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Connect the World

141 Dead in Largest Terrorist Attack in Pakistan's History; Russian Ruble Continues Tumble; Australia's Legal System Under Attack After Hostage Crisis; Teen Survivors Describe Pakistan School Attack; Terrorists Target Schools; Sony Asks Media to Stop Publishing Leaks

Aired December 16, 2014 - 11:00   ET

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


HALA GORANI, HOST: Slaughter on an unimaginable scale in a place the victims ought to have felt protected. Dozens of children are among more

than 130 people killed by the Taliban at a school in northern Pakistan. This hour, we will consider the militant's motives, examine the global

reaction and we'll ask where Pakistan can go from here.

ANNOUNCER: Live from CNN London, this is Connect the World.

GORANI: A horrific terrorist attack at a Pakistani school ended with at least 137 people killed mostly children. It happened at a military-run

school in Peshawar about 120 kilometers from Islamabad. You see it there on the map. Take a look at some of the horrifying video.

And listen to these figures, the Taliban said six suicide bombers scaled the walls of the school to kill older students. Hours later, Pakistani

security forces pushed the militants back and said that all the terrorists were killed.

Officials say almost 200 other people were injured. A Taliban spokesman said this was revenge for deadly army operations in Pakistan's tribal

areas.

And nobody was safe, not even the children.

A short time ago we heard from the Pakistani state minister for education. He explained how the attack took place.

(BEGIN VIDEO CLIP)

MUHAMMAD BALIGH UR REHMAN, PAKISTANI MINISTER OF EDUCATION: It was a planned effort by the -- and a targeted effort by the terrorists. And

they had a plot from behind the -- from the backyard of the school. They blew up a car and diverted attention and then across the wall and

the security guard their attention diverted somehow they managed and got inside.

(END VIDEO CLIP)

GORANI: Somehow they got inside. How did they get inside? Many question on this tragic day.

Let's go live to Islamabad in Pakistan. Journalist Michelle Stockman joins me now.

So these terrorists who stormed the school and scaled the walls with the suicide vests, they were targeting the children?

MICHELLE STOCKMAN, JOURNALIST: That's right, Hala.

According to Taliban spokesman who was in contact with those suicide bombers as they were conducting this attack, they were instructed to

target students between the ages of 12 and 16.

Now this is a segregated school. It has the capacity for about 1,000 students. Boys and girls are educated separately. And what we've seen

in terms of the dead and injured that have arrived at the hospital all had been boys. We're still waiting for more information, but it appears

that boys were targeted, boys between the ages of 12 and 16.

Now, as this is a school associated with the military, these are children of military members. And it's likely that the Taliban saw

these as future military members and wanted to make this attack very personal and in fact systematically targeted these kids.

GORANI: Right. And kids 12, 13, 14 year olds, not only were they not off limits, they were targeted, as you're saying, especially boys.

This was a military-run school in a volatile area in Pakistan. And today people are asking the question how was it not better secured to

prevent against this type of attack?

STOCKMAN: Yes. We are still waiting for a full counting of how this attack could happen.

The military has started releasing information through a press conference. We understand now that there were not just six attackers,

there were seven. The death toll has been confirmed right now at 137 dead, over 182 injured. And what we're learning is that the attackers

came through the back of the school and then they entered various areas.

We've had testimony from children who said they were gathered in an auditorium and gunmen burst in and began to indiscriminately shoot.

So, in contrast to what the Taliban spokesman said at the beginning of this attack that there were 300 to 400 hostages, this was not a hostage

situation. The Taliban had gone in to kill. And they did, firing indiscriminately.

You know, the four children who were killed and those who were injured have very horrific injuries, multiple gunshot wounds.

And so there's been an outpouring of grief here across the nation. This country has been hit many times by terrorist attacks over the past more

than a decade. And this one has very much shocked the country.

And parents and loved ones of the teachers, the students who were in the school, are still waiting, trying to find the missing, waiting here what

the grim news is ahead for them and for the country at large, really.

GORANI: All right, Michelle Stockman in Islamabad, thanks very, very much.

The truth is you don't know what it's like when you're in a situation where your child possibly killed having to go to that school asking to

identify bodies, hoping against hope that at best your child was only injured.

We're going to have a lot more on this school massacre in Pakistan this hour. Even by Taliban standards, this attack is absolutely horrific.

