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LOU DOBBS TONIGHT

Pakistan Believes No. 2 al Qaeda Leader Cornered; Interview With Condoleezza Rice

Aired March 18, 2004 - 18:00   ET

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

(BEGIN VIDEOTAPE)
JOHN KING, CNN ANCHOR (voice-over): Tonight, al Qaeda cornered. Pakistan plans to launch a major airstrike on what it believes is al Qaeda's No. 2 in command.

PERVEZ MUSHARRAF, PAKISTANI PRESIDENT: They are dug in. And they are giving fierce resistance.

KING: We'll have live reports from Pakistan and the Pentagon. General David Grange will join us for "Grange On Point." The White House welcomes the news ahead of a major speech from the president marking the first anniversary of the Iraq war. National Security Adviser Condoleezza Rice will be our guest.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: It would of course be a major step forward in the war on terrorism.

KING: And former U.N. Ambassador Richard Holbrooke will join us.

Population explosion. A new census report finds the number of Hispanics and Asians in this country will triple in less than 50 years. We'll have a special report.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday, March 18. Sitting in for the vacationing Lou Dobbs for an hour of news, debate and opinion, John King.

KING: Good evening.

Tonight, Pakistani troops have surrounded a high-level Al Qaeda target who they believe is Osama bin Laden's top deputy. Hundreds of al Qaeda forces are fighting off Pakistani troops trying to capture Ayman al-Zawahri. Now Pakistan is planning a major airstrike in the area near the border with Afghanistan.

Islamabad bureau chief joins Ash-har Quraishi joins us now live via videophone from Pakistan with the latest -- Ash-har.

ASH-HAR QURAISHI, CNN CORRESPONDENT: Hello, John.

Well, Pakistani forces are engaged in a fierce battle at this hour with hundreds of al Qaeda fighters. They are in south Waziristan in the tribal areas of northwest Pakistan. And this operation has been under way all day. It is part of ongoing operations Pakistan has been conducted in this area over the last few days and weeks.

Now, earlier in the evening, CNN's Aaron Brown sat down with Pakistani President Pervez Musharraf, who gave us his opinions on the operation from the today.

(BEGIN VIDEO CLIP)

MUSHARRAF: But the resistance that is being offered by the people there, we feel that there may be a high value target. I can't say who. But they are giving pitched battle at the moment. They are not coming out in spite of the fact that we have pounded them with artillery.

(END VIDEO CLIP)

QURAISHI: Now, intelligence sources tell CNN that they think, they believe, that Ayman al-Zawahri, Osama bin Laden's No. 2, is in the midst of these al Qaeda fighters, who have been protecting him.

Now, we are also told that intelligence officials are waiting for daybreak to bring in heavy gunships, helicopter gunships to continue this operation. This has been very, very fierce. They have been using heavy artillery to pound this area that had an evacuated earlier in the day. Right now, Pakistani officials say that this is an ongoing operation that will continue as long as it can -- John.

KING: And, Ash-har, what can you tell us? Obviously, you mentioned they are waiting for daybreak to go in with more force. In the past, there has been reported progress. They think they are about to capture somebody, only to have that target escape. Do we know anything at all about the number of Pakistani forces surrounding this area, whether they are getting assistance from U.S. special forces or any other help?

QURAISHI: No indication that U.S. special forces are engaged in this operation now. We do understand a quick-reaction force which is trained by the United States made up of Pakistanis' elite paramilitary and commandos unit is on the scene.

They have cordoned off this area. They have surrounded the area. And they are not saying that they have sealed it, which is what the concern is on the ground right now, that possibly some of these al Qaeda fighters may be able to find some escape routes. And that's why they are waiting for daybreak to enhance this operation and to bring in some heavy gunfire to really pound this area.

But at this point, they are in a holding pattern and they have surrounded the area which they have been engaged in for hours now -- John.

KING: Ash-har Quraishi, tracking a dramatic, developing story for us tonight in Islamabad, thank you very much.

And these developments in Pakistan come five days after the United States military launched a new offensive to find al Qaeda and Taliban forces in the region. Senior Pentagon correspondent Jamie McIntyre is live now at the Pentagon.

Jamie, what is the Pentagon saying about this possibility, perhaps, that this is al-Zawahri in Pakistan?

JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, John, Pentagon officials are downplaying the idea that the capture of Osama bin Laden No. 2, Ayman al-Zawahri, is imminent, saying that it has no independent intelligence to confirm that he's in the area surrounded by Pakistani troops.

In addition, Pentagon officials say that this is a Pakistani operation that is just south of the Afghan border in Pakistan territory and that no U.S. combat troops are involved. However, the U.S. does have a significant troop presence just across the border in Afghanistan, including special forces whose specific mission is to hunt down Osama bin Laden and his key lieutenants. And those special forces also have with them high-tech equipment, including U.S. unmanned Predator spy drones that are equipped with infrared thermal cameras that can see at night right along the border regions.

They will be watching to see if any of these suspected al Qaeda fighters flee across the border. If they do, the U.S. is geared up to try to hunt them down and find them. That operation which is ongoing now is called Operation Mountain Storm. It's the so-called spring offensive in which the U.S. has been gearing up to hunt down Taliban and al Qaeda remnants in the border region along the border with Pakistan.

