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Aired November 21, 2001 - 04:30   ET

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


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Seen in classrooms the world over, this is CNN NEWSROOM.

MICHAEL MCMANUS, CO-HOST: Welcome to CNN NEWSROOM. I'm Michael McManus.

SUSAN FREIDMAN, CO-HOST: And I'm Susan Freidman.

The Bush administration is hoping money will talk as it places a major bounty on Osama bin Laden's head. We'll have more on that later. And when I return, we'll look at some other financial issues of terrorism.

MCMANUS: The hunt for bin Laden is just one aspect of the overall military campaign against terrorism. Cloudy weather restricted air strikes on Konduz Tuesday. Most of the action took place inside the northern stronghold as Northern Alliance officials tried to secure a Taliban surrender.

CNN military affairs correspondent Jamie McIntyre has more on the latest developments and strategies from the Pentagon.

(BEGIN VIDEOTAPE)

(voice-over): The U.S. continued bombing the last Taliban and al Qaeda strongholds in Kunduz and Kandahar, while opposition forces work to negotiate terms of surrender. The Pentagon says there's no bombing pause, except as requested by opposition commanders.

REAR ADM. JOHN STUFFLEBEEM, JOINT STAFF DEPUTY OPS. DIRECTOR: If the opposition groups were to ask us not to bomb a specific facility or location so they could continue their discussions, we'll certainly honor that.

MCINTYRE: Pentagon sources say the U.S. is considering beefing up its forces on the ground, by sending in Marines from ships off the coast of Pakistan. Pentagon sources say, depending on the mission, the number could be few as 100, or as many as 1,600.

With fighting at a standoff in both Kandahar and Kunduz, the U.S. dropped more wanted leaflets over Afghanistan, advertising a reward of up to $25 million for information leading to Osama bin Laden. The one thing the Pentagon doesn't want is for bin Laden, or any top Taliban or al Qaeda leaders, to engineer an escape. DONALD RUMSFELD, SECRETARY OF DEFENSE: If those folks were set free or in any way allowed to go to another country and cause the same kind of terrorist acts, it would be most unfortunate.

MCINTYRE: U.S. officials now say as many as 50 al Qaeda members died last week, in a series of airstrikes that killed Mohammed Atef, a chief deputy to bin Laden.

MCINTYRE (on camera): Pentagon sources say after a building south of Kabul was hit by a laser-guided bomb dropped by a Navy F-18, the U.S. watched as people streaming out of the building returned to try to rescue others trapped in the rubble. That's when a second F-18 hit the building again, resulting in a high death toll that included some lower level al Qaeda leaders.

Jamie McIntyre, CNN, the Pentagon.

(END VIDEOTAPE)

MCMANUS: As the fighting goes on in Afghanistan, the international community is looking toward the nation's future, namely its reconstruction. The United Nations announced Tuesday that the Northern Alliance and other Afghan representatives will participate in the first round of talks in Berlin, Germany.

CNN's Ben Wedeman has more on the discussions and the players involved.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN CORRESPONDENT (voice-over): Refugees flee the northern Afghan province of Konduz, the last Taliban stronghold in the north. And while the dust of war has yet to settle, tentative moves in Kabul toward a post-war national unity government.

After intensive talks with United Nations officials, the Northern Alliance has agreed to take part in preliminary talks, hopefully leading to an eventual Afghan government, one that would represent all of this country's diverse factions and ethnic groups. The talks are due to be held on Saturday in Germany. The choice of venues reflecting continued deep divisions here.

FRANCESC VENDRELL, U.N. ENVOY FOR AFGHANISTAN: Many other Afghans do not regard the United Front or the Northern Alliance as the legitimate government. It has not been approved by any internationally recognized mechanism like elections or a referendum, therefore, for Afghans and other Afghans, it was better to hold it in a neutral place.

WEDEMAN: Missing in the equation, representatives of the Pashtun ethnic group who make up 40 percent of the population. The Taliban, a predominately Pashtun movement, have expressed no interest in taking part nor, in fact, have they been invited.

