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QUEST MEANS BUSINESS

Egypt State of Emergency; Cairo in Crisis; Reaction from British Ambassador to Lebanon; US Secretary of State on Egyptian Crisis; Egyptian Prime Minister News Conference

Aired August 14, 2013 - 14:00   ET

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


RICHARD QUEST, HOST: First it was the chaos, now it's the curfew. Cairo sees a day of unprecedented violence. Protesters and journalists are amongst the hundreds of people killed. We'll be live in the Egyptian capital shortly.

Also tonight, the recession is over, the crisis remains. Olli Rehn tells me there's hard work ahead for the eurozone.

I'm Richard Quest, and this is CNN.

Good evening. Egypt has suffered one of its bloodiest days. Within a matter of hours, protest camps in Cairo were turned into war zones as Egypt's new military government uses bulldozers to drive out pro-Morsy protesters.

Security forces flattened tents and hauled away demonstrators. As they did so, many of the protesters stood their ground and refused to leave. The latest government estimates say 149 people died and more than 1400 people were injured. The Muslim Brotherhood disputes these numbers and says the number of fatalities is far greater.

The state-run news agency says the government is in complete control of the two pro-Morsy camps. The way it was handled has attracted international criticism and calls for urgent peace talks.

In just a moment, we will be taking you to the State Department in Washington, where the US Secretary of State, John Kerry, will be giving -- is expected to give a news conference and will obviously be commenting.

The White House has already condemned the measures and the actions taken this morning and the loss of life, calling on all parties to show restraint. We'll hear from John Kerry in a moment.

First, whilst we await that, let's go to Cairo. The capital is mostly deserted after a curfew came into force an hour ago. A month-long state of emergency has now been imposed by the government, and Reza Sayah is our correspondent there. Take me through the events of the past few hours and the current mood.

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: This was an awful day, Richard, and August 14th, today, is going to go down in history as one of the darkest days ever in Egypt. Based on what we saw, a massacre took place today. This could be one of the deadliest days in recent memory in Egypt, maybe the deadliest day.

And it's a day that's going to have serious implications on post- revolution Egypt, and it's going to have serious implications on this young interim government. And this government is already feeling the impact, one of its leading figures, Mohamed ElBaradei, the Nobel Peace Prize winner, the Egyptian diplomat submitting his resignation just hours ago, apparently as a direct result of the bloodshed today.

The bloodshed started at 6:30 AM this morning. There was lots of rumors swirling around over the past week that a crackdown was coming from Egyptian security forces. As promised, that crackdown, according to witnesses, came, again, a little after 6:30 AM.

The interim government is saying that they moved in on these two sit- ins only firing warning shots into the air in an attempt to get people to move away. The pro-Morsy demonstrators, they have a very different story. They say security forces came in, guns blazing, firing at protesters.

And what we saw was the Nahda -- al-Nahda sit-in in front of Cairo University. Over a couple of hours, that was cleared away, relatively easily, of course, with casualties.

The more difficult operation, the one that lasted a very long time, roughly 10, 11 hours, that took place at Rabba al-Adawiya, the sit-in that became the home base for pro-Morsy demonstrators --

QUEST: Reza --

SAYAH: It took security forces about 10, 11 hours to clear that operation, Richard. Clear that demonstration, Richard.

QUEST: Right. Explain so we can understand, why did the security forces do this? These protests have been there for some time, pretty much since the fall of the Morsy government. Why was the feeling that they had to get rid of them and to do it in such a fashion when the implications and ramifications will be so severe?

SAYAH: Yes. To answer that question, first off, you have to take a step back. There was an interim government in place after the ouster of Mohamed Morsy. They wanted to do everything they can to push forward with the transition into a new democratically-elected government.

But in their way were the pro-Morsy demonstrators, supporters of the Muslim Brotherhood and the ousted president. They say they didn't want this to go forth, they wanted their former president reinstated.

It was the interim government's position that there was terrorist activity going on at these demonstrations, that these demonstrations were a threat to national security, according to them. It's very important for us to point out that we've been at these demonstrations for six weeks, now, and we personally didn't witness anything that could be described as terrorist-related at these demonstrations.

Even so, the interim government was pushing that narrative, that this was a dangerous demonstration, there was a threat to national security, that a crackdown was going to come. There was some points where they said they weren't going to launch a crackdown, that they were just simply going to cordon it off and choke it off.

