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Connect the World

New Austerity Measures for Greece; The Fastest Growing Form of Human Trafficking

Aired June 22, 2011 - 16:00   ET

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

BECKY ANDERSON, HOST: Tonight, crisis averted in Greece, in the near- term, at least. But on the streets of Athens, frustration and anger from those paying the price for the mess.

While its leaders try to keep the country afloat, the world's top bond trader tells me that a Greek default is inevitable.

Also tonight, Mr. Obama prepares to cut his fighting force in Afghanistan. A CONNECT THE WORLD special half hour -- "Preparing for the Afghan End Game."

And what role the Taliban might play in that.

Plus, we'll look at what life on the ground is like in the war-torn country.

These stories and more tonight as we connect the world.

Well, the Greek parliament has confidence in its leader, but not a lot. By a wafer thin margin, the prime minister and his cabinet survived a vote of confidence early on Wednesday. But the hardest work still lies ahead.

Lawmakers now need to tackle the very issue that has brought chaos to the streets of Athens. Leaders will vote later this month on a new round of austerity measures that promise to bring more pain to the long suffering economy and its people, in the form of tax hikes, wage cuts and a fire sale of state-owned assets.

Well, if it passes, that would pave the way for Greece to receive the final slice of a multi-billion dollar rescue package from the EU and the IMF.

But even if these frantic efforts to bailout Greece are successful, the biggest bond trader in the world says the country is headed for default regardless.

PIMCO's CEO, Mohamed El-Erian, says Greece has too much debt and it cannot grow. It is no exaggeration to say that markets move on the back of what El-Erian says.

So earlier on today, I asked him what advice he would give the institutions trying to save Greece.

This is what he told me.

(BEGIN VIDEO CLIP)

MOHAMED EL-ERIAN, CEO, PIMCO: I would say, first recognize what everybody else recognizes, which is Greece is a sovereignty issue, not a liquidity issue. And therefore, something has to be done about the sovereignty part of Greece, which means some type, hopefully, of orderly debt restructuring, although the window for that is closing pretty quickly.

Second, acknowledge that there's no solution to Greece if it cannot be competitive and grow. So you need a number of steps directed at that, which we don't have right now.

Thirdly, focus your attention and your money not on the Greek sinkhole, which is what it is right now, but rather, on protecting other entities in the European Union that will come under pressure.

And, fourthly, recapitalize the ECB.

ANDERSON: Let's just remember, you sold your position in Greek debt some time ago. It wouldn't be in your interests, would it, for this to be successful?

EL-ERIAN: You know, we sold our positions a long time ago because we saw a debt problem. You know, those of us who have the experience of emerging economies recognize quickly what a debt overhang does. You know, it's like a big cloud outside your door. If you have a big cloud outside your door, you're not going to step outside. You're going to wait.

ANDERSON: What on earth were banks around the world doing bundling up the sovereign debt of a country (AUDIO GAP) living above its means?

And they've been doing it now for some time and we're not just talking about Greece here. Surely that shows the sheer audacity of the financial system, its players, its market traders and, frankly, it's unprofessional.

EL-ERIAN: Well, you have to understand the mindset. And that mindset dominated not only within the banks, but it also dominated within policymaker circles. And that's why it's been so difficult for everybody to recognize what Greece is.

And the mindset is simple. Greece is an advanced economy, after all, it is a member of the eurozone. It, therefore, has access to the elite of the elites in terms of economic and financial clubs. And therefore, if Greece gets a -- pays a little bit more interest rates than Germany does, surely it's a good bet.

ANDERSON: But you...

EL-ERIAN: And that is what...

ANDERSON: -- had ---

EL-ERIAN: -- is where the mistake was made.

ANDERSON: Yes. OK. Hang on. But you're -- you're better than this. You know this. It wasn't an advanced economy just because it was part of the eurozone. In fact, it wasn't an advanced economy at all.

And doesn't that bring us back to the -- to the brunt of all of this, which is that the Maastricht Treaty, a single European act, 1992, which sort of began to bundle these economies together, was simply corrupt.

These economies couldn't work together ever, could they?

EL-ERIAN: Well, you speak to something that PIMCO has been saying for a while, which is don't look at labels. So look at this -- this canyon. Do not look at the label, look at what's inside the label.

So the fact that Greece had the label of a eurozone economy should not fool you from what's inside. And that explains why we sold our position very early on, because we looked at what's inside.

But the reality is policymakers and certain private sector participants fall in love with labels as opposed to content. And pretty soon, you -- you recognize that the label may actually mislead you about the content. And that's what we're seeing today in Greece.

ANDERSON: So you take absolutely no responsibility, however small a part you played, in buying and selling the debt of a sovereign country which was never going to be able to pay its bills?