Despite the still wide gaps between those groups set to attend the talks in Germany, few Afghans would disagree with the sentiments expressed by Alliance leader Burhannudin Rabbani in an interview with CNN.

(BEGIN VIDEO CLIP)

BURHANNUDIN RABBANI, FORMER AFGHAN PRESIDENT (through translator): People are tired of war now. We don't want to hear the sound of artillery anymore. People should hear the sound of workers with shovels and hammers rebuilding their country.

(END VIDEO CLIP)

WEDEMAN (on camera): The process set in motion by the United Nations could silence that artillery but only if this country's warlords can settle their differences at the negotiating table and not on the battlefield.

Ben Wedeman, CNN, Kabul.

(END VIDEOTAPE)

MCMANUS: As the Taliban lose control of Afghanistan territory, relief agencies and the Pakistani military are struggling to maintain control of the refugee camps dotting the Afghan border. The land between Pakistan and Afghanistan is dangerous territory. Because of overcrowding, the camps are running low on food and water. In addition, the Taliban are coming dangerously close to the border as they continue retreating, threatening violence near the camps.

Nic Robertson has the first of our two reports.

(BEGIN VIDEOTAPE)

(voice-over): Weighed down by their few precious belongings, Afghanistan's latest displaced trudge into the border town of Spin Boldak. Arriving from deep inside Taliban-controlled Afghanistan, these refugees are stretching relief efforts here to new limits.

Recently donated tents are quickly distributed by officials, concerned about how they will cope with the continuing influx.

WHALID AS SAADOON, SAUDI RED CRESCENT SOCIETY: No, I don't think this is enough, because the refugees, they are coming every day. And they are coming in thousand number, so even -- you are going to bring more and more. This is not enough for them.

ROBERTSON: On the other side of the highway, Taliban officials take journalists to a camp already at capacity, and complain they aren't getting enough help, caring for those they call the victims of the war.

NAJIBULLAH SHEIR ZAI, FOREIGN AFFAIRS SPOKESMAN (through translator): The United Nations is not helping us. The relief agency, Mohammed Bin Rashid, is taking care of and supplying this camp.

ROBERTSON: Indeed, in a United Nations warehouse less than half a mile away, food aid is piled high. The problem, U.N. officials say, is since the Taliban raided their offices, it is no longer safe for them to distribute aid. Most of the anger in the camps, however, is not about starvation, but why they had to flee their homes.

Ullahaddin (ph), like many here, says he was driven out of his home by the bombing. "My children are sick," he says. "Whenever they hear the planes, they lie down." Anger, too, that while they are being bombed, the talk in western capitals is already of rebuilding.

"We don't want dollars," he says. "We don't want Afghanis, we don't want dinars. We just want our goal, Islam." In all the chaos, there appears little attention to detail. No one knows for sure how far this camp sprawls, or how many others have sprung up around town.

ROBERTSON (on camera): We've been in this camp for a little over an hour. We've counted about 1,500 tents, but no one here has an accurate fix on just how many people live here. What we do know for sure is that most people tell us if and when the bombing stops, they will go home.

Nic Robertson, CNN, Spin Boldak, Afghanistan.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

CAROL LIN, CNN CORRESPONDENT (voice-over): One moment it was calm at the Chaman border crossing, the next moment it was chaos. A large crowd on the Afghan side became restless and started throwing rocks and dismantling the border post.

"No one's there to stop them," a border guard yells.

Pakistan's frontier police, the force in charge of securing this border, did not seem to know what to do until their commanders ordered them to throw rocks back at the Afghans.

It was remarkable to watch the seen unfold since it was our first chance to see the frontier since Pakistan's government said it had taken extraordinary steps to secure the border with Afghanistan. For the first time since the end of the Soviet-Afghan War, the army is positioned here, but the soldiers we saw did not try to stop the melee. At one point, after Pakistani frontier police moved back from the stones, armed Taliban on the Afghan side of the border asserted some control. The volatility here worries aid workers trying to shelter refugees.

