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Ireland's Four Year Plan; Is Portugal Next?; Airport Security; Communicating with Bonobos

Aired November 24, 2010 - 16:00:00   ET



BRIAN COWEN, IRISH PRIME MINISTER: This is a time for us to pull together as a people. It's a time for us to confront this challenge.


BECKY ANDERSON, HOST: Well, there's no pulling together in Ireland, as the people protest the prime minister's budget cuts. It all starts with the sovereign debt markets taking aim at Athens first and then Dublin and now Lisbon. Tonight, how Portugal and maybe even Spain will respond when it's their turn.

Going beyond borders on the day's biggest stories, on CNN, this is the hour we connect the world.

Well, as the cost of borrowing money jumps for Portugal, more questions are being asked about when -- not if -- it's going to need to ask the world for help.

I'm Becky Anderson in London for you.

Also tonight, it's a tense stand-off between North and South Korea. You've heard enough people pointing the finger exclusively at Pyongyang. Well, tonight, a Washington insider tells us why Seoul should share the blame.

It's being lauded as the savior for the world's poor, so what happens when India's micro finance industry faces collapse?



ANDERSON: But because we're all believers, we're bringing you Neil Diamond as a Reconnector of the Day tonight.

That's CNN in the next 60 minutes.

Remember, this is your show. Shape it, inform it and get your voice heard -- or @beckycnn on Twitter.

Well, we begin tonight in Ireland, where the government has unveiled the toughest budget measures in its history, helping to both pay for a crippling banking crisis and meet the terms of an international rescue deal.

Let's kick off with Jim Boulden, who joins us now from Dublin -- and, Jim, you've seen the ambitious four year plan.

How does it read?

JIM BOULDEN, CNN CORRESPONDENT: Well, it reads a very, very strict budget process for this government over the next four years. This is the program. It's about 140 pages. It has some tax rises, like the value- added tax, the national sales tax will be going up. It's cutting the minimum wage. It's going to cut thousands of public sector jobs, above the cuts we've already seen.

What the bottom line here, Becky, is this government has run a huge budget deficit and it must get it down below 3 percent to meet E.U. guidelines. It's going to do it through a mixture of ways, including, of course, getting money from the IMF to fix the banks.

But the prime minister went before the people today in a 45 minute press conference and said a number of things to -- to just try to explain to them why they must go through yet four more years of pain.


COWEN: This crisis has really hit the people hard in many respects. And people are trying to find the direction, they're trying to find the way forward, they're trying to provide for themselves and their families. It's a very human issue for many people. It's very -- it's a very human problem that's affecting many people.

But we have to, you know, confront the problem and move on.


BOULDEN: Now, Becky, a lot of people here are not very happy, of course, that they're going to see more pain. There were a few more demonstrations today. But on Saturday, the unions are calling for mass demonstrations on the streets here in Central Dublin -- Becky.

ANDERSON: Yes, right.

Jim, thanks for that.

Jim Boulden in Dublin for you.

This is the show that shows how a story in one part of the world resonates elsewhere. And the cost of Ireland's rescue package has sent shock waves to the Iberian Peninsula.

Portugal -- sorry, Portuguese and Spanish borrowing costs rose sharply on Wednesday, as traders worry that debt levels there will prove unsustainable. Now, it's bond yields that give us a better sense of the risks in any economy. And we can see who they fear will be next in line for a bailout.

When I talk about them, I'm talking about bond traders.

Well, 10 year yields on Irish, Portuguese and Spanish government bonds all jumped on Wednesday. Portugal, in particular, hitting a record intraday high, past the 7 percent barrier.

Now, German yields, which are seen as a benchmark in Europe, also climbed.

Bond yields, of course, move higher as investors demand a bigger return for lending to countries believed to be at risk for -- of being unable to pay back loans.

All right, we get that. I mean we saw it in Ireland and Portugal is reacting no differently, insisting it will solve its own problems with a clear strategy.

But does the rest of Europe agree?

Well, according to New York-based research company, Eurasia, this latest crisis isn't expected to be contained and Portugal will be pressed to accept a package even if the government claims it is not needed.

Let's do more on this for you. This is an important story -- an extremely important story.

An analyst for the Eurasia Group, Antonio Barroso, is with me and now from London.

You're saying that Portugal will be forced to accept a bailout deal from the IMF and from the EU.

How much and how soon?

ANTONIO BARROSO, ANALYST, EURASIA GROUP: Well, Becky, that's -- it's difficult to know, actually. Our -- our point is that it is not now April 2010 anymore. This is not Greece and it's not going to be Ireland. I mean they -- the E.U. has to have the capacity to -- to bailout governments and then now Portugal is under surveillance by institutions by other European leaders.

