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The Divide in Washington Over Raising the Debt Ceiling; Will Japan Take A Hit from the U.S. Debt Debacle?; Heavy Rains Pound South Korea; Countdown to 2012 Olympic Games

Aired July 27, 2011 - 16:00   ET


BECKY ANDERSON, HOST: Poles apart with no sign of compromise, as the brinkmanship continues on Capitol Hill, the U.S. edges further toward a default. While the impasses drags on, the world's currency of choice takes a tumble. Tonight, why what's happening in Washington could be a watershed moment for the global economy.

Plus, new images of the moment Norway's capital was touched by terror. Today, the prime minister says the country will not be intimidated.

And it is a year to the day until the opening of the biggest sporting event on earth -- what London can learn from cities who've done it all before.

These stories and more tonight, as we connect the world.

Staggering debt and incredible stubbornness amongst U.S. lawmakers. Right now, they are digging in their heels, each side hoping that the other will cave in. But time really is running out. If Congress fails to pass a plan to raise America's debt ceiling and reduce the deficit, the U.S. Treasury insists that the country will not be able to pay its bills after August the 2nd, causing a default.

Well, that could damage the global economy. Many people around the world are totally baffled that the U.S., knowing this, would tickle the dragon's tail.

Well, back in Washington, Republicans and Democrats are each pushing ahead with their own fix it manuals. But neither side, at this point, seems to have got its sums right. And at the moment, neither plan seems to have any real chance of passing.

Well, the big sticking points, spending and taxes. Republicans want to slash government spending. Democrats want cooperation and the wealthy to cough up more cash.

And as Jim Acosta explains, this is a huge divide that so far no one has been able to bridge.


JIM ACOSTA, CNN CORRESPONDENT (voice-over): The showdown over the debt ceiling has stretched the Capitol to its extremes, with Tea Party Republicans pulling on one side and liberal Democrats tugging on the other.

REP. JOE WALSH (R), ILLINOIS: President Obama, quit lying.

ACOSTA: Freshmen Republican Congressman Joe Walsh posted a video on his House web site accusing the president of lying about the possibility that Social Security checks could be delayed if the country goes in to default.

WALSH: And that's not being truthful to the American people.

ACOSTA (on camera): Is it appropriate to say...

WALSH: -- and it's not what we need right now.

ACOSTA: -- the president is lying...

WALSH: If he's lying...

ACOSTA: -- and call him a liar?

WALSH: Well, again, a nuance. I didn't call him a liar. In that case, he lied.

ACOSTA: You're basically calling him a liar.

WALSH: Yes. Exactly. And I'm not going to walk back from it.

ACOSTA (voice-over): But back in the late '80s, President Ronald Reagan warned the same thing could happen during his own debt ceiling standoff.

RONALD REAGAN, PRESIDENT OF THE UNITED STATES: This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veteran benefits.

ACOSTA: On the Democratic side, Congresswoman Sheila Jackson Lee has suggested Republicans are sticking it to the president because of his race.

REP. SHEILA JACKSON LEE (D), TEXAS: Why is he different?

And in my community, that is the question that we raise.

Why this president?

And I don't think it...

ACOSTA (on camera): Do you think it could be racial?

LEE: Well, let me say this. I'd like to get past the personal. And I think -- I posed the question. And I think those individuals need to answer the question.

ACOSTA: Is it a fair question?

LEE: I think it's a fair question.

ACOSTA (voice-over): Instead, the reason may be pure politics. When George W. Bush was president, the Congress voted to raise the debt ceiling seven times. On nearly every occasion, dozens of Republicans, including many of today's GOP leaders, voted yes.

ALICE RIVLIN, PRESIDENT'S DEBT COMMISSION MEMBER: I have never seen anything like this. I think it's very scary and very embarrassing for our system of government.

ACOSTA: Alice Rivlin, a veteran of past budget battles, says President Obama is also to blame, for walking away from the recommendations of his own debt commission.

RIVLIN: I think everybody missed an opportunity, both the president and the leadership of -- of the Congress.

ACOSTA: In part, that's because the leaders aren't really leading. One side of Congress is answering to conservatives who won't give on taxes. The other won't touch entitlements. It's no wonder they're getting nervous.

(on camera): Is it getting scary up here?

REP. RAUL GRIJALVA (D), ARIZONA: It's -- it's not to the point of being scary yet, but it is -- it is heading in that direction.

ACOSTA: Adding to the polarization in Congress has been a steady stream of centrists leaving the capitol in recent years. The latest, Democrat Mike Ross, one of a dwindling number of fiscally conservative Blue Dog Democrats. Republicans predict he won't be the last.

Jim Acosta, CNN, Washington.


ANDERSON: Well, if the two sides do not reach a compromise, this generation of lawmakers will be the first to squander the United States' AAA credit rating.

let's get more perspective now from CNN's senior political adviser.

David Gergen is a public service professor at Harvard. He's advised four presidents.

He comes to us tonight from Cambridge, Massachusetts -- do -- do you buy this race line?

I mean I guess what people around the world are asking at this point is why Obama and why now on this?



GERGEN: Well, it's been -- it's been coming to a head for a long time. And -- and so it's -- there's been a buildup. And the 2010 elections that swept Republicans into power was really a -- a mini revolt by voters, who said the government is spending way too much money and not getting enough out of it, we want to reign in spending.

