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CONNECT THE WORLD

U.S. Races Toward Fiscal Cliff; Wintry Weather Buries American Northeast

Aired December 27, 2012 - 16:00   ET

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


MAX FOSTER, HOST: Wall Street comes to a close this Thursday the 27th of December. I'm Max Foster in London and this is Connect the World.

Just four days now until the United States reaches its fiscal cliff. Let's get straight to New York to find out what the mood is like on Wall Street. Alison Kosik joins us now live. Alison, how did it go?

ALISON KOSIK, CNN CORRESPONDENT: Interesting day for stocks, Max. We certainly saw at least the Dow do pretty much a U turn after word that the House of Representatives will be reconvening on Sunday to take up the fiscal cliff and stocks wind up parrying their losses. The Dow was down as much as 150 points. The Dow now closing down only 19.

You know this really has been a day where the market moved on headlines. You know, most of the session the investors were preparing themselves to basically go over the cliff as of January 1. Stocks turned sharply lower right around the time the Senate came back into session and Senate Majority Leader Harry Reid came out before the microphones and said it looks like that's where we're headed, referring tot he fiscal cliff.

Well, the House of Representatives also was not in session today, so all that did not give investors much hope. But then when news came out that the House of Representatives will take this issue up on Sunday of all days you saw the market immediately turn around -- Max.

FOSTER: The markets always looking ahead, isn't it. So what would you say it has factored in in terms of happenings over the next few days?

KOSIK: I talked with one trader. He said at this point if there's no deal the markets already factored in the fact that there is no deal. So you wouldn't necessarily see panic. At the very least even with tomorrow's session, with Friday's session, you'll still see this trend to the downside. But what the market really is -- wants to see, Max, is the market really wants to see a deal. And if it doesn't get a deal it wants to see no deal. It doesn't want to see a Band-Aid measure, because what the market is looking for is clarity. And if there's a Band-Aid measure, you really wouldn't see investors really knowing what information to rely on and for how long so there would be less clarity with a Band-Aid measure. So you're really seeing either the market wanting a deal or no deal, that way there's a little more certainly one way or the other, even though no deal would mean bad news for the U.S. economy -- Max.

FOSTER: You did have some other economic figures that came out today as well, but it is all about the fiscal cliff.

KOSIK: It really is. I mean, it is nice to see the housing market continue to keep up the momentum and to really be the bright -- the brightest bright spot in the U.S. economy. We did get new home sales. They showed that they were -- that they're continuing to rise. But we also got some bad news. You know, consumer confidence, that plunged in December to its lowest level in four months and that had a lot to do with the fiscal cliff.

So it's also bad timing for retailers who based on some early data are tallying up less than stellar holiday receipts. So you're seeing the fiscal cliff really hurting confidence now and hurting the job market now even because it's not just about those looking for work, because consumers say that they expect to see fewer jobs in the months ahead.

But there's also concern about those hiring. Companies are holding back hiring because they don't know what to expect with no fiscal cliff deal. So you know you see consumer confidence taking a hit, that hurt stocks today. The housing, once again, is the bright spot in the economy, but clearly not enough to really move the market, housing isn't. But the market still paring its losses today, only ending down 18 points -- Max.

FOSTER: OK, Alison, thank you very much indeed. Well, U.S. President Barack Obama has cut short his Christmas holiday in Hawaii returning to Washington early. He's hoping there's still time to reach a deal that will avoid the fiscal cliff and the automatic tax and spending cuts that many believe will send the U.S. into another recession.

But as Richard Quest explains that's not the only problem facing congress right now.

(BEGIN VIDEOTAPE)

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: The fiscal cliff and the debt ceiling, two problems which will not only effect the U.S. economy, but also the global economy too. The fiscal cliff, all the parties, Boehner in the House, Reid in the Senate are still negotiating. But Harry Reid, the Senate majority leader, says the U.S. is likely to go over the fiscal cliff which happens at the end of the year. No wonder consumer confidence is now starting to fall as people worry about the tax rises and the spending cuts that will come into play if the worst happens.

Then you've got the debt ceiling. Now the U.S. has a debt ceiling at the moment of $16.4 trillion. And Tim Geithner, the Treasury Secretary, is now having to resort to extraordinary measures, as its called, to prevent breaching it. Literally he's bumping up against the ceiling. And he has to make head room by robbing Peter to pay Paul, moving the money around, anything to make sure you don't go through the $16.4 trillion.

Put all this together, a debt ceiling debacle and a fiscal cliff fiasco, and you really do now start to understand that the dangers facing the U.S. economy are very real, very serious and could eventually affect us all.

Richard Quest, CNN, London.

(END VIDEOTAPE)

FOSTER: Barack Obama has returned to Washington. The Senate also reconvened, but as Richard mentioned the Senate Democratic Leader Harry Reid doesn't believe enough if being done to avert a crisis. Let's take a listen to what he said a little earlier today.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) NEVADA: If we go over the cliff, and it looks like that's where we're headed. Mr. President, the House of Representatives as we speak with four days left after today before the first year aren't here with the speaker having told them they'll have -- they'll give them 48 hours notice. Speaker Boehner should call members of the House back to Washington today. He shouldn't have let them go.

