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Markets Shaken by Eurozone Financial Crisis; Turkey Earthquake; In the Crossfire; 5.7-Magnitude Earthquake Hits Turkey; Silvio Berlusconi to Resign by Monday; Italians React to Berlusconi's Resignation; Effect of Berlusconi Era on Italy; International Atomic Energy Agency Releases Report on Iran's Nuclear Program; Iranian Ambassador to IAEA Denies Iran Has Nuclear Weapon Ambitions; Several Buildings Collapse in Turkey Earthquake; London National Gallery Opens Da Vinci Exhibition; Italy's Future Unclear

Aired November 09, 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 on CONNECT THE WORLD, uncertainty grips the Eurozone as fears over Italy's future push its borrowing costs into the danger zone and talks to find the next Greek prime minister end yet again in deadlock.

Live from Rome, I'm Becky Anderson.

Well, live from Rome, I'm Becky Anderson.

MAX FOSTER, CNN ANCHOR: And live from London, I'm Max Foster.

Also tonight, Iran's ambassador to the IAEA says he's ready to negotiate over the country's nuclear ambitions.

And the scandal which has forced one of America's most successful football coaches into early retirement.

ANDERSON: All right, first up tonight, we are following huge shakeups in two countries in the crosshairs of the markets today. You've just seen the outcome of the financial markets in the U.S., the close some 3 percent lower today. And much of the uncertainty in that market caused by the Eurozone financial crisis. Greece and Ireland both drowning in debt, as many of you will know, looking for new leadership to push through tough austerity measures.

In Greece, Prime Minister George Papandreou gave a televised address earlier today, promising to support his successor without revealing a name.

Well, politicians have been locked in intense negotiations for days, trying to form a unity coalition.

And in Italy, fears are growing that a political vacuum may delay critical reforms here.

Prime Minister Silvio Berlusconi has promised to resign after parliament approved some austerity package at the weekend. But exactly when that will happen and who will then lead the government is still unclear.

That uncertainty helped push Italy's borrowing costs to another record level, some say the breaking point at this point.

Well, President Giorgio Napolitano is trying to calm panicked investors, saying reforms will be adopted within days. Other officials say it will be Sunday at the latest.

Well, let's begin, though, in Greece tonight, where, believe it or not, there is still no named successor to George Papandreou.

Diana Magnay joining us now from Athens.

What's the latest -- Di?

DIANA MAGNAY, CNN CORRESPONDENT: Hi, Becky.

Well, it all appeared so close to reaching a conclusion when we heard that the prime minister was going to be tele -- giving a televised address to the nation. Everybody assumed that it would be his last, his farewell speech. And it certainly sounded like it. As you say, bidding farewell, really, to the country, looking back over the last two years of his tenure, saying he did preserve Greece from bankruptcy and wishing his successor well.

Let's just take a listen.

(BEGIN VIDEO CLIP)

GEORGE PAPANDREOU, GREEK PRIME MINISTER (through translator): I would like to wish every success to the new prime minister and, of course, to the new government. I'll be next to them. I'll support them with every strength of mine within -- within Greece and abroad.

(END VIDEO CLIP)

MAGNAY: So it all seemed set in stone. He went over to the president's office, sat with him. Other party leaders joined. And then the talks collapsed, talks that will reconvene on Thursday morning.

But another day of political drama which you could almost describe as -- as farcical, really, that it all collapsed at this stage, if the stakes weren't so high -- Becky.

ANDERSON: All right, Diana Magnay there with the very latest from Greece.

Stick with CNN. As we get more from Athens, of course, we will bring it directly to you.

But let's get back here and to Italy, where the crisis in the Eurozone's third largest economy just continues here.

It's borrowing costs that have crossed a sort of threshold today that's really worrying not just people here in Italy, but really roiling the financial markets. Crossing this 7 percent line is a staggering number here and it could make it impossible for the country to keep financing what is an enormous debt of $2.5 trillion.

Yields on Italian 10-year bonds soared over 7 percent today, topping out at 7.45 percent. Yields, of course, on what investors charge Italy to loan it money. And many economists consider this 7 percent mark to be a point of no return, a level at which debt becomes unsustainable.

Well, recent history supports the theory. Greece, Italy and Portugal were all forced to seek bailouts once their bond yields rose above 7 percent and stayed there for an extended time.

So how long did it take to get a bailout once the threshold had been broken?

Well, three -- let me tell you, in Greece, 32 days; 181 days for Portugal and just 28 days for Ireland. Of course, Italy is quite a different case, because its debt is -- well, its economy is -- is effectively considered too big to fail.

But is it?

I'm joined now by my senior international correspondent here, Matthew Chance.

He's been following this story back and forth over the year, weeks, if not months.

