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Amanpour

Kenya Mall Siege; Global Economy Titan; Imagine a World

Aired September 23, 2013 - 14:00   ET

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

CHRISTIANE AMANPOUR, CNN HOST: Good evening, everyone, and welcome to the program. I'm Christiane Amanpour.

If Al Qaeda's Somali franchise Al-Shabaab had seemed like it was on the run over the past few months, this past weekend has shown the world a willingness and a ruthlessness to take its fight beyond its borders. Kenyan officials say the brazen attack by Somali militants on a Nairobi mall has killed 52 men, women and children, ordinary people just out shopping.

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AMANPOUR (voice-over): The terrifying ordeal began Saturday. Some shoppers hid for hours; others were taken hostage. Smoke was seen rising above the mall for a number of hours as security forces stepped up their efforts to end the siege.

They say they're now in control of the 4-story complex and it's one of Kenya's most popular shopping malls. Over 200 people have now been rescued; many have needed medical treatment and this matter is so serious that as an extraordinary measures, Kenya's vice president, William Ruto, has been allowed to return temporarily to Kenya from his trial in The Hague to help deal with the crisis.

Both he and President Kenyatta are facing charges of crimes against humanity at the International Criminal Court. That relates to the violence following the 2007 election.

Kenyan authorities say they have arrested 10 suspects, including four at Nairobi International Airport. This is the most audacious attack by Al- Shabaab since it killed 60 people in the Ugandan capital, Kampala, in 2010. That was on the night of the World Cup final.

And joining us live now from outside the Westgate Mall in Kenya is Nima Elbagir.

Nima, thank you for being there. Tell me, what is the very latest?

NIMA ELBAGIR, CNN CORRESPONDENT: Well, the Kenyan authorities, Christiane, are saying that they believe we're now in the end game. They say that they managed to release most of the hostages. They won't give exact figures for how many hostages still remain. But they say most of the hostages they believe are now safely out.

They've also begun -- also there's evidence of how much of the building they now have under their control. They have (inaudible) the last 24 hours to ferry out the bodies that have been remaining in there while the siege had been ongoing; 10 civilian bodies have been brought out in the last few hours.

They say that the hostage takers are cornered, that they have them with their limited space within the building. But the problem remains, Christiane, how do you extract the remaining hostages when you're dealing with people who are more than willing to die, in fact welcome dying to make the bigger point and the bigger cause, Christiane.

AMANPOUR: Let me ask you, because you have been in touch with various officials and spokespeople from Al-Shabaab. And you have actually covered them as we know for so long.

What are they saying about why? What is their aim?

ELBAGIR: Well, they're about aim, the aim that they are (inaudible) publicly is that they want to discussing the Kenyan public from supporting the Kenyan government in its continued presence in Somalia, where the Kenyans (inaudible) the African Union, of course, helping to prop up the -- we could call it still quite shaky Somali government there.

As they've been very successful when Kenya went in, that really was when the tide turned against Al-Shabaab. They were pushed out of the urban centers; they were pushed into quite a small territorial footprint in south central Somalia.

Given that this was a militant group that had a port (ph), it had access to most of the coastline. It had the largest territorial footprint of any Al Qaeda franchise. That's what they're saying this is about.

So really the sense we're getting ,that this is as much as a resurgent Al-Shabaab. For the last year or so, Al-Shabaab has been disunified; they've been -- they've been -- there's been a lot of infighting. They've been very, very weak.

But in the last weeks and months, we've been getting a sense that they've been coming together, that they're reenergizing, that there are new money trails that are finding their way into Al-Shabaab hands.

And you could see with an operation of this complexity, it would have been unthinkable a year ago, two or even three years ago to imagine that something like Al-Shabaab could pull off something of this audacity, something that involves bringing people in across borders, involves coming in in broad daylight.

This standoff now, Christiane, has been going on for longer than the Mumbai terror attack. And when we spoke to the statehouse spokesman, get - - we've freed 200 hostages. But given the number of people that were inside that shopping mall, we actually consider there are 1,000-odd hostages inside Al-Shabaab hands.

And that message is definitely hitting home. People are sitting up and taking notice in intelligence networks across the world, Christiane.