And the Republicans and this new crop of 87 freshmen came into Washington with the war hoops and determined to bring down spending. And what they saw was that sitting out here in the distance was the possibility of using the -- the debt ceiling and the expiration of the debt ceiling, in effect, as a vehicle, as a leverage for pushing their agenda.

And the president said I want a clean debt ceiling. I want to have -- I want to have it lifted without annoying attached. And they said not on your life, we're going to attach something to it. And, by the way...

ANDERSON: All right...

GERGEN: -- when -- when our guy was the president, you started attaching things to it.

So they -- this is all about using the debt ceiling as a...


GERGEN: -- as a -- as a weapon, if you would, to -- to push an agenda that they think is supported but a lot of voters in their districts.

ANDERSON: Because let's remind our viewers around the world, David, that presidents have raised the debt ceiling before without this sort of fanfare, haven't they?

GERGEN: Yes, for the most part, presidents have been able to raise the debt ceiling very easily. It's been sort of cut and dried. President Reagan raised it numerous times. President Clinton, President George W. Bush, all of them have done that. I've been in the White House when these debt ceilings have been raised and it's a -- it's a bit of a struggle. You've got to round up members of your own party because the out guys always want to vote against it. Oh, you're irresponsible, you're raising the debt ceiling. So it's always a question of rounding up your own -- your own voters.

In this case, President Obama does not have the majorities in both the House and the Senate. Otherwise, we don't be having this fight.

ANDERSON: There is a...

GERGEN: You know, so Republicans...

ANDERSON: -- there is a school of thought...

GERGEN: -- have been pushing the fight.

ANDERSON: Yes, David, there is a school of thought that goes that this has something to do with racism here.

Do you -- what are the issues at play?

GERGEN: I think it's -- I -- I just think it's -- is there little strains of racism?

Yes, sure. But it's not the driving force in this, by any means. And I -- I think it would be unfortunate to paint over this with some, you know, question of racism. This is fundamentally about very deep divisions in the United States about the size and role of government. We have people who want a government that is quite lean. They want a government that spends about 18 percent of the GDP in Washington. And they -- and the -- and the left wants a government that they think is more compassionate, more supportive. They want a size of government that spends about 23 percent of GDP.

Now, on the surface, the difference between 18 percent and 23 percent does not sound very big. But in a huge economy, actually, the difference between 18 and 23 is about $700 billion a year in spending. There were -- the -- that's how far apart the parties are and their vision. And -- and they're so polarized and -- and so poisonous that they can't find compromises in between.


GERGEN: It's understandable they have different visions, but the -- it's the polarization that prevents them from finding -- you know, when Reagan was president as a Republican and

Tip O'Neill was the leader of the Democrats, they were on opposite ends of the spectrum in terms of what they stood for, but they could work together and they could come up with compromises that both men could live with. And there were even little bonds of affection between the two.

ANDERSON: Yes. All right, David, thank you for that expert advice from our political analyst this evening, talking about the difference of what is probably, you know, a -- a day-and-a-half of spending on the war in Afghanistan.

Well, the U.S. debt crisis is proving to be good business for foreign currencies. And some are even talking about the possibility that the U.S. dollar may no longer be the world's reserve currency.

America's neighbor to the north, Canada, has seen its dollar climb almost 10 percent, to part in parity earlier this year. In Switzerland, the franc has seen stellar growth over the course of the year, climbing more than 32 percent. The Australian dollar is up more than 21 percent against the U.S. dollar. And finally, in Japan, the yen is up about 12 percent against the greenback.

Well, Japan is America's second largest foreign creditor, holding nearly a trillion dollars in U.S. debt.

As Kyung Lah now reports or explains to you, Japan stands -- well, it stands to take a hit from the debt debacle.


KYUNG LAH, CNN CORRESPONDENT: The Tokyo Stock Exchange and the currency markets are holding their breath, waiting for U.S. lawmakers to strike a deal. Investor concern is rising, as Tokyo stocks are down almost across the board, reflecting that what happens in the U.S. affects Japan's economy from top to bottom, beginning with the fact that Japan is second only to China in holding U.S. debt. It holds about 20 percent of American debt.

So if the U.S. doesn't pay its bills, it's Japan who's partially left holding the bag. For corporate Japan, who still live on the dollar, the falling dollar means a huge hit in corporate profits. The yen is at fresh four month highs versus the dollar, as investors flock to the safety of the Japan currency and away from the U.S. dollar. Analysts expect that within the last six weeks or so, corporate profits may have fallen by as much as 4 to 5 percent and could continue to fall until there's a deal.

Kyung Lah, CNN, Tokyo.


ANDERSON: Well, joining the dots on what is the day's biggest story.

To some, it seems the world's largest economy I digging its own grave and shoveling dirt on the global economy, as well. But a few hours ago, credit agency Standard & Poor's, at least, announced that it does not believe that the U.S. will default.

Well, earlier, we spoke with Valentijn Van Nieuwenhuijzen. And he's chief economist for the ING Management -- investment Management Company.

My first question to him was this -- on a scale of one to 10, just how bad is this and what long-term effect will it have on the global markets.

This is what he said.


