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Arrest of Indian Diplomat; Rodman Goes to North Korea; Americans Told to Leave South Sudan; Snowden Offers to Help Brazil; Lawmakers Leery of Vet Cuts in Budget Compromise; NSA-Concerned Tech Execs Detoured to Talk About Obamacare By President; How Long Will Fed Continue Q.E.?

Aired December 18, 2013 - 12:00   ET


MICHAEL HOLMES, CNN ANCHOR: Escalating on several fronts. Let's start in India. They are now retaliating against U.S. officials in New Delhi.

SUZANNE MALVEAUX, CNN ANCHOR: The fact that this high-ranking Indian woman was strip searched is what is most disturbing to the people of India. Now, she is accused of visa fraud after allegedly submitting false documents to obtain a work visa for her nanny. Well, Pam Brown, she has more on the charges here in the U.S. and the backlash abroad.


PAMELA BROWN, CNN CORRESPONDENT (voice-over): Watch as police remove the concrete security barriers in front of the U.S. embassy in New Delhi. Newspapers in India reporting the government is behind the anti-U.S. protest. Why? Retaliation sparked by an arrest of this Indian diplomat in New York City, Devyani Khobragade.

According to this criminal complaint, Khobragade, a deputy consul general, severely underpaid her babysitter, only paying her $3.31 an hour, far less than minimum wage. The complaint also alleges the diplomat worked her babysitter far more than the 40 hours per week, allegedly without overtime pay, and then lied about all of this on visa documents, a violation of U.S. law.

UNIDENTIFIED MALE: My daughter has not done anything wrong. She has nothing to do with the visa process.

BROWN: State Department diplomatic authority arrested Khobragade last Thursday after she dropped her daughter off at school. She was later strip searched and put in a holding cell with other defendants. Her lawyer says she pleaded not guilty.

DANIEL ARSHACK, ATTORNEY FOR DEVYANI KHOBRAGADE: I have every expectation that she will be completely vindicated.

BROWN: Her arrest sparked outrage among Indian officials, some calling her treatment barbaric, one even calling for the partners of gay U.S. diplomats in India to be arrested. The country recently banned gay sex. YASHWANT SINHA, FORMER INDIAN FOREIGN MINISTER: What the government of India can do immediately is to cancel those visas, arrest all these companions, put them behind bars.

BROWN: Indian officials also snubbed U.S. delegates visiting India. One tweeting, "refused to meet the visiting USA delegation in solidarity with our nation."

KAMAL NATH, INDIA'S PARLIAMENTARY AFFAIRS MINISTER: More steps should be taken against the United States until they give an unconditional apology.

BROWN: U.S. marshal service officials stand by their strip search procedures, saying they treated the diplomat the same way they treat everyone else.

MARIE HARF, DEPUTY STATE DEPT. SPOKESPERSON: Thus far, all indications are that appropriate procedures were followed. But nonetheless, we understand this is a very sensitive issue and we're continuing to review exactly what transpired.


HOLMES: OK. Let's get more on this situation from New Delhi. Mallika Kapur joining us by phone.

Mallika, let's start with this. Is it fair to say the offense is more at the style of the arrest than the arrest itself?

MALLIKA KAPUR, CNN CORRESPONDENT (via telephone): I think that's fair to say, Michael. The outrage over here is really at the manner in which she was arrested. The fact that she was arrested, you know, handcuffed, as she was dropping her daughter off at school, the fact that she was strip searched. She is a diplomat, you know. She does represent India. So the way in which she was humiliated is something that has really angered the people of India. And even the prime minister earlier today called the treatment given to this lady, to this diplomat, deplorable.

MALVEAUX: And, Mallika, what kind of effort do you think is being made between the United States and the Indian government at this point to make it right? Because what we are seeing now is a string of retaliatory acts that are happening in India, including the barricades from the embassy being removed, which some people believe could be a security risk even. Are there talks that are happening now, things that are going on, to make this thing right?

KAPUR: You're right, it really has escalated into a tit-for-tat game. In fact, I'm right outside the U.S. embassy as we speak and I can tell you those barricades that have been here for months, you know, have been removed. And I can go right up to the U.S. embassy gate, which wasn't the case just a few days ago.

In terms of making it right, I think there is a realization on both sides that India and the U.S. cannot afford to upset each other. They cannot afford to go back to the days of mistrust. They've been through the days and years of the Cold War when both sides were, you know, deeply suspicious of each other.