And that operation today had two casualties. Two U.S. soldiers were killed in the Uruzgan area while they were on patrol with an Afghan national army forces. They came under fire from suspected anti-coalition militia. They returned fire, killing five people. But two U.S. soldiers were killed and two were wounded. The wounded were evacuated to an airstrip near Kandahar.

The Pentagon says that that mission, Operation Mountain Storm, is continuing -- John.

KING: And, Jamie, you mentioned the caution, an effort even to lower expectations. I assume that is borne out of the lessons of experiences from the past.

MCINTYRE: Absolutely.

The Pentagon is well aware how difficult it is to get a single individual in this kind of rugged mountain terrain. Just -- you don't have to think back too far. December, 2001, the U.S. thought it had Osama bin Laden essentially cornered between U.S. troops and local Afghan forces. And they believe he slipped away that time -- John.

KING: Jamie McIntyre live from the Pentagon -- thank you, Jamie.

Earlier today, I was in Washington for an interview with National Security Adviser Condoleezza Rice as word of this major operation in Pakistan reached the White House. And I asked her about word Pakistan might be zeroing in on Osama bin Laden's top deputy.

(BEGIN VIDEOTAPE)

RICE: We're every day trying to find these high-value targets. We have very good cooperation with the Afghan authorities, with the Pakistani authorities. We have already collected or killed two-thirds of their known leadership. And so this is an ongoing battle.

KING: What would be the significance of having Mr. al-Zawahri?

RICE: Well, were it true, it would of course be a major step forward in the war on terrorism, because he's obviously an extremely important figure.

But I think we have to be careful not to assume that getting one al Qaeda leader is going to break up the organization. We have always said that, even with Osama bin Laden, who we would all like to see brought to justice, that that will not be the end of al Qaeda. They have local leadership. They have other national leadership. We have to dismantle the entire network, not just one person.

KING: Don't want to dwell on a hypothetical, but if he were captured, do you believe that he would have information on active planning and information on the whereabouts of bin Laden?

RICE: Well, he's clearly a very, very important figure, probably the most important operational figure. And it would obviously be a very big boost. But we'll just have to wait and see.

(END VIDEOTAPE)

KING: We'll have much more of my interview with Dr. Rice, including her reaction to new Iraqi violence and criticism from Senator Kerry, a bit later in the broadcast.

The White House tonight is closing tracking today's developments and being deliberately cautious.

Suzanne Malveaux is at the White House now.

Suzanne, what's the latest?

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, John, the president just returned from a visit with U.S. troops from Fort Campbell, Kentucky. Reporters shouted the question whether or not he knew if al Qaeda's No. 2 had indeed been captured. And this was his response.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We don't know anything new.

(END VIDEO CLIP)

MALVEAUX: President Bush saying that he did not know anything new. Administration officials who I have been speaking with say it is much too early to know anything, but they do say, however, if al Qaeda's No. 2 was captured on the eve of the one-year anniversary of the U.S. war with Iraq, that it certainly would be a coup.

KING: Well, Suzanne, you mentioned that coming anniversary. The president himself was out today, getting a bit more detail on this juxtaposition, if you will, the making a spirited effort to defend the war in Iraq. Now word of a potential breakthrough in the war on terror. How is the administration dealing with this?

MALVEAUX: Well, what they are doing, John, is, they are trying to downplay this. And one of the reasons why is because the worst- case here is, if you get everyone's expectations up, this ends up that they don't capture Zawahri and that everybody is let down. The day after, it looks like it is a colossal failure.

The administration saying, look, this is just one man in the whole al Qaeda network. Of course, it would be quite a success story if they could net him this evening or tomorrow. They certainly hope that's the case, but they don't want to play that up. At the same time, President Bush today arguing that the war on terror continues and that it is his path, his policy that American voters should follow -- John.

KING: Suzanne Malveaux at the White House, thank you very much.

New violence today in Iraq. Insurgents launched rocket-propelled grenades at two targets in Baghdad, a hotel and the Ministry of Oil. No injures were reported. It came a day after a suicide car bombing destroyed another Baghdad hotel and killed seven people. Also today, at least two people were killed in fighting between U.S. troops and insurgents in the Sunni Triangle. And another car bombing killed at least four people in the southern Iraqi town of Basra.

Another European member of the coalition is speaking out in the war in Iraq. Poland's President Aleksander Kwasniewski today said Poland was misled about weapons of mass destruction in Iraq before the war. But Kwasniewski did say Iraq is better off now than it was before Saddam Hussein lost power and it's too early for the coalition to leave. Two other coalition members today reaffirmed their commitment to staying in Iraq. Britain and Italy's foreign secretaries met in London and also pledged to stand firm on the war on terror.

(BEGIN VIDEO CLIP)

JACK STRAW, BRITISH FOREIGN MINISTER: Nobody can opt out of the war against terrorism. And, as far as the British and I know the Italian governments are concerned, nobody is going to opt out either.

(END VIDEO CLIP)

KING: Coming up next, Pakistani troops tonight are fighting to capture a target they think is al Qaeda's No. 2 in command, Ayman al- Zawahri. We'll have much more on what it could mean for the radical Islamist terrorist group next. Plus, more of my conversation today with National Security Adviser Condoleezza Rice. She'll tell us what the rising violence in Iraq could mean for the coalition's plan to hand over power in Iraq in less than four months.

