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CONNECT THE WORLD

An Ancient Iranian City with a Knack for Negotiating; London remembers 7/7; The Pope Addresses Millions in Quito; Fears of Greek Exit Mount. Aired 11:00a-12:00p ET

Aired July 7, 2015 - 11:00:00   ET

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


[11:00:13] BECKY ANDERSON, HOST: Back to the drawing board. Euro zone leaders scramble to contain the fallout of Greece's debt crisis.

And just in the last hour, a new wrench has been thrown into the works. I want to get you to Athens where banks remain closed for at least

another day.

Also ahead, substantial progress, but the deal isn't sealed in the Iran nuclear talks. We'll have the latest from Vienna where the deadline

is being pushed back once again.

And rallying the faithful, Pope Francis celebrates mass for hundreds of thousands of Catholics in Ecuador's capital. Live in Quito for you

coming up.

We are just an hour away from a summit that could prove crucial to Greece's standing in the euro zone, if not the future of Europe itself.

Let me break down what is ahead here. Euro zone leaders will meet in Brussels to consider whether Greece should get another bailout. Two days

after the Greek public rejected Europe's most recent bailout terms.

Greek Prime Minister Alexis Tsipras has been expected to pitch his own proposal in the hopes of getting a deal, but now reports form Athens are

throwing doubt on whether or not that will actually happen.

Well, Greek banks in desperate need of an infusion of cash. Without more euros, they will remain shuttered until at least Thursday.

And euro zone finance ministers have been holding what is this first round of emergency talks this week hoping to pave the way for an agreement.

CNN's Richard Quest joins us now from Athens.

This story moves minute by minute if not hour by hour. Europe clearly looking for clarity, Richard, from the Greek prime minister. What is the

offer from Greece likely to be at this point?

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: Becky, in the last few moments while you were just talking, forgive me please if I'm looking

down and reading while I tell you what we've just heard. The euro group meeting of euro zone finance ministers, the finance ministers who had

expected to receive the proposal ahead of the minute -- of the government heads later tonight, Jeroen Dijsselbloem has just spoken.

He says there were no new proposals from the Greeks. They say they will present them soon. Euro zone finance ministers will have a

teleconference tomorrow to discuss those proposals. They will start to assess the needs of the Greece in a bailout. And then there will have to

be another meeting to decide on whether or not to have a bailout medium- term, not short-term, a sense of urgency.

Now, what does that mean? Allow me to just interpret -- put some interpretation onto that. They had hoped Greece was coming, Becky, with a

proposal for the finance ministers to thrash around and then go to the leaders tonight. That didn't happen.

We are expecting maybe the leaders to get the proposal directly from the prime minister tonight. That's slightly back to front, because the

leaders really are not that enmeshed in the detail.

What is tells us is that clearly any form of, Becky, immediately clarity, immediate bailout, a chance for money to be flowing to Greece soon

has just about been wiped away.

It is just about impossible for the leaders tonight to do a deal. Leaders don't do deals. Other people do the deals, they sign on to them or

reject them.

ANDERSON: Richard, let me put this to you. Isn't it time to admit that Greece is in default to the tune of hundreds of billions of dollars

with very little chance of ever paying that money back? It broke the rules going into the euro, should never have been part of the single currency

union in the first place. And however disorderly, shouldn't it now make its exit?

QUEST: I rather think you have just spoken the truth that dare not speak its name, Ms. Anderson. That is what anybody with any common sense

in this situation says.

And I would have disagreed with you until this morning, but as I sat here in Athens and I read the morning papers, the local papers, and I read

for instance, the Greek government stopped paying building contractors in January. The amount of hotel booking rooms is down by some 50,000 a day.

We believe that there's just 200 million, or so, if that in the banking system.

People are rapidly moving either to a cash or to buying goods at a store to hoard things at home.

Yes, Becky, that is exactly the situation. And I'm guessing that every euro zone leader know it, but as I've said nobody wants to be, nobody

wants to be the first to speak the truth that dare not speak its name.

[11:05:39] ANDERSON: Has anybody worked out what the contagion effect will be if that were to happen? We've been warned so often that this would

be market meltdown, that the sort of chaos in the markets would be such that Europe, you know, would find difficulty in taking it on.

Have we really worked out just how bad things might get, or perhaps have the markets already priced this hole fiasco in and might this clarity

going forward, if they were to fall out of the euro, not just provide a cushion for some future success for this currency union and European

project?

QUEST: Citi has put down a figure of around half a percent on euro zone GDP, but at best that must be a sort of number in the air. In terms

of what would happen, the markets have been -- look, the ECB is sitting on roughly $2 trillion or so in terms of long-term refinancing, securities

markets, it's got its QE program, it's got a huge war chest that it can flood the system.

