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NEWS STREAM

Greek Aid Referendum; Hackers Threaten Mexican Drug Cartel?; Thailand's Flood Crisis; NATO Cargo Drivers Risk Lives To Reach Outposts in Afghanistan; Cyberspace New Battlefront in International Conflicts

Aired November 01, 2011 - 08:00   ET

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

ANNA COREN, HOST: Welcome to NEWS STREAM, where news and technology meet.

Hello. I'm Anna Coren, in Hong Kong.

We begin in Greece. The prime minister's call for a referendum on the country's bailout deal sending European markets sharply lower.

We'll tell you why the anonymous hacking group may be targeting a Mexican drug cartel.

The FBI lifts the lid on a Russian spy ring in the U.S., releasing video on the spies in action.

And two Pakistani cricketers have been found guilty in their match 16 (ph) trial. We'll have a live report right here on NEWS STREAM.

Well, just days after fanfare greeted EU leaders as they agreed to a European debt deal, a new and rather dark shadow has been cast over the eurozone. Well, late on Monday, Greek Prime Minister George Papandreou announced a national referendum allowing the public to decide whether to accept the latest bailout deal.

Well, if Greece returns a no vote -- and a weekend survey found that 60 percent are against the plan -- it could throw the eurozone into yet more turmoil. And the effects of that would be felt around the globe.

This is how things stand in Europe at the moment. And as we can see, we're seeing some fairly hefty losses across the board. And that follows losses in Asia and comes with U.S. futures pointing to a significantly lower open.

The move comes as a surprise and could threaten the entire European debt crisis deal. That deal was hailed as a way to contain the crisis in Greece and prevent it from spreading to fellow eurozone nations.

Part of it was a reduction of Greece's debt burden with a writedown of as much as 60 percent. Well, in return, Greece would get $138 billion of aid to help tackle its ballooning debt, but there is more. EU leaders also agreed to quadruple the firepower of the bailout fund to nearly $1.4 trillion, and raised capital could (INAUDIBLE) banks from further financial shocks.

Well, the announcement of a planned referendum is already unsettling stock markets. Senior economist to HSBC, Frederic Neumann, says it has opened a can of worms.

It's not confirmed when the referendum would be held, but media reports in Greece suggest it could be in January.

Joining us live from Athens to discuss this latest drama is Elinda Labropoulou.

And Elinda, this is a major gamble for Papandreou and for Greece. Why is the prime minister doing this?

ELINDA LABROPOULOU, JOURNALIST: Well, he's decided to hold this referendum because, as he said, his government doesn't have the support at the moment to implement the measures that the new EU bailout foresees. And this has become more and more obvious after the EU summit, with opinion polls showing that about three in five Greeks are not supporting the new bailout.

There has also been public unrest, with protesters disrupting public events only a day after the EU summit, after the new deal was announced. And on top of that, the unions are threatening with more mobilization.

So, what the prime minister in Greece is saying is that unless he can have the people's support backing him on this, he's probably not going to be able to push forward the necessary reforms that Greece's lenders need. And this is why he felt that it was necessary to call this referendum.

Of course, analysts are saying this is one way for the government to sort of divert -- remove the pressure, rather, from the government and leave the decision of what comes next to the Greek people.

COREN: But Elinda, what does this mean for the prime minister? Because as you mentioned, a majority of Greeks, they do not want this deal. Sixty percent say no in a weekend survey. If it comes back a no vote, you would assume there would then be a vote of no confidence in government, and then that would trigger early elections. So what's in it for Papandreou?

LABROPOULOU: Well, that's quite right. To begin with, he has asked for a confidence vote which is going to take place this week, on Friday, almost certainly. And the procedures begin tomorrow, ahead of that.

So, we start with that, and then the details are going to be ironed out of what the new deal with the EU exactly means. And from there on, then we head to a referendum. As you said, the truth is that if it is a no vote, it means that Papandreou at least has to step down, and then the country will certainly go into early elections.

At the moment, what seems to be at stake, it basically seems that it's the only thing that Papandreou has left to do. If he is going to be able to push through any measures, he has to have some support, which he now clearly lacks. So, this is his last card, if you like, before either having to call an early election earlier, stepping down at this point, or waiting for the referendum.

COREN: OK.

Elinda Labropoulou, in Athens.

We certainly appreciate that update. Thank you.

Well, of course Greece is in the spotlight, but depending on the way the referendum goes, actions could be felt around the world.

With more on the wider view, let's go to our Felicia Taylor, who joins us from London.

Felicia, much of the world thought this was a done deal. Now we may not have a vote until January. This means more months of uncertainty. And as we're seeing today, the markets do not like what they're hearing.

