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CNN AMERICAN MORNING WITH PAULA ZAHN

Weapons Inspectors Could Be in Iraq in Two Weeks

Aired October 2, 2002 - 07:34   ET

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

PAULA ZAHN, CNN ANCHOR: Back to the issue of Iraq now. Weapons inspectors could be back there in about two weeks thanks to a deal worked out by officials from Baghdad and the United Nations. But the Bush administration says not so fast. It is still pushing for a tough new resolution backed by the threat of force.
We're going to have reports from Moscow, Paris and the United Nations in just a minute.

But first, let's go to Baghdad for a live report from our own Jane Arraf -- good morning, Jane.

JANE ARRAF, CNN CORRESPONDENT: Good morning, Paula.

Well, Iraqis this morning woke up to government newspapers telling them that Iraq had agreed to let the weapons inspectors back in. But it looks like it's not going to be so easy. In Ankara, Deputy Prime Minister Tariq Aziz warning that Iraq won't accept any new resolutions. What that essentially means is while Iraq is ready and willing to let the inspectors in for what it calls unfettered access to most sites, that access, the unfettered access will stop at the palaces.

(BEGIN VIDEO CLIP)

TARIQ AZIZ, IRAQI DEPUTY PRIME MINISTER: Iraq doesn't feel that there is a need for a new resolution and that's not only the position of Iraq, it's the position of many other countries, including permanent members in the Security Council. Simply, there is no need for a new resolution. The practice of the inspectors in Iraq has been defined by previous resolutions, which we are ready to comply with.

(END VIDEO CLIP)

ARRAF: And those previous resolutions would let weapons inspectors into those palaces, but only with prior notice and accompanied by people like diplomats, a way, Iraq says, to save its dignity and sovereignty -- Paula.

ZAHN: Jane Arraf, thanks so much for the update.

That tough new U.N. resolution that the Bush administration wants is still facing some stiff resistance from three members of the U.N. Security Council -- China, France and Russia. Each has veto power.

We have reports now from Jill Dougherty in Moscow, Jim Bittermann in Paris, Richard Roth at the United Nations. Let's begin in New York -- Richard, good morning.

RICHARD ROTH, CNN CORRESPONDENT: Good morning, Paula.

Well, the U.N. weapons inspectors may soon be all geared up with nowhere to go. This despite a new agreement between the chief U.N. weapons inspector Hans Blix and his Iraqi counterpart, Amir al-Sadi, reached in Vienna yesterday. The two sides made some progress in now saying that so-called sensitive sites could be opened for intensive inspections by the United Nations. They had been subject to prior cumbersome agreements.

However, eight large presidential palaces still remain subject to U.N. agreements with Iraq, which means that international diplomats must escort U.N. weapons inspectors.

Mr. Blix will now be en route back here to New York City, where tomorrow he will brief the United Nations Security Council. And already U.S. Secretary of State Colin Powell says he's going to get some new instructions. Of course, that has to be an agreement between the new perm five, so to speak, of the Security Council on this agreement, who met for the first time going over the proposed U.S./U.K. resolution yesterday. There's the British ambassador flanked by the French ambassador on the left side.

The only thing they reached agreement on, really, was not to talk to the press. But Mr. Blix's bosses are the, is the Security Council members and he's really not going to go back to Iraq on October 15 as planned with a new team until there is an agreement here on what he should do -- Paula.

ZAHN: Let's talk about the reality of the inspections of these presidential sites. David Kay, an inspector, just told us what it was like in '91 when they would go in. He'd say you'd have to announce it ahead of time. A diplomat would have to accompany you and on some of these grounds there would be a hundred buildings and, you know, three guys would go in and he said essentially it ended up being just a tour of the grounds and nothing more.

ROTH: Well, there were also hundreds of other inspections that were not impeded and they did disclose and did find and blow up thousands of items, more than in the entire Gulf War. But under this new U.S. resolution, Paula, the U.N. would take, be able to take scientists and their family members out of Iraq to question them, away from Iraqi minders and away from Iraqi authorities and possible intimidation.

But, of course, that still has to be approved, along with the rest of the resolution.

ZAHN: Yes, and, of course, one of the nation's everybody's waiting to see if it will go along is the nation of Russia.

Richard, we're going to let you go so we can catch up with Jill Dougherty from our Moscow bureau right now to see how the Russians might react to this proposed new resolution. I guess we have a pretty good idea already, don't we, Jill -- good morning.

JILL DOUGHERTY, CNN CORRESPONDENT: We do.

Good morning, Paula.

Well, they're not sold on it, obviously. They basically say that, look, we have resolutions, existing U.N. resolutions. That is what should be carried out. And they say we're happy that Iraq and the U.N. have reached agreement yet again to go according to those original resolutions.

But essentially what they say is let's send the inspectors back as soon as possible and the inspectors are the only ones who can definitively say whether or not Iraq actually does have weapons of mass destruction.

Now, they won't come out and say it directly, but that does put them in opposition to what the United States is saying, which is let's have a new resolution. So the Russian position continues, we want a political solution to all of this.

The real question, Paula, is what would happen if that new resolution does get presented? Would they vote for it? Would they vote against it? What would they do?

And there are some who believe they would vote against it. But there are others here in Moscow who believe that they might abstain. They would not take any decision, they would step aside, let it happen and politically it would be a lot easier for them. In other words, they don't want to sell down their relationship with the United States because of Iraq.