But, indeed, it's clear now that the decision was to aggressively move in and clear it out. Mission accomplished, Richard, but certainly this mission has come at a very, very steep cost, and the implications are going to be clear in the coming days and weeks, Richard.

QUEST: OK. We've got -- we're still waiting to hear from the US secretary of state, amongst others in the short time ahead. And we are seeing various live pictures at different moments of flames and of fires and the like. Reza Sayah, thank you very much for joining us. Reza in Cairo. We'll talk more with Reza and others later in the program.

Gives you an idea of the situation, earlier Reza spoke to a doctor on the streets of Cairo about the kinds of injuries he'd seen. And I do need to warn you, this account does contain some very disturbing details.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They tried to block --

SAYAH: Who's they?

UNIDENTIFIED MALE: A group of armed officers in black gear waiting for the group and with light ammunition guns.

SAYAH: And what did they tell you? What did they do?

UNIDENTIFIED MALE: They gave us -- and banished everybody in the hospital. They gave us a five-minute notice to clear the whole hospital, a seven-story hospital full of injured people and very serious cases.

SAYAH: And just to be clear, you were treating seriously-injured patients?

UNIDENTIFIED MALE: Yes. I was treating people with abdominal injuries, chest injuries, and head injuries --

SAYAH: What kind of injuries? How were -- what kind of injuries are we talking about? Bullet wounds? What are we talking about?

UNIDENTIFIED MALE: Bullet wounds and the pellets -- the pellet wounds.

SAYAH: The bird shot.

(CROSSTALK)

UNIDENTIFIED MALE: I myself --

SAYAH: So, what did you tell them?

UNIDENTIFIED MALE: -- admitted a few cases with pains -- completely outside the --

SAYAH: I understand.

(END VIDEO CLIP)

QUEST: Reza Sayah reporting, there. After the break, we continue our coverage of the crisis in Cairo and the impact it is having not only on the people but, of course, the economy, which is almost on its knees anyway.

(COMMERCIAL BREAK)

QUEST: Egypt's interim vice president, Mohammed ElBaradei has resigned hours after security forces moved to clear the two protest camps in Cairo. The military government has declared a state of emergency. These are live pictures in Cairo at this moment.

A curfew is in effect until 6:00 AM local time, and state television reporting there's at least 149 people have been killed in violent confrontations between the pro-Morsy supporters and the security forces. More than 100 -- more than 1400 other people have been injured.

The Muslim Brotherhood is disputing those numbers and are claiming much higher casualty figures and say many more people have been killed and injured.

Our senior international correspondent Arwa Damon was reporting not far from Cairo University when automatic gunfire forced her and her team to duck for cover. This was the scene.

(BEGIN VIDEO CLIP)

(SIREN)

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: -- for some of the hardcore supporters. You will see them out there continuously, determined. But then, at the same time, you have --

(GUNFIRE)

DAMON: We're OK.

UNIDENTIFIED MALE: The windshield was blasted off. I have a tenth of a battery.

(END VIDEO CILP)

QUEST: Arwa joins me now, live from central Cairo overlooking Tahrir Square. And Arwa, obviously those are very frightening scenes for everyone that was involved, and we're delighted and grateful that you're OK. It's a moment for us to remember, though, that one cameraman from a British television network was killed today, wasn't he?

DAMON: That's right. That tragedy happening fairly early in all of this, and he's not alone. There was also other journalists, at least two other journalists, who were shot and injured in all this.

And then, of course, there is that massive death toll that is ranging in numbers, the government putting it at 149, the Muslim Brotherhood and the pro-Morsy demonstrators saying that it's significantly higher than that.

You know, Richard, throughout the course of the day, we saw the clashes in Cairo spreading to other parts of the city. They weren't just focused on the areas where those two sit-ins were taking place.

We've seen the pro-Morsy demonstrators, which is what they were trying to do in that clip that you showed earlier, regroup in other areas to continue with the sit-in. In fact, they are still there. We went back down there a few hours after that video was shot to check out the situation.

They said that in that field clinic alone, they treated, they're claiming, 1,000 people, 800 of which they are saying had gunshot wounds. They say that there they had 22 people who had been killed.