In terms of the political aspect, that in many ways is more serious, because what happens if they give too much ground to Greece, then Spain,

Italy and Portugal say why did we take so much bitter medicine if the child that made the most noise in the corner got the biggest prize. And that is

something they have to -- and then of course you have straightforwardly Angela Merkel who, as you know, believes in strict fiscal probity.

Put it all together and you have a situation tonight that is simply dreadful. I'm not being over dramatic. I'm not -- there's no hyperbole

here. People will tell you privately this is a disaster.

ANDERSON: Richard, for the time being, thank you.

Well, the European stock markets have not fully panicked over the Greek crisis, not yet. That could, though, change if it does get worse

despite what we were talking about.

Later in the hour, we're going to speak to an economist on the potential economic fallout if Greece does indeed end up leaving the euro

zone.

Well, negotiators at the Iran nuclear talks are extending a self- imposed deadline yet again.

The U.S. State Department has announced Friday as the new target -- Friday as the new target for reaching a deal that would curb Iran's nuclear

program in exchange for sanctions relief.

Now we are learning more today about what exactly is holding things up. Russia confirming reports that a UN arms embargo on Iran is a major

sticking point. While France says even more obstacles remain on the table.

Well, let's get the latest now from Vienna where these talks, as you will be well aware, are taking place. Atika Shubert joining us live.

When is a deadline not a deadline? Well, when we are talking a deal with Iran, of course. Friday now being hailed as the likely day, or the

deadline day. Is a deal likely at this point?

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: We don't know. It's still very much touch and go.

I think the best thing to compare this to is stopping the clock in a sports match, as an example. Basically, they're saying everybody put

things on pause while foreign ministers go back home to their various capitals and then come back to make a final decision, hopefully, either

when they come back Wednesday evening and into Thursday discussions continue.

But it does seem at this point very unlikely that we're going to see much progress until Friday, until that new deadline, as it were.

We already know from Sergei Lavrov who briefed Russian media that there are eight, at least eight outstanding issues. France says they have

issues with, for example, caps on research and development of nuclear weapons programs for Iran, how exactly sanctions will be lifted, what kind

of timetable, and we know from one senior Iranian official who spoke yesterday that a conventional arms embargo imposed by the UN security

council is now being thrown into the mix as well. So -- whether or not that should be lifted.

So there are -- it does appear more stumbling blocks.

They insist, however, that if there is a deal to be done, now is the time. Nobody wants to put these talks indefinitely on hold. They do want

to see a deal done here in Vienna, but clearly it's going to take a few more days, Becky.

[11:10:26] ANDERSON: Atika Shubert is in Vienna. As we get more, we'll get back to you, Atika, thank you.

Much more on this story ahead. We're going to get the mood on the streets in Iran as well as live report from CNN's Frederik Pleitgen who is

in the capital Tehran.

Well, moving on today, and it has been a sober day of remembrance in London, the city marking the 10th anniversary of a wave of bombings that

tore into its public transport systems. Ceremonies have taken place throughout the day, the latest happened just in the last hour at a memorial

site in Hyde Park. It was attended by Prince William, by survivors and by emergency response workers.

You'll remember that 52 people were killed and hundreds more were injured by the four blasts on that day.

Let's cross over to London now where Erin McLaughlin can give us a sense of the mood in the city today -- Erin.

ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT: Hi, Becky. Well, it's been a very powerful day of remembrance here in London, culminating

with that ceremony in Hyde Park, which took place at a very special place, that's the site of the 7/7 memorial. It was actually designed with the

help of victims' families.

It consists of some 52 steel pillars, each pillar representing a victim. The pillars are nameless to represent the indiscriminate nature of

the terror attacks from that day. There's a plaque there where the Prime Minister David Cameron and the London Mayor Boris Johnson laid wreaths

earlier in the morning.

But the ceremony that took place there later in the day was really moving. We heard testimony from survivors from that day, first responders

as well as victims' families.

I want you to take a listen to what Esther Hyman had to say. Her sister Miriam died that day. Take a listen.

(BEGIN VIDEO CLIP)

ESTHER HYMAN, SISTER OF VICTIM: We need to replace the narratives of hatred, division, and anger with the narratives of peace, unity, empathy,

resilience, love, tolerance, all of those things we do. We need a revolution, but we need a good revolution.

My call to action to everyone who is listening today is that we achieve unity in trying to achieve those goals, because it's only by

working together that we can reduce the chances of another event like 7/7 happening again. We have to all work from our corners.