And Former U.N. Ambassador Richard Holbrooke, who is also advising Senator John Kerry's presidential campaign, will join us with his thoughts on Iraq and the hunt for al Qaeda. That and a great deal more ahead.

Stay with us.

(COMMERCIAL BREAK)

KING: As we have been reporting, Pakistani officials believe they have surrounded Osama bin Laden's top al Qaeda lieutenant, Ayman al-Zawahri, along the border of Pakistan and Afghanistan.

Kelli Arena reports from Washington on why al-Zawahri is such a sought-after target in the war on terror.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): Counterterrorism officials say it's just as crucial to get their hands on Ayman al-Zawahri as Osama bin Laden.

MATT LEVITT, FORMER FBI ANALYST: Al-Zawahri is bound to have vast personal knowledge about things that are going on now, where operatives are. He is bound to have cell phones, computers, documents, all the kinds of materials that we are eager to exploit.

ARENA: Officials say it's probably true that Zawahri spent most of his energy just staying alive, but say he may have real-time information regarding al Qaeda plots. Intelligence officials also believe it is his voice on recent and threatening al Qaeda audiotapes.

Officials say Zawahri's capture could also offer clues to Osama bin Laden's whereabouts. They believe bin Laden and Zawahri have maintained close contact and communicate regularly. If Zawahri is turned over to U.S. custody, as expected, officials say he will meet with the same fate as other captured al Qaeda leaders, such as Ramzi Binalshibh and Khalid Shaikh Mohammed. He will be whisked away to an undisclosed location, held as an enemy combatant and interrogated as quickly as possible.

KEN PIERNICK, FORMER FBI COUNTERTERRORISM OFFICIAL: You're disoriented and you become unhinged. And you have a sense of abandonment. And in that time, you are uniquely vulnerable and may be willing to say things that you might not after you have had this space of time to recover.

(END VIDEO CLIP)

ARENA: What Zawahri's capture will not do is put al Qaeda out of business. Experts have repeatedly said that the terror movement is much bigger than any one man or any organization -- John.

KING: And Kelli, to follow up on that point, what are your sources saying is their best guess about his involvement now in day- to-day planning and how much of this has been decentralized?

ARENA: They really do believe that, as we have reported before, John, that these groups have splintered off and that many of these cells are operating on their own.

But there is a belief that he may know about general plans, that he may know where some key operatives are in the region. And that would be important. Obviously, the first thing they want to find out from him is what he knows about any current plots, so that they can possibly save lives. The second part is just more about what has happened to al Qaeda's structure and where some of those key operatives have moved to.

KING: Kelli Arena tonight in Washington, thank you very much.

ARENA: You're welcome.

KING: And today's developments in Pakistan and Iraq and the potential impact of U.S. military strategy is the focus of tonight's "Grange On Point."

I'm joined now by General David Grange. General, let us begin with this operation under way. We're told a small group of al Qaeda forces are fighting off Pakistani troops in a terrible area in terms of access and information. Help us understand now. It is overnight there. They say they want to launch a major offensive in the morning. What are the risks of escape?

RETIRED BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: Well, the risks are high. They may have a very good cordon set up.

General Musharraf had talked to one of his corps commanders, which indicates that it's a very large unit involved, I think almost 30 kilometers in diameter around this series of fortified mud huts, where this 200 al Qaeda force is located with possibly a high-value target. Tough to get to. They know the terrain. They know the escape routes. And if it's not sealed perfectly. If the discipline of the Pakistani troops is not pursued throughout the night, there's a good chance that someone can get away.

KING: It is a sensitive political issue for President Musharraf, but this is obviously a high priority of the Bush administration. What would your belief be of the involvement of the United States military, whether it be special forces or intelligence, right now in trying to make this a success?

GRANGE: Well, there's cooperation, obviously, with U.S. forces and the Pakistani forces on this effort. A lot of it, I believe, is more low-visibility, in other words, intelligence-gathering sources that are not quite overt. In other words, they are high-altitude or offset. There may be some special forces or those type of people advising some of their strike teams. But, again, I don't think you are going to see massive U.S. forces attacking in this part of the country. Historically, they reject foreigners. Historically, they resist any kind of movement of anybody in this area. And so I think we're supporting, but we're doing it in a helpful, standoff manner.

KING: General Grange, we want to ask you to stand by, sir.

And when we return, we'll talk more with our military analyst, General David Grange, about the possible capture of Osama bin Laden's closest adviser; and our interview with National Security Adviser Condoleezza Rice on the future of democracy in Iraq and progress in the war on terror.

We'll have that and much more up next.

(COMMERCIAL BREAK)

KING: Today's developments in Pakistan and Iraq and the potential impact on U.S. military strategy is the focus of tonight's "Grange On Point."

I'm rejoined now by General David Grange.

General, to the average viewer, they might hear there are 200 al Qaeda forces defending this target who they believe to be bin Laden's No. 2. This might sound like much, just 200 al Qaeda fighters. Tell us, how difficult of a fight are we talking about here?

GRANGE: It could be a very difficult fight.