I'll speak with a former Pakistani ambassador to the United States on what they possibly hoped to gain in killing children.

We'll have reaction from Washington where fighting the Taliban has been a top priority and anti-terror efforts since the September 11th attacks,

yet the Taliban still able to mount operations such as this one.

So where do we go from here? Our chief international correspondent Christiane Amanpour will join me with a look at the larger threat to

regional stability as well. Stay tuned, a lot more on our top story coming up.

This devastating story we're following in Pakistan comes as Australians try to make sense of what happened in their largest city just 24 hours

ago. The grief still very much evident over the deaths of two people who were taken hostage in a chocolate shop in Sydney.

Flags over government buildings were lowered to half staff and people are laying flowers at the scene of the standoff. It's still unclear

what exactly happened in the final moments as police stormed in, but as Anna Coren explains questions are starting to emerge about how this was

allowed to happen in the first place.

(BEGIN VIDEOTAPE)

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: Australia's legal system is under attack as questions are raised about why a known criminal was

free to carry out an armed siege on central Sydney whilst on bail facing dozens of other serious charges.

UNIDENTIFIED MALE: How can someone who has had such a long and shaken history, not be on the appropriate watch lists? And how can someone

like that be entirely at large in the community.

COREN: Man Haron Monis had previously pleaded guilty to sending abusive letters to the families of Australian soldiers who died in Afghanistan

and was sentenced to 300 hours community service.

He was also charged with being an accessory to the brutal murder of his ex-wife and 45 counts of sexual and assault related offenses, which he

denies.

The Iranian embassy in Australia confirms Monis was also accused of fraud in his home country. And the Iranian government had requested his

extradition.

Legal experts are defending the court's decision to release Monis on bail saying the rulings are based not only on the seriousness of the

charges, but also on the strength of the evidence.

UNIDENTIFIED FEMALE: The courts didn't know that this individual was as disturbed as he has turned out to be. So it's very easy in retrospect

to say, wow, this man has done this awful thing.

COREN: Monis' most recent lawyer told CNN that he never imagined his client was capable of an armed attack.

MANNY CONDITSIS, ATTORNEY: The person that I knew over a period of time never, ever spoke about physical violence of any kind. Indeed,

everything he said was anti-physical violence. So it's difficult for me to reconcile the Man Monis that I knew...

COREN: A major police operation is now underway across Sydney to try to strengthen security and public safety. A new, tougher bail law is also

expected to come in next month, but security experts say there are potential threats in all parts of the country.

UNIDENTIFIED MALE: There are over 100 individuals of interest and there is absolutely no doubt that the security agencies and the police keep as

close an eye on those individuals as is feasible.

COREN: As Australia grapples with its first gut-wrenching experience with terror here on home soil, there are serious concerns there could be

a backlash against the country's Muslim community. But the dozens of Islamic leaders who voiced their outrage and disgust at this horrific

act believe the Australian public will not judge them in the same light.

UNIDENTIFIED MALE: Australians are well educated. They understand all Muslims are not the same.

COREN: Anna Coren, CNN, Sydney.

(END VIDEOTAPE)

GORANI: Now to Russia's currency crisis, it is deepening by the hour. The ruble is just falling off a cliff. There is no other way to

describe it. In early hours, drastic interest rate hike by the central bank failed to stem the ruble's tumble to today, Tuesday. It briefly

hit a record low of 80 rubles a dollar after a second day of free fall.

That was another low in a year of lows. The ruble had already shed about 57 percent of its value against the dollar in the past 12 months.

The central bank has so far spent more than $80 billion trying to prop up the currency. It's not working. And it's the latest attempt to

stave off a full blown crisis and it has not convinced investors. We're going to have more on this, including what the reaction is, from Moscow,

of course this hour.

Quick break. When we come back, we'll be looking into what Russia's currency crash means for the wider world. That's in about 30 minutes.

And we continue to monitor the situation in Pakistan where more than 100 people, mostly children, were massacred by Taliban militants. We'll

speak to the former Pakstani ambassador to the United States next.

(COMMERCIAL BREAK)

GORANI: Hello, everyone. Welcome back.

Let's update you now on our top story, that horrific Taliban attack on a military-run school in Pakistan. Officials now tell us the death toll

has risen to 137. It's hard to wrap your mind around, to be honest. Nearly 200 others were injured.

