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Sons of Saddam Hussein Killed in Iraq

Aired July 22, 2003 - 18:00   ET


ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, July 22. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening, everyone.

Tonight, two of the aces in the deck of most-wanted Iraqis are dead. Saddam Hussein's sons, Uday and Qusay, were killed in a battle with U.S. troops in Mosul in northern Iraq. Qusay was the ace of clubs, Uday the ace of hearts. They were killed when troops raided a house after receiving intelligence that Saddam Hussein's sons were in the building.

From the Pentagon, Jamie McIntyre will report on today's dramatic raid and its result. From the White House, Suzanne Malveaux will report on what this news means for the Bush administration. And from Baghdad, Rym Brahimi will report on celebrations in the streets.

We begin at the Pentagon -- Jamie.

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, it was a daylight raid based on intelligence from an informant that led the United States military to a house, a villa, really, in Mosul, where the two sons of Saddam Hussein met their fate. At that location, the U.S. military says they believe they killed not only Uday and Qusay, but also one of Saddam Hussein's grandsons and apparently a bodyguard. The U.S. says that all four were killed after they greeted U.S. soldiers with heavy small-arms fire.


LT. GEN. RICARDO SANCHEZ, COMMANDER, COALITION GROUND FORCES: They died in a fierce gun battle. They resisted the detention and the efforts of the coalition forces to go in there and apprehend them, and they were killed in the ensuing gun fight and the attacks that we conducted on the residence.


MCINTYRE: The mission was described as lasting six hours. The gun battle part lasted at least three hours. It involved U.S. special forces from what's known as Task Force 20, the special operations team, hunting for Saddam Hussein and other top Iraqis.

Also brought in were helicopters, TOW missiles, and even an A-10 attack plane. The most encouraging aspect of the operation, according to some Pentagon officials, is that the intelligence behind it came from a walk-in, an Iraqi who may have been motivated by the $15 million bounty placed on the heads of Saddam Hussein's sons.


SANCHEZ: It was a walk-in last night that came in and gave us the information that those two individuals were in that residence. And the other two that were killed in there, we're still working to get final confirmation on who they are.


MCINTYRE: Paul Bremer, the U.S. civil administrator in Iraq, said a short time ago that he believes that this shows that the Iraqi people are behind the United States, especially because there were reports of celebratory gunfire in Baghdad. He says he's always believed that getting Saddam Hussein is just a matter of time. And he hopes that this action today brings that day, in his words, one day closer -- Lou.

DOBBS: Jamie, thank you -- Jamie McIntyre reporting from the Pentagon.

The White House has just released a statement on the death of Saddam Hussein's sons. The White House said it was pleased by today's developments, saying Uday and Qusay were responsible for countless atrocities.

Our White House correspondent Suzanne Malveaux joins me now -- Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Lou, just moments ago, we got details about how the information came to the president.

It was early this morning. Secretary of Defense Donald Rumsfeld called Mr. Bush, said: It looks like we got the two sons. It was then two hours later that there was a single source that had identified the bodies as being the sons of Saddam Hussein, still waiting for additional confirmation. And then it was just before that briefing in Baghdad that the Pentagon called the chief of staff, Andy Card, and said, yes, they definitely had his sons.

Andy Card passed that message along to the president, the president expressing a great deal of satisfaction with that, the White House releasing the statement just moments ago. It says: "We are pleased to learn from the Department of Defense of today's action against Uday and Qusay Hussein. Over the period of many years, these two individuals were responsible for countless atrocities committed against the Iraqi people and they can no longer cast a shadow of hate on Iraq. U.S. military forces and our intelligence community, working with an Iraqi citizen, deserve credit for today's successful action. While there is still much to do in Iraq, the Iraqi people can see progress each day toward a better and more prosperous future for their country."

Clearly, a big win for this administration, Lou, but also somewhat of a low-key response. That is because this administration recognizes there's still a lot of work that needs to be done, American soldiers killed almost on a daily basis inside of that country, weapons of mass destruction still to be found, and also, of course, the big fish still on the loose, Saddam Hussein -- Lou.

DOBBS: Absolutely.

And, Suzanne, the White House, of course, dealing with a controversy. Late today, the National Security Council official took some of the blame for the controversy that involves intelligence used in the president's State of the Union address. What more can you tell us about this development?

MALVEAUX: Well, it was an extraordinary briefing. It lasted for about a little bit more than an hour. It was the deputy national security adviser, Steve Hadley, who said that, yes, that he had obtained -- the White House discovering these two memos from the CIA that were sent to him, as well as to National Security Adviser Condoleezza Rice, those memos expressing some concern over the claim that the president had made in his State of the Union address that Iraq was trying to obtain uranium from Africa.

It was a concern about that statement from the president's Cincinnati speech. It was taken out of that speech in October, but then put back into the State of the Union address three months later. Hadley said, had he recalled those memos during the speechwriting process, he would have alerted the president, sent some red flags up, and said, no, you cannot include this in your speech. But he could not recall those memos. He says that he and Dr. Rice take responsibility for this.