So our point is that even if Portugal will not eventually apply for a bailout because it's a huge political cost for the -- for the current government, the U must -- the EU, in the long-term, the European leaders might try to push a little bit for it.

ANDERSON: You're in Lisbon, by the way. I think I -- I said that you're in London. So apologies for that.

Antonio, how long can the system keep giving at this point?

BARROSO: Well, I mean, I think that the E.U. agreed on a -- on a pretty solid package on -- on -- last May. And I think the system, right now, it's -- it's ready to act. And you've seen declarations and statements of all the European leaders saying that the E.U. is ready to -- to act whenever it is needed.

And I think that the big test is going to be, right now, how the Irish bailout is going to play out. If it's shown that it's actually playing out very, very well and very solvently, then that will be a very good bench -- benchmark for future bailouts.

So I think...


BARROSO: I think that the E.U. is prepared.

ANDERSON: Listen, it was only last week that the Irish were saying that they didn't need a bailout, they were going to be all right. And whether they liked it or not, the boys and girls who play the -- the bond market, the bond traders out there -- decided that they were just going to run those yields up. We've seen the same thing happening with Portugal and, indeed, with Spain at the moment.

What if Spain follows?

Does it -- does the very idea of the Eurozone collapse at this point?

BARROSO: Yes, I mean I think -- I think there is a -- a little bit too -- going too far. I think one of them -- and the bigger question here is the attitude of governments. For example, now that you mentioned Spain, Spain today, again, reaffirmed the commitment of the government to implement measures, saying that they don't understand why markets are treating the -- treating Spain in an inferior way, because they think that they have done a lot, taking very strong measures with this deficit.

In Portugal, as you said, I'm in Lisbon right now. Today there was a -- there was a general strike there. There was a -- there was a public transportation strike. It was very difficult to move around.

I mean these measures are very difficult to sell to the citizens and the governments feel that they are doing -- that they are doing a lot.

Now, the question is that some of these governments, like in the case of Spain, for example, Prime Minister Zapatero promised that he will take - - he would undertake important fiscal reforms. And as a matter of fact, he had -- he had -- he had delayed some of these reforms, like pension debt -- review of the pension system -- until next year.

But now, an interesting political development might be that he might be forced to kind of accelerate the path of reforms to respond to -- to the current situation.

ANDERSON: All right. We're going to leave it there.

Antonio Barroso is an analyst at the Eurasia Group, based in Lisbon, for us, as we -- as we have Portugal facing a -- a financial precipice, and possibly Spain, as well.

We thank you, sir, very much, indeed, for joining us and explaining well the situation that's going on in the Iberian Peninsula.

Well, that is story how -- of how Western finance is struggling out of a recession.

But for years, the model that's been called the savior of the developing world is a system called micro finance. Now, you've probably heard of how successful it's been in circumventing banks to give the poorest of the poor easy access to money.

It all kicked off in Bangladesh, big in South Asia. In India now, though, the system is on the verge of collapse. Coming up, we're going to have a -- a report from there and a look at whether the problem is in the model itself or just with a few aggressive lenders.

Well, that's coming up in the next hour here on CNN.

Still to come this hour, opting out of opting out -- does a -- a national day of protest against full body scans in U.S. airports find its wings?

We're going to have that story for you.

And if you think humans are the only species who can hold an intelligent conversation, well, think again. Part three of our Smart Animals special series for you is still to come.

Stay with us.



KAREN BUBB, PLANE PASSENGER: She had me raise my shirt up and she stuck her hand into my pants and went around my back...

UNIDENTIFIED FEMALE: Outside the underwear?

BUBB: Outside, but inside my pants, but just along my underwear line with her hand, inside the back of my pants. And then she did it to the front. She had me raise my blouse, stuck her hand down in my pants and went all the way around.


ANDERSON: Crucial security or an unnecessary invasion of privacy?

Well, anger over tougher airport checks is reaching the boiling point in the United States. New full body scanners are particularly controversial and denounced by critics as nothing more than security theater. In a fight to have the technology scrapped, the group We Won't Fly called for a day of national protest today. Travelers were urged to refuse the new scans Wednesday in favor of more time consuming pat-downs.

Well, mass delays were anticipated. But instead, it was the protest that failed to get off the ground.


NANCY LOO, CNN CORRESPONDENT: After all the hype over National Opt Out Day, it seems to have little or no support. And that has travelers relieved and pleasantly surprised.

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: This is amazing. This is supposed to be the busiest or one of the busiest travel days in the United States. And look behind me. There is virtually nobody waiting here to go through security at Reagan National Airport.

TERRY MCSWEENEY, CNN CORRESPONDENT: The rebellion has not started, at least not here, at San Francisco International Airport. All is very calm, very orderly. And to tell you the truth, to this point, at this terminal, it looks like just about any other day.