FELICIA TAYLOR, CNN BUSINESS CORRESPONDENT: Absolutely right. I mean, what this does is put us back to where we were before all the negotiations that went on in Brussels last week. It's as though the EU leaders didn't arrive at any kind of a deal at all. And from the market perspective, as you said, this puts uncertainty back into place, and that's exactly what the markets don't want to feel. I mean, the ripple effect was immediate and swift and strong.

(STOCK MARKET REPORT)

COREN: Felicia, as you say, the stock markets have been smashed, bank stocks in particular. What has been the reaction from the eurozone leaders? In particular, Germany's Angela Merkel and France's Sarkozy?

TAYLOR: I don't know that we've actually heard from them directly yet, but certainly they would have disappointment that Papandreou could come out all of a sudden and decide that he could put a question to the people as to whether or not the bailout plan was a done deal. Everybody has assumed that he would automatically accept this bailout plan because there really was no choice.

I mean, the question of tax increases, the austerity measures, the public sector job cuts, I mean, we all know that the public in Greece isn't going to be a fan of those things. But nevertheless, in order to save the country and keep it part of the eurozone, they had to take on and accept the responsibility of the predicament that they're in.

Already, Greek bondholders have been accepting a 50 percent haircut. Some people were looking for even more. If this referendum isn't approved, you bet that we're going to have to go back to the drawing table and possibly take even further writedowns. And again, that's what bondholders of Greek debt certainly don't want to be facing in the weeks and months to come.

COREN: Yes, it's quite amazing, isn't it?

All right. Felicia Taylor, joining us from London for a change.

Good to see you. Thank you for that.

Well, stay tuned to CNN for "WORLD BUSINESS TODAY" with much more on the European debt crisis and how this Greek referendum is being viewed in business circles, and of course reaction on the world stock market. That is at the top of the hour with Charles Hodson in London and Maggie Lake in New York.

Well, anyone who dares take on Mexico's notoriously violent drug cartels knows that reprisals could include kidnapping, torture, and even death.

But Fionnuala Sweeney reports in a new video, a group claiming to be a global hacker ring threatens to expose one of the most feared drug cartels in all of Mexico.

(BEGIN VIDEOTAPE)

FIONNUALA SWEENEY, CNN INTERNATIONAL CORRESPONDENT (voice-over): A YouTube video apparently from the international hacker ring Anonymous. This time, the message, a threat to a Mexican drug cartel.

Posted on October 6th, it claims the Zetas, a notoriously violent drug gang, kidnapped an Anonymous member in the Mexican state of Veracruz.

UNIDENTIFIED MALE: We demand his release.

SWEENEY: The video message was uploaded in both English and Spanish, and warns that the names, photographs, and addresses of cartel supporters can be published, if necessary. CNN has reached out to a contact within Anonymous who wasn't able to verify its authenticity. However, Scott Stewart, vice president for tactical intelligence for the think tank STRATFOR, says the video appears authentic.

SCOTT STEWART, VICE PRESIDENT, TACTICAL INTELLIGENCE, STRATFOR: For example, we saw Anonymous release videos in August, on the 19th and the 26th, and they also did a number of leaflet drops throughout the city, where they would go around and pin leaflets in public places around Veracruz, charging the Veracruz government of being involved in supporting narcotics smuggling.

SWEENEY: The hacking group is known for online attacks against banks and government institutions. They claim to be part of the U.S. Occupy Wall Street and Occupy Together movements, and sympathetic to WikiLeaks. But the messages are sometimes inconsistent.

STEWART: We still have conflicting reports to whether or not there was a kidnapping. We had one alleged Anonymous person saying that it was just a hoax. Other people have said that there is a person that was kidnapped, and they're upset about it.

UNIDENTIFIED MALE: You made a huge mistake by taking one of us. Release him. And if anything happens to him, you will always remember this upcoming November 5th.

SWEENEY: November 5th is Guy Fawkes Day. He was a 17th century British anarchist, and the group is known to wear Guy Fawkes masks to hide their identity.

But as social media becomes an increasingly common battleground in Mexico's drug war, intelligence groups say viral videos may fuel the Zetas to do more of their hacking in real life.

STEWART: Even if they don't have this person currently in custody, I would not be surprised if they would not go out and look for members of Anonymous. This kind of cyber vigilantism we see from Anonymous really seems to be tapping a nerve with the people of Veracruz, and perhaps it will even spread beyond Veracruz to the rest of Mexico.

SWEENEY: Fionnuala Sweeney, CNN, Atlanta.

