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Sydney, Nation Mourns Hostage Victims; Death Toll Rises to 145 In Taliban Attack on Peshawar School; Google's Top Searches of 2014; Preserving Serbia's Pirot Carpet Craft; Top American Movie Theater Chain Cancels Premiere of Sony Picture's The Interview' Russia's Currency Crisis

Aired December 17, 2014 - 8:00   ET

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

MANISHA TANK, HOST: Hi, I'm Manisha Tank in Hong Kong. A warm welcome to News Stream where news and technology meet.

Pakistan mourns the students and teachers killed in a horrific attack on Tuesday.

Russian consumers are hit hard after the ruble's sharp bite.

And how a free mobile game made by one person made it to Google's top searches of 2014.

Well, we begin in Pakistan, a country that is observing three days of national mourning for the victims of Tuesday's massacre at a military-run

school.

Peshawar is overwhelmed with grief as funerals are held for the 145 people who were gunned down. Most of the victims were children.

The full extent of the horror they experienced is still coming to light. You're looking at pictures from inside the auditorium of the school

that was besieged by Taliban militants.

Students were taking exams when gunmen stormed inside with the intent to kill.

Journalist Michelle Stockman has more.

(BEGIN VIDEOTAPE)

MICHELLE STOCKMAN, JOURNALIST: In Pakistan, the grim task begins. Inside this casket, a high school senior, one of 132 students killed in

Tuesday's rampage by the Taliban.

At first, some students at the army school in Peshawar thought the attack was a drill, but the devastation that swept over campus was real and

horrifying. A U.S. counterterrorism official called the assault unprecedented.

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The depraved decision that one has to make to storm a school of innocent children and open fire on

them. I think it's a testament to how cold-blooded these extremists are.

STOCKMAN: The Pakistani military revealed that the attackers had enough ammunition to last for days.

Quick to claim responsibility for the massacre, the Pakistan Taliban, also known as TTP.

TIM CRAIG, THE WASHINGTON POST: : They have been responsible nearly a decade now of attacks against Pakistan army troops and installations and

government buildings.

STOCKMAN: Fixated on overthrowing the Pakistani government, Tuesday's attack on the innocent, TTP says it's revenge for the killing of hundreds

of tribesmen and their children during a recent offensive by the Pakistani military.

"We want them to feel our pain," said a Taliban spokesman.

The attack beginning just after 10:00 a.m., first came the diversion: a car bomb triggered to distract security forces. Meanwhile, seven

attackers scaled the school's walls, descending upon over 1,000 students and their instructors with homemade explosives and donning suicide vests.

"The men entered the rooms one by one," this lab assistant says, "are started indiscriminately firing at the staff members and students."

The school perhaps also targeted for terror, because the Taliban are fiercely against western-style education for children and the employment of

women.

(END VIDEOTAPE)

TANK: A chilling series of events.

Well, that was journalist Michelle Stockman reporting there.

As Pakistan mourns, it is also toughening its stance against terrorism. Prime Minister Nawaz Sharif has lifted a moratorium on the

death penalty for terrorism cases. He says the country will continue to battle extremists until they are wiped out.

Pakistan's army chief is in Afghanistan to help the two countries cooperate in the fight against militants along their border.

Well, just two years ago, the Taliban attempted to kill education activist Malala Yousafzai. She was attacked while riding on her school bus

in Pakistan's Swat Valley. Just last week, Malala received the Nobel Peace Prize, the youngest ever winner. And now she's calling for action after

what she described as the senseless and cold-blooded act of terror in Peshawar.

(BEGIN VIDEO CLIP)

MALALA YOUSAFZAI, EDUCATION ACTIVIST: My family and I are heartbroken after hearing the news that more than 100 innocent children and teachers

have lost their lives in (inaudible) to take on a school in Peshawar. And we stand with all those families and all those children who are injured

right now and who are suffering through this big trauma. and now it is time that we unite and I call upon the international community, leaders in

Pakistan, all political parties and everyone that we should stand up together and fight against terrorism. And we should make sure that every

children gets safe and quality education.

