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Connect the World

Sunset Deadline Passes in ISIS Hostage Crisis; Election Results Stir New Grexit Fears; Fujairah Rising; New Global Energy Hub; Eye on Gas; Gas Strategy

Aired January 29, 2015 - 11:00   ET

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

FREDERIK PLETGEN, HOST: A tense waiting game as the deadline for a potential prisoner swap between Jordan and ISIS passes and leaders and

loved ones from Amman to Tokyo nervously wait for news of the fate of those whose lives are at stake.

We've got the story covered from all angles with reporters in Jordan and Japan and analysts right here in London.

Also ahead, a scene of utter devastation after a gas explosion at a maternity hospital in Mexico City. We'll take you there live.

(BEGIN VIDEO CLIP)

PLEITGEN: Nowadays almost every protest ends with someone not going home.

(END VIDEO CLIP)

PLEITGEN: And the perils of protesting in Egypt. The story of an activist whose commitment cost her her life.

ANNOUNCER: This is the hour we connect the world.

PLEITGEN: Good evening, everyone.

We begin with breaking news out of Mexico City. Government and emergency officials now say at least seven people, including four children,

have died after a gas explosion at a maternity hospital. The truck was delivering gas to the hospital when there was a leak followed by a massive

explosion. CNN in Espanol correspondent Gustavo Valdes is with us from CNN Center in Atlanta.

Gustavo, first of all tell us what you know about the current situation and how emergency services are coming to terms with it?

GUSTAVO VALDES, CNN ESPANOL CORRESPONDENT: Good morning. Yes, what we know is that the authorities in Mexico are desperately asking for more

help. They're having troubles getting ambulances and rescue workers to the area. This happened in the western end of Mexico City. As you know, it's

a big city. And they're having problems trying to get people to come and help. We're seeing the evacuations by air, by ambulances, whatever method

they can do.

Rescuers have been working since very early this morning. This happened around 7:00 a.m. with gas tank was delivering gas to the kitchen

section of this hospital, which is a maternity hospital.

Authorities say that the hose delivering the gas ripped off. Something sparked a fire. and the building exploded.

We do not know yet if all the damage we're seeing is solely because of the explosion created by the tanker or if there were other issues like we

know a hospital might have oxygen or other gases used on the daily operations of a hospital.

At least 30 to 40 percent of the building has collapsed. This is making the rescue efforts difficult. People on the ground say that there

are babies still under the rubble. They're trying to get to them. And they're trying to evacuate them to other hospitals.

As you said earlier, at least seven people have been confirmed dead. And the authorities are trying to find out how many more might be trapped -

- Fred.

PLEITGEN: Yeah, Gustavo, and those are absolutely horrifying pictures that we see there from the scene. And it certainly looks as though there

might be other victims in this explosion.

Tell me those people who have been brought to hospital. What do we know about the types of injuries do they -- that they have. Is it mostly

from debris that was flying around? Is it mostly things that might have fallen on top of these people? What sort of injuries do they have?

VALDES: This is the information we have so far and that's correct. Initially the first people who were able to be evacuated were people who

sustained injuries because of the flying glass, the debris that hit him. Some of the pictures on social media show a bloody faces getting into

ambulances. The more severe ones I saw -- we have seen through these images from our affiliate are being air evacuated.

But the extent of the injuries we do not know. Obviously some of them were severely injured because now the reported dead are some of those

people who at least were able to be pulled out of the rubble earlier.

But this is a fluid situation. The local authorities are about to have a press conference in Mexico City to give more details hopefully. And

we are expecting for those.

PLEITGEN: All right, Gustavo, thank you very much for that one.

Cross over now to Mexico City to our producer Fidel Gutierrez. Fidel, tell me from your vantage point, from Mexico City, what are people saying

there? What's the latest information that you can give us?

FIDEL GUTIERREZ, CNN PRODUCER: Well, the last updated (inaudible) it's about seven people dead. They are about -- they are talking about

four babies and three adults. So, this just the mayor of the city has confirmed.

And the (inaudible) is in touch with the local authorities. He has said he has sent just a couple of elements from different secretaries.

They are -- it's been sent to the place to help the people and help to try and find out if there is people trapped inside of the hospital.

So, this is the last update that just the authorities have said.

PLEITGEN: One of the things with explosions like that is that they are very dangerous. The question is always will that building collapse now?

It certainly looks that there is substantial damage. And we can see there on these live pictures the helpers that seem to be on the scene there

trying to go through the debris.

One of the things that we don't see there, however, is heavy equipment for them to try and maybe lift things off of people who could possibly

still be trapped underneath there.

Fidel, what are you hearing about the rescue efforts that are going on right now? Is it enough people there? Is there enough resources there?

GUTIERREZ: Yeah, well, before just in the morning there were a lot of emergencies, people helping to transporting all the injured people.

They've been transporting to the nearest hospital to the area. It's about maybe -- they are talking about around 20 babies, more than 20 babies and

more than 30 adults.

So, they are just trying to help.

There has been a lot of police and emergency helicopter that have been transporting to these injuries.

