MEDELLIN, Colombia (CNN) -- This city's drug underworld is littered with "poseurs" -- lowlife triggermen pretending they're the real hard cases. But a longstanding and trusted source, with intimate knowledge of Medellin's violent subculture, assured me the two men I was about to meet were the real deal. My destination: a single-story home in the city's notorious "Commune 13" district where I had set up a meeting with two hit men, who have for years hired their lethal services out to the cocaine cartels. Inside the house, a man called "Red" sat on a couch toying a fully loaded 9mm Ruger pistol. "This will stop somebody nicely," he said, as I glanced at it. His face and arms were covered in burn marks. He said it was a testament of the day a barrel of acid spilled onto him as he was working in a clandestine cocaine processing lab in northern Colombia. Red explained that after the accident, the lab foreman tossed him out, half-dead, into a jungle clearing. What little strength he had left, he said he used to bat away vultures. And, against the odds, he made his way to safety and slowly recovered. When Red left the clinic months later, he said he went straight back to the drug lab and gunned down the foreman and three of his henchmen. That wasn't his first killing though, he told me. When he was just 11 years old, Red recounted, he took a razor to the throat of a neighborhood drug pusher who had been molesting his little sister. The other man, "C", sat quietly as I listened to Red. Like Red, my source told me, "C" was also the so-called "chief" of a number of neighborhoods -- running local drug-peddling operations, extortion rackets and organizing hits for a big cartel boss he simply referred to as "El Cucho," or "The Old Man." Don't Miss * Power vacuum fuels vicious drug war It was a hot morning and he was shirtless. His chest was branded with a tattoo of the Virgin Maria Auxilatrix, known in Colombia as the "Virgin of the Assassins." Hitmen, or "sicarios" as they call them here, revere her and pray to her for protection against arrest or death and for help to carry out their killings. During our time with the hit men they offered a fascinating insight into their violent world -- from how much they get paid to what their mothers think of their lifestyle: Penhaul: Why are Medellin's drug bosses and the street gangs in a war right now? "RED": "These problems come about because they're looking for a good man to run things. We have to find him and, in order to find him, what's happening right now has to run its course." "C": "Medellin has exploded right now because different groups want to control it and earn money and gain territory. The authorities locked up, extradited, or cut cooperation deals with the big guys, the ones who controlled all this. Those were the ones people respected. Now there's no respect and anybody who has a bunch of money is grabbing a few kids from a poor neighborhood and putting them to work." Penhaul: What are the cartel bosses paying for a contract killing now? "C": "If you're talking about a contract hit then right now you can get four or five million pesos (between US$2,000 and $2,500) to kill some idiot slimeball. Then of course there are bigger hits where you can earn 15 (million) or 20 million (between $7,500 and $10,000). Some of those hits pay pretty well. There's a lot of people around here with a lot of money and they're using it for bad things. Sometimes even the politicians will pay for a hit to get somebody out of their way." Penhaul: Why did you get into this lifestyle? "Red": "People need to eat and there's a lot of hunger. We don't just want the crumbs. That's the big problem. There's a lot of idle hands around here and many people think they have a chance if they have a gun in their hand." "C": "I grew up in a slum and every time I stepped outside the door there were guys from the local gang smoking (marijuana) joints. They had guns, the best motorbikes and money so I started running errands for them." Penhaul: Didn't you have any big dreams when you were kids? "Red": "I always said when I grow up I would build a house for my old lady with a cement roof and plaster and paint on the walls. I dreamed I'd be able to give her money to go to the supermarket every week." "C": "I dreamed of being a professional soccer player. I was pretty good. But I never got the chance." Penhaul: Do you think you've made your mothers proud by killing people? "Red": "I once gave my mum a wad of cash after I did a job. She took the wad and slapped me in the face and told me not to bring that cursed money into the house. She begged me to get out of that life. She was afraid they would kill me." "C": "My mum knows nothing about this. I guess she imagines because she tells me to take care otherwise I'll wind up dead. But she doesn't know for sure." Penhaul: What did your first contract hit feel like? "Red": "You kill the first one and you panic for a few days. You're nervous. But then you kill the second one and that's a kind of a medicine. It takes the pain away that you were feeling after the first killing." "C": "The first time is really f***ed up. I nearly went mad. You see a cop and think he's going to arrest you. I was 16 or 17. That was my first time. I hardly even wanted to eat. But then you carry on and kill this one and that one. You earn money. After I killed somebody the first time I bought my first decent pair of sneakers. "It's not so tough now. Sometimes you kill somebody and you know they were going to kill you. It's not a question of conscience. It's a question of kill or be killed." Penhaul: Don't you feel any remorse? "C": You know you messed up when you go to the wake and see people crying and you know it's your fault. But I don't back down from a killing because I know if somebody comes after me they won't back down." "Red": "I've got feelings and sometimes you sit down and think what a shame. But the person who's trying to shoot you isn't going to think the same. You're not killing somebody for the fun of it. If you don't mark your territory then you're a nobody." Penhaul: So, apart from the money, why do you do it? "C": "To gain respect round here you have to be a mother f***er. You've got to be a bastard so people respect you. If you're quiet and respectful everybody takes advantage. But if they know you're a mother f***er who'll bust their ass at the first sign of trouble then they respect you and your family." Penhaul: Are you killing innocent people? "C": "I never kill somebody who doesn't deserve it. Sometimes I'll hunt down a "patient" for a week just so that I don't make any mistakes. You can't go and kill somebody just because you want to. You have to ask for permission from the big guys who control us. You explain to the "old man" and he gives the final word." Penhaul: Are you ever on the receiving end of bullets? "Red": "They once shot me four times at point blank range. I heard them laughing as they walked away and one came back and kicked me in the head for good measure. When I got better he was the first one I killed. I've been shot 17 times. Well let's call it 19 if you count the ones that just graze you. They say some bodies have divine protection. Let's hope mine is one of them." Penhaul: Why don't normal citizens just turn you in? Because they're afraid? "C": "The community collaborates with us. We give them food parcels and we throw parties for them and give toys to the kids. We don't mistreat everybody, just the ones who deserve it. We don't kill innocent people." Penhaul: Do you want to get out of this life? "C": "I know you should pay what you owe. But I don't want to pay for all those deaths. I'll be absolutely f***ed if I have to pay. I want to get out of this but I want a clean slate. If I pay my debt to the law then that means jail and if I pay on the street then that means death. I don't want to go to jail or to die." advertisement Penhaul: Do you see any quick end to the current cartel violence in Medellin? "C": "We've survived one war, then another and now this one. I can't see it all ending. I don't think that will happen. If you kill two or three people there's four or five more behind him who want to kill you."