(END VIDEO CLIP)

TANK: The Taliban attack on Malala not only failed to silence her, it amplified her message. And it seems this latest act of terror could also.

It's helping to bring India and Pakistan closer together. The neighboring nations have long been foes. But Prime Minister Narendra Modi is vowing to

stand by Pakistan in its fight against terror.

(inaudible) asked schools across India to observe two minutes of silence for the Peshawar tragedy.

People in India are also showing their solidarity online. They are using the hashtag #IndiawithPakistan. It is, in fact, one of the country's

top trends. Another is #prayforPeshawar.

Well, sadly the attack in Peshawar is not the first to target a school. Gail Lemon of the Council on Foreign Relations writes that "as

schools become battlefields, the need to protect them has never been greater. Education is one of the most potent weapons in the fight for

global stability and security."

And you can read the rest of that on CNN.com/opinion. Do have a look.

Now to very different matters. The New York premiere of the film "The Interview" has been canceled, this after a group that claims to have hacked

into Sony Pictures says it will target moviegoers.

The hackers, who call themselves Guardians of Peace are threatening a bitter fate for anyone who goes to see the movie. The comedy depicts a

fictional plot to assassinate the North Korean leader Kim Jong un.

Pyongyang has denied that it was behind the Sony attack even though it praised the attacks as a righteous deed.

Still to come here on News Stream, Russians are feeling the pinch from western sanctions and a drop in oil prices. We're going to look at the

impact with a report live from Moscow.

And an outpouring of love and support for the victims of Sydney's hostage standoff. We look at how the city is coping after Monday's

tragedy.

(COMMERCIAL BREAK)

TANK: A lovely nighttime shot there of Victoria Harbor.

So, let's get more on this Sony story, something people right across the world have been interested in. We can pick it up now with CNN's senior

media correspondent Brian Stelter to find out a bit more about the reaction.

So there have been these threats against the premiere of this movie The Interview. Tell us a bit more about this and how people have reacted,

how Sony has reacted?

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: It was a very strange threat published online yesterday and sent to some reporters basically

invoking 9/11 and suggesting that American moviegoers stay away from the movie theaters where The Interview was scheduled to premiere on Christmas

Day.

You know, this is the kind of thing that seems absurd to a lot of people, because after all these are cyber hackers, now suddenly threatening

physical harm. A big change in the tactics of these hackers.

But it did cause that premiere you mentioned in New York to be canceled. And one big movie theater chain in the United States has decided

it's not going to show the movie next week, that's Carmike Theaters, a source telling me they decided it's just not in their best interests to

play the movie.

So what we're looking for today is whether other theater chains will make the same decision and also decide to pull the movie.

TANK: Yeah, and I guess also what's remarkable about it, Brian, is the more that you tell people they won't be able to watch the movie, maybe

down the line the more they'll want to watch it.

But aside from that, let's get back to the -- we'll pick up that in a second. I just want to talk about the hacking, though, at Sony.

Sony has tried to plug the leak, as it were, you know, with legal measures. Is it really working?

STELTER: The short answer is no, not entirely working. I do think some news organizations are being more careful about what emails they're

sharing, what private emails from Sony they are reporting on.

But the fact of the matter is, there are still websites that are looking through these stolen documents and sharing what is newsworthy in

them.

Sony, in terms of the crippling nature of the hack at the end of November they are getting back online. Business is, you know, back to

somewhat normal there. Shows are still being produced, movies are still being produced. But this is all anyone in Hollywood is talking about. And

that's going to continue for some time.

Even though Sony is trying to get back on its feet, this is going to continue for some time.

TANK: I'm sure it is.