EL-ERIAN: You know, we've been very clear about our analysis. We've been very clear about the fundamental issues in Greece. In fact, we were criticized two years ago for putting up a yellow and then a red flag about sovereignty issues in that part of the world.

So you can accuse us of being too public, which is often what we're accused of, but I don't think we can be accused of not being open about our -- our assessment and our analysis of the situation.

(END VIDEOTAPE)

ANDERSON: One of the best minds in the financial world.

Well, it is clear this is not just a Greek problem nor is it just a European problem, of course. And here is why.

If Greece defaults, financial institutions from Europe, the U.S. and Asia, which hold Greek debt, will take a massive hit. They would no longer receive interest payments that they thought they could rely on. And that could lead to bank failures, job losses and spending cuts.

Plus, if Greece defaults, experts say a domino effect in other fragile economies, like Spain, Portugal and Ireland -- a wave of defaults like that would send shockwaves around the world.

Well, as riots and turmoil in Greece have shown this week, things have gotten so bad for some people there, that default seems preferable to another round of austerity.

CNN's Diana Magnay is there.

This is her report.

DIANA MAGNAY, CNN CORRESPONDENT: This time a year ago, when Greece negotiated its first bailout package, we came to this furniture repair shop to find out how the austerity measures would affect them.

A year later, we're going to find out what's happened in the meantime.

(BEGIN VIDEOTAPE)

MAGNAY: How are you?

It's nice to see you.

SAKIS GRASSOS, FURNITURE RESTORER: It's nice to see you again.

MAGNAY (voice-over): Sakis Grassos has had to fire one employee since we saw him last. The other three work a reduced three day week. Business is down 80 percent, as demand has fallen away. The country is struggling under the weight of massive debt.

GRASSOS: We have a lot of public debt which always grow, grow, grow, grow, grow, grow. And taking that right now, we owe, as family, about 250 or 300,000 euros -- a euro in the bank, as a family.

MAGNAY: As a family?

GRASSOS: As a family.

MAGNAY: Just because of the debt that Greece has?

GRASSOS: Just -- yes, it's -- that's our part from the -- the public debt.

MAGNAY: Wow!

GRASSOS: That's why I have to be working my last two, last three lives, to pay them.

MAGNAY (voice-over): Then there are the new taxes, which make everything more expensive.

STELIOS PAPADOPOULOS, SMALL BUSINESS OWNER: We pay the same and we get less. Even in the supermarket, we pay the same, we pay the same and we pay, for the family, I pay maybe 50 euros or 100 euros and I take less, less, less. That's why, as me, we like macaroni. It's the cheaper food.

MAGNAY: It's the same story in many of the small family run businesses so typical of the Greek private sector. Stelios Papadopoulos and his brothers used to get five customers an hour, they say. Now, they're lucky to get five a day.

PAPADOPOULOS: People are very much afraid of tomorrow. So they're holding back their consumer instinct, I would say.

MAGNAY: Like Grassos, he feels that businesses like his are having to pick up the cost for a bloated and inefficient public sector.

PAPADOPOULOS: There are a lot of people working in the public that are paying that -- that are paid huge amounts of salaries. Most of the time, they don't work for that amount of salary. And through the tax from the small private businesses, they are paid their funds. That's unfair.

MAGNAY: He doesn't believe this government has the capacity to change things. He hasn't seen it happen yet. Now he, like the rest of the world, waits to see how Greece will emerge from this debt crisis.

Diana Magnay, CNN, Athens.

(END VIDEO TAPE)

ANDERSON: Well, neither he nor we will have to wait long. The Greek parliament has scheduled a vote on the new austerity measures on Tuesday. After that, European finance ministers will meet on July the 3rd and their approval would release the final slice of the bailout pie from last year.

You're watching CONNECT THE WORLD.

It is 10 minutes past 9:00 in London.

I'm Becky Anderson.

When we come back, out on bail and happy to be home -- Chinese artist, Ai Weiwei is released after nearly three months in prison.

Then, in about 15 minutes, we'll bring you a half hour special on Afghanistan. We look at Barack Obama's plan for pulling out America's troops.

And NATO moves out and guess who's moving in?

Find out why the Taliban says it's claiming back its territory in Northeastern Afghanistan.

(COMMERCIAL BREAK)

ANDERSON: I'm Becky Anderson at 13 minutes past 9:00.

You're watching CONNECT THE WORLD.

Here's a look at the other stories that we are following for you this hour.

And China has released one of its most prominent and outspoken artists on bail. Ai Weiwei told CNN he is with his family and that he is happy. He was detained on April the 3rd and was later accused of what Beijing called economic crimes.

Well, many suspected political motivation for the arrest. After designing the famous bird's nest at the stadium for the 2008 Beijing Olympics, he called for a boycott of the games.