And it seems a fairly chaotic situation still here. The story is it's too big to fail.

So will it get a bailout, though, is -- is the next big question.

MATTHEW CHANCE, CNN CORRESPONDENT: Too big to bail, I think, is what it is, because the -- as you mentioned, the -- the debt that Italy has is in the order of $2.6 trillion, which is way, way, way higher than -- than all those other countries you mentioned. In fact, it's bigger than -- than Greece, than Portugal, than Ireland and Spain put together. And there just simply aren't the resources in the European Central Bank, in the European Union, in the IMF, for it to stand behind that kind of debt. And that's why this situation in Italy is so much more serious than what's happening in Greece.

It's kind of manageable in Greece. That kind of money is not manageable at all for those institutions.

ANDERSON: We have heard the details of the austerity plan that the president here hopes will be voted on and put onto the books by Saturday night here. But the problem is this, that once you're on the wrong side of the bond markets, things are tough.

Have a listen to what Niall Ferguson, an economist from Harvard, had to say about that.

(BEGIN VIDEO CLIP)

NIALL FERGUSON, HARVARD UNIVERSITY PROFESSOR: I think the problem is that if you have a very large public debt in the north of 100 percent of GDP and your borrowing costs soar the way that Italy's have in recent months, you have a problem. And the problem isn't really to be understood in terms of liquidity or solvency. The president is just that you're paying more and more of your tax revenues in interest on the debt. And something has got to give.

And if all you've got in the way of advice from the IMF is a prescription for austerity -- slash spending, raise taxes, what happens is that your economy then, in fact, contracts. And -- and this is a cycle that we've seen played out in country after country. Once they're on the wrong side of the bond market -- this, by the way, was something George Osborne understood very well in Britain. Stay on the right side of the bond market, do your -- do your fiscal reform before the markets force you to.

But once you get on the wrong side of the bond market, it's a -- it's a death spiral.

(END VIDEO CLIP)

ANDERSON: It's a death spiral, he says. So I'm not sure which is worse, as far as Niall is concerned, talking about what's in this austerity plan. But let's do it, because we only just got the details of the plan earlier on today.

What's in it -- Matt?

CHANCE: Well, a lot of things. I just want to say that, you know, it may not -- it may be a death spiral, but perhaps at least a good start would be to have a government that is effective, that can pass austerity measures and at least try to get the -- the debt under control.

That's what the Italian governments were attempting to do. They've -- they've acted with extraordinary speed. Just this morning, Silvio Berlusconi was saying he foresaw elections in February, which would have meant he would have been caretaker prime minister through until March.

But what we've seen over the course of this day is the president of the country step up, organize this much more efficiently, bring forward the parliamentary sessions so this all could be compressed into a very short period of time.

What we're now looking at is a situation where Silvio Berlusconi could be gone by the weekend. But this new austerity budget could be implemented by Monday morning. And that's going to sort of implement all sorts of measures that would, you know, at least put Italy back on the road toward getting its finances back in order. So it's a good thing.

ANDERSON: Yes, I think you and I have been quite impressed by what's happened over the last few hours. The problem has been, of course, it's been so chaotic before that.

Matthew, thank you.

Our senior international correspondent on the story for you.

So what does Italy need to do next to convince these markets that it does have a future, it does have an economic plan that is watertight that will create an environment where things will get better, that the market will appreciate and things, you know, will -- will improve here?

I asked Pietro Reichlin, who is a professor at University -- at the University of Rome, that very question earlier on today.

And this is what he told me.

(BEGIN VIDEOTAPE)

ANDERSON: If I gave you a blank sheet of paper and said give me your five point plan for Italy, its economy and its future, what would you...

PIETRO REICHLIN, ECONOMICS PROFESSOR, LUISS UNIVERSITY: I would say...

ANDERSON: -- say?

REICHLIN: -- I would say a reform of the tax system, so shifting taxes from labor in firms to property, liberalizing the service sector. It is very important because Italy lost a lot in terms of competitiveness with respect to Germany and other northern countries. And the cost of services is too high. And making the labor market be more flexible. This is the biggest thing, because, you know, they -- they let -- the inflexibility of the labor market, that creates a lot of unemployment, a huge unemployment, and it also does not allow firms to go -- to get bigger, to -- to -- to exploit economic scale.

ANDERSON: You've given me three. You've got two more.

REICHLIN: OK. So two more. So other things are pensions. We have too many people getting early retirement. This is not going to be a problem in the long run, because there has been already reform on the pension system that was good, but too low, too slow in -- in taking place.

And, well, the other thing that everybody is talking about, the cost of institutional -- public institutions, politics, is too high. We must cap these costs.

(END VIDEO TAPE)

ANDERSON: Professor Reichlin speaking to me earlier on today.

