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CNN'S AMANPOUR

Crisis in the Middle East; Children Caught in the Crossfire; Default or Dodge the Bullet?; Imagine a World

Aired July 29, 2014 - 14:00:00   ET

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


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HALA GORANI, CNN CONTRIBUTOR (voice-over): Tonight, suffering in the cycle of war: how innocent children are the biggest victims of the ongoing

conflict between Israel and Hamas. We are live in Gaza City.

And later in the program, last-gasp talks for Argentina as it tries to avoid its second debt default since the turn of the century.

Can it reach a deal before deadline day tomorrow?

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GORANI (voice-over): Good evening, everyone, and welcome to the program. I'm Hala Gorani, in this evening for Christiane Amanpour.

While a cease-fire in Gaza is a constant source of discussion and speculation, the daily reality of war and the rhetoric of its leaders make

it seem further away than ever.

(BEGIN VIDEO CLIP)

GORANI (voice-over): Most Palestinians in Gaza are still without electricity after Israel's military hit the territory's only power station,

an airstrike the Israeli government is not taking responsibility for.

Palestinian leadership in the West Bank on Monday called for a 24-hour cease-fire, but Hamas is telling CNN it has not agreed to anything yet and

has continued its rocket attacks on Israel.

Meanwhile, Prime Minister Benjamin Netanyahu is warning that the end of the violence may be nowhere in sight.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, PRIME MINISTER OF ISRAEL (through translator): We knew that we would have difficult days. This is a difficult and painful

day. Stamina and determination are required in order to continue in the struggle against a murderous terrorist group that aspires to destroy us.

I said and I repeat, we must be prepared for a protracted campaign.

(END VIDEO CLIP)

GORANI: More than 1,100 Palestinians have now been killed, the majority civilians, according to the United Nations. Also among the dead,

53 Israeli soldiers and three civilians.

CNN's Karl Penhaul is in Gaza City and he joins me now from there, from there now.

We saw your dramatic reporting, Karl. You're having to duck down from your -- where your position is because of explosions very near your live

position.

What's the situation now?

KARL PENHAUL, CNN CORRESPONDENT: Yes, that really is part of the dynamic of the battlefield really, Hala. And last night we did see a lot

of action fairly close to the central part of Gaza City, something we haven't seen in previous days.

Tonight right now, we can hear the Israeli drones up in the air. They sound like a large lawnmower; sounds like there are several up there, also

about 20 minutes ago we heard the pounding of artillery. That sounded to me like it was coming down on the southeast of the border between Gaza and

Israel, not really clear what the targets are.

But this thing is far from over.

(BEGIN VIDEO CLIP)

PENHAUL (voice-over): You'll never get to meet little Mohammed. But his friend next door wants to tell you a bit about him.

Top of the class at math, Barcelona football star Lionel Messi was his hero. Mohammed was just yards from his front door. Witnesses say he and

the other kids were playing toy guns. They call it "doom-doom." The plastic pistol, now broken, the children all dead.

Anas reels off their names.

ANAS, 8-YEAR OLD, SHATI REFUGEE CAMP: Jamal, Mohammed, Ismail, Hassan, (INAUDIBLE).

PENHAUL (voice-over): It's a sight that he should never have seen.

"I saw a boy cut up right there. Over there a man. He looked dead . And I saw a boy who was dead, too," he says.

Just 8 years old, he mans up and describes the explosion.

(END VIDEO CLIP)

PENHAUL: That little boy mentioned there Mohammed. He died along with seven other children and two adults in part of Gaza yesterday. That

as a result of an explosion in his neighborhood. Now both the warring sides have blamed one another for that explosion. But we've heard those

excuses before. And it really doesn't help when you look on the ground and see that 75 percent of the dead and the wounded are civilians.

It also really doesn't put into perspective the magnitude of this tragedy when we look simply at body counts, when we look at the types of

munitions sent over the border one way or another when we look at the targets hit. We really do have to get to grips with this war by names and

faces. And only then, I believe, can we really get to the bottom of how distressing this is for the people of Gaza -- Hala.

GORANI: And tell us a little bit more about the children, I mean, we saw this little kid, Mohammed, his friends, his cousins killed. He saw

some of the things, these scenes of horror that no child should have to see.

What is their daily life like? I mean presumably no school, no normality, no routine.

