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Moammar Gadhafi's Whereabouts Still Unknown; Gadhafi's Three Sons Captured; Rebels Have Already Taken Over Tripoli

Aired August 22, 2011 - 04:00   ET

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

ANDREW STEVENS, CNN ANCHOR: Celebration across Libya as rebels taken control of most of Tripoli. Rebels say three of Colonel Gadhafi's sons are captured but the search continues for the leader.

It's 10:00 a.m. in Tripoli, 9:00 a.m. in London, 4:00 p.m. here in Hong Kong. Hello, I'm Andrew Stevens.

CHARLES HODSON, CNN ANCHOR: I'm Charles Hodson. You're watching CNN's continuing coverage of the uprising in Libya.

History is unfolding today in Libya as Colonel Moammar Gadhafi's 42- year grip on power appears to be coming to an end. Here now the very latest.

Anti-Gadhafi forces say they're in control of most parts of Tripoli. But the rebels caution there are still some pockets of resistance in the capital. Colonel Gadhafi's own whereabouts are unknown right now. But there have been sporadic gunfire and explosions near the in battle leader Bab al-Aziziya compound in Southern Tripoli.

Diplomatic sources Gadhafi may still be there. However, a couple of hours ago, tanks reportedly were seen leaving that compound to shell another area in the capital. Rebels say they have now captured three of Coronel Gadhafi's seven surviving sons, Saadi, Saif al-Islam and Mohammed

Prosecutors for the international criminal court say they hope to put Saif Gadhafi on trial, but a Libyan rebels spokesman said the Libyan people should decide whether to handover the sons to the ICC.

As this has been unfolding, we've been able to speak with some Libyans who say they are ready for change. One young woman says the country has been put through 42 years of hell as she put it. Listen to the pure joy that change has brought to this 19-year-old living in the capital city.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE (via telephone): This is something we've all been dreaming of forever. The second this started, everyone is so happy. It's something we've been waiting for. We were living in fear for the past four decades, now you. All of a sudden, can go out and say what you want, say what you feel. I can talk on the phone without being scared that they are going to come in and take me.

(END VIDEO CLIP)

STEVENS: The official with Libya's opposition says a great majority of the capital is now under rebel control. Guma El-Gamaty us the U.K. coordinators for Libya's transitional National Council. He spoke with us from London in the last hour.

(BEGIN VIDEOTAPE)

GUMA EL-GAMATY, LIBYA'S COORDINATOR, TRANSITIONAL NATIONAL COUNCIL: The great majority of the capitol, Tripoli is under freedom fighters control. It is liberated. There are still few pockets and remnants of Gadhafi forces in about three positions. One is in Tasahura (ph), just outside to what's known as the Cardiology hospital. And one around the Rixo Hotel where foreign journalists have been based. And the other is the Bab al-Aziziya barracks.

Those are the three key points where there are remnants of Gadhafi forces still holding on. But hopefully as the freedom fighters are engaging with them at the moment this will be sorted out in a few hours or in a day or two.

STEVENS: And where is Moammar Gadhafi right now?

EL-GAMATY: It's very difficult to tell exactly. We believe that he is either hiding somewhere closer to Tripoli or in the south of the country, or could already be out, of Libya, maybe in a neighboring Chad (ph) from the South or neighboring Algeria to the west of Libya.

STEVENS: Why do you think he has chosen to go there?

EL-GAMATY: Because those are the only countries, neighboring companies who have been showing support for him. Chad is closely associated with Gadhafi. The ruler there is a close friend and Chad has been allowed a lot of masonries to come to the aid of Gadhafi. Algeria has also been engaged in sanction busting and allowing aid and fuel and mercenaries and arms to come through the Algerian-Libyan border. So we believe if he were - if he has escaped, he would have gone to either of those two countries because he wouldn't have been able to fly out of Libya, because there has been a no-fly zone for the past six months.

STEVENS: OK. We are talking about the situation with the transitional council moving to Tripoli. When will that happen?