Much more from Rome still to come this hour.

We're going to hit the streets to find out if the general public has faith in the government's ability to weather this financial storm.

First, though, let's take you back to London for some breaking news here on CNN.

FOSTER: Just weeks after a major earthquake caused devastation there, the Turkish city of Van is reeling from a new tremor. This one is measured at a magnitude 5.7, with an epicenter around 16 kilometers sort of the of the city. The latest pictures coming in for you there. We don't yet know the extent of the damage. But buildings have collapsed after the tremor. Media reports saying hotels are among those buildings.

The earthquake in October killed around 600 people in Van.

We're going to keep following this story for you.

We'll bring you more details as we do get them.

Journalist

Andrew Finkel, though, I'm told, can join us on the phone with more on the quake.

Andrew, this is the same area, right, that was struck very recently?

ANDREW FINKEL, JOURNALIST: That's right. There was -- there was a -- a major quake here at the end of October. And, of course, some people are calling this an aftershock. But, of course, to the people of Van, to the people on the spot, it felt like an earthquake in its own right. It was a 5.6. Tremor.

Now this caused buildings which were badly weakened by the previous shock to collapse. And we know that some tall buildings, or at least in Van (INAUDIBLE), five story buildings have collapsed, including two hotels. We know people were staying at those -- at that hotel. We know that families of hotel staff who had lost their homes in the quake have been moved to their hotel. There have been several journalists who were -- who were covering the quake who are...

FOSTER: OK. And in terms of this area, we've got the pictures coming in. And, obviously, it's very early days. We see there people scrambling under a ruined building. We understand there were hotels there, but this is obviously a very built up area, right, Andrew?

(AUDIO GAP)

FOSTER: OK, we're losing Andrew there.

But let's just have a look at these pictures. These are pictures from the area around Van where 600 people died in October. And there's been an aftershock. But, you know, it feels like, as Andrew was saying, another earthquake in itself.

People under a building just trying to get in there. These are the latest pictures we have. This happened very, very recently. Very few details. Hotels have collapsed, we're told, from local media reports. A built up area and very early days on this.

But we're trying to get more information, if we can, for you.

Back in a moment.

(COMMERCIAL BREAK)

FOSTER: I'm Max Foster in London.

You're watching CONNECT THE WORLD.

Here's a look at some of the other stories we're following this hour.

Mexican security forces have committed serious human rights violations, even murder, according to a new report by Human Rights Watch. The report says the Mexican people have tortured and even killed innocent people as they try to fight organized crime and drug trafficking there.

CNN's Rafael Romo has been looking at this report and he joins us now live -- Rafael.

RAFAEL ROMO, CNN CORRESPONDENT: Max, the report was released less than two hours ago. And it says that the military and the police who are supposed to protect the Mexican people are, in many cases, torturing and killing innocent civilians, according to the report, titled, "Neither Rights Nor Security." At least 24 people have been killed by Mexican security forces or police since December of 2006, when current president, Felipe Calderon, declared war on drug cartels.

Human Rights Watch also says it has documented 170 cases of torture and 39 disappearances. The organization claims the evidence strongly suggests security forces were implicated.

In a statement, Mexican attorney general, Marisela Morales, said Mexico has taken decisive steps to prevent human rights violations, including constitutional reforms, training of security forces and police, and making legal proceedings more transparent. The Mexican government says it's working closely with the National Commission on Human Rights to prevent abuses and violations and to prosecute soldiers or police officers acting outside the law.

As an example, they point to a case in which two army officers were sentenced to 40 years in prison and 12 soldiers under them to 16 years in prison after being convicted in a civilian court of killing five innocent civilians and injuring three others -- Max.

FOSTER: Rafael, thank you very much, indeed, for that.

Now, a Russian space probe launched on a mission to mars has failed to -- to make full orbit. Scientists at the Russian Space Agency lost track of the craft after lift-off on Wednesday. So it -- it coordinates -- its coordinates are now known and technicians say the probe's engine failed to start, leaving it stuck in Earth's orbit. They now have three days to jump start the craft before its batteries run out.

In the biggest protest London has seen since the August riots, thousands of students have hit the streets to march against a rise in tuition fees and education cuts. The crowd had planned to link up with anti-capitalism protesters who have been camping out at St. Paul's Cathedral since October but were stopped by lines of police.

Well, coming up next, horrific charges of child sexual abuse are rocking a major university in the United States. And now the school's legendary football coach is stepping down as a result. We'll explain, straight ahead.

(COMMERCIAL BREAK)

FOSTER: Welcome back to CONNECT THE WORLD.

We want to take you to Turkey now, because there has been an aftershock following a major earthquake there last month. And we're going to go near the city of Van, because these are the pictures we can take you to. This is unfolding as we speak. And several buildings have collapsed, as you can see. And the rescue operation is underway.