AMANPOUR: Nima, you say it's a resurgent Al-Shabaab; others are saying it's a desperate Al-Shabaab sort of lashing out in some kind of a bid for further relevance.

Do you know what are the nationalities? There's been a lot of speculation about were these all Somali nationals? Were there Somali European and American smiles or Kenyans involved? Do you know the nationalities of the attackers?

ELBAGIR: Well, Al-Shabaab had claimed that there are Americans in there, that there's a Brit, a Canadian and a Finn. This is of course, the claim by -- a claim by a militant group that has been very adept at playing the propaganda game.

But now we've been hearing from the Kenyan authorities that there are multiple nationalities in there. They said that they believe that this has been an organized global terrorism threat that they've been fighting. We've also been hearing from the U.S. State Department that they are growing increasingly confident that there are American citizens inside among those hostage takers.

So it's really Al-Shabaab playing to its major strengths, which, even in its weakest days, has always been its ability to reach out to recruit young men in Europe, in the U.S., often from the Somali diaspora.

But their most famous jihadi leader, who was believed to be killed within the last week or so was actually an American with Syrian parentage.

So this a military Islamist group that has been able to get its voice heard in the most unlikely of corners in Europe and the West, Christiane.

AMANPOUR: Nima Elbagir, thank you so much indeed for joining us.

And so interesting to note that on this program in January of this year, the president of Somalia having just had his country recognized and his government recognized by the United States, had told us that he thought Al-Shabaab was on the run and that it was being weakened. We're obviously going to be tracking this very, very carefully after this attack in Nairobi.

Now taking on terror, as we've seen in Nairobi, often does require force.

But does it also mean attacking the root causes that can breed new terrorists, such as the economic chasm between the haves and the have-nots all over the world now?

I will ask the head of the International Monetary Fund, Christine Lagarde. She's one of the most powerful and influential women on Earth. And she has billions of dollars to invest in troubled nations and closer to home as well, in the European Union. We'll be right back.

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AMANPOUR: Welcome back to the program. This weekend Angela Merkel won a resounding victory in the German election, putting her as one of the most powerful women in the world.

Well, today, we have another of the most powerful women in the world, the IMF director, Christine Lagarde, to talk to us about the economic troubles plaguing the world, the role of women and gender equality in the world's economies and their GDP and, of course, the root causes of some of these terrible terrorist attacks that we have seen unfold in Nairobi and elsewhere.

Christine Lagarde, welcome.

CHRISTINE LAGARDE, DIRECTOR, IMF: Thank you.

AMANPOUR: Welcome back to this program.

Let me ask you, we said that sometimes -- sometimes -- the root causes of this terrorism has to be attacked and addressed.

Do you have any economic thoughts in the wake of what just happened in -- obviously an economic target in Kenya, the mall?

LAGARDE: Well, we do quite a bit of work with Kenya and fortunately it's a country where the economy is picking up, where there is recovery, where there is vibrant forces at play from an economic point of view. And I very much hope that what is happening at the moment is not going to be a break on this positive development that we're seeing at the moment.

AMANPOUR: And you're going there this year, right?

LAGARDE: I'm planning on going early next year.

AMANPOUR: Next year.

And Somalia, what about the economy there? I mean, obviously the world has tried to set up and stand up a new democratic government there.

Is that somewhere that you also invest? I mean...

LAGARDE: We have -- we don't have much of a relationship with Somalia because it's one of the three countries that actually have arrears with the IMF. So we don't do business, so to speak, with countries that are in that situation.

But I met on Friday in Washington the newly appointed central banker of Somalia, a woman, a very courageous woman, who is giving up her career in the U.S., actually, to go back home, so to speak, and start all over from scratch. They have to really rethink about their currency; they have to rethink about setting up a banking system because it's completely --

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AMANPOUR: (Inaudible).

LAGARDE: -- disrupted and -- well, yes.

AMANPOUR: That wasn't too harsh a word, was it?

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AMANPOUR: Talking about women, you, the IMF, has put out a report on women in the economy, gender equality. What does that mean, not just for the issue of women in employment but for GDP and developments in all these countries?

What is the crux of your conclusion?

LAGARDE: Crux of the conclusion from an economic point of view is that better access for women to the job market will mean more growth. And who is not at the moment asking for good, solid, sustainable growth? No one.

So women can contribute to that. And it's true across the globe.