These are people that will fight to the death. They have really no future if they are captured. And they are extreme loyalists to the al Qaeda leadership. This is an area where they are waiting for daylight to bring in airstrikes. And what you have in the situation like this, no matter how hard you pound the target with airstrikes, artillery, I remember, just in Vietnam, going into areas that have had massive B-52 strikes and airstrikes.

And once you go in, the ground is like just powder up to your knees and you still have guys coming out of the ground alive fighting you. So it's a tough fight when you get close to the final part of the objective.

KING: One has to assume that, optimally, the United States would like him captured alive if this is in fact bin Laden's No. 2. Do have you factor that into your military operation? Or do you just have to apply all the necessary force and dead or alive, so be it?

GRANGE: Well, you would like to get this enemy -- these enemy personnel like this alive for interrogation purposes. But there's factors that lead into what you can do and not do.

In other words, you have civilians in the area. I'm sure there's women and children in these villages where these fortified positions are. Also, how many people are you going to lose to try to get somebody taken alive? And so that's going to equate to the commander on, is it worth it? And so they will come to a point where they will kill him if they have to eliminate some of those other problem areas.

KING: I want to close tonight, General, by turning to the situation in Iraq. Tomorrow will be one year to the day when the president started the war in Iraq. We have seen considerable violence in the past 24 to 48 hours. Does that change your assessment at all of the challenge for the troops on the ground and, essentially your report card, sir, at the one-year mark?

GRANGE: Well, I'll tell you, I believe in keeping your resolve, just like the G.I.s that are in the fray are doing right now.

This is a situation where it's very hard to measure the effectiveness of the good things that are happening in Iraq, but there are some good things happening. And what happens is, you have some sensational events that take place. And terrorists, insurgents know that. They know that's going to get the attention of the world. And so you tend to measure the results of what has taken place over the last year with a few of these events.

And I think we have to be steady, go the course and follow this thing through. We have no other choice but to do so. The G.I.s are there. They are doing a great job and I think we're going to take it all the way to victory.

KING: General David Grange, grateful for your thoughts tonight. Thank you, sir.

GRANGE: Thank you.

KING: And that brings us to the topic of tonight's poll question: Do you believe the Bush administration has the right approach to win the war on terror, yes or no? Cast your vote at CNN.com/Lou. We'll bring you the results a bit later in the show.

And coming up, National Security Adviser Condoleezza Rice speaks out on Iraq's weapons of mass destruction, the election, and a great deal more.

And former U.S. Ambassador to the United Nations Richard Holbrooke joins us to share his reaction to these dramatic developments.

Then, a population explosion that will change the face of the United States over the next four decades. We'll have that special report.

Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Sitting in for the vacationing Lou Dobbs, John King. KING: President Bush today personally thanked thousands of U.S. troops who returned from Iraq last month. The president visited with troops and their families at Fort Campbell, Kentucky, home to the 101st Airborne Division.

White House correspondent Dana Bash reports now from Fort Campbell.

(BEGIN VIDEOTAPE)

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: The White House created images here at Fort Campbell hard for any challenger to compete with.

(voice-over): The president took to the stage through a sea of cheering troops to The tune of "Hail to the Chief." The goal was to thank and rally the 20,000 members of the 101st Airborne Division just back from Iraq.

And with national security topic A on the campaign trail, the president made a point to counter Senator John Kerry's charge that Mr. Bush sent troops to battle without the proper equipment and has not supported military families. And he took a not-so-subtle jab at his opponent for voting against a bill to fund operations in Iraq.

BUSH: I want to thank every member of Congress who voted in favor of the $87 billion supplemental that is meeting the needs of our troops in the field right now. When your government gives you a mission, we must accept serious responsibility of our own.

BASH: The president is popular with many in the military and Fort Campbell is no exception. Soldiers here were involved in many of the key probations during the war in Iraq, including securing southern Baghdad and capturing and killing Saddam Hussein's two sons. Most said, although their time in Iraq was tough, it was worth it.

UNIDENTIFIED MALE: No doubt about it, things are much better off for the people of Iraq than they were under the previous regime. And life is getting better for them every day. And as they overcome the hurdles that they have now, things are looking bright for them.

BASH (on camera): Part of the day of appreciation for the commander in chief here, fried shrimp and broccoli with the troops in the mess, a tradition whenever Mr. Bush visits military bases.

But there's another more grim tradition as well, paying condolences to the families of those who did not come home; 65 of 564 killed in Iraq were from this base, more than any other.

Dana Bash, CNN, Fort Campbell, Kentucky.

(END VIDEOTAPE)

KING: Earlier today, I spoke with National Security Adviser Condoleezza Rice in Washington. In addition to the major operation in Pakistan, Dr. Rice and I discussed the increasing violence in Iraq one year after the war began.

(BEGIN VIDEOTAPE)

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: We're going to continue to see violence as the Iraqi people move toward freedom, but it's not going to intimidate Iraqis. It's not going to intimidate the coalition. It's certainly not going to intimidate the United States.

KING: You say move toward freedom, move toward a better future. This handover of sovereignty is supposed to be a little shy of four months from now, and there is still not a plan over who exactly the coalition will hand over power to. Are you nervous that that clock is ticking and there has not been enough progress, that the United Nations might go back in, that's not certain? There's not a plan over who gets the keys, essentially, on July 1st.