(on camera): Near the border crossing, not even a thin line of razor wire or the minimal security provided at the refugee camp Killifiso (ph) is stopping armed Taliban from crossing in at night and threatening the refugees. The United Nations now says it is absolutely imperative to move these refugees away from the border.

SOLVEIG ISBRAND, UNHCR FIELD OFFICER: It's never ideal because this is also according to U.N. standard that we would prefer the refugees to be away from the border areas because it always is an unsafe place for refugees to be in. LIN (voice-over): Solveig Isbrand says there are about 3,000 refugees at Killifiso with an additional 900 people a day now flooding in from Afghanistan. Most say they are fleeing the American-led bombing around Kandahar. Aid workers say most are in very bad shape.

Sadiek Ulla's (ph) daughter arrived in Pakistan traumatized and sick.

"She has measles. She has spots and she has fever," he says.

Now his daughter and thousands of others are making a refugee camp their home. Aid workers here are moving an average of 250 refugees a day from Killifiso to another tent city on a windswept plain about five miles from the Pakistani-Afghan border. It is here where aid workers expect as many as 10,000 refugees will spend the winter. No one is talking about going home to Afghanistan anytime soon.

Carol Lin, CNN, Chaman, Pakistan.

(END VIDEOTAPE)

ANNOUNCER: Teachers, make the most of CNN NEWSROOM with our free daily classroom guide to the program. There you'll find a rundown of each day's show so you choose just the program segment that fits your lesson plan. Plus there are discussion questions and activities and the guide highlights key people, places and news terms. Each day find hot links to other online resources and previews of upcoming desk segments.

It's all at this Web address where you can also sign up to have the guide automatically e-mailed directly to you each day. It's easy. It's free. It's your curriculum connection to the news. After all, the news never stops and neither does learning.

MCMANUS: So what would you do with $25 million? That's the price on the head for the world's most wanted man, Osama bin Laden. The U.S. is stepping up efforts to capture the head of the al Qaeda network by dropping leaflets and broadcasting information about the reward money over Afghan radio stations. Will somebody cash in?

CNN international correspondent Jim Clancy is on the road to Kandahar and has this report.

(BEGIN VIDEOTAPE)

JIM CLANCY, CNN CORRESPONDENT (voice-over): Asked about the U.S. reward, most of the Afghans we talked with said they were unaware so much money was being offered to help catch Osama bin Laden. Like everyone else in the world, they had only seen bin Laden in photos. In the Kandahar province, where the leader of the al Qaeda network is believed hiding, no one wanted to appear on camera to talk about the subject.

So long as the Taliban control this region, it would seem that information about bin Laden's whereabouts will be tough to come by. But some said the massive reward would, in the end, lead someone to seek out the tall, elusive man who has borne the brunt of blame for the September 11th attacks on the United States. The problem may be logistical. Whoever might be in a position to know where Osama bin Laden was holed up in a mountain cave probably wouldn't have a clue how or where to place an international call pointing a finger. But others might be in a better position.

Pashtun tribal leaders, who met in the Pakistani town of Quetta, say they want al Qaeda and the Taliban out, or else. But they also contend they do not want the U.S. dropping bombs on their mountains. There is an alternative, a source close to the tribal leaders told CNN. Local people could surround Osama bin Laden and catch him. Some of the tribal leaders from the Kandahar province do have a reputation for kidnapping for ransom. They might be tapped to help the U.S. bring in the man at the top of its most wanted list.

(on camera): It sounds good in theory, but skeptical Afghans wonder whether it will work. "Osama bin Laden is our guest, " said one Taliban supporter. "It would betray Islam and our culture to betray our guest." All those present nodded in agreement. Then, they all agreed $25 million is a lot of money. Jim Clancy, CNN, Spin Boldak, Afghanistan.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

ROSIE DEPAOLA: I'm Rosie Depaola. I'm from Decatur, Georgia and my question to CNN is, after ending the threat of Osama bin Laden, how we continue to combat terrorism worldwide.