(END VIDEO CLIP)

FOSTER: I'm joined now by chief White House correspondent Jessica Yellin. Jessica, the House has been called, hasn't it, recalled for a session 6:00 p.m. on Sunday. It doesn't seem as though that really gives them enough time?

JESSICA YELLIN, CNN CORRESPONDENT: Well, it does cut it very close, but if they -- if they decide they want to get something done, if the Senate has an agreement and passes it, that does leave them just over 24 hours to pass a piece of legislation and get it over the finish line before New Year's Eve. So if all parties are in agreement, that is enough time to get it in under the wire, but those are a lot of ifs, Max.

FOSTER: What sort of agreement is on the table, are you able to work that out at this point?

YELLIN: Such a good question. At this point, it's sort of understood by all the parties that what the president would like is a plan that keeps taxes where they are for Americans who make $250,000 and less, that extends unemployment insurance and extends certain other patch for doctors who get help from the government to take care of low income people and a certain help for middle class Americans.

But beyond that, whether there will be a sweetener for the Republicans to help them come along and get on board, for example an extension of the estate tax, we don't know yet because nothing is written down as far as we know, there's no piece of legislation, there's no written proposal for a new agreement. Maybe that will come from the Senate Majority leader's office in the next couple of days because something needs to be written down if it's going to pass.

The reason Democrats have held off on writing anything yet is they've argued the longer the wait the more pressure mounts and pressure is a powerful motivator for congress's action.

FOSTER: And Jessica, you obviously know the politics inside out, this sort of language that we're seeing, this terminology the two sides blaming each other, getting into the blame game, is that very negative, are they setting up for a no deal here so they can blame the other side?

YELLIN: Yes. You're reading it very well. This is positioning to try to win the PR war because both sides are losing hope that this will get done in time. And obviously neither party wants to take the blame when the nation -- if the nation goes over the cliff. So everybody in this town is now posturing to be blameless if that should happen.

Democrats accusing too much unwillingness to see that Democrats have the upper hand because they won the presidency. Republicans insisting that Democrats are overplaying their hand.

Polls show right now Republicans will take the majority of the blame if the nation goes over the cliff, but over time that dissipates and we all know what happens -- Americans will blame all of Washington, all politicians. They just want to see something get done -- Max.

FOSTER: OK, Jessica. Thank you very much indeed for joining us from Washington. We'll be back with you a lot of course in the coming days.

Now we know the fiscal cliff is of concern to Americans, but what does it all mean for the rest of the world? To help us answer that, I'm joined by Richard McGregor, he's Washington bureau chief for the Financial Times.

Well, it's a big question, Richard, but are you able to give us an answer?

RICHARD MCGREGOR, WASHINGTON BUREAU CHIEF, FINANCIAL TIMES: Well, it's always good to remember that even though the U.S. -- there's lots of stories about U.S. decline, the U.S. is by far the world's biggest economy. As you were talking about earlier, there's chronic economic weakness in Europe, China has been struggling to come out of a slow down. And if, you know, the U.S. goes into recession that's calamitous for the rest of the world in any way you want to think about it. So it's got massive implications for the global economy.

FOSTER: This term, the fiscal cliff, a lot of people have criticized because it's saying it's more of a slope. It won't all collapse on the first day of the New Year. Do you think it has been exaggerated a bit, because there's so much politics involved here, but what's the pure economics of it?

MCGREGOR: Well, I think it's both a slope and a cliff. I mean, when you got after the first few days that's on a slope, because the immediate economic impact doesn't all cut in at once. It only becomes a cliff if you stay on that path for some months. So, that's why I think we're going to go off the cliff onto the slope initially. But it's only if they don't get something big, something proper, some sort of genuinely market credible deal done within two weeks to a month after that that we're going to have real problems. And I think that's when the markets will probably step in and might be the pivotal factor in solving this impasse.

FOSTER: One positive about having this deadline is that it does force politicians to get down to work, doesn't it? And you have seen the House now being recalled for Sunday.

So if we pass through that deadline, will it only really be the market reaction that will be enough to put pressure on politicians to do something?

MCGREGOR: I think so, because the two sides are far apart. They may get some sort of patchwork deal done before the end of the year. I doubt that personally. But remember, we're not just talking about the fiscal cliff/slope, we're also talking about the U.S. debt ceiling which your correspondent mentioned earlier. And the two are sort of fuse into one in about one month to six weeks. The Republicans are taking a really tough line on the debt ceiling as well, they want cuts proportionate to however much the borrowing limits are increased. And I don't see how they solve that unless you have some outside force, like the markets, like you had four years ago with the bank rescue and the TARP plan stepping in to really knock people over their heads.