AMANPOUR: And why is that still an issue? I mean, obviously there -- you know, entrenched prejudices. But what is the barrier to full female employment in the workforce?

LAGARDE: Plenty. Cultural, some legal, some sort of geopolitical cultural, but certainly from an economic point of view, what we're seeing is that fiscal, where you spend public money, tax, how you tax income and revenue, will actually make a difference as to whether or not women access the job market.

So from our very humble perspective at the IMF, we want to say watch out how you spend your money; you can spend it in a wise way that will help women access the job market. Watch out how you design your tax system because that can be an incentive for women to access the job market and contribute to the creation of growth.

AMANPOUR: Let's talk about the current economic situation. It is five years, give or take, since the collapse of Lehman in September, five years ago.

I was speaking to Sheila Bair on my program about -- a few days ago, last week -- who said that actually a lot has changed but there is a lot still that needs to be done. We're not out of the woods yet. Bob Diamond, the former head of Barclays, has joined the chorus of criticism, particularly saying that this idea that too big to fail is past; that's not true. It still exists.

Are these -- could this happen again?

LAGARDE: Exactly the same thing? I'm not sure. But we could still face major issues because the financial system is not yet fixed as it should. And if I was to name three areas where additional work needs to be done urgently, it's resolution, meaning how to deal with the too big to fails, particularly those banks that are cross-border.

The second would be the derivative markets, where more transparency is required.

And the third one is the shadow banking system where we need to have transparency, regulation, supervision, three areas where more work absolutely needs to be done.

AMANPOUR: Yes, and she was very sure about the fact that there's not enough regulation yet, and it's still very, very dicey in that regard.

LAGARDE: I'm not sure about how much more is needed. What I'm certain of is that better regulations, better supervision, better coordination between supervisors and a clear focus on what's happening beyond the traditional barriers of the banking system because there's a lot of activity out there. Some of it is probably fine, but most of it needs to be checked.

AMANPOUR: You know, there's still an ongoing argument in public about the amount of stimulus, the length of stimulus. There was an interesting graphic done in the "Financial Times" just recently. And we have it for our map here.

So what you see here is the United States seemed to have done the best. It's put in that amount in billions, and it's retrieved that amount. So even more. But in Britain and in other parts of the E.U., not at all as successful. So the banks are still waiting to recoup that amount of money.

What has happened here?

LAGARDE: What's happened here is that in this column, the U.S. has gone very heavily, very early on, sort of being ahead of the curve and putting massive amount of money. That was TARP.

In these two columns, U.K. and E.U., it was much more gradual, much more incremental and in the U.K., for instance, two very large banks are still essentially nationalized and need to be privatized so that taxpayers in the U.K. government can get their money back, to quote another famous woman, and in the E.U., you have a lot of that going on as well with privatization still.

AMANPOUR: Very much indeed. And you yourself have said this past summer that -- sort of a bit of a mea culpa over Greece, that the IMF was too slow, too late and in restructuring that country's debt. And of course, it's had terrible consequences. Many, many people, merely -- I think it's about 55 percent of even women are without a job right now.

You know, did you screw up, so to speak?

LAGARDE: No, I don't think we did, because if we had recommended restructuring of debt in Greece at that time, there was no firewall and there was a clear risk of contamination to the rest of the Eurozone.

So it was a question of when and how do you cut the arm and how do you stop contamination from possibly putting the whole system down? And the choice was made to show that the Europeans build their firewall first before anything very serious was done about the Greek debt.

So in hindsight, yes, it could have been nicer to recommend earlier, but it would have been a possible major, major exposure for the whole of the Eurozone.

AMANPOUR: I interviewed the Italian prime minister in the summer. And I asked him what keeps him up at night. He said his biggest nightmare is the flight, the exodus of the young people from Italy. Again, a massive unemployment rate under the -- amongst the young, and the same in Spain.

I mean, what can be done to give people some kind of hope, some kind of ability to just work?

LAGARDE: Well, hopefully, they will come back, because that's really the ultimate goal of those countries, to reset the parameters of an economy that works, that creates jobs and that provides opportunities for young people.

Some of them have gone, probably to be educated abroad, to get a job abroad. But hopefully a bit like what happened in Ireland or what might happen in Latvia, for instance, when people go elsewhere, get a job, make a living, come back, send remittances at home.