MAJ. GEN. DON SHEPPERD, (RET.) CNN MILITARY ANALYST: Rosie, it's been made clear that this is going to be a long war -- a wide war in many places around the globe. One of the dangers of the ongoing activities in Afghanistan are that if we get bin Laden and we get the al Qaeda cells, that the people will think the war on terrorism is over. It is not.

We're going to pursue terrorists and their terrorist cells wherever they are reportedly right now in 60 countries, including the United States. This is going to be done not only by military means, but by also by financial means; by diplomatic means; and by other means such as law enforcement.

(END VIDEOTAPE)

FREIDMAN: When President Bush first confirmed military strikes had begun in Afghanistan, he said this would be a different kind of war. So far that's proven true. It hasn't just been a series of air raids, nor only combat on the ground, strategies like cutting finances to terrorist have been key.

More now on the connection between terrorism and money from CBC News in Montreal.

(BEGIN VIDEOTAPE) LYNNE ROBSON, CBC NEWS REPORTER: Money, it starts out clean, but every year more than a trillion dollars is laundered by drug lords, organized crime and terrorists.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Money can be as lethal as a bullet.

(END VIDEO CLIP)

ROBSON: Police forces from 45 countries are meeting in Montreal now debating how to separate terrorists from their money.

"Not an easy task." says Guylaine LeClerc.

GUYLAINE LECLERC, FORENSIC ACCOUNTANT: It's more easy to launder money than it's easy to prove that they have laundered money.

ROBSON: A couple of examples of money laundering. A casino -- criminal goes in with thousands of dollars of cash, buys gambling chips, plays a game or two and then exchanges the chips for a check drawn on a legal company, the casino. The dirty money is now clean.

Another example, a ski hill in Quebec bought and paid for with drug money from Florida. Police had to catch the drug dealers to uncover the laundering scheme.

In Canada, police estimate between $5 billion and $17 billion are laundered each year and they recover about $160 million.

JEFFREY ROBINSON, AUTHOR, "THE LAUNDRYMEN": You have to understand, this place was a terrible sin (ph) as little as -- as few as five years ago, there was an awful lot of money coming up here being laundered. Canada has made a huge step forward.

ROBSON: Huge steps, including new legislation and new financial support for fighting terrorism in all forms.

GIULIANO ZACCARDELLI, RCMP COMMISSIONER: And we've had tremendous success with the legislation we have, and we expect to have much more success in the future.

ROBSON: The next challenge, say police, is to get other Canadians speaking out when business deals seem suspicious.

JOHN MAIR, RCMP: We've seen files where, if example, a helicopter was purchased and the money that came to buy this helicopter came from about 30 different accounts. Now the manufacturer is satisfied, they've been paid for their product, but then they're not questioning the source of those funds.

ROBSON (on camera): That kind of blind eye attitude is typical. Police say for a long time Canadians believed money laundering was a non-violent crime of accounting. Now police ask, does anyone still believe that?

Lynne Robson, CBC News, Montreal.

(END VIDEOTAPE)

FREIDMAN: Cutting financial ties to terrorists involves more than just tracking paper money trails, investigators now are looking into other commodities that may be financing criminal operations. Have precious stones, like diamonds and Tanzanite, become a terrorist's best friend?

Allan Dodds Frank looks into that possibility.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): Authorities tracking terrorist money are focusing on middlemen involved in diamond smuggling. Those diamonds are mined in Africa, in areas plagued by civil war.

Investigators are checking possible terrorist connections, especially with Hezbollah, the radical group based in Lebanon.

ALEX VINFS, U.N. PANEL OF EXPERTS ON LIBERIA: Terrorists will use any commodity that they can to finance their operations and diamonds are very convenient.

They're very easy to smuggle. There's no paper trail necessarily to them and so they're a very convenient way of transferring money.

FRANK: Tracking diamonds and other gems is difficult because they move through major jewelry centers such as Antwerp, Belgium, Dubai in the United Arab Emirates and India.

