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LOU DOBBS TONIGHT

Two Suicide Bomb Attacks Rock Israel; Exporting America

Aired September 9, 2003 - 18:00   ET

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

LOU DOBBS, CNN ANCHOR: Tonight: Five foreign pilots who may be connected to terrorist groups are barred from U.S. airspace. Jeanne Meserve reports.
America continues to export jobs and capital to China. Some lawmakers are now saying, enough. Lisa Sylvester reports.

Tonight, we begin a series of special reports in conjunction with "The Economist" magazine. "Islam and Democracy," can they coexist?

And "A Changed Nation." Casey Wian reports on the impact of September 11 on travel and tourism in America.

ANNOUNCER: This is LOU DOBBS TONIGHT for Tuesday, September 9. Here now, Lou Dobbs.

DOBBS: Good evening.

We begin in the Middle East tonight. Two suicide bomb attacks in Israel killed at least 11 people today and wounded dozens of others, a powerful explosion tonight in west Jerusalem. At least five people are dead. Earlier, another bomb killed six people outside an army base near Tel Aviv.

CNN's Samson Desta at the scene of tonight's explosion in west Jerusalem. And he is on the phone -- Samson.

SAMSON DESTA, CNN PRODUCER: Yes, Lou.

We have now been able to make our way closer to the scene. I'm standing literally 20 meters away from this cafe. And Jerusalem police spokesman Gil Kleiman just held a press conference. And he told us that a suicide bomber made his way into this cafe in west Jerusalem in a neighborhood called the German Colony. And he made his way in a few meters. He was approached by two security guards, but he was able to detonate his bomb.

As a result of this, now we have been told now there are six dead, six, plus the suicide bomber. Now, this city had been on high alert this morning. In fact, when we made our way from the hotel to the office, we actually had to go through three checkpoints, but police spokesman Gil Kleiman again saying that that alert and that chase this morning is unrelated to this event today, which means that they believe at least one or two more suicide bombers that may have infiltrated into Israel are still in Israel -- Lou.

DOBBS: Samson, thank you very much -- Samson Desta reporting from west Jerusalem.

Tonight, one of the clearer signs yet that the U.S. Army is facing severe problems in maintaining force levels in Iraq. The Army now says about 20,000 National Guard and Reserve troops will have to serve a full year in the region. That is up to six months longer than previously expected.

The United States is also asking other countries to send their troops, but only 20,000 have arrived in Iraq so far.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT (voice-over): While Guard and Reserve soldiers knew the Army could keep them in Iraq a full year, with civilian jobs back home, many hoped they wouldn't have to.

SGT. NORTON WILLIAMS, NATIONAL GUARD: A lot of guys were thinking we'd be back in six months. But another six months, we got a job to do. We've got to finish it.

MCINTYRE: And with transition time, their service could total a year and a half. The soldiers may be disappointed, but some of their families are irate.

UNIDENTIFIED FEMALE: How can they treat people like this? I have friends in other services who were there in February and they're already home.

MCINTYRE: The problem, according to the Pentagon, is that the Army is out of whack. Too many of the vital combat support functions are only in the reserves. Until that's fixed, the Pentagon has no good options.

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: We are a nation of war. And we have do what it takes in this case to win. So that is what -- that is what's happening. We need that combat support, combat service support, to be with our active forces as long as they're in Iraq.

MCINTYRE: But many in Congress believe the real problem is, the U.S. military is too small, the force in Iraq is inadequate, and the Pentagon is in denial.

SEN. JOHN MCCAIN (R), ARIZONA: When we have to extend Guard and reservists on active duty, when we have to ask for international forces, when we have to do the things that we are doing, it's clear to me that we need additional troops.

MYERS: We could put every sailor, soldier, airman, Marine, Coast Guardsman we have in Iraq and it would not make this problem better. In fact, it could work just to the opposite. The more Americans in Iraq, the less Iraqis might feel prompted to come forward and furnish us that intelligence, which is what we need so badly to deal with this threat.

(END VIDEOTAPE)

MCINTYRE: The Pentagon insists this is a spike, a short-term problem that will require some temporary sacrifice. But officials here also acknowledge, they have to do something to relieve the burden on citizen soldiers in the Guard and Reserve or risk the possibility that they'll end up with too few volunteers to fill that vital role in the future -- Lou.

DOBBS: Jamie, the continued insistence on the part of the secretary of defense, the chairman of the Joint Chiefs, that no further forces are needed, the nine divisions not to be raised to 11, 12, or perhaps even more, the suggestion that more troops would not be helpful, all of this is contradictory on its face. What is going on?

MCINTYRE: Well, they make these arguments.

They say, if you were to add two divisions to the Army, it would take a couple of years. It would cost billions of dollars, and that, by the time they were ready, the problem might be over with. They insist that, if they can continue on the path they're going and get more Iraqis involved into defense, it's going to be much cheaper and much better for Iraq in the long run. That's their argument. They're sticking to it.

DOBBS: Jamie McIntyre, our senior Pentagon correspondent -- thank you, Jamie.

There were more attacks on U.S. troops in Iraq today, five members of the 3rd Armored Cavalry Regiment wounded in two separate attacks towns west of Baghdad, two other soldiers injured when terrorists attacked a supply convoy in Baghdad.

