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AROUND THE WORLD

Tourists Die in Balloon Crash; Pope's Final Days in Power; Senate Votes on Filibuster; Italian Election Ends In Gridlock; Bernake Weighs in on Sequestration; Canada Calls for DNA Testing Following Horse Meat Scares

Aired February 26, 2013 - 12:00   ET

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


ASHLEIGH BANFIELD, CNN ANCHOR: It's all being filmed for an upcoming HBO documentary.

Thanks for joining us today, everybody. I am fresh out of time, but AROUND THE WORLD is coming up next.

SUZANNE MALVEAUX, CNN ANCHOR: I'm Suzanne Malveaux.

MICHAEL HOLMES, CNN ANCHOR: And I'm Michael Holmes.

MALVEAUX: Welcome to AROUND THE WORLD. Here's a look at some of the stories that we are working on.

In Egypt, a freak accident. A hot air balloon explodes in the air, plummets to the ground. Eighteen people now dead. We're going to get a live report.

HOLMES: And Vatican City. We're learning more about the future and what it holds for Pope Benedict XVI. His final week clouded by scandal. Rumors swirling about real reasons for his resignation perhaps.

MALVEAUX: And right now the Dow rallying from yesterday's big loss, but not so for the world markets. Italy's election now causing a great deal of uncertainty. The government of Europe's third largest economy is now facing a deadlock.

HOLMES: We're going to start in Egypt, though. Tourists flying high above some ancient Egyptian sites there plunging to their deaths when a hot air balloon explodes and crashes.

MALVEAUX: At least 18 people now have died. The local government has banned all other hot air balloon flights, at least for now. This happened in the city of Luxor. It's about 300 miles south of Cairo. Our Ian Lee, he's in Cairo with the latest on the investigation.

HOLMES: Yes, Ian, let's start with what the theory is at the moment. There have been reports of a gas cylinder exploding. Describe what you've heard.

IAN LEE, CNN CORRESPONDENT: Well, Michael, that's exactly what we're hearing. We're hearing at roughly 1,000 feet a gas canister on the hot air balloon exploded, sending the balloon tumbling towards the ground. This comes from multiple reported from eyewitnesses. Also eyewitness accounts that people were jumping out of the balloon as it tumbled towards the earth. Right now we're hearing 19 people have been killed. This includes tourists from Europe and Asia. Two people injured, including the balloon driver.

But these balloons are very popular for tourists in Luxor, going up every day, dozens of them. But the government has stopped all balloons for right now while they conduct an investigation.

MALVEAUX: Hey, Ian, this is Suzanne. Michael and I were talking about the fact -- we've both been up in hot air balloons. And there is really no backup plan, really. I mean, you fall, you fall. You don't have anything that's going to really catch your fall. Do you know how high up they were when this balloon went down?

LEE: They were roughly 1,000 feet in the air. And just to kind of give you some perspective. The Empire State Building is 1,200 feet high. So it is quite a long -- a far drop. And while hot air balloon accidents are rare, Egypt did experience some four years ago when they saw over 80 people injured over the span of a couple of months. The government shut down hot air balloon operations then to investigate. They said they implemented reforms that should prevent future incidents from happening. But, unfortunately, one happened again today.

HOLMES: And, really, in the bigger picture, it is considered a fairly safe thing to be doing. But when you look at Egypt, forget the political turmoil that we've been seeing there, the economy has really been in free-fall, unemployment and the like, and tourism so crucial to that economy.

LEE: That's exactly right, Michael. The -- tourism makes up around 10 percent of GDP. And since the revolution, we've seen tourism drop annually about $4 billion. So Egypt has taken quite a hit. And what really hurts the tourism sector are headlines and headlines of instability, headlines of clashes, headlines of turmoil. This is just another headline to put up there, to put tourists off from visiting Egypt.

HOLMES: All right, Ian Lee, thanks so much. Ian Lee in Cairo.

MALVEAUX: That's, really, I mean, it's so tragic.

HOLMES: Yes, terrible.

MALVEAUX: I mean, you know, you go up there. It's beautiful. Absolutely beautiful. And you don't expect anything like that to happen.