And just picking up -- and I know you want to talk about it -- you know, people are asking, so what is it. What is it about this movie The

Interview? Maybe more people are now going to be intrigued about it even if they're being warned not to go watch it in the cinemas.

STELTER: You know, you're right about that. This is the -- you know, and this is awkward to say -- the best publicity a movie like this could

have gotten if, in fact, it is still available in theaters or some other way. Because here's the bottom line, it's kind of a mediocre comedy. It's

gotten very bad reviews so far. Even one Sony executive in one of these leaked emails said it wasn't a very funny movie.

But there were a lot of Seth Rogen and James Franco fans who were going to go see it on Christmas Day, who were looking forward to it. And

if it doesn't come out in movie theaters now, the question becomes will Sony release it some other way? Will they release it online, you know,

Netflix style? Will you be able to buy it online and watch it? And if they make it accessible that way, will hackers try to disrupt that.

I think that might be where this story is going if movie theaters decide not to show it in physical theaters.

TANK: Well, I'm certainly glad that we're going to have you to check in with a little bit later, Brian. I'm sure we're going to be checking

back on this story quite a bit. Brian Stelter, thank you so much for joining us from New York.

STELTER: Now, Russia is set to release its latest unemployment figures, adding more insight into the severity of the country's downturn.

Russia's currency is also in focus, this after taking a beating over the past few days. It's currently making back some of its loss against the

U.S. dollar, back nearly 4 percent at the moment. But it's still down more than 50 percent this year.

The Russian finance ministry says it's been selling currency reserves to prop up the ruble.

You've got to ask how long that can go on for.

The crashing currency has electronics giant Apple no longer selling iPhones, iPads and computers online in Russia, at least for now that's the

case.

And a senior international correspondent Matthew Chance reports Russian consumers are starting to feel the pinch in other ways as well.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT: On the streets of Moscow there's no real panic, just the sense of impending doom particularly

at this curbside currency exchange where Russians buy dollars despite the skyrocketing rates.

UNIDENTIFIED MALE (through translator): An hour ago, it was 60, now it's like 85. I'm afraid because we got our wages in rubles and they don't

pay in dollars it's scary.

CHANCE: It was to halt the ruble's slide that the Russian central bank hiked its key interest rates so dramatically, up 6.5 points to 17

percent.

But the underlying problems of plunging oil price and international sanctions weren't tackled, yet alone solved.

ELVIRA NABIULLINA, GOVERNOR, RUSSIAN CENTRAL BANK (through translator): We must learn to live in a new zone and to focus more on our

own sources of financing and to give import substitution a chance.

CHANCE: At this supermarket in Moscow, shoppers are stocking up on imported goods, like tea and coffee, the head of expected price rises.

It's here in the country's shopping aisles that Russia's economic pain is starting to be felt.

"I can't afford to travel abroad, nor buy any of the imported products I'm used to," says this man.

This woman blames Crimea for the crisis. It was annexed by Russia earlier this year, but can our government afford it? She asks.

That's a criticism we heard at the weekend, too, at this rare social protest bringing doctors and teachers onto the street.

Well, you can see that despite the cold weather here, hundreds of people have turned out into the center of Moscow to protest first and

foremost against the health care reforms that are being implemented in this country.

Now the government says that in order to make the health care services better, it will be closing hospitals and many people, including lots of

doctors who will be losing their jobs. But in the bleak economic climate in Russia, many of these people believe that it's just about saving money

and that their futures are being sacrificed.

UNIDENTIFIED FEMALE: All this reform, as they say, it's because of economical crisis, because they don't have money for medicine. They have

money for war in Ukraine, but they don't have money for medicine, for education and people here start to understand.

CHANCE: It may still be a fringe view in a county where President Putin remains hugely popular, but as this economic crisis starts to bite,

this contempt could quickly spread.

(END VIDEOTAPE)

TANK: Well, we can head live to Moscow now. Matthew is waiting to talk to us. Matthew Chance, thanks for joining us.

