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YOUR WORLD TODAY

Gaza Violence Threatens Push for Peace; Bush Middle East Trip; Hong Kong Stocks Suffer Biggest Losses Since 9/11; Tensions In Kenya; Pope Cancels Address

Aired January 16, 2008 - 12:00   ET

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


(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And when I say I'm optimistic we can get a deal done, I mean what I'm saying.

(END VIDEO CLIP)

ISHA SESAY, CNN INTERNATIONAL ANCHOR: The U.S. president sounds upbeat on Middle East peace even as Israeli/Palestinian violence ramps up.

JIM CLANCY, CNN INTERNATIONAL ANCHOR: Campaign test. Mitt Romney winning a crucial primary in his native state of Michigan. That leaves the Republican road to the White House wide open.

SESAY: Turbulent times. Fears of a major economic slowdown in the U.S. and jitters through global markets.

CLANCY: And I'll have a latte with my Big Mac. Wake up and smell a brewing coffee war between two retail giants.

SESAY: It's 7:00 p.m. in Sharm El Sheikh, Egypt, 1:00 a.m. in Hong Kong.

Hello and welcome to our report seen right around the globe.

I'm Isha Sesay.

CLANCY: I'm Jim Clancy.

From New York to New Delhi, wherever you are watching, this is YOUR WORLD TODAY.

U.S. President George W. Bush leaving the Middle East on a hopeful note, but growing unrest in Gaza threatening to overshadow his tour for peace.

SESAY: Both Israelis and Palestinians launched new attacks a day after the deadliest violence in the area in months.

CLANCY: As rockets pounded southern Israel, Israeli aircraft repeatedly went after Gaza militants suspected of firing them. Some civilians paying the price.

SESAY: That's right. Our Atika Shubert is covering the fighting from Jerusalem, while Aneesh Raman is covering President Bush's Middle East tour from his final stop, the Egyptian resort town of Sharm El Sheikh. But let's start with Atika.

And Atika, what an ending to the president's push for peace. What do we -- as we understand it, what do we -- what's behind this escalation?

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Well, this most recent escalation started yesterday. There have been rockets, of course, launched from Gaza into Israeli towns now on a nearly daily basis, but an Israeli attack yesterday killed 19 Palestinians, most of them militants, Israel says. And the Islamic militant group in control of Gaza, Hamas, vowed revenge.

And that revenge came today in the form of more rocket attacks. In fact, in the last 48 hours, at least 125 rockets have been launched by militants in Gaza landing in Israeli towns. Most of them have fallen in open fields, but one of them, at least, hit a house, directly causing light injuries.

Israel has responded with more air strikes. This morning, one of those air strikes actually missed its intended target and hit a car with a family inside, killing three people, including a 12-year-old boy, a Palestinian medical source has told us.

So all of this is an escalation in violence, it is not a good ending to President Bush's trip in the region. And many Israelis and Palestinians are asking, where will this end? How can a peace deal be done under these circumstances? And they worry that if the rocket attacks continue, it will mean that Israel will launch a major ground offensive into Gaza at some point -- Isha.

SESAY: And Atika, this turmoil is being played out against the backdrop of Prime Minister Ehud Olmert losing one of his coalition members. Tell us how much that has weakened him.

SHUBERT: That's right. It's all part of the same picture, really.

Avigdor Lieberman resigned from the cabinet, pulled out of the prime minister's coalition, protesting ongoing peace negotiations, saying he did not approve of talks on the so-called core issues, those critical but crucial issues such as the status of Jerusalem, Palestinian refugees, the settlements. So he pulled out of the coalition for that reason.

Now, the prime minister coalition is still standing, but it is shaky. And analysts say he will have to find another party that supports his coalition and the ongoing peace talks, because the criticism is only likely to get stronger as he continues to push forward to try and get a peace deal by the end of the year.

SESAY: All right. Our Atika Shubert joining us there from Jerusalem. Many thanks.