EL-GAMATY: I think we look to stabilize the situation in Tripoli as soon as possible and hopefully within a few days the NTC will be based in Tripoli, the capital, and the process of stabilization of Tripoli and the whole country and getting on with the transition period will begin.

STEVENS: And so, what sort of government will this be? A lot of people are concerned about Islamic influence among the rebels, possibly even smells of Al-Qaeda fighters or who at least Al-Qaeda linked fighting alongside you during this uprising, so what will this government look like as it takes shape in the days and weeks ahead? EL-GAMATY: It will be a government of nationalists, mainly Libyan nationalists. There will be technocrats, you know, experienced, qualified people who will be appointed to oversee the various portfolios during this transitional period.

The transitional period is only temporary transitional, with specific task of stabilizing the country, ensuring that the main services are maintained for the population. And also ensuring that there is a constitution casted by the Libyan people and then approved through referendum and then that constitution if you like, would provide the political framework for the future political system of Libya, which we all hope that it will be a nationalist, democratic political system. We hope that this transitional period will not last longer than about a year and a half or 20 months. And after that, there would be elections, possibly presidential and parliamentary elections and arriving at a permanent status for new order, new system, a new dawn in Libya, based on democracy, freedom, justice and you know totally doing away and departing from the dark episode of the last 42 years.

STEVENS: OK.

(END VIDEOTAPE)

STEVENS: Guma El-Gamaty there, the U.K. coordinator for the national council in Libya, which is expected to be comprised, the next leadership, of that country. Charles?

HODSON: Now, the passionate voices of Libya's people tell the emotional side of this story. We're joined now by a witness in Tripoli who's been riding out the storm that's sweeping through Libya. For security purposes we are not identifying him.

Tell us, what is the situation in the capital this morning? There was a lot of gunfire, celebratory gunfire we understand overnight overnight. Is it quiet now?

UNIDENTIFIED MALE: Well, actually, it was a celebration last night, but today, this morning, there is sporadic gunfire going on. We can't tell if it's in one place or if it's moving from place to place. Looks like there are rebels around the area and not in one place and from time to time you can hear clashes between two sides. I cannot see them but I can hear gunshots on the right side, others from the left.

This morning I heard continuous fire shooting in Bab al-Aziziya area along with, I don't know if it is tank or grenades. But it was like small bombs which I hear from time to time. In my area which is close to Bab al-Aziziya, the freedom fighters and the night rebels looks like (inaudible) because they don't speak Arabic. Some of them were harmed, and few were not. So, definitely there's something going on in Bab al-Aziziya area. There is a forest them became their direction are. They seem like these mercenaries came up from this - looks like they are centralized there. People go there and investigate because there are some snipers in the area.

So, still the area around Bab al-Aziziya is still - you cannot say it's heavily armed, but is well armed. You know there are snipers. There's machinery, there's the Gadhafi regime you know around the area. I know they think it will be easy for the freedom fighters to go inside Bab al-Aziziya, maybe it will not take them the whole day, maybe at night we will see some changes unless there is heavy artillery goes into the equation. Until now, I'm just hearing clashes. That's it.

HODSON: OK. We're going to have to leave it there. Thank you very much for joining us. We'll talk to you later on. We've had some problems with the sound quality there. But thank you very much, indeed. We have been talking to an eyewitness live on a rather poor telephone line from Tripoli. Really thanks to you - Andrew.

STEVENS: It was clear, though Charles, that the rebels are still not in full control of the Libyan capital yet, Reuters is reporting between 15 percent and 20 percent of the capital is under government control. We want to show how the rebels got to Tripoli and where it all started?

John Vause takes us through the twists and turns of this month-long conflict.

JOHN VAUSE, CNN CORRESPONDENT: For a long time it seems as if this conflict has been at a standstill. Remember how the rebels swept out their capital Benghazi in the east all the way west to the city of Misrata.