Militants stormed a school where up to 1,000 children attend earlier today. The siege and standoff with security forces lasted several

hours. The attackers have now all been killed, we understand, and a spokesman for the Pakistani Taliban says the attack was in response to

military offensives against the terrorist group.

Let's tell you more about the Pakistani Taliban, or the TTP. They were formed in 2007, based in the country's tribal areas where they control

much of the border area between Afghanistan and Pakistan. The group has strong links to the Taliban in Afghanistan and al Qaeda. Their ultimate

goal is to overthrow Pakistan's government and create an Islamic state ruled by shariah law.

Earlier this year, Pakistan's government began negotiations with the group that led to a ceasefire in March. It didn't last. It ended a

month later.

What is the Taliban trying to achieve after an attack such as this? Let's bring in Sherry Rehman. She is the former Pakistani ambassador to

the United States. And she joins me now live from Karachi via Skype.

What was your reaction when you heard the news?

SHERRY REHMAN, FRM. PAKISTANI AMBASSADOR TO U.S.: I think all of Pakistan is stunned and reeling from the shock. This has been an

unconscionable massacre that has -- that, you know, Pakistan has been unprecedented.

We've seen a lot of carnage in the past, but really this has crossed a Rubicon of sorts.

GORANI: Do you think this could be the -- in some ways a gamechanger, I mean in some ways galvanized people against the Taliban in a way they

were not galvanized before?

REHMAN: Well, I think there's really no option but to be galvanized. But to be clear and I do hope sincerely that this stops some of the

equivocation we have seen from certain quarters in the past and hardened the government's resolve to run a coordinated national security and

counterterrorism plan and fund it better and articulate a clear narrative again. The Taliban attack our children, our homes, our

highways and really hold Pakistan's future hostage.

GORANI: But how is the Taliban, after so many years of the Pakistani armed forces and the government saying they are fighting against this

group, how is it still so strong, still able to mount attacks such as the one we saw in Peshawar today?

REHMAN: Well, actually (inaudible) it has been degraded. There was a sense that after last Waziristan operation the TTP's capabilities have

been substantially diminished, degraded and reduced and certainly even the United States has vouched officially for al Qaeda losing their

traction in South Asia and certain at the core of Pakistan and Afghanistan border areas due to Pakistan military operations.

To say that they have suddenly emerged as strong is underestimating the asymmetrical warrior's strength, as you know. And we are fighting a

battle that is every day that puts all of us into the trenches pretty much every day here.

GORANI: Right, asymmetrical, of course, but they still managed a very spectacular deadly and tragic attack on a military-run school. I think

from the outside looking in, people would expect a facility like that one to be better secured. Were you surprised?

REHMAN: Indeed, it should be, but I think that security forces are fairly spread to the maximum across most of certainly that part of

Pakistan. And having said that, it's -- you know, but indeed a military-run school should be better protected. This one (inaudible)

responsibility of the provincial government normally. And it's high time that all political forces really put their hearts and minds

together and come out with a clear resolve, which is very needed by even the military and law enforcement agencies to secure our lives in the

future.

GORANI: Sherry Rehman, you actually received death threats from the Taliban. This isn't just something that's sort of outside of your -- of

what touches you directly. You have received death threats from these groups, because of some of the work you did against anti-blasphemy laws,

et cetera. So is this something that concerns you today more as far as your personal security is concerned?

REHMAN: I think that anybody who speaks out against terrorism, anybody who speaks for the protection of vulnerable minorities, is at this level

of risk. Certainly I think that the political party I belong to, and continue to belong to and speak for, has seen our stalwarts and

(inaudible) leadership go down, which is (inaudible) as you know.

And we have been really suffering the onslaught of a war that goes unmentioned and unsun and unheard in many capitals of the world. So

it's a hard life, but we kind of stay here with our feet in the ground. And we fight with our face to the sun.

GORANI: Sherry Rehman, the president of the Jinnah Institute in Karachi and the former Pakistani ambassador to the United States, thank you for

joining us on this sad day for Pakistan.

REHMAN: And you can always go to .com to find out more about the motives driving these militant groups to commit such appalling acts of

violence. CNN looks at the history of Taliban attacks and the reasons given to rationalize them. That's at CNN.com/international.

A quick break, when we come back -- or I should say, let's return to another one of our top stories, Russia's deepening currency crisis.