(END VIDEOTAPE)

COREN: Well, still ahead on NEWS STREAM, waiting for the floodwaters to recede. Hundreds of people camping out in Bangkok's domestic airport face increasingly dire conditions.

Plus, spying on the spies. U.S. authorities release previously secret footage of Anna Chapman and other alleged Russian spies.

And we take you to Karachi, Pakistan, where one of the world's most dangerous supply routes begins.

(COMMERCIAL BREAK)

COREN: Well, Thailand's floodwaters have taken over several districts in the capital. Tens of thousands of people in Bangkok have been forced to abandon their homes. Some of them have found safe haven at the capital's domestic airport. But, as John Sparks reports, conditions there are becoming unbearable.

(BEGIN VIDEOTAPE)

JOHN SPARKS, REPORTER, CHANNEL 4 NEWS (voice-over): They left in a hurry. No, not the passengers, but government ministers and officials.

Don Muang Airport hosted Thailand's flood response unit and a huge evacuation center, but on the weekend, those who could got out. Today, we went to see what they left behind. Not a simple trip. The waters here are five feet deep and rising.

We found hundreds of people camped out in the departures hall, evacuees from neighboring districts. And it was dark and smelly and very hot.

UNIDENTIFIED MALE (through translator): When the water went into the power room, they cut the electricity. It's really difficult now. You walk into each other in the dark. It's difficult to get to the toilet.

SPARKS: The government has told this group to leave. The facility is nearly inaccessible now, even to the military's largest vehicles. But they're not listening.

(on camera): There are other evacuation centers.

UNIDENTIFIED FEMALE (through translator): There are, but I want to stay here. It is fine here.

UNIDENTIFIED FEMALE (through translator): I find it's difficult to walk around, so I don't want to move.

SPARKS: It's stifling hot in here. The conditions are tough. But this departure hall has one chief advantage. It's the only bit of high ground for miles around, and the 500-odd people who live here, well, they're not going to give that up.

(voice-over): While we were there, the former prime minister, Abhisit Vejjajiva, turned up.

"You're running out of water," he told them. The message wasn't getting through.

A couple of weeks ago, we visited the flood response center at Don Muang. In the arrivals hall, hundreds of volunteers packed bags with donations for victims nationwide.

Upon our return, we saw a mound of waste, clothes and other essential items, left to rot in the stinking water. And we felt them underfoot as we waded through the muck. Government officials had plenty of time to move these materials, but they did nothing.

(on camera): That did not need to happen.

ABHISIT VEJJAJIVA, FMR. THAI PRIME MINISTER: I think that's clear mismanagement. And I think a lot of people are very angry about that.

SPARKS (voice-over): Tonight, a government spokesman told me he didn't know why this happened at Don Muang, an airport island of wasted aid and struggling evacuees.

John Sparks, Channel 4 News, Bangkok.

(END VIDEOTAPE)

COREN: Well, two former Pakistani cricket players have been found guilty in their match 16 (ph) trial. We'll go live to London with more on that.

And it's called the race that shocked the nation. The Melbourne Cup went right to a photo finish. We'll tell you who ended up victorious.

(COMMERCIAL BREAK)

COREN: Well, in the last half-hour, a partial verdict has been reached in cricket's spot-fixing scandal. Former Pakistan cricket captain Salman Butt has been found guilty of conspiracy to cheat and conspiracy to accept corrupt payment. A London jury has also found his former teammate Mohammed Asif guilty of conspiracy to cheat. Well, jurors are still deliberating over a corruption charge against Asif.

It's a complex case involving numerous people and specific betting methods, and apparently some colossal sums of money.

Well, to break this all down for us, we're now joined by Phil Black. He's outside the courthouse.

Phil, what has been the reaction to the verdict so far?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Well, certainly a degree of surprise, perhaps, Anna. But yes, as you say, let's just run through those results again very quickly, because they had come in only just in the last few moments or so after a trial lasting 20 days, including some four days of deliberations.

Former Pakistan captain Salman Butt has been found guilty on two counts. As you say, they're conspiracy to accept corrupt payments and conspiracy to cheat. His former teammate Mohammed Asif so far has been found guilty on one of those counts, conspiracy to cheat, with the jury clearly having difficulty reaching a verdict on that second remaining count, conspiracy to accept corrupt payments.

And as such, the judge has decided to give them just a little bit more time, some hours, perhaps. He's sent them back into the jury room to see if they can come up and reach some sort of verdict, perhaps a majority verdict, on that final remaining count -- Anna.

COREN: Phil, what sentences could the pair be facing?

