opposed to the stock market -- Becky.

ANDERSON: Yes. Fascinating stuff.

All right, Felicia Taylor there, out of New York. It's that sell on the rumor, buy on the facts story in the market there, just down about .5 of 1 percent point.

Lest we forget, though, these U.S. markets have been royaled by this Eurozone story.

Well, Eurozone borrowing costs are now front and center, of course.

Thanks, Felicia.

You can bet Monday's French bond sale will get plenty of attention.

Beyond that, what's the potential impact of tonight's news from S&P.

Well, from that man many of you will recognize if you are regular watchers of this show, the CEO of the world's biggest bond fund, PIMCO's Mohamed El Erian.

Sir, it's been a messy Friday the 13th.

What's the impact of this news from S&P tonight, starting with France?

MOHAMED EL-ERIAN, CEO, PIMCO: Well, the impact of France on the market hasn't been as dramatic as people would expect because it was signaled. And, in fact, lots of the market pricing has taken France beyond where S&P is likely to go.

The second -- but the second issue is don't underestimate what downgrades do to contracts. So we live in a system in which many contracts write the rating as the indicator of quality. So what will start to happen over the next few weeks is France will find that some investors who used to be able to buy just AAA can no longer buy its bonds.

So it is consequential, but it will play out for France over a number of weeks and months, as opposed to an immediate track.

ANDERSON: I was going to ask you about the impact that you expect the markets or -- or the impact that this will have on the markets on Monday. But given my experience in the markets and the fact that this news has been pretty much marked into prices in Europe and in -- in domestic U.S. markets, that I would -- I would expect to see these markets fairly OK on Monday morning.

The political impact, though, of what has happened to France, it losing its AAA status tonight, surely is significant.

This must give more power to the jar -- German chancellor in future negotiations.

I just want our viewers to hear what the German finance minister had today -- to say tonight.

Have a listen to this, Mohamed.


WOLFGANG SCHAEUBLE, GERMAN FINANCE MINISTER (through translator): The French foreign minister has confirmed that he has received a message from S&P. We're not completely surprised by it. We know there is an insecurity in the Eurozone and that's the reason why we worked so hard to make the regulations for the Eurozone more stable with a fiscal contract.

And I think, at the end of the month, we will have an agreement at the European summit.


ANDERSON: Mohamed, your thoughts on what you've heard from the German finance minister tonight?

EL-ERIAN: So, Germany must be split about this. On one hand, they look better. You know, in fact, if you are still a AAA, you look better. There are very few AAA out there left. So you will -- you will command the premium of a AAA.

Against that, let's not forget that France and Germany are at the core of the Eurozone. And now, Germany has a weaker partner at the core of the Eurozone, which means Germany will finance much more of the bailouts than it has done -- than it has before.

So net-net, I would say it's not good -- it's not good news for Germany. But the fundamental issue -- and, Becky, I don't know the answer. I don't know if anybody knows the answer -- is how does the construct of the Eurozone work...


EL-ERIAN: -- with fewer and fewer AAA at its core.

ANDERSON: One other player that I want to introduce into our conversation tonight is Greece, because I'm wondering whether moves there today may turn out to be more important than the news from S&P?

We are looking at a Greek prime minister who is struggling to get the nod from banks on the write-down of Greek debt and moving closer, surely, Mohamed, to a formal default on what it owes.

EL-ERIAN: Yes, there's no doubt, Becky, that Greece will default in the sense that it will get a debt restructuring. The value, the face value of Greek debt is going to change. There's no doubt about that.

The question is can you do it in, quote, an orderly fashion?

Which is another way of saying can you do it without triggering legal contracts?

There's a notion out there that this is so important that you should put it right at the top. And I think banks and creditors have felt really good about this. And I think finally Greece is waking up that the thing that should be at the top is not whether the restructuring is orderly or not, it's whether it is sustainable, whether it results and helps medium- term debt sustainability, growth and drops.

And what we're seeing is negotiations. And I get a sense that the creditors may have gone too far.

ANDERSON: It's been a rare week of good news for Europe. Friday the 13th turning out to be very, very messy.

Let me just tell you, Mohamed, as you've been talking to me, I'm being fed into my ear that the Italian state news agency is reporting that Italy has been downgraded on its debt from A to BBB+.

What does that mean to you?