FOSTER: OK. You've mentioned Europe and China. Let's look at Europe, because we have a story there as well. It's going to be the big European story. The EuroZone crisis, of course, going into next year. But today we've seen the worse thing of the banking crisis in Europe. Shares of Spanish lender Bankia, fell by almost 20 percent after a new audit showed the bank's parent company has a value of minus 13 billion dollars.

And in Greece, a report out today says the country's four biggest banks will need $36.5 billion to recapitalize by the end of the year.

So Richard, which is the bigger concern here, the euro crisis or the fiscal cliff?

MCGREGOR: Well, Europe has its own chronic problems, both structural and related to the currency. I think the -- you know, they have the potential to feed into each other if they don't get solved. You know, whatever you say about Europe, it can't go anywhere unless it starts to grow again. If it still -- if the economies of Europe still stagnate, then the debt problems you're talking about there, the banking problems just get worse and worse.

So if the U.S. goes into recession that's a disaster for European economies and European growth. So in that respect, they really have the potential to feed on each other.

FOSTER: Politicians really do seem to be holding all the cards at the moment and they're not looking particularly good at this point are they because there seems to be so much indecisiveness which is causing so many problems, not least for the markets?

MCGREGOR: Well, in the case of the U.S. it's probably not a problem of indecisiveness it's decisiveness on both sides of the fence to the point where they can't meet. I mean, the U.S. doesn't so much have a government at the moment, it has a process. And a process which is utterly dysfunctional and utterly constipated. And it's very hard to see that getting solved just of itself, because there's no mood for compromise on either side for the reasons explained previously and that's why you need something from the outside to come in.

FOSTER: OK, Richard McGregor in Washington, thank you very much indeed for joining us.

You're watching Connect the World live from London. Still to come, new brutality in Syria, but an international peace envoy says the country's conflict could end within months.

And in his mother's footsteps, Benazir Bhutto's son and his politics five years after her assassination.

And winter weather chaos, the latest on the slow storm that's disrupting travel plans for thousands across the U.S. and Canada. That's next on Connect the World.

(COMMERCIAL BREAK)

FOSTER: You're watching CNN. This is Connect the World with me, Max Foster, welcome back to you.

Here's a look now at some other stories that we are following for you this hour. Activists in Syria say more than 150 people were killed across the country on Thursday. The opposition says the regime continues to drop so-called barrel bombs on major population centers. Meanwhile, international peace envoy Lakhdar Brahimi says the conflict could end in just a few months. If warring parties agree to a plan with a transitional government.

Brahimi is in Damascus this week meeting with President Bashar al- Assad and other officials. He dismissed rumors that he's pushing a plan backed by Russia and the U.S.

(BEGIN VIDEO CLIP)

LAHKDAR BRAHIMI, UN PEACE ENVOY TO SYRIA (through translator): Some said in Syria and outside Syria that I have come here to market a Russian- American project. I wish there was a Russian-American project. There is no Russian-American project and hence I did not come here to market it.

(END VIDEO CLIP)

FOSTER: The United Nations is growing more concerned about the situation in the Central African Republic. All non-essential staff and dependents are being evacuated because of increasing unrest. Protestors turned out on Thursday to support the country's president against rebels who have captured several major towns. The UN says there's reason to believe that rebels may soon try to take the capital. On Wednesday, an Air France jet on its way there turned around and returned to Paris because of conditions on the ground.

In Pakistan, officials say Taliban fighters are holding at least 21 soldiers they captured in armed raids. Authorities say the militants captured the soldiers during overnight attacks on at least two camp sites outside Peshawar in Pakistan's volatile northwest.

Five years after her death, the only son of former Pakistani prime minister Benazir Bhutto says he will carry forwards his mother's legacy. Meanwhile, Bhutto Zedari told crowds near the family home in Sind Province (ph) that he was heir to the martyr. He appeared alongside his father, President Asif Ali Zardari, ahead of next year's elections.

(BEGIN VIDEO CLIP)

BILAWAL BHUTTO-ZARDARI, BENAZIR BHUTTO'S SON (through translator): Now what are you waiting for? I, the grandson of the martyred Zufikar Bhutto (ph), the son of the martyred Benazir Bhutto, ask you why haven't those responsible for my mother's death who are in custody, why haven't they been punished?

(END VIDEO CLIP)

FOSTER: A 23-year-old Indian gang rape victim has arrived in Singapore for treatment. The attackers sparked huge protests in India with demonstrators calling for tougher laws related to sex attacks. Doctors say the woman's conditions is extremely critical. She was raped on a bus in Delhi on December 16h.

Former Egyptian President Hosni Mubarak is now undergoing treatment in a military hospital, according to his lawyer. Mubarak was transferred after a report by doctor's said that he had fractures in three ribs from falling in a prison hospital bathroom. The 84-year-old is serving a life sentence for his role in the killing of pro-reform demonstrators during the country's 2011 revolution.

The family members of former U.S. President George H.W. Bush say they're confident that he'll soon be released from a hospital's intensive care unit. A family spokesman said the 88-year-old is in a guarded condition and surrounded by his family who is admitted to a hospital on November 23rd with bronchitis and moved to intensive care because of a persistent fever.