You know, it was interesting to hear the lady you spoke to there saying they have money for war, but they don't have money for medicines.

As yet, what does Vladimir Putin have to say about this?

CHANCE: Well, he's been very tight-lipped about the economic crisis. And that's mainly because I think he's keeping his powder dry, as it were,

ahead of his annual press conference, which is scheduled to take place tomorrow, Thursday, local time. It will last between four and five hours,

that's what we've been told. That's what it's lasted for in the past. And the expectation is he'll be asked questions about the economy and that will

be the main focus if not the only focus of this press conference.

And so undoubtedly, Vladimir Putin, who likes to drop bombshells at staged events like these, will be watched very carefully around the world

for what his response has been -- will be.

In terms of what the rest of the government is saying, they're repeating rhetoric that Russia has made in the past that this is

essentially about speculators, that the currency crisis is overblown. Dmitry Medvedev, who is now the country's prime minister in the last few

minutes saying that the government along with the central bank, had put together a package of measures to stabilize the ruble, although he didn't

identify what those measures might be.

And so, yes, government officials doing what they can to try and stave off that early criticism that I mentioned in that report there that they've

bitten off more than they can chew in foreign policy and the consequences - - it's the consequences of their actions overseas, particularly in Ukraine, that are having a real impact economically now.

TANK: Yeah, I wondered about that. And I wondered how deep you feel those seeds of discontent are being planted?

CHANCE: Well, it's difficult to gauge at this early stage. I mean, really the economic crisis here in this very serious form, even though it's

been rumbling along for a few months now, has only just in the past few days become a kind of crisis situation with a currency plunging so

dramatically against the U.S. dollar.

And, you know, so I think that those feelings of discontent may have been there beneath the surface. It remains to be seen, as they say,

whether that that will become more general.

I can say this, though, all since Vladimir Putin came into power back in, you know, the end of 1999 the beginning of 2000 he's delivered a deal

to the Russian public, that deal being I will increase living standards, you will essentially surrender some of your democratic freedoms.

This is really the first time with the projections of recession in Russia, this is the first time that Vladimir Putin will not be able to

deliver on that promise. And that could have profound consequences for his popularity. Certainly Vladimir Putin himself, you still remember enjoys

about 85 percent popularity in this country, but he will be looking over his shoulder constantly now to see what those popularity ratings are doing.

TANK: I think everybody is going to be looking forward with much interest to that address that we're waiting for. Matthew, thank you very

much for the latest there from Moscow. Matthew Chance there.

So, for more on Russia's economy and a look at who is likely to suffer most if its financial system crumbles, you can just head to CNNMoney.com.

Do check that out. There's a lot of really interesting information there, you know, a very serious situation for the Russians.

Now to Australia. A memorial service has been held at a cathedral in Sydney for the two victims of Monday's hostage standoff. Outside the crime

scene in Martin Place, a sea of flowers and cards is growing as people come to pay their respects.

Andrew Stevens reports from Sydney.

(BEGIN VIDEOTAPE)

ANDREW STEVENS, CNN INTERNATIONAL CORRESPONDENT: Throughout the past two days here at Martin Place, Sydneysiders have been queuing to pay their

final respects and to share their grief about what happened at the Lindt Chocolate Cafe just a short way away on Tuesday morning.

Australians of all ages, of all types, coming here to pay their final respects, a chance to lay a bouquet at this ever growing field of flowers

in remembrance.

We've been told by a family friend of Katrina Dawson that her family was down here. Katrina lost her life on Tuesday morning. A picture was

left here by one of her children, one of her young children, a poignant message to a mother she'll never see again.

It's been a very emotional day down here at Martin Place with so many people, not just the family members, but to people who didn't know them,

but just wanted to come and show solidarity.

UNIDENTIFIED MALE: Some people who were I guess killed, murdered in the prime of their life sadly and it's I think it's up to all of us

Australians to remember that. And to remember in a positive way, not in a negative way.