Well, that was back in May. And well, the rebels have won some territory and lost some territory. It seems that this has been at a standstill but for the last few months, rebel fighters with the help of NATO air strikes have been making some significant gains in the Nafusa Mountains. And from there, late last month early this month, hen they began a push towards the capital Tripoli.

First they took the Garrison town of Gharyan that put them about 90 kilometers away from the capital. And in the last week we'll say they moved on another strategically important city Zawiya. Two hundred thousand people live there and it has a major oil refinery and is right on Gadhafi's doorstep. And a lot of people are now saying that this could be the beginning of the end, because the capital is now surrounded. It's under siege.

With the rebels controlling Zawiya, they control the supply lines between Tripoli and Tunisia. They also control the territory to the south, to the east. NATO controls the skies, as well as the sea. So, right now Moammar Gadhafi is isolated. He is cut off from the rest of the world.

HODSON: John Vause reporting there. We are going to take a break. We will continue our coverage of the developing situation in Libya after this.

You're watching CNN, the world's news leader.

(COMMERCIAL BREAK) STEVENS: Joyful Libyans turned out in Tripoli's green square to celebrate what they hope is the end of Moammar Gadhafi's regime. Rebel forces say they renamed it martyrs square.

Libyans also celebrating in Benghazi which has been the headquarters of Libya's opposition movement. Scenes of jubilation as well in the Libyan town of Tajura, a suburb of Tripoli. Thousands of miles away, Libyans living in Manchester, England, also turning out to celebrate and further West Libyans in Washington, D.C. gathered in front of the White House for both solemn prayer and lots of smiles.

Just a short while ago, the NATO Secretary General Anders Fogh Rasmussen made a statement about the situation in Libya. These are some of what the secretary general had to say.

(BEGIN VIDEO CLIP)

ANDERS FOGH RASMUSSEN, SECRETARY GENERAL, NATO: The Gadhafi regime is clearly crumbling. The sooner Gadhafi realizes he cannot win the battle against his own people the better, so that the Libyan people can be spared further bloodshed and suffering. The Libyan people suffered tremendously under Gadhafi's rule for over four decades.

Now they have a chance for a new beginning. Now is the time for all threats against civilians to stop as the United Nations Security Council demanded? Now is the time to create a new Libya, a state based on freedom, not fear, democracy, not dictatorship, the will of the many, not the whims of a few.

(END OF VIDEO CLIP)

HODSON: NATO leader Anders Fogh Rasmussen. Well, Libya's leader often to leave messages on state television. Moammar Gadhafi tried to rally those loyal to him just hours ago even as the rebels were swarming into the capital city.

(BEGIN VIDEO CLIP)

MOAMMAR GADHAFI, PRESIDENT, LIBYA (through translator): Do you remember the million martyrs? I'm with you, alongside with you in this fight. We will not, we will not give way or give up.

(END OF VIDEO CLIP)

HODSON: Remarkable piece of video. Well as the rebel noose tightens around Tripoli, Libyan Leader Moammar Gadhafi's options are of course barely increased and limited. One possibility though for Gadhafi is exile. A rebel spokesman says, Colonel Gadhafi has asked the government of neighboring countries to give refuge to his family member but apparently not to himself. Well, apart from Libya, Gadhafi has had strong support from Venezuela President Hugo Chavez. However, the International Criminal Court wants Gadhafi to answer crimes against humanity. Gadhafi seems to determine to stay in Libya until the end, whenever that is --Andrew.

STEVENS: Yes. We have another witness on the line now. He's a pharmacist who helped organize a civilian hospital in a Tripoli suburb. Doctor Norri Armeli says he has been treating wounded rebel fighters and has seen two deaths over the past two days.

Doctor Armeli, Thanks very much for talking to us. First of all, can you just tell us what you're seeing and hearing? Can you still hear the sounds of battle from where you are?

DOCTOR NORRI ARMELI, PHARMACIST (via telephone): Yes, actually from time to time, we can hear the tanks bombing which is about everywhere.

STEVENS: I beg you're pardon, you are hearing tanks shelling did you say?

ARMELI: Yes.