(END VIDEO CLIP)

MCLAUGHLIN: We've been hearing these incredible calls for peace and hope. Earlier today there was a ceremony at St. Paul's Cathedral, as you

can see just behind me. In that ceremony there was a minute of silence. During that minute of silence, flower pedals actually fell from the ceiling

of the Cathedral. I was here outside the Cathedral, people that were walking by stopped to remember the 52 lives lost that day. So, really what

we're seeing is really touching scenes of remembrance and reflections -- Becky.

ANDERSON: Erin, thank you.

Still to come tonight, this will not be quick, this is a long-term campaign. U.S. President Barack Obama gives and update on the military

mission against ISIS.

And the pope just minutes away from celebrating mass before a huge crowd in the Ecuadorian capital. The message he hopes to deliver later

this hour.

(COMMERCIAL BREAK)

[11:16:26] ANDERSON: Did we have the guest? Minister is OK to wait for five to 10 minutes?

Nine days of lines like these, this is the new reality in Greece. For now, banks are still closed, and cash withdrawals still limited to a daily

60 euros. If those banks run completely dry and Greece is forced to print its own currency, the country will be the first to leave the euro since its

launch in 1999.

You're watching CNN. This is Connect the World with me Becky Anderson. Welcome back.

Well, in less than an hour, euro zone leaders will start their emergency summit on Greece. And the urgency is growing with reports of

finance ministers did not hear any new proposals from Greece in the first round of crunch talks today. They came to the table in Brussels looking to

hear a new plan to somehow help Greece work its way out of its debt crisis and avoid a Grexit.

It's now thought Alexis Tsipras will present proposals to euro zone leaders himself.

Well, for more let's bring in Mohamed El-Erian who is chief economic adviser at Allianz.

Quite frankly, Mohamed, leaders don't make decisions they just sign off on them. I was talking to Richard Quest about this just moments ago.

There are no new concessions from Greece, no new proposals. There may be some going forward for leaders, but at this point this is an out and out

disaster, isn't it?

MOHAMED EL-ERIAN, ALLIANZ: It is a total disaster with huge human tragedies. Yes, you're right leaders cannot produce solutions, but they

can force compromises that buy a little bit of time. And I think that's what they're going to attempt to do.

The problem, as you've said and as you discussed with Richard is that the situation on the ground is slipping out of their control.

ANDERSON: I don't have anything. I've got nothing.

All right, what are the practical terms of any deal that might keep Greece in the euro, Mohamed?

EL-ERIAN: It's a huge requirement. And it has gotten much more difficult because of what has happened in Greece over the last eight days.

This economy has been subjected to a sudden stop. The economic equivalent of a heart attack where different parts of its body are grinding to a halt.

So, in order to maintain Greece in the euro zone, you need three very quick steps. One, a credible program of reforms by the Greek government.

Two, more intelligence austerity, not more austerity, more intelligent austerity. Three, very large injection of cash from Europe along with

significant debt reduction. It's a tall order, and it's really hard to see all the parties being able to deliver given that there's so much acrimony

and so little trust.

ANDERSON: Nobel Prize-winning economic Paul Krugman has called the European Union's approach to Greece, and I quote, a campaign of bullying

whose ultimate aim was to force the leftist government's collapse.

Besides the troubling implications for democracy, he says, the European creditors demands don't make sense. And he writes as follows,

"unless Greece receives really major debt relief, and possibly even then, leaving the euro offers the only plausible escape route from its endless

economic nightmare."

One other commentator put it like this, "membership in the euro zone is a death sentence for the Greek economy. Do you agree?"

[11:20:21] EL-ERIAN: So, I think it's very hard for Greece to stay in the euro zone today and have the hope of promoting economic growth and

addressing what is a very alarming unemployment problem and also a very alarming poverty issue.

The problem is that there are no easy solutions, Becky, so the alternative is equally difficult and more uncertain. And that's why this

has become rather than a quest for the first best, it's the third and fourth best.

But ultimately, I think that conditions are going to force themselves on the Greek government. It's going to have no choice, but to issue IOUs.

And the minute they issue IOUs they're going to evolve into a parallel currency. And that's going to be the start of the exit from the euro zone.

ANDERSON: Should it make its exit now or later, or whatever happens in the short to medium term, I'm just wondering what sort of havoc do you

think an exit would wreck across Europe and beyond, and in the short-term you know we've been talking about this now for weeks, haven't we, what is

the contagion effect? And not just economically, politically as well, of course, because you know let's face it this isn't about economics, this is

about politics as much as anything else, isn't it?

EL-ERIAN: It is. And that is the complexity. So, if Greece exists, which I think is probable, if Greece exists and does so in a disorderly

fashion, the Greek economy is going to go into an even bigger depression and the human tragedy is going to be even higher.