UNIDENTIFIED FEMALE: It's made people in Australia aware that these kind of things are happening here now. And it could have been anybody that

went into that cafe that morning.

UNIDENTIFIED FEMALE: I don't if I could -- really upset, really upset. I've been walking up here for 20 years to go to work, spend many

times in that cafe.

STEVENS: Only the area now directly outside the Lindt Chocolate cafe is still blocked off as forensic teams continue their work. But the

barriers now, as you can see, are being used as a memorial makeshift shrine, the hundreds of bouquets of flowers here springing up in the last

day or so.

And the politicians continue to talk about why this happened and what could have been done to avoid it. The Australian prime minister Tony

Abbott calling for a full investigation into this tragedy.

TONY ABBOTT, AUSTRALIAN PRIME MINISTER: Plainly there are questions to be asked when someone with such a history of infatuation with extremism,

violent crime and mental instability should be in possession of a gun license. I mean, plainly there are questions to be asked here, plainly

there are questions to be asked. And I want answers to these questions when someone who has been involved in a horrific murder is out on bail. I

mean plainly these things -- these are questions that are begging to be asked and which are requiring answers as swiftly as possible.

STEVENS: There are now calls for a more permanent memorial to what happened here in Sydney, but the people I speak to here say that they'll

never forget the day that a lone gunmen brought terror to the streets of Australia's biggest city.

Andrew Stevens, CNN, Sydney.

(END VIDEOTAPE)

TANK: A very sad time, of course, for Australia.

It may be the perfect metaphor for China's aspirations beyond its borders. Up next, the country's connection to a new bridge opening in

Europe.

(COMMERCIAL BREAK)

TANK: China has a new link to Europe, and it's one that many people in Serbia will use every day. It's a new bridge across the Danube River in

Belgrade. And it's been paid for largely by the Beijing government.

CNN's Paula Newton walks across it with a woman who knows all about the project.

(BEGIN VIDEOTAPE)

PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: So we're here on the Zemin Boksha (ph) bridge. It is really quite a collaboration between China

and Serbia. What is the strategic value of this bridge?

DRAGANA MITROVIC, BELGRADE UNIVERSITY: For China, this is going to be a model case of a new Chinese business ability to deliver such high tech

product that contains there's some new materials, new technology. It's supposed to represent a new Chinese business ability to perform as a high

quality and high tech servicer delivery country. And it could also put it within the framework of newly announced framework of new silk road that

also has like a maritime silk road that actually ends, actually touches European soil in Greece, in (inaudible).

NEWTON: So this bridge represents much more than one infrastructure project for China and for this area of Europe.

MITROVIC: (inaudible) that many, many observers ask why Serbia has become so important to China. Because Serbia is located on the very inter-

regional and even inter-continental crossroads. And that makes Serbia beyond very, very good political cooperation with China. So good choice

for delaying all these projects exactly on Serbia's soil.

NEWTON: Paula Newton, CNN, Belgarde.

(END VIDEOTAPE)

TANK: Still to come here on News Stream, a smash hit mobile game made it to Google's top searches of the year. We'll tell you what else is on

that list. Stay with us.

(COMMERCIAL BREAK)

TANK: I'm Manisha Tank in Hong Kong. You're watching News Stream and these are your world headlines.

New video shows the school auditorium where Pakistani military students were massacred by Taliban militants. 145 people were killed,

nearly all of them children. Pakistan has declared three days of mourning and the prime minister has lifted a moratorium on the death penalty for

terrorism.

At least eight people have been killed in an attack on a bank in southern Afghanistan. Police say three attackers stormed the bank in

Helmund Province, this after a suicide blast outside. In a gun battle all of the attackers were killed as well as five civilians, a police officer

and two soldiers.

A memorial service has been held at a cathedral in central Sydney for victims of Monday's hostage standoff. Australian Prime Minister Tony

Abbott has promised to launch a full investigation. That includes a look into why the shooter wasn't on a security watch list even though Mr. Abbott

said he had a long history of violence.