STEVENS: OK. About how far away are you from where you think these battles are taking place?

ARMELI: Because we can't hear it very clear, it could be 200, 150 meters away from us.

STEVENS: OK. Do you have a sense of just how big these firefights could be? Does it sound like they are still significant battles in the capital?

ARMELI: Actually, what happened, all of the civilians surrounding Bab al-Aziziya alright? Which is the Moammar Gadhafi's house, the tank came out from the Bab al-Aziziya through the east side. And it started shelling everywhere. Our civilians tried to stop the shelling. This is what is happening right now.

STEVENS: And are you now receiving casualties at your civilian hospital that you've created?

ARMELI: Actually, at the moment, there are no casualties. We have not received any casualties from two hours ago.

STEVENS: Can you give us a sense of how much casualties have been treating in recent days?

ARMELI: Yes, actually, we receive about 24 killed. We lost two civilians, right? And around eight of them in the severe stage.

STEVENS: Do you know where the victims? Where these wounded fighters were from? Were they from typically or rebels outside the capital?

ARMELI: You mean this evening?

STEVENS: Yes.

ARMELI: No. No. Actually all of the cases came from our area here in, which is very close to Bab al-Aziziya.

STEVENS: OK. Is there a lot of damage around the area where you are at the moment? ARMELI: Actually, the shelling from the tanks started from two hours ago. And most of the shelling was on the opposite side of our area. We had one shell here, it damaged one house. Fortunately, the people ran out of the house.

STEVENS: OK. Do you have medical supplies? Do you have access to medical supplies?

ARMELI: Actually, what happened, we had meeting on the 16th of August (inaudible) in Tripoli, and all have been decided to process (inaudible) and at that time we decided to organize to help which is based in our area, specific area. There were many small hospitals in most of the Tripoli areas, right? So we started organizing hospitals. We got a lot of support from the people. They gave us money, some of them, they own medical companies. They support us by giving us by the medical team and medical devices as well.

STEVENS: Doctor Armeli, do you think this is the end of the Gadhafi regime?

ARMELI: Of course, because as I said, civilians surrounding the Bab al-Aziziya and they are speaking with the Libyan army inside Gadhafi's house, they need to leave peacefully. They don't want to kill the people inside because they are Libyan as well. So they try to make it I mean in the peace way. So I think (inaudible)

STEVENS: All right. Doctor Norri Armeli, Thank you so much for joining us. Dr. Norri Armeli there, who has set up a hospital as you heard him say and said he heard tanks shelling not that far away from where he is based in the capital, Tripoli. Charles?

HODSON: Now, when we return, beyond borders. We will tease out some of the impact of the end of the Gadhafi regime on financial markets, and in particular, the obvious one, how will it effect oil prices around the globe? That's in a moment.

(COMMERCIAL BREAK)

HODSON: Welcome back to our coverage of the uprising in Libya.

STEVENS: Investors are watching the outcome in Libya very closely. The effects of the uprising being felt strongly particularly on the oil markets.

(Inaudible), is there now watching the reaction there,

UNIDENTIFIED MALE REPORTER: Yes, Andrew. That's right. For most of the past few months the price of oil has been dictated by the events unfolding in Libya as well as the rest of the Middle East-Africa region, and the end of Gadhafi's grip on power may actually mean beginning of a fall in oil prices.

First, let me show you where oil prices stand right now. We are going to be looking at Brent which best reflects region, there it is right now. It's now trading at 106.70 to the barrel, down by about $2.44. Analysts are expecting prices to fall further as tumolturist(ph) past six months looks to be coming to an end. And that means reversing the games we've seen since the uprising actually began just in the last, the half year. If we can take this off and we'll click that first. Thank you very much.

All right, so, at this point, oil was trading at about $103 a barrel, and the violence in the region and the uncertainty it fostered sent the price of oil fatally higher. And up here, here is where it reached its peak in April at $126 a barrel.