He has had discussions with the president regarding these memos. And we have been told that the president has confidence, remains confident, in both Hadley and his National Security Council team.

DOBBS: Suzanne, thank you very much -- Suzanne Malveaux reporting from the White House.

Iraq's new governing council is meeting with the United Nations Security Council in New York. Ahmed Chalabi said the death of Saddam Hussein's sons today is an important development for the future of Iraq.


AHMED CHALABI, IRAQI GOVERNING COUNCIL: This is very important. And this will contribute considerably to reducing attacks on coalition soldiers. And it will also contribute to establishing further security in the country.


DOBBS: And tonight, CNN will have a special program, "Target: Saddam Hussein's Sons," with Paula Zahn and Anderson Cooper. That begins at 7:00 p.m. Eastern, 4:00 p.m. Pacific.

Private Jessica Lynch is home tonight. She received a hero's welcome in Elizabeth, West Virginia. Patty Davis is there with the story -- Patty.

PATTY DAVIS, CNN CORRESPONDENT: Well, Lou, it was billed as a low-key event, but this was anything but: flags being waved, yellow ribbons all over town, people lining a parade route, the smell of hot dogs in the air, a real celebration. And the focus of it all: Private Jessica Lynch returning home to West Virginia. She spoke for the first time publicly about her ordeal.

Here's what she had to say.


PFC JESSICA LYNCH, RESCUED POW: I've read thousands of stories that said, when I was captured, I said, "I'm an American soldier, too." Those stories were right. Those were my words. I am an American soldier, too. Thank you for this welcome. And it's great to be home.


DAVIS: Hundreds of people gathered here in Elizabeth, West Virginia, to cheer Lynch on from all over the state, some people coming as far as 2 1/2 to three hours away.

Now, some told us, this is the most exciting thing that has ever happened to them in this part of West Virginia. Now, we did notice some police sharpshooters, very interesting to note that, on the roofs as this motorcade was going on around Elizabeth, West Virginia, perhaps watching for potential trouble here. But Lynch is now home at her home, which is about five miles from here in Palestine, West Virginia, where she will continue rehabilitation, her recovery.

She is still very fragile. She still needs a lot of recuperation time. She has not a lot of feeling in her feet. And that's keeping her from walking at this point. She can use a walker, but she does most of her moving now in a wheelchair -- Lou.

DOBBS: Patty, thank you very much -- Patty Davis reporting from Elizabeth, West Virginia.

Well, still ahead here tonight, Republican Senator Saxby Chambliss, a member of the Senate Armed Services Committee, joins us. We'll be talking about an American military that is overstretched and about a possible mission to Liberia, as well controversy over U.S. intelligence on Iraq, and a great deal more.

Also ahead here: sleeping with the devil, why the United States compromises when it comes to Saudi Arabia. Robert Baer, the author of a new book that examines the complex U.S.-Saudi relationship, he calls it a sellout.

And higher education at a much higher price: Tuition costs are skyrocketing at state colleges in a number parts of the country. Peter Viles will have the report for us.

And cracking down on crime: The president's task force claims success in the war on corporate crime and corruption.

Stay with us.


DOBBS: The White House's Corporate Fraud Task Force today gave the president a progress report on its first year in action. The task force, which includes SEC Chairman William Donaldson and Deputy Attorney General Larry Thompson, they told the president that they have helped uncover and prosecute hundreds of corporate criminals.


LARRY THOMPSON, DEPUTY ATTORNEY GENERAL: The task force has obtained over 250 corporate fraud convictions or guilty pleas, including guilty pleas or convictions of at least 25 former CEOs. The task force has, through its work, in investigations and prosecutions, has charged 354 defendants with some type of corporate fraud in connection with 169 cases.


DOBBS: As we've been reporting here, only one of those corporate criminals has actually been sentenced to jail. Former ImClone chief Sam Waksal today left his New York apartment, where he's been under house arrest. He's on his way to report to Schuylkill Federal Correction Institution Minersville, Pennsylvania. Waksal begins serving his more than seven-year sentence for securities fraud.

Prison officials say he'll be put to work from 7:30 a.m. to 3:30 p.m. five days a week. He'll be cleaning pots, mowing grass and mopping floors.

Updating our corporate America criminal scoreboard, including Waksal, 79 people in corporate America have been charged with crimes, 16 of them from Enron. It has been now 596 days since Enron went bankrupt.

Stocks rose solidly today, partly on news that Saddam Hussein's sons had been killed in Iraq: the Dow Jones industrials up almost 62 points. The Nasdaq rose 24, the S&P up 9.

Christine Romans, as always, has the market for us.

How much did this news on Saddam Hussein's sons being killed really have to do with this market today?

CHRISTINE ROMANS, CNN CORRESPONDENT: Well, 62 points for a rally, at first blush, doesn't look that great, right? But the Dow was down 58 before this news. The reports that this could be these two sons came out this morning, so, in all, about 134 points from bottom to top.

DOBBS: We can call that a rally.