MADRID, Spain (CNN) -- Spanish police arrested a well-known Basque politician linked to the armed Basque separatist group ETA on Tuesday, along with nine suspected collaborators, the Interior Ministry said in a statement.
Former leader of banned Basque party Batasuna Arnaldo Otegi after his arrest.

Former leader of banned Basque party Batasuna Arnaldo Otegi after his arrest.

The politician, Arnaldo Otegi, is a leader of the former Batasuna party, outlawed for its ties to ETA, which is blamed for more than 800 deaths in its four-decade fight for Basque independence.

Otegi and the others were arrested in northern Spain for trying to regroup the leadership of the so-called Basque left movement in order to "carry out ETA's orders," the statement said.

Otegi and four others were arrested during a meeting at an office of the Basque union LAB in San Sebastian. Two others were arrested on the street in the nearby town of Hernani, and three others were arrested in Pamplona, including one for allegedly possessing documents from another suspect's home in an attempt to avoid having them seized by police, the statement said.

The operation is being directed by anti-terrorism Judge Baltasar Garzon of Spain's National Court, and the suspects were due to be taken to Madrid to appear before him in the coming days, the statement said.

Otegi has been in trouble before with the law. In 2007, he was arrested shortly after Spain's Supreme Court upheld a lower-court's conviction of him in 2006 for glorifying terrorism at a memorial in December 2003 for a dead ETA leader.

Otegi was sentenced to 15 months in jail. But at the time of his 2007 arrest, he had been free on $300,000 bail in a separate terrorism case of inciting violence.
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A senior government source who insisted on anonymity said last month that officials had been expecting Otegi to try to step forward soon as an interlocutor promising to help end ETA's violence and negotiate a deal with the government.