Now, over the course of the last few months the balance of power in Libya also tips in favor of who controls key oil centers. Now, rebel forces score a victory Sunday, as they re-captured this city, the oil hub of al Brega(ph) over here in the east. And this strategic port was under rebel control briefly in March but was re-captured by Gadhafi forces shortly after.

Now, why is this so important though? Libya's economy basically is heavily dependent on oil revenue, and that's a stream that's been cut off during the fighting. Libya was producing more than $1.5 million barrels of oil a day it basically means that it supplied 2 percent of the energy the world consumed on a daily basis.

Also, let me show you which countries were actually its biggest consumers. Turns out most of that oil went to Europe. About 80 percent in fact, 32 percent went to Italy, 14 percent to Germany. Some of the Libya's exports also went to Asia as well with 10 percent going to China. And about 5 percent, it's interesting, it went to the United States. So, Libya has a clear impact on the world's supply of oil. We can expect the price of oil to fall through the rest of the year as that supply possibly increases.

STEVENS: OK. Thank you very much for that -- Charles.

HODSON: Coming up, what's next for Libya? Stay with us.

(COMMERCIAL BREAK)

HODSON: From CNN London, I'm Charles Hodson.

STEVENS: And I'm Andrew Stevens at CNN Hong Kong. Welcome back to this special edition, our continuing coverage of the uprising in Libya.

Well, let's bring you up to date on the dramatic and fast-moving developments in Libya. An official with Libyan Transitional National Government tells CNN a great majority of Tripoli is under control of Libya's rebel forces, but opposition leaders caution there are still pockets of resistance in the capital.

Moammar Gadhafi's whereabouts are unknown right now. Earlier there were explosions near the Libyan Leader's Bab al-Aziziya compound in Southern Tripoli. The European Union is calling on Gadhafi to step down from power without further delay. The rebels say they now captured three of Colonel Gadhafi's seven surviving sons, Saif al- Islam, Saadi and Mohammed. Prosecutors for the international criminal court say they hope to put Saif Gadhafi on trial, but a Libyan rebel spokesman said the Libyan people should be the ones to decide whether to handover Gadhafi's sons to the ICC.

HODSON: It's been startling for all of us watching from afar rose of the any way to see the Libyan rebels move so quickly to Tripoli just over the weekend. How could it have happened so fast? CNN's Jonathan Mann spoke with our Senior International Correspondent Nic Robertson in Washington.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Tripoli had, while we were there, while the NATO bombing began and Gadhafi's forces and his loyalists were still firmly controlled the capital, and a sort of ring of steel around it. The brigade there was controlling the capital and was able to sort of draw on munitions from multiple bases from inside the city that have become over the month's NATO's top principle targets to up rise in the city ammunition stores there. And then Sarah Sidner will it driven today as she has overnight from Zawiya in to Tripoli, she came right past one of the most feared bases of one of Gadhafi's brigades controlled by his son, Hamis, who originally the force that went into Zawiya when they first - Gadhafi's forces first crushed the rebels there. The fact that there wasn't resistance there, the fact this ring of steel that we had seen tanks, armored personnel carriers evaporated really gives rise to the perception here of a how the rebels were able to get into the city so quickly, but also how Gadhafi may have been caught out in surprise, of just how quickly people have deserted him, and proven not to be loyal.

The writing has been on the wall for these forces and now it seems they have, in fact, collapsed. And that will enable rebels throughout the city, the people of the city who don't want Gadhafi who have been too afraid to come out on the streets because they don't have the weapons will now realize that the big military machine that they have so feared to a degree has melted away.

Of course, we don't know the details and we don't know the parameters of the areas that Gadhafi's forces, those still loyal to him still control. Certainly there seems to be some of them in the city at this time, Jonathan.

JONATHAN MANN, CNN CORRESPONDENT: Libya is an oil-rich country with, what, 140 different tribes and clans and prominent families which is to say there are a lot of people who have potentially something to fight over if they want to fight each other now. What do you think will happen? Is the transition going to be as smooth as it suddenly seems?