ROMANS: Yes, that's a rally. One guy called it a bad-guys rally. But they'll take it, I guess.

DOBBS: Absolutely.

ROMANS: And some optimism on the trading floor that there's progress in Iraq. It was also earnings. It wasn't just Iraq, a couple of merger deals as well. Texas Instruments was the most active stock, up 8 percent on its higher sales and revenue, same for Corning, up 10 percent. And AOL Time Warner, parent of this network, rose 3 percent on an upgrade a day before its earnings report.

Now, more earnings after the bell today. reported, its net loss narrowed significantly from a year ago. Revenue rose 37 percent. But Sun Microsystems reported a break-even quarter after a profit a year ago. And its sales were disappointing.

Now, more evidence, Lou, that old game of beating the Street and the stock rises, it's over. UPS and Qwest diagnostics beat the Street today and both stocks fell. And a headline in "USA Today" said, "Earnings Whispers Return." Lou, I talked to a lot of people today. Almost everyone thinks, earnings whispers are not retuning. They're not hearing that whisper number stuff that we heard a few years ago. So investors should be careful about whisper numbers and beating the Street. People are really watching revenue and profit growth, the direction of a company.

DOBBS: Real performance.

ROMANS: Sure, yes.

DOBBS: And the quality of earnings certainly is appearing stronger. And there's also a move on the part of the regulators, all of the oversight, as well as, reasonably, a good part of Wall Street. They're not paying a lot of attention just to these quarterly numbers. They're looking at long-term performance now.

ROMANS: Oh, absolutely.

DOBBS: What smart investors probably ought to be doing as well.

You've run some numbers over the course of the past year. They're pretty good.

ROMANS: Unbelievable. You keep hearing people talk about the four-month rally in the market. But take a look at how much the Dow is up over the past 52 weeks: 19 percent, the S&P 500 up 24 percent over the past 12 months. The Nasdaq is up almost 39 percent. It's not just the past four months. We had -- last July, people talked about the bottom. October


DOBBS: They talked about the bottom.

ROMANS: Absolutely. March again. But take the whole 12 months now, it's been a pretty decent advance after three really brutal years. DOBBS: Yes, 39 percent, that is strong by any definition.

ROMANS: It certainly is.

DOBBS: Especially in what has been a very difficult period.

Christine Romans, thank you, as always.

ROMANS: You're welcome.

DOBBS: Still ahead here, Nic Robertson will have a report from Mosul, where Saddam Hussein's sons were killed today by U.S. forces.

Higher education, we'll be reporting to you about a much higher cost for sending students through college tuition and fees at state schools in, particular, rising to what are simply prohibitive levels. Peter Viles will have that report for us.

And many of you wrote in to share your views on Ann Coulter and her book "Treason." And some of the thoughts were actually civil enough that we can share them with all of you.

And Secretary Treasury John Snow, he will be here to talk about the state of this economic recovery and the prospects for creating jobs.

Stay with us.


DOBBS: This fall, many parents may find it prohibitive to send their children off to college. Many of those students paying their own way may find it all but impossible: huge spikes in tuition and fees at state colleges and universities this fall. And you can blame runaway state budget deficits.

Peter Viles has the report.


PETER VILES, CNN CORRESPONDENT (voice-over): This fall on college campuses, a sour note: big spikes in tuition and fees, because, from Albany to Sacramento, legislatures are cutting aid to higher education. And that means tuition hikes.

The University of Arizona, tuition up 39 percent. It's still cheap, though, under $3,600. University of California system up 25 percent. University of Indiana, tuition for new students up 23 percent. State University of New York up 28 percent. At the University of Virginia, tuition has gone up 30 percent in the past year, and that still will not cover $52 million in lost state aid.

COLETTE SHEEHY, UNIVERSITY OF VIRGINIA: When it comes right down to it, higher education is a discretionary part of the state budget. There are no mandates about funding higher education, as there are in funding Medicaid or K-12 education or other kinds of programs. VILES: But you can't blame all of this on the politicians. The truth is, the cost of college has been outracing inflation for decades. From 1970 to 2000, the cumulative effect of inflation was that prices rose 353 percent.

Now, that sounds like a lot, but tuition, room and board at state universities rose 531 percent, and at private universities, 776 percent. Unlike the rest of the economy, higher education has not benefited from increased productivity and has been relatively immune to downsizing and private-sector cost pressures.

RICHARD VEDDER, ALEC: We teach the same way, for the most part, that Socrates did 2,400 years ago. And it actually takes more staff today to educate 100 kids in a college or university, typically, than it did a generation ago.


VILES: Now, most states are making a special effort to protect lower-income scholarship students. But someone has got to feel the squeeze here, and it is most likely middle-class families that don't qualify for big financial aid packages -- Lou.

DOBBS: Middle class, the working man and woman in this country, again getting hammered.

VILES: Yes, really, in this situation, what it's going to mean for the kids is more loans. Jobs are hard to come by this summer for teenagers. Teenage unemployment is very high, so, really, a middle- class squeeze here.