HOLMES: Yes.

MALVEAUX: But there is no backup. I mean, you don't -- like a life preserver or anything like that, that would help you in any way.

HOLMES: Yes. Unbelievable. Yes.

MALVEAUX: All right, we'll take you now to Rome. We're getting new details about what Pope Benedict's life is going to be after Thursday when he no longer is the pope. Our Christiane Amanpour is in Rome.

And, Christiane, first of all, you've got the cardinals who are gathering together today, a meeting. They're going to choose the next pope. What are they talking about? Are they talking about this scandal?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Let me give you a little bit of what's going on. You know, I always notice, at this time of the day, the light is going down in this eternal city and it's been quite a shadowy beginning of the week as far as what's been coming out of the Vatican. And they really want to move out of that darkness and all these scandals swirling around into the light, as they tell me, of what they want to project for these last few days of Pope Benedict's reign. And, yes, they're trying to put this behind them and trying to say that whatever was investigated, for instance, those three cardinals who briefed the pope and only the pope yesterday, that will be put on the desk of the new pontiff to deal with.

So, what we're hearing today from inside the Vatican are details about the pope's next status. He will apparently still be called his holiness. He will probably take on the title of pontiff emeritus. It is an unprecedented situation. No pope has had a former pope looking over his shoulder or being even anywhere near during his reign. This is the first time in actually 600 years that a pope has resigned. So they're telling us that.

They're telling us that he will continue to wear a simple white cassock. He will not have all the ceremonial robes of his papacy. Very interestingly, for those who care, he apparently also will not be wearing his red Prada shoes any longer, but apparently a pair of brown leather shoes. Now, you might think that is a little bit of trivia, but you know these 1.2 billion Catholics all over the world are entranced and transfixed by practically everything papal.

Importantly, about when the next pope will be chosen. We're told that all the cardinals will come and be convened, be told to come to Rome the day after this pope leaves. That will be on Friday, March 1st. They're unlikely to meet over the weekend. They are likely to have their first meeting on Monday, March 4th. And only after that will they start their formal convention and only after that will we know what date the next conclave will start to elect the next pope.

Suzanne.

HOLMES: Yes, amazing. Yes, no, Christiane, thanks for that. Amazing with all of the rumors and sex scandals swirling, the Vatican letting us know about the shoes.

MALVEAUX: Who knew, red Prada shoes, huh?

HOLMES: Christiane Amanpour, thanks.

MALVEAUX: All right, we're going to go live to Dana Bash on Capitol Hill. I understand that there's a vote underway for Hagel in terms of secretary of defense. What do we know?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: That's right. It is under way as we speak. What this is, Suzanne and Michael, is a vote to end the Republican filibuster on Chuck Hagel's nomination to be the next secretary of defense. Ten days ago we had the same exact vote and it failed. Republicans -- enough Republicans blocked it so that the filibuster continued. But Democrats in the White House really only needed effectively one more vote and we think that that is there, at least. At least one more vote. So we believe, at the end of this vote, which has approximately 10 minutes left, Chuck Hagel will -- the way will be cleared for him to be the secretary of defense. Unclear if they're going to have a final vote today or they'll have to wait until tomorrow. But we're watching this to see exactly how it goes down.

But one thing that we did hear right before this started was the Republicans who are ardently opposed to him say that even if he is nominated, which I think he -- confirmed, which I think he will be, he will be to battered and too bruised to be an effective secretary of defense. So they did one last at least public ask of the president to withdraw his nomination, which, of course, we knew was not going to happen.

MALVEAUX: All right, Dana, keep us posted on the very latest. And when this actually becomes official, it will happen soon.

Coming up, AROUND THE WORLD --

HOLMES: Italians, they went to the polls over the weekend. But after the votes were counted, no clear winner and now they can't form a government.

MALVEAUX: And she is a tiny reality star with quite the big following, about to get bigger. We're talking about, believe it or not, Honey Boo Boo going global.

(COMMERCIAL BREAK)

MALVEAUX: Welcome back to AROUND THE WORLD. If you thought the U.S. Congress was stuck in gridlock, just take a look at Italy. That country now in political chaos after a election without a clear winner.