The rescue workers have managed to get there, but the public seem to be involved here, as well. This only just happened. The city of Van hit by a 5.7 magnitude tremor.

And an epicenter about 60 kilometers south of the city, we're told. We don't yet know the extent of the damage. But where this camera is, it's clearly pretty severe. Media reports saying hotels are amongst the buildings that have collapsed. And the earthquake in October, so you know, which originated this aftershock, killed around 600 people in Van.

But now it's a case of just clearing the rubble and seeing what they can find.

We'll have more from Andrew Finkel, who's there, as we get hold of him.

Now, an investigation, meanwhile, into child sexual abuse by a former American university football coach has now cost the head coach of that team his job. Joe Paterno has coached the Penn State football team for 46 years. And along the way, he's wrapped up more wins than any other major college football coach in American history. He's not accused of abusing children, but investigators say he was told that one of his assistant coaches had done so and Paterno failed to report it to police.

Now that inaction has tarnished his pristine career and prompted him to abruptly announce his retirement.

Joe Paterno is a legend on the Penn State campus in State College, Pennsylvania.

CNN's Jason Carroll is there and he joins us now live.

So a real shock for everyone there -- Jason.

JASON CARROLL, CNN CORRESPONDENT: Absolutely. A shock simply because, Max, as you say, this man is legendary here in the world of collegiate football. And, you know, trying to put it into perspective for an international audience, I mean college football is so incredibly popular in the United States. And this man was really the face of a winning team for generations.

And so when something like this happens to a man who is -- who is so well-respected and so legendary in so many ways, it's a shock. It's a shock to many people here. It was a shock to his players, to many in the community. I think some of that shock, in so many ways, turned to anger, Max, once some people learned that -- that Coach Paterno failed to speak to police.

Once again, legally, he did what he was supposed to do. When we heard about this allegation of sexual abuse, he went to his superior and told him what happened.

But the question here, Max, is morally, did he do the right thing?

And I think a number of people here in the community here at Penn State felt as though he did not. And so, as a result, he finally turned in his resignation. He said, in part, quote, "This is a tragedy. It is one of the great sorrows of my life. With the benefit of hindsight, I wish I had done more" -- Max.

FOSTER: Jason at Penn State campus.

Thank you very much, indeed.

Well, it really is impossible to overstate how incredibly popular and lucrative some of these college sports teams really are, including the one we were talking about tonight, Penn State University. It is the third most valuable college team in the U.S., with a reported profit of around $50 million each year.

Others in the top five, as you can see there, the University of Texas, Notre Dame, Michigan and the University of Florida. And if anything, these teams are becoming more popular and more lucrative all the time.

CNN's Mark McKay joins us from CNN Center with more.

And it's something really unique to the U.S., isn't it -- Mark?

MARK MCKAY, CNN SPORTS CORRESPONDENT: It is, Max. The word lucrative being used, that is the operative word here in so many ways. It might not be a business model for many other parts of the world when it comes to sport, but American college football is big business and Penn State is a big player.

Let me give you a little perspective here in terms of profit. According to "Forbes," the profit generated by the university football program last year, $50 million. Now, putting it in perspective, it's more than every other Major League Baseball team pulled in last year. More than 28 of the 32 NFL teams, only Dallas, Washington, Tampa Bay and Arizona, had a bigger profit in 2010 than Penn State University.

It is also the bigger profit than the English Premier League sides Liverpool and Tottenham.

Of course, Penn State's profit, the bulk of it, comes from the fact that American college football players don't get paid. They, instead, get scholarship money, Max. That's another argument for another day, though.

FOSTER: Yes, we'll go into that one day. MCKAY: OK.

FOSTER: Thank you very much, indeed, for that, Mark.

It really is a big deal.

Now, breaking news this hour. We want to take you to Van. We're getting live pictures from there. It's in Turkey. And there's been an aftershock to an earthquake there last month. And a major rescue operation underway. But we haven't got many details apart from the pictures that we've got for you here.

Several buildings have collapsed. A 5.7 magnitude tremor has caused all of this. And we are going to be speaking to our correspondent coming out -- coming up.

(COMMERCIAL BREAK)

MAX FOSTER, HOST: Breaking news -- breaking news this hour. State media in Turkey saying at least 18 buildings have collapsed in the city of Van. Two of these buildings are two hotels, and there's a school affected, as well.

The US Geological Survey measures the quake at magnitude 5.7. An aftershock, this is, from a major October quake that killed around 600 people there.

We've been receiving video from a CNN partner station, DHA, showing residents and rescuers combing through the rubble of what appears to be a multistory building in Van. But we're just relying on these pictures at this point, but they really do show a story to you.