A movie theater in New York has canceled Thursday's premiere of Sony's new movie The Interview. It comes after a hacker group threatened anyone

who goes to see the film. U.S. authorities say they don't believe it's a credible threat, but they are investigating.

Now, Google has released its top searches for 2014. The late actor Robin Williams is heading that list. He passed away in August.

As always, the list is extremely varied. There are threats like Ebola and ISIS, but the top 10 also includes major sporting events like the World

Cup and the Sochi Olympics. And at number seven Conchita Wurst, an Austrian drag queen.

So one of the other top searches for the year was flappy bird, the free mobile game created by a man in Vietnam. But he was so overwhelmed

with the attention that he pulled his game and didn't allow people to download it. Earlier I spoke to Joyce Hau of Google here in Asia. And I

began by asking her about the searches for Flappy Bird.

(BEGIN VIDEOTAPE)

JOYCE HAU, GOOGLE ASIA: It was adorably low tech, right. Flappy Bird was an app made by one developer in one weekend out of Vietnam of all

places. And it just caused such a stir because it was so addictive, frustratingly so. But it really took him, Dong Nguyen, the developer,

announcing that he would take this off the app stores for it to become viral in its popularity.

So people were searching for Flappy Bird as a kind of last chance to download the game before he took it down.

TANK: It's remarkable. You have to tell someone you can't get ahold of something and then those searches spike, don't they?

OK, in a bit of a handbrake turn, twin tragedies for Malaysia Airlines, but you saw people taking to Google in a big way to look up what

had happened to these planes.

HAU: Yeah, that's right. Obviously it was huge, especially here in Asia. People were searching for Malaysia airlines and news of where the

plane could possibly be in the case of MH370. But what was remarkable there was that searches for MH370 found were 14 times higher than searches

for MH370 lost.

So I think that really speaks to the optimism, hopefully, of people really hoping for good news of the planes reappearance.

TANK: And on searching for the plane, did you notice that there was a difference in regions searching for the plane?

HAU: Definitely here in Asia. Of course, Malaysia was kind of the ground zero of searches for the plane, for the airline as well. And

worldwide, Malaysia gained a lot of scrutiny as well as searches for Kuala Lumpur jumped twice as much as previous levels.

TANK: Now, speaking of Asia, it was a huge year for elections. Two of the biggest democracies around. You had India and Indonesia, you also

had Taiwan, a big election there. People again taking to Google to find out a bit more about candidates. And this was especially the case in

Indonesia. You've got the two top candidates at the time in obviously Jokowi was number one there, but people were searching for them in a big

way.

HAU: Yeah, that's right.

So here in Indonesia you can see that Jokowi was number one of all trending terms this year. He's super popular above even, you know, pop

stars and rivals as well.

And the same goes for India as well. So Narendra Modi even beat Shah Rukh Khan in searches for the first time a politician beat a Bollywood star

as big as Shah Rukh Khan. So that was a big year for him.

TANK: Yeah, I can imagine that is a very big deal as well.

But that wasn't necessarily the case in Indonesia, was it? You still had, what was it, one of the big reality shows, the talent shows, that...

HAU: Oh, yes, Indonesian Idol searched for ten times more than presidential debates. So I guess people wanted to vote there more for

their favorite pop idol than look at the presidential debates.

TANK: Now, the big subject if you're someone who loves your gadgets this year has been phablets. And that has been evident on your list.

Let's take a look at consumer electronics. Here, where you've got the consumer electronics, these are all the top phablets at the moment. These

are basically the big phones. What is this telling us, this trend?

HAU: 2014 was the year that phablets went mainstream. So if you remember back in 2011 when Samsung started coming out with the Note, people

were laughing at them and saying this is kind of an awkwardly large phone. You know, why would you ever want to hold something as big as a Note up to

your face.