VALENTIJN VAN NIEUWENHUIJZEN, CHIEF ECONOMIST, ING INVESTMENT MANAGEMENT: Only a default will really being systemic fears to the global economy or the financial system. A downgrade for the U.S. will probably complicate matters for the U.S. economy for growing at the pace that we were used to seeing it growing even more. And there are other challenges ahead, as well.

Secondly, it will also probably increase further fiscal tightening in the near-term and that is undermining already a pretty fragile state of the U.S. economy.

So we are now looking at a very strong picture anyways.

ANDERSON: We're looking at public debt of some $14 trillion. When you look at those numbers, the European numbers are dwarf in comparison.

And yet, I'll put this to you -- how does what's going on in the States this week compare to the troubles that we've had with the European debt over the last year, 14 months?

VAN NIEUWENHUIJZEN: Well, I think in the end, the big comparison here is that it -- is it not so much about economics and finances only. It's really about political will to solve these problems. To a large extent, it is economically pretty much probable to prevent both Europe and the U.S. to have solvency risks in the long -- the medium to long-term.

However, can they find the political willingness to sort of reach common ground on political issues and distributional issues between the countries in Europe?

that is the big question. And there you see that the hurdles, the political hurdles are much larger than they've ever been over the last 20 to 30 years.

ANDERSON: Finally, let me just put this to you. You talk about solvency risks for the U.S. and for Europe. I mean I've been doing this job for 17 years and for some eight or nine of those, I specialized in -- in following the markets and business journalism. It does seem extraordinary that in 2011, we're talking about solvency risks for two enormous areas in the world.

This is -- this is a -- a real watershed moment, isn't it?

Never mind what's going on with the debt or default issue, this is a real watershed moment for -- for global finance.

VAN NIEUWENHUIJZEN: Absolutely. Absolutely. I remember in the late '90s, we were talking about the fact that U.S. government debt would disappear completely and that that was going to be a problem. And now we're facing the complete opposite. So it just tells you very much that these deleveraging headwinds, which have moved from the financial sector to the public sector, will constrain growth in developed markets for some time to come and that even the longer-term issues, which not necessarily are the key focus in a lot of the debates right now, will come -- will continue to depress the growth prospects that we're faced with. And that creates a world which is more volatile and more risky, while, at the same time, not generating as much growth and not generating as much of attractive returns as we saw over the last 30 years.

So seriously more challenging.

ANDERSON: Remarkable times, huh?

Well, our top story of this evening, America's financial mess. Some banks and analysts say the risk of default is not quite as imminent as the White House and U.S. Treasury would have us believe. They say the government won't be able to borrow any more money after August the 2nd, but that the U.S. will still have enough cash to cover its bills until August the 5th or even as late as August the 10th.

As for which scenario is correct, well, many hope we won't have to find out.

You're watching CONNECT THE WORLD. It's 16 minutes past 9:00 here in London.

Still to come, roads turned into rivers, hills into avalanches of mud -- torrential rains trigger landslides in South Korea, the worst flood damage there in decades, coming up.

Then, the landscape is changing in London as it prepares to host the world's biggest sporting spectacle. A year and counting until the Summer Games.

And a terrifying moment caught on tape -- new footage of the bombing that changed Norway forever.


ANDERSON: I'm Becky Anderson in London.

You're watching CONNECT THE WORLD here on CNN.

some of the other stories that we are following for you this hour.

And the Taliban are claiming responsibility for what is another high profile assassination in Southern Afghanistan. A suicide bombing killed Kandahar's mayor, a close ally of President Hamid Karzai. Now, the president's brother was assassinated, you may remember, in Kandahar just two weeks ago. And authorities say a man approached Mayor Ghulam Haidar Hamidi at a city hall meeting then set up explosives in his turban earlier. The new U.S. ambassador to Afghanistan says he is not convinced the Taliban are responsible, although he did add this.


RYAN CROCKER, U.S. AMBASSADOR TO AFGHANISTAN: I would judge that the Taliban is now damaged to the point where they can no longer conduct large scale operations. They have had to kind of regroup and figure out what they can do and -- and in some cases, that has been assassination.


ANDERSON: Well, the New York maid who accuses former IMF Chief Dominique Strauss-Kahn of trying to rape her has met with prosecutors. The meeting at the Manhattan district attorney's office was expected to focus on whether the case will go ahead and the doubts over Nafissatou Diallo's credibility. Earlier this week, she gave interviews to "Newsweek" magazine and to the television network, ABC.

Strauss-Kahn has denied seven charges of attempted rape and sexual assault.

Well, at least 39 people are dead across South Korea as the country gets pounded by heavy rains that are causing mudslides. Rising water levels have cut off many parts of the country.

From there, Paula Hancocks reports.


PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: The death toll has been steady rising here in South Korea as torrential rain continues to pummel the peninsula. Now, this is the rainy season. We're used to rain here, but not to this extent.

This is the Han River, which cuts through the middle of Seoul. And usually you'd have the banks up to about 150 meters until you come to the water. And cars have been stranded. Homes have been flooded. As you can see, the Han River is flooding pretty significantly.

And over the past 24 hours alone, there's been 400 millimeters, or 15.3 inches of rain, just in Seoul alone.