South Africa's beloved former president Nelson Mandela has been discharged from hospital and is receiving treatment in his home. The 94- year-old was hospitalized for a lung infection earlier this month and also had surgery to remove gall stones. Robyn Curnow has the latest from Johannesburg.

(BEGIN VIDEOTAPE)

CURNOW: In this house on a suburban streets, watched by local media, Nelson Mandela is no doubt resting. After 19 days in hospital, Mandela's doctors sent him home here to his Johannesburg residents. While this is good news, a statement from the government said that Mandela is still receiving high care, which means behind these walls his doctors and nurses are still closely monitoring and observing him.

While in hospital, Mandela was treated for a lung infection, and had surgery to remove gall stones.

And these are the most recent pictures of him taken in July by CNN at his 94th birthday party in his home surrounded by his large family as he looked bewildered and didn't smile, so different to the vigorous man who fought so hard, endured so much.

Over recent years, though, the former South African president has seemed frail and unsteady on his legs. Public appearances became increasingly rare, just too much effort for a man in his 90s. And those he did make, Mandela sometimes dozed off during speeches and seemed confused.

He's mostly spent his time at this home in Kunu (ph) is the eastern Cape, soothed by the slow pace of the rural rhythms in the hills near his boyhood village. And it's unclear if and when he'll return back to his primary residents here.

For now, though, South Africans are just relieved that he's out of hospital.

UNIDENTIFIED MALE: Mandela's, he our father. We are very happy he's alive. He's now free, back to home.

UNIDENTIFIED MALE: (inaudible) I can see that is get him strong.

UNIDENTIFIED FEMALE: I'm worried about this -- at least if he can manage to reach at least 100 that would be great for us.

CURNOW: A man who gave so much and who is still so deeply revered by anxious South Africans who just wish him well.

Robyn Curnow, CNN, Johannesburg, South Africa.

(END VIDEOTAPE)

FOSTER: All right, from London, this is Connect the World. Coming up, an update on the wintry weather wrecking havoc in the U.S. with even more snow expected tonight.

(COMMERCIAL BREAK)

FOSTER: You're watching Connect the World live from London. Welcome back. I'm Max Foster.

Now heavy snow and punishing winds continue to wreck havoc on America's east coast. Storm warnings have been posted throughout the region from New York State to Maine, causing travel delays and general chaos this holiday season. Let's get an update what's going on from CNN meteorologist Jennifer Delgado.

Some incredible pictures coming through, Jennifer.

JENNIFER DELGADO, CNN WEATHER CORRESPONDENT: Max, you're absolutely right. We're talking about very heavy snowfall, strong winds. At times we did have blizzard warning in place for parts of the U.S.

As we start off right now, I want to show you on the radar things have really quieted down from yesterday, but we're still dealing with snow from eastern parts of New York all the way over towards Maine and down towards the south of them, the warm sector. We are still looking at rain for parts of Boston as well as some of those bigger cities across parts of the northeast as well as into New England.

But it's not just the U.S. We're also talking about areas like Canada. Look for Montreal, they're also dealing with snow. In fact, we'll continue to see this moving through the evening hours. And many of the winter storm warnings don't expire until 4:00 am local time.

Now if you look at the wider view of this, Max, you're thinking my goodness all of the U.S. is going to be encompassed with snow out there. Well, what you're looking at across parts of the upper Midwest, this is a shot of more cold air that's going to be bringing us potentially more snow when it combines with a system to the south. But as we talked more about the storm system affecting parts of the northeast, that includes New England as well as into Canada, notice for yourself we're talking 43 that looks like centimeters possible for Quebec, 15.

Let's show you some of the photos of the snowy days over the last couple of days.

Now, Max, I know you have been dealing with a lot of rain across the region. Haven't had a lot of snow, but these are some of the images of how that snow storm affected areas from Cincinnati, from Colorado. This was sent in from Dustin Singer. It's showing you a beautiful snow display as we saw it start off in the plains with blizzard conditions across that region. Here's another image coming out of the Colorado Springs. And then Benton, Arkansas, they hadn't had a white Christmas in quite awhile. And it certainly was a white Christmas. As I take you over to our graphic here.

And we want to talk about some of those delays out there. A real delay that we're really following now is Montreal where they've actually closed the airport because of the bad weather. Now if you notice for areas like JFK as well as into New York, LaGuardia, we're also still looking at some delays there as well. And that is due mostly to the strong winds as well as some left over rain there.

But certainly I think weather conditions and travel conditions will be improving across parts of the northeast.

Now as we go into the future into Saturday, as I said to you, another storm system. It looks like it could be affecting parts of the Delmarva region as well as into Mid Atlantic as that storm comes in from the south when that cold air collides it looks like for areas like Washington, D.C. into Pennsylvania, New York more snowy conditions. Now Max, your rain is not so bad if you think about that, right?

FOSTER: Absolutely. You mentioned the rain here in the UK. I mean, we're used to it, but not at this level. What are the highlights in other parts of the world?