Well, a special military court in Bahrain has sentenced activists for their role in anti-government protests there. State media say eight people were given life in prison for plotting the overthrow of the royal family. Thirteen others were convicted on terrorism-related charges. Human rights groups say the charges are simply unfair.

John Galliano has denied charges of anti-Semitism on the first day of his trial in Paris. The disgraced fashion designer is accused of making abusive anti-Semitic rants in a cafe, which he says he simply can't recall.

Now, outside the courtroom, Galliano's lawyer told CNN people were too quick to judge him.

(BEGIN VIDEO CLIP)

AURELIEN, HAMELLE, GALLIANO LAWYER: We should not judge that man based on 30 minutes where he was sick to alcohol and medicine, prescription drugs, but through 30 years of a career and a life of great diversity.

(END VIDEO CLIP)

ANDERSON: Well, if convicted, Galliano could face six months behind bars.

Well, golf's newest superstar, Rory McIlroy, returned to Northern Ireland today, two days after seizing the U.S. Open championship. You'll remember, he stopped by the golf club where he'd been training since he was a knicker. He was just seven years old when he started at this golf club. And he spoke with CNN's "LIVING GOLF" about how it feels to return home a hero.

(BEGIN VIDEO CLIP)

RORY MCILROY, 2011 U.S. OPEN CHAMPION: It's a great feeling. You know, to come back to Hollywood, to see all the familiar faces. You know, it brings back a lot of memories from my childhood. You know, I basically spent every day of the summer here, you know, just playing golf with my friends and chipping and putting. And -- and to think that from -- from then until -- until now. You know, it's been -- it's been an incredible journey. And, you know, to -- to sit here as a major champion, it's funny, too. It's -- it's a very nice feeling.

(END VIDEO CLIP)

ANDERSON: A good lad.

Well, since his win, Rory has become world number four in golf. We'll have more on this story, of course, coming up on "WORLD SPORT," which is just about an hour from now.

Well, in just a moment, caught in the web of lies, trapped by debt and isolation -- the CNN's Freedom Project takes you to Thailand -- from Thailand to the U.S. today, where workers claim they were tricked into forced labor then trafficked across the country.

And later in the show, it's our special on Afghanistan. Tonight, we're going to bring you the stories from people who have lived and worked there for years and what they have to say about the country's future. That is in about 10 minutes from now.

We're going to take a very short break.

Back after this.

(COMMERCIAL BREAK)

ANDERSON: If you are a regular viewer of CNN -- and I hope you are -- you'll be well aware of our Freedom Project. We make absolutely no excuses for devoting an entire year to revealing the dark world of modern-day slavery. Giving the victims a voice, exposing the perpetrators and fighting to end the trade in human life.

Well, in tonight's report, we are investigating contract labor.

Thelma Gutierrez, one of my colleagues, reports on the fastest growing form of human trafficking and what might be the largest scheme of its kind in U.S. history.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): This man we'll call "Boon" is a rice former from Northern Thailand, a man human rights advocates say became a modern day slave in the United States.

"BOON," FARM WORKER (through translator): Inside my heart, I cry, because I sacrificed to come to the United States to work.

GUTIERREZ: We tracked "Boon's" story back to Lampang, Thailand, where the average family lives on about $125 a month. We're not using his real name to protect his family.

"Boon" says in 2003, Thai recruiters who worked here told him he could earn in two weeks in the U.S. what he made in a whole year toiling in the rice paddies of Thailand. He says the recruiter told him his expenses, travel and housing would be paid for by Global Horizons, a multi-million dollar corporation that supplies foreign workers to American farms under the U.S. Temporary Agricultural Worker Program, but he'd have to pay the recruiter about $9,300 U.S. up front.

So "Boon" borrowed money and mortgaged ancestral lands to pay the fee. Then he and 30 other farmers were flown from Bangkok to Los Angeles, where they were met by an agent of Global Horizons.

From there, he says, they were sent to Honolulu, where the government claims company representatives confiscated their passports.

At this pineapple farm, "Boon" says they lived in freight containers for several days with no running water, electricity or bathrooms. The farm was so remote, he says, they had to forage for food. They labored in the field eight hours a day. "Boon" says they were never paid a cent for their work.

After Hawaii, "Boon" and a group of workers were sent to the fields of Maryland, Mississippi and Georgia.

In the seven months "Boon" worked for Global, he says he was not paid for all the hours he worked and that the $4,000 he did receive didn't even cover half of his recruiting fees.

On the other side of the world, "Boon's" family worried about him.

UNIDENTIFIED FEMALE (through translator): My son kept asking when father would be home. We he told him he had to stay there to work and pay off his debt.

GUTIERREZ: Last year, the Department of Justice indicated Global Horizons' CEO, Mordechai Orian, on charges that Global conspired with Thai recruiters to commit forced labor of 600 Thai workers, charges Orian calls "absurd."