DOBBS: And I love the rather -- if I may characterize it this way -- glib response of the expert you had in your report. That's just the way it is. Tuition and education costs in this country outpacing inflation, it's ridiculous.

VILES: But he was, in fact, a little bit critical, in the sense that higher education has not retooled, has not reexamined the way it spends money, the way it provides a service, in the way that American industry has really constantly now for three decades. That hasn't happened in higher education.

DOBBS: And, at the same time, the government, the federal government, is making it more difficult for many needy students, particularly middle-class students, to get into college and pay for it.

Peter Viles, thank you.

Now we'll take a look at some of your thoughts.

Many of you wrote in with about my interview last night with author Ann Coulter, who wrote the book "Treason: Liberal Treachery from the Cold War to the War on Terrorism."

Robert Staiger Jr. of Scotland, Maryland, said: "Ms. Coulter is simply wrong. Liberals love America. I am a Vietnam veteran, a liberal, and love my country."

Catherine Dunn (ph) of Norcross, Georgia, wrote: "I was very disappointed that you gave Ann Coulter airtime to spew her hatred and venom. We need to hear from people who can help bring this country together. She labels everyone who disagrees with her a traitor."

And Stanley Balter of Woodcliff Lake, New Jersey, said: "Plaudits to you, Lou, for trying to talk sense to your radical guest, but you were unable to put much of a dent in her radical right-wing rants."

Daryl Jackson of Simsbury, Connecticut, said: "Your attempt at moderating her extreme views was unsuccessful, but commendable. Her fanatic commitment to the position that McCarthy was an misunderstood American hero reminds me of the latter-day Nazi sympathizers who claimed that the Holocaust never happened."

George Vorel of Westmont, Illinois, wrote about the political cartoon in "The Los Angeles Times" that depicted a man pointing a gun at the president. "The cartoon," he said, "was vicious. Anyone else would have been prosecuted. And so should the cartoonist and editors of the paper for condoning its publication."

Jean in New York said: "I dislike all President Bush stands for, but I think the cartoon has gone too far."

Ann Haymaker of London, Ohio, wrote in about our special report on "American Classics," last night's focus on John Deere, saying: "Not only do the farmers take pride in this classic company. The thousands of John Deere employees who invent, produce and service these green tractors take even greater pride. I know. My husband is a retired John Deere employee who bleeds green."

Well, it's great to hear that there are still companies in this country that inspire loyalty and pride in their employees.

We love hearing from you on a host of subjects. You choose them. E-mail us at

And still ahead here: a live report from Mosul, Iraq, where Saddam Hussein's sons were killed today in a firefight with U.S. forces. Nic Robertson will have the live report.

Also tonight: a bigger military. As the White House considers sending troops to Liberia, officials question whether a bigger U.S. military is the answer. Senator Saxby Chambliss is a member of the Armed Services Committee. And he joins us to discuss that issue and more.

And a new book says U.S. dependence on cheap Saudi oil has led the United States to turn the other cheek and sell out, in many cases, to Saudi misdeeds. Robert Baer is the author of "Sleeping With the Devil." He's our guest.

Stay with us.

(COMMERCIAL BREAK) DOBBS: U.S. officials met with West African leaders in Senegal today. They're talking about the possibility of sending U.S. peacekeepers to Liberia. Rebels in Liberia announced a cease-fire today, but both sides continue to fire upon each other. President Bush seems in no hurry to make a decision on whether or not to contribute those peacekeepers.

Kitty Pilgrim has the report.


KITTY PILGRIM, CNN CORRESPONDENT (voice-over): There is no arguing that the situation in Monrovia is dire, and become more so every day. But the Bush administration says no decision on U.S. participation in an African-led peacekeeping force has been made.

RICHARD BOUCHER, STATE DEPARTMENT SPOKESMAN: And let's remember the goal, whether it's political effort that we're making, the effort of the West Africans, the possible U.S. role, including possible military roles in all this. The goal is to implement a cease-fire and a political transition, as the parties have agreed to.

PILGRIM: Military strategists point out several arguments against large-scale U.S. involvement. The first is, U.S. forces are already stretched thin in 120 countries around the world. Some argue, Liberia has very little strategic interest for U.S. foreign policy. And the last intervention in Africa and Somalia was viewed as a debacle.

Military strategists say the mission could be seen as a noncombat mission with no clear exit strategy, something not in favor in military circles. The humanitarian need is dire. And violence is escalating. U.N. Secretary-General Kofi Annan has been piling on the pressure for the United States to intercede. But even the specially- trained African forces in the region have not rushed in, instead asking for support. The conflict has destabilized other countries in the region.

JOSEPH SIEGLE, COUNCIL ON FOREIGN RELATIONS: The Liberia situation has spilled over and is the main cause for instability in that part of West Africa. Charles Taylor, the current president in Liberia, has taken the war over into Sierra Leone, where he initiated a rebellion there against the Sierra Leonean government.


PILGRIM: Military strategists say, before U.S. forces should be considered in such a volatile situation, there are significant questions: the duration, the scope of the mission and the exit strategy. And those are questions the Bush administration is clearly struggling with -- Lou.

