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Houthi Rebels Storm Sanaa Presidential Palace; ISIS Demands $200 Million For Japanese Captives; Libya's Deepening Crisis; World Leaders Gather for Economic Summit; China Posts Worst Growth in 24 Years; IMF Cuts Growth Outlook Ahead of Davos Summit; Russian Spy Ship Docks in Havana

Aired January 20, 2015 - 11:00   ET

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

BECKY ANDERSON, HOST: Clashes at the heart of Yemen's seat of power. Houthi fighters attack the presidential palace.

CNN is on the ground. And we'll bring you the latest on what is an unfolding situation.

Also ahead, ISIS threatens to executed two Japanese citizens and the ransom the group wants is staggering.

And what a difference a year makes. Ahead of U.S. President Obama's State of the Union speech just hours from now, we look at the state of the

Middle East and America's relationship with key allies.

ANNOUNCER: Live from CNN Abu Dhabi, this is Connect the World with Becky Anderson.

First, the breaking news in Yemen's capital this evening where we are hearing that the presidential palace there is under attack by Shiite Houthi

rebels. And Yemen's minister of information has just confirmed to CNN that the rebels have now completely taken over that palace, the clashes part of

a bloody power struggle between the Houthis and the government forces in what is this majority Sunni country.

Well, this latest violence follows shots fired at a U.S. embassy vehicle at a checkpoint in the Yemeni capital. No one was hurt in that.

For more, let's get you, though, to the Pentagon correspondent Barbara Starr in Washington.

Barbara, clearly the focus will very much be on the security of U.S. citizens in the first instance in Yemen, but the wider picture here is that

continued violence, which of course complicates U.S. efforts to battle al Qaeda's Yemeni franchise and their ability to export terror.

What is the response in Washington this hour?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Becky, I think you've really put your finger on it. Even as the security situation

unravels apparently minute by minute in Yemen, the whole question about whether to evacuate the embassy it's a security question, but it's also a

political question, because of that very point. The U.S. embassy in Sanaa basically the only U.S. eyes and ears on the ground to try and deal with al

Qaeda in Yemen known as AQAP.

If they shut down the embassy, if all the diplomats go, if all the intelligence personnel goes it leaves the U.S. more blind, if you will, to

what AQAP might be up to.

So, this is a very complex, very difficult situation right now.

The U.S. view is that as the situation unravels this is just giving AQAP more room to maneuver, more room to dig into its safe havens and more

room to plot and plan potential future attacks outside of Yemen.

So the concern about all of this just simply couldn't be higher. And right now, U.S. officials will tell you they are not sure there is any way

out of this situation -- Becky.

ANDERSON: What sort of intelligence does the U.S. have on the ground, Barbara?

STARR: Well, this is a very difficult question. What we know, again, is that U.S. diplomatic personnel certainly interact with the government of

Yemen and try and get information that way about what al Qaeda is up to there. I don't think it's any big mystery the U.S. also flies satellites

over Yemen. There are drone attacks, not terribly frequent right now, but they do look for any intelligence about where al Qaeda figures may be

hiding out and where they might engage in drone attacks.

And I also don't think it would be any big secret. You would expect it to the extent that they can U.S. officials, U.S. agencies engage in

intercepts and electronic surveillance of any known al Qaeda elements.

But this is spotty information at best. Nothing really beats having people on the ground talking to other people to get that minute by minute

information. And if the embassy shuts down that is really going to put a crimp in the ability to do that, Becky.

ANDERSON: And I wonder, then, how this affects relations with two other significant powers in the region. To the north of Yemen, Saudi,

which is clearly terrified about what is going on south of its border with a Shiite Houthi militia looking to all intents and purposes as if it is

conducting a coup, an organization, some may say, allied to Tehran, a country that a present John Kerry is closely allied with and the U.S. is

trying to forge some sort of diplomatic result so far as its relations with Iran are concerned through P5+1.

How does this reshape relations if at all, do you think?

STARR: Well, you know, the sort of working theory in the U.S. government is that the discussions with Iran on that nuclear program that

you're mentioned that is one set of issues with Iran. President Obama has said, you know, that doesn't negate any of the other differences that the

U.S. has with the Iranian regime. And make no mistake, it is widely said that Iran is behind the Shiite rebels, the Houthis, that are undergoing --

that are trying to take on this overtaking of the Yemeni government. And that, of course, has the Saudis quite concerned, because they see Iranian

influence extending in so many places in the region. The Iranians really are a powerhouse of influence, you know, from Afghanistan to the Gulf now.

So there's a lot of concern about that.