High-ranking government officials went to Capitol Hill today, there to defend the president's request for another $87 billion for operations in Iraq and Afghanistan. Deputy Defense Secretary Paul Wolfowitz said the money is a small price to pay to prevent future terrorist attacks. Senators from both parties said Americans must focus on the future, not the past.

(BEGIN VIDEO CLIP)

SEN. JOHN WARNER (R), VIRGINIA: Now is not the time, in my judgment, to try and assess what went right and what went wrong and who may be at fault for faulty vision.

SEN. CARL LEVIN (D), MICHIGAN: Before priding reconstruction funds, partly to assure that those funds can be effectively spent in an effort that will be successful, we must assure ourselves that the administration is willing to give more than lip service to enlisting the support of key additional nations in providing troops and resources for the long struggle that lies ahead in Iraq.

(END VIDEO CLIP) DOBBS: Still a war in Iraq and the trade war brewing with China. Elsewhere on Capitol Hill, a bipartisan group of senators is taking on China for a currency policy it says leads to unfairly cheap wages and goods in China. Those senators today proposed an import tariff on all Chinese goods.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): China has been on the winning side of an unbalanced trade picture. But lawmakers on Capitol Hill say the Chinese have not been playing fair.

SEN. CHUCK SCHUMER (D), NEW YORK: What we're simply seeking to do is level the playing field, so that Chinese goods compete on their true price, as international agreements state they should.

SYLVESTER: A bipartisan group in Congress is threatening to slap a 27 percent across-the-board tariff on all goods from China, if the Chinese government continues to keep its currency artificially low. China's currency has been pegged to the U.S. dollar since 1994, keeping their prices low and fueling Chinese exports.

In 1997, China's exports to the U.S. were value at $62 billion. By 2002, exports jumped to $125 billion. When Treasury Secretary John Snow visited China last month, Chinese officials said they would maintain the peg to the dollar, at least for now. American manufacturers say the problem impacts not only their industry. White- collar jobs are also disappearing.

UNIDENTIFIED MALE: Many of our major corporations are adopting a new business model of, pay Chinese wages, charge U.S. prices, and the heck with the consequences. And that just can't fly.

SYLVESTER: But critics say Congress should not have a knee-jerk reaction, arguing, many household goods will jump in price if the proposed legislation goes through.

UNIDENTIFIED MALE: You could call this bill the Grinch tax. If it comes in time for Christmas, it's going to be a tax on toys and shoes and baby clothes and all sorts of things that are important to American families.

(END VIDEOTAPE)

SYLVESTER: The Bush administration is walking a very fine line here, on one hand favoring free trade. But, at the same time, the White House is very aware of the sensitivities of the loss of manufacturing jobs.

The other factor is that the White House is -- needs China's help, particularly when it comes to diffusing the North Korean situation -- Lou.

DOBBS: And, meanwhile, Lisa, this is certainly to be a major issue in the upcoming presidential campaign, the issue of exporting American jobs.

Lisa Sylvester, thank you very much, reporting from Washington.

And coming up next: "A Changed Nation," how the attacks of September 11 changed the way that we travel. Casey Wian will report.

And daily attacks on American troops in Iraq. And our next guest says we are, nonetheless, winning the war on the ground. Max Boot has just returned from Iraq. He's our guest.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Coming up: the reaction of the Iraqi people to the United States is overwhelmingly positive, according to Max Boot, author, senior fellow at the Council on Foreign Relations. He's just returned from Iraq. He joins us next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Homeland security officials today banned five foreign pilots from entering this country. New security checks indicated the pilots could have terrorist connections. The announcement came just before the second anniversary of the September 11 attacks.

Our homeland security correspondent, Jeanne Meserve, has the report.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Five foreign pilots banned from flying in U.S. airspace after new intense background checks.

ASA HUTCHINSON, UNDERSECRETARY OF BORDER & TRANSPORTATION SECURITY: As we checked our various terrorist watch lists, as we checked various law enforcement databases, these names popped up.

MESERVE: One hundred and ninety individuals stopped from entering the U.S. on student visas because they were not registered at any American school, despite those successes, testimony on Capitol Hill Tuesday about a new congressional report that says easily obtained and used fraudulent documents still make it possible to get in and move around the country.

ROBERT CRAMER, GENERAL ACCOUNTING OFFICE: We breached the security airports and federal office building, even driving a rented van into the courtyard of the Department of Justice, because no one questions the authenticity of our counterfeit identification.

MESERVE: At a facility in Northern Virginia, personnel from Immigration and Customs Enforcement use cutting-edge technologies to detect fake documents. UNIDENTIFIED FEMALE: You suddenly see the outline from the original head here. Here's the hair.

MESERVE: Thanks in part to video links with ports of entry, about 60,000 fraudulent document were seized at the nation's borders last year.

But now a new wrinkle: When Governor Davis signed legislation last week allowing illegal immigrants to get driver's licenses, California became the 21st to do so. That means a license is no longer a reliable proof of citizenship, although it's regularly used by Americans to reenter the U.S. after travel in this hemisphere.