EL-ERIAN: That is more consequential, because once you get into BBB language, it's known as investment grade, your investors change. They become the more risky investors and there's fewer of them out there.

So in the case of Italy, this is more consequential. It will result in a decline in its investor base.

ANDERSON: Watching these markets, Monday, perhaps, I was a little premature in saying that the -- that we probably priced most of this into the markets.

Mohamed El-Erian, as ever, always a pleasure.

Thank you very much, indeed, for joining us.

Our viewers, your expert on the subject, of course, tonight.

You're watching CONNECT THE WORLD live from London.

Still to come, a groundswell of support in Syria for armed rebellion. We're going to see who's now backing a group of army defectors fighting the regime.

And it could be a case of the squeaky wheel getting the grease. British boxer Amir Khan lost a controversial bout last month. You may remember. But his complaint about the result looks to have landed him a rematch.

And later on, hitting the big 4-0 -- Denmark's queen marks 40 years on the throne. Her country is getting ready to party.


ANDERSON: You're watching CONNECT THE WORLD here on CNN.

I'm Becky Anderson.

This is the world's news leader.

Welcome back.

Now, Nigeria's trade unions have suspended strikes and protests over raising petrol prices to allow talks with the government to take place. Now, pressure is mounting on President Goodluck Jonathan to seal a deal after days of unrest across the country. Thousands of people are angry over what is the removal of fuel subsidies, which has more than doubled the price of fuel.

Now, speaking to this program, the governor of Nigeria's central bank has said he's hopeful a deal will be reached in the next 48 hours.


LAMIDO SANUSI, NIGERIAN CENTRAL BANK GOVERNOR: What should, I think, happen is have an agreement on what the level of security will be in the short- to medium-term, probably some commencement of certain deliverables from the government and then hopefully a time line for the final removal of -- of these subsidies, or at least of their reduction to a level where it is no longer economically profitable for anyone to smuggle and to -- and to abuse the process.

So I -- I think that the labor (INAUDIBLE) are all committed to reaching a compromise. It is in nobody's interests at this point in time for the system to continue being overheated. And certainly nobody should continue to risk the loss of life.


ANDERSON: More from my interview with Lamido Sanusi, the governor of Nigeria's central bank, coming up in about 15 minutes time here on CONNECT THE WORLD.

Well, a look at some of the other stories that are connecting our world tonight.

And the head of the Arab League says that civil war is a very real possibility in Syria and the entire region, he says, should be concerned. Well, the warning comes amid a shift in Syria's anti-government movement. An opposition group initially opposed to force is now coordinating efforts with army defectors fighting the regime. Protesters across the country rallied in support of the Free Syrian Army today. Earlier, CNN spoke to the head of the Arab League's monitoring mission in Syria, asking him about the prospect there of civil war.


MOHAMMED AHMED MUSTAFA AL-DABI, HEAD OF ARAB LEAGUE MISSION IN SYRIA: I don't think that there -- there is a civil war now. But there is a lot of corruption and misunderstanding news. And there is hit and run here and there. But it is not a civil war (INAUDIBLE).


ANDERSON: Well, that is the voice of the head of the Arab League's delegation in the country.

Let's get to Damascus in Syria.

CNN's Nic Robertson joins us on the line.

You -- you heard the statement there from the head of the Arab League.

How does that tally with -- or not, as it were -- with -- with what you're seeing and hearing on the ground -- Nic?

NIC ROBERTSON, CNN CORRESPONDENT: There's a polarization between the pro- and anti-government factions here. This 10 month uprising is grinding, if you will, to a standstill between the two sides. And when I say a standstill, they are still holding their same positions but the situation is getting tenser because the -- the gap between anti-and pro- is getting bigger.

So when General Dabi says that he doesn't believe there's a civil war (AUDIO GAP)

ANDERSON: Nic Robertson on the line there from Damascus.

Unfortunately, I think we've lost that line.

Nic has been on the ground all week. Technology not easy out of Syria for foreign journalists at that moment.

Well, 28 years in prison -- that is the sentence Peruvian judges have handed down Friday to Joran Van Der Sloot. The Dutch national appeared visibly upset as he was sentenced.

Now, Joran Van Der Sloot also was ordered to pay almost $75,000 to the family of Stephany Flores, whom he confessed to killing. Van Der Sloot was previously arrested but never charged in connection with the disappearance of American Natalie Holloway in Aruba in 2005.