But Yemen was rapidly becoming a failed state, if you will, even before this. The economy collapsing, security situation very precarious, a

country that is running out of water and resources, a country barely able to take care of its people, a real tragedy about what is going on there for

the people of Yemen.

The government had been struggling for months to really hold on and provide any services.

So this is the situation that the Houthis themselves are able to take advantage of as well as al Qaeda, because this is a government that really

cannot control its country -- Becky.

ANDERSON: And we're getting to Sanaa in just a few minutes. For the time being, Barbara, thank you.

Japan's government now facing the same horrible ultimatum that others have faced in recent months. The ISIS militant group says it will kill two

Japanese hostages it is holding unless a huge ransom is paid in the next three days: $200 million in this case.

The captives, seen in a new video posted online kneeling beneath a man dressed in black. The speaker says Japan is being punished for taking part

in the coalition against ISIS.

CNN airing this brief so that viewers can hear what seems to be the same British accent that we've heard in previous videos. Have a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: To the prime minister of Japan, although you are more than 8,500 kilometers away from Islamic State, you willingly have

volunteered to take part in this crusade.

(END VIDEO CLIP)

ANDERSON: Japan's role in the region has been purely humanitarian, not military.

Let's go to CNN's Will Ripley. He's tracking the details of this story from our bureau in Beijing.

And as the Middle East grapples with the problem of extremist violence, not least down in Yemen as we've been reporting with Barbara

Starr, now Japan also thrown into this mix.

What's the reaction from authorities there?

WILL RIPLEY, CNN CORRESPONDENT: Shock, Becky, because you make a very good point that Japan's role has been purely humanitarian. And that $200

million that Shinzo Abe, the prime minister, pledged during his Mideast trip was intended not for military purposes, not to fight ISIS with

violence, but to help the refugees of ISIS, the people whose lives are in turmoil as a result of this terrorist group.

But according to the jihadist in this new video, any association with the coalition is essentially a death sentence and that is why you saw ISIS

take these two Japanese men, hostages that they've been holding for several months, put them in front of the camera, put them down on their knees and

threaten their lives if this massive ransom is not paid.

Kenji Goto, a freelance journalist, well respected in Japan who had covered war zones for years was covering the crisis in Syria in the city of

Kobani at one point, according to his social media posts and videos online; and Haruma Yukawa, a private military company owner whose role in the

Middle East was really unclear, but we do know from various media reports that his wife died, his business went under in Japan and he went to the

Middle East essentially as a lost soul.

These two men then brought together under these horrible circumstances. In this video ISIS now using them to punish, as you

mention, the Japanese government for playing a humanitarian role in such a troubled part of the world, Becky.

ANDERSON: Will Ripley on that story for you.

Well, it was al Qaeda in Yemen who claimed the terror attacks in Paris almost two weeks ago sparking a massive investigation that has taken in

several European countries, as you will be well aware. Well, now French media say more terror related arrests have been made. Multiple news

outlets say five men arrested overnight in southern France.

Well, this is just one of many new developments out of France. CNN's Jim Bittermann joining us from Paris.

As I suggest media quoting sources as saying that an act of terrorism being planned by these men. What more do we know at this point?

JIM BITTERMANN, CNN INTERNATIONAL CORRESPONDENT: Well, at his point not much. They're being questioned. And we're not sure where the

questioning is going. It's being reported that they were found with explosives. The five were picked up, said to be Russians of Chechen

origin.

In fact, there were big protests in Chechnya over the Charlie Hebdo publications. So it could be related to that.

The other thing it should be said, however, is that in the past there have been Russians who have been involved in the mafia in the south of

France. And it could have something to do with that.

So, at this stage we really don't have much clarification because the prosecutor is not giving much information until he gets through with the

questioning -- Becky.

ANDERSON: Jim, strong words from the French prime minister today talking about a form of social apartheid in France. What did he say?

BITTERMANN: Well, those are the words he used. He said a social, economic and territorial apartheid. And what he was talking about was

basically the suburbs in France where so many young people are disaffected and may have French passports, but for some reason have not become well

integrated in society, come from broken homes sometimes, but also they face discrimination as they grow up. They are sometimes second and third

generation members of their families who have immigrated from North Africa and other parts of Africa. And as a consequence, they don't feel at home

in France and they don't feel at home going to their parent's homeland either.

It's a real problem for France. And there are plenty of people that - - young people that feel that way. They unemployment rates out in the suburbs are much higher than it is -- than they are in the rest of France.

So, I think that's what he was talking about. And he says it's something that he first addressed during the riots in France back in 2005.

I think you probably remember those, in which -- at that point in time the government said they were going to do something about all this, but in fact

it hasn't had much traction. And if you judge by the recent terrorist here, Becky.

