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Aired January 14, 2002 - 04:30   ET

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


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Seen in classrooms the world over, this is CNN NEWSROOM.

MICHAEL MCMANUS, CO-HOST: Welcome to CNN NEWSROOM. I'm Michael McManus.

SUSAN FREIDMAN, CO-HOST: And I'm Susan Freidman.

U.S. warplanes take aim at an al Qaeda training camp in eastern Afghanistan. Intent air strikes were reported Sunday near Khowst, just across the border from Pakistan, where al Qaeda and Taliban members are believed to be hiding and training under ground.

MCMANUS: As the war on terrorism continues in Afghanistan, U.S. President Bush is calling on the leaders of India and Pakistan to work toward peace. This weekend, Mr. Bush praised a speech by Pakistani President Pervez Musharraf, which condemned religious extremists in Pakistan.

Our Joel Hochmuth has more.

(BEGIN VIDEOTAPE)

JOEL HOCHMUTH, CNN CORRESPONDENT (voice-over): Despite a major speech from Pakistani President Pervez Musharraf this weekend, a standoff between two nuclear powers goes on. Hopes were high the speech could help defuse tensions that have led India and Pakistan to the brink of war. The two nations have massed hundreds of thousands of troops along their shared border in the wake of a terrorist attack on India's parliament last month that killed 14 people. In the address to his nation Saturday, Musharraf did vow to crack down on religious militants operating out of his country. He's outlying five Islamic groups in particular, including two India claims are responsible for the December attack.

GENERAL PERVEZ MUSHARRAF, PAKISTANI PRESIDENT: Pakistan rejects and condemns terrorism in all its forms and manifestations. Pakistan will not allow its territory to be used for any terrorist activity anywhere in the world.

HOCHMUTH: On the surface at lest, that statement would seem to satisfy some of India's demands before talks to defuse the current crisis could begin. While reaction from India has been positive, its leaders are looking for action not just words. JASWANT SINGH, INDIAN EXTERNAL AFFAIRS MINISTER: The lessening of tensions on the borders is entirely dependent on the steps that are taken inside Pakistan to operationalize what has been stated by his excellency General Pervez Musharraf. We have to go not by the stated intent but by action on the ground.

HOCHMUTH: Even before the speech, Pakistani police announced they had raided religious schools and mosques to arrest more than 250 suspected militants. India says that's not enough. It still wants Pakistan to extradite 20 suspects, in particular, accused of bombings, hijackings, assassinations and other crimes within India. Pakistan refuses and says it will only try them within its borders and only if there is more proof of their guilts.

And the issue of Kashmir remains a huge sticking point. Kashmir is that region split between the two countries that both have claimed as their own since India and Pakistan gained independence more than 50 years ago. Sporadic shelling goes on across the so-called line of control. In his speech, Musharraf said Pakistan will not budge in its position that Kashmir, a largely Muslim region, be granted independence. India wants to keep it within its borders. Musharraf is calling on the international community to mediate the dispute, an idea India is rejecting.

MUSHARRAF: Now you must play an active role in solving the Kashmir dispute for the sake of lasting peace and harmony in the region. We should be under no illusions that (UNINTELLIGIBLE) demands of the people of Kashmir can ever be suppressed without their just resolution. Kashmiris also expect that you ask India to bring an end to (UNINTELLIGIBLE) terrorism and human rights violations.

SINGH: We reiterate our conviction that all issues between India and Pakistan can only be addressed bilaterally. There is no (UNINTELLIGIBLE) for any third party involvement.

HOCHMUTH: Still, third parties are weighing in. President Bush phoned both sides on Sunday urging them to work together to reduce tensions. And Secretary of State Colin Powell, who heads to the region this week, is calling Musharraf's speech bold and principled.

Reaction to Musharraf's speech is coming from within Pakistan as well. For that we go to Ash-har Quraishi.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

ASH-HAR QURAISHI, CNN CORRESPONDENT (voice-over): Following a boldly introspective speech by President Pervez Musharraf, many Pakistanis are giving their self-appointed leader a nod of approval.