ANDERSON: Well, a lot of fuss has been made about airport security, hasn't it, in the US?

But in other parts of the world, the checks are much tougher.

Let's get a -- a quick trip to India, Israel and Germany for you.

First, though, we're going to start off in Iraq with Arwa Damon.



Now, this being a war zone means that security at the airport, where we're not allowed to film, is naturally very tight. But to give you an idea of what the average person goes through, before you even get anywhere near the terminal is the first checkpoint. Everybody out of the vehicles, including the luggage.

The bomb sniffing dog comes through. And then the first body search - - all over, full contour, at times, fairly intrusive.

By the time the average person has actually boarded their flight, in total, they would have gone through two bomb sniffing dogs, four x-ray machines and three full body searches. It's a process that can take hours.

But that being said, there have been very few security breaches at Baghdad's international airport itself.

PAULA HANCOCKS, CNN CORRESPONDENT: I'm Paula Hancocks in Jerusalem.

Israel has a very different approach when it comes to airport security than other countries. It has all the latest technology and the sophisticated machinery, but here, the human element is key. Pretty much every passenger will be questioned, sometimes by more than one security officer, and some are strip searched. And no matter how distasteful it may be to civil liberties groups, Israel actively profiles passengers and makes no apology for it.


NERI YARKONI, FORMER HEAD, ISRAELI CIVIL AVIATION ADMINISTRATION: You should profile. If you don't profile, you waste -- you waste time, you waste money and you might miss what you're looking for because you're searching for it on the wrong people.


HANCOCKS: Yarkoni says that behavior, intelligence gathering and statistics have to be taken into account, as well as race. But there have been plenty of accusations of racism from Arabs and Muslims, who say they found themselves on the wrong side of profiling.

Another difference here, you won't have to take your shoes off as standard and you won't have to give up your bottle of water at security.

MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT: I'm Mallika Kapur in Hyderabad, a city in Southern India.

We can't show you inside the airport or anywhere close to it because of security concerns. Security at Indian airports is tight. Just to enter the airport, you need to produce a printout of your travel documents plus a photo I.D. Once done with checking in, passengers have to form two lines for security -- one for men, one for women and children.

For hand baggage, the usual rules apply -- no sharp objects, no liquids. In fact, here in India, you're not even allowed to carry ordinary battery cells.

Regarding personal security, passengers are first frisked by a handheld device. Pat-downs occur sometimes, but to be honest, that's really quite rare.


Now, in this country, when you go through security, you have to take off anything metallic then go through the x-ray scanners. You go through a gate scanner and if you beep -- and even sometimes if you don't -- you'll get the once over with one of those wands. Nothing as intimate as is going on right now in the United States.

There is only one body scanner in this country in use at the moment. That's in a test phase in Hamburg. But already, there have been various complaints about the fact that it seems to set off a lot of false alarms, that there are long cues in front of that body scanner. People also are calling it a naked scanner, calling it, also, a violation of people's privacy.


ANDERSON: Diana Magnay closing those reports out on airport security for you around the world.

As North Korea accuses the South of pushing to the brink of war, we're going to speak to a man who has spent time in the U.S. government and believes that Seoul bears some of the blame.

Plus, my colleague, Anderson Cooper, attempts to talk to the animals as he meets two very brainy great apes.


ANDERSON: Well, they say animals do the funniest things.

But are they more intelligent than we give them credit for?

Well, that is the question that we've been asking all week, as we have taken a look -- or are taking a look at the big brains of the animal kingdom.

On Monday, we showed you how a simple mirror can provide a window into the minds of dolphins, one of the only species to be able to recognize their own image, bringing them closer to humans than you might think.

And yesterday, we saw how lemurs are at the top of the class when it comes to maps and revealed how their knack for numbers help us to understand our own way of thinking.

Well, humans -- us humans already have a lot in common with great apes. We share more than 95 percent of our DNA with them.

But do we also share the ability to communicate?

Well, Anderson Cooper put that to the test as he went to meet a pair of bonobos, one of the lesser known great apes.

Take a look at this.


ANDERSON COOPER, CNN ANCHOR (voice-over): Meet Kanzi and his younger half-sister, Panbanisha. They're bonobos -- cousins to the chimpanzee and an endangered species. Kanzi and Panbanisha are also superstars in the world of science.


COOPER: Some scientists believe they can understand spoken English and can communicate by pointing and gesturing.

SAVAGE-RUMBAUGH: Let's show Sue peanuts.


COOPER: Dr. Sue Savage-Rumbaugh discovered Kanzi's capabilities nearly three decades ago and since then, has dedicated her life to studying how early and constant exposure impacts language development. To do that, she's created a culture here at the Great Ape Trust in Des Moines, Iowa that's both human and bonobo. She spends nearly 24 hours a day, seven days a week, interacting with the species.