But for the last decade or so, the last 10, 15 years, both sides have really worked to improve relations with each other. And relations up until this incident, you know, have been in a good place. So there is a realization that both countries need each other, especially economically speaking, and there is a realization that they shouldn't let this incident ruin those relationships because both sides mutually need each other very much.

HOLMES: Mallika, you're on the spot. What is actually happening outside of the embassy at the moment?

KAPUR: At the moment, there are four police vans right outside the U.S. embassy. But I have to say, the surroundings do look different because those huge, heavy barricades, the concrete barriers that have always been placed at the U.S. embassy have been removed. They aren't here anymore. They have been removed in what seems to be a retaliatory measure to what's been happening in New York.

But local police officials will tell you that the reason these barricades were placed here was to really help with traffic in this area, to help control traffic. And as the New Delhi police have placed them more as a courtesy to help the U.S. embassy control traffic here. It was never a diplomatic requirement.


KAPUR: And they do insist that they are not scaling back security for any U.S. embassy officials whatsoever, and that they remain safe now as they've always been.

HOLMES: All right, Mallika Kapur on the spot in New Delhi. Appreciate that, Mallika.

And it was interesting, on our air earlier to, one Indian was saying, imagine if it was reversed and that happened to an American official in India. There would probably be outrage.

MALVEAUX: Yes. And you and I have been talking about this all morning, just wondering, is this the normal procedure for a visa -

HOLMES: For a regular person?

MALVEAUX: Yes, visa fraud infraction.


MALVEAUX: You know, strip search, arrested at the school -

HOLMES: Handcuffed at the school.

MALVEAUX: I mean, yes, still a lot of questions.

A direct dig at Russia's anti-gay laws, U.S. delegations, both to the opening and the closing ceremonies of the Winter Olympics in Sochi, will now include at least two openly gay athletes. HOLMES: Yes. We're talking about the tennis great Billie Jean King. Also the ice hockey player Caitlin Cahow. Now, just in case the Russians don't get the message from that, President Obama, the first lady, Michelle Obama, Vice President Joe Biden, they're all going to be conspicuously absent. In fact, no high ranking incumbent U.S. official is going.

MALVEAUX: Our CNN foreign affairs correspondent, Jill Dougherty, she's joining us live from Moscow.

Good to see you, Jill. This really does seem to be, on many fronts, an in your face move by the Obama administration. Are the Russians responding at all? Are they reacting to this? Do they - do they get it?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, they're not responding, at least so far. But you could go back to what President Putin already said, which is, that U.S. athletes or gay athletes of any stripe who come to the Olympics should not worry. They won't be discriminated against.

But I think it is definitely sending a message, but it's almost -- it's a strong but subtle message at the same time because, after all, there are some people among gay activist who had said, why don't we boycott what -- the U.S. should not even go to the Olympics.

The U.S. is going to the Olympics, but by sending these prominent athletes who happen to be gay is sending this signal, as President Obama himself said, represents diversity, determination and teamwork. And that word diversity, of course, is often used in the context of gay rights in the United States. So it is a message that these are respected members of the community, respected sports people, and they're going to represent the United States.

But you know, I think you have to add that nobody here or in the United States right now knows exactly how that anti-homosexual propaganda law, as it's called, actually will be enforced. Nobody -- it's not clear. So right now, Billie Jean King and Caitlin Cahow don't have to do anything other than show up and be who they are to send a message.

MALVEAUX: All right, Jill Dougherty, thank you very much.

Michael, I had a chance to meet Billie Jean King, you saw those pictures there, at the White House when she received that award with the president.

HOLMES: She's great.

MALVEAUX: She'll be there. And also want to make sure that you know the ice hockey player, Caitlin Cahow, she is going to be on CNN next hour to talk about the message that she and others are going to bring there, the U.S. delegation, hoping to carry to Russia. It is an important one. It's symbolic, but it's also very significant, as well.

HOLMES: Great representatives regardless of the rule (ph). MALVEAUX: Yes.

HOLMES: So, yes, that works.

All right, we are closely watching two things happening right now in Afghanistan. One is a new attack on a border crossing that's actually used by NATO to move troops and equipment in and out of Pakistan. This happened today near Jalalabad, which is a major city, of course. We're told Afghan security forces fought off what's being described as a wave of suicide bombers.

MALVEAUX: At least one Afghan soldier and several attackers were killed. No NATO casualties were reported.