PENHAUL: A lot of the children on vacation anyway now, but really what is interrupting their normal routine is this displacement. There are

180,000 people now living in United Nations shelters that in normal times operate as schools. And they have to live there because their own homes

are in a combat zone in many cases. Their own homes have now been reduced to rubble.

And a lot of those 180,000 in those U.N. shelters are children. We've been in them and Gaza has a very young population. And so inevitably there

are gaggles of kids everywhere you go. And these children of course have no time just to sit and play. Of course there are times during the day

when they play, but they're needed to do the basic chores as well.

Water is often in short supply and so the kids are the ones that are sent with big water jugs, big plastic canisters, back and forth, back and

forth, to bring water for the rest of the family, for the rest of the extended household.

And as you saw in a bit of that report, the children as well, seeing combat first-hand, seeing the impact of this war, this urban guerilla war

on the civilian population. It's shattering them. They look at it -- and you saw there, them explaining very frankly what went on around them, for

what the doctors say is that get some weeks, some months down the line, and then children as well as the adults are going to have tremendous

psychological trauma. And there simply aren't going to be enough carers to talk them through their -- talk them through the scenarios and help them

with mental health issues -- Hala.

GORANI: All right. Just so happens we're going to talk about that very topic right now.

Karl Penhaul, thanks very much for your reporting, Karl is in Gaza.

For many children in Gaza, war is all they know and there are many children. Some 43 percent -- 43 percent of the population -- is under the

age of 12. The United Nations says more than 200 of those children have been killed so far in this latest conflict.

Rifat Kassis' mission is to document the violations against children. He's director of the Defence for Children International Palestine and he

joins me now from Bethlehem.

Rifat Kassis, thanks for being with us. Let's talk a little bit about the possible impact on these children longer term.

What will it be like for them to try to process all this violence and instability?

RIFAT KASSIS, DIRECTOR, DEFENCE FOR CHILDREN INTERNATIONAL: Thank you. Thank you, Hala.

Actually from previous experiences and we should also mention here that you mentioned about how many children there are in Gaza. I should say

that in the past 26 years three wars happened in Gaza. So we are talking about a generation who only experienced war and violence all his life.

From also previous experiences, most children, if not all, they'll become -- I mean they suffer the trauma and we see many symptoms of trauma

within children. The problem that time doesn't heal trauma. Trauma needs to be treated psychologically and today the -- even the United Nations most

cautious figures, they are talking about 200,000 children who are in need of immediate psychosocial support and help.

So in the long run, the impact on children is really devastating and most children, they will continue carrying all these symptoms their whole

life.

GORANI: So I'm curious: a child who experiences three wars, who may witness death, bloodshed, the death of family members, does that child then

grow up to exhibit aggressive behavior?

I mean, in other words, is this a child that will end up becoming a bitter adult who wants to then perpetuate this cycle, if you will, but an

adult incapable of integrating into a normal social structure?

KASSIS: Yes. Actually, I am not a real expert on this matter. But you know, trauma is something very individual. So every child that

responds to his or her trauma, sometimes in a different way.

But in general, in general, most of these children, they will live up with depression, anxiety, hopelessness, grief, resentments, anger and fear.

Of course, the most worst thing is their memories and they might also develop nightmares. You know, it's really very difficult to identify

exactly or to decide the of impact this trauma will have on the life of these children.

But as I said earlier, it is -- time doesn't heal trauma. Most of these children will live with post-traumatic stress disorders. They need

help. My biggest fear personally that these children, who witnessed such violent actions and you know, it's -- when there is no place in Gaza where

you can feel secure, when you lose your parents or one of your parents, this loss of that protection, this loss, the separation feeling from your

parents, this actually worse than the war activity itself.

So it's difficult to decide. But my biggest fear that these children will live up with hatred, with violence, with all these feelings which

should not -- should not continue. It should not last. It should be treated and this is where we are calling upon all international

organizations that such a trauma needs to be dealt with immediately and not to leave it even until further.

I know and I am realistic that today -- I mean, even my organization, Defence for Children International, there is very little what we can do

because there is no safe place in Gaza, moving; it's very difficult. So what we can do now is just violating -- sort of implementing that the

violations, we focus mainly on killings.