RICE: Well, there actually has been a lot of work done, and of course there is a transnational -- sorry, a transitional administrative law that will help to guide this period of transition. There is a U.N. team that will, we think, be going back out very shortly to help the Iraqis design this interim government. It should be remembered that this interim government is envisioned to be in power only for a few months until the elections can be arranged at the end of the year or at the beginning of next year to then bring in a transitional government that can write a constitution and have elections for a permanent government.

RICE: So there is plenty of time to develop a plan for this interim government. I should also mention that there are ministries and ministers who are running the day-to-day affairs of Iraq and have been for some time. So there's a Ministry of Finance and a Ministry of Agriculture and a Ministry of Education. And so the country is really being run in large part by the Iraqis in any case. This is the political layer that needs to be put in place, and there is plenty of time to get that done.

KING: One of the debates about going to war in the first place, of course, has been over weapons of mass destruction. The president of Poland said today that he believes there are none, and they will not be found. The administration says we're still looking. Is it time, at the one-year mark, to just concede that point, that the intelligence was wrong, that there were no active stockpiles of chemical and biological weapons and move on?

RICE: Well, I talked to the Poles, and they think they were a big misinterpreted here, because there's been no stronger ally in this than the Poles. And President Kwasniewski and the president have talked about this, and they went to war for the right reasons.

Look, John, it's not as if anybody believes that Saddam Hussein was without weapons of mass destruction. We have to remember that we looked at the intelligence, the United Nations looked at the intelligence. Many, many allied -- the intelligence services looked at the intelligence. And he was considered a serious weapons of mass destruction threat. KING: We are having this conversation in the middle of a rather contentious presidential campaign. Senator Kerry, the president's Democratic opponent laid out his views on military matters, foreign policy, yesterday, quite harshly critical of this administration. I want to read you one thing he said. This is about the war in Iraq. "Today, we know the mission is not finished. Hostilities have not ended, and our men and women in uniform fight almost alone, in reality, with the target squarely on their back and their front." He also says, "no end in sight," and that this administration has stubbornly stuck to what he calls a failed policy that has alienated our longtime traditional allies.

How would you answer that?

RICE: Well, we're going to have an interesting debate in this country about whether the right response to the act of war that was committed against this country on September 11th, when they went after the twin towers and the Pentagon and perhaps the Capitol and the White House were on the list -- whether that act of war is going to be answered by an American strategy that is bold and decisive and takes the fight to them or whether we're going to go back to days when we thought that principally this was a law enforcement action and we would use kind of minimal military force once in a while. That's what led to September 11th. It was the fact that the country was not really mobilized to take on the war that had been launched against us.

We're going to have that debate. But it is also really unfortunate that anyone would diminish the sacrifices of the countries that are fighting with us. The Poles, the Spanish have lost people. The Italians have lost cabanieri (ph). There have been deaths among our coalition partners, people who were fighting bravely with us. Could it really be the fact or the case that we only value allies who disagree with us? Could it really only be the case that if you somehow refuse to participate in what the United States considers to be essential to its home security that you're somehow valued?

I find it a very odd comment, frankly.

KING: Sounds like you might like to get on the campaign trail a little bit.

RICE: No, I'm going to do what I need to do, which is to work hard for this president's policy, to work hard to finish the job that we have begun. The president has had in many ways the very tough job of being a wartime president after we were attacked on September 11th, but the opportunities that have been afforded to liberate 50 million people in the last three years, to set Iraq and Afghanistan together with those people on a road toward democracy, to eliminate two of the most brutal and dangerous regimes. But also to do other very important things -- to launch a major initiative, $15 billion initiative on AIDS, to double by 50 percent -- to increase by 50 percent American developmental assistance to the world's poorest nations, to have a policy that defends free trade and is against economic isolationism, to have the best relations with Russia and China that the United States has enjoyed in many, many years. That's the job that I'm working on, and yes, it's difficult. War is always tough. There's nothing of value that can be gained without sacrifice. I think the American people know that and that's what we're going to have.

KING: You mentioned the sacrifice of some of the allies. Spain, of course, one of them. As you know, the election there has brought some extraordinary changes in just the past week. The newly elected prime minister, Mr. Zapatero, said it is fiasco, what's going on in Iraq, and he says he will pull his troops out when he takes office.

He also says that he hopes the people of the United States follow the lead of the people of Spain and elect new leadership. Pretty extraordinary for a prime minister-elect of a traditional ally of this country, and a major NATO ally, to say something like that in public, is it not?

RICE: Well, of course, it's not up to the Spanish prime minister-elect. It's up to the American people, so I think we'll just ignore that comment.

On the matter of Iraq being a fiasco, I don't think the Iraqi people who have been liberated from Saddam Hussein think so. I don't think that our pilots, who no longer have to fly dangerous no-fly zones think so. I don't think that the Kuwaitis, who lived under the shadow of Saddam Hussein, or the Saudis or others who lived under his shadow, think so. I don't think the people of the Middle East, who are looking at an Iraq that might be a model for a democratic future think so.

