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Crisis In Cyprus; "Defect Or We Will Track You Down"; Hillary Clinton's Miles Logged As Secretary Of State More Concrete Than Policy Legacy

Aired March 18, 2013 - 16:00:00   ET


RICHARD QUEST, CNN HOST: Now to New York. Hala Gorani has "AMANPOUR," which is live.


HALA GORANI, CNN CONTRIBUTOR: Hello, everyone, and welcome to the program. I'm Hala Gorani, filling in for Christiane Amanpour.

Today yet another bailout for yet another small country may turn out to be the Eurozone's Waterloo. The crisis this time is in Cyprus, where a 10 billion euro bailout plan announced this weekend has kicked off an angry reaction, a contagion that could spread across the continent, some fear.


GORANI (voice-over): Cyprus is just the latest in a cascading series of bailouts, of course, from Ireland to Spain, to Italy, to Greece.


GORANI: But this time it's different because this time the government plans to seize funds from private bank accounts to help pay for the bailout. It would impose a one-time tax, 6.75 percent on deposits less than 100,000 euros, 9.9 percent on deposits greater than 100,000 euros, totaling almost 6 billion euros paid for by bank depositors.

In other words, the government is breaking one of its most important promises, a promise it made when it guaranteed deposits of less than 100,000 euros. If you put your money in the bank, it will be safe, they said.

And to add insult to injury, bank investors aren't being touched. The financial firms and hedge funds that hold Cyprus' debt won't see any losses. After a run on cash machines this weekend, the government shuttered banks at least through Wednesday. Now with the banks closed, the focus turn to Cyprus' divided parliament, where it is by no means clear that the bailout plan will even be approved.


GORANI: My guest, Felix Salmon, is a finance blogger for Reuters. He predicted a worst-case scenario for Cyprus months ago. In fact, a default for the island nation. He joins me now in the studio.

So they were bailed out in the end?

FELIX SALMON, FINANCIAL JOURNALIST, REUTERS: Well, they've always been together to get a bailout but the bailout was always going to involve some kind of bond default until it was too late to do a bond default. And so they had to come up with plan B, which is this cockamamie --


GORANI: So is this the result of --

SALMON: -- deposit scheme.

GORANI: -- it was procrastination?

SALMON: Yes. It was because the Germans dragged their feet for so long on how on Earth they were going to put this bailout together that it became too late to do it the obvious way, which was by restructuring the sovereign debt. So they had to go to this crazy plan B.

GORANI: So what's going to happen now? Everybody's going to make a run on the banks in Cyprus withdraw their money, including the rich Russian investors and depositors. What happens to Cyprus?

SALMON: Well, they're not going to withdraw all of their money because they're going to withdraw 90.1 percent of it because the other 9.9 percent has been -- has been taxed.

But, yes, that kind of massive bank (inaudible), which seems inevitable at this point, no matter whether they even implement this tax or not. It is going to be very bad for the (inaudible) economy. Cyprus is a bit like Iceland was. It's one of those small countries with a very big banking sector. If the banking sector collapses overnight, which seems to be likely, then there's really not much left in this poor economy.

GORANI: Why is there so much Russian money in Cyprus?

SALMON: There's very old ties between Russia and Cyprus. But, frankly, the real reason is because Cyprus is the Eurozone country with very lax bank regulation, which means they don't ask too many questions about where the Russian money exactly is coming from.

GORANI: Is that a polite way of saying some money laundering goes on there?

SALMON: That's exactly what it is, yes. And the Europeans have been very annoyed at the way that the Cypriots have been allowing loads of Russian money to come in and have been backing with the euro even without really cracking down on money laundering at all.

GORANI: Whose fault is all this?

SALMON: It's the -- it's the entire Eurozone project, where everything -- where you get 20-odd different countries which are culturally completely different from each other, with very different laws from each other, with very different traditions from each other, all pretending that they're all operating under the same kind of banking system, the same kind of civil law and they can all backstop each other. It just doesn't seem to work out in practice.

GORANI: But in the end, who pays? The private -- the private depositor, I should say, investor. The ordinary Cypriot with the savings account of 1,000 euros, 2,000 euros. They have to pay for this.

SALMON: And they would -- people, as you said, who had a deposit guarantee. And inevitably, now, across Europe and especially in the other Mediterranean countries in Greece and in Portugal and in Spain, people are going to be wondering just how much the deposit guarantees are worth. The deposit guarantee is put on by the government. It can be broken by the government, unilaterally.

GORANI: So what happens next? I mean is it Cyprus first, Portugal next, Spain next --


SALMON: -- second. Greece first.

GORANI: Right.