But, you know, as screen sizes got bigger and bigger and bigger people really saw the value of having that larger screen to watch videos on, to

take selfies on, and this year Apple really embraced that with the iPhone 6 and their iPhones 6plus, of course.

TANK: Yeah, interesting.

I mean, YouTube, one of the most searched videos has been the Apple iPhone 6 bending...

HAU: Bendgate.

TANK: Bendgate. Exactly.

If we look at tech devices, here you go, we're talking about -- and this is in particular for India. It's very interesting that the ones that

made the list here and the reasons why they made the list.

HAU: Yeah, so Xiomi had a huge year this year. Of course, the Chinese handset maker released three flagship phones this year, one of them

was this higher end Mi3, one that was a lower end RedMi. And they had also a phablet screen size as well.

But it was really remarkable that countries all around China were searching for Xiomi. So Xiomi peaked in Taiwan and Hong Kong, but also

Malaysia and India as we have here.

(END VIDEOTAPE)

TANK: That was a really fascinating conversation we had with Joyce earlier.

Now in a remote corner of Serbia, a centries old art form is in danger of disappearing. That story when we return.

(COMMERCIAL BREAK)

TANK: Now all this week CNN's On the Road is exploring customs and culture of Serbia. In this addition, we show you a centuries' old craft

and the effort to keep it alive.

(BEGIN VIDEOTAPE)

NEWTON: How do you pull and prod and coax and create a rare work of art from these intricate strands of wool? The description is nearly

poetic.

SLAVICA CIRIC, CARPET COOPERATIVE (through translator): The person in a mysterious way simply possesses her. You (inaudible) steps and she's so

taken by her work that everything around her stops. She forgets about the time she surrenders herself to the pattern.

NEWTON: Slavica Ciric speaks of her work on the loom with obvious passion. Her labor of love, pirot carpets woven in complicated

combinations of colors and patterns. Each carpet is unique and can read like a book. Decode the traditional patterns and what unfolds are stories

of love and family.

CIRIC (through translator): We as a group of woman really love this handicraft. The carpet weaving is in our DNA. We were born on carpet and

we grew up in homes filled with pirot carpets. And then we realized about 10 years ago that there is a danger that pirot carpet weaving could soon

disappear.

NEWTON: Less than a dozen women now call themselves the guardians of this famed craft.

We've come to the town of Pirot in the southern Serbian hills near the Bulgarian border to meet them. It is here on the old caravan roads these

carpets can trace their roots to the middle ages. And while this was once a crossroads for kingdoms and their trade, Pirot's carpets are now in

danger of extinction as are the secrets of their craft.

There are only a few hundred left of these rare breed sheep that provide the strong yet supple woolen strands that make pirot carpets one of

a kind. A small community of farmers is now carefully raising about 70 rare sheep for the pirot carpets.

SERGEJ IVANOV, RARE BREEDS SHEEP FARMER: For me, for family and for my friends, my colleagues this is some kind of passion and some kind of

life mission, because we want to preserve those breeds for future generations.

NEWTON: Historians tell us it only takes a glance and these carpets are recognized as uniquely Serbian.

Back on the loom, Slavica says she is trying to pass on the love of these fine works to future generations in Pirot. As her granddaughter

takes instruction, she wants her to understand these are more than carpets.

CIRIC (through translator): We believe in the mysticism and energy of patterns of Pirot carpets. And if we do even a single small pattern

incorrectly that for us is the same as we had clipped the wings of angels.

NEWTON: Pirot carpets weave a picture worth so much more than 1,000 words. These strands bond Serbian history and tell the Unique story of

this Balkan nation.

Paula Newton, CNN, Belgarde.

(END VIDEOTAPE)

TANK: What a beautiful art to preserve.

And that's it from News Stream. I'm Manisha Tank. But don't go anywhere, World Sport with Alex Thomas is up next.

END