But those countries -- Italy, Spain -- they are showing signs of turning the corner. They're not completely out of the woods yet, but it's improving.

AMANPOUR: Well, that's good news.

Do you see a general improvement? Or what kind of forecast are you making across the zone?

LAGARDE: In the Eurozone? We think finally positive growth next year. So from having had quarters and quarters of negative growth, we are seeing progress next year. And they are beginning to show that already now.

So it's -- I don't want to use the green shoots analogy, but we're seeing some positive news on that front. Still much work to be done, but...

AMANPOUR: And what is your response to the Fed's position on tapering?

LAGARDE: In a way, we are very satisfied with what has happened, because we always said all along gradual tapering when it's needed, based on factual elements demonstrating that the economy is recovering and communication.

Preferably in a dialogue with emerging markets, other central bankers. I think we see quite a bit of that. Markets are not happy but markets are not happy when central banks decide to take the wheel.

AMANPOUR: And what do you think of Janet Yellen, who stands a very good chance?

She's your friend.

LAGARDE: Yes. And I've always supported her and I'm very pleased to see that turn of events. But I'm sure the president will make the right decision.

AMANPOUR: And she'll be the right person for the job?

LAGARDE: If she's appointed, I'm very sure she'll be a good person for the job, as good as you can get.

AMANPOUR: And as for you, do you have political ambitions? Do you want to go back to France and challenge for the presidency? I'm interviewing President Hollande tomorrow.

LAGARDE: Wish him the best of luck.

AMANPOUR: What should I ask him about the economy?

LAGARDE: How much more? How fast? And how deep are the structural reforms will be going forward, because that country has so much going for it. And yet it has to embark on and endorse reforms that will make it more competitive.

AMANPOUR: And very finally, Egypt. We've seen the political crisis in Egypt. And there was to be a big loan and some help for their economy.

Where does that all stand now? What does Egypt need to do to get its economy back on its feet?

LAGARDE: You know, we are obviously very attentive to what's happening in Egypt. The country is resettling in some way. Its neighbors are giving it huge support. There are massive reforms to be had. The energy subsidy reforms has to be tackled. The fiscal situation needs to be addressed. Too much deficit. We are working with technical people at the technical level at the moment.

AMANPOUR: Christine Lagarde, head of the IMF, thank you very much for coming in.

LAGARDE: Thank you.

AMANPOUR: And as we've said, Egypt is one of the countries that are badly in need of financial transfusion. But political instability has that country's economy reeling.

So will a court ruling in Cairo today mark a new beginning? Or is history merely repeating itself? We'll examine the evidence when we come back.

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AMANPOUR: And finally tonight, imagine a world where a political party rises to the height of power only to be judged an outlaw -- again. An Egyptian court has banned the activities of the Muslim Brotherhood and frozen its finances. It's a stunning reversal for the organization that only 16 months ago ushered in Egypt's first democratically elected president.

Today, of course, Mohammed Morsy is a prisoner and his Freedom and Justice Party is illegal. That is the political wing of the Muslim Brotherhood. And yet for Egyptians, it is deja vu all over again.

From its beginnings in the 1920, the brainchild of the Islamic scholar Hassan al-Banna, the brotherhood challenged authority, which in Egypt was at the time was embodied by imperial Britain. And in the 1950s, when Gamal Abdel Nasser let a military coup to toss out the British-backed King Farouk, he had the Brotherhood's support. That would soon change.

And after an attempt on Nasser's life in 1954, the Muslim Brotherhood headquarters in Cairo were torched and the party was outlawed. It remained that way for almost 60 years, until the fall of President Mubarak in 2011, when the Muslim Brotherhood rose again from the political dead to become Egypt's ruling party -- if ever so briefly.

And tomorrow, next door to Egypt, Libya is going through its own Arab Spring growing pains. So I'll ask Prime Minister Ali Zeidan whether he can rescue Libya from becoming a failed state. And also my exclusive interview with the French President Francois Hollande, whose country led the intervention in Libya back in 2011. Two frank and fascinating conversations that you won't want to miss.

And that is it for tonight's program. Meantime, you can always contact us at our website, amanpour.com. Thanks for watching and goodbye from New York.

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