CLANCY: Well, despite the violence, U.S. President George W. Bush says he is optimistic Israelis and Palestinians can indeed reach a peace deal. He concluded his eight-day Middle East tour meeting with Egyptian President Hosni Mubarak. Mr. Bush expressing his commitment to the peace process, saying he's going to stay engaged.

(BEGIN VIDEO CLIP)

BUSH: I believe the leadership in Israel and the leadership of the Palestinians is committed to a two-state solution. And I know nations in the neighborhood are willing to help, particularly yourself. And I appreciate your strong constructive support for the process.

And I told the president, I'm going to stay -- you know, there is a wonder whether or not the American president, when he says something, whether he actually means it. When I say I'm coming back to stay engaged, I mean it.

(END VIDEO CLIP)

CLANCY: Well, Middle East correspondent Aneesh Raman was at that news conference in Sharm El Sheikh.

Aneesh, we saw the president pushing forward on peace over the last eight days. Pushing back, too, on Iran. But on the peace front, we heard support coming from President Mubarak, but does it have the same meaning that it did, say, a decade ago?

ANEESH RAMAN, CNN MIDDLE EAST CORRESPONDENT: The short answer, Jim, no. Just a decade ago, just a few years ago, any U.S. president visiting the Middle East would have started in Egypt, described, of course, as the beating heart of the Arab world, would have spent the night.

Instead, President Bush here for just four hours at the tail end of a trip. It shows Egypt's diminishing relevance in the Middle East. It has really become determined by Saudi Arabia and Iran.

Egypt's trying to figure out if it can have any part in that. And one example to show you of its diminishing influence, when Hamas took over Gaza, Egyptian mediators immediately went in to try and broker some deal between Fatah and Hamas. And we now know months later, that is far from on the table. So, Egypt really has little influence in Middle Eastern affairs right now -- Jim.

CLANCY: You know, on another hand, when we look at what's going on in the Middle East, you talk about a beating heart there, nowhere is that more evident than on Egypt's streets. What was the reaction to Bush's messages there?

RAMAN: Yes, it is probably good, Jim, that he didn't go to Cairo and instead came to Sharm. Protests starting on Monday in the Egyptian capital. Egyptians, by and large, did not get what they wanted out of President Bush. Standing next to President Mubarak, he offered no direct criticisms of what has been a rollback of rights in recent years in Egypt.

We have seen bloggers jailed, we have seen demonstrators jailed. We have seen political opposition members jailed. And it comes just a few days, of course, after President Bush railed against Iran for human rights violations, a number of which are taking place in Egypt now.

A lot of people felt when Bush came into office he called them to arms, if you will. Democratic activists in the world, you know, do what you need to do in your country, we will support you. Meantime, the leading opposition candidate remains in jail. And the U.S. really won't, unfortunately, criticize Mubarak for it -- Jim.

CLANCY: President Bush also trying to push back on Iran to sell the notion that it is a major threat to the Middle East. Overall, on this eight-day trip, how did that go over?

RAMAN: Yes, I don't think President Bush got what he would have liked out of these U.S.-Arab allies. He was very forceful making cases he has made before, but making them within the Middle East. But these countries are all on their own trying to forge new relations with Iran. They don't see Iran as rising, they see it as a country that has arrived.

Egypt, for example, just yesterday, Hosni Mubarak said there should be no war at all when it comes to Iran, all issues should be resolved diplomatically. And chief amongst the U.S. allies here, Saudi Arabia, the king for the first time invited Iran's president to the Hajj pilgrimage late last year.

The countries in this region outside of the U.S. influence are trying to figure out how to incorporate Iran into their foreign policy. So, President Bush, I think, did not get what he wanted in terms of forceful support from these U.S. allies.

CLANCY: All right. Aneesh Raman reporting there live from Cairo, as President Bush is headed home aboard Air Force One -- Isha.

(NEWSBREAK)

SESAY: Let's get to the White House, where it remains wide open on both the Democratic and Republican side. Each contest so far seems to thrust a different candidate into the winner's circle. Now it's Republican Mitt Romney and Democrat Hillary Clinton who hope to seize momentum as they head into the battle for delegates in South Carolina and Nevada.