HUTCHINSON: It would be a burden on U.S. citizens to require them to travel with passports in the Western Hemisphere, which we haven't historically done. But, at some point, we may have to look at that.

(END VIDEOTAPE)

MESERVE: Hutchinson says way to ensure only people with the proper paperwork get into the country is to make travel documents machine-readable. But a program requiring machine-readable passports from some countries has just been put on hold for a year because of the potential disruption to travelers -- Lou.

DOBBS: Jeanne, thank you very much -- Jeanne Meserve reporting from Washington.

The program that Jeanne Meserve just reported on would require visitors from 27 countries, mainly in Western Europe, to use new computer-coded passports. It was mandated by Congress after September 11 and expected to go into effect this October 1. However, the State Department is now offering to delay those new rules for another year because many passports from the 27 countries have not been adjusted and it would be inconvenient.

Well, from computer codes to color codes, another reminder tonight that we seem to be on our way to becoming a Crayola nation. It all began with the five-color terrorism threat chart, designed to indicate how worried we should all be about a terrorist attack in this country. Now comes word the government has plans to color-code each and every airline passenger in America, only three colors here.

Passengers would be graded green, yellow or red, depending on their perceived threat. Testing of this new color system may begin as soon as early next year.

And soon, some of our currency will also be changing color. Those $20 bills will no longer be greenbacks, will be however, something more of a peach color, according to the Treasury Department. The goal of this color switch, to make the job of counterfeiters more difficult.

A securities scare for Air Force One in Florida today. The president's aircraft was about to land at Jacksonville Naval Air Station when the control tower ordered the pilot to abort his landing. The White House says tower officials were confused when they spotted a police car waiting on the road at end of the runway. Air Force One landed without incident on the second attempt. The president was in Florida to promote his education policies and to raise money for his reelection campaign.

From security to politics, word tonight that Peter Ueberroth has dropped out of California's crowded gubernatorial recall race. Ueberroth, a Republican businessman, was praised as an experienced grown-up in the effort to unseat Government Gray Davis and to claim the governor's chair. His campaign, however, didn't catch on with California voters. Ueberroth was running fourth, with just about 5 percent of the vote. Ueberroth says he will not yet endorse another candidate.

Powerful Hurricane Isabel is now churning the Atlantic Ocean, picking up strength tonight, as it approaches the Leeward Islands. Isabel is now a Category 4 storm, winds of 135 miles an hour. Those winds may reach 145 miles an hour by tomorrow. Isabel is following a path that would take it just north of Puerto Rico and the U.S. Virgin Islands.

The storm of controversy over sexual abuse in the Catholic Church may soon be over, at least in one archdiocese. The church has agreed to pay $85 million to the more than 500 alleged victims of clergy abuse in Boston. The average payout would amount to roughly $156,000 per victim. The actual amount will range from $80,000 to $300,000, based on the extent of abuse. The agreement must still be approved by the plaintiffs.

Coming up next here: The United States needs a bigger Army, more Marines, according to my next guest. Max Boot, a senior fellow at the Council on Foreign Relations, he has just returned from Iraq. He joins us next.

And "Islam and Democracy," a joint report tonight in conjunction with "The Economist" magazine. Can the two successfully coexist? Tonight, we begin our series of reports.

And travel and tourism in America after September 11, Casey Wian tonight on "A Changed Nation."

Stay with us.

(COMMERCIAL BREAK)

DOBBS: My next guest called upon the White House last month to give the United Nations a greater role in post-combat Iraq. Since then, the White House has taken steps to do just that. Max Boot has just returned from Iraq. He left, he said, feeling more confident about the future than when he arrived. Max is senior fellow at the Council on Foreign Relations and with us here in New York.

Good to see you.

MAX BOOT, SENIOR FELLOW, COUNCIL ON FOREIGN RELATIONS: Good to see you, Lou.

DOBBS: The situation as you found it in Iraq?

BOOT: More positive than I expected, in many ways.

I spent time with the 1st Marine Division in the south, with the 101st Airborne in the north. And in most of those cases -- in all those cases, really, talking to troops, they report seeing progress. Their morale seems to be good. They seem to have good relations with the Iraqi people. Now, I have to say, obviously, major problems remain, because I went there right after the bombing that destroyed the U.N. building. I left right after the bombing that destroyed, killed 100 people in Najaf.

So, clearly, major challenges remain. But I really got the sense that, especially in the north and the south, they're making tremendous progress in rebuilding Iraq and winning the goodwill of the people. I think the major challenges are really limited to the Sunni areas around Baghdad.

DOBBS: The Sunni areas around Baghdad. Obviously, most of the country is Shia under -- long time under the control of the Baath Party, predominantly Sunni. What are we seeing in the way of progress toward creating localized secular governments within Iraq itself?

BOOT: That's going on everywhere, Lou.

Everywhere I went, there were Iraqis who were provincial governors, Iraqis who were sitting on city councils, Iraqis who were police chiefs. This is one of the big unreported stories of what's going on in Iraq, because both the Army and the Marines are very anxious to push as much authority as possible to the Iraqi people. And one of their other big initiatives, of course, is training Iraqi security forces to take over the jobs which are now being performed by American troops.

DOBBS: Then what role could there be for the United Nations, if all this is so positive and progress is being made?