I think that the terrorists, who are really worried that when we win in Iraq and finally really develop a prosperous and peaceful and democratic Iraq, that their sense of inevitable victory, that their sense of having the Middle East as their forward base of operations, that that's going to be undone. I think they think it's a disaster.

And I would really hope that the Spanish government, the new Spanish government, would go out of its way to make very clear to the terrorists that whatever they decide about their forces in Iraq -- that's up to the Spanish government. But that whatever they decide about their forces in Iraq, that they make clear to the terrorists that they understand that there can be no separate peace with terrorists.

KING: You say you will ignore the comment about our election process here, but you can't ignore the new leadership in the sense that there has been conversations about NATO taking a much more aggressive role, helpful role, in Iraq in post-war Iraq after the handover in sovereignty. Do you fear, because NATO is an organization of consensus, that that will have to be scuttled now, because the new prime minister of Spain will say no.

RICE: No, I don't fear that, because I believe that the NATO allies will be convinced that we have to finish what we've started, that we owe it to the Iraqi people, whom we've liberated now, to help them to create a democratic future. That we owe it to them to finish the job until the circumstances are stable and that they can do it for themselves, that we owe it to their neighbors and to the Middle East to finish this important chapter and to launch the Middle East on a new future. I think NATO will understand that. When we started fighting this war on terrorism after September 11th, the president said we are not going to fight this war on the defensive. As much as my colleague Tom Ridge or John Gordon spend every day thinking about how we can harden our ports, how we can harden our airports, how we can make ourselves more secure at our borders, we all know that we will never be able to fully secure the United States by defensive means, not if we want to remain the United States that we are, open and welcoming to people from abroad.

And therefore, we have no choice but to take this fight to the terrorists and to defeat them in their forward areas. And that's what we're doing. That's what we've done in Afghanistan. That's what we're doing in Iraq. They can no longer count on safehaven in Pakistan and in Saudi Arabia or in Sudan or in Libya. Their world is getting smaller, and yes, it's going to take some time, but these terrorists are being defeated, and I think the American people understand that what we cannot do now is lose our will or lose our nerve, and this president will not do that.

KING: You make the case with a great deal of passion, as the president, but as you remember too well, perhaps, going into the war into Iraq, we had the divide with Europe, the French and the Germans principally, publicly outspoken against the position of the United States. Do you worry that we are going back into an environment like that, when you have the newly elected prime minister of Spain saying he believes that the war on terror, the U.S. way of using shock and awe and military force has actually inspired more violence?

And Romano Prodi, former Italian prime minister, the European Union's representative, if you will, to the world, a very senior official in the European Union, says he believes the same thing, that the use of military force is only inspiring the terrorists.

RICE: I'd just ask them what inspired September 11th, then? What was it that inspired September 11th? It wasn't the use of military force. It's the fact that we are a free people and that these evil designs of al Qaeda and their ilk were to destroy our will, to decapitate this country on that day, to crash our markets and destroy our economic prosperity.

It wasn't our military force that brought al Qaeda to attack us. It wasn't the military force of Moroccans or Russians or people in Turkey. It is the fact that these terrorists do have a political design, and it is one that is 180 degrees from the political design of the free world. And so I just don't understand the notion that it's somehow military power that's causing terrorism.

We didn't create al Qaeda. Al Qaeda came to us, and now we have to fight them. And yes, we fight them by law enforcement means and intelligence means. Every day, we are -- the FBI is working with law enforcement agencies around the world. John Ashcroft is working with justice ministers around the world. Every day, we're fighting by diplomatic means and we're cutting off their finances and we're sharing intelligence, but we also have to take the fight to them and take away their territories.

They had Afghanistan as an operating base. They don't have it any more, because the American armed forces destroyed them in Afghanistan by military means. They were operating, Zakhari (ph) was operating in Iraq. We know that. In and out of Iraq, leaving his network in Iraq, which ordered the hit on an American diplomat in Jordan.

We know that they once operated out of Sudan. We know that they like to have territories. So we can't sit here in the United States and pretend that we can do it all by law enforcement. Yes, we're going to have to use the full range of instruments and options at the disposal of the American president, and that's the case the president of the United States has made to the American people.

KING: The head of the International Atomic Energy Agency was here yesterday to talk to you and the president about the showdown, if you will, with Iran, about getting inspectors in. He suggested, yes, the international community needs to be tough, but he also suggested, we are told, that perhaps it's time for some senior official in the United States government to pick up the phone and give dialog -- at least a chance to pick up the phone and say if we talk to you, where would this go?

RICE: The Iranians know very well, through all kinds of channels and public statements, what our problems are in the relationship. They know that we believe that they're holding senior al Qaeda leadership and that they really ought to turn them over to their countries of origin. We're not asking them to turn them over to us. We understand that that would be difficult, but to their countries of origin.

The Iranians know that we are concerned about their activities on their border with Iraq. It's not that we don't want Iran to have a good relationship with Iraq, with its neighbors. We would be delighted if there's never again a war between Iraq and Iran, but they need to stop operating in Iraq in ways that are destabilizing. The Iranians know that we are concerned about their nuclear program, and indeed, we have a lot of company.