Well, Romney scored his first major campaign win and a much- needed victory in Michigan's Republican primary on Tuesday. He soared over rivals John McCain and Mike Huckabee in a state where the faltering economy is the number one concern. Romney touted his business credentials and poured more than $2 million into ads there. (BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Well, I think it was a sense of optimism that our campaign brought over the Washington-style pessimism which seemed to permeate from Washington over the last several weeks. This is a state that's had some tough times, and they wanted to make sure that they had somebody who was going to be their leader, who would fight for them. And I'll fight for any state in America that's going through a one-state recession.

(END VIDEO CLIP)

SESAY: Well, on the Democratic side, it was largely an uncontested race. Hillary Clinton easily bested rivals Barack Obama and John Edwards. They skipped Michigan after the National Democratic Party stripped the state of its delegates in moving up its primary.

Even so, 40 percent of voters cast ballots for uncommitted delegates. And uncommitted even carries the county that includes the city of Ann Arbor, home to the University of Michigan.

Well, there's no rest in sight for the White House contenders. The next big campaign date is Saturday, January 19th. That's when Nevada holds its Republican and Democratic caucuses.

That same day, Republicans square off in South Carolina's GOP primary. But South Carolina's Democrats won't vote until a week later. Their primary is on January 26th.

CLANCY: And still ahead right here on YOUR WORLD TODAY, Wall Street sneezes. Does the world catch a cold?

SESAY: Fears of a recession cause markets worldwide to shutter. More on that and our business report just ahead.

CLANCY: Also, growing pains. Boeing's Dreamliner will have to stay on the ground for a few months longer.

SESAY: And sometimes brewing in the upscale -- something is brewing in the upscale coffee market, I should say. Are retail giants McDonald's and Starbucks getting ready for a mocha war?

(COMMERCIAL BREAK)

SESAY: Welcome back to CNN International and YOUR WORLD TODAY.

CLANCY: We're covering the news that the world wants to know, giving you some perspective that goes a little bit deeper and sometimes wider into the stories of the day.

For example, Wall Street. Certainly the effects of Terrible Tuesday there were felt all around the world today. Worst day of the new year. Each of the major averages tumbled more than 2 percent.

SESAY: That's right. And today stocks are once again under pressure. (BUSINESS REPORT)

CLANCY: You know, as we mentioned, fears of a recession in the U.S. tipping stock markets around the world into a sell-off mode.

SESAY: Asian stock markets also took some really heavy falls this session. As American consumers fuel Asian markets, how will they cope?

Asian business editor Eunice Yoon has more.

(BEGIN VIDEOTAPE)

EUNICE YOON, CNN ASIAN BUSINESS EDITOR (voice over): Hong Kong clothing maker Stephen Au is getting some of his latest designs ready for a fashion show. Au sells to retail stores in the U.S., but he is getting worried about the future of his business with the threat of a recession looming.

STEPHEN AU, EQ FASHION (through translator): My American customers are squeezing our process and holding on orders. A recession in the U.S. would hurt us all.

YOON: American shoppers are key to fueling the world economy. They buy everything from Japanese cars and Korean TVs to Chinese T- shirts.

China alone sells hundreds of billions of dollars in goods to Americans every year. That's helped fuel China's economic boom.

So if the U.S. falls into a recession, as investment firms like Goldman Sachs now predict, many worry Asian economies could take a hit, too.

KIRBY DALEY, FIMAT SECURITIES: What's been fueling the Asian growth has been the U.S. consumer. Take that out of the equation, and we're going to see this flow around Asia also slow and each of the respective economies who are highly dependent on exports to the U.S. take it right on the chin.

YOON: Citigroup worries how a protracted U.S. recession and a potential reduction in Chinese exports could impact China's economy.

YIPING HUANG, ECONOMIST, CITIGROUP: When we look at the Chinese economy, 37 percent of GDP's exports, if that growth is gone, I fear that we'll see lot of overcapacity, we'll see depreciation, we'll see lots of non-performing loans. It's actually a pretty scary scenario.