The U.S. Marine Corps is promising a full and fair investigation into the case of four U.S. Marines who were seen on video apparently urinating on dead insurgents. Well, four, they say, have now been identified, but their names haven't been made public. They served in Afghanistan last year and were members of a sniper team in Helmand Province. We're told that all four are back in the U.S., but the military won't say whether they are still on active duty.

Thailand says it may have thwarted terrorists' plans to strike Bangkok. Authorities say that they've detained a Lebanese man with suspected links to Hezbollah after the United States passed some information about a possible threat against tourists, both the U.S. and Israel are warning their citizens in Bangkok, though, to exercise extreme caution and to stay on alert.

Well, finally, the release of Apple's iPhone 4S in Beijing turned ugly on Friday morning. This was the angry scene when Apple's flagship store in the Chinese capital failed to open as promised.

Well, one frustrated member of the crowd hurled eggs at the store's glass walls. After the scuffle came the bad news -- the iPhone 4S would not be available at the store in its first day of sale in China. Apple said it was halting sales in Beijing and Shanghai to ensure the safety of customers and employees.

Can you believe it?

Still to come on CONNECT THE WORLD here live out of London, could the on again, off again Manny -- Floyd Meddle -- Mayweather fight be on again?

The latest after this.


ANDERSON: All right, 23 minutes past nine.

You're watching CONNECT THE WORLD live from London.

I'm Becky Anderson.

Before we move onto the -- the sports blog -- and Pedro Pinto joining me here in the studio, I want to get an update from Damascus. We just lost Nic Robertson on the line out of Damascus.

I want to bring him back because, Nic, there's an -- there's an important story out there today, a -- a watershed, if you like.

The -- the Syrian National Council, the SNC, which has been working sort of -- sort of -- provided sort of coherent opposition to the Assad administration, today announces that it will support what is known as the Free Syrian Army.

What do you know on this story and what's -- what might the likely impact be?

NIC ROBERTSON, CNN CORRESPONDENT: Well, immediately, you can see it's going to make political rapprochement, if there was ever going to be any, with the Assad regime or even people who might be sort of in between, in the middle, it's going to make that much harder because now they're siding with a military force.

We have seen this sort of go from popular street protests now to something where the Free Syrian Army has gathered itself, it's organized itself.

But this is also going to help play into Bashar al-Assad's hands. The Arab League has demanded he remove his tanks and his -- and his military hardware and his soldiers from the streets. So this is going to give him more legitimacy -- legitimacy to be able to say to the outside world, for anyone who will listen, look, I'm going up now just against some sort of protests that you see in the streets. These people are now backed by this Free Syrian Army, albeit the government here played down its side.

But this will give him a right -- a reason to keep his troops out on the streets. They're beginning to look more like a long-term military stand-off stalemate and that he may yet use even tougher tactics try to and quash -- Becky.

ANDERSON: Fascinating.

Nic Robertson out of Damascus for you this evening.

Nic, thank you for that.

All right, we're going to move on here.

After weeks of protests, British boxer, Amir Khan, is finally being granted a rematch against the American fighter, Lamont Peterson. Khan lost his WBA and IBF world titles before Christmas after what was a controversial split decision in Washington.

Now, the Brit was docked two points by the referee and a so-called missed mystery man was seen speaking to one of the judges. In the handling for score cards during the bout, only the WBA has ordered a rematch so far. The IBF will decide next week.

Pedro Pinto joins me in the studio for more.

I love this mystery man story. It's fantastic.

Who was this guy?

What was he doing?

PEDRO PINTO, CNN "WORLD SPORT" ANCHOR: Well, no one really knows yet. They know he's not connected to anyone who should be in that position. He -- he was said to interfere with one of the judges. And that's why the WBA has ordered a rematch...


PINTO: -- because of questionable decisions by the referee. The idea hasn't yet, however, Lamont Peterson doesn't have to accept a rematch. If he doesn't want to fight for the WBA title, he just says, OK, Khan can have that back and he keeps the IBF.

ANDERSON: Let's remind viewers that it took 10 minutes for that decision to come through on who had won that fight, which is why there's a bit of controversy around why it had taken so long. A great story. If Khan gets a rematch, then so be it. And we'll -- we'll see what happens.

Pacquiao, Mayweather.