The IAEA, the members of the IAEA, our friends in the European Union, the Russians, are all concerned about what the Iranians are doing, because they seem not to be able to get the stories straight. They keep telling different stories about what they're doing. The Iranians also know that we dislike and are concerned about their support of rejectionist (ph) terrorist groups in the Middle East that are a problem for getting to a solution between Israel and the Palestinians.

So I don't think anybody needs to have a conversation with the Iranians, because they know what the problem is.

KING: I want to ask you lastly, in closing, you have said it is not a matter of personal preference that you would not testify in public before the 9/11 commission. It seems to indicate you would like to say something. Is there any way to arrange an appearance where the commission would agree, and make the public statement, that you cannot talk about certain things in public -- to get you out in public to quiet those who say, why not? Does this administration have something to hide?

RICE: Well, John, this administration, first of all, has nothing to hide, and in fact, we have spent a lot of time with the commission. I myself have spent more than four hours with the commission, answering their questions. I've said I'm happy to do it again, in private.

But the problem is that there is a longstanding legal and tradition -- both from the legal perspective and from tradition that there has to be a separation of the powers between the executive and the legislature. I'm not a confirmed official for that reason. I am an assistant to the president. I am presidential staff. And we don't testify in public.

The commission will have all of the information that I have to give. I am happy to talk about anything. They will have a report. I hope that they will be able to make as much of that possible as they can.

KING: Thank you very much for your time.

RICE: Thank you, John. Good to be with you.

(END VIDEOTAPE)

KING: A reminder now, we'd like you to weigh in on tonight's poll question. Do you believe the Bush administration has the right approach to win the war on terror? Yes or No. Cast your vote at CNN.com/lou. We'll bring you the results later in the program.

Coming up next, former U.S. ambassador to the United Nations Richard Holbrooke with reaction to those comments just now from Condoleezza Rice. We'll talk about national security, the presidential election, and recent events in Iraq.

And the changing face of America the U.S. population is expected to explode in the next 50 years and minorities will make up half the population. We'll have that story and much more when we return.

(COMMERCIAL BREAK)

KING: As we have been reporting, fierce fighting is underway along the Afghan-Pakistan border. Pakistani officials have surrounded what they believe to be a high-value al Qaeda official. Richard Holbrooke is the former U.S. ambassador to the United Nations and an adviser to Senator John Kerry's presidential campaign. He joins me tonight in the studio. Let us start with this operation underway along the border. They think they have al-Zawahiri, they say, the No. 2 to bin Laden. Would his capture now, if this is the case, be as significant today as perhaps it might have been two years ago, in your view in terms of his operational control of al Qaeda.

RICHARD HOLBROOKE, FMR. U.S. AMBASSADOR TO U.N.: Whenever you capture him, the excellent interview you just ran with Condi Rice says it all. She has the up to the minute intelligence, that was an important statement. She said and I agree with her, of course, that he's very important. I think he's as important as bin Laden in many ways. But his capture isn't going to end it. One thing she said was interesting, we have to dismantle the entire network. In fact, as you reported many times, it's not a network like the KGB or a government or a football team. It is many different loosely connected and often completely detached networks fueled by the same hatred and rage and desire to destroy, so, yes, we have got to capture him and we got to capture Osama bin Laden. We should have done this two years ago. If we do it let's hope it happens.

KING: You are an adviser in a presidential campaign that has become very heated in recent days over the issue of national security and the approach to the war on terrorism. I want to get to Iraq in a minute but in this case, Pakistan is a difficult one, as you well know. Has the administration handled this one right? The relationship with President Musharraf and the hunt for al Qaeda along the border?

HOLBROOKE: Senator Kerry was extremely critical after his trip to Afghanistan at the beginning of 2002 of the failure to capture bin Laden in Tora Bora using all the he had from his own military experience, he came to the conclusion and said very publicly that the U.S. failed to go after bin Laden adequately. They subcontracted the search of the caves to local warlords. Paid the warlords and didn't send enough American troops in. The warlords let them out. Warlords don't do caves, they do villas and they do drugs.

So anyway, when Senator Kerry said this, he was roundly attacked by administration officials for being unpatriotic in the immediate post 9/11 environment. You remember that very well. You were at the White House reporting those attacks. Everything John Kerry said turned out to be true. It was all verified and admitted later by the military. Now, finally, they are going after bin Laden, 24/7, great. It raises the question, what have they been doing for the last two years?

KING: Well, Condi Rice, in that interview, also said the American people face a choice between taking it to the terrorists with the military or an approach that believes this is not a war but more a law enforcement issue. They believe that is Senator Kerry's approach. How would you answer that?

HOLBROOKE: They can characterize Senator Kerry any way they want, in fact, they have been mischaracterizing him very steadily. John, you said this is a heated campaign. I have been in a lot of campaigns. You realize this is only the beginning of the third week of the campaign and this is like the -- I know you do -- this is like the Ali-Frazier fight in Manila where they come out in the first round trying to blow each other away and they keep at it for 15 rounds.

The administration and its friends have thrown everything they have against Senator Kerry in just the last ten days. The president from the Oval Office, the vice president, these ads which distort his record. And even the secretary of state is supposed to stay out of politics. Now, I've been in a lot of these campaigns but I also respect the integrity of our foreign policy process. In the areas I'm in considerable agreement with the administration on.