YOON: But others like the World Bank say the Chinese consumer could actually help cushion a global slump. The bank says developing nations will help offset the decline in the U.S. and elsewhere, as consumers in those countries buy goods from their neighbors. That's good news for people like Au.

AU (through translator): Purchasing power in China is becoming stronger. People there can afford higher quality, more expensive products.

YOON: His hope now is that the Chinese economy remains strong.

Eunice Yoon, CNN, Hong Kong.

(END VIDEOTAPE)

SESAY: Protests put the brakes on the visit by Pope Benedict XVI.

CLANCY: Coming up right here on YOUR WORLD TODAY, the pontiff canceling a planned trip to Rome's oldest university.

SESAY: We'll tell you why demonstrators rolled up the welcome mat.

CLANCY: And fears grow for the health of a former politician held hostage for years in the Colombian jungle.

SESAY: Why her husband says time may be running out.

(NEWSBREAK)

(COMMERCIAL BREAK)

CLANCY: Hello and welcome back to our viewers joining us from all around the globe and here in the United States as well.

This is YOUR WORLD TODAY.

I'm Jim Clancy.

SESAY: And I'm Isha Sesay. Here are some of the top stories we're following for you.

Tensions on the rise in Kenya as police and protesters clash once again after the opposition calls for three days of mass rallies. At least one person was killed as police fired tear gas and bullets into the crowds protesting the disputed presidential election.

CLANCY: Escalating violence in Gaza threatening to overshadow that renewed push for peace. Israeli aircraft, hunting down militants, missed the target of one attack. They killed three civilian family members in their car. Palestinian militants, meantime, keeping up the rocket attacks on southern Israel.

SESAY: Egyptian President Hosni Mubarak calls the lack of a Israeli/Palestinian agreement a core problem in the region. As U.S. President Bush ended an eight-day Middle East tour, Mr. Mubarak said Egypt is ready to work hand-in-hand with the U.S. to see a deal before Mr. Bush's term ends.

Now, some U.S. politics for you that we want to bring you. And Michigan was largely an uncontested race. Hillary Clinton pulled in the majority of votes. But that's because her opponents Barack Obama and John Edwards were not on the ballot. They skipped Michigan after the national Democratic Party stripped the state of its delegates for moving up its primary. Even so, 40 percent of voters cast their votes as "uncommitted."

CLANCY: All right. We're going to take you now live to Kenya. Tensions on the rise in that country right now. Police and protesters clashing in the streets. At least one person is known to have died. There is three days of mass rallies being called by the opposition. Our own Zain Verjee was caught up in the turmoil. She's with us now.

Zain, you got a little bit too close to the story today. What happened?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: A little too close, Jim. Really it was a day of drama, confrontation and brutality. There were running battles all over the country, here in the capital Nairobi, as well as in western Kenya, in the town of Kisumu, the coast of Mombasa and, as well, in the town of Eldoret. Police were firing tear gas at demonstrators out on the streets.

The opposition here has called for three days of mass protests. They've been accusing the government of rigging and stealing the election. Opposition leaders, too, Jim, tried to get into Uhuru Park that was ringed by police and paramilitary forces and they got tear gas fired on them. They scattered and they ended up being hold for a few hours at hotels all over the city before they regrouped.

Paramilitary forces at the same park they were trying to get to, Uhuru Park, fired on journalists as well, including CNN. Here's what happened.

(BEGIN VIDEO CLIP)

VERJEE: Opposition supporters and security forces appear braced for another confrontation on this side. Supporters of Raila Odinga saying that he is really the president. They want to march into Uhuru Park. In Uhuru Park, if you take a look there, what you see is hundreds of police and paramilitary forces.

They've just added another truck now in for reinforcements. They've been firing tear gas canisters at both supporters of the opposition, opposition leaders themselves and journalists as well. They are beginning to make their move and it's very likely that from the other side they will start firing back.

UNIDENTIFIED MALE: You OK?

VERJEE: Ah, they hit my back. Yes. Yes.

UNIDENTIFIED MALE: They got you?

VERJEE: Yes. They shot me here in the back, yes.