In a single, one-hour address, Musharraf laid out blunt measures for dealing with two of the country's biggest and most persistent problems, the dispute over Kashmir and Pakistan's long history of tolerating violent extremist groups. PERVEZ MUSHARAFF, PRESIDENT, PAKISTAN: What direction are we being led in by these extremists? Pakistan has been made a weak state, where the supremacy of law is questioned. This situation cannot be tolerated anymore.

QURAISHI: In a strategic move, police raided the offices of several extremist organizations in Karachi, shortly before the president's long-awaited speech, and rounded up more than 250 members of these groups in one of the largest crackdowns ever.

Of the five extremist groups banned by President Musharraf, two were directly accused of being involved in sectarian unrest. Today one of them, the violent Sunni group, Sipah-e-Sahaba finds its offices closed. The only people in sight are a few children, left behind to remove signs from the building. The other banned group, the minority Shi'a Tehrik-e-Jafria party.

ALLAMA SAJID NAOVI, TEHRIK-E-JAFRIA: This is very unfair. He has done a great injustice to us. I condemn his decision.

QURAISHI: But on the streets of Karachi, a sense of approval for the steps President Musharraf has taken. In a local barber shop this man says, "I think what he did was the right thing because Pakistan needs to think about its well being. That's why I think it's OK."

And at a corner flower stand, a similar reaction, "I think the things he said were very good for the country," this man says. "He is just the kind of leader this country needs."

(on camera): While the reaction in Karachi has been mostly positive, President Musharraf's greatest test may come in a few days, after Friday prayers, a traditional time of protest by religious hard- liners. It remains to be seen whether or not his new vision for the country can stand up to the small but vocal minority that opposes him.

Ash-Har Quraishi, CNN, Karachi, Pakistan.

(END VIDEOTAPE)

MCMANUS: We continue our focus on Pakistan's border with India. As we have said, the two countries are in the middle of a face-off over Kashmir. Even "The Lonely Planet," the guidebook to the world's most dangerous places, warns travelers to stay away from Kashmir. So what's the director of tourism to do? We'll explore that dilemma.

But first, Ash-har Quraishi returns as he meets villagers long living in fear along the edge of Pakistan.

(BEGIN VIDEOTAPE)

QURAISHI (voice-over): This is Hardiola (ph), a small village about two miles from the border with India. It's mostly empty now. The fear of war has scared almost everyone away. The few that remain behind are only here to guard the belongings left behind -- mostly men and teenage boys. "The situation is very tense," he says. "Both armies are all over the border. So I moved my family to Lahore. I'm only trying to look out for my children."

The village elders speak of current events and politics here. As for the current situation, they are defiant.

HAJI KARAMAT ALI, VILLAGE ELDER: On the border, people have -- people are very courageous. If the time comes war, the Pakistanis will take, with their armed forces, they will face the consequences.

QURAISHI: The atmosphere in the village of Lallo (ph) is a little different. It sits just 300 feet from the border, under the watchful eye of Indian military post. In 1965, Indian forces were able to make their way through the village and almost to the city of Lahore. Today, the village is a virtual ghost town.

(on camera): It's the same story in villages all along the border. Every time tensions between India and Pakistan increase, people here say they're forced to leave out of concern for the safety of their families. But some villagers we spoke to say that they welcome war as a possible end to the fear they've been living with for years.

UNIDENTIFIED MALE (through translator): I say, let the war start so this can be over with. We are forced to run this way and that way. I say, let the war start so we can get on with our lives.

QURAISHI (voice-over): For now, the signs of impending war are everywhere. Bunkers scattered across the landscape. Army positions around every corner. So villagers continue to leave these areas. Musar Ahmet tells us that he doesn't know when he will be back. He says he will join his family and leave his house and farm behind until the troops have gone from his fields.

Ash-Har Quraishi, CNN, on the Pakistani-Indian border.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

JASON BELLINI, CNN CORRESPONDENT (voice-over): Mazir Jon (ph) has the kind of job that would make even George Costanza jealous, working in Kashmir's office of tourism.