PINTO: Yes, it seems like this fight is on one day, off the next. It's incredible.

After earlier this week, Floyd Mayweather challenged Pacquiao to fight on the fifth of May, through Twitter. Pacquiao has now said that he will accept to get in the ring, maybe not on the 5th, later that month. He's questioning Mayweather's ability to come up with his half of the purse, which is supposed to be around 25 million pounds, or up to, what is that in currency, $35 million, something like that, $40 million?


PINTO: So it seems, Becky, that we're closer than ever before to getting these two guys on the ring. Everyone wants to see them fight. Mayweather, a champion in five different weights. Pacquiao in seven different weights. Two of the best boxers, most diversified boxers the world has ever seen.

ANDERSON: Good stuff. 2012 carving up to be a -- a particularly good one for the world of boxing, one hopes (INAUDIBLE)...

PINTO: It needs it.

ANDERSON: -- enjoy it. Yes, good stuff.

All right, quickly, let's do some cricket, shall we, because India struggling to perform in its current tour of Australia at the moment.

India's media also up in arms over the actions of the ground staff of one of the...


ANDERSON: -- one of the grounds.

What's going on there?

PINTO: Well, it's -- it's getting embarrassing for India on the pitch because they lost the first two tests comprehensively. And now they're on -- they're on the way to another big defeat. And earlier on Friday, in the third test, the first day in Perth, we had David Warner smack the fourth quickest century in -- in test cricket history, off 69 balls. And the other story you were talking about -- and I don't know if we have pictures of this -- but at the WACA venue in Perth, the night before the first day of the test, this is security officials from the venue going out onto the pitch and having some drinks. They actually pulled back the cover, were on the wicket having drinks and India are up in arms about how this could be allowed, that it affected the wicket, that it's a lack of respect. The Australians say it's normal. Normally, the -- the guys just stay out on the -- on the side of the pitch. They don't actually make it all the way in. But you rarely see this. It -- it's very strange.


PINTO: I mean we know Aussies enjoy their...


PINTO: -- their alcohol, but...

ANDERSON: I'm just wondering how the booze affects the sort of -- because it's all about the atmosphere for the ball, isn't it?

It's all about, because of, you know...



ANDERSON: I don't really understand it.


ANDERSON: My dad does. He always (INAUDIBLE) there but we don't really understand it.


ANDERSON: Pedro, thank you for that.

PINTO: Thanks, Becky.

ANDERSON: We'll have more on Australia's big first day in the third test in Perth, of course, later on "WORLD SPORT".

Pedro coming up in an hour's time.

Do watch that.

Still to come on CONNECT THE WORLD here on CNN, first, crippling strikes now threaten to shut down oil production. Nigeria facing major backlash over soaring fuel prices. We're going to ask the country's central bank governor why he supports the end of subsidies.

Also, political prisoners in Myanmar free at last.

But it is a genuine step toward democracy?

I'm going to ask the daughter of one of those freed today. She's got some doubts.

Stick around with us for that.

And we'll also introduce you to the queen of Denmark in the next half hour. She is very excited about a big celebration this weekend in her honor. We're going to show you why.

Stay with us.


BECKY ANDERSON, HOST: More on Australia's big birthday and the third test in Perth, of course, later on "World Sport" with Pedro coming up in an hour's time. Don't miss that.

Still to come on CONNECT THE WORLD here on CNN first, crippling strikes, now a threat to shut down oil production. Nigeria facing major backlash over soaring fuel prices. We're going to ask the country's central bank governor why he supports the end of subsidies.

Also, political prisoners in Myanmar free at last, but is it a genuine step towards democracy? I want to ask the daughter of one of those freed today. She's got some doubts. Stick around with us for that.

And we'll also introduce you the queen of Denmark in the next half hour. She is very excited about a big celebration this weekend in her honor. We're going to show you why. Stay with us.


ANDERSON: Welcome back, it's just after half past nine in London. You're watching CONNECT THE WORLD here on CNN. Let's get you a check of the world news headlines at this point.

France confirms that it is losing its prestigious Triple-A credit rating. Standard & Poor's ratings agency is keeping the world in suspense. Reports, though, have been swirling all day that the eurozone's second- biggest economy has been lowered one notch.

On top of that, Italian state-run media say that Italy has now been downgraded to Triple-B-plus. That is what is known as investment grade only.