We told you a moment ago how in early hours drastic interest rate hike by the central bank in Russia has failed to stem the ruble's tumble.

Foreign Minister Dmitry Medvedev says the government will meet to discuss the situation. What are Moscow's options.

Let's get more from Matthew Chance in the Russian capital. I was updated, Matthew, our viewers on what the ruble has done. Down 57

percent in the last year. Interest rates 10.5 percent, inflation 10 percent. We're expecting a contraction of the Russian economy of up to

5 percent next year. What's the reaction in Moscow?

MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT: Well, actually the interest rates have gone up to 17 percent. That was the big interest

rate hike that was announced overnight by the central bank in an attempt to stem panic and to encourage Russians to keep their rubles in their

bank accounts.

It doesn't appear to have worked, though. The ruble has resumed its slide, reaching record lows once again. And, you know, part of the

reason for that is because the interest rate hike does not tackle the underlying issues affecting the Russia ruble. We're talking about a

sinking oil price. That's been dragging down the ruble. The ruble is essentially linked to the price of crude oil. And there's not really

much the Russian government can do about the global oil price.

The other issue are the international sanctions. These were imposed against Russia by the United States and by the European Union for its

alleged activity inside of Ukraine. And of course, for its actual annexation of the Crimean peninsula earlier this year.

And those sanctions appear to be taking a really serious bite at Russia, preventing companies from getting loans in banks from overseas. And

all of these factors have combined together to create this situation that is really, really negative for the ruble. And there's not much, it

seems, at least immediately, that the Russian government is going to be able to do about it.

They're having those meetings. They're discussing their options. But there's no silver bullet that's going to end this for Russia.

GORANI: Matthew Chance, thanks very much, live in Moscow. We're going to have a lot more on the misery in Moscow on the program.

Will President Putin's popularity also plunge as the crisis begins to bite? It's sky high still. We'll bring you that in 20 minutes.

Also ahead, the latest on that school massacre in Pakistan. Leaders around the world are condemning the Taliban act. That list includes

U.S. President Barack Obama. We'll have the view from Washington.

(COMMERCIAL BREAK)

GORANI: Hello everyone. Welcome back. Let's get you back to our top story.

Today, Pakistan saw one of its worst terrorist attacks in the nation's history. Police say at least 137 people were killed, nearly 200 others

were injured, when militants stormed a school run by the military in Peshawar.

A spokesman for the Pakistani Taliban says the attack was in response to government offensives against the terrorist group. Pakistani officials

say all of the attackers were killed and that the attack is over.

A short time ago, we heard U.S. Secretary of State John Kerry strongly condemn the attack on Peshawar.

(BEGIN VIDEO CLIP)

JOHN KERRY, U.S. SECRETARY OF STATE: Mothers and fathers send their kids to school to learn and to be safe and to dream and to find

opportunity. And particularly at this military school in Pakistan, they sent their kids there with the hope and dreams of serving their country.

Instead, today, they are gone, wiped away by Taliban assassins who serve a dark and almost Medieval vision and the opposite of everything that

those mothers and fathers wanted for their children.

(END VIDEO CLIP)

GORANI: John Kerry, the U.S. secretary of state who is currently visiting London here in the United Kingdom.

And by the way, it's starting to look like this may in fact be the worst terrorist attack in the history of Pakistan, because authorities are

telling CNN the death toll has now risen from 137 to 141. These are military sources telling CNN 141 confirmed killed in the attack on that

school in Peshawar.

Over the past decade, Washington has spared no expense in its efforts to (inaudible) Peshawar today. Jim Sciutto joins me now with more reaction

from the U.S. capital. What's being said in Washington, Jim?

JIM SCIUTTO, CNN CORRESPONDENT: Well, very strong words like you're hearing from John Kerry, just calling this as the president did as well,

a barbaric act that shows, and again you'll hear this from U.S. officials, the need for both the U.S. and Pakistan to challenge this

group and others like it in that part of the world.

Remember, the TTP as its known, the Pakistani Taliban, its principle target is the Pakistani government, but has come up and targeted U.S.

interests as well, certainly American forces across the border in Afghanistan.

But this is a group that inspired a 2010 failed bombing inside Times Square in New York City -- you'll remember that attack -- behind an

attack in eastern Afghanistan that killed seven CIA officers in 2009. And is also a group that is tied to al Qaeda, that's tied to the Afghan

Taliban.