BLACK: Well, these are criminal charges, and they're expected to be sentenced possibly later this week with submissions by their lawyers playing a big part in determining just what that ultimate sentence will be. But to put this in some context for you, this all goes back to an undercover newspaper operation carried out by the now-defunct "News of the World" newspaper, a video sting in which Salman Butt's manager was recorded accepting a large sum of money, some $140,000, and promising to organize three specific no-ball (ph) or illegal deliveries to be balled (ph) during the last years and final test match between Pakistan and England at the Lord's Oval.

Now, those predictions came to pass. And as a result of all that, that has come to result in this trial that has been taking place here at Southern Crown Court for the last three weeks and has now resulted in those guilty verdicts against those two former Pakistan players -- Anna.

COREN: Phil, I mean, these verdicts are extremely damning. What are the ramifications going to be for the Pakistani cricket team and for the game itself?

BLACK: Well, for the game itself, it depends on how you look at it, perhaps, in the sense that these have been uncovered and these players held accountable for it. It goes to show that perhaps the problem is being policed sufficiently well within the game. But over the course of this trial, some of the evidence heard by the jury included the value, the problem, the sheer size, if you like, of betting on cricket matches, particular in this continent.

The money that was described -- well, the adjective used at the time was "breathtaking," billions of dollars. And so, within that, it points to an existing problem within the game itself. But this is significant in and of itself because these are the first two international players to be found guilty of criminal charges in this way -- Anna.

COREN: And quite extraordinary.

Phil Black, in London.

We appreciate the update. Thank you.

Well, there was an exciting finish at Australia's most famous horse race. Now Don Riddell joins me from London with much more.

Don, I want to know, did you back the winner.

DON RIDDELL, CNN INTERNATIONAL SPORTS ANCHOR: No. I know someone that did, though. Sadly, I didn't.

Anna, it is known as the race that stops a nation, and the Melbourne Cup had all of Australia holding its breath earlier today. In the closest finish ever seen, the French racer Dunaden just edged the victory.

It was Christophe Lemaire's first-ever ride in Australia, and he was caught up as a standby six days ago because Dunaden's regular jockey was suspended. And we only know for sure that he was riding the day before, but he rode magnificently Red Cadeaux right on the line.

It was a photo finish, and there was an anxious wait before the judge awarded Duanden the race. It's the second consecutive year that a French horse had won the famous two-miler.

(BEGIN VIDEO CLIP)

CHRISTOPHE LEMAIRE, JOCKEY OF WINNING HORSE DUNADEN: This day will be one of the great moments of my career, and I will never forget. I hope to come for the Melbourne Cup year after year, and my thanking goes also to Craig Williams. I know it's very hard for him, but it's part of our jockeys' life. And I'm sure he'll win the Melbourne Cup one day.

(END VIDEO CLIP)

RIDDELL: Now, there have been two major sporting retirements within the last 24 hour or so, and both men are going out on top. St. Louis Cardinals manager Tony La Russa has retired just days after guiding his team to World Series victory.

And Graham Henry has announced that he is standing down as coach of the Rugby World Cup-winning All Blacks. The 65-year-old, whose New Zealand team beat France by 8-7 in the final at Eden Park the previous weekend, told a news conference in Auckland that he had "had enough."

Henry enjoyed an incredibly successful eight years in charge, and said it was a privilege to be involved. He's turned down offers to join overseas clubs in order to stay in New Zealand and assist in the development of local coaches.

(BEGIN VIDEO CLIP)

GRAHAM HENRY, FMR. NEW ZEALAND COACH: Can I just say it's been a privilege to be involved with the All Blacks, and a real privilege, an enormous privilege. I'm very proud of what they have done over the last eight years, have certainly added to the legacy of All Black rugby. And that's very important to this team, to Richie (ph) and Tanner (ph), before him, and all the boys who have played. Adding to what the All Blacks have done in the past has always been a major motivation for this group.

I'm also very proud of the culture they've created. They've gone out of their way to have contact with people, young people, older people, people in New Zealand, people overseas, and put a smile on their faces.

(END VIDEO CLIP)

RIDDELL: Now, a football fan has been charged following the disgraceful scenes that marred Sunday's Romanian League game between Petrolul Ploiesti and Steaua Bucharest. Angered by a controversial penalty, one fan ran on to the pitch and punched Steaua's defender, George Galamaz, and spat on him.

He then headed towards the other players and clashed with Novak Martinovic, who subsequently kicked him and wrestled him to the ground before security guards led the troublemaker away. Martinovic and goalkeeper Razvan Stanca were sent off for attacking a fan. Galamaz was left with a fractured cheekbone and hearing problems.