Europe has the instruments in place to be able to limit the contagion, the adverse spillover effects, and there's even an argument that after the

initial shock, the euro zone could even emerge stronger if it starts focusing on what has set aside as it's had one emergency Greek summit after

the other.

The rest of the world can navigate this shock well.

The big issue, Becky, is not just Greece, is we have Greece. We have what's happening in China. We have the geopolitical elements. And those

can come together in a perfect storm. The world can manage each one of them individually, but it's going to be much harder if, and I stress this,

and if -- if these three things come together.

ANDERSON: Well, stay with me, because one man who says the Greek crisis is not a threat to the whole euro zone is the European commission

vice president, Mohamed, Valdis Dombrovskis. He joins me now from Brussels where he's been attending those euro group meetings.

Leaders don't make decisions, they sign off on them is something we've been discussing. There have been no knew concessions from Greece, so no

new proposals to discuss at this point.

This, sir, is just about the worst case scenario not just for Greece, but for Europe isn't it?

UNIDENTIFIED MALE: We have to wait for them to reconnect.

VALDIS DOMBROVSKIS, EUROPEAN COMMISSION VICE PRESIDENT: OK.

ANDERSON: All right, while we try and get our guest back -- Mohamed, you were just -- we were just discussing whether this was as much politics

as it was economics. And I just want to get our viewers some sound here. The Greek no vote caused some market tremors, but was a political

earthquake and that's what we've been discussing. Indeed, many very pro- European Greeks issued a firm no to what the commission and most EU governments said was the best medicine for Greece.

Other leftist parties have looked to Greece as the frontrunner in a social revolution, right, since the Syriza coalition's election in January.

This is the leader of Spain's Podemos Party in Athens at the time with Greek leader Alexis Tsipras. And take a listen to the new Greek finance

minister's words back in March when he addressed the party congress of Irish nationalist and anti-austerity party Sein Fein.

(BEGIN VIDEO CLIP)

EUCLID TSAKALOTOS, GREEK FINANCE MINISTER: Their fear of Syriza has more to do with the fear of the aspirations of their own people or social

justice and a new model of social inclusive development. It is you that they fear, not us.

(END VIDEO CLIP)

ANDERSON: This is politics, not economics. And this is about right versus left in Europe.

What do you think the fallout will be and the future will hold so far as the politics are concerned?

[11:25:01] EL-ERIAN: So, there is a political element and there's a geopolitical element. But it's not a left or right, it is non-traditional

parties taking on the traditional order. And you see this from both sides of the spectrum, extreme left and extreme right they are taking it on. And

it's single issues -- anti-austerity, anti-immigration, anti-EU. And it speaks to the dissatisfaction on the ground.

You know, Becky, when the no came in so decisively on Sunday, I was immediately reminded of a movie I saw as a young man called Network. And

in that movie at some stage people start opening their windows and saying I am as mad as hell and I'm not going to take this anymore.

And you're getting this in various parts of Europe. People are mad, and they are expressing this through support for non-traditional parties,

but of the left and of the right.

ANDERSON: Hold on in there again. I'm going to try and get the euro zone's -- European Commission vice president up to help us analyze what is

going on at present.

Valdis Dombrovskis is joining me now from Brussels, I hope, where he can hear me. He's been attending those euro group meetings.

Sir, no new concessions from Greece, not yet at least. So what happens next?

DOMBROVSKIS: Well, good afternoon.

First of all, this euro group meeting was a first occasion for finance ministers of euro zone to take stock of the situation and also to listen

from the new Greek finance minister what is Greek government's assessment of the situation after the referendum and how they interpret the result of

the referendum.

And the positive news is that clearly there is a willingness of the Greek government to continue with negotiations with the euro group, with

institutions and to reach an agreement.

ANDERSON: Yesterday you said we respect the democratic choice of the Greek people. But quite frankly euro group doesn't really, does it,

because you are still pushing for -- you -- I'm sorry, I think it may have been the president, no it was your words. We respect the democratic choice

of the Greek people.

But given that you are still pushing for further anti-austerity reforms that's not strictly true is it?

OK, we are going to take a break because we are having technical difficulties between Brussels and it seems that somebody else is also

talking to our guest at the same time.

We've got Mohamed El-Erian I think is still with me, but I'm going to take a very short break. This is live TV. Role with us on this. We're

going to be back with you in, what, 90 seconds.

(COMMERCIAL BREAK)

[11:30:32] ANDERSON: This is Connect the World with me Becky Anderson. The top stories for you this hour.

South Carolina's Senate has passed a bill in favor of removing the Confederate flag from statehouse grounds. That puts the southern United

States state one step closer to removing it, but it isn't law yet. The issue hits international headlines after a racist mass shooting in the

state last month.