SALMON: And then Cyprus second and the European Union said Greece was a unique case. And then they said that Cyprus is a unique case. And I'm sure there's going to be another unique case, possibly it could be the, you know, Greece mark 2; possibly it could be Portugal; possibly it could be Ireland. Each of those things we ad hoc, another thing that's going to be quite like the other. But this is a rolling crisis.

GORANI: So when -- you're in the Eurozone and you're an ordinary citizen with a savings account. And it says in the agreement that you sign that your deposits are guaranteed up to 100,000 euros. Is that now a lie?

SALMON: It means the government has guaranteed -- well, I mean, technically the Cypriots have a clever way of answering this because they're saying all of your deposits are guaranteed up to 100,000 euros. It's just we can tax them.

GORANI: I see.

SALMON: They're still guaranteed.

GORANI: But it's double tax.

It's already taxed when you deposit it. But then they're saying we'll give you shares in the banks that are the equivalent of what we've withdrawn. Is that good enough?

SALMON: It clearly isn't. Those shares are probably going to be worthless. The -- no one knows how this is going to play out. No one -- there's lots of talk about renegotiating these levels and there's even talk about Gazprom, the big Russian natural gas giant coming in and trying to bailout the entire country in return for access to Cyprus' gas reserves. That probably won't happen, but it's, you know, in the air.

Where is -- we're in a state of flux right now. But there's no good solution here.

GORANI: So when we talk about Gazprom and we talk about the possibility of energy resources in Cyprus, that must have at least a few companies interested potentially.

SALMON: Anything possible.

GORANI: All right. And now, the big question is going to be as far as the parliament is concerned, delaying this vote, possibly renegotiating -- they've been given the go-ahead to kind of amend the deal. To quell public anger or something else, do you think?

SALMON: If they just move the money around so they still raise the same 5.8 billion euros but put more of the onus on the Russians, that might put a tiny bit of oil on the waters, but not a lot. The Cypriot depositors, if they have to pay any money at all, they're still going to be furious.

GORANI: And the Russians definitely will go and go where?

SALMON: Latvia.

GORANI: What's -- why?

SALMON: Well, they need to find a small country with (inaudible), right?

GORANI: And Latvia is it?

SALMON: Latvia is the new Cyprus.

GORANI: All right. That's where you think some of the money is going to end up?

SALMON: It's already started flowing.

GORANI: Felix Salmon, thanks very much. Pleasure talking to you today.

SALMON: Thank you.

GORANI: All right. Let's turn our attention now to Syria.


GORANI: Defect, or we will track you down. That is the ultimatum of Syrian rebel leaders giving Bashar al-Assad's army. General Salim Idris defected to the Free Syrian Army last July. And he's now warning his former colleagues that the rebels know who they are, where they live and what they've done. General Idris joins me now on the phone from Istanbul.

General Idris, thanks for being with us. And I want to read a portion of the speech you gave on the anniversary of the uprising, March 15th.

"We know who you are. We know where you live. And we have a full record of your crimes. But we are willing to give you a last chance on this second anniversary of the revolution."

Is this an amnesty, General Idris, or a threat?

BRIGADIER GENERAL SALIM IDRIS, FSA: Yes, yes. It's is an amnesty. And we like to tell all officers and soldiers who are still in the army that if they decide to announce that they will be accepted and there will be no justice for them or if they have clean hands.

GORANI: So if they have clean hands, one of the other things you said is you are giving them one month and if they do not come to you, that you will publish a blacklist with names, ranks and crimes committed. And then you say we will track you down and bring you to military courts.

IDRIS: Yes, yes, because now what is going on in Syria is very dangerous. The army is killing the people, is destroying the country. And we are fighting since two years. And these soldiers and officers must decide to join the Free Syrian Army, to defend the country, to stop killing, to stop massacres. And if they still fight with Bashar and his army and his regime, that is a crime. And they must be brought to the justice.

After one month period of time, they will be blacklisted and they will be brought to justice.

GORANI: And have you heard from any of these Assad army fighters or leaders since you've issued this offer of -- this amnesty offer?

IDRIS: Yes, they are some officers and soldiers who defect every day. Every day, there is a defection from the army. And we hope that all other officers and soldiers simply think about the future of their country, about the future of their families. They have to join to the Free Syrian Army.

The Syrian army now under the command of Bashar and his regime is not the Syrian Arab army who has to defend the country. They are defending the murderer. They are defending those who kill, who kill people, who destroy the country. That is our point of view. And that's why we like them to join us, to come to us.

GORANI: General Idris, I -- a few days ago, I spoke with a researcher from Amnesty International, Donatella Rivero (ph). She just spent about a couple of weeks in Syria.

When she came back, she said, although the magnitude of the violence and the potential crimes against humanity are committed by the regime, that, quote, "There is an escalation in abuses by the armed opposition in Syria: kidnappings, criminality, torture."

Do you have any control over what these armed fighters are doing?