Also, there have been a number of deadly landslides that have been triggered by this heavy rain. There was a deadly landslide near the city of Chuncheon, just two hours east of Seoul. And it's claimed the lives of more than a dozen people. Many of them are college students who were doing volunteer work in the area. They were staying a local inn when the landslide caused the roof to collapse.

The local media is referring to this weather as "water bombs," showing that the sheer volume of torrential rain isn't usual.

And it's not over yet. The Korean Meteorological Agency has issued a special heavy rainfall alert in the center of the country.

One official tells CNN that three quarters of the rain that has fallen during this rainy season has fallen in just the last 24 hours.

Paula Hancocks, CNN, Seoul.


ANDERSON: Well, doctors gave the Lockerbie bomber about three months to live, so Scotland let him go in 2009. Well, two years later, Abdelbaset Mohmed Ali al-Megrahi appeared on Libyan television at a rally to support Moammar Gadhafi. The man responsible for 270 deaths is in a wheelchair and does look frail. Britain's foreign secretary says the appearance proves the release was a big mistake.

So, Colonel Gadhafi has the support of the Lockerbie bomber, but the British government is recognizing the rebels today. We'll be live in Tripoli in about 20 minutes time for you.

Up next, we'll be, though, live in Trafalgar Square, where London is celebrating with just a year to go until the opening of the 2012 Olympic Games. Stay with us for that.


ANDERSON: Well, with exactly a year to go, the organizers of the London Olympics say that all six of the permanent Olympic Park venues have been completed. The new aquatic center opened with a splash earlier this evening, with British medal hopeful, Tom Daley, diving into the pool.

Today also means that the final countdown to the Games is very much now underway.

let's get more on that story with "WORLD SPORT" Pedro Pinto, who's been in Trafalgar Square in the center of London today where the festivities have kicked off -- Pedro.

PEDRO PINTO, CNN "WORLD SPORT" ANCHOR: Hey, Becky, I think it's safe to say that the Olympic bug has bitten the Londoners, because I felt real excitement here at a celebration party that was organized to mark the one year out from the Olympic Games London 2012.

just around the corner here, thousands of people watched a series of - - of events, of dances, of performances. We also had the president of the International Olympic Committee, Jacques Rogge, welcoming the athletes of the world to these games. We have the mayor of London, Boris Johnson, welcoming people from around the planet to visit the city.

It was truly a festive occasion here at Trafalgar Square earlier on today.

Now this is, of course, an incredible event for the organizers, also for the athletes, to go into -- into the mind of an athlete. I am -- I am privileged to be joined by former Olympic champion, Linford Christie.

Linford, you won the Olympic gold back in '92. You're now training a lot of the British hopefuls.

What do they tell you that this means to -- to them, to have the Games on their home soil?

LINFORD CHRISTIE, OLYMPIC GOLD MEDALIST: Well, I think, first of all, you know, it's been six years. I mean we've gotten the Olympics six years ago and then I was thinking that it's going to be a long time. It's just come around so quick. And my athletes know that it -- they're thinking it's not that long to go. We've got to get ourselves in shape. We can't wait because, of course, we've got -- and we've got a home crowd advantage but I still (INAUDIBLE) counted on that. They've got to be on form, you know, this time next year.

PINTO: Boris Johnson says that 88 percent of the venues are pretty much ready to go. The city is in a great position now, with 12 months left.

Today, did you feel that the people embraced the Olympic spirit and the people are ready, as well?

CHRISTIE: Oh, definitely. It's not just the Londoners, because London is one of the most multicultural cities in the world. So I mean well, suddenly, we see people walking around, people with cameras. Everyone is celebrating. And it's just like it's their Olympics. So people should stop saying it's London Olympics. The Olympics now belongs to everybody, the whole world.

PINTO: When you talk about the meaning of an Olympics to -- to an athlete, take us back to what you were thinking when you won that gold medal in '92 and how you felt when the anthem was playing?

CHRISTIE: Well, first of all, the Olympics (INAUDIBLE) all athletes create. Everybody wants to be an Olympic champion and every coach wants to coach an Olympic champion. And when you're standing on that podium and they're playing the national anthem, you realize you're the cause -- you're the cause of it, you've done well, you feel (INAUDIBLE), you know it's going to go down in history forever, because it doesn't matter wherever you win before, if you've got one Olympic champion, you're never going to be (INAUDIBLE) again.

PINTO: And as an Englishman, how would you like this Olympic Games to be remembered as?

CHRISTIE: As one of the very best, not only as far as participation is concerned, but it's going to be green, it's going to be, you know, great for the environment. The people are going to enjoy it. And people -- it's going to -- we're going to have venues and places were people want to come back. After the Games are all finished, they're calling it a legacy. And we've got to leave a legacy, not just for London, for the kids, the people all over the world who want to come back and say they're going to visit London in 2012.

PINTO: Linford, it was a pleasure to talk to you on CNN.

all the best.

CHRISTIE: Thank you.

PINTO: And I can really tell that for the former athletes like Linford Christie, they really hoped that there would still be an action today so they could compete on home soil. It's an historic occasion for the British athletes, Becky, and for athletes around the world, that they are now ready to turn up their preparations...


PINTO: -- to qualify for the Games, that are now 365 days away.