It has been a number one target for U.S. drone strikes there, because of that threat.

And, you know, this military operation that the Taliban says this attack on the school was in retaliation for, that's something that Pakistan did

under great pressure and encouragement from the U.S. The U.S. has been pushing them to confront the Pakistani Taliban for some time on the

ground just as U.S. drones have been targeting them for a number of years. In fact the last four years, U.S. drone strikes have killed two

Pakistani Taliban leaders, Hakimullah Mehsud and Baitullah Mehsud in 2009.

So, it's a group principally focused on Pakistan, but has certainly also been a threat to U.S. interests.

GORANI: So, you mentioned there the drone attacks from the United States, also the Pakistani military saying that it's waging a battle

against the Taliban in Pakistan. And yet these groups still are organized enough and strong enough to conduct operations such as the one

against this military-run school.

What's at the root of their continuing strength?

SCIUTTO: Well, it's a difficult group to put to down, right. I mean, I have spoken to U.S. intelligence officials who say that, you know, in

light of this offensive that's happened in those tribal areas in the northwestern part of -- or northeastern, rather, part of the country,

you can see this as something of an attack of -- an act of desperation to show their relevance, to show that they can still strike at the heart

-- in this case at the Pakistani military, at the heart of the Pakistani security establishment.

But, you know, I've been up in those tribal areas in Swat, et cetera, which have been safe havens and strongholds not only for the Pakistani

Taliban, but for core al Qaeda. This is a very good place to hide just from the landscape, from the motivations of a lot of the people who live

there.

It's hard to eliminate a group like this, and that's not their only stronghold. They're active in other parts of the country. It takes

time. And this is just a reminder.

Remember, core al Qaeda has been under assault for 13 years there at great expense, blood and treasure from the U.S.

Core al Qaeda still exists, and now you have the US starting a large military campaign against ISIS in Iraq and Syria, it's going to be a

number of years. And you talk a lot about degrade and destroy these groups, but as you and I both well know, having covered this region for

a long time, it's almost impossible to wipe them off the map.

GORANI: All right, Jim Sciutto, live in Washington. Appreciate your time. Thanks very much, Jim. And we'll be speaking --

SCIUTTO: Thank you.

GORANI: -- to Jim later as well in the coming hours for more on this breaking news story. It's worth mentioning again, 141 people killed in

this attack on that military-run school in Peshawar -- just a mind- boggling and shocking number -- most of them children.

We'll have the latest world news headlines just ahead, plus innocence struck down. We'll have more on the massacre in Pakistan. Chief

international correspondent Christiane Amanpour will be here with analysis. Stay with us.

(COMMERCIAL BREAK)

GORANI: Our top stories. Authorities in Pakistan say at least 141 people were killed, almost all of them children, in an attack on a

military-run school in Peshawar. You're seeing some of the video of the aftermath. Nearly 200 people were injured.

A spokesman for the Pakistan Taliban says the attack was in response to military offensives against the terrorist group. Pakistani officials

say all of the militants involved in this attack were killed.

Also among the top stories, Australians are mourning the death of two people who were taken hostage in a chocolate shop in Sydney. Flags over

government buildings are lowered to half staff today, and people are laying flowers at the scene of the standoff. Police say what happened

during the police raid that ended the siege is still under investigation.

And Russia's currency is plunging to new record lows today against the dollar despite a drastic interest rate hike to 17 percent. The central

bank's late-night action failed to convince investors or stop the ruble's free fall. At one point Tuesday, it was changing hands at 80

per dollar, but it has improved a bit since then.

Let's return now to that horrific Taliban attack on a Pakistani school. Atika Shubert is following developments for us throughout the day, and

she joins me now live with the latest. And we have a new death toll, Atika?

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: That's right. We have now gone over 140 -- 140 victims, the vast majority of them children

between the ages of 12 and 16. This seems to have been a specific target by the Taliban attackers.

And now, we're getting some new details as well as to how they conducted the attack. According to the education minister speaking to CNN's Jim

Clancy, he says that they actually detonated a small car bomb elsewhere, diverting the attention of security guards at the school. They were

then able to scale the walls of the school and get inside.

Some reports said they were actually also wearing Pakistan military uniforms. And we understand that not only were they carrying guns, but

also suicide vests. One of them apparently detonating inside the school.