Now, the match resumed several minutes later, with Steaua going at (INAUDIBLE) with a contested penalty. But soon after, the referee was forced to abandon the game when the reserve goalie, Tripian Tadrasanu (ph) was hit by a firework, suffering severe burns.

Prosecutors said that the fan that caused the initial violence, named as Dragos Petrut Enache, was high on drugs when he made the assault. The home team, Petrolul (ph), were fined $3,000 for their handling of the match.

Anna, those are incredible pictures and absolutely disgraceful scenes. No football fan wants to see anything like that happen.

COREN: No, I guess you definitely call those people fans, that's for sure.

All right, Don. Good to see you. Thanks for that.

Well, you are watching NEWS STREAM.

Still to come, Operation Ghost Stories. America's Federal Bureau of Investigation releases a trove of spy ring surveillance videos. We'll show you some of the highlights shortly.

(COMMERCIAL BREAK)

COREN: I'm Anna Coren in Hong Kong. And you're watching News Stream. And these are your world headlines.

Well, French President Nicolas Sarkozy and German Chancellor Angela Merkel have scheduled an emergency call after the Greek prime minister called a referendum on the latest bailout deal for his country. Well, that has rattled the stock markets and cast a shadow on the rescue plan agreed to by EU leaders in Brussels last week. Well, no date has been set for the vote, but local press reports say it could happen in January.

Aid workers are warning Thailand will could soon be hit by a wave of disease. Flood waters become breeding grounds for mosquitoes and bacteria. Historic floods have left many parts of the country under water. And relief agencies are concerned that diarrhea, Dengue fever and malaria could spread.

Agence France Presse is reporting Chinese authorities have ordered dissident artist Ai Weiwei to pay $2.4 million in back taxes. The 54 year old, famous for his work on the Bird's Nest Olympic Stadium in Beijing was detained for 81 days earlier this year. He says the tax bill is just a pretext, the government is really trying to silence him.

And just a few hours from now, we could learn whether Dr. Conrad Murray plans to testify at his involuntary manslaughter trial in the death of Michael Jackson. The judge gave Murray until today to make up his mind. Prosecutors allege Murray's use of Propofol to help Jackson sleep was criminally reckless.

Confronting cyber crime, a two day conference kicks off in London today. Officials from dozens of nations will look at how best to wage battle against cyber attacks. Well, Pentagon correspondent Barbara Starr reports hackers are targeting everyone from governments to corporate giants to the Taliban.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Is cyberspace a war zone? The U.S. Secretary of Defense could not be more clear.

LEON PANETTA, U.S. SECRETARY OF DEFENSE: The next Pearl Harbor that we confront could very well be a cyber attack that cripples our power systems, our grid, our security systems, our financial systems, our governmental systems. This is a real possibility in today's world.

STARR: There's already been one serious attack. In 2008, an infected flash drive was inserted into a laptop on a U.S. military base. A foreign spy agency had placed a malicious code on the drive. Secret data was transferred to foreign control. The Pentagon won't name the suspect country.

The Iranian's nuclear facilities were also attacked by the international computer worm known as Stuxnet. No perpetrator was named.

Even a Taliban web site claims it was hacked, leading to a rumor Mullah Omar was dead.

On the very day the Pentagon unveiled its plan for operations in cyberspace, another breach revealed.

WILLIAM LYNN, U.S. DEUPTY SECRETARY OF DEFENSE: A single intrusion this past March, 24,000 files were taken. It was done, we think, by a foreign intelligence service. In other words, a nation state was behind it.

STARR: Pentagon officials confirm sensitive military data was taken from a contractor's computer. No country has been named.

LYNN: Cyber attacks will be a significant component of any future conflict, whether it involves major nations, rogue states or terrorist groups.

STARR: Cyberspace is now full of attacks. Experts warn, however, just hacking into a network, or taking down an electric power grid doesn't mean an automatic military response.

ROBERT NOONAN, BOOZ ALLEN HAMILTON: But in the course of knocking down that electronic grid, people were to die, or you were to knock out hospitals, knock out the ability to provide for services for people than certainly I think that would meet the definition of an act of war.

STARR: The new Pentagon strategy focuses on defending military systems from theft and denial or disruption of service. But cyberspace has a particular attraction for attackers.

WILLIAM MARSHALL, CHERTOFF GROUP: Also, there's a fairly low cost of entry in this business. They don't have to have a massive military- industrial complex to actually build an offensive capability and employ it.

STARR: And if they attack, they can remain largely anonymous, making it difficult to find and target them, becoming the enemy right on the computer screen.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

COREN: Well, cyber attacks may be the next weapon of choice for the world's spies. The FBI is raising the curtain on the real-life world of espionage. It's released never before seen photos, documents, and videos from its so-called Operation Ghost Stories which brought down a ring of Russian sleeper spies in the United States. You see some of those videos here.