SAVAGE-RUMBAUGH: It is truly a humbling experience, because I have, throughout my life, been like a skeptic. And for many years, even now, I have underestimated them.

Show me egg.



COOPER: As Kanzi's language comprehension grew, so did this. It's called a lexigram board. Each lexigram represents a word -- objects like Jell-O and ball, verbs like want and drink and the abstract, like good and bad, tomorrow and yesterday. There are 400 words on the board.

SAVAGE-RUMBAUGH: Can you touch your hand now, Kanzi?

COOPER: When I come face-to-face with Kanzi and Panbanisha, we're separated by glass for my own safety. Bonobos are amazingly strong -- at least five times more powerful than the average adult male.


SAVAGE-RUMBAUGH: He said ball.

Did you see him say ball, Anderson?

COOPER (on camera): Yes.

SAVAGE-RUMBAUGH: You can ask him. If you didn't see it, you can ask him to say it again.

COOPER: Where's the ball?

SAVAGE-RUMBAUGH: Show him again.

COOPER: Where's the ball?

That one?

(voice-over): Immediately, Kanzi gets down to business.

(on camera): Am I going to look out there?

(voice-over): I've been told that bonobos had asked that I bring surprises when they learned I was coming to visit. They wanted, among other things, a ball and pine needles.

SAVAGE-RUMBAUGH: Are you ready?

Are you ready?


COOPER: Once Kanzi is content with his ball, Panbanisha points to pine needles on her lexigram board.

(on camera): Clearly, you know, some people will see this and say that you're projecting onto them, that you're interpreting things they say and, you know, they -- they make a sound and you say, oh, well, this means that.

Is that a fair criticism?

SAVAGE-RUMBAUGH: It's a fair criticism until I can show what every single sound means. But it's not a fair criticism when it comes to the lexigrams. I can say the English word and they can find the photo -- even a novel photo they've never seen. And they can find the lexigram on their keyboard.

So while I haven't yet penetrated their sound system, I have penetrated their cognitive system.

COOPER (voice-over): Bonobos are found only in the Democratic Republic of the Congo, where ongoing violence threatens their existence. Conservation International says there are only about 5,000 bonobos left in the wild.

SAVAGE-RUMBAUGH: We can solve a lot of -- a lot of puzzles about ourselves by looking at bonobos as they exist now. And if we wipe them out, those answers are lost to us forever.

COOPER: Anderson Cooper, CNN.


ANDERSON: Well, and you can find out more about the bonobos and the work of the Great Ape Trust by heading to our Facebook page. That is Sign up if you're not already a fan.

Tomorrow, while the chimpanzee may be the closest animal to man, it's man's best friend who knows us the very best. We're going to discover how humans are only starting to unlock the secrets of the canine mind now.

Also tonight, the U.S. sends a warship to the Korean Peninsula -- a show of military might meant to deter any more aggressiveness from Pyongyang. We're going to have new details about Tuesday's deadly attack on a South Korean island right after this very short break.

do stay with us.


ANDERSON: At just before half past nine, you are back with CONNECT THE WORLD out of London.

I'm Becky Anderson.

Coming up, a definitive military provocation or a definite one, at least. South Korea reacts to the North's deadly attacks on one of its islands, as a U.S. naval ship heads in for war games.

Helping India's poor out of poverty -- we'll take a look at the double-edged sword of micro credit.

And some beautiful noise -- Neil Diamond has been delighting audiences for nearly 50 years and he's still got more to give. The man dubbed "the Jewish Elvis" joins us as your Reconnector of the Day this evening.

In the next 30 minutes for you, those stories are ahead.

Let's, though, first, as ever, at this point, get you a quick check of the headlines here on CNN.

Well, a small group of protesters lashed out against Ireland's newly announced austerity measures. A four year recovery plan involves new property taxes and reducing the minimum wage. The cuts are meant to save $20 billion.

Well, hundreds of students packed into Central London to protest the British government's plan to hike tuition fees. At one point, the demonstrators swarmed around a police van. Students also protested in Lee, in Cambridge and in Birmingham.

One protester was killed and dozens were we needed when Coptic Christians and police battled in Cairo. The clashes erupted after Egyptian authorities blocked the construction of a new Coptic Christian China.

And a heartbreaking conclusion to days of waiting in New Zealand. The official in charge says no one survived a second explosion on Wednesday in the Pike River Coal Mine. An explosion Friday trapped 29 men.

Why don't we get you an update now on the attack that's taken longstanding hostilities between the Koreas to a threatening new level?

South Korean rescuers are reporting the first civilian deaths on the island hit by North Korean artillery shells. Now, they say they found two burned bodies at a construction site, raising the death toll from Tuesday's attack to four.