ANDERSON: That's right. And as he was talking there, the hairs was standing up on the back of my arms. I remember that race so clearly, as if it was yesterday, and my goodness, it's, what -- what, a long time ago. I can't even do the math in my head.

Pedro Pinto is...


ANDERSON: -- in Trafalgar Square this evening with the -- what is the kick-off event, effectively, to the -- to the London 12 -- 2012 Olympic Games.

Well, over 40,000 construction workers have been helping to prepare London for the Games. Let's have a look at some of the venues for you.

Exactly 365 days from now, as Pedro said, the opening ceremony will take place here in the Olympic Stadium. With a capacity of 80,000, it will also be the venue for main events like the 100 meters final, which, of course, Linford won back in 1999.

The wave-shaped aquatic center was the last of the permanent venues to be completed, just six days ago. Three pools hold 10 million liters of water. The 6,000 feet Velodrome will host the indoor cycling event. Organizers say its track was laid by 26 specialist carpenters with 56 kilometers of timber.

Well, London has certainly come a long way since winning its bid for the Olympics in 2005. : "WORLD SPORT'S" Don Riddell has been speaking with Sebastian Coe, who chairs the organizing committee for the Games.

Have a look at this.




As ready as it comes.


When London won the bid, what was the first thing that went through your mind?

COE: Excitement, really. Responsibility.

RIDDELL: Who will top the medals table?

COE: China.

RIDDELL: What has been the proudest achievement of your life so far?

COE: Singapore, getting the bit across the line.

RIDDELL: What non-Olympic sport would you like to see in the Games one day?

COE: Cricket. But it will never happen.


RIDDELL: How many hours do you work a day?

COE: Too many.

RIDDELL: How many hours do you spend in the gym?

COE: Not enough.


RIDDELL: What's the best sports movie ever made?

COE: "The Fighter."


what was the last thing you listened to on your iPad?

COE: Jazz.

RIDDELL: Should Paralympians be able to compete in the Olympics?

COE: If they are qualified and meet the right standards, yes.

RIDDELL: Who's your favorite Olympian of all time?

COE: David Thompson.

RIDDELL: Who do you think should light the Olympic flame.

COE: I can answer this question because I've absented myself from any discussion in the lead-up to this, but he's my closest friend. I would say Davy.

RIDDELL: OK. And finally, have you ever cried at Olympic achievement?

COE: No.

RIDDELL: Don't get a lump in your throat ever?

COE: A lump in my throat, but I don't cry. I only cried once in my life, and that was the birth of my first child.

RIDDELL: I hear you. Seb, thanks very much good luck.

COE: Thanks.


ANDERSON: Excellent. We're going to have much more on the Olympics. Coming up, we're flattering ourselves today, because of course we are based in London and it is a year out, so stick with us.

In 15 minutes, we're going to take a look at the legacy of Beijing, the last home of the Summer Games.


ANDERSON: It's 32 minutes past 9:00 in London, you're back with CONNECT THE WORLD, I'm Becky Anderson, this is the world's news leader. Let's get you a check of the headlines this hour.

Fears over the US debt crisis hammering global stocks. The Dow closed almost 200 points lower today. The NASDAQ slid two percent also, and the S&P fell about the same. The US Treasury Department says if lawmakers cannot reach a deal on raising the debt ceiling, the US will default in six days time.

A suicide bomber has killed the mayor of Kandahar in Afghanistan. Officials say the bomber walked into a meeting at City Hall and detonated an explosion hidden in his turban. The mayor told CNN last December that he knew his life was in danger.

Drought-stricken Somalia has received the first aid from a World Food Program airlift. Ten tons of supplies were dropped in Mogadishu earlier today, aimed a feeding children in danger of starvation.

Rescue workers are searching for dozens of people missing in landslides and flooding across South Korea. The disaster relief agency says 39 people are dead, including 16 in Seoul. Some of the wealthiest parts of the capital are under water.

British medal hopeful Tom Daley opened the last of London's six permanent Olympic venues earlier this evening. The countdown to the 2012 Olympics has now begun. British prime minister David Cameron has promised they will be the greatest Games.

And those are your headlines.

A few seconds of shock and disbelief before panic sets in. This has video has surfaced showing the exact moment an explosion rocked Oslo last week, one of two attacks that would change Norway forever.

A store camera captured this surveillance footage about a block from where the bomb went off. While police converged on the scene, the assailant when to a nearby island and opened fire on a political youth camp.

Prime Minister Jens Stoltenberg says Norway will learn from the tragedy.

JENS STOLTENBERG, PRIME MINISTER OF NORWAY (through translator): We'll set up a commission to go through everything that happened in the government buildings at Utoya.

It's important to make a proper review so that we can learn any lesson from this, the most severe -- event since the second World War. This will be called the commission for this, the 27th of July. It can be an independent commission and will report to me. And we will then go through this and let Parliament know in due course.


ANDERSON: Jens Stoltenberg, there. Well, police have released the names of 13 more victims, 12 who died on the island and one who was killed in the bombing in Oslo.

A Norwegian Christian extremist has confessed to the attacks that took at least 76 lives in all. Authorities are now searching a farm near Oslo that's linked to Anders Behring Breivik. As Nic Robertson tells us, they want to make sure he didn't leave any explosives behind.


NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Police and army bomb disposal experts continue to go through Breivik's farm, searching for more of that fertilizer bomb-making material.