IDRIS: Yes. I would like to tell you that the fighters of the Free Syrian Army who are fighting for freedom and democracy, those -- or these fighters don't do crimes, don't do massacres. They don't kill citizens who don't have to do with Bashar and his troops.

And what sometimes announced or published in some newspapers or other media, it is not really true. There is some kinds of propaganda that attempts to say that fighters of the Free Syrian Army are doing crimes, are doing massacres, but the reality is not -- is not so.

GORANI: OK. Well, we -- I know first-hand of kidnappings for ransom committed by the Free Syrian Army fighters in some cases, and these human rights researchers are saying this is a very dangerous situation because some of the armed opposition are engaging in practices that could be considered war crimes.

IDRIS: Yes. We have trained a lot of officers who are working in our brigades (ph) and battalions (ph). We train them about international humanitarian law and they train their soldiers. They give them an idea about crimes, about how they have to deal with other fighters from the regime, how to behave in the battlefield.

And those battalions or those commanders who kidnap or arrest people or arrest foreign journalists are really -- we see them as criminals. And we don't protect them and we don't try or like to ask the others to protect them. We will -- we like to bring them to the justice and because that is enough (ph) legal and we don't like to have anything to support them.

GORANI: All right. General Salim Idris, thank you very much for joining us here on CNN International with the amnesty offer to the Assad army fighters extended by the Free Syrian Army.

And whether it be Syria, the Eurozone or any other corner of the globe, America's secretary of state is always on call.

Now Hillary Clinton answered that call for over four years, logging more miles than any other of her predecessors. But she also found time to log a few memorable moves on the dance floor as she did in a visit to South Africa. Will she dance at her own inauguration as America's first female president, when we come back? Stay with us.




GORANI: Welcome back to the program. I'm Hala Gorani, filling in today for Christiane.

When Hillary Clinton stepped down as U.S. secretary of state last month, she'd logged nearly 1 million miles on trips around the world. Yet Clinton's policy legacy is less quantifiable. And her political future is still very much up in the air.

Veteran foreign correspondent Kim Ghattas has accompanied Clinton on hundreds of thousands of those miles as a member of the traveling press corps. Her new book, "The Secretary: A Journey with Hillary Clinton from Beirut to the Heart of American Power," is an insider's account of Clinton's diplomatic whirlwind. I spoke with her shortly before this program.


GORANI: Kim Ghattas, welcome, author of "The Secretary." Is it quite successful, the book?

KIM GHATTAS, BBC CORRESPONDENT AND AUTHOR: It's getting a lot of great reviews, Hala, because I really try to bring the reader along for this whirlwind tour of the world. It's full of colorful details. There's a sense of pace and momentum.

As I take the reader both leaders in the U.S., but also around the world on the trip with Hillary Clinton as we explore countries and issues that seem very far away for Americans, but actually have an impact on people's lives here in the U.S., but also answer some of the questions that people have around the world, but how much power Americans really has --


GHATTAS: -- and how it uses it.

GORANI: Right, absolutely, American foreign policy, always a hot topic of discussion around the world, no matter where you are. As you know full well, including in the Middle East.

GHATTAS: Absolutely.

GORANI: Hillary Clinton, though, you know, she was a pretty divisive person. But then as secretary of state, she gained this kind of rock star status --

GHATTAS: Along the way --


GORANI: -- what happened?

GHATTAS: -- figure before becoming secretary of state, of course. She was a first lady; she was a senator. She was a trailblazer when it comes to women's rights. So around the world, she was quite beloved already. And that's one of the reasons why President Barack Obama chose her as his ambassador to the world, to help improve perceptions of the U.S. around the globe.

But within the U.S., she transformed from just a politician to a stateswoman. Because she was removed from domestic politics. That's what happens when you step out of domestic politics and become a diplomat. Her approval --


GORANI: But not all diplomats become this popular. Not all diplomats have Tumblrs devoted to them --


GORANI: -- and this, by the way, is one of the pictures you snapped while on one of your trips.

GHATTAS: On one of the trips.

GORANI: She became cool, right, because she wasn't always cool.

GHATTAS: And I asked her that in one of my many interviews. I interviewed her 19 times, including for the book. And I said, listen, I mean, you have attained the status of cool. You were once polarizing and popular. Now you seem to be just popular. What's happened? Have you changed? Or is people's perception of you different now? Are they seeing you for who -- for who you really are?

And she said very honestly, "It's probably a bit of both. I've changed a lot over the last 20-30 years. I've learned a lot."

GORANI: But two things, we have what a secretary of state does, what a secretary of state represents under Barack Obama, which might be quite different than under other presidents. There have been reports that a lot of foreign policy decisions are made at the White House.

GHATTAS: Absolutely --


GORANI: -- and that in fact --

GHATTAS: -- the case.