And elsewhere in Afghanistan, the U.S. military trying to find out how six American troops died yesterday. Was it from the helicopter crash or were they killed by enemy fire after the helicopter went down? Well, yesterday, it was the deadliest single day for U.S. troops since the summer of 2012.

HOLMES: And here's more of what we're working on this hour for AROUND THE WORLD. Dennis Rodman, yes, Dennis Rodman, back to North Korea, this time to train its basketball team ostensibly. But what's he going to say to his friend the dictator?

MALVEAUX: And could he actually make an impact on the nuclear testing issue?

HOLMES: Toronto's mayor, yes, that guy, he may have lost his mayoral powers, but he's still dancing. I don't know what he's got. He's got that.

MALVEAUX: Dancing, I guess.


MALVEAUX: We'll see what's behind that, up next.


MALVEAUX: Retired basketball star Dennis Rodman is about to head back now to North Korea, despite tensions over the leader's decision to execute his own uncle.

HOLMES: Yes, Rodman says the North Korean dictator is his friend, so he's going to Pyongyang tomorrow to help train the country's basketball team for an upcoming exhibition game. Here's Anna Coren.


ANNA COREN, CNN CORRESPONDENT (voice-over): With his piercings, tattoos and at times outlandish behavior, there's no deny former NBA star Dennis Rodman loves attracting attention. And where he's heading, it's certain the world will be watching as the 52-year-old makes his third visit into a country ruled by one of the world's most repressive regimes. DENNIS RODMAN, FORMER NBA STAR: I want to bridge a gap with North Korea. That's all I want.

COREN: It comes at a time of dramatic political upheaval in North Korea. Of just last week, the country's young leader, Kim Jong-un, had his uncle executed in what some experts believe is just the beginning of many more purges to come. A power struggle is believed to be the reason why he had his mentor and second in command allegedly killed by machine gunfire. And with all the instability, it would appear that the supreme leader could use a good friend.

RODMAN: I mean, I'll call him my friend. He's my friend. If you hate my guts, hate my guts, but he's my friend.

COREN: Rodman is traveling with a documentary crew that will film him training the North Korean basketball team. They're preparing for an exhibition match in January against a group of former pro basketball players to celebrate the birthday of Kim Jong-un, a diehard basketball fan. Many are wondering whether Rodman will raise the issue of 45- year-old American missionary Kenneth Bae, who was sentenced to 15 years prison in Pyongyang for what authorities say was an attempt to overthrow the regime.

But Rodman says this trip isn't political. Although on previous visits, he has made himself available for basketball diplomacy, offering to be a mediator between his close friend Kim and U.S. President Barack Obama.

RODMAN: And this guy just wants to do one thing, let's have a conversation with you. That's it. So why Obama are you afraid to talk to Dennis Rodman.

Anna Coren, CNN, Seoul.


MALVEAUX: So many folks are questioning whether or not something good could actually come of his visit to Pyongyang.

The only person born in the North Korean labor camp to have escaped to the West has now written an open letter to Rodman. Shin Dong-hyuk, actually the former -- asked the former basketball player to use his influence with Kim Jong-un to make him hear the cries of his people.

HOLMES: Yeah, Shin writes about people being starved, beaten and publicly executed in those labor camps. He says he grew up watching the executions, including the hanging of his own mother. Now, this open letter is published in "The Washington Post."

MALVEAUX: Here's a quote. It says, "I cannot presume to tell you to cancel your trip to North Korea. It is your right to drink fancy wines and enjoy yourself in luxurious parties as you reportedly did in your previous trips to Pyongyang. But as you have a fun time with the dictator, please try to think about what he and his family have done and continue to do." HOLMES: All Americans are now being told to get out of the world's newest country right now for their own safety. We're talking about South Sudan where fighting throughout the country has left about 500 people dead, 800 wounded, many, many thousands have fled their homes.

MALVEAUX: And U.N. officials, they're not even exactly sure the reason, the exact reason for the violence, but they are concerned that it's based on ethnic divisions since the country of Sudan was divided two years ago.

Now, South Sudan's president says there was a coup attempt and his forces put it down.

HOLMES: Former NSA contractor Edward Snowden now communicating directly to the people of Brazil, offering to help investigate U.S. surveillance of Brazilian citizens.

MALVEAUX: Snowden put the open letter to the people of Brazil on the Internet, saying that the United States monitors all cell phone calls in Brazil and keeps track of people who are having affairs. Snowden says he wants to help investigate what he calls "U.S. crimes against Brazil."