DELGADO: Oh, highlights. Sometimes we'll just call those lowlights, Max. And for parts of the UK we are talking some strong winds. And this is also going to affect parts of Northwest Europe.

Look at this radar, we have still continued to see rain coming down, especially through southern parts of England. Look what's happening through Germany and also through Austria. And we're also seeing some of that snow working through.

Well, we've had a series of really just lows just coming in off the Atlantic and that has been producing some strong winds in addition to the heavy rainfall and snow at times.

Look at some of these wind gusts. For Stuttgart we had a wind gust earlier today of 94. For Geneva, we saw 72. And with these winds around Max, this is going to cause a big travel delay for parts of Europe. And this is for some of the major airports like Heathrow as well as Gatlit (ph), Glasgow, Amsterdam. Your delays for Friday are going to be 60 to 90 minutes. And of course that's going to have a ripple effect on some of those smaller airports. And for Dublin as well as into Copenhagen, we're also talking about strong winds around. And we're going to keep that in the forecast through Friday, even potentially into Saturday we could still see gusty conditions.

But if there is a bright side to the story, temperatures above freezing across a good part of Europe. Just really in that northeastern part, that's where it tends to be still rather cool for this time of the year. Max, there's a lot of weather to talk about.

FOSTER: Absolutely, a lot of weather indeed. Thank you very much indeed Jennifer.

The latest world news headlines just ahead, plus the orphan children at the center of a political battle between Russia and the United States. Moscow could soon bar American adoptions, but who stands to lose the most?

Manchester United's legendary manager gets off Scott free after his latest run in with referees.

And how a shark ended up in a Chinese mall. All the details up next.

(COMMERCIAL BREAK)

FOSTER: Welcome back. The UN-Arab League envoy is pushing a plan to bring a transitional government to Syria. Lakhdar Brahimi says the so- called Geneva Plan could end the bloodshed within months. He's in Damascus this week to meet with President Bashar al-Assad and other officials. Meanwhile, the opposition says violence across the country has killed more than 150 people today alone.

In Pakistan, Taliban fighters have captured at least 21 government and paramilitary soldiers outside Peshawar in Pakistan's volatile northwest. Local officials say heavily-armed fighters stormed at least two camps overnight and seized the soldiers.

US president Barack Obama has returned to Washington to take part in efforts to avoid the so-called fiscal cliff in the new year, and we've learned that the US House will reconvene on Sunday. If no deal is reached, significant automatic spending cuts and tax hikes kick in on January the 1st.

Legendary former South African leader Nelson Mandela is at his home in Johannesburg after being released from hospital. Mandela is said to be fighting a lung infection and had gallstones removed during his 19-day hospital stay. He is 94 years old. Doctors will continue to treat him at home.

Russia is just one step away from passing a controversial new bill that bars Americans from adopting Russian children. The bill has already sailed through the Russian parliament. All it needs now is President Vladimir Putin's signature.

It's widely seen to be part of an ongoing political row between the two nations. Our senior international correspondent Matthew Chance explains.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, this is essentially an act of retaliation by the Kremlin against a law that's been passed earlier this year by the United States called the US Magnitsky Act, which is a law that penalized certain Russian officials accused of being involved in the killing of Sergei Magnitsky back in 2009.

He's a lawyer who uncovered a huge fraud in the Russian taxation system, also officials accused of taking money from that fraud as well. They've been, essentially, sanctioned economically, refused to be given travel permits for them and their families into the United States.

And that's something that's hit hard, it's something that's very much angered the Russians as well. So, they've been searching around for the past several months for some kind of appropriate response, and this is what they've come up with, a whole package of measures, including this potential ban on adoptions by American parents.

FOSTER: Are there a lot of American adoptions of Russian children?

CHANCE: There are. There are a lot of them. In fact, the number of Russians coming into -- Russian children coming into America is the third- highest after Vietnam and China. So, there's a lot of them, and the past 20 years, there have been 60,000 Russian children who have been adopted by American parents and brought back to the United States.

Of them, according to official figures, 19 of them have died whilst in the care, supposedly, of those American parents. So, one of them, Dima Yakovlev, is a boy who was killed several years ago when his father left him in a car for many, many hours in the United States without any water, and he died. And that's the name that they've given this potential ban, this bill that the Russians are about to put through.

Each one of those 19 cases, by the way, has sparked outrage in Russia, that a Russian child could be killed at the -- while supposedly in the care of an American parent.

FOSTER: And where are we in the process, then? Presumably, as you say, it will go through, so the ban will come into effect soon?

CHANCE: Well, that very much depends on Vladimir Putin himself. It's already passed the two houses of the Russian parliament, the Duma and the Federation Council. It's now been given to the Russian president, who has to sign it before it becomes an act.

And he's given his strongest indication yet that he will do that. He says he sees no reason not to sign it, although he's going to study the final text. So, it's still very much in Vladimir Putin's hands.