Negotiators in Vienna are extending talks on Iran's nuclear program once again. The U.S. State Department has announced that Friday is the new

target for reaching a deal. I says it's more concerned with the quality of an agreement rather than with any ticking clock.

At least 14 people have been killed and 11 in Jeddah (ph) after a night time attack on two homes in northern Kenya. Al Shabaab has claimed

responsibility for the attack. A Kenyan official says between 10 and 15 attackers were estimated to have been involved.

And memorial services are being held across London marking the 10 year anniversary of the 7/7 bombing. In one act of remembrance, Londoners stood

silent for a minute. 52 people, and over 700 others, were injured -- 52 killed and 700 injured in those attacks.

Euro zone finance ministers say so far Greece has brought no new bailout proposals to the negotiating table. The ministers gathered for

emergency talks in Brussels today ahead of a summit of euro zone leaders. That summit expected to start in about a half hour time.

Well, right now a crowd of several hundred thousand Catholics is gathered in Ecuador's capital to see Pope Francis to celebrate mass. This

is the pope's second mass in as many days during the start of what is his weeklong trip to South America. It's just getting underway as we speak.

CNN's Rosa Flores is in Quito and she joins us now. And as we wait for the beginning of this, the pope hinting that changes could be coming to

the Catholic Church. Pope Francis asking a large crowd on Monday to pray for god to make miracles out of ideas that some believers might consider,

quote, impure or even, quote, threatening.

What does he mean by that?

ROSA FLORES, CNN INTERNATIONAL CORRESPONDENT: You know, Becky, I'm having a little trouble hearing you only because the mass right now is

actually in full force.

Pope Francis just walking up moments ago. You can probably see him over my shoulder walking to the altar, getting ready to celebrate mass with

more than 1 million faithfuls according to the latest estimate that we just received.

Now this is a homecoming of sorts for Pope Francis who was born in South America. And he is coming to Ecuador, Bolivia and Paraguay not by

mistake, but because he understands the needs of these countries.

And so as you look over my shoulder again and we have this live look, this is the moment that millions of people in these countries have been

waiting for. And of course the millions that are present here waiting to hear the homily.

This mass is supposed to be dedicated to evangelization. Yesterday's mass was about the family.

Now a lot of people think that they know everything about Pope Francis, but I've got to tell you something, I spoke to one of his very

good friends. And here is what he revealed.

(BEGIN VIDEOTAPE)

FLORES: A personalized the message from a dear friend is always a good gesture.

FATHER HERNAN PAREDES, FRIEND OF POPE FRANCIS: I ask you to keep praying for me and may God, may Jesus and the blessed mother take care of

you.

FLORES: But when that friend e-mails you a month after being elected pope, it's practically a blessing sent from God. He was a busy man at the

time.

PAREDES: Yes, he was. Can you imagine with all the job and all the situation in the church -- but he had the time for friends.

FLORES: Father Hernan Paredes has known Pope Francis for three decades, their first meeting back in the 80s when Pope Francis was Rector

Jorge Mario Bergoglio the head of 100 seminarian Jesuits, including now Father Paredes. What do you call Pope Francis?

PAREDES: Jorge.

[11:35:11] FLORES: They stay in touch by writing letters and e-mailing all in Spanish. That's because Paredes says...

PAREDES: Forgive me, Pope Francis, but he failed twice to learn English. He went twice to (inaudible) -- for him to gain confidence. And I

have no confidence anymore.

FLORES: This picture, a memento from their visit in Argentina a few months before Francis became Pope.

He gave me his blessing, but at the same time I asked him to have a picture. He told me, Hernan, I am not a man of pictures. I feel ugly -- you

can see it's terrible.

FLORES: Now with his rock star status, the 78-year-old pontiff who loves listening to opera is probably one of the most photographed faces on

the earth and one of the most quoted as well.

His message during his three-country visit to South America one of inclusiveness, service, and democracy. Next on his agenda, Cuba and the

U.S. in September.

Father Paredes said he doesn't know if Pope Francis, famous for his "who am I to judge" quote about homosexuality, will comment about the

recent Supreme Court decision legalizing same-sex marriage.

PAREDES: Remember dear that the tradition of the Church doesn't change overnight, and at the same time he acknowledged that there are other ways

of living.

FLORES: Father Paredes who now lives in New York recently visited with the Pope in the Vatican. His first time seeing his dear friend since being

elected. It was an emotional reunion.

PAREDES: And now he said that I am too American now.

FLORES: What does that mean?

PAREDES: Well, probably I put (inaudible)

FLORES: Like two old friends, they poked at each other. One of them just happens to be pope.

(END VIDEOTAPE)

FLORES: And as we take another live look here you can see over my right shoulder Pope Francis celebrating mass for more than 1 million

faithful here in South America.