Well, in one, accused spy and red-headed bombshell Anna Chapman is in a New York restaurant. She's chatting unknowingly with an undercover FBI agent about problems on her laptop that she used to contact Russian officials.

Well, then there is the infamous brush past, which many of you have probably seen in the movies, only it's a little more obviously done here. Alleged spy trades off a bag full of cash with a Russian official as they pass on a stairwell on a train station.

And take a look at this, an accused spy ring member is digging up a buried package of money from what's called a dead drop in spy lingo. The FBI watched the 10 Russian suspects for years before arresting them in 2010 and sending them back to Russia.

Now so long ago a career CIA employee and the former head of KGB counterintelligence were on opposite sides of the Cold War, but as Suzanne Kelly reports they've reached mutual detente. And they're opening up about the dangerous world of espionage.

(BEGIN VIDEO CLIP)

CHARLIE ALLEN, FORMER CIA: The Bulgarian umbrella. That was Markoff (ph)

OLEG KALUGIN, FORMER KGB: Markoff's (ph).

ALLEN: Who was killed in London.

KALUBIN: That's right.

ALLEN: Assassinated.

SUZANNE KELLY, CNN CORRESPONDENT: Charlie Allen and Oleg Kalugin can tell you chapter and verse about every spy story that helped write the history of the Cold War, not because they read them, because they lived them.

Spying may be synonymous with James Bond, but as suave as he was in Goldfinger, Bond was a fake. These guys are the real deal.

ALLEN: You always do the SDRs, surveillance detection routes, to make sure you're not surveilled.

KALUGIN: The coat which has both the hidden listening device and a camera to take pictures, it's just that coat, one of these buttons is very special.

KELLY: A revolver on your ring finger, or a single shot inside a fake tube of lipstick. Right under your nose, even under your feet.

KALUGIN: The shoe was a hidden transmitter.

KELLY: As a CIA employee, Charlie Allen made a career out of espionage, rising up through the ranks of the agency for more than four decades.

Oleg Kalugin was his adversary.

KALUGIN: That's his actual -- his wife's

KELLY: A former KGB general who became chief of Russian counterintelligence.

For both men, walking through the International Spy Museum in Washington, D.C. is walking back through time.

ALLEN: That was tremendous according to records -- official records. You were able to decipher 2 million U.S. Navy classified....

KALUGIN: More than 2 million...

ALLEN: . more than 2 million U.S. classified messages. That was pretty stunning -- that was stunning.

KELLY: Well, you may think the one-time rivalry between the U.S. and Russia is long past, you need only remember back to last summer when the FBI arrested 10 suspected Russian spies. They weren't put on trial, instead they were swapped for four Russian prisoners who had been accused of spying for the U.S. Can this really still be happening?

ALLEN: It is classical Russian espionage is to run illegals -- whether it's in the United Kingdom, or whether it's here in North America they do it and they'll continue to do it. I have every reason to believe it.

KALUGIN: But illegals had a very special mission, just to prepare grounds and conditions for operations if the war between the United States and the USSR was imminent. Then their job would be to blow up, say, power lines in Washington, D.C. area or poison water supplies in the area.

KELLY: Are either of you worried about the state of intelligence today?

ALLEN: There are some fine intelligence services around the world, and some the United States is working with, because of the threat of al Qaeda and other types of terrorist groups. So we see some very small, but very good intelligence services, for example the Middle East.

KELLY: What do you think?

KALUGIN: I think at the time when the world is facing major threats from fanatics driven by their faith which is far more dangerous than the, say, Communists. And these guys, fanatics, obtain access to weapons of mass destruction than the whole world is in trouble. That's where the United States, Europe, Russia, whoever -- China, perhaps (inaudible) will do whatever they can to stop that threat, to eliminate it and to save the world from mutual destruction.

(END VIDEOTAPE)

LU STOUT: That was Suzanne Kelly reporting there.

Ahead on News Stream, under fire on one of the most dangerous routes in the world. Will relentless militant attacks stop critically needed supply convoys from reaching coalition forces in Afghanistan? That's next.

(COMMERCIAL BREAK)

COREN: Well it might just be the most dangerous drive in the world, and one of the most critical for the coalition mission in Afghanistan. Well, drivers of NATO supply convoys put their lives at risk on hazardous routes between Pakistan and Afghanistan.

Well, many say they've come under fire from militants.

Reza Sayah tells us why they're willing to get back behind the wheel.