They're setting off controlled explosions. The amount of bomb material they discovered so far they say is unsafe to travel. They're using TNT to detonate it, and they'll be doing it throughout the day, perhaps one or maybe a few more detonations to go.

But the reason that Breivik was able to use the farm to buy fertilizer and to get away with making a bomb, according to Norway's intelligence chief, is because everything he was doing in all his planning was legal.

JANINE KRISTIANSEN, HEAD OF NORWEGIAN INTELLIGENCE: We can explain it because he did it very lawfully. He registered his weapons, he bought or rented this farm so he could buy the fertilizer. He bought small amounts, obviously, of chemicals that we have.

We think he might have bought something for Poland for about $15. We think, also, that he has been very, very careful in those who he has been communicating with, and he has been very moderate when he has actually said something on the internet.

ROBERTSON: But critical in the investigation will be determining if they can account for all that fertilizer that Breivik says that he bought.

If they can account for all of it, that means probably no more bombs on the loose. If some of it is missing, then the police believe that there's a potential there could be another bomb.


ANDERSON: Nic Robertson reporting, there. Well, as you heard, this shooter planned his attack using lawful means and somewhat moderate comments on the internet, but could his plot have been uncovered before he killed 76 people?

My colleague Isha Sesay spoke with the CEO of a firm that specializes in predicting attacks like this about how it's done. Have a listen to this.


MATI KOCHAVI, CEO, AGT INTERNATIONAL: Prediction is becoming one of the most complicated issues, and if we see what's happened in the world only in the last couple of months, what happened in the Middle East and no one knew about it. Even so, there's so much money invested to understand the Middle East.

Or when we see what happened in Japan in terms of natural disasters. So, the ability to predict and yet to prepare yourself for changes is a critical part of our philosophy and our business.

ISHA SESAY, CNN CORRESPONDENT: But how do you predict?

KOCHAVI: OK. So, the -- that's a very interesting question, because the first prediction relates to listening to the voices that are usually unheard of.

So, let's take for instance the internet. People talk to the internet and say what they feel about different issues. They -- they want governments, they want their companies, they want their organizations to listen to what they are saying.

No one is collecting those voices and saying "Here is what it means" to governments or to companies or to mayors of cities.

There is a voice over there that should be collected and packaged in a way that leaders would understand what really people think about what's happening to their environment.

So -- and this is a very important part of the ability to predict things before they happen, that's when it comes to people.

When it comes to nature, how can you collect signs that nature creates and now you can bring all the signs together and say, when I have all the signs set up together, we are in for some kind of a natural event and we have to prepare ourselves for that.

So, the ability to collect all these trillion bites of data, of information, and being able to make sense out of it is a critical part of the prediction.

SESAY: So, let's be absolutely clear. Could your company have predicted the recent events in Norway?

KOCHAVI: If there is a case over here of someone who was using the internet to convey his certain messages and someone would have listened to what he says. And interesting thing, it's public information. And someone would listen to what he says, you would have been able to basically identify a profile which is -- you should look at it.

Threats today are really interesting in two major ways. One, most of them are creating very low signal. So, it's more complicated to see those threats, so you have to find them and to listen, to be very careful to the voices that you hear.

And the second thing about threats are that the power of few is today -- few have today the power that once only nations used to have. And that's a very big change in whatever we see in the -- compared to the 20th century. Never in history we saw small groups who could have the power that only nations have.

So, if you take all these considerations together, the power of few, the internet, which spreads ideas, good ideas, but also complicated ideas and negative ideas. Globalization that removes border. When you take all those things together, you're saying we are living in a new world.


ANDERSON: The possibility of predicting attacks like that which we've seen in Norway.

Still ahead, there may be stalemate on the battlefield, but Libyan rebels have scored another diplomatic win. We're going to see who's the latest country to get on board a growing international effort to strip Moammar Gadhafi of his legitimacy. Stay with us.


ANDERSON: It's 43 minutes past 9:00, I'm Becky Anderson in London. Now, Britain today gave a huge boost to rebels trying to overthrow Moammar Gadhafi, formally recognizing their Transitional National Council as the legitimate government of Libya.

Well, it also expelled all remaining staff loyal to Moammar Gadhafi from the Libyan embassy in London. British Foreign Secretary William Hague says the moves are far from symbolic.


WILLIAM HAGUE, BRITISH FOREIGN SECRETARY: The 91 million pounds of assets to be unfrozen is, of course, material assistance to the people of Libya and to the National Transitional Council.

And it also opens the way for us to intensify our efforts to unfreeze other assets. So, there are practical consequences to what I have announced.


ANDERSON: All right, so far from just symbolic. Who else has recognized this Transitional Council, then, in Libya? At least 30 countries now view the council as the sole representation of the Libyan people, that is all of these countries that are in yellow.

This includes the United States, which recognized the council on July the 15th. The EU, many European nations accepting the council, including influential countries like France, Germany, and Italy.

Qatar, remember? The Middle East, several states showing their early support, including Qatar, the UAE, and Kuwait.

And over here, Japan in Asia, the only country to acknowledge the council. Australia, though, has also shown support.

Interestingly, both China and Russia -- you can see this area just here in orange -- has said they recognize the importance of the rebels but do not see them as sole government in Libya.