ANDERSON: Jim Bittermann is in Paris for you this evening.

Jim, thank you.

At 11 minutes past 8:00 in the UAE, still to come back to the instability in Yemen for you. A headline today our top story. Could it

lead to a power vacuum? We'll take a deeper look at what is the ongoing turmoil there.

Give you a sense of why wherever you are watching in the world it matters, from Yemen to Lebanon, Syria to Saudi Arabia, it's a new year but

the divisions are even deeper across this region. We'll put the Middle East in perspective for you in about 15 minutes' from now.

We're taking a very short break. Back after this.

(COMMERCIAL BREAK)

ANDERSON: This is CNN and Connect the World with me Becky Anderson. Welcome back.

Now, Yemeni government forces and Houthi rebels clash in Sanaa. The conflict increasingly worrisome to the west. There are growing concerns

that al Qaeda in the Arabian peninsula, based in Yemen, could benefit from what is this chaos.

We've been tracking the influence of AQAP as commonly known for years, but it's considered by U.S. officials to be al Qaeda's most dangerous

branch, most recently claiming responsibility for the massacre at Charlie Hebdo in Paris.

Now in 2009, Umar Farouk Abdulmutallab, the so-called underwear bomber, tried unsuccessfully to blow up a plane over Detroit. That was an

AQAP plot.

CNN's Nick Paton Walsh is remarkably close to what is the turmoil in Yemen's capital. He joins us now from Sanaa with details on what is

happening. And just a few moments ago, we were reporting on the breaking news that the Houthi rebels have taken over the presidential palace.

If that is the case, perhaps you can confirm that for us. What's the significance of this latest turn of events?

NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT: Well, we understand from the minister of information Nadia Sakkaf, she confirms as

the two Interior Ministry officials that the presidential palace, the presidential administration, the large complex which was being fought over

yesterday in the artillery duel we saw from our hotel that is now in the hands of the Houthi rebel movement.

We haven't heard from the Houthis if they accept that at this stage, but that is what the government is saying.

They are also saying that according to eyewitnesses as well, that there are a number of clashes outside various key buildings. There is said

to be shooting in the street outside the presidential -- sorry, the Republican Palace, that is where the prime minister is. And there's also

said to be shooting outside the presidential residence, which is where President Hadi is at this point.

We understand that some of the shooting has now stopped, but it has led to great concerns within the government to the point where the minister

of information Nadia Sakkaf said that she felt the president had lost control at this stage.

Now, talks are continuing. And many believe that what is happening here is a bid on the streets by the Houthi political movement, who I said

we haven't heard from directly at this stage, a bid by them to try and use force to alter the negotiations happening behind closed doors.

But some also say that frankly the vestiges of power from the government are now slipping. And effectively one needs to accept certain

(inaudible) that is necessary to accept that substantial changes happened here -- Becky.

ANDERSON: Nick, is this an effort for Houthi political inclusion or is this a coup? And if it is, what are the consequences?

WALSH: Well, it's certainly called a coup by the information minister. She said it was an attempted coup yesterday and she now

considers what's happening here to be the completion of it.

She's one of the more vocal voices within the administration, but it is quite clear that the negotiations that began this morning where they

were supposed to be an agreement hammered out between the Houthis and the president and other parties, too, that is certainly in some state of

collapse and it certainly has not stopped violence on the streets.

Now we have no precise number of casualties. There are suggestions of some fatalities during these most recent clashes.

We saw around the presidential administration ourselves earlier this morning a number of Houthi gunmen, substantial numbers, but also some

republican guards dug well in there, too. So there may have been significant change in the balance of power inside that compound if it is

now in the hands of the Houthis.

But people are trying to ask, is this a move by the Houthis to effectively seize all the power? Do they actually want to front a

government, or are they seeking here to simply ensure that whatever government remains in place reflects better their interests? So their

part, they say they're unhappy with the new constitution that was supposed to be moved in as part of the peace and transition plan. And they

certainly wanted the president to be more aware of their sensitivities. And they do claim that yesterday's violence at the presidential

administration resulted from them actually being attacked.

But a mixed picture on the ground, and one that has certainly seen violence on the streets dictating politics, rather than the other way

around, Becky.

ANDERSON: Yeah, and we're looking at pictures, as you speak, of soldiers talking to people in their cars, but also pictures of streets

which seem to be very empty. And it has to be said other images of what appears to be a city sort of still on the move, as it were.

I want to just step back for a bit -- stay with me, Nick. Yemen's government is a partner with the U.S. in the fight against al Qaeda, but

apart from that struggle at home, as Nick has been reporting, Houthi rebels have been battling the government on and off for more than a decade. The

group are Zaydi, a branch of Shiite Islam that exists almost solely, it has to be, in Yemen.