(BEGIN VIDEOTAPE)

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Four months ago Bullah Madbos (ph) got in his oil tanker and started what's maybe one of the most dangerous drives in the world. And this is how he ended up, severe burns on both his legs and both his arms.

"I couldn't think, just wanted to run away," he says. "There was gunfire, a huge blast."

The attack was among hundreds carried out by militants in recent years, all targeting fuel and supply trucks destined for U.S. and NATO troops in Afghanistan.

Afghanistan is surrounded by land, no sea ports, so the supplies first arrive here at the southern port city of Karachi, Pakistan.

Every day hundreds of trucks load up their cargo and start the grueling 24 hour drive that may take days to complete. For this, they get a little more than $200.

They use two routes. One goes from Karachi through northwest Pakistan and onto the Kyber Pass, the other goes through Balochistan Province, southwest Pakistan and through Chaman District.

At one point 80 percent of U.S. and NATO supplies went through Pakistan, the supplies critical for the military operation there. Then came the attacks. The defenseless trucks torched, bombed, looted, easy prey for militants who now had a potent way to bleed the NATO mission in Afghanistan.

This YouTube video shows Pakistani Taliban fighters joy riding in an American humvee they said they lifted in one of the attacks.

Raise your hand if you've been attacked -- if your truck or you have been attacked?

At this truck depot dozens say they're victims, some showing off their scars.

"15 to 20 militants blocked the road, started firing and then torched out truck," said this driver.

"We can only get in the truck and drive. If we get there, great. Otherwise anyone can kill us."

What's left of the trucks end up in graveyards like this. Police say over the past three years scores of attacks have destroyed hundreds of trucks killing at least 50 people.

With mounting attacks and losses, U.S. officials say they've cut deliveries through Pakistan by about half, opting to use alternate routes through Afghanistan's northern neighbors.

Yet every day Olam Hossein (ph) and hundreds of Pakistani drivers still make one of the world's most dangerous drives knowing it could be their last.

"What else can we do," he says, "poverty has made us desperate."

Reza Sayah, CNN, Karachi.

(END VIDEOTAPE)

COREN: Well, people in Beijing are talking about the smog. And this is what it looks like. Take a look at the video just into us here at CNN. The skyline looks as if it's been washed in gray. Authorities warn the haze is greatly reducing visibility.

Well, according to local reports some flights were canceled over the weekend. And the Global Times reports local emergency medical center saw a 13 percent rise in respiratory patients this weekend over the same time last week.

Well, Beijing has been among the world's most polluted cities for years. And this picture comes to us from NASA. It was taken about two weeks ago. It gives you a sense of the scale of the giant opaque (inaudible) that now is over China's coastal plain south of Beijing just right here.

Well, for more on conditions in Beijing let's go to our Mari Ramos. And Mari, how long is this smog expected to hang around for?

MARI RAMOS, CNN WEATHER CORRESPONDENT: You know what, there's no real break in the weather that we can see.

What happens is when you have big areas of high pressure, the air sinks down, it traps the pollutants close to the ground and there's no mixing of the atmosphere, so it kind of accumulates. You have the accumulative thing of the pollutants just over the same general area and that's what we have ended up here in Beijing.

Let's go ahead and take a look at some of the pictures that we have from this area. Look, haze is a huge, huge problem. There's more traffic accidents. There's huge travel delays when you have a situation like this. And of course you were mentioning some of those -- some of those health issues that come along as well.

Stepped back over to the weather map over here. Let me go ahead and show the quality -- the air quality in there. So, you know, blue sky days would be between the good to moderate range. Once you begin to get to the unhealthy to very unhealthy you're really talking about some serious problems. Now, anybody that has asthma or allergies or anything like that would of course be affected even more; any one with heart disease or lung disease.

And over the last four days in a row, at least the four days, that's how far back I went to look, you have been in this range right over here, in the hazardous where those particulate matter, meaning they're over 300, it got as high as 300 in '89 I think was the highest one that I saw so far. It tends to go down a little bit during the nighttime hours, but during the day that's the worst.

And what they're measuring is the particulate matter, or PM. You'll see this word used over and over. What's actually in the air is acids and organic chemicals and metals even and soil and dust and debris from pollution from cars, from industry, from construction even, and of course from factories. All of this stuff is in the air and people are breathing it.

What happens is there's big stuff that really doesn't get into your heart or to your lungs, but anything less than 10 micrometers, that can be inhaled and it goes into your heart, deep into the lungs in some cases, and it's even been found in the blood steam, that's why it's so dangerous. That's why you see these problems of coughing and asthma as you mentioned that spike in people having to go to the hospital because of chronic bronchitis, and people have been known to have heart attacks, in many cases non-fatal heart attacks, but it's a huge, huge concern, especially the long-term exposure of these kinds of chemicals.