And I say South America, because not only are faithful here from Ecuador, but from other surrounding countries. They wanted to make sure to

welcome the first Latin American pope this continent -- Becky.

ANDERSON: Thank you.

Live from Abu Dhabi, it is 37minutes past 7:00 here. Coming up, U.S. President Barack Obama gives an update on the military campaign against

ISIS saying the group is opportunistic, and nimble.

First up, though, lessons on negotiating from an ancient city in Iran. We're going to see how time tested skills could help the talks currently

underway over Iran's nuclear program.

(COMMERCIAL BREAK)

[11:40:17] ANDERSON: Let's get you back to the efforts underway in Vienna to resolve a long standoff over Iran's nuclear program. Now Iran is

looking for relief from crippling sanctions in exchange for curbing its nuclear activities, in short effectively.

Representatives from Iran, the U.S. and five other power have extended negotiations until Friday to try to reach a deal.

Now Iran says it has the right to peaceful nuclear energy, denying accusations that it wants to build nuclear bombs.

Well, there's no doubt that trust is key to reaching an agreement, something that has been in short supply for decades between Iran and the

west.

CNN's Fred Pleitgen visited an ancient town in Iran where people are well known for their mediating skills. He says they could teach

negotiators a thing or two about conflict resolution. Have a look at this.

(BEGIN VIDEOTAPE)

FRED PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: With its ancient mud brick houses right at the food of the Karkas Mountains. The village

Abyaneh is unique even by Iranian standards, with a country's wealth of diverse cultures.

The folks here like to take things slowly. They might even appear somewhat frail at first sight. But make no mistake, they know and follow

international politics.

"We like the American people, we like Obama, but we don't like Congress," says 74-year-old Hani Amiri (ph).

And her 80-year-old friend Fatima Jamal (ph) adds, "we've heard that Obama said the military option is on the table. Well, we're not afraid of

that.

Abyaneh is one of the oldest places in Iran. The city council says it dates back almost 4,000 years. Its people still wear a traditional

colorful dress.

We were allowed to fill a Koran lesson for women and girls inside the oldest and biggest mosque in town. But the people here weren't always

Muslims.

This Mosque is about 1,000 years old. And even before it became a mosque, it was a Zoroastrian temple. Zoroastrianism is the ancient

religion of Persia and Zoroastrian is still the language that people speak here today.

And they believe their traditional mindset has made them great negotiators, well known as conflict mediators in this part of Iran.

Reza Ali Rezaye (ph), the head of the village council, tells me he believes as the U.S. and Iran try to improve their relations, they could

learn a thing or two from Abyaneh.

"The people of Abyaneh have always talked to each other in councils," he says. "And the output and the thoughts of the council were always

stronger than any one man's thoughts. And this is what creates civilizations."

And the ancient civilization of Abyaneh in central Iran is one that, despite its old and traditional ways, remains strong and vibrant and at

ease with the world.

(END VIDEOTAPE)

ANDERSON: Amazing stuff.

Fred Pleitgen joins us now live from Tehran where he is this evening with more.

And let's get to the crux of things here. If reports are to be believed, it's a UN weapons embargo on Iran that is the main obstacle still

to be overcome. There are other issues in the mix, but it seems this is the crux so far as Iran is concerned. Does that make sense to you?

PLEITGEN: Well, it makes sense to a certain extent. I mean, one of the things that the Iranian government has been saying from the very

beginning, and certainly also the conservative politicians here in Tehran as well is that they want the all of the UN sanctions that in any way had

anything to do with the nuclear program to be lifted immediately. And even though the weapons embargo is not something that is directly related to the

nuclear program, it was also set into place during the same time that those nuclear sanctions were set in place as well.

So, this is certainly something that the Iranians want.

Now, are they willing to budge on that issue? That of course is the big question. One of the things an Iranian diplomat said in the past, as

you know, all sides have red lines in these negotiations and the art of the diplomats is try and work around those red lines to make sure that those

people who put those red lines in place can say they are still in place even though you've somehow worked around them.

And that's certainly something that we can see here very much in Iranian society. I mean, if you talk to most people here on the ground

they will tell you they want a nuclear deal, they want sanctions to be lifted as fast as possible, but they still do consider the civilian use of

nuclear technology to be their right. And then on the other hand, you have a lot of hardliners here who quite frankly don't want to give an inch to

the international community and are fine to continue under the current sanctions regime that's going on.

It's a very, very difficult tight rope that the Rouhani government is walking in all of this. And that's certainly something that we have to

factor in as they go into these long, long negotiations and try and get a deal that all sides here within Iran are willing to accept, Becky.