UNIDENTIFIED MALE: They almost hit your head, huh?

VERJEE: Yes.

UNIDENTIFIED FEMALE: Are you OK?

VERJEE: Yes. It's OK. I'm standing.

(END VIDEO CLIP)

VERJEE: All over the country, Jim, there was a huge amount of police brutality. We even heard of some old ladies who were selling tomatoes being tear gassed by the police and security forces here. The police spokesman here though, Jim, telling journalists that they had to be really tough today because they don't want a situation where looters take advantage of the situation and start destroying Nairobi the way they destroyed a city like Kisumu -- Jim.

CLANCY: Zain, just to be clear here, you know, we see that object hitting you in the back. What was that?

VERJEE: That was a tear gas canister that hit my -- me on one of my shoulder blades. It stung a little bit. But we continued working when that happened and the cameraman managed to keep the shots fairly steady. But that's what that was. And shortly after they fired that, and we dispersed, they continued to do so a number of times. They also brought in horses at one point and tried to get us out of the way using horses. But we all stayed and stayed put -- Jim.

CLANCY: You got, what, two more days, at least, of this coming up now?

VERJEE: Yes, two more days. The opposition says that it wants to use the streets, to use their card of civil disobedience, to pressure the government in some way either to compromise a deal and work with the opposition leader, Raila Odinga, and come to some sort of genuine power-sharing deal. The opposition is saying they want peaceful demonstrations and they are accusing the police of provoking violence. But the police are saying it's the demonstrators, it's the looting elements and that could really destabilize this country.

I talked to a lot of Kenyans, Jim, who are just fed up, you know? They say they want their leaders to just get on with it and to compromise. And underlying all of this is the real issue of poverty in the country. And they say that needs to be addressed. Forget the tribal issues. Forget the wrangling over power now. They say just get on with it -- Jim.

CLANCY: Zain Verjee reporting for us live there from the Kenyan capital, Nairobi.

Zain, thank you very much for that and stay safe.

SESAY: All right. We want to get to Italy now where Pope Benedict XVI has canceled an address he was to deliver to university in Rome. Alessio Vinci explains why the cancellation unusual and important.

(BEGIN VIDEOTAPE)

ALESSIO VINCI, CNN CORRESPONDENT, (voice over): Protests against a papal visit are not uncommon, but canceling one is rare. Usually it happens because of security concerns or health problems. But this time neither appeared to be the case.

The Pope, instead, decided to cancel his speech at Rome's oldest university after a group of professors and some students opposed his visit. They argued Pope Benedict was hostile to science. Physics Professor Andrea Frova is one of a small group of academics who signed a letter opposing the Pope's visit.

ANDREA FROVA, PHYSICS PROFESSOR: Because of its rather well known, somewhat anti-scientific attitudes, which apply to mostly to genetics, biology, medicine and other things, in which is very similar to positions that four centuries ago were taken by (INAUDIBLE) four centuries ago when Galileo, of course, was prosecuted. And there is a certain similarity.

VINCI: In the letter, the professors cited a 190 speech delivered by then Cardinal Ratzinger during which he quoted a philosopher who supported the church's stance against Galileo. The Italian scientist, who in the 1600s argued that the earth revolved around the sun. That position considered heresy at the time.

But in that speech the cardinal, who would then become a pope, did not support that view. And, in fact, the Vatican insists the Pope is not against science. He has, however, long argued that science can be destructive, especially when it closes off religion.

A papal speech at a university which generates controversy? Does it sound familiar? Protests across the Middle East have followed a papal address at a German university in 2006 when he quoted a medieval emperor who suggested Islam was a violent religion. The demonstrations did not deter the Pope from traveling to Turkey where tens of thousands protested his visit.

So why did the Pope cancel this speech after the opposition of a small group of Roman professors and students?

UNIDENTIFIED FEMALE: By not going he's accomplishing two things. He's avoiding another headline about protests against the Pope, and at the same time he's managed to get some of his fiercest critics on his side this time who are now decrying what they say is this embarrassing example of intolerance.