(on camera): I mean no disrespect by this, but as assistant director of tourism what do you do all day?

MAZIR JON, ASSISTANT DIRECTOR OF TOURISM, KASHMIR: Well --

BELLINI: (voice-over): What Mazir does and does well --

(on camera): It's very nice.

MAZIR: Isn't it?

BELLINI: Yes.

(voice-over): -- is talk about the things Kashmir has going for it, as a tourist destination.

MAZIR: The people who wants to go for trout fishing. We have a very, very good trout beach here.

BELLINI (on camera): These people on here, what are they doing?

MAZIR: They are my staff.

BELLINI: They're your staff?

MAZIR: Oh yes. They are working.

BELLINI: Yes. They're working, what are they doing?

MAZIR: Same what I am doing.

BELLINI: Same with what you're doing.

MAZIR: At the moment, not much work.

BELLINI (voice-over): As he shows me his brochures, Mazir (ph) tells me what I could have been doing in Kashmir if I was here 12 years ago.

MAZIR: We used to have previously, but now we don't have.

BELLINI: Adventure tourists used to flock to Kashmir. Water rafting and mountain tracking were especially popular. No more.

(on camera): So there's no way to have an adventure here?

MAZIR: Not at the moment. Even we don't have the skiing this time because we don't have any snow this time. The climate, and nature is also against us.

BELLINI: Playground of the world, you don't find that ironic?

MAZIR: No.

BELLINI: No?

MAZIR: No.

BELLINI (voice-over): He remembers when people in India and around the world thought Kashmir, and thought beautiful relaxing get- away.

(on camera): How long have you been working here?

MAZIR: Since the last 30 years.

BELLINI (voice-over): Hotels in Kashmir accommodated thousands of visitors at once. Most are still here, still open, still elegant, still waiting for tourists to come back.

(on camera): I'm staying at the Intercontinental Hotel here in Srinagar and as far as I can tell, I'm the only guest here at the moment. I literally have three people waiting just on me here in the restaurant.

MAZIR: Background is the houseboats.

BELLINI: Now tell me about these houseboats. What should I know about them?

MAZIR: This valley was known as Kashabrishi Puf (ph).

BELLINI (voice-over): Mazir takes me to one of his main selling points. Houseboats the British colonialists built for their summer holidays, but now function as wotels (ph), water hotels. Okay, wotels (ph) is my word.

MAZIR: See this carving? It is pure walnut wood carving. Very expensive. You come during summertime, we will go to the dock.

BELLINI: Mazir tries to convince any foreigner he meets to come back. It's his job, but also his nature.

MAZIR: I hope you will be -- you will come - you will come, certainly, in your future, again.

BELLINI: (on camera): Unforgettable Kashmir, what's so unforgettable about Kashmir?

MAZIR: The beauty of Kashmir.

BELLINI: That's what's unforgettable?

MAZIR: Yes.

BELLINI (voice-over): Unfortunately for Mazir, the world will remember Kashmir --

MAZIR: You will remember.

BELLINI: -- but as a global hot spot, the kind even most adventure tourists avoid.

Jason Bellini, CNN, Srinagar, Kashmir, India.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

HAYAT BEYHUM, MIAMI, FLORIDA: My name is Hayat Beyhum from Miami, Florida. And I wanted to Ask CNN: How did the U.S. acquire its naval base at Guantanamo Bay, Cuba?

MARK POTTER, CNN CORRESPONDENT: Guantanamo Bay was taken over by U.S. Marines in 1898 during the Spanish-American War. In 1903, a newly independent Cuba leased it to the United States for an annual fee of $2,000 in gold. A 1934 treaty reinforced the agreement and allowed the U.S. to stay as long as it wished.

After the Cuban Revolution of 1959 and Fidel Castro's takeover, tensions rose at Guantanamo Bay, first with the Bay of Pigs Invasion and then the Cuban Missile Crisis of 1962.

During huge boat lifts from Haiti and Cuba in 1994, more than 60,000 refugees were detained there behind wire fences where frustrations often ran high.