But now we can't say if there are trapped people inside of the hospital. Authorities are working. They also have said that we'll use

some special box for trying to track if there are some people inside or not.

Yeah.

PLEITGEN: All right, thank you very much Fidel Gutierrez. You will, of course, keep us updated on the situation there. As we can see a lot of

destruction, certainly a very, very big scene there of destruction there in the west of Mexico City as that building there partially has collapsed and

as we've just heard parts of it are threatening to collapse.

All right, we're going to turn now to our other top story. And Jordan and Japan are on the edge right now as ISIS has demanded the release of a

convicted terrorist, but their deadline for the release has passed.

This is where we stand at the moment. The fate of two hostages held by ISIS remains unclear. The audio message said Jordanian air force pilot

Moaz al-Kassasbeh, here seen on the left, and Japanese journalist Kenji Goto on the right side of your screen, could be saved if Jordan releases

would-be suicide bomber Sajida al-Rishawi -- it's the person that you see in the center of those photos.

These were the terms: the extremists want al-Rishawi brought to the Turkish border just north of the ISIS self-declared capital of Raqqa, which

is in Syria, of course. All that was supposed to happen by sundown Mosul time in Iraq. The deadline passed about 90 minutes ago.

This was the scene at the border crossing as the sun was going down. Negotiations might still be going on behind the scenes. We will have live

reports from our correspondent in just a few minutes, but let's get you more on this developing story. Will Ripley now is live from Tokyo. And

Will, we've seen the scenes there at the border crossing, Japanese journalists who are still out there. Certainly Japan is on the edge.

Jomana Karadsheh also we have in the Jordanian capital.

But let's go first to you Jomana, what's the sense right now in Jordan? How are people dealing with things there?

JOMANA KARADSHEH, CNN INTERNATIONAL CORRESPONDENT: Fred, people really are on edge here. Very nervous about what the outcome here might

be. Of course the issue is the Jordanian government in the last couple of hours. We've heard from officials here saying that Sajida Rishawi is still

in jail. She has not left Jordan. So that means, based on these public comments that are made by the government, that she would not make it for

that planned exchange, that demanded exchange on the Turkish-Syrian border.

And what we're hearing again, Fred, from the Jordanian government reiterating their same position, saying, yes, we will release Sajida

Rishawi, as we said yesterday. But they are putting on their own conditions, their own terms to this saying that they will only do this if

they get proof of life. And this has been the crucial issue for the Jordanian government who, as we've heard from officials, has had indirect

negotiations through indirect channels to try and secure the release of al- Kassasbeh. And they say for some time now they have not received that proof of life.

And again, we're stressing that point today saying they will do this, they will fulfill their promise of releasing her, but only if they get the

proof of life.

Now the other major issue here, Fred, is what the Jordanians are offering. They're offering an exchange of Sajida Rishawi for Moaz al-

Kassasbeh, but this is not what ISIS is demanding, of course. As we know from the previous recordings is they want an exchange with Sajida Rishawi

and Kenji Goto and threatening to kill Moaz al-Kassasbeh.

Very uncertain times right now. And we're also hearing from our producer who is with the family of Moaz al-Kassasbeh right now that they

are also still appealing, they're still calling for the release of their son, saying we plead to you on behalf of the Jordanian people, the

Jordanian tribes. He is the son of the Jordanian people as his father put it about half an hour ago speaking to reporters there, Fred.

PLEITGEN: Yeah, Jomana. And we saw those demonstrations in the past couple of days where people are demanding that the government do whatever

it takes to try and get Moaz al-Kassasbeh released from ISIS. I want to thank you very much Jomana.

We're going to cross over to Will Ripley now. And Will, of course Japan is also very much on the edge. Relatives of the Japanese hostage

have come out and have also demanded that everything be done for his release. Where do things stand in Tokyo right now?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, publicly the government is not saying much right now, Fred, and it's because the reality

is there's probably not much they can say. As Jomana pointed out, ISIS is making a demand and yet refusing to offer the Jordanian government what it

needs to make it happen, which you know keep in mind there was another ISIS video where they were demanding a $200 million ransom. But when the

Japanese government tried to reach out to them directly they got no response.

So, what we've seen over the last week here is ISIS continuing to make rules, break rules, set deadlines, let deadlines pass. They executed one

Japanese hostage, Haruna Yukawa. And now for the first time we are hearing from Kenji Goto's wife who reveals in a new statement that was posted

online by a nonprofit for freelance journalists and also a new audio recording. She reveals that she has been in contact with Kenji Goto's

captors, exchanging a number of emails, trying to secure his release.

The last email that she received was about 24 hours ago urging her to get his -- this message, this new ISIS threat out to the world, or warning

her that her husband would be next.

I also want to play another portion of her audio recording that we just got in, Fred.

(BEGIN VIDEO CLIP)

RINKO GOTO, KENJI GOTO'S WIFE: My husband and I have two babies (inaudible). Our baby girl was (inaudible). I hope our oldest daughter

will (inaudible) soon will get to see her father again.

I want them both to grow up knowing their father.