HOLMES: Yes, here we go again. It's a familiar tale, isn't it? The center left party, they won the vote by a slim majority. The problem is, they don't have enough seats in the Italian senate to actually form a government. And the current prime minister, Mario Monti, well, he finished a distant fourth.

MALVEAUX: But what really threw a wrench into all this was a surprisingly big vote for a protest party led by a famous Italian comedian, a guy named Beppe Grillo. And, of course, to make things more complicated, controversial former Prime Minister Silvio Berlusconi, he's not entirely out of the picture. He's got a lot going on. HOLMES: It is an amazing country politically. It's also important to remember that Italy is the third biggest economy in Europe. It's got the second biggest debt burden in Europe. Investors do not like the outcome of this election.

MALVEAUX: And, of course, we watched it because the Dow dropping more than 200 points after the results came out. The European markets taking a pretty big drop when it opened this morning. I want to bring in our Richard Quest out of London.

Tell us what's happening. What is the reaction?

RICHARD QUEST, HOST, CNN "QUEST MEANS BUSINESS": Well, the worst and most dramatic reaction has been on the Italian markets, of course. The MIBTel Index in Milan, that fell the best part of 5 percent in trading on Tuesday. Yields on Italian debt, they rose. And all in all, there is a general feeling that what has happened in Italy, because this was an anti-austerity vote, and those parties against austerity did so well, what the feeling is, that we could be off to the races again. The people have spoken and they don't like the policies that European bureaucrats are imposing from above in their view and now, of course, we're starting to see the results. All of the major markets, the FTSE, the DAX, the CAC, the (INAUDIBLE) all heavily down.

HOLMES: Yes, and the American markets don't like it much either.

You know, we're talking here that when you talk about Grillo, this comedian, this is a guy, let's face it, his party does not have a comprehensive plan, a political plan really, going forward. Just said a lot of things that people wanted to hear. People are already talking about another election. How has it been viewed there in Europe?

QUEST: Oh, well there's no question that if they can't come to an agreement -- and, first of all parliament has to meet. And then the president starts the horse trading to see if any of the parties -- and it is very complicated, guys. I mean, you know, the center left, the center right, the middle, the Berlusconi, the Bersani, (INAUDIBLE) the Monti. Monti almost certainly won't be a player in all of this. But the machinations that would put together a government seem highly unlikely. And that's why the view is, you'll end up with some sort of caretaker and Italy will be back to the polls.

But, look, these are the numbers that came out from the European Union and the commission last week. Italy, this year, is expected to contract by 1 percent. The second straight year of recession. So you have an incredibly complicated position. You've got demands for austerity to put the fiscal position back together again, but at the same time the people saying, no. It's not surprising, volatility is the only thing I'm going to forecast.

MALVEAUX: Richard, real quickly here, because, you know, we always think about how it comes back to the United States. But how is this going to impact --

QUEST: Oh --

MALVEAUX: Really, no, seriously, how is it going to impact American markets clearly when Italy is really in disarray at this point?

QUEST: Oh, it's going -- of course -- what I was saying, Suzanne, of course it's going to have an impact because, once again, if Italy's markets and European markets are in trouble, that has a crisis of confidence in Europe, and that very quickly -- quicker than I'm speaking to you, transmits itself across the Atlantic.

But now factor in the forced spending cuts. That word which shall not say its name, the sequester that we're not -- you know the word -- the name that shall not be used. Now, when that comes in, you just picture this. You've got Italy in, I won't say chaos, but you've got democratic turmoil. You've got the U.S. with forced spending cuts. You've got no growth in the union. It's not surprising that in this environment investors are saying, sit on their hands, go into cash, wait for a sunny day.

MALVEAUX: Yeah, that's really true. It's all about unpredictability. There's uncertainty.

Richard, thank you very much. I guess we'll get a check on the markets.

HOLMES: Yeah, I mean, political uncertainty in Italy, who would have thought it?

Yeah, the markets are actually up at the moment. They're up 76 point on the day, half a percent.