DOBBS: Kitty, thank you very much.

Our next guest says the United States needs a clear mission and exit strategy in Liberia before it commits troops there. Senator Saxby Chambliss also says the United States will have to make a long- term commitment in Iraq to eventually stabilize that country. The senator, who is a member of the Armed Services Committee, joins us now from Capitol Hill.

Senator, good to have you with us.

SEN. SAXBY CHAMBLISS (R), GEORGIA: Good to be with you, Lou.

DOBBS: Do you believe the president should make the decision to send U.S. forces into Liberia?

CHAMBLISS: Lou, I have continued to ask the question, from all the experts and the individuals who have been before the Armed Services Committee and the Intelligence Committee discussing Liberia, to tell me what is the national security interest to the United States that is being jeopardized in Liberia. And, very honestly, I can't get a positive answer on that question.

And until I'm satisfied that there is a security interest that is in jeopardy, then I just don't think we need to be sending troops. They may be going in a peacekeeping role. But any time we send troops, they're very, very vulnerable.

DOBBS: Vulnerable. And do you have any -- any insight into where the White House is now, which way it's leaning?

CHAMBLISS: No, I don't. I haven't gotten any indication from the White House. I know, obviously, the president is considering it as a very, very serious question. Otherwise, he would have made up his mind pretty quickly. Another thing we do know is that there are a lot of young people over there who are fighting on both sides. And for our folks to be in the middle of that, I'm not sure it's in the best interests of the United States.

DOBBS: Senator, you talked about the vulnerability of U.S. forces in conflicts. Certainly, that is being approved in Iraq each day. Today, a success. U.S. forces succeeded in killing Saddam Hussein's two sons in Mosul. How important a development do you think that is?

CHAMBLISS: I think it's very significant. Any time you remove leadership from a band of renegades, army renegades like we have in Iraq right now, it tends to fragment those folks, and I think it's very, very significant, particularly for the long term. Short term, we may see an increase in sniper and other activities directed towards American troops, kind of in retaliation for the deaths of Qusay and Uday. But I think long term it's going to fragment the communication, fragment what those rebels are going to continue to be able to do with respect to attacks on American GIs.

DOBBS: Those attacks, Senator, continue. Do you believe that the U.S. military, which did an absolutely spectacular, marvelous job in the war against Saddam Hussein and securing the country, do you believe that the U.S. military is following the right strategy, putting those forces on patrol in a law enforcement role effectively? Do they have sufficient resources, sufficient manpower to carry out the mission that has fallen to them?

CHAMBLISS: Well, Lou, very honestly, I'm not sure we had another option that was available to us. When Baghdad fell as quickly as it did, I think we frankly thought it was going to take a little bit longer than that. And it is necessary right now that we have those troops in place. But long term, we don't need a combat unit keeping the peace in Iraq. We need people who are more in tune to police type activity in those positions, special operations forces and even military police. That's why it's so important that we move ahead with training the Iraqi people, Iraqi army personnel as well as military and civilian police personnel, to be able to restore order, maintain peace. Order is being restored, but we need it done frankly by a different type of officer than an infantry officer.

DOBBS: Senator, as you look at the armed forces issues in the context in Iraq, are you surprised, are you disappointed that it has taken so long to move resources, commercial resources, into Iraq to begin aggressively the rebuilding of Iraq from infrastructure to building its commerce?

CHAMBLISS: No. I don't think I'm particularly surprised by either one. We knew, for example, that Saddam Hussein had really pilfered a lot of the assets of Iraq and used those assets for his own personal gain, that he was taking money away that belonged to the Iraqi people. It may have been in bigger numbers than what we thought, but the economy of Iraq had suffered greatly during the reign of Saddam Hussein, and that was not surprising to us.

DOBBS: Turning to another subject and one that is not receiving perhaps the attention that one might expect, that is, North Korea. In the midst of all of the controversy over Iraq and Liberia these days, North Korea purportedly using a second secret weapons processing facility for its nuclear weapons. How concerned are you about those developments?

CHAMBLISS: I'm very concerned about North Korea and the potential for the Korean Peninsula to be nuclearized. We just simply can't allow that to happen. Kim Jong Il has maybe not received the attention that some other terrorists around the world have received, but he is a dangerous individual, and we don't know what he may do with nuclear weapons if and when he is able to put them in his arsenal. So I'm very concerned about it. I do know that it's being addressed at the very highest diplomatic levels, that those conversations need to continue to make sure that the Korean Peninsula is not nuclearized.

DOBBS: Senator Saxby Chambliss, we thank you very much for being with us tonight.


DOBBS: Turning to our poll question following the deaths of Saddam Hussein's sons. How important is it to you that Saddam Hussein himself be captured or killed? Very, somewhat or not at all? Cast your vote at We'll have the results for you later in the show.

The final results of yesterday's poll. The question, how do you regard the "Los Angeles Times" political cartoon? Sixty-two percent of you said it was fair commentary. Sixteen percent said tasteless. Seventeen percent called it vicious.