And we have this incredibly, tense, difficult-to-navigate situation with the security forces saying that they managed to clear both of those main sit-in sites, but still having to deal with these demonstrators, who are quite simply refusing to go home Richard.

QUEST: As you go into the evening hours, now, how would you assess it?

DAMON: It's a little bit quieter right now than it was during the day. The streets most certainly are empty because of that curfew that went into effect. People very worried, very fearful.

When we were driving around shortly before curfew was imposed, neighborhood watches had been set up in some areas. You had young men with bats, with batons, stopping cars, setting up these makeshift checkpoints, searching them. People most certainly bracing for more violence to come.

You're not just dealing with the dynamic, here, of the Morsy supporters clashing with the security forces, you also have the added dynamic of clashes happening between pro- and anti-Morsy camps.

Residents in the area where these sit-ins were taking place -- and, in fact, in many other parts of Cairo -- very frustrated, angry with Morsy supporters, angry with the damage that they view them as having done to this country. So, there's a lot of tension in the streets, even at a neighborhood level.

QUEST: Right. And how far, for those who -- no doubt, it won't be long before we'll be hearing from the Egyptian minister of this or that telling us that the holiday resorts of the Red Sea and Sharm el-Sheikh and tourists are still bathing and enjoying themselves. So, give me a feel for how widespread what we're seeing in Cairo tonight is. Is it even within the city itself?

DAMON: Well, within Cairo itself -- and this is where, really, most of what we saw taking place has been happening, it's pretty widespread. The distances, for example, between the sit-in and Cairo University, and the one -- the larger one that was Rabba al-Adawiya. That's around a half- hour drive if there's no traffic.

This third sit-in location that they had just taken over, that's a few kilometers away from where we are. The clashes that we were hearing about really fairly widespread across all of Cairo. We also various reports of clashes taking place in other parts of the country. There were also attacks against churches. We heard various reports that the library in Alexandria was being attacked as well.

And the government had to very early on in all of this call in at the military, some units of the military, and right now, we not only have the riot police out in the streets, but we have the military as well, Richard.

QUEST: Finally, Arwa, is it your -- obviously, a government with a military is going to win the battle. Of that there can be no doubt, on sheer physical force alone. But if you had to assess how this moves Egypt forward or backwards to the next stage, what would it be?

DAMON: It would seem right now that Morsy supporters are going to continue to try to gather. They're going to continue to try to march, and they are invariably going to clash, either with security forces or with people who, quite simply, do not support what they are doing.

All of this, of course, has made any notion that there can be a political solution to all of this incredibly difficult to fathom. That being said, though, the interim government is still and has been moving ahead with the road map that it wants to put into place. It is debating amendments about the constitution. Those are supposed to be put to a vote eventually at some point down the road.

Bring the Muslim Brotherhood, though, at this point, into the political fold, into those negotiations, hard to see how that's going to happen and hard to see how Egypt is going to have a solid foundation moving forward when it can't really have an all-inclusive government.

QUEST: Arwa Damon, who is in Cairo for us this evening. Arwa, we thank you.

Egyptian banks and the country's stock exchange remain shut on Thursday amid the current situation. The Egypt's benchmark index closed lower by 1.7 percent. Trading is expected to resume next Friday -- sorry, I beg your pardon. Trading is expected to resume next week. Friday is, of course, the start of the weekend in Arab countries.

We are waiting to hear from the US secretary of state, John Kerry. He's expected to give a press conference in Washington. Earlier, though, I spoke to the British ambassador to Lebanon, Tom Fletcher, and I asked him for his reactions to the events in Egypt.

(BEGIN VIDEOTAPE)

TOM FLETCHER, BRITISH AMBASSADOR TO LEBANON: Obviously, we're very worried. I think anyone watching the footage on TV today can't fail to be shocked, concerned. We've condemned the way in which the protests have been broken up.

Clearly there's a need for much greater restraint on the part of the authorities. There's a need for calm heads to prevail. And above all, there's a need to get back to some form of dialogue. This cannot end in -- with more violence.

QUEST: And yet, the ending, some would say, that's happened today was pretty much inevitable. If this government -- the new government -- was going to get a grip on the country, they had to in some way bring to a close the pro-Morsy demonstrators, which seemed to be never-ending.