Investors have digested that news from Europe and, now, back to the guessing game, of course, over forced spending cuts and, of course, it comes on the back of a big drop yesterday. So, a little bit of a recovery.

MALVEAUX: Yeah, and those cuts, Richard said sequester. No, don't say sequester.

Those cuts are going to happen on Friday if there's not a deal that's made today. Even the Federal Reserve chairman, Ben Bernanke, he was weighing in on the forced cuts.

Here's how he put it.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: A significant portion of this effect is related to the automatic spending sequestration that is scheduled to begin on March 1st, which according to CBO's estimates will contribute about six-tenths of a percentage point to the fiscal drag on economic growth this year.

Given the still moderate, underlying face of economic growth, this additional, near-term burden on the recovery is significant.

(END VIDEO CLIP)

HOLMES: Yeah, let's bring in Maribel Aber from New York. And, Maribel, it's interesting, you know, a lot of, shall we say, "Bernanke-speak" in that clip, but he actually said something that's pretty significant.

MARIBEL ABER, CNN CORRESPONDENT: Hi, Suzanne and Michael.

He certainly did, and you know what? Especially because those are some pretty cautionary words from the head of the Fed.

And it's interesting, I want to say, because he's not normally so direct when it comes to congressional action in saying just how significant the burden would be.

Ben Bernanke pointed to numbers from the Congressional Budget Office forecasting the cuts set to take effect on Friday would slow down GDP by 1.5 percentage points this year.

So, what does that do? That translates into American jobs and incomes taking a hit. And you know that's, of course, not good considering economic growth has already been so slow.

You know, Bernanke also echoed sentiments we've heard a lot from him in recent years. And what's that? That's the Fed's monetary policy which pumps out, of course, you know, billions of dollars of stimulus each month, can only do so much.

So, really turning to lawmakers, they really have to find the fiscal ways to reduce the long-term deficit without threatening the economy in the short-term, Suzanne and Michael.

MALVEAUX: So, Maribel, what happens here? How are companies preparing for Friday? Are they essentially preparing for the fact that these cuts will go into effect?

ABER: You know what? Chances are pretty slim that the cuts will be averted in time.

But the sense from traders is that the deadline doesn't mean a whole lot to Wall Street at this moment. So, any negative reaction will not be immediate. Even with yesterday's sell-off we were talking about, right, the market's has had a nice run-up recently.

So, it would really take a lot to knock the wheels off this wagon. You know, stocks are trading mixed today following the Dow's biggest sell-off Monday, investors weighing those cautious remarks by Bernanke, but then you've got to remember, too, we had these upbeat readings on new home sales, home prices and consumer confidence.

So, Suzanne and Michael, kind of a mixed bag as we wait for that shoe to drop Friday.

HOLMES: Maribel, good to see you. Maribel Aber there, breaking it down for us.

MALVEAUX: Thank you.

Coming up "Around the World," every day hearing more about these food scandals, the latest when it comes to horsemeat.

You and I have been talking about this.

HOLMES: Yeah, we're talking Swedish meatballs now, Ikea.

But we're seeing butchers who can be detectives. We're talking about DNA testing that could help solve the mystery of what's in our food.

We'll check that out.

(COMMERCIAL BREAK)

HOLMES: Welcome back, everyone. Here are the stories making news "Around the World."

In the Middle East, Gaza, a militant group is claiming responsibility for firing a rocket into Israel. It is the first such attack since a cease-fire took hold in November.

Police say a road was damaged, but there were, fortunately, no injuries.

In Pakistan, another deadly attack on workers giving polio vaccinations to children. This time, it happened just outside Mardan which is about 40 miles or so east of Peshawar.

Men on motorcycles opening fire on the workers, but what they did was actually shot and killed a police officer who was there protecting the workers.

A Taliban commander, by way of background, has banned the vaccinations. Says at least ten health care workers have been killed since December.

Pakistan, one of just three countries where polio remains a threat.

In Almaty, Kazakhstan, talks are now under way about Iran's nuclear program. There are representative there from Iran, Germany and the five permanent members of the United Nations security council, the U.S., France, Britain, Russia, and China, of course.