Coming right up, help for this economy. Treasury Secretary John Snow will be here to talk about his outlook and what can be done about this sluggish job market.

And "Sleeping with the Devil", Robert Baer, a former CIA operative, the author of a new book that says U.S. dependence on Saudi oil colors the values of the relationship between the two countries. Is it a sellout? He'll tell us next. Stay with us.


DOBBS: The NASA manager in charge of the shuttle Columbia mission had dismissed the possibility that a piece of foam crashing into the shuttle's wing could have posed a safety risk. NASA today released transcripts from management meetings during the mission. In them, manager Linda Ham said the foam strike - quote - "is not a factor because there isn't much we can do about it" -- end quote. The independent board investigating the disaster has since found the foam strike is the most likely cause of the disaster.

In Maryland, the roommate of missing Baylor University basketball player Patrick Dennehy today charged with murder. Carlton Dotson arrested after police said he made self-incriminating statements. Dennehy has been missing since last month.

And large wildfires continue to rage in every state in the West. More than 800 firefighters are now working to put out one fire in Stanislaus County California. The fire has burned through 5700 acres in the Delpratto Canyon (ph) and firefighting efforts continue tonight.

DOBBS: Treasury Secretary John Snow on Wall Street today to meet with economists, fund managers, and others. Administration officials traveling around the country to promote the president's $350 billion economic growth package. The White House wants to ensure the president is given full credit for doing as much as possible to increase the economic growth rate and create jobs. I am now joined by the Treasury Secretary, John Snow.

Good to have you with us, Mr. Secretary.

JOHN SNOW, U.S. TREASURY SECRETARY: Thank you, thank you, good to be back.

DOBBS: How goes it? We are not seeing job creation. We've still got an economy that's not performing optimally, I think it's safe to say.

SNOW: No, it's not optimal. But I think the recovery is under way. And the economy is poised for a good take-off. And of course the last things that ever come back in a recovery are jobs and capital spending.

DOBBS: Capital spending, business investment, very stubborn to return, is - one talks to CEOs in this country, and particularly in your talks with them, do you get a sense of any rising confidence because it is certainly not being reflected in the amount of money that they're putting forward to build plant and equipment and to purchase equipment?

SNOW: But I think it's going to come, Lou, I really do, because we have a corporate structure that's leaned out, inventories are tight as a drum, corporate America is very productive. They've taken a lot of costs out. So when the economy comes back I think we're going to see a nice pick-up in profitability and in cash flows. And that's always the precursor of expansions in capital spending.

DOBBS: We've lost about 3 million jobs in the course of the past 2 1/2 years. How soon will those 3 million jobs be regained? How soon will we see corporate America investing significantly, substantially to drive growth and job creation?

SNOW: I think we're going to see a substantial pick-up in the third quarter and the fourth quarter. We're looking at growth rates for the third quarter now of over 3, for the fourth quarter of 3 1/2 or so and for next year of over 4. If we get those sorts of numbers, if the economy is growing that strongly, that will mean those jobless numbers come down, the employment roles go up, and capital spending will be part of that.

DOBBS: Mr. Secretary, we even had a rally on the dollar today, perhaps a celebration of your appearance on Wall Street today. Do you expect to see that rally continue? Is that consonant with your vision for the dollar's performance?

SNOW: There are a couple of things I don't do, one is predict interest rates and the other is predict the international value of currencies. But we have a floating exchange rate system. We believe in letting markets set the value. You've got to expect some variability.

DOBBS: Europe, which you've just returned, those economies not, to this point, been particularly helpful and the world economy. Give us your sense of world economic conditions, the prospects for growth.

SNOW: I think the biggest problem we face today on the economic side of things is inadequate world growth rates, particularly the big economies, Japan and Europe, the E.U. So my message is we want to work with you, Europe. We want to work with you, Japan. We want to work with you, Asia, to promote growth. And encourage that in Japan good structural reforms are being put in place. And there are signs that they are taking effect. Deflation is - the signs of deflation are easing some. In Europe...


DOBBS: ... rates still negative than (ph) in Japan?

SNOW: Well, but the deflationary forces I think are easing, I think they are. And in Europe, some positive signs. The move by Chancellor Schroeder to deal with labor issues and tax structures, President Chirac to deal with pension plans, all encouraging. And I think President Chirac's call for a look at the stability pact, the growth and stability pact, raising the question whether the limitations on deficits there are getting in the way of growth.

DOBBS: Are you saying - I have to be very careful here to understand what you're saying, you're not suggesting that you see France and Germany dealing in the short term with their pension systems effectively?

SNOW: Oh, they're beginning to, yes. I think there is some real promise here that - I really do, yes, I do. I think President Chirac has made dealing with pensions a priority. And my reports from speaking with Minister Mir, Francis Mir, the French finance minister, is that there is growing public support and real prospects for major reforms.

DOBBS: Well, that is encouraging and news.

SNOW: It is.

DOBBS: My Secretary, we thank you for being with us.