My husband is a good and honest man who went to Syria to show the plight of those who suffer. I believe that Kenji may have also been trying

to find out about the (inaudible) situation.

I was extremely saddened by the death of Haruna and my thoughts go out to his family.

I know all too well what they are going through.

(END VIDEO CLIP)

RIPLEY: Imagine, Fred, the agony for her at this time doing whatever she can now speaking out to try to secure her husband's release.

One thing that she also said in a statement here, "I fear that this is the last chance for my husband and that now we only have a few hours left"

-- Fred.

PLEITGEN: Yeah, Will, certainly you can hear the despair in her voice. And there is that feeling that we are now in a very decisive phase

here in this whole drama. Thank you very much, Will Ripley there in Tokyo.

And we want to take you now back to Jordan where government spokesman Mohammed al-Momani is on the line to speak to us.

First of all, sir, welcome to Connect the world.

MOHAMMED AL-MOMANI, JORDANIAN GOVERNMENT SPOKESMAN: Hi, Fred. Nice to be with you.

PLEITGEN: Thank you very much.

Sir, the latest that we have from your government is that so far you're seeking proof of life for Moaz al-Kassasbeh. You have not received

that at this point, however you do say you are willing to release Sajida al-Rishawi if, in fact, you -- the exchange with Mr. Kassasbeh happens.

Are we any further in all of that? Do you still have negotiations going on? Has there been proof of life? Has anything developed so far?

AL-MOMANI: Thank you, Fred.

You're right, we have said publicly that we would like to see a proof of life. We requested that. We have not received any indication or proof

of the life of the Jordanian pilot. And that increased the level of suspicion we have.

What we said yesterday is that we are willing to do the exchange for between Sajida Rishawi and our pilot, Moaz al-Kassasbeh, but only if we see

a proof of life first and then we can go further with that exchange.

This is where we stand now. And we have not, as of this moment, received anything that will indicate to us and prove to us, that our pilot

is alive.

PLEITGEN: Why haven't you flown Ms. al-Rishawi to Turkey yet. Because their demand is for her to go into ISIS controlled territory from

Turkey. Wouldn't that at least be some sort of a gesture to move things forward and maybe get a response from their side?

AL-MOMANI: We, through our communication, we think that anything we will do should be done with logic and reason. And we think that we should

see a proof of life at this point before we talk about any further steps. The tape that is connected to DAISH (ph), demanded the release of Sajida.

And we said we are willing to do the exchange, but we want to make sure that our pilot is alive and they have not responded to this yet.

So, once this is done, then we can talk about any further steps of moving Sajida to anywhere or talk about the exchange with details.

PLEITGEN: How close is your coordination with Japan? And to what extent are they a part of your strategy moving forward? Because they're

obviously very interested in getting Kenji Goto released. You're very interested in getting your pilot released. To what extent are you working

together and trying to forge a coherent strategy.

AL-MOMANI: We actually work with our Japanese friends very closely. They have a team in Amman. And they are in close and daily contact with

our institutions and security institutions and intelligence department.

We share information. We plan on different steps. So we are in constant and continuous coordination with our Japanese friends, because we

both actually are going through the same problem dealing with this issue.

PLEITGEN: Mohammed al-Momani, we wish you all the best with those negotiations. Thank you very much for joining the program.

And also still ahead this hour, we have a Greek crisis no question about it. That's what a prominent official in Europe told me point blank.

Carl Bildt spells out what he thinks should happen in 20 minutes time. You'll see that.

And heightened tensions along the Israeli-Lebanese border after a deadly attack. Now signs things may be easing. We'll get the latest in a

live report. We'll come back.

(COMMERCIAL BREAK)

PLEITGEN: Welcome back. You're watching CNN. This is Connect the World. I'm Fred Pleitgen. And I am coming to you live from London. And

we are following breaking news out of Mexico City the past let's say about 15 minutes or so.

We've learned that there are now at least seven people dead in that gas explosion at a maternity hospital in Mexico City. Four of the dead are

children. A truck was delivering gas when there was a leak followed by a massive explosion, part of the hospital is now collapsed and more than 50

people are injured, including some two dozen children.

We'll continue following the story and bring you updates as we get them.

And right now we're joined by the president of the Red Cross in Mexico Fernando Suinaga. Sir, first of all I have to ask you for an update on the

situation. Do you know how many people are killed, how many injured? What's the situation like at the scene?

FERNANDO SUINAGA, PRESIDENT, RED CROSS IN MEXICO: At the moment the government information released that seven people have been killed and that

more than 50 people is injured. They are not -- there are different kind of injuries, but there are the ones that are with (inaudible) in just

hospital. We already took them. We used more than 20 (inaudible) from the Mexican Red Cross. And we have more than 60 volunteers there, because now

we are in the process of reviewing and cleaning all the collapsed structure about 30 percent of the hospital held down. So, we are looking now to see

if we can find some persons under the collapsed structures.

That's where we are now.

We are working with the government with the fire department and with the police and (inaudible). So we are all together trying to save the

people that in this case have been in this accident.