UNIDENTIFIED MALE: How can it be human trafficking when all the government is helping us to bring those people in?

GUTIERREZ: Workers' advocate, Chancee Martorell, head of the Los Angeles-based Thai Community Development Center, says greater oversight is needed to prevent the exploitation of labor.

CHANCEE MARTORELL, THAI COMMUNITY DEVELOPMENT CENTER: It is the fastest growing form of human trafficking around the world, contracted labor.

GUTIERREZ: Orian is out on bail in the criminal case and awaiting trial. He says he never took a cut of the recruiting fees, that his workers lived in clean apartments, not squalid freight containers. Orian also denies confiscating the workers' passports.

He says "Boon" and the others are testifying against him in exchange for special visa status that allows them to stay in the U.S. and bring their immediate families.

UNIDENTIFIED MALE: You would promise legal, you'll do green card, you'll do anything. Everybody knows that around the world.

GUTIERREZ: "Boon" hopes to stay in the US. And since leaving Global Horizons, he's been working as a cook. But he says he lost what cannot be replaced -- the deeds to his ancestral lands and time with his son. After eight long years, "Boon" was finally able to see his wife and his son, now a young man, and elderly mother, face-to-face, via Skype.

"Boon's" mother is pleading with him to come home. But under his special visa, he cannot leave the U.S. yet. "Maybe in three years," he tells her, if he gets his green card. But she doesn't know if she will see that day.

Thelma Gutierrez, CNN, Los Angeles.

(END VIDEO TAPE)

ANDERSON: That's one of a series of reports for our Freedom Project.

Well, every year in Nepal, thousands of young girls are trafficked into the sex industry. This Sunday, we'll share their stories with you in a compelling documentary. We head out with actress Demi Moore, who is an outspoken advocate for victims of human trafficking.

And in this preview of the documentary, she joins our the 2010 CNN Hero of the Year for what is a very special journey.

(BEGIN VIDEOTAPE)

DEMI MOORE, ACTRESS: It's a six hour drive into the mountains to reach Tuli's village. And as our vehicle struggles up the dusty road, there's plenty of time for me to hear her story.

So how is it that she ended up being trafficked?

What was the situation?

UNIDENTIFIED FEMALE: Well, Tuli also was looking after her brother's small shop in the village. He would see her later. And then one day, she met a man and he said, oh, it's a better life, you know, in a bigger place. You know, let's go. I will get you a job. And then that's how she landed up.

As usual, she had come for shopping in the -- in the city for her brother. And then she never returned home. So first, they thought that she was in the religious house. And they looked in the religious house and they could not find her.

Then, afterward, they knew that she had gone and disappeared somewhere. So they didn't tell anybody. They just waited for some time and later on, then, they found out that she was trafficked, when they got the message.

MOORE: It's been a long and bumpy ride, but finally we arrive at Tuli's village. At 3,500 meters above sea level, it's breathtaking in every sense of the word -- a cluster of metal roofed shacks clinging to the mountainside. But before we research her home, there's a little matter of 500 steps to negotiate down the hillside.

(END VIDEO TAPE)

ANDERSON: "Nepal's Stolen Children," a CNN Freedom Project documentary. The world premier, Sunday night, 8:00 p.m. in London. You can work out where you are in the world at what time that is here on CNN.

Well, the U.S. president has called it NATO's most important mission, but Barack Obama is now ready to outline the first steps toward an end game in Afghanistan. We're going to preview his big speech tonight. And then we'll see how the U.S. has gone from all-out war on the Taliban to bringing at least some of them to the negotiating table. That is a special 30 minutes of CONNECT THE WORLD starting straight ahead.

(COMMERCIAL BREAK)

ANDERSON: You're back with CONNECT THE WORLD at just before half past 9:00 in London.

I'm Becky Anderson.

Let's give you a check of the latest news headlines.

Dissident Chinese artist, Ai Weiwei, has been released from custody. Ai was detained in April in a nationwide crackdown. Well, the government later said he was accused of tax evasion. State media says Ai was freed on bail after confessing his crimes.

Well, the largest bond trader in the world says even if Greece is bailed out, it will still default on its debt. The CEO of PIMCO says Greece just has too much debt, it can't grow and none of the proposed solutions will prevent default.

Italy is urging an immediate suspension of the fighting in Libya. Officials say a cease-fire is necessary to allow the delivery of humanitarian aid. NATO is vowing to press ahead with its mission.

Fashion designer, John Galliano, is accused of making some anti- Semitic comments. But as his trial got underway, he told a Paris court he has no memory of uttering them. Galliano also told the court that he is in treatment for addiction to alcohol and prescription drugs.

And those are your headlines here on CNN this hour.

Well, a major speech in three-and-a-half hours could dramatically alter the course of a decade-old war. U.S. President Barack Obama is set to announce a long-awaited plan for beginning a troop pullout from Afghanistan.