As Stan Grant now reports, many residents have now fled, no longer feeling safe so close to a disputed maritime border.


STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): They'd survived a deadly attack on their island, now plunged into the middle of a media frenzy. Hundreds of evacuees pouring onto the port of Incheon.

The young, the old, the frail, some carried on stretchers to waiting ambulances. All share a similar tale of terror.

"It's a mess," this woman says. "There's nothing left. All the stores are blown up, glass shattered. All of it, just disappeared in no time."

Some had seen their homes destroyed, lost their possessions, as North Korea rained down shells onto Yeonpyeong Island. South Korea returned fire. For over an hour, an armistice of more than 50 years was shattered. Buildings ablaze, smoke billowing into the sky.

For some, the island can never truly be home again.

GRANT (on camera): Do you feel that you want to go back to your island? Will you feel safe on your island again?

UNIDENTIFIED MALE (through translator): A large number of villagers are thinking of leaving Yeonpyeong Island. This experience was just too shocking, too threatening.

GRANT (on camera): Do you think that this has taken the tension between the two countries to a new level, that relations now are the worst period?

UNIDENTIFIED MALE (through translator): I think this situation is at its extreme. In reality, what we experienced was much graver than what you see on TV.

GRANT (voice-over): The South Korean military is on full alert. President Lee Myung Bak threatening a, quote, "enormous retaliation." Next week, it will hold joint military exercises with the United States, a show of military might designed to send a warning to Pyongyang.

KIM TAE-YOUNG, DEFENSE MINISTER, SOUTH KOREA (through translator): The fact that they have indiscriminately fired upon a defenseless civilian zone was a brutally inhumane action, an illegal and intentional action against the UN constitution and the armistice between the North and South Korea.

GRANT (voice-over): North Korea also ratcheting up the rhetoric, warning of a merciless military confrontation. South Korea leaving no doubt how serious this situation is, talking of wartime aid being shipped to those left stranded and without electricity on the island.

GRANT (on camera): This is different to past provocations. This is different to past flashpoints on the Korean peninsula. Now, we're seeing an attack on South Korean soil, and these people, civilians, caught in the crossfire. Stan Grant, CNN, Incheon, South Korea.


ANDERSON: Well, Stan just mentioned past provocations. We've seen many from North Korea before. Experts believe Pyongyang uses military attacks to try and force international concessions on everything from easing sanctions to securing more food aid. The US government, for one, says it won't be bullied into anything.


PJ CROWLEY, US STATE DEPARTMENT SPOKESMAN: We will not be drawn into rewarding North Korea for bad behavior. They frequently anticipate doing something outrageous or provocative and forcing us to jump through hoops as a result, and we're not going to buy into this cycle.


ANDERSON: All right. Well, our next guest says Washington often sees acts of aggression from Pyongyang as unprovoked bolts out of the blue, he says. But he also says that's far from the whole story. Leon Sigal has worked for the US State Department and is the author of "Nuclear Diplomacy With North Korea." He joins us, now, from New York.

Leon, is it right that you say that South Korea should actually share the blame, somewhat, for the situation we're seeing right now?

LEON SIGAL, SOCIAL SCIENCE RESEARCH COUNCIL: Well, look. The first thing is that the North Koreans did what they did, and sharing the blame -- the issue is that the South Korean government came in in 2007 determined to show the North Koreans who's boss. And the problem with that is that this is North Korea's game. Unfortunately, they're brutally good at it.

And so, where -- I wouldn't say share the blame, I would just simply say they did things that made these kinds of incidents more likely.

ANDERSON: Do you think that -- let me just stop you there for a moment.

SIGAL: Sure.

ANDERSON: Do you think the way that Washington, for example, then, is reacting to what's going on at present is wrong?

SIGAL: No. Look, Washington to has to stand by its ally. That's the first thing. You have to reassure South Korea to try to calm things down. But we have to think of this as a two-step process, and we've got to keep open the key to trying to get our way out of this. And that is to get back to negotiations.

You're not going to do that right away. The first step is to reassure the South. But at some point, the only way out of this fix is negotiations. And it's negotiations on two fronts.

One is, we need a peace process on the Korean peninsula. The six party talks actually have an -- there was an agreement. South Korea was part of it.


SIGAL: So was North Korea. That there would be a peace process on the Korean peninsula. The North and South actually signed a very useful summit agreement back in 2007 that actually had a provision that might have worked to calm things down in the Yellow Sea. It provided for a joint fishing area and naval confidence building measures.

Unfortunately, the South actually walked back from that. Obviously, we don't know what the -- whether the North would have gone forward but, unfortunately, the South walked back.

ANDERSON: All right, let me ask you this. Is the Barack Obama administration, to your mind, doing anything differently with Seoul, on the one hand, and its attitude towards Pyongyang on the other, that the Bush administration didn't do?