SNOW: Good to be here, thanks.

DOBBS: Treasury Secretary John Snow.

Let's turn to "Tonight's Quote". "I think all the stars are aligned for the economy to pick up. It's been growing, it just hasn't been growing fast enough to create new jobs. But I think the tax package on top of easy money will probably kick it over." That from Robert McTeer, president of Federal Reserve Bank of Dallas. Thought you might want a little collaboration and corroboration as well there.

A reminder now to vote in our poll tonight. The question - "How important is it to you that Saddam Hussein be captured or killed? Very, somewhat or not at all? Cast your vote at We'll have the results for you later in the show.

Still ahead here, a live report from Mosul, Iraq, where U.S. forces killed Saddam Hussein's sons today in a firefight. Nic Robertson will have that report for us.

Also coming up, "Sleeping with the Devil", a new book that cites the U.S. dependence on cheap Saudi oil, a corrupt relationship, the author claims, between the two countries. Robert Baer, the author, former CIA operative, he joins us here next.

And later, our series of special reports on "American Classics". Tonight, 150 years of Levis. Jan Hopkins will have the story. Stay with us.


DOBBS: We have more for you now on today's dramatic news from Iraq. Saddam Hussein's sons Uday and Qusay killed by U.S. forces. They were killed in a gun battle with those forces in Mosul in northern Iraq.

Joining us now from Mosul is Nic Robertson, and we want to explain, Nic's picture from Mosul is going to be dark because U.S. forces there for his personal safety, the safety of the crew, said turn out those lights. Nic, what can you tell us?

NIC ROBERTSON, CNN CORRESPONDENT: That's right, Lou, the thermal imaging that the troops are using to keep this building secure at the moment is affected by our lights and that's why...


DOBBS: ... that there will be more forces there, the 101st carrying out this operation. What more can you tells on the U.S. forces there, and what they're planning.

ROBERTSON: Well they're planning at the moment appears to be to keep the site secure, and we're not sure yet whether there will be a further search of the building when daylight returns. Certainly, that was their -- what was indicated to the eyewitnesses who were standing around a little earlier this evening. But the security around the city is tight, but we don't know exactly what is to happen yet. We do understand that the bodies have left this area. The troops who were involved in the fire fight here tell us that it was very, very intense, described it as all hell breaking loose, and indeed as we've been here this evening, some of the electricity wires that are hanging loose that got knocked down in the fire fight, some of those have been blowing in the wind, sending up sparks, and we've seen troops who are located in the building running out of those buildings this evening - Lou.

DOBBS: Nic Robertson reporting from Mosul, where U.S. forces today killed Saddam Hussein's two sons. Nic, thank you very much.

The attacks of September 11 called into question this country's longtime relationship with Saudi Arabia. Fifteen of the 19 hijackers, of course, were Saudi nationals. But Saudi Arabia is officially an ally of this country. A new book entitled "Sleeping with the Devil: How Washington Sold its Soul for Saudi Crude" examines Saudi Arabia's relationship with powerful Americans. Author, former CIA operative Robert Baer joins us now from Washington. Good to have you with us.


DOBBS: This is strong stuff. You say basically that Saudi Arabia has bought influence in this country. You name names and companies and...

BAER: Well...

DOBBS: ... you're taking some heat for it.

BAER: I'm taking a lot of heat for it. But I'd like to point out the Saudi ambassador, Bandar (ph), said very specifically that he likes to take care of people when they come out of office, and the new people coming in are a lot more friendly to Saudi Arabia. That's his quote from "The Washington Post". So what I'm taking is a lot of what's obvious to many people in this relationship, and that is we are dependent upon Saudi Arabia to stabilize oil markets, sell us cheap oil. It's very difficult to take on an ally like that. And a long time ago, we made a deal that they would pump oil, they would meet our needs, but we wouldn't look too closely into their country. And they said trust us, we can take care of fundamentalism, they were wrong.

DOBBS: And you point out that this is a relationship that has endured over many presidencies, many administrations, Democrat and Republican. When you walked out as a CIA operative in, what, 1997, you were disgusted with the matter. Has it improved at all in your judgment since?

BAER: I think it has. I think we're obviously aware that Saudi Arabia is a terrorist state now or supports terrorism, at least elements in it, and I think that the CIA and the FBI are really cracking down. Of course, it's a little bit late for the victims of September 11, but, again, we do not have all the answers. We find out from "Newsweek" that an agent received two of the hijackers in Los Angeles and took them to San Diego. Who is that agent, and why aren't the Saudis turning him over to us? I don't accept their word for him that he's innocent.

DOBBS: We're going to have a congressional report this Thursday that report on the failures of 9/11. You've got a sense of what's coming. What's your reaction?

BAER: Well, everything I've read is they've blacked out everything on Saudi Arabia. The really damning evidence is not being included in the public report. I think that's a mistake. I think there should be accountability in this town as well as Riyadh.

DOBBS: And you talked about accountability in this town and Riyadh. You go further, you say it needs to be fixed. You say that the Saudi regime, the monarchy, the royal family is on the verge of collapse. Do you have any evidence that that is imminent?