FLETCHER: Of course, there has to be an effort to return to stability, but the best guarantor of that stability is actually a decent, open, credible political process. I don't think that more violence is the way to end the problem.

QUEST: To get to that more open process, can, for example, the UK and the European Union, can anybody act as the honest broker now to try and move this process forward, do you believe? Or is it so deeply entrenched between the pro and the antis that, frankly, this is the only way out?

FLETCHER: Well, I think what you're seeing in a moment is there are frantic efforts behind the scenes on the political track between diplomats, between ministers, politicians, to try and find some way to break this deadlock.

Obviously, Cathy Ashton has visited recently, and you're seeing in the statements being made by Western ministers now, this determination to find a way to try to change that paradigm, the answer is not going to be more violence.

(END VIDEOTAPE)

QUEST: That's the British ambassador to Lebanon, who was talking to me earlier.

The eurozone extends a tiny tendril of growth. It'll need plenty of care if it's going to flourish. Is it as green -- is it a green shoot? After the break, the EC's Olli Rehn on how to nurture a recovery. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: John Kerry, the US secretary of state.

JOHN KERRY, US SECRETARY OF STATE: -- occasion, perhaps even more than the past week. We and others have urged the government to respect the rights of free assembly and of free expression. And we have also urged all parties to resolve this impasse peacefully and underscored that demonstrators should avoid violence and incitement.

Today's events are deplorable, and they run counter to Egyptian aspirations for peace, inclusion, and genuine democracy. Egyptians inside and outside of the government need to take a step back. They need to calm the situation and avoid further loss of life.

We also strongly oppose a return to a state of emergency law, and we call on the government to respect basic human rights, including freedom of peaceful assembly and due process under the law, and we believe that the state of emergency should end as soon as possible.

Violence is simply not a solution in Egypt or anywhere else. Violence will not create a road map for Egypt's future. Violence only impedes the transition to an inclusive civilian government, a government chosen in free and fair elections that governs democratically, consistent with the goals of the Egyptian Revolution.

And violence and continued political polarization will only further tear the Egyptian economy apart and prevent it from growing, providing the jobs in the future that the people of Egypt want so badly.

The United States strongly supports the Egyptian people's hope for a prompt and sustainable transition to an inclusive, tolerant, civilian-led democracy.

Deputy Secretary of State Burns, together with our EU colleagues, provided constructive ideas and left them on the table during our talks in Cairo last week. From my many phone calls with many Egyptians, I believe they know full well what a constructive process would look like.

The interim government and the military, which together posses the preponderance of power in this confrontation, have a unique responsibility to prevent further violence and to offer constructive options for an inclusive, peaceful process across the entire political spectrum.

This includes amending the constitution, holding parliamentary and presidential elections, which the interim government itself has called for.

All of the other parties, all of the opposition, all of civil society, all parties, also share a responsibility to avoid violence and to participate in a productive path towards a political solution. There will not be a solution through further polarization. There can only be a political solution by bringing people together with a political solution.

So, this is a pivotal moment for all Egyptians. That path toward violence leads only to greater instability, economic disaster, and suffering. The only sustainable path for either side is one towards a political solution.

I am convinced from my conversations today with a number of foreign ministers, including the foreign minister of Egypt. I am convinced that that path is, in fact, still open, and it is possible, though it has been made much, much harder, much more complicated by the events of today.

The promise of the 2011 revolution has simply never been fully realized, and the final outcome of that revolution is not yet decided. It will be shaped in the hours ahead, in the days ahead. It will be shaped by the decisions which all of Egypt's political leaders make now and in these days ahead.

The world is closely watching Egypt and is deeply concerned about the events that we have witnessed today. The United States remains at the ready to work with all of the parties and with our partners and with others around the world in order to help achieve a peaceful, democratic way forward.

Now, Jen will be happy to answer any questions, thanks.

UNIDENTIFIED CORRESPONDENT: Will there be any consequences to the military?

KERRY: Jen, will you --

UNIDENTIFIED FEMALE: I'll be back in just a few minutes.

KERRY: Go ahead..

UNIDENTIFIED FEMALE: Oh, no. I'll be back.