But of course we receive reports from our local partners on the ground and also from other international organizations about how devastating the

situation -- the situation is.

GORANI: It's a sad situation for the most vulnerable --

(CROSSTALK)

GORANI: Rifat Kassis, we're going to have to leave it there. We really appreciate your time there for a look at the most vulnerable, the

most innocent of the victims, the children, of course, wherever they're killed, wherever they're hurt or injured, it is always a tragedy. Rifat

Kassis of Children International, thanks very much.

And while both sides of the Israel-Gaza conflict continue to trade blame, to lob rockets and ultimatums at each other, across the globe, in a

completely different part of our world, in Argentina, a nation is on the brink of devastating financial default -- again -- largely as a result of

self-inflicted wounds. An excruciating loss in the World Cup final was hard enough to bear. But watching the clock tick down on an economic time

bomb could leave the nation broke as well as blue. We'll crunch the numbers that could crush a country when we come back.

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GORANI: Welcome back to the program. I'm Hala Gorani. Christiane Amanpour is off.

Argentina is staring down the barrel of yet another debt default, a country that just weeks ago was at the height of World Cup fever could be

facing an economic crash with no major breakthrough in some last-gasp negotiations. Happening now in New York, Argentina will default on its

obligation to bondholders tomorrow if nothing changes.

Last time Argentina defaulted, it was a catastrophe, an economic meltdown that sparked violence on the streets and wreaked havoc in the

global market.

But this time there seems to be almost a been there, done that tone as Argentinians anticipate a slowdown but perhaps not Armageddon.

Argentina's president, Cristina Fernandez de Kercher, blames the brinksmanship on, quote, "vulture capitalists," picking at the bones of

Argentina's economy.

But Paul Singer, the billionaire bondholder, calling in Argentina's loan says any damage is self-inflicted.

Felix Salmon is a financial blogger and commentator who's been following the brinksmanship in Buenos Aires closely and he joins me now

from New York.

So, Feliz, will Argentina default?

FELIX SALMON, SR EDITOR, FUSION: Yes, yes. They're going to default tomorrow. This seems pretty clear at this point. Whether it's really

their fault is something we can get into. They've transmitted the money to the bondholders, to the bondholders' trustee, Bank of New York. They did

that a month ago. And the problem is that the trustee, under the terms of a U.S. court order, isn't allowed to hand the money onto the bondholder.

So the bondholders are not going to receive the money as they expect.

GORANI: OK. Why not?

If the money's there?

SALMON: So the money's -- is at the Bank of New York. And then there's this judge, who's in -- also in New York, called Thomas Griesa. He

has an order and he has ordered the Bank of New York not to pay a penny to any of the bondholders unless and until Paul Singer, the vulture investor,

the hedge fund manager, gets paid off in full the $1.5 billion that he's owed.

GORANI: OK. So where do we go from here then?

SALMON: So the next step is probably that tomorrow Argentina will be officially in default. But right now they're in this grace period. They

have 30 days to get the money to the bondholders. They haven't worked out any way of doing it. So we'll have an official default tomorrow.

And then everyone will be in default. Paul Singer has been in default for a decade now basically and now everyone else will be in default as

well.

So it will, to use a technical term, be a mess.

GORANI: What is this big default party going on? Why is everyone defaulting? Why is this such a mess? I mean, (INAUDIBLE) before with

Argentina? Haven't we learned any lessons? The inflation rate is astronomical. The unemployment rate is disastrous. The economy is a mess.

And now this default is hanging over the country's head.

What is going on?

SALMON: Well, the last time Argentina defaulted was in 2002 and it had to default. And it had to default because it didn't have the money and

it had all of these lower denominated bonds, which it couldn't afford to pay because it devalued and there was an economic crisis and we thought you

showed that the genuine economic Armageddon that befell Argentina back in 2002.

In 2014, none of that is the case. You know, inflation is high; unemployment is bad. But we're not anywhere close to Armageddon and

Argentina has the means to pay its debts and it has the willingness to pay its debts. The only reason why it's not paying its debts is because the

U.S. courts aren't allowing it to do so.

GORANI: OK. So, OK. So if we look at it that way, then it's not fundamentals as much as technicalities. But the actors in this drama are

interesting as well and colorful. Of course the president of Argentina and the hedge fund manager, head to head.