In 1999, plans to house 20,000 Kosovo refugees never materialized. But now with the Afghan prisoners, Gitmo is back in business with perhaps its most dangerous mission yet.

(END VIDEOTAPE)

FREIDMAN: More al Qaeda and Taliban detainees will join those already being held at a U.S. base in Cuba. Heavily guarded, 30 more left Kandahar Sunday aboard an Air Force transport plane. The 8,000- mile journey will take them to a remote facility at Guantanamo Bay. They'll join 20 other Taliban and al Qaeda fighters who arrived in Cuba Friday. Military officials say those detainees are already giving up critical information.

CNN's Kathleen Koch brings us up to date on the war against terrorism beginning with a closer look at the detainees and some troubling revelations.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): Another C-17, this time loaded with 30 detainees, took off from Kandahar, Afghanistan, bound for Guantanamo Bay, Cuba. Military sources now say some prisoners in Kandahar had plans to one day travel to the United States and kill Americans.

The information worries U.S. senators who visited the region, including one who met with some of the detainees.

SEN. JOE BIDEN (D-DE), CHAIRMAN, FOREIGN RELATIONS COMMITTEE: These are some real hard, hard, hard cases. But unless we gather the list of leaders which we -- I have in my pocket here, and there's about another 20 we don't have. People think that the possibility of them being able to do guerrilla kind of attacks on military here are real, and they're very concerned about it.

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: That's why we're still there. That's why we're still attacking. We've got to destroy them, and we've got to make sure that they don't reconstitute themselves and reorganize to strike at us again from another base in that area of Afghanistan or someone else in the world.

KOCH: U.S. aircraft over the weekend made another round of strikes on a large complex in Zawar Kili, near the border with Pakistan that the military believes was being used as a transit point for fighters fleeing the country.

Another senator just back from Afghanistan says most needed now: U.S. aid to help the fragile interim government maintain order.

SEN. FRED THOMPSON (R), TENNESSEE: They're trying to get everybody under the same tent. They're doing a pretty a good job of doing that, but they've got to have some kind of an army eventually. They've got to have some kind of police force.

KOCH: Senators reported there is still conflicting information on whether Osama bin Laden or Mullah Mohammed Omar are still in the region.

(on camera): Information and intelligence being gathered there is drawing a chilling connection between al Qaeda fighters in custody and planned terrorist attacks against the United States. Military sources say why they weren't carried out is unclear.

Kathleen Koch, CNN, the Pentagon.

(END VIDEOTAPE)

FREIDMAN: Although in the midst of war, many Afghans are looking to the future and working to rebuild their lives and the economy from the ground up. For people who want to succeed that often takes creativity to meet unusual challenges.

Michael Holmes takes a look at how necessity is often the mother of invention.

(BEGIN VIDEOTAPE)

MICHAEL HOLMES, CNN CORRESPONDENT (voice-over): Mohammed Aghah does business in his Kabul grocery store. Nothing unusual in that except his store is a shipping container. He bought it seven years ago for a few hundred dollars and has never even thought about moving into a more traditional shop front.

MOHAMMED AGHAH, SHOP OWNER (through translator): I couldn't afford to buy a regular store. Plus, this land is government land and they can make us move. I can take the container with me.

HOLMES: No doubt to the horror of architecture purists, the traditional mud brick store is in many places being squeezed out by the ubiquitous shipping container. Street after street of stores that may look normal from the front, but from the back, resemble a container parking lot. They are structures of strength in a city where buildings of bricks and mud have crumbled to rockets and bombs.

WAZIR GHUL, CONTAINER DEALER (through translator): We can make doors, gates, many things.

HOLMES: Wazir Ghul was unemployed for three years before jumping on the container bandwagon. He's something of a wholesaler, an entrepreneur buying them for $250 each and either selling them, renting them or breaking them into pieces. In his yard, a worker toils for $2 a day breaking the welds that hold the container wall together. No blowtorch here, it's all done the old fashioned way.

A few miles away, those pieces are turned into truck panels, doors or steel gates for a population that likes some solid protection.