QUEST: The US secretary of state, reminding the Egyptians that the world is watching, and that there is no answer in violence. John Kerry giving a robust point of view on the violence, the White House already having come out today and saying what's taken place is not acceptable and calling on all parties to return to some form of talks.

And John Kerry, there, again referring to exactly that, alluding to the fact of the Europeans and the Americans doing what they can.

We will be back in just a moment. We will be back in Cairo with more of the events in Egypt. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: -- minister speaking on television.

HAZEM BEBLAW, INTERIM PRIME MINISTER OF EGYPT (through translator): - - outside to express a particular view, and when we start carrying weapons and -- attacking public buildings. This is not called the respect of freedom of speech. This is the attack against the state and its citizens.

In order for life to be respected, therefore, there was -- we were obliged that we would have to take a position and to say the situation must stop. After giving the right opportunity, which we have given, and we respected the feelings of these religious people of Egypt, especially after this holy Ramadan, and we've seen all these events happen after Eid.

We have to stand up to it and make a decision for the state to interfere, to return the security and peace to the Egyptians so they can feel that their lives have not been confronted or they feel the fear that they will be attacked in their home.

So, we've asked the Ministry of Interior to take all what it needed in order to bring the peace and security into the street. This is within the constitution and the law -- the rules of law. This is not a question that we are only here to ensure that people are moving freely in peace without a stable policy.

This crisis, who's going to protect the investors especially when the government negotiates decisions, very serious decisions, thus really how to push us to interfere? We have us the necessity to keep calm, to a certain point.

I would like to thank the security forces who made all the efforts, all with a higher level of calm and reasoning. Those groups of the group of calling for human rights and we found out that there is weapons, other artilleries, but the first face of this which took place in Rabaa al- Adawiya.

There was some motion of unrest, start attacking hospitals and government buildings and then the government was obliged -- was forced to interfere because there is no state or nation which does not respect itself because when you impose the curfew by any democratic country, it is necessary.

And I promise it will be this curfew imposed, it will be for a very short period so people can revive and sit down and think about the future again. I would like to say at the end this government is still maintaining this road map, (inaudible) and we will give the freedom to all without any distinction. We are here to build a democracy based on justice, social justice.

And do not forget that to build the economy, it goes to all, to all the distance in order to provide the possibility and the -- and to make -- we don't want to build a state open, not civilian, not -- sorry, not been military and not religious.

And all the bloodshed by all parts and every Egyptian only can feel painful what this crisis and this situation went to. We have to reason and use the common sense. We are all -- we are all part of this nation.

We will have -- we will want to utilize this period of the curfew and hopefully -- and we -- hopefully we will build our nation, (inaudible) civilian, democratic civil democracy open to the world, which have a place to all the people regardless of their affiliation or religion and they deserve from us more than what we have given them so far.

RICHARD QUEST, CNN HOST: The prime minister of Egypt, the interim prime minister, Hazem al-Beblawi, speaking.

Let me just recap what he basically said.

He keeps -- he kept using the word, "interfere," as the translation went, anyway. The government was pushed to interfere, the necessity to keep calm, he said. The government was obliged to interfere, but he said no state or no nation could be allowed to have such a -- have the curfew ignored in such a way.

And then he went on to say that he committed himself and continued to commit the government to the road map and to give freedom to all.

Reza Sayah is at our Cairo bureau and was listening to the prime minister, the interim prime minister, as well.

How will the country have reacted and respond to basically -- basically the answer he gave tonight was we have no choice.

REZA SAYAH, CNN CORRESPONDENT: Well, this was the first major statement by the military-backed interim government justifying the deadly use of force. And I can tell you, Richard, the justification, the explanation delivered by the prime minister is certainly not going to satisfy the Muslim Brotherhood, the supporters of the ousted president, Mohammed Morsy.

And based on what we've heard early on, from international human rights groups, like Amnesty International, Human Rights Watch, based on what we've heard from the international community, it might not satisfy them, either.

But as you mentioned before, this was the prime minister saying he was forced to do this, that there was no other choice left. I think a lot of people are going to dispute that. He claimed that security forces found evidence of weapons there. He described the demonstrations as not respectful to the rule of law.

He said we were obliged to take a position and the situation had to stop. And that's when he said he authorized the interior ministry to use any means necessary to clear out these demonstrations.