There has been some hope that he may be the sane voice in all of this and he may at the last moment sort of claw back and get rid of the whole ban on adoptions, or at least water it down to a certain extent, although we just don't know what he's going to do.

(END VIDEOTAPE)

FOSTER: Well, over the last 20 years, Americans have adopted tens of thousands of Russian children. If the bill is passed, it's unclear what will happen to Americans who are currently midway through that adoption process. This is precisely the concern of one family in Georgia, as CNN's Rafael Romo reports.

(BEGIN VIDEOTAPE)

RAFAEL ROMO, CNN SENIOR LATIN AMERICAN AFFAIRS EDITOR (voice-over): Jenny and Aaron Moyer describe Vitali as the sweetest four-year-old boy you could ever meet.

AARON MOYER, ADOPTIVE PARENT: He's our son. In our hearts, he's our son.

ROMO: Vitali lives in an orphanage in Russia, where the Moyers visited a few months ago with the intention of adopting him.

JENNY MOYER, ADOPTIVE PARENT: We know that there's an orphan crisis, particularly with children with special needs in that area of the world, and that is something that we are open to, and the child that we are pursuing, Vitali, has Down Syndrome.

ROMO: But even the adoption process is nearly complete, the Moyers, who live in Georgia, are facing what could be an insurmountable obstacle: the Russian parliament has approved a bill to bar American couples from adopting Russian children. President Vladimir Putin has indicated he will sign it into law.

ADAM PERTMAN, DONALDSON ADOPTION INSTITUTE: If what they say is going to happen really happens, those families are not going to be able to adopt the kids even if all the legal processes already have been in place. But much more important, let's focus on the children. What it means is those children will remain institutionalized.

ROMO: Some see the Russian bill as retaliation for a new American law that places financial restrictions on Russians accused of human rights violations. It also denies them visas for travel to the United States.

ROMO (on camera): According to statistics by the US State Department, the number of Russian children adopted by American couples has decreased significantly in the last few years. In 2004, the number was more than 5800 compared to only 962 last year.

ROMO (voice-over): Over the last 20 years, Americans have adopted more than 60,000 Russian children, more than any other country.

PATRICK VENTRELL, DEPUTY SPOKESMAN, US STATE DEPARTMENT: We remain committed to supporting inter-country adoptions between our two countries. The welfare of children is simply too important to be linked to political aspects of our relationship.

ROMO: The bottom line, says this expert: it is ultimately the children who will suffer because there aren't enough families in Russia willing to adopt.

PERTMAN: There are by some estimates 700 -- 750,000 children in orphanages and institutions in Russia. They don't have that many families stepping up.

ROMO: The need is especially great for children with special needs, like Vitali.

J. MOYER: We rely on our faith and our hope in Jesus Christ, and that's what's going to get us through this, but it would just be devastating for those kids.

ROMO: The Moyers already have two biological children, both boys, and one adopted American girl. They say their children are just waiting for their brother to come home.

Rafael Romo, CNN, Atlanta.

(END VIDEOTAPE)

FOSTER: Well, the bill's under fire from officials in both the US and in Russia, as well as child rights activists. Critics say Moscow is playing politics with the lives of children. Live from Boston is Adam Pertman. You saw him in that report. He's from the Donaldson Adoption Institute, and thank you so much for joining us.

How much -- the numbers are quite big, but do you not think that there will be some sort of -- other countries will step in to replace the adoptions from the US if this law does indeed go through?

PERTMAN: Well, there are two answers to that. First, the US adopts more children than the rest of the world combined. So, there's no indication based on history that that will happen, and I hope it does happen.

But the second part of the answer is that right now in the Duma, there are people talking about banning all international adoptions, so if this continues, if this trend within Russia continues, that won't be an option, regardless of who -- what parents want.

FOSTER: Is there no way of creating a system in Russia where there are enough local adoptions? The government obviously seems confident about that. And there has been a lot of press, hasn't there, in Russia, about failed adoptions abroad and problems within adoptions? So, there's a movement away from foreign adoptions within Russia, at least.

PERTMAN: Well, let's be clear. This legislation was not passed in order to deal with the problems of those 19 cases where children died in the custody of their families. That was 19 -- over 20 years, there have been 19 cases. It's awful, there should not be one.

But there's a US-Russia treaty that was negotiated last year that went into effect November 1st that explicitly was meant to deal with that exact problem. So, suddenly there's legislation in the Duma to deal with something they've already dealt with. Clearly, there's a different agenda here. So, the problem was being dealt with, and suddenly this comes up.

The victims here are -- Russia wants to punish us, wants to take a -- something that's dramatic, something that hurts personally, and thrust it back at us, apparently because of this human rights legislation.

It might or might not work. Certainly a lot of people are getting hurt, but the bottom line, however many people there may be in Russia who are ready to step up and adopt children, and there, again, history teaches us that the numbers are not that large yet, maybe they can promote that culture.

But however many there are, there are tens of thousands of children, hundreds of thousands of children, in their orphanages and other institutions. They certainly don't have that many parents. So, for some number of children, their lives are going to be lived out in those institutions as a result of this law.