While the majority of the local population are Sunni there, Houthi rebels seized control of the capital Sanaa in September. Since then,

they've advanced further into central and western regions of the country where they've met deadly resistance from Sunni tribes and from al Qaeda

fighters. And Nick, that I guess is the ultimate question here.

For many watching this broadcast from the west, the international community who say the further this country descends into chaos, the better

the prospects of AQ in the Arabian Peninsula.

WALSH: Well, that's certainly the case.

The issue here, of course, we know -- and it's well understood -- that the greater the chaos in Yemen, particularly vacuums in power like this and

the notion that whatever government there is, is increasingly lacking in executive capacity, that benefits al Qaeda. That's well known. Power

vacuums allow them for a foothold in the place in failed states to operate.

What is key, though, here in Yemen is the sectarian nature of what is developing.

Now it's fair to suggest that the Houthi here are predominately Shia. They're a collection of militia and tribes, but that has led their success

in moving across the country and taking the capital has led, it's said, to a lot of Sunnis to be extraordinarily concerned and nervous. And that has

also led some of them to feel that al Qaeda in the Arabian Peninsula and groups allied with them might be a better bet in protecting them.

So as we've seen in many other areas in the Middle East, it's often the extremists who find -- who end up often from Sunni backgrounds to find

other Sunnis at times willing to assist them, to defend them in complicated times like this.

I know it's got many concerned the sectarian nature of what's happening here is in fact fomenting sectarian violence here, but it's

benefiting Sunni al Qaeda in the Arabian Peninsula by making some Sunnis here fight along them, boosting their numbers in local fights. That's the

added complexity of what's happening here in Yemen outside of the fact that a failed state benefits al Qaeda type groups.

ANDERSON: Nick, thank you for that. Nick in Sanaa in Yemen.

Events there unfolding very quickly at this hour.

I'm joined by a pro-Houthi activist now Hussain al Bukhaiti who is currently in Sanaa as well.

And, sir, you heard Nick talking about the sectarian nature of what is happening and the benefit that this spiraling chaos provides for al Qaeda

in the Arabian Peninsula, as it is known by experts, an al Qaeda franchise, which is particularly brutal taking responsibility for the Paris attack on

the Charlie Hebdo building.

Is that what a Houthi activist like you is looking for in Yemen? Is that the environment that you see for the future of your country?

HUSSAIN AL-BUKHAITI, PRO-HOUTHI ACTIVIST: No, actually we have al Qaeda in Yemen before the Houthis has entered Sanaa and well as before that

2011 revolution. We have problem with al Qaeda that they were kicked out of Saudi Arabian towards Yemen and they had based in Yemen. And the United

States has failed in the last (inaudible) in fighting al Qaeda in (inaudible) and Houthis and with the (inaudible) committee they have

succeeded to do in four days what Yemeni government and the United States has failed in four years.

So there is -- the fighting al Qaeda is going on...

ANDERSON: Is this a coup?

AL-BUKHAITI: ...but of course -- the fighting with al Qaeda is going on and (inaudible) is heading this fight. And the cleared Sanaa and many

areas from al Qaeda. We haven't seen any attack for many, many years. And I hope this is going to be in Sanaa and other parts of Yemen as well.

ANDERSON: OK. With respect, sir, let me just put a couple of questions to you, then.

You talked about what the Houthi have been able to achieve in the last four days. What is that? How would you describe what has happened? The

information minister calling this a coup. Is that what, or how you would describe this?

AL-BUKHAITI: Yeah, it's not a coup. If the Houthi want to get rid of Hadi, they could have done it 21st of September last year. But when they

entered Sanaa at the time, they ask for the full implementation of the national dialogue and they signed this deal with the President Hadi and

other parties.

So they don't want a coup. The fighting happened yesterday. After that, they called for an agreement and partnership agreement to be

implemented.

It's not a coup, because they could have done it before, but they didn't. They want a partnership with all parties.

ANDERSON: The story this hour as we understand it -- and Nick is on the ground -- is that the presidential palace has been taken over by those

involved in the Houthi political organizations. So it looks and smells like a coup to all intents and purposes.

But I think the wider picture here that our viewers will be fascinated to hear your view on is just how this power vacuum will aid the average

Yemeni, and indeed to wider story, which is a power vacuum which allows for more from the likes of al Qaeda?

AL-BUKHAITI: The power vacuum we -- that's the thing, you're focusing on the Houthis that are the reason of the power vacuum. We have power

vacuum in Yemen for the last five years. And we have al Qaeda as well. So when Houthis fought in Sanaa, it was the government that withdraw all its

forces from Sanaa streets. The Houthi had to take over.