VINCI: The canceled visit was perhaps a missed opportunity to discuss the Pope's views on science. The dean who issued the invitation said it was a defeat for the freedom of expression.

Alessio Vinci, CNN, Rome.

(END VIDEOTAPE)

CLANCY: Well, let's stay in Rome now as an Italian artist and two accomplices, as they're being described, have dumped half a million colored balls down the Spanish steps. Take a look. This is what it was like as the municipal workers try to clean it up. He said he did it to illustrate Italy's various problems. Most notably the current garbage crisis in Naples. Some would say it only added to the problems with all these balls. Italian police say the artist is the very same man who filled Rome's Trevi (ph) Fountain with red dye. That was last year. What a mess!

SESAY: How do you get your hands on that number of colored balls?

CLANCY: You buy them, I guess.

SESAY: I mean -- yes, but how much does it cost? I mean, it's quite elaborate, I suppose is my point.

CLANCY: Well, it wasn't exactly De Vinci or Michelangelo was it. But he is an artist.

SESAY: Of some sort.

OK. She called herself and her fellow hostages the living dead after being held by Colombian rebels for years.

CLANCY: Now coming up right here on YOUR WORLD TODAY, the family of captive Ingrid Betancourt appeals for her freedom. Why they're fearful that even weeks could mean the difference between life an death.

(COMMERCIAL BREAK)

SESAY: Welcome back, everyone.

The recent release of two hostages held captive by the leftist rebels in Colombia is raising hopes that others may be freed as well. Columbian President Alvaro Uribe says he's willing to release some jailed rebels in hopes of reaching an accord with the FARC. But previous offers by the president came with conditions the FARC rejected.

More than 700 people are still being held hostage by the FARC and they include Colombian military and police officers, legislators and U.S. contractors. Some have been held for as long as 10 years. A former politician and one-time presidential candidate is one of them. And as Karl Penhaul reports from Bogota, Ingrid Betancourt's family is worried that her time may be running out.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT, (voice-over): A haunting proof of life from a guerrilla concentration camp. In video shot by her captives and seized by the Colombian government in December, Ingrid Betancourt seems too weary to speak. And in a letter dated October 24th, she described herself and fellow hostages as the living dead. Contrast that with her message sent in 2003 a year after she was kidnapped. She began, "I'm well. I'm alive."

Now her husband, Juan Carlos Lecompte, feels time is running out.

JUAN CARLOS LECOMPTE, INGRID BETANCOURT'S HUSBAND: She can't buy any time. I mean because she is right now very weak. We are right now in an emergency. We cannot wait any longer. More months or more years. We can wait only weeks or days.

PENHAUL: Betancourt has become a poster child of Colombia's kidnap industry and four-decade-old guerrilla war.

LECOMPTE: They are playing with human life. I mean the Colombian government and the guerrilla, they don't care for the human life. They only care for the political benefit that they can have.

PENHAUL: Betancourt was running for president when she was snatched in 2002 by guerrillas calling themselves FARC, the Revolution Armed Forces of Colombia. Three days after the kidnapped, the guerrilla chieftain responsible for her capture issued an ultimatum.

"Ingrid Betancourt, and others like her, will be used as leverage for a prisoner exchange. We're giving the government a year to decide. If not, the FARC will take the most suitable decision," Ramirez (ph) said.

That one-year deadline came and went. Now almost six years into the kidnapping, there's still no deal on swapping rebel-held hostages for jailed guerrillas, fueling the despair of Betancourt's mother.

YOLANDA PULECIO, INGRID BETANCOURT'S MOTHER, (through translator): In this country, the kidnapped are like lepers at a dance. Nobody pays any attention to them. The government shows no interest in helping us and the guerrillas are playing their games and we are in the middle.

PENHAUL: In what they described as a unilateral goodwill gesture, the FARC did free two hostages last week, including Betancourt's former vice presidential running mate, Clara Rojas. But Rojas brought no fresh news of her friend. She said the pair had been separated three years ago.