The aim, according to the source, was to permit a rebranded Batasuna to run for local office again, on the promise it would seek to end ETA's violence once it had regained elected government positions.

But government officials have said publicly there can be no further talks with ETA, which is listed as a terrorist group by Spain, the European Union and the United States. Video Watch background behind ETA's decades-long struggle »

When ETA declared a unilateral "permanent" cease-fire in March 2006, the government began steps toward a peace process, but ETA then bombed Madrid's airport in December 2006, killing two men and causing extensive damage.

ETA in 2007 called off its cease-fire, which the government had already considered finished.

The government has said since then that the only way to end more than 40 years of violence will be for ETA to renounce its campaign and lay down its arms or face its demise through a police crackdown.

Yet ETA has continued its killings and bombings, including fatal attacks in the Spanish island of Majorca in August.
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But police in Spain and in neighboring France -- ETA's traditional rearguard base -- have cracked down hard, arresting dozens of ETA suspects, including four of its alleged top leaders.

The arrest of Otegi and others on Tuesday comes two days after police detained two of the most-wanted ETA suspects in France. They were allegedly involved in ETA logistics and police later found weapons and material to make car bombs, the Interior Ministry said in a statement.

MOSCOW, Russia (CNN) -- U.S. Secretary of State Hillary Clinton stressed Tuesday that Washington and Moscow are working together to ensure Iran's nuclear program is strictly for peaceful purposes, but Russia has stopped short of committing to Iranian sanctions.
Russian President Dmitry Medvedev greets U.S. Secretary of State Hillary Clinton on Tuesday outside Moscow.

Russian President Dmitry Medvedev greets U.S. Secretary of State Hillary Clinton on Tuesday outside Moscow.

Speaking to reporters after a closed-door meeting, Clinton and Russian Foreign Minister Sergey Lavrov indicated there has been no agreement between the countries on any sort of sanctions plan, even though Russia is not opposed to sanctions in principle.

The United States is using a two-track approach, pursuing diplomacy with Iran and going on to stronger measures -- such as sanctions -- if that effort fails.

"We are aware that we might not be as successful as we need to be," Clinton said. "So we have always looked at the potential of sanctions in the event that we are not successful, that we cannot assure ourselves and others that Iran has decided not to pursue nuclear weapons."

Clinton quoted Russian President Dmitry Medvedev's recent comment that sanctions might be "inevitable" but not at this stage. Video Watch as Clinton stresses the importance of the diplomatic track with Iran »

While the Obama administration has been cautiously optimistic about the "inevitable" comment, Russia has long believed that sanctions are not yet necessary, even though they may be a factor to consider down the road.

Lavrov said that sometimes sanctions theoretically need to be imposed when all diplomatic efforts are exhausted -- but not in the case of Iran.
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"Threats, sanctions and threats of pressure in the current situation, we are convinced, would be counterproductive," he said.

World powers have long been concerned that Iran wants to build a nuclear weapon, and those suspicions were heightened by the discovery of a secret uranium enrichment plant near Qom. However, Iran has consistently said it is developing nuclear power for peaceful purposes.

"Iran's nuclear program remains a matter of serious concern. We're working closely with Russia through the P5 and 1 process," Clinton said, referring to the diplomacy with Iran conducted by Germany and the five permanent members of the U.N. Security Council -- the United States, Britain, France, China and Russia.

"We are working to ensure that Iran moves forward with us on this engagement track," said Clinton, who added that Iran must show without any doubt it is pursuing unequivocally only a peaceful use of nuclear power.

Clinton also met with Medvedev at his residence outside Moscow. Other items on Clinton's agenda included Afghanistan, arms control and the new U.S.-Russia bilateral presidential commission.
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Clinton spoke about surmounting historical difficulties in U.S.-Russian relations, changing a relationship "once defined by the shadow of mutually assured destruction into that based on mutual respect and over time increasingly mutual trust."

"We are different countries; we have different historical experiences, different perspectives," she said. "But we are planting those disagreements in a much broader field of cooperation, and hopefully we are enriching the earth in which this cooperation can take root."