ANDERSON: How will, then, what is happening at present improve, rather than worsen, what is going on?

AL-BUKHAITI: We -- it will improve, because if we get rid of the corrupt people, if we get rid of the people in the government that are

supporting al Qaeda, then we can fight al Qaeda. So we have to clear the capital from that.

There was a camp just north of Sanaa that Houthi has found and destroyed about weeks ago. And as well in Radaa (ph).

But the government -- the Yemeni government was related to al Qaeda. There was support coming from the ministry of defense to this al Qaeda camp

in al-Haab (ph) just 20 kilometers from Sanaa. And now by fighting corruption in the capital, getting rid of these people who are related to

al Qaeda, that will -- is a good head start to clear Yemen from al Qaeda.

And as well the United States hasn't succeeded to fight al Qaeda neither in Afghanistan, neither in Iraq, neither in Yemen. So how can they

tell us what to do?

ANDERSON: All right, sir. With that we'll leave it there. We thank you very much indeed for joining us from Sanaa tonight as events unfold at

what is breakneck speed it seems.

Live from Abu Dhabi, this is Connect the World with me Becky Anderson.

Coming up a deepening crisis in Libya. UN talks have ended with parties agreeing to more talks. We look at the details in about 10 minutes

time for you.

First, though, island living just off the coast of the UAE's capital city. We travel by boat to Nurai Island next on One Square Meter.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

JOHN DEFTERIOS, EMERGING MARKETS EDITOR: This week on One Square Meter, we're doing some island hopping. It may appear that we're heading

off to a distant location, but we're actually not. It's just 30 minutes from downtown Abu Dhabi.

Tucked away in the glittering turquoise waters of the Gulf is a new and exclusive address on the UAE's map. Nurai Island is a haven of luxury

residential villas and boutique hotel with a Virgin Island feel.

UNIDENTIFIED FEMALE: This villa was really designed to allow families to bond. As you can see here, there's lots of glass and sunlight because

for us at Zayyad (ph) it's really about bringing the nature in to your home.

DEFTERIOS: Nadia Zal (ph) is the co-founder and CEO of the homegrown developers Zayyad Development (ph). Only a half hour from the bustle of

the Abu Dhabi capital, Nadia said she wanted to create and escapist retreat for the successful and hardworking.

UNIDENTIFIED FEMALE: Here is an opportunity to create communities and spaces that really make people stop and switch off and connect with what

really matters and that's really the inspiration for our flagship project on Nurai.

DEFTERIOS: Despite pricetags of $8 million to $12 million, all 23 villas have been sold.

The island's master plan includes a spa, marina, gym and endless tranquility.

It's still a few months away from completion, but the island's boutique hotel, Zayyad Retreats (ph) is up and running. Housing 32 opulent

retreat villas, each with a private sun deck, butler, launch pool, fire pit and direct access to the beach.

DEFTERIOS (on camera): The beach retreat is in the midst of a soft launch until March. The resort will target local residents, of course,

even be open for corporate events. But they want to tap into the emerging markets from here stretching all the way to China.

UNIDENTIFIED FEMALE: WE are this exclusive destination resort. We compete with the Maldives, we compete with Hawaii, we compete with anywhere

that tries to attract people to that exclusive but also casual luxury. We call ourselves barefoot luxury.

DEFTERIOS (voice-over): Just a short boat ride away from Abu Dhabi's key attractions, it promises those with itchy feet close entertainment for

when relaxing gets too much.

UNIDENTIFIED FEMALE: Nowhere else can you be 12 minutes away from a capital city where you've got the Louvre being built, you've got Formula 1

on your doorstep. You can go and play on a championship golf course. And it's all here, it's all right there.

DEFTERIOS: Giving this island getaway its most unique selling point.

John Defterios, CNN, Abu Dhabi.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BECKY ANDERSON, HOST: At just after half past 8:00 in the UAE, wherever you are watching, a very warm welcome to CONNECT THE WORLD with

me, Becky Anderson. The top stories for you this hour.

Fighting in Yemen's capital continues. Yemen's information minister tells CNN the presidential palace in Sanaa, the capital, has been

completely taken over by Houthi rebels. Reuters News Agency reports that a Houthi leader says they are, quote, "protecting the palace against security

forces trying to steal weapons and have not taken control if it," end quote.

Well, the ISIS militant group demanding $200 million for the release of two Japanese hostages. The speaker in a new video says it is

retaliation for Japan's involvement in the coalition fighting ISIS, and that the ransom must be paid within 72 hours.