BOOT: Well, I think the reason, Lou, to go to the United Nations is not because we're losing in Iraq, which seems to be a lot of the spin that you're hearing these days. I think the reason is simply because the burden is very high on the American taxpayer.

As you know, we have the $87 billion request from President Bush. And it would be good if other countries, Japan or Western European countries, would kick in some-odd billions to defray some of the costs, and also if we could get some more troops that would rotate with ours, because, right now, I visited with the 101st Airborne. They are due to go home in February, but they're not sure if they will, because they're not sure who is going to rotate in after them. And we don't have a lot of U.S. Army units...

(CROSSTALK)

DOBBS: ... clearly a sort of modern America effort, denial on the part of the secretary of defense that we need more troops, but a request for more troops from allies who weren't in the first place, unilateralism when it is, if you will, expeditious to our natural interests, as we understand it. This is a bizarre period that we're going through. Don't you think?

BOOT: Well, we're facing a lot of very unusual challenges, Lou.

And I think, clearly, the administration has made some missteps. I was one of those people who was saying they needed to do more to get more money, more support into Iraq early on. And they're finally waking up to the need to do that. But I think, despite all the headlines about all the things that are going wrong, I think we also have to be cognizant of the fact that it's only -- it's fewer than five months since the end of the war, and we've actually made a lot of progress on the ground.

DOBBS: What kind of job is Paul Bremer doing there, as far as you can tell?

BOOT: That's the one big negative that I heard, was about the coalition provisional authority, which Paul Bremer runs, which is the civilian side of the occupation.

Some of the people in the military I talked to joked that CPA stands for "can't provide anything," because they're not getting a lot of support from the civilian side of the occupation in Baghdad. They are having to do everything themselves. And that's one area where I think it wouldn't hurt to bring in other nations, more support for the political side.

DOBBS: You mean something efficient and productive like the United Nations?

(LAUGHTER)

DOBBS: I have seen what the C.B.s (ph) can do, what the Corps of Engineers can do.

BOOT: They do great work.

(CROSSTALK)

DOBBS: Where in the world are they? Why aren't they moving ahead? Why isn't Bremer driving this? And why are we still having this discussion this many months later?

BOOT: Well, the answer, Lou, is that they are moving ahead.

There's a lot of progress that's being made by military, by the C.B.s, by the Army Corps of Engineers, by the Marines. They are doing tremendous work. But they're not getting that much support on the civilian side, because there just aren't that many civilian occupation people outside of Baghdad. They are trying to centralize things in Baghdad. You don't have people out in the provinces.

So it's really left up to a bunch of Army generals and colonels, all the way down to corporals and sergeants, to decide what to do with the people of Iraq. And they're doing a tremendous job. I think they are doing tremendously well. But they could use more support, in terms of more money and those kinds of things.

DOBBS: But what you're saying, really, at counterpoint to what Secretary of Defense Rumsfeld said. He didn't want to know much about infrastructure investment, because his people weren't running that. Yet here you are saying that those generals, those C.B.s, and the Corps of Engineers and the Army engineers are driving ahead with what is actually being accomplished.

BOOT: They absolutely are driving ahead. And they're not waiting for the go-ahead from Washington or Baghdad.

For example, up in the north, the 101st Airborne Division decided on its own to open the border with Syria to get trade going. They concluded deals with Syria and Turkey to trade Iraqi oil for electricity, which they badly need in the north. They're just making these decisions and then, eventually, somebody in Baghdad signs off on them. But it has to be a decentralized process, because it's such a big country.

(CROSSTALK)

DOBBS: It sounds almost American and democratic in its concept.

BOOT: Bringing federalism to the Middle East, Lou.

DOBBS: Well, or you might just call it participatory democracy.

BOOT: That's right.

DOBBS: A good -- a little bit of American ingenuity, innovation and the hell with bureaucracy.

BOOT: That's right.

DOBBS: Thank you, Max Boot. Good to see you.

BOOT: Thank you very much.

DOBBS: Glad you're home safe.

Our poll question tonight takes us back to a story Lisa Sylvester reported earlier about the move on the part of a number of legislators on Capitol Hill to raise taxes on products made in China and the continuing loss of American jobs overseas. Our question tonight: Whom do you blame for exporting millions of U.S. jobs, consumers, corporate America, Congress, or the White House? Cast your vote at CNN.com/Lou. We'll have the results for you later in the show.

And coming up next: Two years after September 11, the impact on travel and tourism in this country. Casey Wian will report.

And "Islam and Democracy." Tonight, we begin a series of special reports in conjunction with "The Economist" magazine. And a top-secret launch from Florida.

We'll have the story, a great deal more, still ahead. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: This week, we're taking a look at all of the ways in which September 11 has changed this country. The September attacks had, obviously, a very significant impact on the way we travel.

Tonight, in our series of special reports, "A Changed Nation," Casey Wian looks at the way we travel now and the state of the travel industry.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Anyone who has been to an airport lately knows travel has changed.

UNIDENTIFIED MALE: Security lines tend to be a little bit longer and you do get more random checks.

UNIDENTIFIED FEMALE: You have to go in, take off your shoes.