GORANI: -- and that in the fact that you -- but more so under the administration of Barack Obama, and that, in fact, perhaps, Hillary Clinton was frustrated by that. Is that true?

GHATTAS: There were always frustrations within an administration because a secretary of state, even Condoleezza Rice, for example, who certainly had the ear of the president, didn't win all those battles.

But what I found interesting in the way that Hillary Clinton handled that relationship with a former rival is that she always showed loyalty, because both she and President Obama did not want to show any divisions to the outside world, even if they disagreed in private, then they came to a conclusion, to a decision, and showed a united front to the outside world.

And if she decides to run for president in --

GORANI: And that's the question.

GHATTAS: -- she decides to run for president, she will have to show how she was different than President Obama on issues, for example, like Syria.

GORANI: So we're going to talk about Syria right now, in fact, because I said on the one hand, what is the role of the secretary of state, under a president such as Barack Obama, but also on the other hand, when you talk about smart power, was power used in a smart way after the Arab Spring or during the Arab Spring, I should say?

People around the world, and as you know, in the Middle East, feel the U.S. is way too disengaged when it comes to capitalizing on what has gone on after these revolutions in the Arab world.

Is that fair?

GHATTAS: You know what really strikes me is the fact that at the moment you see resentment against the U.S. growing in the Arab world because the U.S. isn't willing to intervene in Syria.

And if you contrast that to the resentment against the U.S. during the Bush administration because the U.S. had intervened in Iraq, whatever the reasons they used, it's interesting to see this fine balance that the U.S. has to constantly walk between exercising too much power and too little power. And it's also up to people of course in various regions to decide how much power they want to see from the United States.

GORANI: And it's interesting, because Iraq was viewed as an unjust invasion; Syria is viewed as an injustice committed on a portion of the population that is victimized by the regime that needs to be --


GHATTAS: -- two different Shias (ph) in Iraq were pleased that Saddam Hussein was removed. But in Syria, you also have to remember that despite the 70,000 casualties and people who have died in this conflict, you still have people who feel that perhaps Assad is their best bet against total chaos. It's hard to keep that in mind, but it's important as well.

And then the U.S., of course, has many interests to weigh and balance, you know, the negotiations with Iran, the relationship with Russia. And you know, Hillary Clinton, I thought, was very candid in one of my -- in one of my interviews with her, said, you know, the U.S. has values and interests. And it tries to align them. But it doesn't always work.

I found that she was always very personable, very charming. She has high emotional intelligence. She is always interested in the people she meets. She has her faults; no one is -- no one is perfect. But mostly I found that she is somebody who evolves and learns. And I think that's --

GORANI: Is she going to evolve and learn enough to mount a campaign for the 2016 presidency?

GHATTAS: Well, I wish I could tell you that she's whispered that answer in my ear (inaudible) job as secretary --


GORANI: -- more than once, yes?

GHATTAS: -- I have not. I have asked her a very different question, a very indirect way of getting to the answer. I asked her how she, you know, what she had learned as secretary of state that she wished she had known as a candidate in 2008.


GHATTAS: (Inaudible) see how this woman had changed and what she might bring to a 2016 presidency. And she was taken aback by the question. No one had asked her that in an indirect fashion before. And she said that she had learned to connect with people in ways that perhaps she hadn't known how to do before.

And remember in 2008, that was one of her problems on the campaign trail, connecting with people, showing her softer woman side. She wanted to come out as a tough candidate in a man's world. And I think she's moved beyond that.

GORANI: Kim Ghattas, thanks very much and good luck with your book.

GHATTAS: Thank you very much for having me, Hala. Pleasure to be here.


GORANI: And we'll be back with a final thought.



GORANI: And finally, 10 years ago this week, the Iraq War began with shock and awe, kicking off a decade of death and disruption.



GORANI: Iconic images there.

Now try to imagine the world if that war had never happened, how different things would be. Lord John Prescott was Britain's deputy prime minister under Tony Blair and an unapologetic cheerleader for the invasion. But 10 years later, as he told Christiane Amanpour, he wishes he could turn back the clock.


LORD JOHN PRESCOTT, FORMER BRITISH DEPUTY PRIME MINISTER: .. we can see now that in the shock and awe, may have got rid of Saddam, but it certainly never brought peace.

And you have to ask yourselves 10 years on was it justified and was it really about regime change? And if it was about regime change, I'm afraid that didn't make it legal.


GORANI: John Prescott there, and you can see the rest of that frank and fascinating conversation and much more tomorrow when we present a special program to mark the anniversary of the Iraq conflict and controversy.

Meantime, you can always contact us on our website, It's been a pleasure hosting this program. Thanks for watching. I'll be back with you on Wednesday. In the meantime, stay with CNN. The news continues.