SALMON: They're both incredibly strong personalities. Cristina Fernandez de Kirchner is this hard-charging populist woman of the Left,

champion of her people, who has made a political career in large part out of demonizing what she calls the vulture funds who are epitomized by this

man, Paul Singer, multibillionaire, hedge fund manager, who bought up Argentine debt at pennies on the dollar and now wants to get well over face

value for his debt.

You know, everyone else went into this bond exchange. They said, you know, Argentina, you can't pay all of your debts in full, we'll take 30

cents on the dollar. He said I'm not taking 30 cents. I want 100 cents. And if you don't pay me, I'm going to force you to default on everyone

else.

GORANI: And you speak of the president of Argentina, Fernandez de Kirchner, her popularity rating, I mean, initially she was seen as a kind

of protector and a defender of the lower socioeconomic classes. But she's losing some of her appeal. I mean, she's only about 25 percent in

popularity rating.

Could that have an impact?

SALMON: She and her husband have been one or the other in power for as long as anyone can remember, pretty much now, in Argentina, again, for

the best part of a decade. So I think at this point Argentina is a bit fed up at having Kirchner as president. Next year we'll have elections; there

will be a new president who might be more willing to negotiate with Paul Singer.

But it certainly doesn't seem as though this president is particularly inclined to do so.

GORANI: All right. I'm looking at the numbers here and her popularity rating and the nation's unemployment rate are pretty much --

(LAUGHTER)

GORANI: -- on par with each other.

Still higher than Francois Hollande --

(CROSSTALK)

SALMON: That's not a headline any president really wants to see.

GORANI: That is correct. OK. So if Paul Singer is forcing everyone else to default on that, because he wants 100 cents on the dollar that is

owed to him, what then is the outcome here? Because at some point you have to find a solution. And this can't drag on forever.

SALMON: You're absolutely right. And will really entering into completely uncharted territory here. Argentina has defaulted before,

virtually every other country in Latin America has defaulted before. The bond markets in the international capital markets know how to deal with

sovereign default in principle and in general. But this ozone is so different because it's entirely a U.S. jurisprudential issue, really. It's

all about what is going to be acceptable to the judge in New York, what will the judge in New York consider to be an acceptable negotiation or

compromise and the markets have basically been cut out of it. The judge is saying you can't do a market deal. You can't do a market exchange. You

can't deal with the default the way that countries have historically dealt with a default, or the way that you did it in 2005, the way that Argentina

did it in 2005.

None of that is acceptable. You only -- the only way you can do it is if I'm OK with it, I, Thomas Griesa (ph), the judge in New York. And no

one really knows what he's going to be OK with.

GORANI: All right. As the chronicle of a default foretold, thanks very much, Felix Salmon, joining us in New York, always a pleasure talking

to you, Felix, thanks very much.

And after a break, if Argentina is looking for an economic role model, maybe it should look to its most famous son. Pope Francis has put modesty,

humility and financial accountability -- what is that? On the menu at the Vatican. Food for thought when we come back.

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GORANI: And a final thought tonight, imagine a world where fiscal responsibility begins at home in the House of God. While his native land

of Argentina struggles to keep its economy afloat, Pope Francis continues to live up to his namesake, denouncing what he calls savage capitalism or

a, quote, "cult of money" that puts profits ahead of people.

The pope doesn't just talk the talk, even if it's in Latin. He also walks the walk. Not only did he pass on the apostolic palace and move into

a much more modest guest house, he also drives around Vatican City in a used car with almost 200,000 miles on the odometer.

And just last week, he made a surprise stop at a Vatican cafeteria and sat down for lunch with his fellow workers, chatting over codfish and pasta

-- hold the sauce -- and just a few French fries.

But it isn't merely a matter of style and symbolism. This month the pope continued to shake up the Vatican bureaucracy by restructuring the

Vatican Bank, which, for decades, has been awash in rumors of money laundering and other charges of corruption.

With a new director and advisory board, the bank will now aspire to be, in the Vatican's words, a, quote, "model for financial management

rather than a cause for occasional scandal," unquote.

Amen to that.

That's it for our program tonight. I'm Hala Gorani. Thanks for watching. Remember you can always contact us on our website, amanpour.com,

or follow me on Twitter @halagorani. Thanks for watching. Goodbye from London.

END