UNIDENTIFIED FEMALE: When you have to think three times while you're packing, it makes a huge difference. But it should.

UNIDENTIFIED MALE: I'm glad that the nation is recognizing that we to step to this level of security, although it may be a little more inconvenient at times. But we've got to be sure for ourselves.

WIAN: Travelers' habits have changed. They're driving more and planning less.

CRAIG JACOBS, GENERAL MANAGER, HOTEL DEL CORONADO: Our customers are making decisions with less time. In other words, there are a lot more spontaneous decisions for leisure, business. And companies that used to plan out far in advance are shortening that window of time.

WIAN: Business travel already was suffering before 9/11. Then came the war in Iraq and SARS.

BILL CONNORS, EXECUTIVE DIRECTOR, NATIONAL BUSINESS TRAVEL ASSN.: It's been a tough couple of years. But we see some optimism out there. We see business travel coming back. And we hope that 2004 will be a much better year.

WIAN: It can't get much worse. Every major airline except Southwest is expected to lose money this year, with combined losses projected to exceed $6 billion. United is in bankruptcy. Several others have come close. And 70,000 airline industry jobs are gone.

Like many travel destinations, San Diego suffered after 9/11, but business is improving. (on camera): San Diego has lost about half of its international travel business since September 11, 2001. But domestic visitors have more than made up the difference.

(voice-over): Hotel occupancy rates here are higher than they were two years ago, in part because of more advertising in nearby cities.

REINT REINDERS, SAN DIEGO CONVENTION AND VISITORS BUREAU: Principally, we are a leisure destination. And so we have been able to capitalize after 9/11 on the fact that we are accessible to tens of millions of people with a relatively short drive.

WIAN: The biggest problems facing the industry now are the economy, price pressures linked to the Internet and the fact that consumers say they have less free time to travel.

Casey Wian, CNN, San Diego.

(END VIDEOTAPE)

DOBBS: And tomorrow night here on our series of special reports, "A Changed Nation," we look at the impact the September 11 attacks have had on this country's foreign policy and the way the rest of the world now views America.

A federal judge today ruled the families of those killed on September 11 can seek damages from the airlines, Boeing and the Port Authority of New York and New Jersey. The judge said the industry should have anticipated the -- quote -- "foreseeable risk" -- end quote -- that a hijacked plane would crash.

That ruling comes three months before victims' families must decide whether to seek compensation from a national fund. Doing so would restrict them from suing the airlines and others. So far, the compensation fund has paid an average of $1.5 million to families who have applied for it. The minimum payout is $250,000. And incidentally, $250,000 is the standard life insurance benefit received by families whose relatives have died fighting in Afghanistan or Iraq.

Spouses of the U.S. military also received up to $6,900 for burial expenses and $948 a month. Each dependent receives $237 a month.

Coming up next, Islam and democracy. Our special report in conjunction with "The Economist" magazine. And we'll be talking with three of the country's leading experts on Islam. We'll be talking about how this country views Islam and how Islamic nations now view the United States.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight we begin a series of special reports in conjunction with "The Economist" magazine on Islam and democracy. Islam is the world's fastest growing religion and there are more democracies around the world than ever. However, there are some elements of Islam and democracy that some say make them incompatible. Some disagree.

(BEGIN VIDEOTAPE)

DOBBS (voice-over): Today it's known as the European City of Light. But back when Paris was a dark, unsanitary swamp, Muslim citizens of Seville lived with streetlights and running water.

GRAHAM FULLER, FORMER CIA OFFICIAL: Westerners are perhaps not fully aware that Islamic civilization was the leading world civilization, really, for over a thousand years, perhaps, when the West was quite still primitive in many ways.

DOBBS: There was great respect for education and learning in the Muslim world.

JOHN ESPOSITO, RELIGION PROFESSOR, GEORGETOWN UNIVERSITY: If you look historically, the great translators and the great communicators of world culture were Muslims in the Islamic world for several centuries. They were the ones that preserved a good deal of Western learning.

DOBBS: But today, a darker history is being written. One in five Arabs live on only $2 a day. Less than 1 percent of Arabs have computers. Even fewer are on the Internet. Sixty-five million Arabs are illiterate, affecting everything from their productivity to their politics.

PETER DAVID, FOREIGN EDITOR, "THE ECONOMIST": There's a fantastic record of underachievement throughout the Arab world. An extraordinary proportion of adult Arabs are illiterate. Now, many of those will be women, who have a second-class status in most Arab countries.

DOBBS: The unequal treatment of women raises questions about whether democracy and Islam can ever co-exist.

But there are other questions that go to the heart of the religion.

PROF. FILES KEPEL, INSTITUT D'ETUDES POLITUQUES: There is a sort of opposition between Islam and democracy because democracy in Greek means sovereignty of the people.

DAVID: Democracy is based on the idea that men make laws. Islam is based on the idea that only God can make law. On a strict religious, theological point of view, Islam and democracy have a hard time meshing together.

DOBBS: This is the view held by some Muslims, (UNINTELLIGIBLE) radical Islamist groups like bin Laden's al Qaeda. They believe that according to the Koran, Islam's holy book, there is no room for democracy. Nonetheless, some still hold out hope and optimism. Some Islamic experts now argue that, like Communism, radical Islam has failed miserably and that democracy is on the rise.