A massive show of support today for the Free Syrian Army, a group of army defectors fighting the Syrian regime. Demonstrators rallying across the country as Syria's largest opposition group announced it has begun coordinating efforts with those army defectors.

The US and Myanmar will exchange ambassadors for the first time in more than two decades just as hundreds of political prisoners are being released from prisons in Myanmar. Some of those freed include pro- democracy activists.

US forces in Afghanistan are being ordered to treat the courses -- the corpses, sorry -- of slain insurgents and civilians with, and I quote, "appropriate dignity and respect." The order comes after this video appeared on the internet causing widespread outrage. All four of the US service members seen here have been identified. Their names, though, aren't being made public.

UK and Pakistani officials are denying an Associated Press report that suggested Pakistani prime minister Yousuf Raza Gilani called the British High Commission, worried about a military coup. Friday, Mr. Gilani told lawmakers they have a choice between dictatorship and democracy.

And later here on CNN, former Pakistani president Pervez Musharraf speaks with my colleague Wolf Blitzer. Viewers in Europe can see that on "The Situation Room." All others can catch it on "World Report" about 90 minutes from now, here on CNN.

Well, union workers in Nigeria are threatening to cut the country's economic lifeline if the government doesn't reinstate a popular fuel subsidy. Mass protests brought Nigeria to a halt for a fifth day on Friday.

Union leaders are suspending the nationwide strike for two days to allow protesters to stock up on food and supplies, but a threat to shut down oil production on Sunday does remain in effect.

Well, talks to avert that prospect ended on Thursday with no deal, but labor leaders and top government officials are due to meet again on Saturday. CNN's Nima Elbagir is following the dispute over soaring fuel prices, joining us now, live, from Lagos, tonight.

What are the prospects that these two -- groups are going to get into negotiations and get a result at this point, Nima?

NIMA ELBAGIR, CNN INTERNATIONAL CORRESPONDENT: Well, at this point, Becky, we really aren't seeing any light at the end of the tunnel for the Nigerian government. It's interesting that the Central Bank governor was saying to you that he was actually sounding quite optimistic about taking it back to the point of fuel subsidies being gradually phased out.

Comments like that by government officials are being seen as incredibly tone deaf here in Nigeria, because really, it's veering dangerously as being actually quite beyond the issue of just the fuel subsidies. This is becoming a vote of no confidence in the government itself.

And for the Central Bank governor to say that -- we were speaking to union labor -- I'm sorry, to union officials today, and they said, in a budget where 75 percent goes back into just running the government itself and the federal states, that really is incredibly shortsighted.

The impact that this is going to have for your average Nigerian in a country where people are living day to day, this is going to triple just their costs on public transportation. So, for the governor to say that this issue is -- is far from over -- sorry. For the governor to say that this issue is really looking like there's an end in sight, that's not the sense that we're getting here on the ground, Becky.

ANDERSON: Yes, all right. Let's see what happens this weekend. Nima's on the ground for us all weekend. Nima, thank you for that. Nima Elbagir out of Lagos for you this evening.

The whole country feeling the pain of the fuel price hike, of course, but some businesses are also suffering from a lack of customers. CNN's Vladimir Duthiers now looks at how the nationwide strike is, frankly, affecting their bottom line. Have a look at this.


VLADIMIR DUTHIERS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Anger on the streets of Lagos, protesting the government's removal of fuel subsidies. The price of gas has doubled, and many see it as too heavy a burden.


DUTHIERS: As the protest grows, the economy shrinks.


ANDERSON: And it looks to me as if we've got some slight technical problems on that report out of Vladimir. If we can get it right, we'll get it to you.

I'm going to move us on, though, because speaking to CONNECT THE WORLD, Nigeria Central Bank Governor is hopeful some sort of compromise over the fuel subsidy level could materialize over the next 48 hours. This is something that Nima was just alluding to.

Lurking, though, in the background, that threat from the country's main oil union to shut down output. So, I asked Governor Sanusi how worried he was. This is what he said.


LAMIDO SANUSI, NIGERIAN CENTRAL BANK GOVERNOR (via telephone): Well, I think at this point in time, given that the unions have agreed to speak to government, which is a good move, and given the fact that the signals from yesterday's meetings were that some progress has been made, but a deal is not yet struck, one would think that might be unnecessary.