ROBERTSON: The military transition may be, may be quick. May appear to be smooth in the initial analysis and securing control in Tripoli and other cities will be sort of the most immediate need. But getting a political consensus beyond that is going to be difficult.

You have a traditional east/west split within the country. That's historic. You have a lot of the rebels coming from the east of the country. You have tribes that have been loyal to Gadhafi, like the Zunusi tribe, the tribe that the head of intelligence is from, Abdullah Zunusi, wanted by the international criminal court, the right-handyman man of Gadhafi really in controlling the country.

That tribe has always been in power in government what will they settle for now? Well, those tribes that have powerful and had power in the past that had sat on the sidelines, will the rebels want to take them in and give them political power? We know the rebels have different views. There are Islamic element, there are sort of more moderate liberal elements, there are perhaps other elements within the transitional national council as we know it today and politicians that I talked to who fled Libya say that the political makeup and tribal makeup is very diverse, and this is what may, may slow and the sort of arrival, if you will, or the announcement of any sort of transitional government.

So, there are many, many hurdles. This initial phase, the military phase is not over. It may be the simplest one, and of course a counter insurgency by Gadhafi loyalists cannot be ruled out of this phase or perhaps on the coming months.

(END VIDEOTAPE)

STEVENS: Nic Robertson there, talking to Jonathan Mann a little earlier. Well, as we hear the celebratory gunfire and see the victory signs in Libya, we are reminded that this is another country attempting to form a new government as we heard there with a patchwork of rebel leaders.

A short while ago, we spoke with the Ali Suleiman Aujali. He is the ambassador to the United States from the transitional national council, the main rebel movement. And he spoke confidently about how the coming days will play out.

(BEGIN VIDEO CLIP)

ALI SULEIMAN AUJALI, LIBYAN AMBASSADOR TO THE UNITED STATES: TNC is going to run the country. They will move to Tripoli as soon as possible. They are preparing, I think everything is ready for the election of the temporary council, and of course they have to take care of the security of the city, and of course there is our concern now where is Gadhafi. We have to find out where is he.

And I believe very much in what the TNC is doing. I think the takeover of Tripoli today. It is amazing. I never expected. And I believe now Gadhafi's hands are paralyzed, because two of his sons have been captured. And I don't think that will be a major issue with Gadhafi's more resistance.

In the mean time, (Inaudible), he made it very clear that they are ready for any changes happening and they are ready for any surprises. And you know, the celebration and the people there are getting together. I think it is a historical moment in the life of the Libyan people.

UNIDENTIFIED FEMALE REPORTER: You raised the issue there of Gadhafi's sons. Now, what will you do with them?

AUJALI: The question, you know the Libyan people I think they want to bring them to justice and at the same time, the ICC, they want them, too. I believe the choice is for the Libyan people, they have the right you know, what they want to do with them.

That's would be decided I think in this coming maybe few weeks or few months. It's difficult to say at the present time. But I have very good news also from al-Brega now. I understand the Gadhafi brigade raised the white flag, and that the revolutionary, the national army there will enter the third section, what they call the industrial area. And this means Libya is under the control of the TNC now.

(END OF VIDEO CLIP)

HODSON: The ambassador of the TNC there of the United States. Financial markets opened for a new week of trade. Do the fear and uncertainty from last week remain? Well, kind of a new mood. We'll find out more about it in just a moment.

(COMMERCIAL BREAK)

STEVENS: Let's update you on the latest from Libya. Joyful Libyans have turned out in the capital of Tripoli and other cities to celebrate what they hope, is the end of Moammar Gadhafi's regime.

An official with Libya's transitional national council tells CNN "a great majority of the Libyan capital is now under control of the rebels but opposition leaders caution that there are still some pockets of resistance in the city". No one seems to know where Colonel Gadhafi is at the moment. Earlier there were spreading gunfire and explosions near the battle leader's Bab al-Aziziya compound in Southern Tripoli. The news was last heard on Sunday when broadcast and appeal for help from his supporters. The rebels say they now captured three of Colonel Gadhafi's seven surviving sons, Saif al-Islam, Saadi and Mohammed.