SIGAL: Well, at this point, no. But I think the attitudes are different. There are no hard-liners in this administration, it's a little different problem.

Here, it's a matter of some people think it is too hard to get negotiations going politically, and they don't expect that they'll get anywhere, and others think there's no other option but to try. And that has kept things -- the big thing was, we were letting Seoul take the lead and, unfortunately, that has not helped.

ANDERSON: Yes, all right. But what's the solution here. If the world engages, for example, with North Korea, don't you think that that sends a message, somewhat, that irresponsible behavior will be rewarded rather than punished?

SIGAL: That's the usual argument, and the answer is, notice what's happened. We've spent two years trying to pressure the North into behaving better through a combination of sanctions and basically had only one round of talks, with basically the same thing that the Bush administration did. One round of talks in 19 months.

And look what's happened. We've got an enrichment program. So, obviously, they were able to go around the sanctions. In fact, they say they did it because of the sanctions. You can believe them or not believe them.

So, clearly, the current policy isn't working. Now, this is a very difficult time to begin to change policy, so we're doing the first step, which is reassuring the South. But we have to bring South Korea along and try to get negotiations. After all, peace process on the Korean peninsula directly involves South Korea and must and should and will.

And the nuclear negotiations have to involve other parties than just the United States and, most importantly, South Korea. So this will have to -- we can't take too much time, because clearly the North Koreans are prepared for more provocations.

But we have to understand the only way out of this box is to see whether North Korea means what it says when it wants the United States to change relations with it -- with them. And that will allow them to take steps to stop and maybe roll back their nuclear programs.

We don't know for sure, that's what they're saying, and we have to see whether that works.

ANDERSON: Yes, fascinating stuff. Leon, thank you, very much, indeed, for joining us. Your expert on the subject tonight. And a different take than that which, perhaps, you've seeing in the media or reading in the media. Leon, there, with the story.

Watch this space, because we've just heard this from our Senior White House Correspondent, Ed Henry, US president Obama will be calling President Hu Jintao of China in the next few days to discuss North Korea.

Now, that comes as various officials, including Joint Chiefs of Staff chairman Admiral Mike Mullen, says that China talking to North Korea is the key to resolving the crisis.

Still ahead, it was once heralded as one of the most promising ways to lift people out of poverty, but the world of microfinance is now coming under the microscope itself after suicides in India were linked to borrowers' inability to repay their loans. That story, up next.


ANDERSON: This is CONNECT THE WORLD, I'm Becky Anderson in London for you, now. "Little loans, big trouble." That is one of the recent headlines about a microfinance crisis in India. The industry is meant to empower poor people by giving them small loans, but one state is accusing lenders of exploiting the system to make huge profits, and it's encouraging borrowers not to repay them.

Mallika Kapur kicking us off this part of the show, looking at how desperation over mounting debt may have led to dozens of suicides.


MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT (voice-over): A pledge, to use the money honorably. That's typically how India's 70 million borrowers take on a small loan from microfinancial institutions, or MFIs, which are concentrated mostly in the southern state of Andhra Pradesh.

Bara Leshme (ph) borrowed money to buy a buffalo, but decided instead to finish constructing her home. "I now have to pay back about 750 rupees every week," she says. That's about $18, far more than what she earns as a laborer and her husband as a cobbler. Others resort to a different tactic.

KAPUR (on camera): To pay off that initial loan from a microfinance institution, may people here in this village in South India say they've had to take on a second loan, even a third, quite often from unofficial sources like neighbors or the local moneylender.

KAPUR (voice-over): This farmer has taken five soft loans. "I have no choice," he says. "If I don't pay back, I lose face, and others in the village will be angry."

The pressure to pay back is reportedly responsible for a spate of suicides in Andhra Pradesh. Now, in an unprecedented move, the local government is telling thousands of villagers not to pay MFIs back. Last month, it tightened rules governing microlending to protect borrowers, it says, from private companies charging the poor extraordinary interest rates to make huge profits. MFIs typically charge higher rates than banks to cover their administrative costs.

VIJAY MAHAJAN, PRESIDENT, MICROFINANCE INSTITUTIONS NETWORK: Some of them also have had extra normal profits. But the sector as a whole cannot be called either greedy or irresponsible.

What this ordinance has done, it has taken two or three outliers and, using their behavior as the excuse, it has shut down or nearly shut down the entire sector, which was helping something like 7 million households in just Andhra Pradesh.

KAPUR (voice-over): A slowdown in microfinance could end up hurting India's banks, which fund part of the $8 billion tied up in microfinance. Economists say India's economy can absorb it.

BB BHATTACHARYA, VICE-CHANCELLOR, JAWAHARIAL NEHRU UNIVERSITY: This is a tiny bubble compared to the US subprime crisis, which is a staggering amount, a couple of billion dollars of loan. This is just nothing.