I think that in the next 24 to 48 hours --


SANUSI: -- we should be able to get out some statement.

ANDERSON: Nigeria has some of the largest oil and gas reserves, of course, in the world. It's almost completely dependent on imported oil for its energy needs. How on Earth did that happen?

SANUSI: Well, a number of issues. First of all, we produce two million barrels of oil a day, but we have a population of 167 million people, and always it's important to look at these things in context.

The nearest OPEC country to us in population is Iran, with about 75 million people. Saudi Arabia has a population of 24 million and produces eight million barrels a day.

So, first of all, this idea of Nigeria as an oil-rich country has to be viewed in terms of how much oil we actually could use and how much oil we actually have compared to the size of the population.

The second thing is that the refineries are just a reflection of a general breakdown in -- in government systems. You've got to -- our power system is down, we're not producing enough power. Our rail lines are down, our roads are down, our infrastructure is down. We're trying to reach out of a general decay in infrastructure.

ANDERSON: The cutting of these subsidies, sir, is part of what is a broader recalibration of the Nigerian economy as a whole. To your mind, what is the grander vision, at this point?

SANUSI: Well, I think the -- the basic principle, first, is that you need to have the balance sheet of the government on a sustainable -- on a sustainable foundation. We don't want a situation in which two years from now, three years from now, the Nigerian government runs into domestic debt crisis.

We've seen what happens with Greece, what's happened with Italy, what's happened with Spain, what's happened with Latin America and the United States, and it is simply unsustainable that we could keep borrowing huge amounts and spending that on conventions.

The second thing is that the fiscal reforms have to be accompanied by ongoing structural reforms that are aimed at building on eras of comparative advantage, moving agriculture from primary production to intermediate goods, to final goods.

Things like market access, irrigation, imports, training for farming so that we stop importing what we produce.

ANDERSON: Let me drag you back to this weekend, this weekend coming. What do you expect to see in Nigeria? Can we expect street protests once again by Sunday, for example?

SANUSI: What should, I think, happen is have an agreement on what the level of subsidy will be in the short-to-medium term.

There will be some commitment of certain deliverables from government and, hopefully, a timeline for the final removal of these subsidies, or at least their reduction to a level where it is no longer economically profitable for anyone to smuggle and to beat the process.

So, I think that the neighbor, the sort of the -- that is big as the governors are all committed to reaching a compromise. It is in nobody's interest at this point in time for the system to constantly being overheated. Nobody should cause the risk the loss of life.


ANDERSON: Stick with CNN for news out of Nigeria all weekend. It's going to be a big one for the people there.

You're watching CONNECT THE WORLD. Still to come, Myanmar takes another step towards democracy as hundreds of political prisoners there are given their freedom. We're going to talk to the daughter of one of them right after this short break. Stay with us.


ANDERSON: The former prime minister of Myanmar, Khin Nyunt, walks free after more than seven years in jail. He was among hundreds of political prisoners released by Myanmar's military-backed government on Friday.

Others included journalists and bloggers, high-profile activists who were arrested following the failed 1988 student uprising and anti- government demonstrations in 2007.

Well, the release of the prisoners has been applauded by leaders around the world as a, quote, "significant step" towards democratic reforms. So, how much so that the -- let me start that again. So much so that it's prompted the United States to resume diplomatic ties with the country more than two decades after the American ambassador was withdrawn.


HILLARY CLINTON, US SECRETARY OF STATE: Based on the steps taken so far, we will now begin. In consultation with members of Congress, and at the direction of President Obama, we will start the process of exchanging ambassadors with Burma.


ANDERSON: Well, Myanmar's new civilian government has been credited with recent flickers of progress. Changes started last March after this man, Thein Sein, became president in controversial elections. Since then, the government has eased media restrictions and, in October, it released 200 political prisoners.

Myanmar's neighbors have also acknowledged its progress. The country will chair the Association of Southeast Asian Nations in 2014.

Last week, Aung San Suu Kyi's National League for Democracy party was approved to run in April elections and, on Thursday, the government signed a cease-fire with one of the country's leading ethnic rebel groups, hoping to end a long-running conflict.

No one has welcomed the freedom of the political prisoners more than their families, of course. A short time ago, I spoke to the daughter of pro-democracy campaigner, Mya Aye, a leader of the 1988 student uprising who has been imprisoned twice over the past two decades, spending 13 years of his life behind bars.