The federal pay czar is trying to force the American International Group to reduce $198 million in bonuses promised to employees of its trading unit, where problems posed a threat to the global financial system last year.
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But the Treasury’s special master for compensation, Kenneth Feinberg, is running into legal hurdles because those bonuses fall outside new rules against bonus payments at companies receiving government assistance. The bonus agreements at issue were struck before last year’s emergency rescues by the Treasury and the Federal Reserve, and thus are not directly covered by the new rules.

The problem is a recurring one. A.I.G. payments early this year to the same employees elicited public outrage, though government officials said then that they had little legal authority to rescind pre-existing contracts.

To strengthen his hand, Mr. Feinberg is threatening to reduce the compensation packages he does control, according to a person close to the talks. That could mean shrinking the pay of other A.I.G. executives — including its new chief, Robert Benmosche — if the firm does not claw back part of the bonuses for the people in its trading unit, known as A.I.G. Financial Products.

At companies that received extraordinary government support, Mr. Feinberg’s task is to monitor and enforce rules governing new pay packages. He can approve or reject cash pay that exceeds $500,000 for top executives.

Mr. Benmosche, hired by A.I.G. late this summer, received a compensation package that includes $3 million initially and about $4 million in stock that he must hold for five years, as well as annual bonuses based on performance.

A.I.G. has a variety of employee bonus programs. The Financial Products group began a two-year retention program in January 2008, before its government rescue, designed to keep skilled employees from leaving and jeopardizing its derivatives portfolio .

After A.I.G. paid $165 million in retention bonuses to that group in March, it promised to try to recover much of the money to quell the uproar that ensued.

But the insurance company has recovered only $19 million of the $45 million it asked the recipients to repay, according to an audit of its compensation program and the government’s oversight.

A company spokeswoman, Christina Pretto, said in a statement that the people who had received that money had “until the end of the year to fulfill their commitments,” and that the company believed those people would honor them.

But the special inspector general for the Troubled Asset Relief Program, Neil M. Barofsky, who conducted the audit, said some of the money appeared to be unrecoverable, because the employees had resigned rather than return the pay.

Other people are still weighing tax issues arising from those bonuses, and some have asked the insurer to dock their paychecks in the future, rather than make a single payment now.

The inspector general’s audit will be the subject of a hearing Wednesday by the House Oversight and Government Reform Committee.

The report stated that Mr. Feinberg had “informally advised A.I.G. not to pay the full $198 million,” scheduled for payment next March, but did not reveal how sharply Mr. Feinberg hoped to pare the bonuses.

The amount of the bonuses at A.I.G. is quite small relative to the record amount of government assistance received by the firm over the last year, roughly $182 billion.

The $165 million in bonus pay made last March coincided with the news that A.I.G. had just posted the biggest loss in American history and would need a bigger rescue package. That led to stormy Congressional hearings and tours of the suburbs where some bonus recipients lived.

Company officials argued at the time that only a handful of the employees of financial products bore responsibility for the disastrous derivatives trading, and it was unfair to blame everybody for the harm caused by a few. The company also said it wanted to honor its commitments because skilled people might resign en masse if bonuses were rescinded.

The new audit pointed out that the bonus program for the Financial Products unit was unusual because it included payments to unessential people. It cited a $7,700 bonus for a kitchen assistant, a $7,000 bonus for a mailroom assistant and $700 for a file administrator.

The audit also described the lack of coordination between the Federal Reserve and the Treasury over A.I.G.’s compensation program. It said Fed officials had their own conversations with company officials about compensation last fall, and were further briefed over the winter by compensation specialists at Ernst & Young brought in to help.

But the Fed did not convey any of the information it had gathered to the Treasury until just before the bonuses were scheduled to be paid in March. Then, the Fed sent an e-mail message to the general counsel at the Treasury, the report stated, warning that the looming bonuses had “garnered press and congressional attention” and would “not be easy for Treasury and the Fed to defend.”

That message promised to supply more detail, but nothing followed for about a week.

“Despite the strong language” of the Fed’s messages, the audit found “that the e-mail did not raise any flags in Treasury.”

Stephen Labaton contributed reporting.