(on-camera): So how much would this door be?

UNIDENTIFIED MALE: Twenty dollars.

HOLMES: Twenty dollars? It's a good door for $20.

And there's another reason that these shipping containers are so popular here. The shooting may have died down somewhat in Kabul recently, but crime still very much a problem. A businessman was kidnapped right here last week. He was killed and break-ins are very common. Now for a storekeeper, a shipping container provides both peace of mind and importantly, a lock door.

UNIDENTIFIED MALE (through translator): It's stronger and thieves can't break the door easily.

HOLMES (voice-over): The story of Afghanistan's shipping containers is the tale of the country's economic decline during the civil war of the 1990s. Goods came in to the country in these containers, but there was nothing to send back out. Afghans say a sign of a recovering economy here will be when the containers start leaving again, this time, full of goods for the outside world.

Michael Holmes, CNN, Kabul, Afghanistan.

(END VIDEOTAPE)

MCMANUS: The energy giant that once was makes news in our "Headline" segment. Enron used to share the Fortune 500 list with the likes of IBM and Kodak. Now what's left of the company is bogged down in bankruptcy court, but blame for the mess continues to grow from Houston all the way to the U.S. political and financial capitals.

Reports now from Greg Clarkin and John King.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SENOR WHITE HOUSE CORRESPONDENT (voice-over): Top Bush deputies disclose new details of their contacts with Enron officials, but say the bottom line is unchanged: A major political supporter of the president asked for help, and the answer was no.

DON EVANS, COMMERCE SECRETARY: I'm going to do everything I can to protect the integrity and the trust of that office. And my judgment was to protect the integrity of that office, not to step in.

KING: Key Democrats say it is not time for pointing fingers. SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: I have not seen any evidence up to this time that officials of the Bush administration acted improperly with regard to Enron.

KING: Still, Democrats in Congress want every detail of Enron's dealings with the administration.

Enron chairman and CEO Ken Lay spoke to Commerce Secretary Evans on October 15 of last year, the day before the company disclosed major losses. But Evans says the only topic discussed in that call was Enron operations in India. The Enron chief called Evans again on October 29. And Evans says in that conversation Lay asked for help with bond agencies.

Lay also called Treasury Secretary Paul O'Neill twice: in late October at home, and again at the office in early November.

PAUL O'NEILL, TREASURY SECRETARY: Ken Lay didn't ask me to do anything and we -- you know, we did nothing.

KING: The White House says the president learned of the phone calls just last Thursday, more than two months after the fact. And the president's spokesmen said late last week he did not believe anyone at the White House was told at the time.

But Evans says he told the White House chief of staff a few weeks after the call because Enron's troubles were making headlines.

EVANS: I thought the White House ought to know. I was over there one day, and I stepped into Andy Card's office and told him I received this call. He simply listened to me and said thank you very much.

KING: Thousands of Enron shareholders and employees lost millions when the company filed for bankruptcy. And some Democrats say Secretaries O'Neill and Evans should have warned the public the company was in trouble.

(on camera): But Secretaries Evans and O'Neill say they were not told anything about the company's finances that was not already public knowledge. And they say any investigation in the end will show Enron's generous support of the president, and its connections within the administration, bought it no special treatment.

John King, CNN, the White House.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

GREG CLARKIN, CNNFN CORRESPONDENT (voice-over): It's already engulfed Houston and Washington, and now the Enron collapse threatens to pull in Wall Street.

A number of Enron critics are asking if Wall Street's bankers played a role in keeping information away from the public as the one- time energy giant collapsed.

WILLIAM LERACH, SECURITIES LITIGATION ATTORNEY: A fraud of this scope and size simply cannot be perpetrated without the assistance of sophisticated professionals. This case is going to continue to evolve and expand. There are other professionals, lawyers, investment bankers and the like, who appear to be deeply implicated.

CLARKIN: The former head of the Securities and Exchange Commission agreed, saying Wall Street bears some of the blame.