Journalist Andrew Finkel joins us from Turkey with more on the quake. What more can you tell us about this area, Andrew?

ANDEREW FINKEL, JOURNALIST: Well, yes, of course. This is -- was a region which was badly shaken by the quake at the end of October. Of course, those buildings were badly weakened then.

Two of the buildings which we now know to have collapsed, these two five-story hotels, were hotels that journalists covering the quake were used. And indeed, you mentioned CNN's partner station, DHA. Apparently two of their reporters are unaccounted for somewhere under the rubble.

We have unofficial accounts of maybe 18 or 20 people still to be accounted for, still lost under the rubble. There have been -- we know one person was pulled out alive. There's been sounds from beneath this rubble.

Rescue workers are on their way from Istanbul, from Ankara, from the big cities, but also from the towns near about. There's a town called Siirt, there's a town called Mus. We know rescue workers are going from there.

But of course, the great difficulty is that now this is a city in which people were afraid to go back into their homes, in which there was a shortage of tents and which there was a shortage of accommodation. It's cold out there.

And now, many more people will be afraid to sleep under their own ceilings tonight for fear of another quake, Max.

FOSTER: And as we understand it, the epicenter is around 16 kilometers south of the city, but obviously camera crews are in the city. You can assume, then, outlying areas are going to be severely affected as well. So, paint a picture of the area so we can understand how much damage would've been done around the city.

FINKEL: Van is a very -- it's a huge lake. It's a lake in the middle of a highland. It's a very beautiful part of the country and not a very populated part of the country. I suppose that's the good news in all this, that this is a poor and underpopulated part of Turkey.

The epicenter we believe is in a place called Edremit, which is south of Van along the lake. But we have no reports yet of either destruction or injuries or fatalities there yet.

But of course, what happens is in these situations is that it's the villages around about, villages where the houses are not made of earthquake-resistant materials, they're often mud brick, and these are the places which the rescue workers reach last.

So, it's really a question of what's going on around Van as well as what's happening in Van itself, Max.

FOSTER: Just to talk through what we've got here, this is Van, and you can see rescue workers trying to get to the root of this rubble. As you say, Andrew, these buildings would've been weakened by the previous earthquake.

So, it's an area which is used to earthquakes and it had a recent earthquake, so you'd hope that actually the teams are in place to try to go in and rescue effectively, right? And local people would've had experience from the recent quake.

FINKEL: Well, there's two sides to it, to any tragedy like this. There's the rescue side, there's the specialized work of finding people under the rubble and making sure that they get out alive. Now, that's a very specialized function.

Now, the people who do that really leave the site certainly after the first week of the -- of any disaster. So, those people will have gone back to base. Maybe some of them -- we know some of the heavy moving equipment is still in place. That doesn't move so quickly.

So, what's happened is the people who helped rescue people back in the end of October when the first quake hit are now returning to the site, but to get there, they have to come from major cities and from -- the towns nearabouts. The nearest ones are about three or four hours drive from van.

But hopefully, yes, there will be people in Van who know how to do this business, Max.

FOSTER: That's one thing. Andrew Finkel in Turkey, thank you very much for bringing us up to date with these latest pictures we're getting into us from Van.

Another breaking news story coming into us from Italy, and Becky is, of course, in Rome for us.

BECKY ANDERSON, HOST: That's right. Thank you, Max. Silvio Berlusconi has been conspicuous by his absence over the past 24 hours.

We do now, though, know that he will probably resign as prime minister by Sunday or Monday. The vote on the austerity measures that he wanted to see through the Senate and back to Parliament will happen on Saturday.

So, the expectation is that Silvio Berlusconi will then resign and be out as prime minister of Italy by the beginning of next week. The president now saying that he will step down within days, that's Silvio Berlusconi.

But the big picture, of course, here does remain murky. What kind of government is going to fill the void? Well, replacing Italy's leader may be seen as a magic bullet by some out there, but it's -- its problems are still -- well, it's difficult here, it's chaotic.

Matthew Chance, our Senior International Correspondent, got out onto the streets of Rome today to find out how Romans think about what's going on.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, just a few days ago, it would have been unthinkable to imagine that the man who's dominated Italian politics for so long would step down, but that's exactly what's happened.

Here, the newspaper headlines in Italy say it all. "There's no alternative," says this one. "We're going to the vote. This one says Berlusconi announces his resignation.

But I have to say, you don't really get the sense walking through these Piazzas in Rome that we're at the start of a new ear, and many Italians, when you speak to them, they're only cautiously embracing the dramatic developments of recent days.

Do you believe that he will go? Do you believe he'll step down?