PLEITGEN: We're seeing live pictures of what's going on right now. And it certainly seems like there's a lot of people there going through the

debris. There's a lot of helpers who seem to be -- and rescue workers -- who are on the scene there right now. How well are you informed about

whether or not there might actually still be people under there? I know you're looking for people, but are you certain that people might still be

buried somewhere down there?

SUINAGA: Well, the people that was over the structure, it's already taken to some different hospitals as I told you, so we -- the only thing

that we have to check is if there is people under this collapsed structures from the hospital. So we have to move these materials and hope we don't

find anybody down there. We might be finding some.

PLEITGEN: Sir, thank you very much for joining the program. And all the best in the efforts going forward.

We're moving along now. And Israel says it's received an indirect message from Hezbollah saying the militant group wants to de-escalate

tensions along the Israeli-Lebanese border. That message was relayed via the UN interim force in Lebanon, UNIFIL that follows a deadly spat of

violence in the region. Two Israeli soldiers were killed in a Hezbollah missile attack in the disputed Shebaa farms region on Wednesday. Seven

were injured.

Israel responded with shelling the south of Lebanon.

A Spanish peacekeeper in Lebanon was killed in the crossfire. It's unclear which side hit the UN position.

We have Atika Shubert show is standing by now in northern Israel on the border with Lebanon and Nima Elbagir who is in Beirut in Lebanon. I

want to get to Atika first. Atika, of course right now the tensions are still high. What's going on right now? Is it fairly calm?

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: It's been very calm. It's more than 24 hours since the attack. And we haven't seen anything

else to escalate the situation. In fact, Israel's defense minister Moshe Ya'alon said on army radio today that they are getting the message from

(inaudible) does not want to see any more attacks.

PLEITGEN: It looks like we've lost Atika's signal there. I want to go over to Nima Elbagir -- oh, actually she's back. She's back. There we

go.

Sorry, Atika, we lost you for a second. Continue.

No. It looks like we've lost the signal again.

Of course, it is a very difficult region to do live broadcasts from.

We're going to move over now to Nima Elgabir who is in Beirut in Lebanon. And Nima, we've heard about this apparent message of de-

escalation that came from Hezbollah. And it really doesn't seem as though at this point with the conflict raging in Syria that Hezbollah has either

the appetite, the manpower or the resources to open another front, do they?

NIMA ELBAGIR, CNN INTERNATIONAL CORRESPONDENT: Absolutely.

And domestically the sense is that Hezbollah has retaliated for that attack 10 days ago where a number of Hezbollah fighters and an Iranian

revolutionary guard commander were killed. There is very little appetite here. The sense is for a tit-for-tat. And that's always the specter

really that looms over any of these incidents between Israel and Lebanon, the concern that it could mushroom into the proportions of the 2006

conflict.

With this purported message of de-escalation, the sense here is that the temperature is starting to go down, that both sides are expressing at

least at this point a desire not to return to those battle days.

We are looking towards Hassan Nasrallah, the head of Hezbollah's speech tomorrow just after lunchtime here local time. That will give us

that final sense of whether the two sides are ready for now to step away from this, Fred.

PLEITGEN: Yeah, absolutely, Nima.

And of course we know in that region even if the temperatures appear to be going down, as you said, it is one that's very volatile and where

things ignite very quickly.

What's the mood now in Lebanon right now? Because I know people there are afraid anyway of a spillover of the Syrian conflict. A lot of them are

very uncomfortable with the role that Hezbollah is playing in Syria and now they have this going. How does that play into the entire mood there in

Lebanon?

ELBAGIR: That's a very good way of describing it. There is already this almost base level of tension that people here have been trying to grow

accustomed to living with, because o a spillover of that instability from Syria. The sense of that is such an encroach upon their daily lives.

In addition you have a pretty volatile situation domestically politically. A government at standstill, a lot of basic services that

aren't being delivered and then now on top of that this potential reignition sparks beginning to fly over that border.

That takes things up to a level that people say already our lives are difficult, the last thing we need is this.

The hope is that for Benjamin Netanyahu, for the Israeli prime minister, looking down toward that countdown to the Israeli elections, that

the political calculus right now will not add up. That's what people are pinning their hopes on, Fred.

PLEITGEN: Nima Elbagir, thank you very much for that insight from Beirut.

And we are live from London. This is Connect the World. And coming up, will there be a showdown between the new Greek government and its

bailout backers in Europe? If so, what might happen? That's one of the questions I put to the former prime minister of Sweden during an interview

coming up in five minutes.

(COMMERCIAL BREAK)

PLEITGEN: Welcome back, this is CONNECT THE WORLD, and these are the top stories this hour.

It's now been two hours since the deadline set by the ISIS militant group has passed, and there is no word on the condition of the two hostages

who are under threat. ISIS had demanded the release of a convicted terrorist, seen here in the middle, by sunset.

Mexico City officials say at least seven people, including four children, have been killed in a gas explosion at a maternity hospital in

the western part of the city when a hose from a gas delivery truck burst and caused the blast, collapsing part of the hospital. Officials also say

at least 54 people were injured, including 22 children. And an unknown people, including babies, might still be trapped in the building.