So, some horrific reports coming from eyewitnesses from inside. And unfortunately, it does look like that death toll may continue to rise,

because many of those wounded are very serious gunshot wounds, Hala.

GORANI: Right. It's really starting to look like the worst terrorist attack in the history of the country. Thanks very much, Atika Shubert.

The Taliban targeted the most vulnerable in society: children. We've spoken to some of the survivors. This is how 14-year-old Ahmed Faraz

described what happened.

Quote, "Four or five people entered and started rapidly firing. I was shot on my left shoulder, and I lay under the bench. They were making

exclamations of 'God is great.' Then, one of them proclaimed that, quote, 'A lot of the children are under benches, kill them.' They

climbed the benches and started firing at the children.

Chief international correspondent Christiane Amanpour joins me now live on set with more. It's hard to read these words and not be shocked by

this event today

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Right.

GORANI: Even by the standards of the Taliban.

AMANPOUR: Well, you know what? This is their MO. This is their standard. And the condemnation from the world has been swift, it's been

absolutely sharp. And from Muslim countries, not just the West. India has also been supportive and also condemning the attack. Afghanistan,

the president has said that this is un-Islamic and inhumane.

And interesting, these Taliban and the al Qaeda, they all like to say they're the greatest Muslims, they call everybody else takfiri, not real

Muslims, infidels.

GORANI: Right.

AMANPOUR: Well, the head of the Human Rights Commission of the UN said they are takfiris, and they, along with people like Boko Haram and al

Qaeda and ISIS seem to be competing to be the most barbaric in the world.

So, that is what we have here. And as I say, sadly, killing children and targeting schools, in other words, soft targets, not full-force

military targets. They have been doing that for years.

And obviously Malala Yousafzai, who we all know so well, is the most famous child victim of the Taliban in Pakistan and anywhere, and she was

just given the Peace award, the Nobel Peace Prize last week in Oslo, and she also has put out a statement obviously condemning it, obviously

expressing her heartbreak at what's happened in her country while she continues to lobby for the right of kids to go to school.

GORANI: Well, she's the most famous Taliban victim -- child victim, shot in the head just for advocating for children's rights to go to

school. But how do you combat an enemy like the Taliban? Very asymmetric warfare. I mean, it's the very definition of it, really.

They are targeting schools.

The Pakistani military has said they are trying to fight this force. The US is using drones and all sorts of methods to try to target the

Pakistani Taliban and elsewhere on that tribal border area. And yet, still, they're able to mount these attacks.

AMANPOUR: Yes, indeed. And it's been going on for a long time. And obviously, people are at their wits' end as to how to end this.

One thing that's happened in Afghanistan that might help is that they've had an election whereby the majority of the Afghan people have voted for

a moderate future by voting for Ashraf Ghani, a moderate future, the rights of everybody, the rights of women and girls, a proper sort of

market economy, democracy, the rule of law.

What's happened in Pakistan over the years is that all the various different arms of the government have not necessarily been working

together. And in fact, the military and the ISI, the military intelligence, have been accused, often, of actually colluding with the

Pakistan. Certainly working against the United States and sometimes even against the civilian government.

And this is a serious problem, because going forward, the only way that experts say that this can be defeated is if all the government

ministries and law enforcement are working together, and intelligence are working together.

And some are saying now in the wake of this, they have to go on television and have really strategize as to how to bleed away any kind

of sort of moral support for these groups.

GORANI: It's a war of ideas as much as it is --

AMANPOUR: It is.

GORANI: -- a war on the ground. A military war.

AMANPOUR: It is. And I think importantly. And the only little bit of hope there is that the majority of the Pakistanis actually do not

support the Taliban. It's a country of over 160 million people --

GORANI: Right.

AMANPOUR: -- and they are not all extremists, and they're not all in the camp of the militants. But this goes back to the 1980s, early

1980s, when then dictators Zia-ul-Haq brought in this extremist ideology.

And all the sort of organs of the state were kind of shaped around this, and it's come back to bite them in a major way, and unless they realize

this is their biggest existential threat, it's going to continue.

GORANI: It's possible, perhaps, that an attack like this, one so shocking, could be a game changer and galvanize people --

AMANPOUR: Or some have said, obviously, that if the military can't get their act together in the face of this attack on their children --

GORANI: Yes.

AMANPOUR: -- then what is it going to take?