Now, the decision hasn't been easy. How do you scale back a war that's had no real tipping point, no clear defeat, no surrender?

In this special half-hour CONNECT THE WORLD, we analyze the drawdown and all of its consequences. We're expecting President Obama to say the U.S. military has made substantial progress against the Taliban, enough to undo the troop surge he ordered back in 2009.

If everything goes as planned, a 30,000 surge troops would be home by next year. But that would still leave some 70,000 U.S. troops on the ground in Afghanistan. And that is nearly double the number that were there when President Obama took office in 2008.

Well, he's walking a delicate line trying to balance competing interests. He's under pressure from military commanders, of course, cautioning against a speedy withdrawal but from also the general public in growing increasingly tired, to be frank, of war.

Let's bring in our Pentagon correspondent Barbara Starr.

He's got one eye, of course, on re-election hopes in 2012, Barbara. Does he though run the risk of pleasing nobody with his speech tonight?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, he's certainly going to please some of the democrats on Capitol Hill, Becky, who have been pressing for this withdrawal to get going. A lot of republicans and some other democrats, in fact, though aren't so cheery about the whole thing.

The President is going to announce a very aggressive withdrawal schedule for those 30,000 troops that are part of this surge. And how that all goes will be very interesting because can he really demonstrate that the goals have been achieved. You know, the Karzai government is stronger. Afghan security forces are stronger. But things have been - everything's been done so that the drawdown can begin and that the security games won't be risked. Becky?

ANDERSON: So we're talking about 30,000 troops - 10,000 probably to be released from Afghanistan this year, 20,000 by the end of next. But we're still talking about 70,000 troops on the ground, Barbara, never mind the terrible human cost of this war. Of course, it's also the fiscal cost which is unsustainable (INAUDIBLE) as to get a sense that - Barbara - will be spending on the war in Afghanistan has skyrocketed since Mr. Obama took office. Now, the war costs about 15 billion a year back in 2003 when George Bush turned his attention to Iraq . Two years later, it cost 20 billion. And by 2007, it has doubled. Jump ahead to 2011 and spending on the war for this year alone is nearly 120 billion dollars.

Barbara, it would be naive of any of us to imagine this is purely a military decision, isn't it?

STARR: Well, I think that's right. I mean, I don't think anybody thinks this is purely a military decision. In the United States government, you know, politics plays a very large role and clearly, the President knows that public support in the United States for the war has declined. Congressional support for the war is shaky in some quarters. He needs to demonstrate that he can live up to that promise he made 18 months ago when he announced the surge that indeed the surge would begin drawing down.

But one of the things that is going to be so interesting is when General David Petraeus speaks on Capitol Hill tomorrow at his confirmation hearing to be the next CIA director. What will Petraeus say? Will he say he supports the President's decision by all accounts? General Petraeus at this hour thinks that the decision may be a bit aggressive from a military standpoint, Becky.

ANDERSON: Interesting. All right. Our Pentagon correspondent Barbara Starr. As ever, Barbara, thank you.

STARR: Sure.

ANDERSON: Well, a staggering price tag helping erode U.S. public support for the Afghan war. A conflict of Mr. Obama once called the "good war" in comparison with Iraq, pointing to its clear ties to September the 11th.

Suzanne Malveaux now reminds us how it all began.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN CORRESPONDENT (voice-over): September 11, 2001 - Al Qaeda attacks America. Shock soon gives way to anger.

GEORGE W. BUSH, FMR. U.S. PRESIDENT: I can hear you. The rest of the world hears you. And the people - and the people who knocked these buildings down will hear all of us soon.

MALVEAUX: Afghanistan's Taliban rulers refused to eject Osama Bin Laden.

BUSH: On my orders, the United States military has begun strikes against the Al Qaeda terrorist training camps and military installations of the Taliban regime in Afghanistan.

MALVEAUX: Al Qaeda's last (INAUDIBLE) Tora Bora is destroyed. The Taliban retreat to the mountains.

Over the next two years, the U.S. and its NATO allies try to subdue a stubborn insurgency. And then -another invasion.

BUSH: Intelligence gathered by this and other governments leaves no doubt that the Iraqi regime continues to possess and conceal some of the most lethal weapons ever devised.

MALVEAUX: Within two months, there are 150,000 American troops in Iraq. But those weapons are never found. As the U.S. military gets bogged down fighting a local insurgency and Al Qaeda followers, Afghanistan becomes the forgotten war.

ROBERT GATES, U.S. DEFENSE SECRETARY: The reality is we won the first Afghan war in 2001-2002. We were diverted by Afghan by Iraq and we basically neglected Afghanistan for several years.

MALVEAUX: That's the argument Candidate Obama makes as he pitches himself for the White House.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We're confronting an urgent crisis in Afghanistan and we have to act. It's time to heed the call from General McKiernan and others for more troops.