UNIDENTIFIED MALE: I say yes. But there is the same. Berlusconi, not Berlusconi, same man. We need that, and when it is the morning -- (whistles).

CHANCE: It'll make no difference to you, you think?

UNIDENTIFIED MALE: No different. For me, no different.

CHANCE: Do you think it will get the economy of Italy back on track? Do you think it will help the economy?

UNIDENTIFIED FEMALE: I hope that it will help, so then maybe it will be a good thing for the economy, Europe maybe trust more in Italy.

UNIDENTIFIED MALE: The time of Berlusconi is finished. The reality is this. In my opinion, Berlusconi must go out and not only Berlusconi. The political system around Berlusconi.

In Germany, left to right, together. In Greece, together. When there is a problem, together resolve the problem.

CHANCE: Well, there's no doubts about the freshness of the produce on these piazzas, but one of the big concerns amongst all of these people you speak to is that what follows Silvio Berlusconi may be even worse, even less affected. Already, there's confusion about how the next government of Italy will be chosen.

And that is, if anything, fueling fears that Italy's crisis could yet deepen.

Matthew Chance, CNN, Rome.

(END VIDEOTAPE)

ANDERSON: and there is still question mark tonight over whether there will be a coalition or a technocrat government ordered by the president next week or whether we will indeed see elections. That's what Berlusconi wants -- or his party wants. And those elections would be probably not until about January.

So, lots of unanswered questions still here in Italy. Barbie Nadeau, who's "Newsweek's" Rome correspondent -- Barbie, come and join me, here -- is with me here now. We're on the cusp of a new era. It's a post- Berlusconi era, that we know for sure.

What sort of mark has Silvio Berlusconi made on the Italian psyche?

BARBIE NADEAU, ROME BUREAU CHIEF, "NEWSWEEK": I think certainly if you look at it from the international perspective, it's more of a stain than a mark. I think he's really damaged this country's reputation on the world stage.

But I think within Italy, maybe not so much in the last year or two, but certainly during his glory days in the first part of his administration, he allowed Italians to dream.

He was a great enabler. He did things that they wanted to do, he was with beautiful women, he cheated on his taxes, allegedly. He did all the things that a lot of people really felt enabled them maybe to cut a few corners, too.

I think in the last couple of years, we've seen a change. We've seen him sort of go from maybe charismatic to a little bit squalid in some of his sex scandals.

But I think that in general, the Italians will miss him on some level. There will never be anyone like him who can so -- sort of motivate a crowd, who can -- and can be so charismatic. And anyone you look at who's on the list of people who will replace him just don't have that. They don't have.

ANDERSON: Will he go quietly, do you think?

NADEAU: I don't think he'll really go, to be honest. He may leave his job, but I think he'll always be a presence in Italy. I think that he will, as long as he's living, will have some influence on the center right government no matter who is really at the helm of it. He'll be here until the end.

ANDERSON: Because Barbie, it's his party, isn't it, that runs Italy at the moment? He created this party 18 years ago. And he also, of course, runs an enormous conglomerate here, which is so engaged in so much of Italian life.

NADEAU: That's right. He controls privately 45 percent of Italy's media. As a public figure, he as control over 50 -- the other 50 percent of it. That 45 percent is still going to be under his control. He'll still be able to fight back with his own message within his own media holdings. He'll be a voice for a long time to come.

ANDERSON: Silvio Berlusconi doesn't leave the Italian limelight, as it were, easily. I think I agree with you on that one. Barbie Nadeau, "Newsweek's" Rome bureau chief here with me tonight.

I'll be back later in the show. For now, though, back to Max.

FOSTER: Becky, up next, the Iranian ambassador to the IAEA tells CONNECT THE WORLD Iran's open to negotiations and inspectors can have full access to the country's nuclear program. His reaction to the latest report by the UN's nuclear watchdog is next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WILLIAM HAGUE, BRITISH FOREIGN SECRETARY: The assertions of recent years by Iran that their nuclear program is wholly for peaceful purposes are completely discredited by this report.

(END VIDEO CLIP)

FOSTER: Now, officials from around the world are reacting to the latest report by the IAEA on Iran's nuclear program. The report is the International Atomic Energy Agency's toughest assessment to date and says there is credible information that Iran may be developing nuclear weapons. But it stops short of saying Iran has made the decision to build nuclear bombs.

There are some allegations that are listed openly for the first time, including the claim that Iran has used computer modeling on the behavior of a nuclear device. Iran fervently denies its program is meant to make weapons and says it's for peaceful purposes only.

European states and some members of the US Congress are calling for stronger sanctions against Iran. France says the report reinforces their deep concerns. The foreign minister says the country will adopt, quote, "sanctions of an unprecedented scale" if Iran refuses to comply with the demands of the international community.