Malaysian authorities have formally declared the loss of Malaysian Airlines Flight 370 an accident. The plane appeared -- disappeared last

March while flying from Kuala Lumpur to Beijing. The government says all 239 people onboard are presumed to have lost their lives.

We turn now to one of those top stories. Japan and Jordan in the grips of a hostage crisis that is still ongoing this very minute. Sajjan

Gohel joins me now to discuss this. He is the international security director for the Asia Pacific Foundation. Sir, thank you very much for

joining us today.

First of all, I think the thing that stuns many people is you have Japan involved in all of this, you have Jordan involved in this, and of

course ISIS. There doesn't seem to be a coherent strategy that Japan and Jordan have. It seems one is fighting for their hostage, the other one is

fighting for their hostage. Is that the sense that you get?

SAJJAN GOHEL, INTERNATIONAL SECURITY DIRECTOR, ASIA PACIFIC FOUNDATION: Very much so. And in the middle, as you mentioned, is ISIS,

who know how to exploit the media for the oxygen of publicity. They're very skilled at strategic communications.

I've heard people mention that they seem to be somewhat disorganized, can we take them seriously? But remember, ISIS control the agenda. And

what does it say about the international community's inability to get a direct result from this?

The other factor that doesn't get mentioned a lot is that recently ISIS failed in taking the town of Kobani. That had become their obsession

in the last few months. In many ways, they could be raising this hostage issue in order to deflect their own defeat in Kobani.

PLEITGEN: So, do you think that this is a serious offer that's on the table right now? Because there are many people who are saying why on Earth

would they want Sajida al-Rishawi? Because she's quite insignificant in the bigger picture, isn't she?

GOHEL: There's enormous symbolism with al-Rishawi. She was part of a plot back in November 2005 to target several hotels in Amman, Jordan. She

was the only suicide bomber whose device didn't detonate.

Now, the group that was behind it was led by a woman, Sabal (ph) Zarqawi, the Jordanian terrorist who introduced beheading videos in Iraq,

fermented sectarian conflict. ISIS is, in many ways, the successor group to them.

There's often been this demand in the past for her release. When the Jordanian pilot had actually been taken by ISIS fighters in Raqqa last

year, one of the first demands was for al-Rishawi to be released. And now they're again restating it. It's symbolism. They see this as a connection

to the past, to al-Zarqawi.

PLEITGEN: ISIS is obviously a group that is very difficult to deal with at any time, certainly in a situation like this one. How do you

communicate with them at this point? How do you make your side known to them? How does all of that work right now, especially since we are in the

11th hour if possibly not even later than that right now in these negotiations?

GOHEL: Unfortunately, it is very one-sided. ISIS will make the demands. They are unlikely to negotiate. In the past when they've asked

for ransoms to be paid, there's perhaps been a degree of negotiation with third parties. We know that some European countries have provided funds

for their nationals to be released. But ultimately, what ISIS wants is attention, it wants notoriety.

PLEITGEN: Why do you think they don't want -- I'm sorry to jump in here. Why do you think they are not asking for a ransom? Because

originally, they wanted those $200 million. It's clear they want money to fund their operations. Why have they gone away from that?

GOHEL: One thing about the group itself is that it's not a top-down structure. Yes, at the head is Abu Bakr al-Baghdadi. But there are many

autonomous, decentralized elements within ISIS that have their own leadership and their own command.

And that has, perhaps, been their greatest strength is that they operate in this very fragmented way. Which they're allowed to then use as

their ability to get their message out, negotiate independently. And why the constant change tact. One day it's asking for a ransom, the next day

it's for a prisoner exchange.

But the main thing is always the obsession, is to use new media to get their information out, to control the narrative. That is always ISIS's

way.

PLEITGEN: And you were touching on it before. Do you think that the reason why they have come out with these videos of the Japanese hostages is

that they feel that they're losing on the battlefield now? Do you think this is a group that feels under pressure, that feels like it might be

getting difficult for it?

GOHEL: There's no doubt that they've taken a lot of hits in Kobani. It became, effectively, their Stalingrad. They didn't need the town, but

they became obsessed with it because they felt that it was a strategic point for them. Poured fighters into it, they lost.

PLEITGEN: Because on the battlefield, it was quite insignificant to them, wasn't it, Kobani?

GOHEL: Yes. It's not a big thing in terms of the grand scope of their so-called "Islamic State" that they've wanted. They could have gone

past it, just like Hitler could have avoided Stalingrad, but then got bogged down in it itself.

But this is a group that continues to spread its tentacles, recruit foreign fighters, it controls many dimensions of new media. But

ultimately, they also don't like to be criticized. Another dynamic is the increasing use of being referred to as "Daesh," a term that they hate in

Arabic --

PLEITGEN: Yes.

GOHEL: -- because it describes them, effectively, as bigots. So, strategic communications for ISIS are very important, but they hate to lose

control of the narrative.

PLEITGEN: Thank you very much, Sajjan Gohel, for joining us today.

All right, let's focus now on the latest headache facing the eurozone. Many are wondering what sort of demands Greece might take to its European

creditors now that its now anti-austerity government is in place. Greece was set to hold talks with the head of the European parliament on Thursday.