I began by asking his daughter, Wai Hnin, who has taken up her father's cause, if she ever expected this day to come.


WAI HNIN, DAUGHTER OF FREED PRISONER: I didn't really -- I didn't really believe it until I heard my father's voice this morning. When I heard the news yesterday, I -- kept talking to myself, "Don't keep your hopes high."

And when I talked to my mum, my mum was like, "Yes, your father's been released."

So I said, "Are you sure?" Because there were lots of rumors and everything.


WAI HNIN: So until I got to talk to my father and I said, OK. Until now, I keep pinching myself.

ANDERSON: What did he say when you spoke to him?

WAI HNIN: Well, very typically, he said, "How are you?" to each of them, and we said, "What should we do next?" as a campaigning point of view. And he said, "Oh, there are lots of political prisoners," and his colleagues still remain in prison. So we should campaign more for their release and we should do more.

ANDERSON: So, you're still campaigning even though he's just been released. Tell me about your dad.

WAI HNIN: It's very typical. So, I teased him this morning, and said, "Can't you wait 24 hours to talk about politics? You were just released from the prison."

So, he is very -- he believes in human rights and freedom, and he said he will work for it until we've got democracy and freedom in our country. So, from -- for his personality, he is very generous and he is very kind, and he -- liked to tease people a lot with a straight face, and that's what I have to deal with sometimes.

ANDERSON: Does he believe this is a significant day?

WAI HNIN: He is very happy with the fact that he is with the family again and also to see his friends released from the prison.

But what he thinks is President Thein Sein is -- my father said if President Thein Sein actually believed in genuine reform and change, then he should release the prisoners who are in prison for their belief for democracy and freedom. But still, political prisoners remain in prison, so my father is being very cautious about the change.

ANDERSON: You are studying here in the UK, now. Your family is in Myanmar. How do you see the future shaping up?

WAI HNIN: I really hope that there is actual reform and genuine reform and change is coming to Burma, because at the moment, I'm very happy with the fact that political prisoners have been released and everything.

But still, some part of me is a little bit cynical about it because the laws that put my father in prison still remain in place. So, if my father and his friends are very critical about the regime, then the regime will put them back to prison anytime.

So, I'm a bit -- I'm not very sure whether I should be happy 100 percent or -- but I'm very cautious about the change at the moment.


ANDERSON: The eurozone -- excuse me, I'm going to start that again. The eurozone has been dealt another blow this evening. After a number of countries have been pulled into the vortex, as it were, S&P, the ratings agency, has downgraded the debt of nine eurozone nations, including France, Italy, Spain. French debt cut from Triple-A, that is important, to Double- A-plus.

Let's get to Felicia Taylor in New York in a moment. We're going to take a very short break on this, but the breaking news this hour, the euro crisis dealt another blow as the ratings agency S&P downgrading the debt of a number of significant European countries. Back after this.


ANDERSON: All right, you can see the breaking news in that strap at the bottom of the screen, now, and it is breaking news tonight. The S&P ratings agency has downgraded the debt of nine eurozone nations, and those include France, Italy, and Spain.

The French debt has been cut a notch from Triple-A to Double-A-plus. Various other countries taking a bigger hit. This is countries getting caught in the sort of vortex of this eurozone crisis.

A relatively pain-free week for European stocks and bonds, actually. You ask any investor, they'll say the first four days of this week have been relatively risk-free, as it were. But things not looking so good this Friday as we close out the trading week.

Felicia's in New York, for you, Felicia Taylor's there, tonight. Long weekend coming up. Traders wouldn't have wanted to see this on their screens. But my sense is they already knew what was going to happen before S&P actually announced this officially.

FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Exactly. This was already priced into the marketplace. We've been hearing about this since last December. The fact that it's actually news right now and that it's actually happened isn't great. Nobody wanted to see this happen.

But at the same time, this is almost a sigh of relief. It's like the punishment has finally been delivered. A lot of people have criticized the S&P ratings for not having done this sooner. So, this sort of takes the problem off the table just a little bit.

And what it means is that, and the significance for this is, whether a country was degraded by one notch or two notches. You mentioned a couple, France and Italy were, I think, two -- sorry, one notch. We've got -- excuse me, I'm going to be exact here.