GORANI: What is it going to take? All right, our chief international correspondent Christiane Amanpour, thanks very much, and we'll see you

on "Amanpour" a bit later.

AMANPOUR: Yes, well, we'll continue with the defense minister, in fact.

GORANI: All right, look forward to it. Thanks, Christiane. The defense minister, as Christiane was mentioning, that happens on

"Amanpour" at 7:00 PM London time.

We'll be right back after this. Just how low can the ruble go, and what can Russia do to prevent this currency from collapsing? We'll be asking

those questions next.

Shares plunge 10 percent off the back of leaked e-mail. How far will they fall? Everything is falling. We'll be back.

(COMMERCIAL BREAK)

GORANI: Pakistanis are in a state of shock after one of the worst terrorist attacks in the nation's history, and the death toll continues

to rise. Authorities are now telling us at least 141 people were killed when militants stormed a school run by the military in Peshawar.

Almost all of the victims, 132 of them, were children. The other 9, according to the military, were staff members at the school. A

spokesman for the Pakistani Taliban says the attack was in response to government offenses against the terrorist group. Pakistani officials

say all of the attackers are now dead, have been killed.

Let's return to another of our top stories. The Russian ruble is falling to the lowest levels on record against the dollar. A late-night

attempt by the central bank to use a dramatic interest rate hike did not stop the free fall.

This Tuesday, the ruble continued to tumble. Falling oil prices, Western sanctions, and a looming recession next year all playing a part

in the crisis. So, what options does the government have?

Here to help us work through what this means for Russia and the world is Liam Halligan. He writes a column for "The Telegraph" and is also

editor-at-large with Business New Europe. Hello, Liam.

LIAM HALLIGAN, ECONOMICS COMMENTATOR, "THE TELEGRAPH": Hello.

GORANI: Would you put your money in a savings account in Moscow at 17 percent?

HALLIGAN: Well, you'd certainly need a strong stomach, that's for sure. Of course, we saw a rise, a shock rise in interest rates in Russia

overnight from 10.5 percent to 17 percent. It's the sixth rise in interest rates this year as the government tries to defend the ruble.

Today, we've seen the ruble touch -- or go over 70, and at one point, almost touch 80 to the dollar. It's recovered slightly since. There's

a lot of speculation now that Russia could even reach for the big stick, if you like, of capital controls.

Of course, since 2006, Russia's been pretty much the only big emerging market out there with an open capital account. Money can come in and

out at will, in contrast to China, of course, and India, and even Brazil to a degree.

There is speculation, now, in the market that in order to try and stop the rot, if you like, and stem a currency blood bath --

GORANI: Yes.

HALLIGAN: -- that could really use up Russia's financial system, we may see capital controls.

GORANI: Now, can you explain what that would mean?

HALLIGAN: What that would mean is that there would be physical restrictions, if you like, placed on people moving money out of Russia.

This isn't unusual. When I was growing up in London, we had capital controls. I remember little marks in the back of your passport and so

on.

A lot of major economies still have capital controls. Russia's been very vocal under Putin about not using them, wanting to create Moscow as

an international financial center, of course.

A lot of work's been done on that in recent years, and the fear now is that all efforts to de-dollarize the economy, if you like, to get people

saving in rubles as much as possible, to on shore the Russian economy -- and it is a pretty big economy. Before this rout, it was the sixth

biggest in the world. These may be undone by this damage to the currency.

GORANI: Now, Liam, people watching us, might be in other countries outside of Russia, most probably they are, and they're wondering, how

could this impact ordinary people outside of Russia. Because this could be contagious, couldn't it?

HALLIGAN: Absolutely.

GORANI: I mean, in emerging markets here.

HALLIGAN: Western -- if you're an English-speaking sort of Brit or American or whatever, you're social media's full of people saying oh,

when do I pop the champagne corks at 75 to the dollar, 80 to the dollar.

GORANI: Right, right.

HALLIGAN: But we really need to be careful, and we really need to not be hubristic around -- about this. Let's wind our memories back to

1998. It was a rather innocuous currency in Thailand, of course, which then sparked a broader systemic crisis, which led to a full-blown rout.

The 2008 crisis was different, that was a crisis that was made in the West, made in the city of London, made on Wall Street. We could see a

return here to a contagion from the emerging markets to the West, reversing the 2008 direction.