Russia is skeptical. Moscow says the report contains nothing new and the facts have been politicized. Israel has called on the international community to stop Iran from getting nuclear weapons which, quote, "endangers the peace of the world."

And China is urging the peaceful resolution but said that, quote, "Iran bears the responsibilities of nuclear nonproliferation."

Now, China favors dialogue, whilst in a speech to the British lawmakers, UK Foreign Secretary William Hague criticized Iran for not responding adequately to calls for negotiations.

Iran's ambassador to the IAEA says the report is not fair and -- categorically rejects any nuclear weapons program. I asked Ambassador Soltanieh, in that case, why not start discussions?

(BEGIN VIDEOTAPE)

ALI ASGHAR SOLTANIEH, IRANIAN AMBASSADOR TO THE IAEA: We have nothing to hide. In fact, the report -- even this report, which was distributed yesterday, the first ten pages prove that Iran -- all nuclear activities of Iran, including enrichment, are under the fullest safeguard of the IAEA.

As I said for the last eight years, even one gram of nuclear material have not been diverted to military purposes, and you can see the reports of Mr. Amano even confirms that --

(CROSSTALK)

FOSTER: So why not go into some negotiations --

SOLTANIEH: -- as the dividing negotiation --

FOSTER: -- saying that in those meetings? Enter some negotiations with them.

SOLTANIEH: We have --

FOSTER: William Hague today --

SOLTANIEH: -- already --

FOSTER: -- he says --

SOLTANIEH: -- we have already --

FOSTER: -- you're entering a more dangerous phase, William Hague, the British foreign secretary. They sit on the Security schedule --

SOLTANIEH: We have -- we have already --

FOSTER: -- the longer Iran goes on pursuing a nuclear weapons program without responding adequately to calls for negotiations from the rest of us, the greater the risk of conflict as a result. You're stoking talk of a conflict.

SOLTANIEH: We have already -- we have already on several occasions invited all to cone to the negotiating table without preconditions, and in fact, this is the case, and in case of the IAEA, as you notice, the writer, Deputy Director General and last week.

Also, we had officially announced in a letter by vice president of Iran to Deputy -- to Director General of IAEA that we welcome the agency's team to come to the agency -- in fact, to come to Iran for working with Iran on all these allegations.

(CROSSTALK)

FOSTER: Will you allow them complete access --

SOLTANIEH: That we always prepare --

FOSTER: -- to whatever they want to see?

SOLTANIEH: -- and they do this.

FOSTER: Can they get complete access?

SOLTANIEH: Of course we have done so. Please read the last report of the agency that IAEA DDG in fact was in Iran and we even were able to give access to RND of centrifuges, which was unprecedented in the history of IAEA.

FOSTER: So, you're saying here --

SOLTANIEH: You cannot find any --

FOSTER: -- you're going to allow free access to inspectors --

SOLTANIEH: -- country that has permitted entry --

FOSTER: -- and you're going to enter negotiations with the likes of Britain and France?

SOLTANIEH: Of course we have always said the agency has had full access to all our nuclear activities, and we have always invited that rather than creating confrontation. Those countries, if you have any questions, they should come to the negotiating table and come to the IAEA, we will remove any --

(CROSSTALK)

FOSTER: But they're saying you don't want negotiate. They say you're not negotiating with them, and it's causing talk of a conflict.

SOLTANIEH: No, this is absolutely untrue, and I reject that, because in the negotiation they have to notice that the issues related to nuclear issues are belonging to the IAEA, and we have been always prepared to do so.

And I, in fact, invited the -- the ambassadors of the EU and Western countries to come visit Natanz' enrichment plant, and you'll remember that they refrained from coming to.

This is very unfortunate that when we are 100 percent transparent they are, in fact, afraid to see this kind of nuclear transparency which is unprecedented in the whole world.

(END VIDEOTAPE)

FOSTER: That's the Iranian ambassador to the IAEA speaking to me a little earlier.

We want to take you straight to Turkey now, though, because we've got this breaking news from there. These are the latest pictures we have from Van, and there has been an earthquake there. We understand it's been an aftershock to the earthquake that struck last month.

And the epicenter was actually south of this city, so it would have affected a wide area. This is a few kilometers away from the epicenter, but look at the damage it's caused.

You need to remember that these buildings were weakened after the initial earthquake, so a lot of damage expected, and we're trying to get more details for you. Several buildings affected in Van. More details coming up.

(COMMERCIAL BREAK)

FOSTER: An extraordinary Leonardo Da Vinci exhibition opened here at the National Gallery in London today, the greatest collection of his work every displayed under one roof. And judging from the queues outside, it's already enjoying a reception worthy of the Renaissance master. Here's Nick Glass.