The trail starts in Africa, where most of the so-called conflict or blood diamonds are mined.

SEN. RICHARD DURBIN (D), ILLINOIS: What's happening in Sierra Leone and Angola and the Democratic Republic of Congo is that these diamonds are being used by the terrorists. They are, of course, being taken from the miners. They're put into commerce. The resources that they generate are funding these terrorist activities.

FRANK: The United Nations has focused on Sierra Leone, where a rebel army exploits the diamond trade, often smuggling the gems through neighboring Liberia.

JOHN FANEST LEIGH, SIERRA LEONE AMBASSADOR TO U.S.: Right now, terrorists and criminals around the world have assembled in Liberia for the sole purpose of grabbing the wealth of Sierra Leone, while making a civil war in my homeland.

FRANK: Diamonds as well as Tanzanite, a blue precious stone mined in Tanzania, surfaced as possible al Qaeda funding sources last April during testimony in the embassy bombing trial.

A witness, Mohammed Ali Odeh, said that Wadih el Hage, a one-time lieutenant of Osama bin Laden, tried to enlist him in the gem trade. A defense lawyer asked about it.

"Did you learn at the beginning of your relationship with Wadih what gem stones he was mostly dealing with?

The reply, "what he told me, Tanzanite and some diamonds to America."

FRANK (on camera): Investigators from the United States and the United Nations are getting help from the legitimate diamond industry, which has been pushing for the origin of all diamonds to be certified.

The publicity about conflict diamonds has been bad enough. The last thing the industry wants is for precious gems to be associated with terrorists. Allan Dodds Frank, CNN Financial News, New York.

(END VIDEOTAPE)

FREIDMAN: Diamonds are considered by many people the king of gems. Timeless in beauty and ages old, most diamonds were formed billions of years ago. They symbolize commitment and evoke images of wealth. Despite the mystery surrounding the diamond, it's actually just a mineral, a natural crystalline substance.

Rudi Bakhtiar brings us a closer look at the creation of the precious gem, the science behind the sparkle.

(BEGIN VIDEOTAPE)

RUDI BAKHTIAR, CNN CORRESPONDENT (voice-over): Diamonds are not exclusive to the African continent, they are a global natural resource. But it's an accident of nature that deposits of these durable and dazzling gems occur almost exclusively in some of the most remote regions of the world. Currently, raw diamonds are mined on every continent, except Europe and Antarctica, in a total of more than 20 countries. The top seven diamond mining nations are Botswana, Russia, South Africa, Angola, Namibia, Australia, and the Democratic Republic of Congo.

But what exactly is a diamond? Except for trace impurities like Boron and Nitrogen, diamonds are comprised solely of carbon, the chemical element fundamental to all life on earth. The stones are formed or crystallized deep below the surface of the earth in an environment of great heat and very high pressure.

JOCK ROBEY, RESEARCH GEOLOGIST: Diamonds, we believe, (AUDIO GAP) mantle, at depths of about 300 kilometers. They have to be deeper than 150 kilometers, otherwise the carbon will not crystallize as a diamond. It will -- if it's shallower than 150 kilometers, it's going to crystallize as graphite.

BAKHTIAR: Diamonds aren't created overnight. The journey for baubles of beauty like these began about three and a half billion years ago. Like crude oil, diamonds are a non-renewable natural resource. Once you take it, it won't grow back.

ROBEY: Diamonds, we believe, are extremely old. They've grown in processes involved within the earth and they sit there resident at depths in the upper mantle waiting for volcanoes to be generated and sample them and bring them up to the surface.

BAKHTIAR: The volcanic rock that transports the diamonds is called kimberlite. It was named after Kimberley, South Africa where the unique rock was first discovered during digging operations in 1870.

ROBEY: It essentially is a volcanic rock made up of a variety of distinctive minerals, olivine being the main mineral. It's got a peculiar color and texture. It's formed up of large minerals and much smaller ones in a journey (ph) of finer blackish matrix. It's difficult to describe it, but it has got different chemistries from other well-known volcanic rocks.