Well, Gadhafi's government is furious that Britain has now formally taken sides and recognized its bitter enemies. Ivan Watson joins us now from Tripoli with some reaction. Ivan?

IVAN WATSON, CNN CORRESPONDENT: That's right, Becky. The bullets and bombs continue to fly, and now even more, a diplomatic pressure on the regime here in Tripoli.

The deputy foreign minister for the government here just a few hours ago gave a press conference in which he called the British government decision to hand over Moammar Gadhafi's embassy in London to the rebels, he called this "irresponsible" and "illegal."

Take a listen to some of what he had to say.


KHALID KAIM, LIBYAN UNDERSECRETARY FOR FOREIGN AFFAIRS: The aim of this and the objective and aim of this step is to give more support and boost to the rebels. But I tell the British government, they are flogging a dead horse.

The rebels will not be benefited from this. This is -- that will be another illegal move that will not help them to achieve their criminal goals.


WATSON: And Becky, the same diplomat said that the regime here vows to battle the decision to hand over that embassy and more than $100 million in frozen Libyan government assets to the rebels, vowing to battle that using the British legal system as well as the international courts of justice.

And he says they're going to file a formal complaint before the United Nations Security Council later this week, Becky.

ANDERSON: And Ivan, in this sign of defiance, certainly many will see it that way, Megrahi around today at a pro-government rally. What should we read into that?

WATSON: Well, that's right. He appeared last night at one of the daily rallies that are organized here in support of Moammar Gadhafi, very briefly on state television last night, Becky. That's the Lockerbie bomber, convicted and released for health reasons.

Basically, when I got here a couple of weeks ago, there were some hopes that some kind of diplomatic progress could be made to, perhaps, reach some kind of a deal between the warring camps before Ramadan starts in just a few days.

It appears that those hopes have been dashed. All sides have taken harder positions. Just a few days ago, earlier this week, William Hague was saying that perhaps Gadhafi could be allowed to stay in Libya if some future deal is reached, and now he's taken a much harder position.

And we're hearing that from the regime here in Tripoli, as well, saying no negotiations, no negotiations over the future of Gadhafi, either as leader of the government here in Tripoli unless a cease-fire is reached first. We can expect possibly a very bloody holy month of Ramadan just ahead. Becky?

ANDERSON: Ivan Watson for you in Tripoli in Libya this evening. Ivan, thank you for that.

Still to come, one year before the Games begin, what can London learn from other host cities and from its own Olympic past? The city rich in history gets a lesson of its own. We're back with the Olympics after this.


ANDERSON: One year from today, as many as billion people will turn their eyes towards this city, when London lights the torch to kick off the 2012 Summer Games.

Well this, of course, is not the first time the Games have been held in this city, so I set out to learn a little bit more about the rich Olympics history in what is this great city of London.


ANDERSON (voice-over): 1908, 1948, 2012. Spanning the course of a century, perhaps no city has been more influential in shaping the future of the modern Olympic Games than London.

ANDERSON (on camera): But it was only by chance that the Olympics were held here. The Games were originally scheduled for Rome, but even a century ago, the event could be an economic burden.

The Italian government feared that the Games could bankrupt them and when in 1906 Mount Vesuvius erupted, they beat a hasty retreat.

With no budget, no venue, and only 18 months to go, the Olympic Committee cast around for another venue, and in the summer of 1906, they found one.

REBECCA JENKINS, AUTHOR, "THE FIRST LONDON OLYMPICS, 1908": Britain rules the waves, or it thinks it does, so the red empire map is covering most of the globe.

And although the first World War is coming, when you look at it in retrospect, they don't know about this. So, in 1908, they are trying to show the world how sport is played.

ANDERSON (voice-over): Having taken on the Olympics, the British set about organizing it, with the help of some royal intervention.

JENKINS: Well, this seat of British majesty was where the marathon race began, under the windows of the east terrace. And the story was that Princess Mary, the Princess of Wales, wanted it to start so that the children could see it from the nursery.

And that is the distance in length from here down to the stadium that brings you to 26 miles, 385 yards.

ANDERSON: Marathon runner Dorando Pietri captured the public's imagination that year. In gold medal position, he fell just meters before the finish. The crowd, desperate to see him beat American Johnny Hayes, encouraged the officials to help him across the line. He was later disqualified.

JENKINS: Queen Alexandra, who was watching in the box, was so moved by this wonderfully tragic, heroic tale that she goes in her cupboards overnight and comes out with a special silver cup. She says, "Where is Dorando Pietri?" And he comes up from the crowd with these acclamations of the crowd and is given this special silver cup.

ANDERSON (on camera): The London Games of 1908 could not have been in starker contrast to those of 1948. The city, like much of Europe, had been ravaged by war. The local population was still under rationing and coming to terms with life in peace time. London was a broken city.

UNIDENTIFIED MALE: A flight of birds was released into the skies, a message to the world that strife must cease.

ANDERSON (voice-over): Despite the times, Charles McIlvenny remembers the Games for very different reasons.

CHARLES MCILVENNY, 1948 OLYMPIC TORCH BEARER: I was very, very fortunate to run a leg of the relay to bring the flame to Wembley.

ANDERSON (on camera): And this, of course, was your torch.