You have the problem with (inaudible). You also have what's called acid rain, that's when the surface water, or in the soil actually get contaminated by all of these chemicals that are in the air. And then you have the problem of corrosion of buildings -- the concrete gets damaged, the metal gets damaged, and all of those things have to be replaced even quicker.

So it is a big problem.

When you talk about the weather pattern right now, there's a big area of high pressure. So far in Beijing you've only had over a millimeter of rain since October 14. You really are caught up in this dry weather patter that really has no place to go. So it is a big, big concern over the area. As you can see, no rain in the forecast for now.

Let's go ahead and check out your city by city forecast.

Where we've seen a decrease in rainfall has also been across southeast Asia. High pressure hanging on, but rain showers are actually farther to the south. And with these rain showers farther to the south one of the things that we begin to see is tropical cyclones that start to form not only in the Bay of Bengal, but also in the Arabian Sea. And out here in the Arabian Sea, Anna, we do have one tropical cyclone just close to the coast of Oman. Actually it hasn't even formed yet. It has a low chance of forming, but it's looking very healthy. Some of that rain making it on shore. Rough seas expected throughout the area.

In Salalaa right now winds close to 30 kilometers per hour, dust storms not out of the question here. Where it's not raining, you're going to get some dusty conditions. And the rain mostly confined to the coastal areas, but that could be enough that could cause some flooding across those regions.

And the forecast, it does appear that in the next two days, if this storm stays out at sea, we could be looking at a healthy tropical cyclone forming just parallel to the Omani coastline. So we'll be following this one for sure. Back to you.

COREN: Keeping a close eye as always, Mari. All right, good to see you. Thank you for that.

Still to come on News Stream, we are heading back to Melbourne for more on the race that stopped the nation, only this time not for the track, but the track (inaudible).

(COMMERCIAL BREAK)

COREN: Well, just a little bit earlier we told you who won the Melbourne Cup, but now we're turning to the other thing that people love, trackside fashion. Hermione Gibson has this report.

(BEGIN VIDEOTAPE)

HERMIONE GIBSON, CNN INTERNATIONAL CORRESPONDENT: When it comes to Flemington's high end fashion, experts are prepared to go to extreme lengths to stand out.

UNIDENTIFIED FEMALE: Crazy clown was my theme today, so that's why I've got the little bows and the big neck ruffle.

GIBSON: From head to toe, lot of colors to an extended stage. Florals and (inaudible) were teamed with polka dots and parasols to create classic outfits of era's past.

UNIDENTIFIED FEMALE: I kinda of gone a bit of a 60s, 70s look.

UNIDENTIFIED FEMALE: A bit of a 60s influence is cut out for here.

GIBSON: In headware, hats with height made a comeback.

UNIDENTIFIED FEMALE: (inaudible) it's about 15 years old. And the dress I designed and made myself.

UNIDENTIFIED FEMALE: It's pretty high. And it's actually really light. It's made out of feathers.

UNIDENTIFIED MALE: The crown (ph) (inaudible) which is great to see.

GIBSON: Sometimes modest (inaudible) is more.

JENNIFER HAWKINS, MODEL: I go for comfort now, because I've done the bigger is better thing. And sometimes in a market (ph) can be quite annoying.

UNIDENTIFIED FEMALE: I've done a bit of DIY with two necklaces that I found at the last minute.

GIBSON: And while comfort maybe key for some in the fashion stakes.

ASHLEY HART, MODEL: It's really comfortable. And I've got a good pair of heels on today, so I feel, you know really set for the day.

GIBSON: It's a compromise others are willing to make.

UNIDENTIFIED MALE: A little hard one to get into, and I've had trouble (inaudible).

GIBSON: But it's not just the ladies competing in this fierce trackside competition of best dressed.

UNIDENTIFIED MALE: You've got to make sure the tie matches the waist coat matches the rose.

UNIDENTIFIED MALE: A lot of (inaudible)...

GIBSON: An effort indoors by an international style icon.

J. ALEXANDER, FASHIONISTA: I think the boys should make an effort, because the men can be quite boring -- navy blue, black, and gray.

UNIDENTIFIED MALE: We need to stand out too, what the beautiful ladies put out. So it wouldn't look good if we don't.

GIBSON: Hermione Gibson, 10 News.

(END VIDEOTAPE)

COREN: It's compulsory to have a glass of champagne in your hand at all times.

Well, that is it for News Stream, but the news certainly continues here at CNN. World Business Today is next.

END