GORANI: And the difference as well is you have exposure by Western banks to Russian debt. So, here you have another component you didn't

have in 1998.

HALLIGAN: In many -- in the minds of many of your viewers, Russia will be a very, very distant place. If you're here in Europe, particularly

if you're from Germany or Eastern Europe, Russia looms very, very large in your economy. Germany in particular. Austria, enormous exposure to

Russia. The Chinese, of course, increasingly exposed to Russia.

GORANI: So, we should all be hoping that this is going to get resolved.

HALLIGAN: I think it would be --

GORANI: Even people upset with Russia over Crimea should not be applauding because Russia is going through tough times now.

HALLIGAN: In the end, we all live on the same planet.

GORANI: Right.

HALLIGAN: And if there is a major -- continuation of a major currency meltdown, a loss of confidence, investors will start saying -- will

start questioning, is this really about Putin? Is this really about sanctions, or is this really about the end of QE? Is this really about

an inability of the West to dig itself out of an economic hole.

GORANI: Central banks --

HALLIGAN: All questions will be back on the table unless we see some kind of -- end to this crisis in the next 24 for 48 hours.

GORANI: All right. So, there is -- definitely a time there, the countdown clock has started, 24 to 48 hours, we'll see if it gets worse

or if it is contained. Liam Halligan, thanks very much for joining us.

HALLIGAN: Thank you.

GORANI: Editor-at-large with Business New Europe.

All right, we'll be right back after a quick break. The bad news continues for Sony executives, but they don't want us to tell you why.

Regardless, we'll have more after the break.

(COMMERCIAL BREAK)

GORANI: I'm Hala Gorani, welcome back. Let's update you on the attack on that school in Peshawar, Pakistan. A military spokesman says the

death toll has risen to 141. Almost all of the victims were children between the ages of 12 and 16. Nearly 200 others were reported to be

injured.

The Pakistani military says it killed six militants who carried out the attack. The Taliban claimed responsibility. Security forces spent

hours clearing the school of explosives. The Taliban spokesman says the attack was revenge for military operations against their group in tribal

regions.

All right, let's turn our attention, now, to Sony. Sony is asking news organizations, including CNN, to stop analyzing and publishing the

company files that hackers made public over the past few weeks. So, the question is, should we? For more on this, let's bring in CNN's Samuel

Burke, who is live in New York. Should we? Will we?

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Hala, this is one of the most important tech stories that we've ever covered at CNN and that other

media organizations have covered. Hacking is one of the stories of our time. There's individual hacking, corporate hacking, military hacking.

And really, Sony is going to become the poster child for what corporations should do to protect themselves, or else they could end up

like Sony. I think it would be irresponsible to just sit back and pretend as if it weren't happening.

That said, of course we aren't reporting on all of the details. I, for instance, reported on the fact that medical information about Sony

employees has been put out on the internet by these hackers, but of course, I don't say their social security numbers, what type of medical

treatment they were receiving.

But we're reporting on the facts and talking about the importance of these facts in the broad strokes of this story, not putting out some of

the scandalous and juicy details that are released and that some blogs and social media are reporting on, Hala.

GORANI: OK. So, what happens next for Sony? They must be preparing themselves for more bad news.

BURKE: Well, two things are happening right now. One, their stock is down about 10 percent over the past week. The good news for Sony is

that's publicly reported information. That's not a secret that's been divulged.

But the other bad news that could be on the horizon is that some of these hackers are threatening some type of Christmas Day surprise.

Imagine how much information they have, Hala. Imagine if somebody got our e-mails, all the e-mails that you and I have sent over the years of

working at CNN.

There's probably a lot of information in there from all of the -- Sony's employees and executives. So, time will only tell what they have.

GORANI: All right, Samuel Burke, thanks very much. Just the idea that all of the e-mails we've ever written, Samuel, would be made public just

sends shivers down my spine.

(LAUGHTER)

BURKE: Let's stick to what's out, Hala.

GORANI: Let's stick to that.

(LAUGHTER)

GORANI: Let's stick to handwritten letters, I think. I don't know. Thanks very much, Samuel Burke. I'm Hala Gorani and this was CONNECT

THE WORLD. "The International Desk" is up next with the latest, of course, on our top story, that horrific shooting at a school in

Pakistan. We will be live in Islamabad. Thanks for watching.

(COMMERCIAL BREAK)

END