HODSON: All right, let's see what's going on now in the financial markets. We are going to start here in Europe where 105 minutes into the trading day and here how they look at the moment is.

Quite interesting, we are seeing gains, clearly a new mood, lower oil price, boosting the FTSE up by one percent, same story for the Paris CAC, and the ZURICH SMI.

Quite interesting though, the market that's been doing badly throughout the session is the DAX. Still off just very slightly, was off by more than one percent. I'm going to stick my neck out and guess this is because over the weekend the German chancellor, Angela Merkel, said no, no, no, to euro bonds, to euro zone bonds. And then I think is not welcome as far as investors in Germany's export industries are concerned because they have the most to lose from a euro collapse. And the markets idea is that without euro, without bonds whether see the euro in a great deal of difficulty.

STEVENS: Absolutely. I mean interesting. German stocks down, I think by eight percent last week, Charles, as you point out the uncertainty remaining there.

Well, here in Asia, markets are bouncing around today as they tended to steady after another round of uncertainty last week. That's the numbers here. The NIKKEI was down over one percent. Hong Kong is finishing the day up by a half percent. Shanghai going the other way. And the BSE in Mumbai, up 0.75 percent.

What can we expect in the week ahead? Mark Konyn is the CEO of RCM Asia Pacific setting here to joins as now with more on that market. Mark, welcome back to the show.

The uncertain is nothing has changed between now and Friday, very difficult to read, you expect more volatility?

MARK KANYN, CEO, RCM-ASIA PACIFIC: I think volatility definitely but investors are becoming accustomed now to the changing circumstances globally. They are seem to be shocked by the by the slow in numbers coming out of Germany. And as you know, we are bracing for manufacturing data this week coming out of Europe. But I think now investors are acclimatizing to slower global output both in the U.S. and other developed economies.

STEVENS: So what are they saying? What is the market numbers telling you about where they think the economic performance of Europe and the U.S. is going to be? Is it a full recession they're pricing in now?

KONYN: Not just yet, no. I think the slowdown is being seen as more than a mid cycle slowdown, so clearly it's structurally based because of the debt that's encumbering many of these developed economies. Not yet for recession being price still but I would say they are not really set for much upside from here because much focus now on earnings. Because remember, in Asia we are very significantly impacted by global sentiment and the global economy, in previous slowdowns earning have been hammered in this region.

STEVENS: Absolutely. So, is it clear effect about what happens in Europe and the U.S. will affect earnings here?

KONYN: Indeed.

STEVENS: Some earnings were down about 50 percent.

KONYN: During the slump, some earnings were down 48 percent.

STEVENS: So, it's not all exporters in Asia, though. Is there some decoupling here? Should investors be looking at the local markets?

KONYN: Well, that's been the sort of watch word since really the end of '08, looking at this decoupling effect, exports to other countries in the region, from each other's countries here, but also exports to other emerging parts of the global economy. We have seen for example Korean car exporters starting to export more to emerging economies than to developed countries mostly global financial crisis which is a very significant step forward.

STEVENS: So we are seeing this decoupling now somewhat? KONYN: We have seen it, but not quickly enough really to reassure investors. And in particular with China, China really is well advanced in the current cycle. As you know, it been tightening and their ability to continue to stimulate while the external environment is weakening is quite limited now.

STEVENS: Well, this is the big question, isn't it, what happens with China? We're seeing downgrades of economic growth in China Q4 around about eight percent, which for China actually is sort of getting quite low. What's the impact going to be on Asian economies of the China slowdown?

KONYN: Well, certainly the Chinese leadership has been starting to prepare the world and the community in China for a slightly moderating growth level in China. And that's been the case over the last probably 12 months, expecting to see the impact of that excessive stimulation starting to ease off.

What's the impact for the rest of the region? Well clearly, we've got an increasing or appreciating value on the RMB which makes other exporters in the region more attractive or more competitive.