[08:45:24] ANDERSON: Yeah, your last film that we just saw before we came to you reflecting the sense of the sort of, you know, the art of

ancient negotiation and those who come from an area where it's sort of part and parcel of life.

Those that you spoke to there, are they impressed by their team, their side, as it were, those who represent Iran at these talks and negotiations?

PLEITGEN: Do you know, it's very interesting, because one of the big questions was is Iran really behind its nuclear negotiating team. And

certainly of course if you speak to the people there in that ancient village, they are very, very well informed. They are very smart people, a

lot of very educated people. They know exactly what's going on. They say they're absolutely behind their team.

The big question was here were the hard liners behind the negotiating team. And what's happened during these negotiations is that the supreme

leader Ali Khamenei has come out and said all Iranians should support their nuclear negotiators even though he himself said he was very skeptical of

the negotiations. He said it's every Iranians duty to be behind the negotiating team and at least wish them well and hope that they reach a

very good agreement.

So, whether or not the agreement will be accepted here, which ever agreement might come out, if one comes out, is certainly up for debate.

But certainly right now you can tell that even the hard liners here at least publicly are saying that they support their negotiating team, Becky.

ANDERSON: Thank you, Fred. This will not be quick, this is a long- term campaign. Those words from the U.S. President Barack Obama as he gave an update from the Pentagon on the military mission against ISIS.

Now Obama said that ISIS militants were opportunistic and nimble, his words, and emphasized the need to involve local forces in the fight against

them.

Pentagon correspondent Barbara Starr with more for you.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Coalition war planes pounded Isis positions around Raqqa, the group's declared capital.

Here, just one of 16 ISIS-controlled bridges destroyed. It's the kind of progress President Obama wants to talk about.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In short, ISIL's recent losses in both Syria and Iraq prove that ISIL can and will be defeated.

STARR: A total of 18 airstrikes on July 4th, several airstrikes in populated areas. The Pentagon insists no change in policy, but could there

be new flexibility.

COL. PETER MANSOOR (RET.), CNN MILITARY ANALYST: I think with the strikes on Raqqa over the weekend show is that they've relooked the rules

of engagement for those airstrikes and they're willing perhaps to take a little bit more risk with collateral damage and civilian casualties.

STARR: The U.S. hope the strikes will force ISIS leaders to reposition troops and weapons. Syrian and Kurdish fighters are on the ground, now less

than 50 miles from Raqqa, working with the Americans to pin point more ISIS targets for bombing.

MANSOOR: If you put pressure on a force with ground forces, with offensive action, it forces the enemy to move, to communicate and to mass

to defend his positions, and then he becomes vulnerable to airstrikes.

STARR: U.S. officials say one of the dead may have been an aide to Jenaid Hussein (ph), an ISIS hacker believed to have communicated with an

attacker in the Garland, Texas assault on a cartoon contest. The U.S. still looking for top is leaders, including Abu Bakr al-Baghdadi who the U.S.

believes could be in Raqqa.

ASHTON CARTER, U.S. DEFENSE SECRETARY: With respect to leadership, they were not the subject of these particular tactical opportunities that

arose over the weekend north of Raqqa, but we continue to take action. STARR: But a setback in Iraq. Seven killed and eight wounded in an

Iraqi military jet accidently dropped a bomb on a residential neighborhood in Baghdad.

The battlefield certainly remains fluid. There are reports, unconfirmed from an activist group, that is has taken a town in Syria back

from the Kurds who had captured it. ISIS wants that town to keep its supply lines flowing. The Kurds want the town back.

Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

ANDERSON: And this programming note for you, CNN will air Hillary Clinton's first nationally televised interview since she entered the U.S.

Presidential race three months ago. Our senior political correspondent Brianna Keilar will sit down with the Democratic frontrunner in the state

that will prove her first test, that being Iowa.

Clinton came in third place there back in 2008, you may remember. It comes as she faces growing challenges for the nomination from within her

own party, and polls that show voters generally don't consider Clinton honest and trustworthy.

Well, that exclusive interview airs Tuesday 10:00 p.m. London time, 11:00 p.m. Central European Time, only on CNN.

I'll leave you to work out times locally in your region.

Live from Abu Dhabi at 10 to 8:00 this evening, this is Connect the World. I'm Becky Anderson. Coming up, one of football's greatest stars is

heading to the U.S., but is he going for the passion or the paycheck?

(COMMERCIAL BREAK)

[11:52:19] ANDERSON: This is CNN and Connect the World with me Becky Anderson. You are very welcome back.

Let's turn to sports now and one of the world's best football players is heading to New York City. At 36 years old, Italian Andrea Pirlo may be

getting a little past his prime, but his move is all part of a plan by investors from right here in Abu Dhabi to score big in the United States.

Amir Daftari has more.