UNIDENTIFIED MALE: None of the pro-Western regimes in the Muslim world has been toppled for the time being. On the contrary, the Taliban regime in Afghanistan is nonexistent. The Iranian regime is having a number of difficulties. Sudan has now gotten nearer and nearer to the U.S. and even Qadaffi's Libya is negotiating with the U.S. financial compensations for the Lockerbie bombing.

DOBBS: The political slogan, "Islam is the answer," isn't selling very well these days. According to a recent Pew survey of 44 country from Jordan to Pakistan, democracy won strong support. Stronger support than in Eastern Europe, in fact.

UNIDENTIFIED MALE: I think most Muslims definitely want to live under democratic rule. One of the reasons for rage and anger and frustration today is they feel that they have no control over their lives whatsoever. They can't get rid of rulers. Policies are backwards, brutal, incompetent.

DOBBS: Even radical groups such as Egypt's Muslim Brotherhood are now publicly, at least, embracing democracy.

DAVID: They're almost like, you know, a social Democratic Party in Western Europe. They say they want free elections, a free press, you know, clean government.

DOBBS: But can these apparent conversions be trusted? Should they be trusted? Will groups in Islamic countries use democracy to seize control, then abolish elections altogether and forever?

DAVID: One of the reasons that people are suspicious of Islamists who claim to be democrats is that they do appear to speak with different voices to different audiences.

(END VIDEOTAPE)

DOBBS: Tomorrow, in our series of special reports with "The Economist" magazine on Islam and democracy we turn to Egypt. One of America's oldest Arab allies faces tough questions, tough issues, including the issue of democracy and its future as a nation. That's tomorrow night here.

When we continue, Islam -- the threat it poses to the world and its own people. Three of this country's leading experts on the Muslim world join us next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Islam and democracy, can they co-exist? Nasser Hadian is a leading scholar on contemporary Iranian politics and foreign policy. Abdulaziz Sachedina is a professor of religious studies at the University of Virginia. Robert Spencer is the author of "Onward, Muslim Soldiers." We thank each of you for being here.

Let me begin, Nasser, with you. The idea of democratizing the Middle East, is it possible to do in the near term?

NASSER HADIAN, POLITICAL SCIENCE PROFESSOR, UNIVERSITY OF TEHRAN: I don't think so, in the near term it is possible. But we can begin from now. And a number of factors are important to have in mind if want to democratize the Middle East. First of all, we have to take into consideration the nature of the states. We have basically the nature of society.

DOBBS: Robert, let's get your sense of it as well.

ROBERT SPENCER, AUTHOR, "ONWARD MUSLIM SOLDIERS": Well, I think that anything can be begun and anything can be attempted, but there are enormous obstacles, and among them are the fundamental fact that millions of Iraqis, as millions of Muslims around the world consider that no state has any legitimacy unless it obeys Islamic law, the Shariat, which is considered to be the law of Allah, and is not open to voting.

DOBBS: Abdulaziz, is there any antidote for that particular tenet of Islamic thought?

ABDULAZIZ SACHEDINA, RELIGIOUS STUDIES PROFESSOR, UNIVERSITY OF VIRGINIA: Oh, yes, certainly. I think there is understanding in Islamic world today that it's not only the question of Shariat, which is important for the state, but it is also the question of how do we divvy (ph) up a sense of citizenship in a society that is multi- ethnic, multi-faith, and there are possibilities within the Islamic scripture, Islamic tradition, to show that this can be done.

The problem is that we have traditionalist authorities who are not willing to see the possibility of such compatibility with the modern ideas of having people who are to be treated equally by these states.

SPENCER: Well, that equality that people would be treated, would that include women and non-Muslim minorities when Islamic law stipulates, with many specific directives, that they would not have the same equality of rights as the Muslim male would have? How on Earth...

SACHEDINA: Islamic law...

SPENCER: I'm sorry?

SACHEDINA: That Islamic law is no more practiced. I think there's...

SPENCER: I think that millions of Saudi Arabians would be very interested to hear that, as well as Iranians, as well as many in Pakistan, as well as many in Egypt. The last two states, obviously, the Shariat is not in full force, but the pression (ph) of non-Muslim minorities on a large scale continues in many of these states. HADIAN: But Robert, that was the case in the West, too. The women could not have vote, could not vote until a few decades ago. That was the case with the minorities. So it is not as strange to see that it is the case in -- it is the case in many of the Muslim (UNINTELLIGIBLE). But as time passes, Islam is going to be interpreted in a way which is very much compatible with these modern institutions.

SPENCER: Well, I hope you're right. I'd love to see that.

HADIAN: And in fact, already (UNINTELLIGIBLE) that attempt has been made. In fact, the reformist (ph) Islam in Iran was an articulation which basically attempted to make Islam very much compatible with modernity.

DOBBS: Well, Modernity and Islam, certainly modernity has lost and lost significantly, the huge illiteracy rate in the Middle East across the Arab states.

(CROSSTALK)

DOBBS: Well, let me finish, Robert, and I'll turn to you. These issues are fundamental. And Islam, as it's represented, has not responded to these problems, and then many, many scholars suggest that it's actually been that which held back people.