All the time China has been moving up the value-added scale so starting to compete with other economies like Korea, like Japan.

STEVENS: So it's not all good news?

KONYN: It's not all good news. And I think markets are really not yet out of the woods yet and looking at global events.

STEVENS: All right, Mark thanks for coming in.

KONYN: As always.

STEVENS: Mark Konyn, the Asian adviser here - Charles.

HODSON: Well, if that's not depressing enough, let's look at the global weather picture now.

The first hurricane of the Atlantic Ocean's hurricane season does appear to be forming and millions may be in its path by later this week. Our meteorologist, Pedram Javaheri joins us from the international weather center with more on this.

Is this going to be a big one, Pedram?

PEDRAM JAVAHERI, AMS METEOROLOGIST: All right Charles, I think so at least the foreseeable future here for folks across portions of say the Dominican Republic even areas of Puerto Rico right now. We know that governments of these particular islands have issued hurricane watches and warnings. And we've gone through nine storms so far, Irene being the ninth one. All of these have been tropical storms. Irene is the one destined here to become a hurricane in the next 24 hours.

And one of the latest we've seen, it gets so many storms and none of them turned in to a hurricane. This one looks like it has what it takes. Winds rate now at 113. If you know anything about the hurricane force winds and how, so what strength it's supposed to get to before it's designated that title, 119 or about 73 miles per hour is what we're looking at here. So only six kilometers per hour shy of becoming a hurricane, and right now impacting portions of San Juan, Puerto Rico is going to begin to shift its way towards that direction.

And if we can look at your graphics, there you go heaviest rainfall around 25 centimeters or so, northern tip there, a portion the of the Dominican Republic, the storm system then pushes towards Haiti and the big concern is where it will end up as we head in towards the portion, later portion of this coming week. It looks like it will brush the northern tip of Haiti. So Port-au-Prince should be on the quieter side of this storm but eventually the Coast of Florida, Miami, Port Lauderdale - Charles, this is an area we are watching very carefully as this could be a dangerous hurricane this coming weekend. Charles?

HODSON: Thank you very much, indeed. Pedram Javaheri joining us there lives from the international weather center -- Andrew?

STEVENS: We will take a short break. When we come back, we'll update you on the latest from Libya. You are watching CNN.

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STEVENS: Welcome back. If you are just joining us, you're watching ongoing coverage of the uprising in Libya on CNN, the world news leader.

HODSON: Well, now the latest developments in Libya where the question of the hour is where can Colonel Moammar Gadhafi?

It appears his government may be falling, I think that's an understatement because clearly nobody seems to be and certainly not Colonel Gadhafi, himself, is exercising power across Tripoli, but so far there is no sign of the embattled leader himself.

Anti-Gadhafi forces admit they don't know his current whereabouts. A growing number of world leaders are indeed calling on Gadhafi to give up and to order his supporters to give up and to order his supporters to disarm.

An official with Libya's Transitional National Council tell CNN quote" a great majority as it was put of the Libyan capital, is now under the control of the rebels, but opposition leaders caution that there are still pockets of resistance in Tripoli."

The rebels say they now captured three of Colonel Gadhafi's seven surviving sons. Saif al-Islam, Saadi and Mohammad.

Prosecutors for the International Criminal Courts say they hope to put Saif Gadhafi on trial, but a Libyan rebel spokesman says the Libyan people should be the once to decide whether to hand over Gadhafi's son to the ICC -Andrew.

STEVENS: And stay with CNN for continuing coverage of the uprising in Libya as rebel close in and control of the capital, Tripoli. We'll leave you with some scenes of crowds gathering to celebrate the rebels advance. This iReport came to us from the action in Benghazi's freedom square.

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SAMMI ADDAHOUMI, CNN, iREPORT: It is now 1:00 a.m. Sunday, August 21st. Quite possibly the first night of freedom for all of Libya. Freedom square, Benghazi.

This is by far the largest crowd I've seen in probably months of coming to this area.

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