BAKHTIAR: The key to isolating diamond deposits is locating concentrations of four so-called indicator minerals. These are garnet, chrome diopside, spinal (ph) and ilmenite.

ROBEY: We call them indicators because, together with diamond, they effectively are quite heavy, and they get trapped in rivers and in between rocks and the base of the river where you could look for them the same way as someone would pan for gold. One would look for heavier minerals, and they are a bit different from the other minerals of the earth which tend to be lighter. So you end up looking for the indicator minerals to find your diamond.

BRIAN ROODT, DE BEERS CORP. AFFAIRS MANAGER: Diamond deposits are found fairly frequently. The problem is a question of whether those deposits are actually economic to mine. And the discovery of an economic deposit, or particularly a large economic deposit, those come on average once every 15 to 20 years.

BAKHTIAR: Diamonds can be mined in two ways, through Alluvial mining, the sifting of stones from ancient river beds and seashores, or more commonly, by kimberlite mining, the heavy-duty extractions of diamonds from cone shaped pipes of volcanic rock. In the mines of South Africa, kimberlite is drilled and blasted on an almost continual basis.

(on camera): Now the material that's being dragged through the scrapper tunnel is kimberlite, what diamonds are found in. It may look very hard, but it's not. It actually breaks down in water.

(voice-over): From the scrapper, the chunks of ore are loaded into train cars and transported to a crusher. Many stages of crushing and processing follow. Diamond mining may look similar to mining operations for metallic elements like copper and silver, but diamond mining companies are quick to point out a key difference.

ROODT: One of the really exciting things, in environmental terms, about diamond mining is that it's a very benign process, unlike, for example, other forms of mines, one doesn't have to add chemicals or anything like that. It's simply an addition of water and then a subtraction, and just sort of concentrating the material to get the diamond. BAKHTIAR: Ironically, the absorbent nature of kimberlite is also its biggest potential danger. Water flow conditions in diamond mines must continually be monitored to avoid potential disaster.

BILL FAIR, UNDERGROUND GUIDE: In the early days, the biggest killer was a mud rush or a mud flood, so the sums they're pumping is a very big part of the whole mining system. That cable would set off a siren that you could hear no matter what the circumstances. If anybody noticed a sudden flood of mud or water, they'd yank that cable and you'd get everybody out of here faster than you can imagine.

BAKHTIAR: The strong bonding and carbon composition of a diamond means its surface will actually repel water. At the same time, it readily accepts wax and grease so those properties are used to separate diamonds from other minerals that come out of the mines. Sorting involves the separation of rough unpolished stones into more than 14,000 different categories. Quality and color are key factors in this painstaking process. The ultimate aim is to determine the estimated worth of a stone.

RICHARD SABBATINI, TRAINING CONTROLLER: It's essential that we, as valuators, can tell whereabouts in those -- in that stones the flaws occur, because that is going to be very much dependant upon what is the polished return and the yield and ultimately the value of that stone itself.

BAKHTIAR: Diamonds are weighed by carats. According to legend, the word carat is derived from an ancient measuring unit, the carob fruit seed or carotene in Greek. By modern measures, one carat equals one-fifth of a gram, so there are 5,000 carats in one kilo of diamonds. Eighty percent of all diamonds mined annually are used in industry. Because it is the hardest substance known to man, diamonds are used to cut, grind and polish most other hard substances, including other diamonds.

Rudi Bakhtiar, CNN, Kimberley, South Africa.

(END VIDEOTAPE)

FREIDMAN: You can do your own diamond mining online, head to CNNfyi.com. There you will find more on how diamonds move from the mines of Africa to the worldwide marketplace.

MCMANUS: And our trip to the world's largest continent continues next week from the diamond mines of South Africa to the churches of Lalibela. We'll explore the other side of Africa.

FREIDMAN: So don't miss it. And don't forget, we're not here Thursday or Friday. We're off for the Thanksgiving holiday.

MCMANUS: Have a safe and happy holiday break. We will see you next week.

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