KAPUR (voice-over): Nothing for India's robust banking sector, but everything for millions of Indians, for whom a loan is the only way to get a shot at a livelihood. Mallika Kapur, CNN, Palakonda, South India.


ANDERSON: All right. Well, people in India and other South Asian countries do make up the lion's share of those taking advantage of this form of lending. The Microfinance Information Exchange, or the MIX, as it's known, is a non-profit group that tracks the industry.

Now, it found that by the end of last year, there were nearly 44.5 million borrowers in that region. That is more than half of all globally. MIX says the average balance carried was around $912.

East Asia and the Pacific region were a distant second with just over 14.5 million borrowers with an average balance of just under $700.

Latin America had about the same number of people taking advantage of microfinancing, but that average balance is much higher, more than $1300.

While the East Europe -- while Eastern Europe Central Asian region only has about 3 million borrowers, but on average, they hold more than $4000 each.

So, you can see it's a global industry. The promise of microfinance was given a global platform in 2006 when economist Mohammed Yunus won the Nobel Peace Prize. His idea was simple. Give the poorest of the poor access to credit to help them build small businesses that will, in turn, help build better lives.

Yunus believes microfinance should be non-profit yet, in many cases, that is not what we are seeing today. In fact, the former governor of India's Central Bank says, "To understand microfinance, you need to look at incentives."

YV Reddy says, and I quote, "If it's for profit and if there is aggressive lending, then it's just money lending. Ultimately, it's something like subprime lending," he says.

Well, we all know how the subprime fiasco ended up, so is there also a fundamental flaw in the microfinance model, or is it even fair to compare the two? Let's bring in an expert for you. Mary Ellen Iskenderian is the president and CEO of Women's World Banking, the world's largest network of microfinance institutions.

Mary Ellen, hundreds of people defaulting in England -- in India. It's being compared to the subprime crisis. That was a sort of domino effect, as we know, that could affect the entire system, one assumes. Do you buy that argument?

MARY ELLEN ISKENDERIAN, PRESIDENT, WOMEN'S WORLD BANKING: I would certainly agree with one of the earlier speakers. This is nothing in comparison with the tragedy of the US subprime crisis.

The business model of microfinance remains very strong, and that is because microfinance is really predicated on knowing your client and knowing what the client's needs are. And that's really been a hallmark of the microfinance industry worldwide.

ANDERSON: Well, I've interviewed Mohammed Yunus a number of times. He's a super fellow. He always says, time and time again, "This is about non-profit. This is not for profit." What we are seeing around the world, and let's remind our viewers, that this is a global industry. It's prevalent in South Asia, but we see it in Arkansas in the US, for example.

This is a global industry where -- you say the model isn't flawed. But surely, when we see people going for profit and we see, effectively, sharks, moneylenders in the business these days, it has to be flawed, doesn't it?

ISKENDERIAN: I would really question some of those assumptions. First of all, you're absolutely right, it is a global industry. But what is still really shocking given all of the highlight and the incredible spotlight that was shown on microfinance when Yunus won the Nobel is that there are still only 150 million borrowers worldwide.

And it is my profound belief that there is just not enough donor capital -- capital from foundations or from governments that could really fuel the kind of scale that is really probably closer to two billion people who would be eligible for microfinance.

If you think of 70 percent of the Chinese population and the remainder of the Indian population alone, that's two billion people. And so, commercial capital has a very important role to play in bringing this sector to scale.

ANDERSON: If you were asked for a solution and a message to the world, what would it be at this point?

ISKENDERIAN: I think we can actually find a very good example of a quote-unquote "solution" in India. There's an organization in part of the Women's World Banking network, Sanwa Bank, that went the extra step in microfinance and actually is a regulated bank.

And today, it has -- and I think, what I'm about to say I think really is the silver bullet -- they have more than three times as many savers as they do borrowers. And saving is such a critical piece of the development of this sector, both for the individuals, the households who have the safety net of a savings account, but also for the microfinance institutions, who can rely on their savings to lend and not be so dependent on foreign lending or bank lending.

ANDERSON: It's a model that the big banks around the world might -- well, certainly would like to follow. They wish they could at this point. None of us have got any savings. But I take your point, and you make it very well, and we're going to leave it there. I've got to take a commercial break. We thank you very much, indeed, for joining us. Your expert, there, on the subject this evening.

Next up, one of our favorite Connectors of the Day dubbed the Jewish Elvis. Neil Diamond has a fascinating tale about his rise to stardom. Find out how a shy young man became one of the world's greatest entertainers.


ANDERSON: No matter where you are in the world and no matter what language you listen to music in, chances are, the tunes of our re-Connector of the Day today, as I'm going to call him, have touched you. Here he is, a true music gem.