And he claims, the prime minister claims, the security forces did it within the constitution and the rule of law and then he went on to thank the security forces for what he described as them using the highest level of calm.

We should tell you that during our day there, that there were many times where the description of the prime minister did not square with our observations because we saw the deadly use of force; we saw scores of people being hurt and being killed.

So I think despite the prime minister's statement, his justification, his explanations, there's going to be critics of this government who are going to say something else could have been done. There could have a peaceful resolution.

One of the people, Richard, who are already saying that is a key figure, a now former figure of the interim government, Mohamed ElBaradei, the Nobel -- the Peace Prize winner, who submitted his resignation apparently as a direct result of the bloodshed today.

QUEST: One thought, which as I was listening to the prime minister, on two occasions, two or three occasions, in his speech to the country, he referred to the economy. He referred to the need of the economic nature of Egypt and what was happening there.

Now obviously one never counts the economic effect over the bodies and the dead. But it is interesting, bearing in mind where this prime minister has come from in the past, and his economic background and the roles in which he has played in the previous administrations, that he is aware of the very damaging effect long-term on Egypt.

SAYAH: Perhaps that's true, Richard. But I think it's statements like this, when he's coming and putting an emphasis on the economy, when people are being killed, I think it's statements like that that are going to outrage a lot of people and fuel the anger that already exists within the Muslim Brotherhood.

But keep in mind, this is an interim government and in a difficult and challenging position, their mission is to push forth with a transition to a democratically elected government. They claim that they want this government to be inclusive, presumably.

They mean the Muslim Brotherhood as well. But you have to wonder how in the world is this new government going to include the Muslim Brotherhood after a day like today?

QUEST: Reza Sayah in Cairo, making valid points. Thank you, Reza. Good to see you.

Now after the break, we'll turn our attention to the Eurozone. I was going to say the Eurozone in recession, but it is no longer in recession as (inaudible) after the break.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: The Eurozone is out of recession after nearly two years the bloc is finally growing once again, reporting its first quarter of expansion since 12 -- since 2011. GDP grew by 0.3 of 1 percent in the three months to June. And that beat economic forecasts.

On this map, the green means expansion; the red is contraction and the yellow is there's no data for this quarter. It's not available.

France and Germany did most of the heavy lifting, reporting growth of 0.5 percent and 0.7 percent respectively. Portugal's resurgence was the main surprise, though. In Portugal the GDP expanded by 1.1 percent. That was much more than expectations.

The European Commission vice president Olli Rehn says the figures show sustained recovery is now in (inaudible). Just a short while ago, he said that that recovery and the policies needed will have to be nurtured.

(BEGIN VIDEOTAPE)

OLLI REHN, V.P., EC: Slightly more positive data is certainly welcome. But there is no room for complacency whatsoever. I hope there will be no premature declarations suggesting that the crisis is over, because we still have many obstacles and many chances, relatively low growth and high unemployment in many parts of Europe.

QUEST: The temptation will be for many people to say, well, yes; things are slowly getting back to normal. We can ease off the changes that need to be made.

REHN: I think that would be a dangerous sentiment because, as I said, we have very substantial chances with high unemployment in many parts of Europe and still relatively modest growth. And but it -- nevertheless, it's important that these recent data seem to indicate that the recession is now ending and the European economy is gaining (inaudible). It's gaining momentum.

QUEST: The truth is you now have to warn governments, don't you? Don't get involved in a nasty political mess. Don't backtrack and make sure you keep moving forward. And best of all, do not squabble amongst yourselves at this crucial moment. That's really what you're saying, isn't it?

REHN: That's a correct interpretation. And our role is to be an encouraging manager that supports the 28 European teams of E.U. member states to continue to pursue economic reforms and to balance their public finances and to rebuild the economic and monetary union.

I think we are on the right track now. But it's essential that we do maintain the momentum of economic reform and we don't give up because of any kind of ungrounded sense of complacency.

(END VIDEOTAPE)

QUEST: The European Commission vice president, Olli Rehn, talking to me earlier.

U.S. prosecutors have charged two former JPMorgan bankers over the huge London Whale losses. Javier Martin-Artajo and Julien Grout are accused of conspiring to cover up the losses which total around $6 billion.

Maggie Lake is in New York with me, where the U.S. attorney held a press conference a short time ago.