ARTHUR LEVITT, FMR. SEC. CHAIRMAN: It's not just he auditors, it's the security analysts; it's the rating agencies that dropped the ball; it's the investment bankers who cooked up the scheme to hide matters from the general public.

CLARKIN: As for the auditors, Arthur Andersen, Enron's accounting firm, has admitted to destroying documents relating to the company. "TIME" magazine reports Andersen employees were direct to destroy all but the most basic, quote, "work papers," end quote.

One member of Congress said, if true, it may lead to criminal charges.

LIEBERMAN: If this memo was what it looks like, I'm afraid that the folks at Arthur Andersen could be on the other end of an indictment before this is over.

CLARKIN: Senator Lieberman also said the Enron disaster could bring down Andersen as well.

LIEBERMAN: Arthur Andersen is a great company with a great name. That name is being sullied; and ultimately this Enron episode may end this company's history.

CLARKIN: Andersen's role has many demanding new oversight of those charged with checking the books of corporate America.

Former SEC Chairman Levitt points out what happened at Enron could happen to other corporate heavyweights.

Greg Clarkin, CNN Financial News, New York.

(END VIDEOTAPE)

FREIDMAN: When America's new war is over, how will it be remembered? How will the gallantry of those servicemen and women who fought bravely be etched in history?

MCMANUS: Yes, freedom is derived through acts of courage. Sometimes we forget those who truly gave, sometimes through an act of omission and sometimes not.

FREIDMAN: That's right, Mike.

CNN's Bruce Morton has the story of a soldier long forgotten who is finally getting his due as an American hero. (BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): They lay a lot of wreaths at Arlington, play "Taps" often -- but this was different. Honors coming late to Sergeant Henry Johnson, an African-American hero of World War I. He fought off a whole German unit, sustained 20 or so wounds, and vanished: no medals, no awards.

His family only recently learned he was buried here. His 85- year-old son Herman, a Tuskegee airman in World War II, knows why.

HERMAN JOHNSON: Race has caused a lot of things in this country. And that happens to be just one little thing. But certainly there's no question in my mind, and nobody has been able to tell me anything different, that it all -- it was race.

MORTON: Henry Johnson, his son noted, lies in a segregated part of Arlington, surrounded by other blacks.

He got the purple heart just a couple of years ago. Arlington is an honor, his son said, but there is one thing more. Because U.S. forces in World War I were segregated, Johnson fought under French command. He won France's highest award for gallantry -- the only American who ever did. But New York's Governor George Pataki, who's been pushing Johnson's cause, wants one thing more.

GOV. GEORGE PATAKI, NEW YORK: But we're not going to stop. The next step is for Sergeant Henry Johnson to be recognized by receiving the medal of honor as the true American hero that he truly was.

MORTON: New York veterans groups were here; and emotion from the sergeant's son.

JOHNSON: I think I'm a pretty strong guy, but I'm really filled up. It makes it kind of difficult to be as articulate as I'd like to be.

MORTON: A wreath, a grave in Arlington. America is fighting a new war, and still struggling to heal the scars of an old one.

Bruce Morton, CNN, Arlington National Cemetery.

(END VIDEOTAPE)

FREIDMAN: Lessons we all continue to learn from wars old and new.

MCMANUS: That's right.

Now for a programming note, we are making a few changes here on CNN NEWSROOM. Beginning on January 22, CNN NEWSROOM and CNNfyi.com will be renamed CNN Student News and CNNstudentnews.com.

FREIDMAN: Our name will change and the format will be changed slightly, but users of CNN NEWSROOM and CNNfyi.com will continue to see... MCMANUS: That's right.

FREIDMAN: ... the same quality resources you come to expect. In the next few months, we'll continue to fine-tune the format. We hope you like what you see.

MCMANUS: We sure do. And for more information or if you have questions, comments or of course suggestions, please visit CNNfyi.com or call that number right there on your screen, 1-800-344-6219. And of course, be sure to keep watching. In the meantime, we'll see you tomorrow. I'm Michael McManus.

FREIDMAN: And I'm Susan Freidman. Have a great day.

MCMANUS: Bye-bye.

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