(BEGIN VIDEOTAPE)

(CHORAL MUSIC)

NICK GLASS, CNN CORRESPONDENT (voice-over): Nine AM, and a queue snakes around the block outside the National Gallery in London.

GLASS (on camera): Five hundred tickets available on the day, and it looks like they're already spoken for. I've never, ever seen a queue like this at the National Gallery.

UNIDENTIFIED MALE: Something extraordinary are the words that can describe them.

UNIDENTIFIED FEMALE: It's once in a lifetime you see so many Leonardo Da Vincis together all in one place.

GLASS: All the way from Sweden.

UNIDENTIFIED MALE: All the way from Sweden.

GLASS: For this.

UNIDENTIFIED MALE: Yes.

GLASS: Why?

UNIDENTIFIED MALE: Because I love art.

(CHORAL MUSIC)

GLASS (voice-over): The Leonardo exhibition in London is simply without precedent. Paintings so beautiful, so fragile, so rare. It seems almost vulgar to mention their insurance value, over $2 billion.

LUKE SYSON, CURATOR, NATIONAL GALLERY: I think this may be a once in a lifetime experience. It may be once ever.

GLASS: "The Musician" has come from Milan, where he was painted. And dominating a central room, an astonishing pair of altar pieces.

At one end, "The Virgin of the Rocks" from the National Gallery itself, recently restored and cleaned. And at the other, Leonardo's earlier version from the Louvre.

It's unlikely these virgins will ever be in the same room again.

Here was a unique opportunity to compare angel with angel. In the Louvre version, she glances out at us through the stain of centuries. In the London version, she's lost in her own thoughts, one of the most admired beatific faces in Renaissance art.

SYSON: Beauty is absolutely key, and Leonardo realized that paintings could make you fall in love and that in order to do that, you needed to be amazed by a kind of absolutely essential beauty, a beauty which was beyond what you yourself happened to fancy.

GLASS: A copy of "The Last Supper" done by some of his followers just a few years after the original fresco. It's so much better preserved, so much brighter.

For his first public outing, "Salvator Mundi" gets a contemplative corner to himself and is flanked by to preparatory drawings. Studies of the folds in Christ's tunic. Yet more evidence that this is Leonardo's original painting.

This may well be the first time the painting and the drawings have been together since leaving his studio.

SYSON: To be able to say that you're seeing the face of Christ is to state that you have a particular talent that is God-given, essentially. It's quite an austere painting, and I think for those people who find Christ a judgmental figure, they won't find that in that picture.

MARTIN CLAYTON, SENIOR CURATOR, ROYAL COLLECTION: It's slightly disturbing in some ways because it's been over-painted. It's not exclusively by Leonardo in the state in which we see it now, but the passages that are in good condition seem to be absolutely right. It's a remarkable discovery.

GLASS: Scholars and public alike came out exhilarated.

UNIDENTIFIED FEMALE: It's magnificent. I wish I could spend more time with each drawing and really get up close.

UNIDENTIFIED MALE: It was wonderful. And to see this group of pictures together, which we'll never see again, probably, was fabulous.

GLASS (on camera): Will you tell me what you -- presumably went and saw "Salvador Mundi" -- what you thought?

RICHARD STEMP, RENAISSANCE SCHOLAR: Yes. I was pleasantly impressed, because up until today, I'd just seen the photograph in the catalog. It's a wonderful painting. It's very ghost-like, which sort of adds to its charm.

GLASS (voice-over): The show is on for just three months. It isn't traveling anywhere else. A unique opportunity for scholars to reexamine the work in one place, and for the rest of us to just drink in all that beauty.

(END VIDEOTAPE)

FOSTER: Well, CNN provides you rare access to this amazing Da Vinci discovery, because if you can't queue, you can watch it here on our special, "Leonardo: the Lost Painting." It debuts on Friday at 4:30 in the afternoon here in London, 5:30 Berlin, 8:30 Abu Dhabi, right here on CNN, of course.

But before we go tonight, we want to give you some final thoughts on this extraordinary day in Italian and European politics. Becky is there for us in Rome. Becky?

ANDERSON: Yes, Max, and Italians will be hoping that this new political era will usher in a renaissance of sorts, so far as the Italian economy is concerned.

What we do know tonight is that Silvio Berlusconi will resign as early as Saturday or Sunday, ushering in a -- either a coalition government or the date for an election for Italy. That could be as early as January or February next year.

So, things a little clearer tonight, but not as clear as the markets would like, and the evidence of that is in the US markets, where we saw the Dow down some three percent on concerns about this euro zone crisis. Things continue to be extremely murky here across the continent.

I'm Becky Anderson in Rome for you, it's a very good evening from here. Max will be back with the headlines and that will be followed by "BackStory" here on CNN. Good night.

END