Maggie, they're not accused of the whole lot of losses, are they? I mean, they're not -- it's not said that they made the losses. The London Whale did that with his trading strategy. So what did they do or alleged to have done?

MAGGIE LAKE, CNN CORRESPONDENT: Well, what they're saying is basically they lied, they covered up. And U.S. Attorney Preet Bharara actually just wrapping up that press conference, Richard, and once again proving why he is one of the most feared men on Wall Street right now, maybe in global financial circles, for that matter, because this is not an issue limited to the U.S.

Basically wire fraud and conspiracy charges are the legal name that they're charging them, the legal charges put against them. But basically Preet Bharara saying these suspects tried to hide, purposely hide these huge losses.

Very interestingly, two men named Bruno Iksil, who was himself nicknamed the London Whale, is not charged, Preet Bharara saying he is cooperating with the government and therefore avoiding prosecution right now.

And in a press conference just wrapping up once again, Bharara sort of laying it on the line in layman's terms, saying, listen, these are complicated subject matters, but their behavior, the behavior of these two men was not complicated. Have a listen.

(BEGIN VIDEO CLIP)

Those lies misled investors, regulators and the public and they constituted federal crimes. As has already been conceded, this was not a tempest in a teapot, but rather a perfect storm of individual misconduct and inadequate internal controls.

(END VIDEO CLIP)

LAKE: Tempest in a teapot, of course that famous phrase that Jamie Dimon, CEO of JPMorgan, first said about the incident; later he changed his tune.

Preet Bharara today actually saying they cooked the books. They knew they were doing it; they cooked the books. We reached out to JPMorgan Chase for comment; they did not respond to our calls. But this investigation remains open, Richard. So we will have to watch.

QUEST: Maggie, we're out of time, but as I understand it, neither man is in the jurisdiction of the United States or at least I don't believe they are at the moment. So warrants and extraditions and all sorts of things will be ahead, I suspect.

LAKE: It's going to get complicated, Richard.

QUEST: It always does. Maggie Lake, we'll talk more about it. We really need to move on.

Rescue efforts are underway in Mumbai. We'll take you there, where explosion and an update on the explosion that partially sank an Indian navy submarine. (Inaudible).

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: An Indian navy submarine has exploded at a dockyard in Mumbai, killing an unknown number of people. The country's defense minister confirms that some officers on board have died and hasn't said how many. Eighteen personnel were believed to have been on the vessel at the time of the blast. A major fire broke out on the submarine before it partially sank. Rescue efforts continue, officer.

Mallika Kapur is following the story for us. She's in Mumbai for us tonight.

Mallika?

MALLIKA KAPUR, CNN CORRESPONDENT: Richard, at the moment ,we know that rescue operations are underway. We know that navy divers have been able to reach the submarine. They've been able to open the main hatch, which is the main way for them to enter the submarine.

That is a relief because earlier on in the day, there was talk that maybe divers would actually have to cut the steel of the vessel to be able to enter it. But they've been able to open the hatch. And the focus now is on pumping water out of the vessel. The idea is so that once they've been able to pump water out of the vessel, it becomes lighter and it's able to float.

Once it's able to come up to the surface of the water, it will make it much easier for investigators to try and figure out what went wrong. What is it that caused those two explosions and that massive fire last night on this vessel, causing it to partially sink?

But most importantly, it will give the navy divers a chance to reach the 18 people who are still trapped inside the submarine. There has been no word from them for the past 24 hours and that's exactly what 24 hours ago that this explosion took place.

There's been no word from them even though the sailors inside did have the means and the resources available for them to reach out for help, to call out to people on land, that there's been no word from them. As the army chief put it to reporters a short time ago, we can hope for the best, but it's time to prepare for the worst, Richard.

QUEST: Mallika Kapur in Mumbai tonight.

Now the weather forecast.

Jenny Harrison joins us from the World Weather Center.

JENNY HARRISON, CNN METEOROLOGIST: Hey, Richard, I'm going to start with conditions across in Europe, a fairly calm picture for the last couple of days really and also we head into the weekend, the heat is still clinging on across the southeast, a bit of a warm-up in the southwest. But you can still see one or two areas of cloud.