Cypress, Italy, Portugal and Spain were lowered by two notches. And then we've got the long-term ratings of Belgium, Estonia, Finland, Germany, Ireland, Luxemburg, and the Netherlands all staying the same.

But what's significant is that a couple of countries, including Spain, had a negative outlook. And so what that means is that possibly S&P could downgrade them once again in 2012 or 2013.

Essentially, what S&P is saying is they don't believe that he European policy-makers have done a good enough job to clean up the eurozone, or have they done it quickly enough, and that they're frustrated, and showing them by issuing these downgrades.

So, while it isn't catastrophic, it's certainly something that nobody wanted to see going into a long weekend.

ANDERSON: Felicia, I think there are three points for our viewers, aren't there, tonight? Let's start off with France which, of course, has presidential elections this coming April. President Sarkozy is going to really feel he's swimming in turbulent waters at this point.

This Triple-A rating, for those of our viewers who don't track the markets on a day-to-day basis, it's -- this is the gold standard, and if you lose that Triple-A rating, what the markets are effectively saying is, "We're not confident you're going to pay your bills in the future."

TAYLOR: Right.

ANDERSON: This is no good for Sarkozy going forward, is it?

TAYLOR: Absolutely. That's exactly right. He at one point had said he was confident that he would be able to hold onto that Triple-A credit rating. Clearly, he really wasn't looking at the depth of the issues and acting on them, either, in terms of taking any kind of measures.

Going into a political election, clearly this is damaging to him. How is he going to explain the fact that now, suddenly, France no longer has this gold tier rating.


TAYLOR: And compared to Germany, which has been able to keep it. Their finances are in as much trouble as some of the other eurozone countries, like Spain and Italy. Not as bad --


TAYLOR: -- but certainly not good, either.

ANDERSON: Sure. It's certainly going to -- my sense is, it's certainly going to give the Germans more leverage to lead these negotiations going forward and how the eurozone really sort of sorts itself out.

But the Germans, of course, also want to see the eurozone in a better position so far as its debt's concerned than it is at the moment.

Second point, I think, you and I would agree on tonight is this double-notch decrease for Italy, which takes Italy into what is known as "investment grade rating." It's a Triple-B-plus rating going forward --

TAYLOR: Right.

ANDERSON: -- as opposed to an A grade. And that may again not sound particularly important to those who don't track these markets, but it is, isn't it?

TAYLOR: It is, and it -- taking it down to that Triple-B tier is very significant for the marketplace. That puts even more fear and uncertainty around the ability for Italy's economy to shore itself up and become at least somewhat healthy again.

And think about it. To get back up to that A tier is going to take a long time and a lot of austerity measures. We're talking probably five, six, seven years. This isn't -- for them to get back into the A category is going to take a lot of time and some difficulty for them. We're not so certain that Italy's economy is going to be able to stand.

And you can see that, when we talked earlier about the yields, which were somewhere around five, six percent.


TAYLOR: There's a lot of uncertainty on the behalf of investors that are not going to want to put money into that country.

ANDERSON: Felicia, last point. Greece, tonight --


ANDERSON: -- really struggling. It looks as if it may have to default after all. It can't --


ANDERSON: -- or certainly, the prime minister, at the moment, just can't nail these negotiations with banks who are expected to write off some 50 percent of Greek debt. Do you see a default going on there sometime soon?

TAYLOR: Their -- you know what? Just because they put a pause on this conversation that their investors were coming together to basically say whether or not we voluntarily agree to continue to prop up Greece, that's a major problem. And yes, it takes them one step closer to a default and also exiting the eurozone currency.

Basically what -- the private inspector has done is agreed, as we remember back in October, to take that 50 percent haircut. What they haven't agreed on yet is the maturity and the coupon, and that's where they need to come in and voluntarily agree on that.

If there is a non-voluntary agreement of sorts, then we start to talk about credit default swaps, and that creates chaos in the financial market. Becky?

ANDERSON: It's an unhappy Friday the 13th in the eurozone for many of its members --


TAYLOR: It happens to be Friday the 13th.

ANDERSON: -- nine downgraded this evening. Felicia, have a good night.

TAYLOR: You, too.

ANDERSON: That's it from us here on CONNECT THE WORLD. Felicia will up with this story, of course, on CNN as we move forward. The world news headlines and "BackStory" up after this very short break. Don't go away.