HOLMES: Relations between Brazil and the U.S., they've been a bit frosty for a while after reports that the NSA was spying there, including on the country's president.

The former NSA contractor, of course, now living in Russia under Moscow's protection.

MALVEAUX: And the bipartisan budget deal, supposed to gave the government billions of dollars, but critics say veterans will be the ones paying for some of those savings out of their own pockets.

We've got that story, up next.


HOLMES: Welcome back.

John McCain says it gives him heartburn. Lindsey Graham says politicians will, quote, "get the hell kicked out of them for this."

MALVEAUX: The senators are talking about how that bipartisanship proposal will affect veterans. And there are some Democrats who are upset about this, as well. Those who retire after 20 years of service would give up part of their pension benefits.

Now, that's supposed to save the government more than $6 billion, and supporters claim many of those affected are just in their 40s and can get civilian jobs.

HOLMES: Yeah, Senator Patty Murray, who co-authored the bill, you'll remember, with Congressman Paul Ryan says it will help prevent billions in cuts to the defense industry. But critics say military personnel have sacrificed enough. The Senate expected to approve the deal today.

MALVEAUX: Interesting sidebar here. Some of the tech executive who met yesterday with President Obama say they wanted the focus to be their concerns, right, with the NSA surveillance program. But they're now wondering why they spent so much time talking about website instead.

Our chief Washington correspondent Jake Tapper has some new information about the back story that went on behind closed doors.

What are we learning, Jake?

JAKE TAPPER, CNN CHIEF WASHINGTON CORRESPONDENT: According to sources I've spoken to and also that have spoken to Jim Acosta, our senior White House correspondent, one of the subjects that everyone really wanted to talk about was the NSA, and that was really why they flew across the country, not necessarily to talk about although they were willing to talk about that.

They wanted to talk about NSA because this is an issue, as you've mentioned before, Suzanne, that is affecting the bottom line for these companies, which are international corporations that rely upon businesses and others thinking that their information, whether it's on Google or Twitter or wherever, will be kept confidential and the U.S. government won't be able to access it. And this could hurt them.

At one point, one of the executives who was there, Mark Pincus, who is the founder of Zynga, which is -- they do those game apps for the iPhone, he suggested that President Obama go so far as to pardon Edward Snowden, the NSA leaker, the person that some people call a traitor, others call a whistle-blower.

President Obama said he could not do that.

Some of the other things that we heard from participants in the meeting include that the president told the executives that NSA reforms will be announced in January.

The executives got the impression from President Obama that have bulk collection is not likely going to stop anytime soon, but that there will be an attempt at more transparency.

The executives, as I said, pushed really hard on the impact for their companies. These are very successful corporations, Facebook, Apple, Microsoft, et cetera, and they don't want the government and the government surveillance hurting their companies' abilities -- ability to grow in 2014.

MALVEAUX: All right. Jake, thanks. Appreciate it as always.

TAPPER: Thank you.

HOLMES: The Federal Reserve, wrapping up its final policy meeting of the year, and everybody's watching, of course.

Will Ben Bernanke drop a bombshell on the financial markets? MALVEAUX: We're going to know in about 90 minutes or so.

CNN's Richard Quest, joining us with his take, coming up next.


HOLMES: The word's financial markets, not just the U.S. ones, have one question today. How much longer will the Federal Reserve continue to prop up the U.S. economy with that bond-buying program?

I just like to say quantitative easing.

MALVEAUX: I don't know why.

HOLMES: It's just something to say at dinner parties.

MALVEAUX: But you know what? In real language, real-speak we're talking about $85 billion a month.

The answer coming in about 90 minutes, what is the Fed going to do about all of this, big public announcement?

Richard Quest to break it down for us here. Quantitative easing, what the -- what is this all about? Tell me.

RICHARD QUEST, CNN CORRESPONDENT: For the last year or so, the Fed has been buying $85 billion a month of both U.S. government securities and mortgage-backed securities. It's a very posh way of saying "printing money."

And what they've been doing is they've been doing it to try and support the economy, to keep interest rates low and to give necessary stimulus, not so that the economy doesn't slip back into recession, but to give it a boost so it gets to warp speed, or at least escape velocity.

Now, we know it's coming to an end. It's an if, not a when. The question is whether that "if" begins now. Do they start to take the punch away from the party?