MCILVENNY: And that was the torch, which I've still kept and it still --


ANDERSON: It's got your name on it and everything.

MCILVENNY: See, it's got my name and everything.

This one here was at the actual changeover and each runner had their own torch --

ANDERSON: Were you nervous?

MCILVENNY: Not really.

ANDERSON: You lost it?

MCILVENNY: Well, I was young and fit, then.

ANDERSON (voice-over): And so, to London, 64 years on, what can we expect from this next Olympic chapter?

KEN KIVINGSTONE, FORMER LONDON MAYOR: We have every race, every nationality. It's going to be a festival that is going -- no one who comes will ever forget it as long as they live.

BORIS JOHNSON, MAYOR OF LONDON: I think people will come and they will see a happy, self-confident city. And I humbly say, as the mayor of this city, it is the greatest city in the world.

And they will remember this Games for taking place in the cultural, financial, artistic capital of the world, the biggest, best party on Earth in the greatest city on the planet. That's what they're going to remember.


ANDERSON: Boris Johnson, there. Well, although London is no stranger to hosting the Olympics, as you've seen, it has been more than 60 years since the torch was lit here, so what can this city expect its 2012 legacy to be?

Well, for that, we check in with some of the recent host cities. In a moment, we're going to head to Atlanta, which hosted the 1996 Olympics. First, though, Stan Grant in Beijing, home of the 2008 Summer Games.


STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT: China hosted the world when Beijing held the Olympics. There were still so many questions to be answered back then. Would the city be able to pull it off? What about the pollution, censorship, or political control?

GRANT (voice-over): China's Olympic Games was a political statement, "One World, One Dream." That was the official Games slogan, but this was definitely China's world, a coming out party for an emerging super power.

The secretive and controlling Communist Party relaxed media restrictions and opened up the internet -- for a while -- but has since backtracked. Censorship has been tightened, and human rights groups complain of activists jailed, beaten, and harassed.

Yet some changes have been longer lasting. China banned cars from the roads, moved factories, and planted trees, all to counter pollution. Today, there are more blue sky days. The city was given a facelift, new buildings, the grand stadium, and a water cube swimming center.

The cost of all of this? Officially, $15 billion. Unofficially, three times higher. A very expensive public relations campaign.

China is still celebrating, the all-powerful Communist Party now marking its 90th anniversary. And China's influence and power continues to grow.

GRANT (on camera): In 2008, China topped the medal tally. It is now passing the torch to London 2012, but it's certainly not about to let go of the mantel of the most dominant sporting nation on Earth.

Stan Grant, CNN, Beijing.

CANDY REID, CNN CORRESPONDENT: In 1996, Atlanta hosted the Summer Olympics, at a cost of $1.8 billion, 197 nations took part, with a record 79 nations winning a medal.

REID (voice-over): The Games began on a high note with boxing legend Mohammed Ali lighting the Olympic Torch at Centennial Olympic Stadium, which hosted the Opening and Closing Ceremonies as well as the athletic events, and has since been transformed into the home of the Atlanta Braves Major League Baseball team and has been renamed Turner Field.

The Atlanta Games were marred by the Centennial Olympic Park bombing, which happened right here in this very park.


REID (voice-over): Eric Rudolph killed one spectator and wounded 111 others. But since then, it's been transformed into Atlanta's finest public park, with a fountain of rings as the centerpiece.

REID (on camera): Despite the bombing, the then IOC president Juan Antonio Samaranch labeled the Atlanta Games as most exceptional, and former London Mayor Ken Livingston seems to agree. He suggested that London look to Atlanta as a role model because of its strong Olympic legacy.

Candy Reid, CNN, Atlanta.


ANDERSON: Well, the excitement for London 2012 is not limited to those who've already hosted the Games. People in every corner of the world have been telling us what they are most looking forward to when the Games begin here next year.

Have a listen to just a few of them.


LARA KURIK, EAST LONDON, SOUTH AFRICA: I am Lara, and I'm from -- well, living in South Africa, but I'm originally from Canada, but this has been home for 20 years.

And to be quite honest, when South Africa was admitted back into the Games, we've always been huge supporters of the South African athletes. They've always done really, really well in the pool and on the track.

And the Olympics really have been such a poignant event for South Africans and Africans in general.

STEPHEN TERSTEGGE, KANEOHE, HAWAII: My name's Steve, I'm calling in from Hawaii, and yes, I'm really excited about the 2012 Olympics in London.

And just after the spectacular 2008 Olympics in Beijing and all the fanfare they had, I'm just excited to see what London is going to unfold in 2012.

KEN TANAKA, YOKOHAMA, JAPAN: Well, I mean, they do know how to party in London, so I'm guessing that it'll be pretty good for them.

I'm more concerned about how's it going to be here. Like I said, it's my first time being in Japan, so I don't know how exactly the country follows the Olympics, but knowing Japanese culture, it's going to be pretty well supported, so I'm pretty excited.


ANDERSON: Good stuff. And join us tomorrow for the first in a series of specials that tracks London's progress towards the start of the 2012 Games. That's Aiming for Gold, Thursday 6:30 PM London, 7:30 in Berlin, for example, right here on CNN.

I'm Becky Anderson, that is your world connected. Thank you for watching. The world news headlines and "BackStory" will follow this short break here on CNN.