As you might expect, the main stock index in Athens has been rattled by all this uncertainty. It fell 9 percent on Wednesday but has since

recovered just a little bit, as you can see, plus 3.16 percent.

Earlier, I had a chance to sit down with Carl Bildt. He serves as both -- served as both prime minister and foreign minister of Sweden, and I

wanted to get his perspective on the dilemma Greece's creditors will face if its new government demands concessions to the bailout terms.

(BEGIN VIDEOTAPE)

CARL BILDT, FORMER SWEDISH FOREIGN MINISTER: We have a Greek crisis, no question about that, and that is primarily for the Greek government to

sort out its policies. That's going to take some time. Rhetoric will have to meet reality at some point in time.

They are running out of money, and they can't expect the taxpayers of other European countries to sort that out. At some point in time, there

might be some sort of negotiations on something, but I think it's way too early to speculate about that.

PLEITGEN: Do you think there might also be somewhat of a changing reality in Europe? Because the fact of the matter is that there are

Italian politicians who have welcomed the new Greek stance. Francois Hollande has congratulated Mr. Tsipras and said that France will be there

for them.

Is the policy of austerity something -- it's always been unpopular with a lot of public. Is it something that is getting under pressure

because of this?

BILDT: Well, it is never popular, in the sense when you have created -- it has been created, a profound mess in your economic policy, and you

have to get out of it. And part of that is cutbacks and part of that can be tax increases, things like that. It is rarely a recipe for immediate

popularity.

But money is money, and figures are figures. And it's very difficult to get away from this. The only way to get away from it is harsh policies.

We've seen that succeed in a number of other countries. Spain is on the way up. The Irish, even the Portuguese, the Latvians and whatever. But it

does involve a number of hard choices, no question.

PLEITGEN: Do you think that the Greeks are going to go to the negotiating table with the EU and they're going to start making

compromises? Because they would also lose face vis-a-vis the people who elected them if they started taking a softer stance.

BILDT: They will, but I don't see that there's any alternative. I fail to see that the governments of the rest of Europe are going to go to

their respective taxpayers and say that, hi, we need you to spend more money for the Greeks because the Greeks don't want to do more of the things

that we've been doing in our respective countries.

That's got to be a losing proposition in quite a number of other European countries with their respective electorates. So, I sort of -- the

Greek government will have to face the music at some point in time.

PLEITGEN: What sort of steps could that be? Things that would relieve the economy, would allow them maybe to spend a little more, would

help them in job creation?

BILDT: Well, job creation is going to come when they get the competitiveness back in the Greek economy. To some extent, it's happened.

You see that costs have come down. That means that they are more competitive in the tourist sector. I think they have one of the best

tourist seasons ever last year.

But industries are struggling by bureaucracy and by a lot of different things. And I think the Greek government has demonstrated they do have a

credible program for dealing with the fundamental issues of the Greek economy. It was on its way. The previous government didn't do perfectly,

but they did fairly OK.

PLEITGEN: How worried are you about Greece at this point? Because there was talk of them possibly defaulting the stock market, crashed almost

yesterday. The banks are doing terribly.

BILDT: No, that is certainly the case. I am worried. But I think it's important to point out, this is a Greek crisis, not a European crisis.

Had this happened a number of years ago, it could have been a European crisis. Now it is a Greek crisis, and that's bad enough.

PLEITGEN: What about Greece's advances towards the Russians? Because they are capable of doing some serious damage as far as a common European

position on things like sanctions are concerned.

BILDT: There's a meeting today of the EU foreign ministers in Brussels, and going into that meeting, it's 27 versus 1, where the Greeks -

-

PLEITGEN: But 1 with a veto.

BILDT: Well, 1 with a veto, but it's not sort of -- no decisions are going to be taken at this particular meeting, it's more discussions. But I

think it would be difficult for them, and no doubt the Greeks are very much influenced by the Russian propaganda and by the Russian position.

But I think it would be difficult at the end of the day for the Greeks to veto every single policy in sight of the European Union at the same time

as they're asking for vast sums of money from the European Union.

PLEITGEN: But they are -- they did already voice their complaints about the recent tougher stance. That alone is something that -- it

doesn't shatter the European position by any means, but it does weaken it, and it shows that there are different points of view.

BILDT: There are different points of view. They are -- so far, we've seen them expressing completely different point of view. So at the moment,

it is 27 versus 1.

PLEITGEN: What does Greece hope to gain from closer relations with Russia? Is it something that is a fundamental position, because they do

have Marxists in their government? Or is it something where they hope to gain economically, for instance, by getting export restrictions or import

restrictions to Russia.

BILDT: I don't think so. I don't think it's an economic issue. There are economic relationship with Greece and Russia, needless to say.

But I don't think they are necessarily that significant.

I think this is more a political thing. They're coming from a part of the political spectrum where they've had traditional sympathy for Russia.

They have aligned themselves up with the nationalist party to the extreme right, which for other reasons now have an element of sympathy for Mr.

Putin. So, it's more that they are sort of subject to Russian influence on those particular issues.