HADIAN: So what point is that -- I mean, once -- we are talking about Islam, or we are talking about the Muslims, and also you are talking about different governments which are in power. Those governments in power probably have not acted -- not probably, for sure have not acted the way they were expected to act.

But in fact, even in terms of the literacy, I don't think that's a total failure. A lot of Islamic societies are being more and more literated, and as time passes I believe the chances of experiencing a democracy would increase. I don't have any doubt in my mind.

DOBBS: Abdulaziz?

SACHEDINA: Yes, I think there is an important issue that we need to consider, is the culture of domination which is part of the Middle Eastern governments. We are dealing with autocratic systems in the region, who will have to open up their system for an accounting by the public. They are not being held accountable to the public at the moment because of the autocrative systems. It has nothing to do with Islam as it has to do with the culture, which is dominant there.

(CROSSTALK)

SPENCER: What Dr. Hadian said before about the fact that in the West many of these things were -- the inequality of rights for women and for minorities was in this country up until a few decades ago, that's absolutely true. But in -- the difference is precisely within the confines of Islamic law that Islamic law actually teaches and has a -- gives a theological and jurisprudential base for this inequality of rights and dignity, and this is going to have to be reformed at the highest levels before there's any kind of real change.

DOBBS: I think Abdulaziz was pointing to this, and Abdulaziz, correct me if I'm wrong in interpreting, what you're really saying is the current leaders of Islam, those leading seminaries, those imams are really very traditional in their sense, conservative, close-minded from a Western perspective. Is that not what you were really saying?

SACHEDINA: Exactly. I think we have a very interesting dilemma, that the traditional leaders do not believe that they can really open up the society in such a way that religion becomes relativized in its value and in its guidance to the people. And yet I think the modern way of living itself demands that women have to be considered as equal participants, and so are the minorities to be treated as equal citizens. I think Islamic law that Mr. Spencer is mentioning is no more the source of this kind of what we call the control over the public; rather the public wants to see that those who are ruling them are held accountable, and the traditional authorities are not helping them.

HADIAN: If, in fact, if a Jewish law and if the Old Testament and the New Testament can support equal rights and rights of the minorities, for sure in Islam also, we obviously believe we can, we can interpret Islam in a way to do the same thing.

DOBBS: This is within the theological context, this is within the context of at the best beginning a secularization. But the fact is in Iraq, the contest between the Shia, the Sunni, those, the relationship between Iran and Iraq, democratization, which is the avowed goal of this administration and the U.S. government policy, can it happen? Are we on the right track? And what is required to get there?

HADIAN: For sure, of course, it can happen, but it's not going to be easy. I mean, just what you can hope is beginning of a process. And for that, for having a democracy in Iraq, we need to have the state which is power is very much limited. We need strengthening the civil societies and institutions. We need a culture which also backs up and supports the democracy. We need the international community which also would then support such a process. But it is not going to...

(CROSSTALK)

DOBBS: Robert.

SPENCER: I would love to see this. And I wish that it were that easy and that it was going to happen. But the problem is that what you have here is a legal superstructure and a tradition and a theology that is far more extensive and entrenched than these gentlemen are representing, and this is the fundamental obstacle to the democratization of Iraq and of all the countries in the Middle East.

DOBBS: The fundamental tenets of Islam itself?

SPENCER: Yes.

DOBBS: Abdulaziz?

SACHEDINA: Yes, I think that there is some misunderstanding here, that that system, theology, legal system that is being -- actually it has declined its influence and the -- my own working with the religious leaders in Iraq has shown very clearly that there is a search for a new type of governance and that governance would be democratic, would be inclusive...

DOBBS: Will it be Islamist?

SACHEDINA: Islam in a very different way.

DOBBS: Will it be Islamist? Would it be Islamist,in your view? Abdulaziz?

SACHEDINA: It would still be -- I don't think it will be Islamic but it would certainly it would be Muslim. Islamic in the sense that theology today -- there's a need for new theology and Muslim leaning, Muslim religious leaders are not willing to see that new theology coming about. And therefore, there has to be what we call a Muslim effort to call upon those leaders to respond more relevantly to their needs in the modern Democrat societies.

DOBBS: Nasser, you get the last word. A succinct word.

HADIAN: We have have to distinguish between the Muslim government and Islamic government. In Iraq, what is possible is a Muslim government. By that I mean, having a group of people who have are being perceived by the population as a Muslim, as loyal to the tradition...

DOBBS: Is a secular government possible?

HADIAN: Yes, it is very much possible.

(CROSSTALK)

HADIAN: Exactly. The Muslims, to be in power but with a secular setting.

DOBBS: Nasser, Robert, Abdulaziz, gentlemen, we thank you very much for being with us.

(CROSSTALK)

DOBBS: Tonight's thought is on democracy itself. "Democracy is said to be the worst form of government except all those other forms that have been tried from time to time." So said Sir Winston Churchill.

And a reminder to vote in our poll tonight. The question, "Whom do you blame most for exporting millions of U.S. jobs? Consumers, corporate America, Congress or the White House?" Please vote at cnn.com/lou. We'll have the results coming up here in just a few minutes. Also coming up, Christine Romans on the controversy over the New York Stock Exchange's chairman, Richard Grasso. Had a huge payday. Could have been even bigger. A lot of people very unhappy with how much you make running a not-for-profit organization.