ZAHN: Jill, we're going to leave it there with you this morning so we can travel to Paris, where Jim Bittermann is standing by to give us his take on what the country of France might do when it comes to this proposed new U.N. resolution -- good morning, Jim.

JIM BITTERMANN, CNN CORRESPONDENT: Good morning, Paula.

The French favor not just one resolution, but two. They like the idea, like the United States, of getting the weapons inspectors back in, especially under a new toughened inspection routine.

However, the French say that before any military action, one should let the inspectors do their work and then evaluate what's happened and see if military action is warranted. That military action would be authorized in a second resolution, which would be brought before the Security Council once the inspectors have had some time to do a little work in Iraq.

That's been the French position for almost a month now, even before George Bush went to the United Nations for his big speech. And it was outlined again earlier this week in a front page article in "Le Monde" by the French foreign minister, Dominique de Villepin. De Villepin said that, in fact, the United States should not have a blank check for military action in Iraq. And he also said that if it is the goal of any military action to change the regime in Iraq, if that's the stated goal, then the French would not be behind it because they view that as a clear cut violation of international law.

However, if, in fact, the goal is to have weapons inspection work, then the French would be in a position to support with their own military any kind of military action that is taken if the weapons inspectors are thwarted from their job -- Paula.

ZAHN: Thanks for the review of all that.

Jim Bittermann in Paris, Jill Dougherty in Moscow and Richard Roth at the United Nations.

Thanks for that.

We have heard from the Congressional Budget Office that waging war against Iraq could carry a staggering price tag. But what would it mean to all of you out there?

"Fortune" magazine's editor-at-large Andy Serwer is here to tell you.

Good morning.

ANDY SERWER, "FORTUNE" MAGAZINE: Hey, Paula, good morning to you. Thank you very much.

We're going to be talking a little bit over the next couple of weeks about the price of a war in Iraq on American consumers, their pocketbooks, the economy, the stock market. A good example, yesterday the stock market took off in part because of talk of the U.N. agreement, flawed though it may be. And we'll see how the market responds today now that the administration is suggesting that it's very, very flawed, indeed.

I want to talk a little bit about the price of oil, of course, though, Paula, because that impacts Americans so directly. The price of oil this year has really taken off, up about $10 a barrel since the beginning of the year, from $21, you can see, up to around $31. And when we talk about this, the reason why this is so important is because Iraq, surprisingly, is a huge exporter of oil to the United States.

In fact, the United States is the biggest customer of Iraqi oil. Very surprising here, 878 barrels a day flows from Iraq to the United States. You can also see it goes to Europe, Canada and Japan, our other allies, as well.

So the question then becomes how high could the price of oil go in a war?

ZAHN: Well, there doesn't seem to be any consensus on there, does it?

SERWER: Right. Right.

ZAHN: It has a lot to do with what Venezuela might do, what Saudi Arabia might do. What is your best guess?

SERWER: Well, our best guess is the price of oil would go up about $10 a barrel from the $31 price to $41. That's what happened 10 years ago.

ZAHN: Wow.

SERWER: And that would have a dramatic impact on the economy. The price of gasoline is $1.45 a gallon nationally. That would certainly go up. The question then becomes what happens with the war and then where does the price of oil go, reflecting what's the developments there?

So, you're right, it is a really difficult situation to analyze.

ZAHN: Well, you can't also predict how production might be increased by these other countries.

SERWER: That's right. That would offset it. Also, the Iraqis, if the war was swift, the Iraqis might step up production. How badly would the wells be impacted, that kind of thing?

We have one other chart I want to bring up here that's really fascinating, I think, and that is the percentage cost of a gallon of gasoline in terms of its components. You can see here that when you buy a dollar -- the way to look at this is you buy a dollar of gasoline. The crude oil cost itself is only $0.37. Taxes are a big part, refining is a big part, as well. But those other costs hold constant.

So when the price of crude goes up, that's the variable cost. That's what makes the price of oil go up and that's why you are paying so much more when there are problems.

ZAHN: Because you're saying the other percentages remain pretty consistent?

SERWER: Those remain constant. That's right. And one very interesting thing we want to talk about tomorrow, Paula, we're going to talk about some gas stations and oil companies that only sell American oil, something that's very, very interesting. We'll be getting into that tomorrow.

ZAHN: Look forward to that. And I know you're back from Las Vegas. Did you lose your jacket there, Andy?

SERWER: I lost my jacket. I didn't lose my shirt, though. Listen to Bill Hemmer laughing. I didn't lose my shirt, but it's just amazing.

ZAHN: Were you working or playing?

SERWER: I was working. I was giving a speech out there to some insurance executives and it's just amazing how fast that city continues to grow.

ZAHN: Yes.

SERWER: No matter what's going on in the world, people love to go to Las Vegas.

ZAHN: It's kind of like a whole different, a whole different world.

SERWER: Yes, that's right.

ZAHN: It's really quite extraordinary.

Thanks, Andy.

SERWER: Thank you.

ZAHN: Glad you came back semi-whole.

BILL HEMMER, CNN ANCHOR: He's always worth a good laugh, I think. Good morning, Andy.

SERWER: Well, thank you, Bill.

HEMMER: Nice to see you.

SERWER: OK.

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