(BEGIN VIDEOTAPE)

AMIR DAFTARI, CNN CORRESPONDENT: The unmistakable passion of football fans, diehard support. But how much support can you really have when your

team kicked its first ball less than a year ago, that's the challenge facing New York City Football Club.

The new kids on the U.S. soccer scene are controlled by City Football Group, the Abu Dhabi based company that also owns Manchester City in

England. Abu Dhabi has sunk around $1 billion into NYCFC, and it's been splashing the cash, especially on players.

CLAUDIO REYNA, SPORTING DIRECTOR NYCFC: We believe you do need big stars to draw the fans, but of course we have to do well and have success

and perform on the field.

DAFTARI: Cynics will say they come here for retirement, they're passed their best. Do you think there will be a day when world class

players come and play in their prime in the MLS?

REYNA: Well, it will be difficult, because the Premier League, the Champion's League, there are some big, big clubs in Europe. And, you know,

the best players are wanted by many teams. So, we hopefully will have players come over earlier. The good thing about the players we have in

Frank Lampard and David Villa is that they are winners, they're competitive, they're not here on a vacation. They know this league is very

tough, must be respected. So we're adding quality guys to the locker room, to the club. And they're going to leave a legacy far beyond the couple of

years that they play here.

DAFTARI: Legacy is on the minds of everyone at NYCFC, from the officials to the owners. They're hoping to create something that's more

than just a passing fad: long lasting success both on and off the field so that this unmistakable passion will endure for decades to come.

Amir Daftari, CNN, New York.

(END VIDEOTAPE)

ANDERSON: Your Parting Shots tonight: images and memories of a day that shook London and the world. It is 10 years today since four suicide

bombers targeted tube and bus passengers. For everyone touched by the violence, it is a day that will never be forgotten.

(BEGIN VIDEOTAPE)

[11:55:08] (BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: All I remember is a white light in front of my eyes. And it wasn't just a flash, I felt like it was there for a long

time. And I remember looking at this white light and having the feeling that I was being shook from side to side.

NEESHA KAMBOJ, SURVIVOR 7/7 ATTACK: Dense billowing smoke poured into the carriage. And it felt like the air had been suctioned out of the

carriage. We didn't know what had happened at that time, but it felt like there was an explosion.

UNIDENTIFIED MALE: All London hospitals are now on major incident alert.

MARTINE WRIGHT, SURVIVOR 7/7 A TTACK: I mean, the bomber was four foot away from me.

UNIDENTIFIED MALE: And we're getting reports of another explosion.

WILLIAM SARGENT, METROPOLITAN POLICE: There was a power surge it was described as it happened at All Gates STation.

KAMBOJ: Some people were sitting silently, some people were crying hysterically.

WRIGHT: I was just trying to move myself. And I couldn't understand why I couldn't move myself. And then I sort of looked up and all I could

see was this metal, which was actually the corner of the tube had buckled from the explosion that was just going -- it like it was going down into

the ground, but it wasn't, it was going down into my legs.

SAJDA MUGHAL, SURVIVOR 7/7 ATTACK: I'm Muslim by faith, and I started to pray.

UNIDENTIFIED FEMALE: I've just saw fire engine nearly run somebody over in a hurry to Tavistock Square.

GRAHAM RUSSELL, FATHER OF VICTIM: Obviously the news was full of the four explosions. And one of them is in Tavistock Square here. Now I

thought, well, that's not a problem because my son would not be in Tavistock Square being he works over in the city.

ESTHER HYMAN, SISTER OF VICTIM: Miriam had spoken to my dad on the phone at -- after she got evacuated and before she got on a bus.

UNIDENTIFIED MALE: It was an eerie seen, because the bus had been ripped apart by the explosion, and a quiet, a really, really deadly quiet

except for the sound of sirens.

STEPHEN MCDERMOTT, LONDON FIRE DEPARTMENT: A lady died right in front of me. And I looked and she had a wedding ring on. And you're thinking,

oh, she's obviously married. Has she got children, you know, is mom not coming home tonight?

RUSSELL: We didn't know that Philip had died until Monday.

HYMAN: On the Saturday, I allowed myself to think about the possibility that she could have been on the bus, and on the Monday her

identity was confirmed to us forensically.

WRIGHT: I will never, ever forget those people that lost their lives that day.

STAVROS MARANGOS, LONDON FIRE BRIGADE: I heard a quote by a Detroit fire fighter who had 32 years in the job and he was retiring, and he said I

wish my head could forget what my eyes have seen. And that just sums it up really, doesn't it.

(END VIDEOTAPE)

ANDERSON: I'm Becky Anderson, that was Connect the World. From the team here it is a very good evening. Thank you for watching. CNN

continues after this short break.

END