Belgian authorities suspect this 27-year-old from Brussels is the ringleader of the terror cell that was raided last week in Verviers. His

name is Abdelhamid Abaaoud, and officials think that the other suspects contacted him in Greece as they planned an attack that was foiled by

Thursday's raid.

Syria and Iraq remain a battleground for ISIS, but beyond the crisis there, the situation across the Middle East is even more volatile as we

start 2015. Yemen right in the thick of it, the hot spot now, with turmoil and clashes between government and opposition forces.

I spoke to Faisal al Yafai, a regular contributor to the show and the chief commentator for "The National" newspaper here in the UAE about the

active players in some of the region's simmering situations. Have a listen to this.

(BEGIN VIDEOTAPE)

FAISAL AL YAFAI, CHIEF COLUMNIST, "THE NATIONAL": Let's look at two stories that have been in the news the past week, and let's set them in

context. Let's start in Yemen, here at the south, on the tip of the Arabian peninsula.

Yemen has been a problem for the last six months, in particular because of the Houthi rebels, who came down from the north and took control

of the capital, Sanaa. In the last week, they kidnapped the most senior aid to the Yemeni president and have still not told us what they're going

to do with him.

Go back to that map and you see Saudi Arabia, very concerned about what happens on its southern border, but at the moment, unwilling to give

money or arms in case it falls into the hands of the Houthi rebels. Why? Because the Houthi rebels are supported by Iran, its longtime foe and

regional rival.

ANDERSON: Let's move from Yemen, then, up through Saudi, because you clearly see a problem for Saudi and others on its border down here. Go

north.

AL YAFAI: So, here's the northern border, Saudi Arabia and Iraq. A month ago, they had an infiltration from ISIL. They came across the border

with a suicide bomber and killed a very high-ranking Saudi general. The Saudis are now building a border stretching all the way across here, $600

million --

(CROSSTALK)

ANDERSON: A border wall.

AL YAFAI: A border wall to keep out ISIL and keep out any of the other militant groups that are moving across Syria and Iraq, which has, as

we've talked about before, become one theater.

ANDERSON: We're seeing the continued presence of ISIS. It appears it may be gaining ground, not losing ground at present. So the fight against

extremism alive in this region. Let's go to Lebanon, where the other recent story has been.

AL YAFAI: So, Lebanon almost sounds like the introduction to a bad joke. An Israeli, a Lebanese, and an Iranian walk into Konitra (ph). But

actually, it's an extraordinary story. This you see the funeral for the son of Imad Mughniyah, who was killed in a military strike by the Israelis

on Syrian soil.

No Syrians involved in that. They were Iranian generals, there were Lebanese operatives, Hezbollah, and the Israelis came across the border.

An extraordinary situation, which explains to you quite how much Syria, which started as an uprising, has become this space where all of these

other players are playing out their own politics.

ANDERSON: Hours from now, we'll hear the State of the Union address by President Barack Obama. Clearly US security and interests at play as we

look to this region. Now, the State of the Union is generally for a domestic audience. What should, though, we expect so far as any foreign

policy remarks are concerned?

AL YAFAI: Well, President Obama will doubtless be talking about what has happened in the last few months, the stuff that will be in the American

public's mind. That will probably be Yemen, if only because of the Charlie Hebdo attacks in Paris, which were linked to Yemen.

It may also involve some talk about Israel and the peace process and what has happened just now in Syria. I suspect that President Obama is

going to try and minimize expectations. Another two years before he leaves the presidency, another year before he gets into the campaign.

And if we've learned anything in the last year, it is that you cannot handle the problems piecemeal. When ISIL exploded last summer, it did so

across two theaters, Syria and Iraq. So, I don't think President Obama is going to want to wade into this intractable conflict. He's going to try

and minimize expectations.

(END VIDEOTAPE)

(AUDIO GAP)

ANDERSON: -- Yafai speaking with me. If you were to look to the West of that map, another Arab country also facing its worst crisis since the

overthrow of its leader four years ago. And that is Libya. Two governments there now fighting for power, one recognized internationally

while the other is self-declared.

The country has witnessed ongoing clashes and a spate of kidnappings, the latest being Libya's OPEC representative, it seems. He's not been seen

since Thursday.

Meanwhile, UN-brokered talks in Geneva ended this week with the conflicting factions agreeing only to more talks. Let's bring in

Bernardino Leon. He's the UN special envoy to Libya, joining us now from Tunis, where the UN is based.

You called the recent truce a "significant step towards ending months of violence." It does, though, seem on the ground any truce has been

breached. You must be disappointed. But are you really surprised, sir?

BERNARDINO LEON, UN SPECIAL ENVOY TO LIBYA: Could you repeat the question, please? I couldn't understand well.