MALVEAUX: For much of 2009, as President, Barack Obama wrestles with a new strategy for Afghanistan, eventually opting for a surge in troops to take on the Taliban in their heartland.

OBAMA: As commander-in-chief, I have determined that it is in our vital national interest to send an additional 30,000 U.S. troops to Afghanistan.

MALVEAUX: But progress is slow, gains fragile. The Taliban has support and resources across the border in Pakistan. The U.S. has a prickly relationship with Afghan President Hamid Karzai who berates his allies over civilian casualties.

But the U.S. is also taking casualties. By February 2010, a thousand American soldiers have lost their lives in Afghanistan.

There is progress in the south - the Taliban's heartland - but much still to be done. And the American public is tiring of decade of war.

Suzanne Malveaux, CNN, Atlanta.

(END VIDEOTAPE)

ANDERSON: You're watching a special half-hour here on CONNECT THE WORLD on Afghanistan, ahead of President Obama's announcement tonight.

How might that announcement change the U.S.-led mission? Well, we're joined now by our Nick Paton Walsh. He's at Bagram Air Base in Afghanistan for you and former NATO commander with me here in the studio, Chris Parry.

Nick, what's the mood there like tonight?

NICK PATON WALSH, CNN CORRESPONDENT: This is enormously significant, frankly. This is the first time we're hearing the commander-in-chief of American forces here talking about taking people home. Until now, announcements have been about increasing resources here. Remember, this is the longest war America has ever fought and tonight, they're going to have the beginning of the end of that war. They plan to start taking people home. (INAUDIBLE) Washington (INAUDIBLE) plan as aggressive (INAUDIBLE) but I think here, on the ground, we're looking at slightly slower pace in terms of what it will impact to America's capability on the ground. But 2/3 of the surge are going to be here until the end of next year.

That's another two whole fighting seasons away and 10,000 will be leave by the end of this year. Frankly, out of a force of 100,000 Americans and 50,000 other allies here, a shave-off of about 10,000 is not a huge deal. This presence here has become enormous - bureaucratic in some way - and you could (INAUDIBLE) commanders could find that figure of people to send home without massively impacting their capabilities here on the ground, Becky.

ANDERSON: Nick Paton Walsh is in Afghanistan for you this evening, viewers. Nick, thank you for that for the time being.

Chris, you were involved in the operational planning of the Afghan operation and (INAUDIBLE) even a small drawdown in U.S. troops tonight, the President is signaling an end surely to what was a counter-terrorist and straight counter-insurgency mission. So how does the mission change?

CHRIS PARRY, FORMER NATO COMMANDER: I think we've got to look at how they think the campaign is going overall. At the moment, I think NATO and U.S. troops holding the ground that they've taken during the surge, I think development is taking place. Outside that area, I think it's probably pretty patchy and we've got a Taliban that knows everybody's leaving in 2014 and probably actually is sitting back and saying, "We'll just wait for three years." And we may be getting false symmetrics - as the Americans call it - on the ground where success actually is only relative and not absolute.

ANDERSON: We're going to talk about the Taliban shortly. Let me just give you some numbers that have just come in to us from one of our sources in Washington. We are now told that the President tonight in about three hours' time will say that there will be 33,000 troops involved in the original surge coming back home by the summer of 2012. This timing gets a lot more interesting when one considers that will be bang in the middle of Obama's electioneering period.

PARRY: Well, one has to wonder whether this is an electoral or a strategic decision. And I hope tonight we'll hear from the President to the strategic logic that lies behind this drawdown because (INAUDIBLE) is simply a fiscal or a structural move to bolster his electoral chances, then he'll betray all the success and all the losses that have been sustained so far.

ANDERSON: Does that worry you?

PARRY: Well, it worries me because between 2003 and 2007, we neglected Afghanistan and I think it's worth remembering that up until 2007, we only had about 27,000 to 28,000 troops there and of course the situation got seriously out of control. And leading up towards 2014 when the Taliban know that we're going to go, they will have several aces in their hands and they will want to kick the United States out. They won't want to go quietly.

ANDERSON: Chris and Nick joining us in this special half-hour tonight on CONNECT THE WORLD.

Still to come, (INAUDIBLE) in the hands of the Taliban now that NATO's moving out, these men have moved in. We'll take you to a forgotten part of Afghanistan. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEOCLIP)

ROBERT GATES, U.S. DEFENSE SECRETARY: Well, I think there's been outreach on the part of a number of countries, including the United States. I would say that - that these contacts are very preliminary at this point.

(END VIDEOCLIP)

ANDERSON: U.S. Secretary of Defense there on CNN's "STATE of UNION" confirming that America is, in fact, in preliminary talks with the Taliban. Robert Gates did say it could be months before real reconciliation dialogue begins when the Taliban come under increased military pressure.