FOSTER: And what about the Americans hoping to adopt? Have they got other options, or do they go to Russia because they struggle elsewhere?

PERTMAN: Well, the number of options for anyone who wants to adopt anywhere in the world, if they want to adopt internationally, are declining. The decline in numbers from Russia are just one indicator of an overall trend.

The numbers -- to use the US as the best example because there are the most adoptions here -- in 2004, there were about almost 23,000 adoptions into the US from other countries. In the past year, that number was around 9,000.

So, the decline is across the board in most countries, and what this action in Russia that occurs is going to do is accelerate that trend and allow fewer options for people who want to adopt in this way.

FOSTER: OK, Adam Pertman, thank you very much, indeed, for joining us. Appreciate your time.

Live from London, you're watching CONNECT THE WORLD. Still to come: a date in the desert. We reveal the wonder food that's helping to fuel Dubai's rapid rise.

(COMMERCIAL BREAK)

FOSTER: New buildings, new roads, new ports. Dubai has grown at a rapid pace in recent years. But it's not just oil fueling this Gulf nation's meteoric rise. In this week's episode of Gateway, Becky explains how an ancient fruit full of minerals and energy is helping the country thrive.

(BEGIN VIDEOTAPE)

BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT (voice-over): Since ancient times, dates have been an integral part of the culture and identity of the UAE. Production has increased nearly a hundredfold in the past four decades. They're carefully harvested by hand from more than 40 million palm trees across the country.

ANDERSON (on camera): The Emirates is the fifth-largest producer in the world, but it's not just local fare that you will get here. The UAE also imports 250,000 tons of dates every year. So, where are these all from?

UNIDENTIFIED MALE: From Saudi, from Iran, United Arab Emirates. It's 90, 95 percent Saudi dates.

ANDERSON: Saudi dates here. So, a box of those, please.

ANDERSON (voice-over): After two days at sea, this wooden dhow has arrived at Al Hamriya, one of Dubai's oldest ports. It's laden with 350 tons of the fruit, destined for Mumbai in India.

KHALDOUN ASMAR, CEO, BARARI GROUP: These fast-moving dhows, they can go and come within two, three, four days maximum. So, it's easy in terms of moving around, really. You lost fast, and you discharge fast.

Here in Dubai, we are connecting the Far East with the Middle East and the European markets and the US markets.

ANDERSON: Khaldoun Asmar has been trading dates for 25 years. Sourcing about 50 varieties from eight different countries, he handles up to 80,000 tons of the fruit every year.

ASMAR: This batch came about four, five days, came from Iraq. So, we offload it here. These dry dates also came from Iraq. This is very processed dry dates. Also came about last week, and hopefully we can ship it within two, three days.

ANDERSON: Once loaded onto the container, the dates are then transported by truck to the larger Jebel Ali port, 35 kilometers away.

MOHAMMED AL MUALLEM, SVP AND MD, DP WORLD: Dubai is a trading hub for the region, and Dubai is a center of export. We have traders coming from all over the region here. They come and see the products in the warehouses, and basically they say, "I want this to be delivered to -- " to a certain area where they don't have ports.

Lots of cargo that comes through to Dubai again gets onboarded to these dhows and they just go off everywhere.

ANDERSON: From dhow to container ship, by combining both old and new modes of transport, Dubai has become the hub that feeds the demand for this much-loved traditional fruit.

(END VIDEOTAPE)

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FOSTER: Manchester United manager Sir Alex Ferguson has escaped punishment for berating the referees during a Boxing Day match, but some would argue he was cleared on a technicality. Mark McKay joins us from CNN Center. What do you reckon, Mark?

MARK MCKAY, CNN SPORTS CORRESPONDENT: Well, yes, maybe so, Max. I think that might be the case. Those who don't agree with this policy or this punishment, lack thereof, probably pull for anybody else besides Manchester United.

But here's what went down. It was during the Boxing Day match against Newcastle yesterday. Manchester United manager Alex Ferguson voicing his displeasure at the beginning of the second half to referee Mike Dean after being angered that Newcastle's second goal was given despite the player being in an offside position. Ferguson felt that Dean, the referee, should not have ruled -- overruled his assistant.

Well, the English Football Association said that no action will be taking against the longtime United manager because Dean did not mention it in his post-match report. Therein lies the technicality.

The thrilling Boxing Day match did put Manchester United, Max, seven points clear of the top of the table. He may not smile a lot, but Sir Alex Ferguson can finish this year with a big smile on his face now on two counts: his team's out front, and he escaped yet another punishment by the FA.

FOSTER: News just have to smile, obviously. On CONNECT THE WORLD as well, Mark, we were talking about donkey cheese recently in relation to Djokovic. You'd better explain this one, but you've got an update, that's why we're talking about it again.

MCKAY: Yes, I know. You might not have been up on this story. A couple of weeks ago, Becky and I were joking about this, that Novak Djokovic went out and bought the world's supply of donkey cheese, which is a delicacy in his native Serbia. He runs some restaurants.