Since the last round of talks last June, Iran's uranium enrichment program has actually expanded, violating U.N. resolutions.

Yeah, Iran is claiming its program is for civilian use only, energy and such things, but Western leaders fear that Iran is building a nuclear bomb.

In Canada, a group of scientists is now calling for food to be DNA tested to make sure that these things, the products, are what they say they really are. All right?

HOLMES: (INAUDIBLE) they are not.

Now, Paula Newton's going to report that testing would keep horse meat and such things from ending up in beef products and other types of food fraud.

(BEGIN VIDEOTAPE)

PAULA NEWTON, CNN CORRESPONDENT: With all the new food scares, I bet you're wondering if there's any way you can know for sure exactly what you're eating and what you're giving your family.

So, we've come here to Canada and the University of Guelph in the Biodiversity Institute of Ontario. And Chris Weland is here.

Now, you used to be doing this in forensic labs for crime scenes. You've brought CSI, really, to the butcher here, and what we're starting with are Ikea meatballs.

CHRIS WELAND, UNIVERSITY OF GUELPH: All we really need is a one- millimeter piece.

NEWTON: A scrap of food, that's all it takes to screen and i.d. exactly what we're eating.

WELAND: So, it's going to have -- is it beef and pork? Now that I've tested products and we've found ...

NEWTON: The DNA extraction, while not perfectly scientific here but demonstrated for CNN, is what the "barcode of life" is all about.

WELAND: We can incorporate it into all large manufacturing companies' quality assurance and quality control procedures, so they go out and do DNA testing on their products.

NEWTON: Dr. Paul Hebert first conceived and developed the barcode of life and explains why it can and should be used to prevent food fraud.

PAUL HEBERT, INTERNATIONAL BARCODE OF LIFE, UNIVERSITY OF GUELPH: You can move from a tiny piece of an organism to a DNA sequence that tells you what that species of entity is within a matter of about an hour to an hour-and-a-half and it will cost you about two dollars.

So, there's absolutely no reason that the food marketplace isn't being screened aggressively to stop substitution.

NEWTON: Leading science like this really can be like a crime scene investigation, not just horsemeat scandals but studies here have found as much as a third of U.S. seafood, for instance, is sold and labeled as one type of fish, but is really another.

Despite this ...

DIRK STEINKE, UNIVERSITY OF GUELPH: So the behavior on the side of the market hasn't changed a whole lot.

NEWTON: Why do you think that is?

STEINKE: Money. Substitution always happens that the cheap stuff is on your plate instead of the expensive one you pay for. NEWTON: Consumers can change that. Small, meat specialty shops like RoweFarms in Canada are already controlling and scrutinizing supply chains, the farmers, the livestock, the meatpackers.

JAMIE COONEY, CEO, ROWEFARMS: When you understand that supply chain and how it actually all works, yeah, I think we're very exposed.

NEWTON: Meat crossing borders, companies cutting corners, here they are random DNA screening can and will be demanded, more and more.

COONEY: I think that it's just a matter of time, that I think customers, as they've shown in our business, are prepared to pay a little bit more for something that they're confident in.

NEWTON: Back in the lab the meatball results won't be released for a few days.

What's certain, though, as an investigative forensic tool, the barcode of life can bring leading-edge science straight to the supermarket.

Paula Newton, CNN, at the University of Guelph in Canada.

(END VIDEOTAPE)

MALVEAUX: You haven't eaten horsemeat, have you?

HOLMES: No, no. Plenty of other exotic things over the years, camels and -- yeah, stuff like that. Kangaroos.

MALVEAUX: Coming up "Around the World" ...

HOLMES: Yeah, you remember back in 2001, the "Boston Globe" newspaper exposed the abuse scandal that has rocked the Catholic Church.

MALVEAUX: We're going to actually talk to one of those journalists who helped uncover the widespread abuse by the priests in Boston.

(COMMERCIAL BREAK)

MALVEAUX: Welcome back to "Around the World." Here are the top stories that we're following right now. In Luxor, Egypt, at least 19 people are dead after a hot air balloon filled with tourists exploded and crashed.