You're watching our CONNECT THE WORLD special on the future of Aghanistan.

In the next 10 minutes, we'll be focusing on the Taliban. They're (INAUDIBLE) scope and how peace can be broken off.

Our first story takes us to northeast in Afghanistan tonight near the porous Pakistan border in a remote region NATO forces have long left. Well, the new flag flies in the wind there.

Nick Paton Walsh looks at why it seems the Taliban are back in town.

(BEGIN VIDEOTAPE)

WALSH (voice-over): In this quiet, mountainous village near the Pakistani border, one of NATO's worst fears is realized. This is the local government building of a district in Waygal, mostly deserted. But above it flies a new flag - the white banner of the Taliban.

"There is no god but Allah and Mohammed is his messenger" it reads but it's real message is simple: "We the Taliban are back in power here."

And to the men who called themselves the new administration, they showed a local cameraman's CNN (INAUDIBLE) of Afghanistan is back in the Taliban's hands. Now, they're the local council - the local law. It's like NATO was never even here.

UNIDENTIFIED MALE (through translator): (INAUDIBLE) the Mujahideen (ph) are in-charge of this area and the people's problems are solved under Sharia law. The tribe has welcomed us. Bring us their problems and we deal with them. They understand implementing Sharia is one of their duties.

WALSH: They say they captured the area in late March. A local official now in Kabul confirmed to CNN this is a government building and the area is still held by the insurgency.

This hilly stretch along the border is under increasing Taliban influence. Since NATO withdrew from its isolated outposts here, these valleys are becoming a safe haven for militants and their hard-line law.

UNIDENTIFIED MALE (through translator): Smoking is forbidden here and our religious department will punish those who shave and who intoxicate themselves. Schools and hospitals are open under Sharia law.

WALSH: They're also eager to display a softer, almost enlightened, side saying they're letting this bridge be rebuilt. They're keen to show themselves mingling among welcoming locals.

" We don't have any security problems here in the bazaar" says one trader, "and we don't fear thieves like we did before." Another says, "Business now is not as good as we had before but we're fine with the Taliban."

It's not clear how genuine these smiles are but this small Taliban fiefdom has opened up while NATO's surge is at full strength , leaving many wondering what they'll do as NATO starts to leave.

(END VIDEOTAPE)

ANDERSON: Let's bring back Nick Paton Walsh who is with us from Bagram Air Base outside of Kabul and we apologize for the logistics tonight. We have a little bit of a delay on this.

The problem here, of course, is - Nick - that the Taliban were never delegitimized, were they? So now, we're going to talk to them. Is it any clearer who Gates is referring to when the U.S. talk about talking to the Taliban?

WALSH: Interestingly enough, when Gates made those comments, it was just after Afghan President Karzai had said himself that the Americans were talking to the Taliban so he may have been (INAUDIBLE) into that statement but certainly, there is an understanding that the initial feelers are going out to people who perhaps intermediaries to the Taliban to perhaps begin talks about having talks at some point. But let's be absolutely clear - don't get the impression that Mullah Omar, the Taliban leader, has sat in a room somewhere with a NATO negotiator. We're very, very far away from that. This is about setting the framework to see if it's possible. Remember, Robert Gates himself said the military pressure has to be sustained all this summer in the hope in the winter there may be some window for peace talks, Becky.

ANDERSON: So is it obvious yet what role the Taliban might play in the endgame?

WALSH: No, frankly. It's not clear. On one end of the spectrum, they could come back here if there was some significant force in running the country. That's the fear. I think, on one end, they would definitely have to have some kind of (INAUDIBLE) in the government. But that's probably Taliban life. That's the moderates. That's not the people who were around in the (INAUDIBLE) when the American invasion - with the Draconian law put in place here. They'll be much more acceptable (INAUDIBLE) the Taliban to western society. Nobody really here says that there's not going to be the Taliban and the insurgency somewhere in the future make-up of this country's government. The question is how acceptable would that be for the west and can they avoid violence against the insurgency as they work that deal out, Becky.

ANDERSON: Nick Paton Walsh at the Bagram Air Base in Afghanistan for us this evening at this special CONNECT THE WORLD. Nick, thank you very much indeed for that.

Coming up, looking to the future, a country torn apart by decades of war. What's going to happen when NATO troops finally leave. That in just 60 seconds. You're watching CNN. Stay with us.

(COMMERCIAL BREAK)

ANDERSON: We're back with a special edition of your CONNECT THE WORLD.

We're just hours away from finding out what President Obama will say about drawing down his troops in Afghanistan. We expect him to say that 33,000 surge troops will leave the country by the summer of 2012. That's what we're hearing from Washington tonight.

Well, once NATO leaves, what will the future look like? CNN put that to three people working and living in the country. What they said is pretty stark. Have a listen to this.