But he's now come out and said, well, that's not necessarily true, that he's actually saying that the farm that produces donkey cheese, they did come to him and offer what he calls cooperation, but it's not true that he's bought up the whole world supply.

It goes for about $500 a pound in Serbia, so Max, I know you were looking forward to serving up donkey cheese at your New Year's Eve celebration. You can rest assured that Mr. Djokovic did not take it all off your plate.

FOSTER: Now I know.

MCKAY: Yes, you do.

FOSTER: Mark, thank you so much.

(LAUGHTER)

FOSTER: Thank you so much. I'll share it in the office. I'll be here on New Year's Eve, but that's fine. Mark, thank you very much, indeed. Do join Mark for much more on "World Sport" at the bottom of the next hour.

Now, we are approaching the annual awards season when the best of film and TV are crowned for excellence in entertainment. Some familiar names are starting to emerge in the nominations, including "Modern Family." Our Nadia Bilchik sat down with the show's producer, Danny Zuker, to find out what makes the series such a big hit.

(BEGIN VIDEOTAPE)

DANNY ZUKER, EXECUTIVE PRODUCER/WRITER, "MODERN FAMILY": It's hard to know what makes "Modern Family" such a phenomenon, but I think it's that it's very relatable to a wide swathe of the audience. From my children's - - their friends watch the show, and their parents watch the show.

Someone described it as -- a friend of mine described it as it was kind of like a campfire, and there hadn't been anything like that on the air for a while that everybody sort of watched together. And I think it was an antidote to snarky television for a while.

NADIA BILCHIK, CNN INTERNATIONAL CORRESPONDENT: Now, how do you find your inspiration for some of the jokes in "Modern Family"?

ZUKER: Well, the stories come right from my family. In fact, something will happen in my family, and my kids will watch me go for my phone to write notes, and they'll be like, "Don't put that in the show."

And all of the writers on the show have this with our families, because we purge -- we have just told -- we have dug from the depths of our family, all of our -- all of the skeletons in our closet, because we need stories, and that comes first.

We did an episode -- well, this actually happened to me. The EMTs in my town of Manhattan Beach are famously attractive, and I was doubled over in the middle of the night with gallstones, and my wife called 911 because we didn't know what it was.

And she disappeared for a while, and then the doorbell rang, and I'm in my underwear, and she comes out of the closet and she has completely dolled herself up for the firemen. And we -- so, I told that story, and we would up doing that in an episode.

BILCHIK: Now, Eric Stonestreet plays the partner to Mitch --

ZUKER: Yes.

BILCHIK: So, he's gay. And yet, in real life, he isn't. Are people always surprised by that?

ZUKER: I think they are. Eric is -- Eric is definitely the person on the show most playing a character, I think. They all are, but his transformation is -- we watch him get "Cam hair," we call it. His hair just becomes that Cam hair. And then you'll see him afterwards, and he looks like a good old boy, which is basically what he is, yes.

BILCHIK: And Sofia Vergara, nobody had ever really heard of her before "Modern Family."

ZUKER: Well, Sofia Vergara was fairly big in Latin America, so the people -- early on, we go to -- when we'd go out to restaurants and something, or anywhere, some of the -- and we'd be in anyplace where there were Latino people, they would always come up to her like they had known her. But yes, this was definitely a breakout role.

BILCHIK: "Modern Family" really resonates beyond entertainment. In fact, it's been credited with changing people's perception, for example, of gay marriage. Does that put pressure on you as a writer? Is that something you think about a lot?

ZUKER: We do take pride after the fact in changing opinions. Our more conservative relatives and family members have come up to us and said, "I never really looked at gay people in that way."

BILCHIK: You have over 150,000 Twitter followers. You have to explain your love of Twitter.

ZUKER: I love writing jokes. I just -- and I saw this forum as just this perfect place to practice writing jokes. And when I was -- I came up as a joke writer, and originally, if you wanted to get your jokes heard, you'd have to go to this gatekeeper. So, it would be like the head writer of "Letterman" or of "Leno."

But now, a joke occurs to you and you just put it out there and you get immediate feedback, and I know lots of young comedy writers who've gotten hired strictly off of their Twitter feeds.

BILCHIK: Well, @DannyZuker --

ZUKER: Yes.

BILCHIK: -- it has been a pleasure having you on @CNN.

ZUKER: Oh, it's my pleasure, thank you so much.

(END VIDEOTAPE)

FOSTER: On tonight's Parting Shots, amazing pictures inside a Chinese shopping center. CCTV footage in this Shanghai mall captured the moment an aquarium full of sharks -- can you believe? -- burst and swamped shoppers and staff.

Sixteen people were injured, mainly by shards of glass, not the sharks. They were sent flying through the air when the 33-ton tank exploded. As for the marine life, three sharks, dozens of turtles and small fish, were unable to be saved.

I'm Max Foster, that was CONNECT THE WORLD, thank you for watching.

END