ANDERSON: Yes. I wonder if you are disappointed but ultimately not surprised by the fact that at present, it seems, no cease-fire between

rival factions, which has Libya spiraling into chaos.

LEON: Well, the information we have been able to gather so far is that the cease-fire is starting to be applied, but as always in these kind

of situations, not 100 percent. There are breaches in Ras Lanuf and in Sabratha.

We are dealing with these breaches. We are working on some verification mechanism. And we hope that in the coming days, all fronts

will abide and will be able even to take further measures beyond the freeze fire, like disengagement and all those measures.

ANDERSON: Are you confident, sir?

LEON: It's difficult to be confident in Libya, taking into account the complexity of the situation. We are working by the day. For the

moment, we have two very recent cease-fire statements from both camps. Our team is working very intensively with both camps.

And we will see. I hope the message from the Libyans, from the Libyan society, which is that this must stop, the fighting has to stop, will be

heard by the militias --

ANDERSON: Right.

LEON: -- and by the military actors in both camps.

ANDERSON: You have pointed out that a truce will allow much-needed humanitarian aid to fly in -- flow into the country. Late last year, the

Libyan health minister told me on this show that the UN is actually making things worse, not better, certainly by declaring Libya unsafe, which meant

that international organizations, including the UN, had to pull out. Are you now encouraging international organizations and, indeed, yourselves at

the UN, back in?

LEON: The situation on security terms is not safe at the moment. We have to be very careful when we take these kinds of decisions. The

evacuation was decided when the fighting was very high in Tripoli. And we have to remember that fighting has increased in other areas in the country.

We are trying to go back. We have had beyond the political mission -- the UN political mission, humanitarian teams have been going to different

cities in the country. We are doing our best. But as you know, there is also a surge --

ANDERSON: Sure.

LEON: -- in terrorist attacks in the last few weeks. So -- and UN has been declared a target. So, we are trying to strike the right balance

between both elements, the threat and our wish to provide humanitarian support.

ANDERSON: You rightly point out that the UN mandate is to carve out a political dialogue, which has clearly failed at this point. Meantime, the

security situation continues to deteriorate. And as you explained to me last time we spoke, the deteriorating security situation, the evidence of

Islamic extremists in some cities, is not part of the UN's mandate.

If not yours, whose is it? Because the international community isn't willing to get involved. So, do you, for example, support more involvement

by regional players, like Egypt or Saudi or the UAE, where we're based?

LEON: Well, let's say that we all have to work in parallel. What the United Nations is trying to do is to broker these political

settlements, because this will be also the best situation to address terrorism.

We don't have the means and we don't have the mandate, as you very rightly pointed out. But others have means and possibilities to help the

Libyans. And I believe that there are moderates in both camps, and that all these moderates see terrorism as a common threat.

So, for them, our call is that they work with the international community, with those who can provide help. Because this is a very serious

threat, and as I said before, it's becoming more and more concerning.

ANDERSON: And with that, sir, we will let you go. We thank you very much, indeed, for joining us.

Live from Abu Dhabi, this is CONNECT THE WORLD with me, Becky Anderson. Coming up, the IMF has delivered another reminder of the

economic uncertainty ahead. How its latest global growth prediction will impact this year's World Economic Forum in Davos. That's next.

And a Russian spy ship is making its second appearance on the shores of Havana, but who is it there to spy on? We're live in Cuba for that

story in about ten minutes.

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ANDERSON: Forty-eight minutes past the hour here in the UAE, welcome back, this is CONNECT THE WORLD, I'm Becky Anderson for you.

Some of the world's -- let me start that again. Some of the greatest economic minds in the world are gathering in the alpine resort of Davos, or

I'm sure at least that's how they'd like to be tagged. The annual World Economic Forum begins Wednesday in Switzerland.

Neither US president Barack Obama nor the Russian president, Vladimir Putin, will be among the attendees at Davos this year, but in a rare move

for Chinese leaders, the premier will appear at the summit. He'll visit as China, the world's second-largest economy, posts its slowest growth in more

than two decades. The economy grew by 7.4 percent last year, just missing the government target of 7.5.

The International Monetary Fund also predicted a slowdown for the world economy, cutting its outlook on global growth. Joining me now to

look at the implications of these predictions on the year's World Economic Forum and certainly its atmosphere is CNN's emerging markets editor John

Defterios.

They already had a lot on their plate. This is going to add to it. You are live in Davos, where world leaders are gathering. A fairly ominous

way to start the forum, with an IMF downgrade for growth.