BAER: I put evidence in the book. If you notice in my book, a lot of it's blacked out. I have a contract with the CIA that I can't use all the information I obtained inside the CIA, and I think we have to see there are some problems in Saudi Arabia. There's running gun battles every week. That is a bad sign, a country that's normally been stable.

DOBBS: You go further. You talk about the relationship between the Sunni and the Shia, the Shia obviously reaching across most of the Middle East, the Sunnis in power in Saudi Arabia. You go so far as to say should it collapse that the United States should take over those oil fields because they are so critical, obviously, to the world economy. How much heat are you taking for that recommendation?

BAER: I'm taking a lot of heat for the whole book. This is very objectionable to people in Washington. They accuse me of saying that I'm talking about bribery. I'm not talking about bribery. I'm talking about simple dependence on cheap oil. I do have to be pragmatic. I used to work for the CIA, and we used to come up with the worst-case scenarios in order to prepare this town (UNINTELLIGIBLE) and this is what I'm doing. I'm saying, listen, if things don't get better there, if we can't cure ourselves of using cheap gasoline, we need to consider taking over the oil fields. That's the absolute last resort. But that's what we should do as a government.

DOBBS: Robert Baer, the book is "Sleeping with the Devil" and it is a biting, critical examination of a tortured relationship between the United States and Saudi Arabia. Good to have you here.

BAER: Thanks, Lou.

DOBBS: Coming up next, we'll have the results of tonight's poll and an American classic celebrates a birthday. A hundred and fifty years of American tradition, western style. Jan Hopkins reports on those Levis. Stay with us.


DOBBS: Tonight's poll question -- "How important is it to you that Saddam Hussein be captured or killed? Sixty-nine percent of you say very. Eleven percent somewhat. Twenty percent not at all. You can continue to vote on our Web site, of course, until tomorrow evening's broadcast.

Turning now to our series of special reports this week. We're focusing on the brands that have become "American Classics". We focus on a company that's been a comfortable fit for Americans for a century and a half, Levis. Jan Hopkins reports.


UNIDENTIFIED FEMALE: Ready. One, two, three.

UNIDENTIFIED FEMALE: Ready. One, two, three.

UNIDENTIFIED FEMALE: Ready. One, two, three.



JAN HOPKINS, CNN CORRESPONDENT (voice-over): It's been 150 years since Levis was founded in the midst of the California gold rush. Bavarian immigrant Levi Strauss came to San Francisco to sell clothing to gold miners. Twenty years later a customer wrote with a suggestion, to put rivets in the pants to make them stronger.

LYNN DOWNEY, HISTORIAN, LEVI STRAUSS & CO.: Levi Strauss and Jacob Davis, Levi Strauss & Com., the holders of the patent were the first to make riveted denim clothing, which was the birth of the blue jean. HOPKINS: Levis bought a pair of those early jeans on eBay recently for $46,000. Levis grew along with the American West from the gold rush to the railroads to the cowboys.

KATE DIMMOCK, MARIE CLAIRE: It's sort of emblematic of the rebel and sort of that American, rustic, you know, individualism, because Levis were created for the men that created America.

HOPKINS: Levis packaged the image and sold 3.5 billion pairs of jeans in more than 100 countries. Customers keep coming back for a piece of American culture.

UNIDENTIFIED MALE: Levis become better and better every year, you know.

UNIDENTIFIED FEMALE: I think they're a trendsetter.

UNIDENTIFIED MALE: When I was a kid they were called dungarees, but somehow somewhere in the '60s they became blue jeans and I just never took them off.

HOPKINS: Levis remain an aggressive advertiser.


HOPKINS: The company also sells its corporate values. It was one of the first integrated factories and one of the last to export jobs overseas. But the company has closed all but two U.S. plants to save money. The company's CEO, who was brought in from Pepsi, believes Levis is one of the world's great brands.

PHILIP MARINEAU, PRESIDENT & CEO, LEVI STRAUSS & CO.: Brands that are known throughout the world and that are embraced by so many people have one thing in common is that they become part of people's lives, their everyday lives, and I think Levis is a brand that really truly reflects that.


HOPKINS: Levis doesn't really need to reinvent itself to sell more jeans. The CEO cites a study that the average American man has in his closet at least one pair of pants that's up to 10 years old and one size too small. That is a huge market to tap for future sales - Lou.

DOBBS: Good old Levis. All right, thanks very much, Jan.

And finally tonight's thought on classics, so you know exactly what we're talking about. "A classic is a classic not because it conforms to certain structural rules or certain definitions. It is classic because of a certain eternal and irrepressible freshness." American writer Edith Wharton.

That's our show tonight. Thanks for being with us. Tomorrow, in our series of special reports on "American Classics", we look at an experiment that became an all-American icon. Our guests will include Senator Evan Bayh, a member of the Senate Select Committee on intelligence and former deputy director of the CIA Admiral Robert Inman.

For all of us here, thanks for being with us. Good night from New York.


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