(MUSIC - "Ain't No Sunshine")

BECKY ANDERSON, CNN HOST (voice-over): Legendary singer/songwriter Neil Diamond has been delighting audiences for nearly 50 years.

DICK CLARK, HOST, "AMERICAN BANDSTAND": Ladies and gentlemen, Mr. Neil Diamond.


(MUSIC - "Cherry Cherry")

ANDERSON (voice-over): Often referred to as "the Jewish Elvis," Diamond has earned 36 Top 40 hits for songs such as "Sweet Caroline" and "Song Sung Blue."

(MUSIC - "Sweet Caroline")

(MUSIC - "Pretty Amazing Grace")

ANDERSON (voice-over): Over the last four decades, Diamond's been nominated for 12 Grammys and sold more than 115 million albums worldwide. And today, the musical legend is still touring the world, with concerts that draw millions of fans, many of whom sing along to the great classics.

(MUSIC - "I'm a Believer")

ANDERSON (voice-over): Last month, he released his latest album, entitled "Dreams," a string of interpretations from his favorite songs by other rock artists. He talked to me about this new format and his choice to try it out.

NEIL DIAMOND, SINGER: It's kind of a dream album for me because I get a chance to record some of my all-time favorite songs from the rock era, and I'm excited to hear what people think of it.

ANDERSON (on camera): Oh, well, let me tell you, you'll hear from them. We've had hundreds of viewers asking when the next tour starts and where it'll be. So, can you fill us in?

DIAMOND: Yes, well we start to tour Australia, New Zealand, and South Africa in February and March, and I'm looking forward to that. And we'll see what happens beyond that. If they don't throw tomatoes, we'll continue the tour.


ANDERSON: I'm sure they won't. Listen, your hits came during the 70s, the 80s, and the 90s, didn't they? And you say you've really enjoyed this last album. You still command huge audiences. To what do you attribute that staying power, Neil?

DIAMOND: Luck and the fact that I refuse to go away.


ANDERSON: Let me get to some of the viewer questions, here, and not hog this interview. It's their part of the show. Hitoshi is a fan from Japan and says, "You once revealed that 'Sweet Caroline' was about Caroline Kennedy. Can you tell us about that?

DIAMOND: Yes, of course. Well, it wasn't about Caroline Kennedy, but the name was inspired by Caroline Kennedy's name, which was, in the 60s, not a usual name. It was kind of unusual and I remember writing it down when I saw a photo of Caroline Kennedy. She was a little girl, and I thought that name someday should be in a song.

I happened to be in Nashville -- actually, it was Memphis in the late 60s and I needed a song for the next day's recording session, and "Caroline" came out, and that's what it was. It was a "Sweet Caroline" song, and it's been sweet for me ever since.

ANDERSON: If it wasn't inspired by Caroline Kennedy, who was it for?

DIAMOND: It was inspired by the moment. You know, necessity is the mother of invention, and I needed a song, and it was sitting in the back of my mind for years, the title. And why it was written, I don't know. Only God knows that.

ANDERSON: Tom in Brazil says, "Is there a singer from the past that you wish you might have made a song with?"

DIAMOND: Well, I've been lucky, I've had Elvis record my music and Frank Sinatra, Waylon Jennings and Johnny Cash, some of my all-time favorites, even my high school buddy Barbara Streisand recorded one of my songs. So, yeah, I guess maybe if I had the chance, Billie Holiday, I would've loved to have Louis Armstrong do one of my songs. I love --

ANDERSON: The Lady Gagas of this world?

DIAMOND: Of course, as long as I don't have to dress like she does.


ANDERSON: Barb is a fan in the States. She says, "If you could sit down to dinner with one person, Neil, living or dead, who would it be?"

DIAMOND: I'd have to say George Gershwin. He was one of the most brilliant writers of the 20th century, so I would have to pick his brain and find out where and what his modus operandi was in writing.


ANDERSON: Neil Diamond for you. I could go on listening to him for hours. Well, we're going to bring you another of our favorite Connectors tomorrow night. She was once declared by "Forbes" magazine as the most powerful woman in the world. In a candid interview, former US Secretary of State Condoleezza Rice told me where she went wrong in Iraq.

For more on our great lineup of Connectors, do head to the website,, you know where to find us. Lots of really good stuff for you there.

I'm Becky Anderson, and we'll leave you with this traditional Thanksgiving pardon given to a turkey or two by the President of the United States.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: As president of the United States, you are hereby pardoned.


ANDERSON: Barack Obama today sparing Apple and Cider from what he described as a shellacking. The birds join a long line of turkeys that have been spared the fate of Thanksgiving buffet center plates around the world.

That is your world connected this evening. The headlines and "BackStory" are next, right after this short break.