PLEITGEN: But do you think -- because you talk about the reforms in France that are needed, the reforms in Italy that are happening, but still

needs to continue. Are some of these governments, are politicians there looking to Greece and saying this could be an outlet for us to maybe soften

up our -- or our need for it.

BILDT: Well, we haven't seen the end of the Greek story. The Greek story could end in tears. We should be aware of that risk that is there.

They have been office for a couple of days and they've been doing things that very few people believe are sustainable. So, it might be that Greece

will not be so much an inspiration as a warning of what happens.

(END VIDEOTAPE)

PLEITGEN: Warning words, there, from Carl Bildt, former prime minister, former foreign minister of Sweden.

I'm Fred Pleitgen, and that was CONNECT THE WORLD for today. MARKETPLACE MIDDLE EAST is up next, and we'll also have the latest from the

deadly hospital blast in Mexico City. That's on "The International Desk" with Robyn Curnow in about 15 minutes' time. Stay tuned here to CNN.

(COMMERCIAL BREAK)

JOHN DEFTERIOS, HOST: It's an often overlooked emirate compared to the UAE's growing mega cities of Dubai and Abu Dhabi, but Fujairah is

looking to boost its place on the map and become a strategic location for energy exports. This week, MARKETPLACE MIDDLE EAST heads to the tiny

emirate with lofty ambitions.

Plus, pipeline politics.

(BEGIN VIDEO CLIP)

NATIG ALIYEV, AZERBAIJAN MINISTER OF INDUSTRY AND ENERGY: And it is not only Azerbaijan in the focus of the -- Europe's interests. It is the

Caspian region.

(END VIDEO CLIP)

DEFTERIOS: Azerbaijan's industry and energy minister tells us why ongoing political instability is a cause for concern.

Welcome to the program. We're in Fujairah, one of seven emirates making up the UAE. This largely mountainous area covers only 2 percent of

the country. In the past, it did not benefit from Abu Dhabi's oil wealth or Dubai's trade and tourism traffic. But large-scale investment is

rapidly changing the landscape here.

(BEGIN VIDEOTAPE)

DEFTERIOS (voice-over): Sandwiched between the Hajar Mountains and sandy beaches, the tiny northern emirate of Fujairah has always been the

more laid-back sister city of Dubai and Abu Dhabi. Until recently, it is the minerals lying under Fujairah's famous mountains that has helped boost

the emirate's economy.

Sitting on vast resources of limestone and hard rock, Fujairah has been exploited for years by quarry companies producing construction

materials like cement and stone wool. With various activities, like diving, fishing, and even mountain-climbing on offer, Fujairah is now

positioning itself as the UAE's up and coming tourist destination.

More recently, however, this traditionally backwater emirate has turned itself into a major shipping port for trade to and from the Gulf and

has become a key strategic export hub for the UAE's oil.

(END VIDEOTAPE)

DEFTERIOS: It is no surprise that Fujairah's investing in its port and free zone activities. It is the only emirate that has a coastline on

the Indian Ocean south of the Strait of Hormuz. As a result, the UAE is now investing billions of dollars to make it an oil and gas distribution

point.

(BEGIN VIDEOTAPE)

DEFTERIOS (voice-over): The Port of Fujairah is putting new meaning into the phrase build it and they will come. Sitting south of the world's

busiest oil shipping lane, the Strait of Hormuz, it wants to become a global energy hub. The initial idea came during the first Gulf War in

1991, when there was a traffic jam triggered by concerns of bomb attacks.

MOUSA MURAD, GENERAL MANAGER, PORT OF FUJAIRAH: More than 200 ships just waiting here. From that, we say, yes, I think we should think about

how we consider this shipping as a maritime services.

DEFTERIOS: Today, the once sleepy port is going well beyond loading fuel for ships. After Iran threatened to shut down the strait in 2008, the

emirate of neighboring Abu Dhabi decided to leverage Fujairah's strategic location.

DEFTERIOS (on camera): This is a control room at an energy storage terminal here in Fujairah. The UAE government built a pipeline worth more

than $3 billion to take crude from Abu Dhabi to the port on the Indian Ocean. It has a capacity of 1.5 million barrels a day.

DEFTERIOS (voice-over): Opened two years ago, the pipeline can take in about half of the UAE's daily production.

THANGAPANDIAN SRINIVASALU, EXECUTIVE DIRECTOR, GULF PETROCHEM: The Strait of Hormuz always is a problem. And the Abu Dhabi pipeline came in

here, and I don't see a reason why other producers will not be bringing the pipelines here shortly.

DEFTERIOS: The 30-year veteran of the business says Fujairah has something the top energy hubs in Asia and Europe don't have. It sits in a

neighborhood with 60 percent of proven oil reserves.

SRINIVASALU: Unlike Singapore and Rotterdam, which are the leading ports, you are surrounded by crude producers, surrounded by the foundries.

So, this is what interested us the most. I'm very pleased.

DEFTERIOS: And the UAE is upping the ante, adding a big refinery and the ability to handle so-called VLCCs, very large crude carriers that ship

up to 2 million barrels.