Betancourt has become a cause celeb (ph) in France, where her children live and where she has dual citizenship. But generally, in Colombia, with little public solidarity, all grass-roots political pressure to win the prompt release of the FARC hostages. That leaves the families to grieve alone.

PULECIO: From the moment I opened my eyes, I wonder how Ingrid is, how she slept and if she will have to walk a lot and whether they are mistreating her. It's such a deep pain. Not a minute goes by when I'm not thinking about her.

PENHAUL: Betancourt is just one of 750 hostages the government estimates the FARC is holding. There's no end in sight for their nightmare. Still, Betancourt's husband is refusing to give up.

LECOMPTE: No matter how long it's going to take to take her back, but I'm going to be here. I am going to wait until she is free and I don't know how long it's going to be.

PENHAUL: But looking at how frail Betancourt has become after years in captivity, she may not be able to wait too much longer for her freedom.

Karl Penhaul, CNN, Bogota.

(END VIDEOTAPE)

CLANCY: They once fought as bitter enemies. Today, they forged a friendship. But they're still fighting. Only this time, they're fighting for peace. We turn to a group of Israelis and Palestinians whose change of heart turned them away from armed combatants and they became Combatants for Peace.

Some of the founders are joining us today of Combatants for Peace as they begin a U.S. tour. Bassam Aramin and Yonatan Shapira have extraordinary stories. Aramin is a former Fatah fighter. He lost his young daughter a year ago today to an Israeli rubber bullet. He's teamed up with former Israeli air force captain Shapira to end the violence that's taken so many lives on both sides.

Welcome to both of you. Great to have you with us.

You know, we're concluding a week, President Bush trying to push peace in the Middle East. But, Yonatan, you look at the situation today with rockets flying from Gaza into Israel, aircraft carrying out missile strikes in Gaza at the same time, you come to the United States to spread a message of peace, but it doesn't seem like the region's ready for it. What's your message?

YONATAN SHAPIRA, COMBATANTS FOR PEACE: I think that they don't have to be color or have a PhD in political science or to be a military expert to understand the very basic fact that as long as we continue to occupy and to oppress millions of people, there will not be peace. As long as we continue to build illegal settlements and to lie to the world and to ourselves, we will not achieve the desirable peace. And in our initiative, we try a different way, an alternative, both for Israelis and for Palestinians.

CLANCY: All right. Bassam, it was a year ago today that you lost your daughter, Abir (ph). She was only 10 years of age. Tell us what happened to her and how did that change your involvement -- or did it?

BASSAM ARAMIN, COMBATANTS FOR PEACE: Yes. Truly a huge one. We lost, in the last year, 92 kids, Palestinian kids, without an investigation. No suspect. I lost my daughter before one year exactly. She wasn't a fighter. She don't belong to Fatah or to Hamas. She was a child. One Israeli soldier, (INAUDIBLE) soldier, killed her in cold blood. And (INAUDIBLE) after (INAUDIBLE) they opened investigation. Then after three months they close it. This is what had happened with Abir.

And we are in (INAUDIBLE). This courage and modern movement which we create in 2005 in order to stop this circle of violence, it's like in Gaza now it's not violence, it's a massacre against the civilians in Gaza. It's not violence in Gaza. And this is what has happened. It's a war from one side, against the Palestinian civilians, and (INAUDIBLE) rights in general also. It's the civilians of Israel and Palestine.

CLANCY: Well, exactly. And the missiles flying into Israel creating civilian casualties, suicide bombs may be down, but there are some people who have lost families. Israelis and suicide bombings that are also members of Combatants for Peace.

Yonatan, you know, President Bush just went through the region pushing for peace. Most Israelis, many Israelis, don't believe he's going to be able to achieve that. What's going wrong? What are we doing wrong in the approach to peace in the Middle East then?

SHAPIRA: You know, it's hard to say that we already -- we are -- we still have belief in President Bush and also in our leadership in Israel. If President Bush wanted us to end occupation, it could be over years ago. Instead of that, they continue to send billions of dollars of weapons, both to Israelis and Arab countries. In that way you will never achieve peace.