DEFTERIOS: Yes, indeed, Becky. Think about it, this is a downgrade almost across the board with the exception of the United States, which the

IMF is suggesting can grow 3.5 to 3.6 percent in 2015. But overall, it's a downgrade of 3.8 percent, that they made, that prediction back in October,

down to 3.5 percent.

I've picked out some countries I wanted to talk about here, because we're starting to see the influence of lower oil prices starting to trickle

through. Now, China delivers 7.4 percent growth in 2014. By the way, that was the lowest in 24 years. The IMF suggesting that will be 6.8 percent

this year and going down to 6.3 percent next year. So, this is going to have an influence on demand for oil.

And look at Nigeria. Nigeria downgraded by 2.5 percent for 2015, down to 4.8 percent. And Saudi Arabia, that number is pretty weak for Saudi

Arabia, 2.8 percent getting knocked down by 1.6 percent.

And Russia had the biggest downgrade, Becky, at this stage, with a contraction in 2015 of a negative 3 percent because of the sanctions,

getting downgraded by 3.5 percent since October alone. And it's interesting, the European Bank for Reconstruction and Development

suggesting that the contraction could be nearly 5 percent this year.

So, the Russians that will be coming here to Davos will be talking behind the sidelines here, how do they manage the sanctions, and whether

there's going to be an olive branch to the European Union and the United States. Can they restart talks over Ukraine to see if these sanctions can

be eased?? Because you can see right now, the pain will be quite dramatic.

But as you suggest, starting the meeting with this sort of tone and a ratcheting down of growth, with the exception of the United States.

ANDERSON: Yes, it's going to quiet down those parties, I would expect. I wonder whether you'll think there'll be a recognition of the

danger that lower oil prices could have on security around the world, not least regional security here in the Middle East?

DEFTERIOS: Yes, in fact, Becky, I was listening to your interview with the UN envoy and also with Faisal a little bit early about the

turbulence we're seeing. We're suggesting here that they'll wake up to the reality.

Because there's a debate taking place tonight behind the scenes, it's kind of the alter-Davos, this is the governors of the oil and gas CEOs

meeting with some of the ministers that are here in Davos. And you can almost call it an Arab Spring 2.0, what we're seeing today.

And the drop in oil prices and the drop in gas prices will put additional pressure on Yemen. It'll put additional pressure on Libya. And

you saw that downgrade for Nigeria and you saw the downgrade for Russia. This is going to fervent more tensions going forward, and nobody really

knows where the end game is right now.

They're acknowledging that it's a power over market share -- a power play over market share with Saudi Arabia. They don't know when this is

going to recover, whether it'll be as early as the second half of 2015 or not.

ANDERSON: John Defterios in the house, or just outside the house, as it were, in the snow in Davos for you this evening. Talk to you tomorrow,

John.

Live from Abu Dhabi, this is CONNECT THE WORLD. Coming up, a Russian spy ship docks in Havana ahead of a high-level US visit. Coincidence or

power politics? That's next.

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ANDERSON: Is it a bird, is it a plane? No, it's a Russian spy ship, gliding into port in Havana, Cuba, just a few hundred yards from our bureau

there. The Viktor Leonov visited Cuba before in 2014, then, some suggest, to eavesdrop on US telecommunications.

Well now, it's back just a day before a high-level US State Department delegation visits the island. Patrick Oppmann following the story from

Havana and joins me now, live. Patrick, what do we now?

PATRICK OPPMANN, CNN INTERNATIONAL CORRESPONDENT: The Russians have come back, at least for a short visit, Becky. And just behind me, here, we

got a surprise visitor this morning when the Viktor Leonov, a high-tech Russian spy ship glided into port and set up -- dropped anchor just

hundreds of yards away from a building where most of the international press is located in Havana.

You can see the Russian flag flying. It's bristling with high-tech satellite communications equipment that's used to suck up data from,

presumably, the United States. And this ship has been here before. It cost a bit of a furor last year, particularly among opponents of

normalizing relations with Cuba.

And of course, that it's arriving just a day before the highest-level delegation from the United States is set to come here and begin the process

of normalizing relations, it can only be expected that it will begin to stir up some controversy yet again.

But very interesting, though, is that neither the Cubans nor the Russians seem to be keeping the ship's presence here a secret at all.

We're in downtown Havana, this is where tourists, cruise boats dock. So all this ship's mission might be sort of a classified intelligence

gathering type mission, its presence here is not a secret at all.

For now, for all the world to see, the Russians have come back and apparently are going to begin monitoring communications in the US just 90

miles away, Becky.

ANDERSON: Patrick, thank you. Out of Havana for you this evening.

I'm Becky Anderson, that was CONNECT THE WORLD out of the UAE. Thank you for watching. From the team here, it is a very good evening.

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