(BEGIN VIDEOTAPE)

CARLOTTA GALL, "NEW YORK TIMES" SENIOR CORRESPONDENT: My name is Carlotta Gall. I'm a senior correspondent with the "New York Times." I've been in Afghanistan for nearly ten years. It's still shocked and impressive every time I come here and see it. It really reminds you of the damage done to the whole country of Afghanistan. I think you're going to have instability and insurgency still and you're going to have people very nervous who are anti-Taliban who are going to start agitating to say "we have to defend ourselves." We're going to have the middle classes who've managed to start building and doing things who will be wondering "Should we leave the country and flee and be refugees again?"

The Afghans are also tired of foreign soldiers trampling around. So a lot of people tell me, even Taliban tell me, as long as they don't do it like the Russians which means leave in one day. So there's a great trepidation of what next. Is America going to pull out in the same way and leave us to a big mess?

So I'm hoping we won't - it won't go back to those dark days of civil war and terror. I mean, it was a rule of terror - the Talibans. But that fear is lingering in every Afghan's minds because they've been through so much and this just reminds you of what they've been through.

JOHN CHRISTOPHER TURNER, AMERICAN TRUCKER: John Christopher Turner, American. I've been working in Afghanistan on and off since 1967. They've been a kind of hard ten years during the Russian War. I'm working with a nomadic tribe right now doing trucking for the U.S. Army.

Kabul was a beautiful city in the '60s. You can see that what used to be a green garden. There were trees everywhere and the entire valley was lush.

The bottomline is that the Taliban is in control. They're going to get more in control. Corruption here is outrageous. It's on a much bigger scale. So perhaps us pulling out would be a good thing because we'll retract that fund of money that they've been coffering and I think a lot of the bad guys will leave.

But you know, their traditional power structure that's been in Afghanistan - the "war lords", if you want to use that term - they're in power now. They're going to be in power when we go. It's that - nothing has really changed. We like to think that we've impacted this country and we have met a lot of men very well - the Karzai family being one of them. But as far as really changing the livelihood of the rural people - the people in the provinces - we haven't impacted.

DR. ABDULLAH ABDULLAH, OPPOSITION LEADER: I'm Dr. Abdullah Abdullah. I'm the opposition leader. This is my parents' house and I was born here. It means a lot to me.

Ten years after the international engagement, we should have been in a much, much better situation. Karzai, the president of Afghanistan - he has lost that sense of direction, mixing the enemy in place of a friend and a friend in place of the enemy. So the people are confused. Their situation is uncertain. Rampant corruption in the government has distanced the people further from the government and Taliban can take advantage of this in order to get stronger.

(END VIDEOTAPE)

ANDERSON: Dr. Abdullah Abdullah played an (INAUDIBLE) part of the show.

With me here in the studio is the former British NATO commander Chris Parry. Quite sad, actually, when you listen to those voices coming to us from Afghanistan.

Chris, what is the endgame here?

PARRY: I don't think there is an endgame at the moment. And one of the things Obama's got to do tonight is say "We're talking to the Taliban" and all these other drawdown measures fit within an overall strategy. We're very heavy on ways and means at the moment but pretty short on ends. And unless we bring the Afghans, the Taliban - if you have to - and all the people associated with the future Afghanistan together and really find out what people want, particularly the people of Afghanistan who've never had a strategy and have looked like pinning the tail on the donkey on the hope that something will work.

ANDERSON: I introduced you as someone who is involved from the very start in operation strategy for NATO. Is it that people didn't listen to what you and other strategists wanted or was it that you guys got it wrong?

PARRY: No, I think there was a compulsion to get into Afghanistan but to punish the people who did 9/11. There's no question about that. But also, there was this idea that maybe they would do state building. That wasn't the advice that some of us gave at the time. We said, "I think we need to punish Al Qaeda. We need to make sure they can't use Afghanistan as a base." But we actually have to look at the way Afghanistan currently runs. And I remember saying at the time, "It's not normal political discourse there." Think of the Sopranos, think of the Godfather, and you're approaching the Machiavellian way in which tribal and other politics work in Afghanistan. And our experience coming from the 19th century historical experience and what happened in the 1920's and 30's said to us, "If you have Kabul and nothing else, you don't have Afghanistan. " You must reach out into the provinces, find out who has the power and work through them.

ANDERSON: Fascinating. Chris, thank you for joining us.

CNN will have live coverage of President Obama's speech on the drawdown of U.S. troops. It's early Thursday morning - one in the morning here in London, 2 a.m. in Berlin, and the times I'm sure you can work out yourselves locally.

Thank you for watching. I'm Becky Anderson. That is your world connected this evening. The world news headlines and "Backstory" will follow this short break.

I'm going to leave you tonight with our parting shot , just some of the powerful images from a country torn apart by conflict.

Good night.

END