MALEK AZIZEH, COMMERCIAL DIRECTOR, FUJAIRAH OIL TERMINAL: We can save about 90 percent.

DEFTERIOS: Malek Azizeh of Fujairah Oil Terminal says those investments are game changers. He's involved in a joint venture with

backing from Sinopec of China and Concord Energy of Singapore. That opens in December.

AZIZEH: All these things, add them up and they give you the perfect scenario for somebody to take a step forward and get out of the usual thing

and do something different.

DEFTERIOS: And if talks go well with Tehran over its nuclear program, this expanding hub could also welcome Iranian crude if sanctions are

lifted.

(END VIDEOTAPE)

DEFTERIOS: Securing energy supplies, of course, is crucial. Tensions remain high, of course, in Iraq and Syria, and also with Russia and

Ukraine. We'll get into pipeline politics and the rising powers in the natural gas industry when MARKETPLACE MIDDLE EAST continues.

(COMMERCIAL BREAK)

DEFTERIOS: Welcome back to MARKETPLACE MIDDLE EAST, this week for the emirate of Fujairah in the UAE. It is widely known that more than half of

the proven reserves of oil are based here in the Middle East, but also better than a quarter of the gas reserves. And with rising gas demand,

especially in Asia, there's a scramble now to bring more gas to market over the next five years.

(BEGIN VIDEOTAPE)

DEFTERIOS (voice-over): Since the Saudi-led 1973 Arab oil embargo, when the world first realized what life would be without crude, oil has

stolen the limelight when it comes to energy security. But now, there's a new contender that is garnering attention. Natural gas is the world's

fastest growing fossil fuel, with consumption expected to surge over 50 percent by 2040.

The Middle East sits on the bulk of the world's proven gas reserves, with Iran and Qatar holding the lion's share. Iran has over 1,000 trillion

cubic feet of natural gas. That's the equivalent of 206 billion barrels of oil, with Qatar following behind.

Over the past two decades, the Gulf state has undergone a massive transformation, turning a tiny nation of less than 2 million people into a

economic powerhouse and the world's largest exporter of LNG.

But the region is not the only energy player. With gas reserves equivalent to 190 billion barrels of oil, Russia is a dominating force,

currently supplying Europe with 30 percent of its energy needs.

Natural gas is an ever-evolving market, and new players are emerging onto the scene rapidly. The US discoveries of shale oil and gas is a game

changer for the energy sector, with the United States saying it can look to energy independence by 2020, and east African nations of Tanzania and

Mozambique are being dubbed as the new frontiers.

But like oil, geopolitical tensions remain high over a Russia-Ukraine gas dispute, especially this winter, leaving the markets nervous and

nations looking to alternative sources of energy.

(END VIDEOTAPE)

DEFTERIOS: Azerbaijan also has a presence in Fujairah. SOCAR is the state energy company of the country. I asked the industry and energy

minister how the tensions in Russia and Ukraine will impact demand on the southern corridor, taking gas from Azerbaijan to Turkey.

(BEGIN VIDEOTAPE)

ALIYEV: It is not only Azerbaijan in the focus of the -- Europe's interests. It is the Caspian region. Because we are now work -- we have

free lateral discussions with EU, Azerbaijan, Turkmenistan, to deliver natural gas to Europe and make a fourth corridor.

DEFTERIOS: It's interesting, if you look at the numbers today, you have about a half a percent of both the oil and natural gas reserves --

proven reserves. But you think you're just warming up. You've got a long ways to go. Tell us about your targets over the next five to ten years.

ALIYEV: Now we are considered that this is a very pessimistic scenario, that we deliver since 2019 16 billion cubic meters of gas to

Turkey, to Greece, to Italy.

DEFTERIOS: This is almost triple what you are today.

ALIYEV: Yes, right. But in my mind, it will be more. It will be more, up to 25 billion cubic meters.

DEFTERIOS: So today, Minister, Azerbaijan is providing about 5 percent of European supplies. Over the next eight years, you think you

could provide 10 percent if not more. Is that a correct calculation?

ALIYEV: Yes. This is correct. But it is what we are waiting for, full development of our resources. If we will be successful, it will give

us new opportunities to have new discoveries.

DEFTERIOS: We see US shale production going up.

ALIYEV: Yes.

DEFTERIOS: East Africa coming onto the market.

ALIYEV: Yes.

DEFTERIOS: Australia coming onto the market.

ALIYEV: Oh, yes.

DEFTERIOS: Could we have a big glut of natural gas in five years, where there's too much natural gas on the market?

ALIYEV: There is a lot of questions. It is uncertain what is volumes, what is really a price of the producing of this gas? Again, I

would like to say that the world economy needs more and more very friendly environmental sources of energy. And natural gas is one of this energy.

(END VIDEOTAPE)

DEFTERIOS: Natig Aliyev, looking at the gas market in the near future, the minister of industry and energy for Azerbaijan.

And that's all for this edition of CNN MARKETPLACE MIDDLE EAST, this week from the emirate of Fujairah in the UAE. I'm John Defterios, thanks

for watching.

(COMMERCIAL BREAK)

END