If you want to achieve peace, if you want security, both for Israelis and Palestinians and the rest of the world, you have to stop the occupation. You have to stop every form of violence. Construction and building of settlements is not going to bring us any good and is not going to end the violence. It's going to just perpetuate the violence.

And in our organization, we try to bring this message also to the international community. For example, to Jewish people around the world, if you really support Israel, if you really care about the Jewish people and the Jewish state, if you really want to prevent the destruction of Israel, you have to start to love us with a better way and we call it tough love. You have to start to put pressure on your leaders and on our leaders to stop the occupation. That's the only way, the only way we can bring some kind of solution to the people in the Middle East.

CLANCY: Yonatan Shapira and Bassam Aramin, I want to thank both of you for being with us. Co-founders of Combatants for Peace. Good luck on your speaking tour around the United States, gentlemen.

ARAMIN: Thank you.

SHAPIRA: Thank you very much.

SESAY: Watch out Starbucks, McDonald's wants to alter a morning routine.

CLANCY: And we're going to have that story when we come back. You'll like it.

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CLANCY: All right, Isha, a battle brewing in the world of java.

SESAY: McDonald's is getting ready to serve up mochas, lattes and cappuccinos.

CLANCY: Our own Richard Roth has the story from the big apple.

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RICHARD ROTH, CNN CORRESPONDENT, (voice-over): Cafe latte with your Big Mac? That's the order of the future at McDonald's. And just like Starbucks, a barista will prepare the mochas and the cappuccinos. Foam's up. It's the outbreak of a coffee war between two retail giants.

UNIDENTIFIED MALE: This is not about a competitor, this is really more about customers. It's about their desire. Clearly their desire, as they've stated it, to be able to have espresso-based drinks.

ROTH: The stock price of Starbucks has tumbled recently and the company has been criticized for over expansion. It declined an interview request about McDonald's coffee announcement. With cola sales dropping at McDonald's, coffee can brew money.

UNIDENTIFIED FEMALE: Coffee is hot. Everybody wants a cup of joe many times through the day. And so I think there is room enough in the category for a McDonald's, for the Starbucks.

ROTH: Currently McDonald's serves up roasted coffee.

UNIDENTIFIED FEMALE: It's very good, too. I'm just kind of hooked on Starbucks.

UNIDENTIFIED FEMALE: I'll stick with McDonald's. I don't know, Starbucks is expensive.

ROTH: Forget those torturous venti (ph) and grande descriptions to remember. McDonald's will keep it small, medium and large. The reaction outside Starbucks.

UNIDENTIFIED FEMALE: If they can give me a good coffee, I don't care what they call it.

UNIDENTIFIED FEMALE: I think it would be good because McDonald's coffee, as is, is not very good.

ROTH: Are you the barista here?

UNIDENTIFIED MALE: Yes, currently.

ROTH: Don't forget the average joe selling a cup of joe on a corner.

UNIDENTIFIED FEMALE: I like trying to support the little guys more so than the big corporations.

ROTH: A little guy like The Mudtruck in New York's east village with a recipe from grandma. Some mud lovers are telling McDonald's, here's mud in your eye.

UNIDENTIFIED FEMALE: I don't really want to smell cheeseburgers while I'm ordering a coffee.

ROTH: But the McDonald's coffee move may have some in the industry getting caffeine jitters.

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ROTH: Now Starbucks has had a rough financial time. It kicked out its chief executive officer, but it seems to be ready for this latest challenge now. This one coming from McDonald's. McDonald's is going to have to match the quickness that Starbucks boasts of. It's being test marketed, Jim and Isha, over the next 18 months. And then every store will supposedly have a McDonald's barista.

SESAY: McDonald's barista.

CLANCY: Yes, I don't know -- well, you know, it's going to come down to pricing. We're going to have to wait and see.

Richard Roth there with our story reporting live from New York City.

But for us now, that has to do it for YOUR WORLD TODAY.

SESAY: Indeed. I'm Isha Sesay.

CLANCY: And I'm Jim Clancy. Don't go away. There's more news straight ahead on CNN.

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