This is really the picture as we go through Friday, more scattered showers pushing into the northwest. Warming up across central areas. We had that brief cooldown and then really remaining above average across much of the southern half of Europe. So this Wednesday, still some of these areas are seeing temperatures as much as 6 degree above the average.

Scopier (ph), you can see there, 36 degrees, similar 36 in Bucharest and Istanbul, a high of 33 Celsius on this Wednesday. So for the next few days, again, certain cities will again stay a little bit above average, Belgrade, for example, up to 33 by Saturday. The average is 27. Rome, just a couple of degrees above average.

And Vienna, really kind of coming back down to average by Saturday, 31, the average there is 25. You can see that cooling trend to the north and then really elsewhere it really will come back down to the average.

So really no flight delays to tell you about either across in Europe. We've got no strong winds; we've got some more rain, of course, coming into the northwest with the next system. With those scattered showers, but nothing which should really hamper your travel plans.

And then for the most part, we've got sunny skies, maybe one or two just popup showers that really nothing more than that. So for Thursday, high temperatures of 27 in Paris, 29 in Rome. It is warmer in the southwest through Portugal and Spain, 36 is the high temperature in Madrid. Just the latest update with Typhoon Utor.

This is still a typhoon, even though it made landfall in the last few hours. To the west of Hong Kong, in fact, conditions improving in Hong Kong. Of course the stock exchange still closed throughout Wednesday. Winds right now, 140 kph.

There was a very big wind gust of 159 kph reported on mainland China over across into Hainan (ph). We actually had some rainfall there of 173 millimeters that was actually recorded as well. The winds will continue to dissipate in the next 48 hours, still blustery along those coastal areas. The rains, however, it'll be a little bit longer before they really continue to actually work their way out.

We're still going to see this storm system hold together. And so the totals really will continue to add up. Look at this area here, Guangdong province really the worst hit. And look at some of these totals; Yulin (ph), 384 millimeters in the next 48 hours. So we do expect to see some low class flooding. So again, we'll keep you informed on this, Richard.

QUEST: Jenny Harrison, we thank you for that. It's obviously an extremely busy day. The focus of our attention is very much on the events taking place in Cairo.

"AMANPOUR" after the top of the hour will obviously be dealing with it in great detail and giving you the analysis.

After this short break, I will update you. I will update you on the stock markets.

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QUEST: And now a press conference being held by Egypt's interior minister.

MOHAMED IBRAHIM, INTERIOR MINISTER, EGYPT (through translator): In the (inaudible) we were very clear not to use any weapons, yes, only to use tear gas. After giving warning by loudspeakers and also we have decided all the places where we will have to deal with it.

And in order to make sure the safety for the civilians, there was some -- we did not mean at the time which we have given initially to give the necessary time in order to avoid bloodshed (inaudible) to our citizens, because we are all Egyptian. Our differences, political differences is not a motive in order to see a loss of life of these people.

We are here. We try to ensure the safety for all the citizens and we try to guarantee the stability to the best of our abilities and (inaudible) live in peace and security.

But there will -- the incitement and using the all different style of fear and totally (ph) in the citizens which threaten the security of the state, which may that decide to take a decision which we were trying to avoid this crisis. It's only God who know it (ph).

After we have taken the decision from the different council to start (inaudible) the plan and we decided this morning to start exhibiting our decisions and after spreading all this forces, there's number of the one who is sitting in it and most people have noticed that, have seen over the TV they started -- they started to fire in the air in order to bring the peace and the forces which dealt with the crisis, with the situation, they did it such a proficient way, without any losses.

And we arrested a big number of the people who are causing all this unrest and in we put -- and we have in the position many different weapons, some 21 live -- they have (inaudible) 21 live ammunition, a number 55 millimeter (ph) and small other arms and a number of quantity of wide weapons. And the Rabbuh (ph) Square, members of the Muslim --

QUEST: There we have the interim Egyptian interior minister giving a summary of what's been happening, once again, following up from what the interim prime minister is saying, that light arms have been found, arrests have been made. Continuing the line that is now being put forward that the government had no choice, they had to interfere if they were to restore some sort of order.

We've heard from the U.S. secretary of state, who has, of course, condemned the events that have taken place. And in the hours ahead, we will of course hear from others as we put together the question of whether the actions taken by and admitted by the interim prime minister and how Egypt moves forward.

Now "AMANPOUR."

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