Senator Kerry and I both support President Bush on his global fight against HIV-AIDS which Condi mentioned in the interview with you. But these charges are not fair. And Senator Kerry as the American public has already learned is a very tough counter puncher. He has offered to debate the issues. I think that would be a good idea.

KING: Eight more months of that to come. I want to ask you in closing, so much attention in recent days have been focused on Iraq, focused today on the al Qaeda leaders. Another story might be getting a lot more attention if it were not for the violence, that is the ethnic violence we've seen in the last few days in Kosovo. You were a key player in those negotiations. What is happening?

HOLBROOKE: I'm glad you raised that. On a normal news day this would have been our lead. After four years very bad ethnic violence broke out between Serbs and Albanians in Kosovo. We got American troops there. We are responsible for security. This is a serious failure that I believe falls on the shoulders of the U.N., the United States, and the European Union. Let me clear on why.

In the four years since president Clinton's efforts liberated the Albanians from the oppression of Milosevic, the worst dictator in Europe, the United States, its allies, the EU, the U.N., have done nothing to move forward on the final status. When I went there in October and you covered that trip, CNN covered it very well, we stated publicly if the U.S. did not use its leadership this thing would deteriorate. What has now happened is a tragedy. The United States must show the leadership here.

Point No. 2. President Bush said publicly, we went in together, we will leave together. You were with him when he said that. What happened? In Bosnia, the administration is trying to take our troops out. It's like taking our players off the field in the fourth quarter of a game that we're winning. We haven't captured Radovan Karadzic and Ratko Mladic, you have the Osama bin Laden and Saddam Hussein of Europe.

We should not pull our troops out and jeopardize a successful effort in Bosnia. We've to reinforce the effort in Kosovo. And we must make the negotiations move forward. It is a serious absence of American leadership in the heart of Europe.

KING: Richard Holbrooke, former ambassador to the United Nations. I'll have you back as the campaign plays out. But I did want to raise that point.

And when we return, the United States prepares for a population explosion as the census bureau releases its latest projections. We'll have that special report. Please stay with us.

(COMMERCIAL BREAK)

KING: Stocks slipped today on Wall Street. The Dow down nearly 5 points. The Nasdaq fell more than 14 points and the S&P 500 lost 1.

The United States is preparing for a population explosion. The census bureau today said the Hispanic and Asian populations will triple by the year 2050. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): In the next half century America will look entirely different. Hispanic and Asian Americans will triple in numbers. And the numbers of nonhispanic whites will shrink to barely half the population of this country.

LOUIS KINCANNON, DIR. U.S. CENSUS BUREAU: Each woman in the minority populations has a higher birth rate than nonhispanic white women on average. And there's a big factor for Hispanics for Asians of continuing immigration.

PILGRIM: Here's how the population is expected to shift. In 2000, the nonhispanic white population stood at nearly 70 percent, Hispanic 12 percent, Black nearly 13 percent, and Asian nearly 4 percent. But by the year 2050, the percentage of nonhispanic white population will decline to barely half the population. Hispanics will glow to nearly a quarter of the population, Black Americans will be nearly 15 percent of the population, and Asians will grow to 8 percent of Americans.

Minorities will approach half the population of the United States. The entire U.S. population has been growing rapidly and will continue to show healthy gains. That is a contrast to Western Europe where population growth has plateaued. Immigration is a large component of U.S. population growth but, again, it comes back to birth rates.

TAMAR JACOBY, SENIOR FELLOW MANHATTAN INSTITUTE: We already have a big second generation, a big third generation of Hispanics and more of the population increase is coming from births than from immigration. So even if you stopped immigration tomorrow, which isn't practical, isn't possible, isn't going to happen, you still are going to see a huge increase in these groups.

PILGRIM: The female population of the country already outnumbers the male population, that is expected to continue for the next few decades.

(END VIDEOTAPE)

PILGRIM: Now there is an upside to the continued growth in population. Economic benefits from having more people in the labor force earning money and also consuming products. That bodes very well for economic growth -- John.

KING; You mentioned in the piece the distinction, the difference with Europe. Population relatively flat, why?

PILGRIM: The population is relatively flat, because the birth rates have plateaued. Their population is aging so they are getting more of a burden from the aging population and not enough new young people coming in from declining birth rates and also restrictions on immigration. So, they are not getting the benefits.

KING: Kitty Pilgrim, thank you very much.

Meanwhile, a population explosion of a different sort on line. The number of Americans with Internet access has topped 200 million. Nielsen Net Ratings says that's three out of four Americans up 9 percent from this time just last year. The survey measured Internet access as opposed to usage.

Coming up next, the results of tonight's poll question, but first, a reminder check our Web site for the complete list of companies we have confirmed to be exporting America. That's CNN.com/lou. Stay with us, we'll be right back.

(COMMERCIAL BREAK)

KING: Now the results of tonight's poll question. 20 percent of you believe the Bush administration has the right approach to win the war on terror, 80 percent do not.

And that's our show tonight, thanks for being with us. Tomorrow, as the war in Iraq hits the 1 year mark, Deputy Secretary of State Richard Armitage is my guest. And news makers, the editors of the nation's leading business magazines joins us. For all of us here, good night from New York. "ANDERSON COOPER" is next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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