Also, a top secret satellite launch from Florida in the early morning hours. We'll have that story as well.

Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Now the results of our poll. The question, "Whom do you blame most for exporting millions of U.S. jobs?" Four percent of you said consumers; 47 percent said corporate America; 7 percent said Congress; and 42 percent blame squarely the White House.

On Wall Street today, stocks took a break from their recent run- up. The Dow lost almost 80 points, the Nasdaq fell 15, the S&P down 8.5 points.

Meanwhile, the New York Stock Exchange today responded to Securities and Exchange Commission demands for details on Chairman Dick Grasso's pay package.

Christine Romans has the story -- Christine.

CHRISTINE ROMANS, CNNfn CORRESPONDENT: Well, Lou, the first public remarks from Dick Grasso about that $139.5 million payout and this bombshell -- he's entitled to another $48 million that he will forgo.

(BEGIN VIDEO CLIP)

RICHARD GRASSO, CHAIRMAN AND CEO, NYSE: Some will say, you waived $48 million in payments. I'd like to say, Look what I've achieved and how I've been blessed by this board and the compensation committee. I put this behind me. I'm not going to debate the issue of the size of future payments.

(END VIDEO CLIP)

ROMANS: But debate is brewing among NYSE members, criticism from the 1366 seat members who own the NYSE has been backchannel until now. Member James Rutledge wrote a letter to the SEC and he distributed it on the trading floor. He writes, "The controversy spawned by recent exchange disclosures has severely battered an image that faces economic dangers of historic proportions." He asked the SEC for direct invention.

Another member, a 30-year veteran, told me today that members want to see improved transparency and accountability. Frank Maglio said, "The floor members hold ourselves to a very high standard. Our word is our bond. The NYSE holds its listed companies to a very high standard. The stock exchange should be held to those same standards." Other members have expressed frustration that Grasso's pay grew to such a big chunk of NYSE earnings. In 2002, he was paid about $12 million. The NYSE earned $28 million that year. In 2001, he made $25 million. The Exchange earned about $31 million.

Tomorrow Dick Grasso and Bill Donaldson, the chairman of the SEC, will appear together at a business roundtable discussing corporate governance.

DOBBS: And excessive executive compensation.

ROMANS: Absolutely.

DOBBS: What in the world is he thinking about? Where did this $48 million come from that he put aside?

ROMANS: This $48 million is separate from the $139.5 we heard about. The stock exchange said it didn't have to disclose that because he hadn't accepted it. It was deferred compensation that it hadn't had to pay out.

DOBBS: When did he choose not to accept it?

ROMANS: Recently. He did.

DOBBS: Ah. And is that supposed to make everybody feel better about a $149 million package for a guy running a not for profit organization? Quasi-regulatory?

ROMANS: He says every year the board tells him how much money he's going to make and he says, Thank you, I'm blessed. Those are the four words that he talks about...

DOBBS: Yes, he is certainly blessed and I tell you, it's going to be an interesting conversation between he and Donaldson...

ROMANS: It certainly will.

DOBBS: ...as he tries to set a standard for constraint on the part of corporate America.

Christine Romans, thank you.

Now for a look at some of your thoughts.

Hugh Gray of Madison, Alabama wrote in about our series, "A Changed Nation," "Travel by air used to represent the most convenient, low cost and practical method of moving about the country. Post-9/11 it has lost most of those aspects due to security processing. I, for one, will always choose my auto for traveling the country rather than flying simply because I appreciate my American right to come and go at will unsearched."

On the millions of Americans who earn slave wages for their hard work, Carol Madison of Windsor, Colorado wrote, "Smoke is coming out of my ears here. Joe and Mary Lunchpail work long hours for slave wages or can't find a job because they're being outsourced overseas for cheap labor. The extra money saved by companies pulling this garbage is given to overpaid CEOs for undeserved bonuses. These windbag politicians from both parties need a reality check."

Janet Young of Cambridge, Massachusetts wrote, "As a nation, we need to ask ourselves why jobs that involve taking care of people, nursing home workers, teachers' aides, policeman and firefighters pay so little when jobs that involve taking care of money, or not in the case of Enron, are so well paid."

And on the president's request for more money to fight the war in Iraq, John Sloan of Olive Branch, Mississippi, "With Iraq having the second-largest oil field in the world, why are we paying for the reconstruction? They were able to pump the oil before the war and sold it."

J. O'Brien of Minneapolis of Minnesota: "We're spending $87 billion to defend America and our way of life. Who is protecting us against, self-enriching CEOs of American industry who are stripping the American dream from millions of workers to send work to people who hate us."

Send us your thoughts to loudobbs@cnn.com. We love hearing from you. And so do all of our other viewers.

Finally tonight, the United States has another ear in the sky tonight to help fight terrorism. The Air Force launched a rocket carrying a top secret satellite last night, lighting up the skies over Florida. The satellite is believed to be a new high-tech listening device so sensitive it can listen in on cell phone conversations.

That's our show for tonight. Thanks for being with us. For all of us here, good night from New York.

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