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CNN Live At Daybreak

Latest Suicide Bombing in Iraq; Iraqi Reaction to President Bush's Talk About the Prisoner Abuse Scandal

Aired May 06, 2004 - 06:00   ET

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

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


CAROL COSTELLO, CNN ANCHOR: A suicide bombing on the edge of a neighborhood thought to be one of the safer neighborhoods in Baghdad.
And good morning to you.

From the CNN global headquarters in Atlanta, I'm Carol Costello.

Here are the latest headlines for you right now.

Flames and thick smoke rise from the scene of today's car bombing near Baghdad's green zone. A U.S. soldier and six Iraqis were killed. We're going to take you to Baghdad for a full report in just a minute.

President Bush sends a message to the Middle East in his meeting today with Jordan's King Abdullah. The president is expected to encourage Palestinians and Israelis to return to the bargaining table.

The wife of former Enron finance chief Andrew Fastow is expected to plead guilty today to a misdemeanor charge of filing a false tax return. Lea Fastow faces up to one year in prison.

And hundreds of Southern Californians return to their homes this morning, or what's left of them, as a change in the weather slows the wildfires. More than 26,000 acres have burned, at least 14 homes destroyed -- Chad.

CHAD MYERS, CNN CORRESPONDENT: It is getting better out there, Carol. Temperatures are going to cool down today, but they're really going to get cool tomorrow.

(WEATHER REPORT)

COSTELLO: No break from the violence in Iraq. A suicide car bomber kills seven people, an American soldier and six Iraqis. That happened in Baghdad earlier this morning.

Let's head live there now to find out more from Ben Wedeman -- hello, Ben. BEN WEDEMAN, CNN CORRESPONDENT: Hi, Carol.

Well, coalition officials say this bomb bears all the hallmarks of Abu Musab al-Zarqawi, that Jordanian man who's believed to have ties with Osama bin Laden's al Qaeda network. The bomb went off at about 7:30 local time at a U.S. manned checkpoint just outside the so- called green zone, which, of course, is where the U.S.-led coalition is headquartered. The blast killed seven people, five Iraqi civilians, one U.S. soldier and the suicide bomber, whose nationality we actually don't know at this point. Twenty-five people were also wounded by the blast. That includes three Iraqi policemen and two U.S. soldiers.

Now, the bomb apparently was made or contained artillery rounds. Many fragments of those shells found around the site of the blast. This is the first car bomb in Baghdad since March 17, when a blast went off outside a hotel, killing seven people -- Carol.

COSTELLO: I also wanted to ask you about the Arab reaction to President Bush's appearance on two Arab television networks -- tell us, Ben.

WEDEMAN: Well, the Iraqi reaction has been mixed. Some people reacting positively, saying that he's come out, he's dealing frankly and openly with the problem and that he has said that those involved in the abuse will be punished. On the other hand, there are many others who say it simply isn't enough, that they -- many people noted that there was not a frank apology from the president for this incident. And, in fact, I have a Baghdad newspaper with me right now from -- it's called "Dar-es-Salaam." That's from the Islam Iraqi Islamic Party. It says that an apology is not enough for the torture of -- yes, the torture of Iraqi prisoners.

So a lot of different reaction. Obviously, the United States still has a long way to go before it restores its previous credibility here in Iraq -- Carol.

COSTELLO: Ben Wedeman live in Baghdad this morning.

The International Red Cross says it repeatedly asked U.S. authorities to take action on prisoner abuse at Iraq's Abu Ghraib Prison before the recent revelations. The Red Cross began visiting that prison last year.

And there are more pictures coming out showing Americans allegedly abusing Iraqi prisoners. Take a look at what's on the front page of the "Washington Post" this morning. It shows Private First Class Lynndie England holding a leash tied to a naked man at the Abu Ghraib Prison. Yes, that's the same soldier shown in the other set of infamous photos. England's friends and relatives tell the "Post" the pictures must have been staged. A friend says England wouldn't pull a dog by its neck, let alone drag a human across the floor. And England's mother says her daughter told her, "I was in the wrong place at the wrong time."

President Bush says the Pentagon needs more money to carry on its work in Iraq and Afghanistan. That tops our situation report this morning.

He's asking Congress for an additional $25 billion. House Appropriations Chairman Bill Young says that's not enough, though.

A bipartisan group of senators is suggesting the prison where Iraqi prisoners were abused should be torn down. They say the prison is a symbol of Saddam Hussein's reign of torture and now an embarrassment for the U.S. military.

A senior administration official says the president has scolded Defense Secretary Donald Rumsfeld. The president, we're told, was not very happy to learn the details of the prisoner abuse scandal from watching television.

Families of Iraqis killed in British custody demand answers. An American held captive prepares for the long awaited trip home. And Israel is accused of building illegally in the West Bank. Other big stories making headlines around the globe this morning.

We've got Diana Muriel in London, Chris Burns in Germany, John Vause in the Middle East.

Let's begin with Diana.

DIANA MURIEL, CNN CORRESPONDENT: Well, Carol, we've been speaking with Phil Schneider, who's the lawyer who represents the 12 Iraqi families who say that their loved ones were killed by British soldiers there after May the 1st, which is technically when the war was declared over. He was at the high court in London yesterday to produce the witness statements. He says that next week he expects to have these test cases go forward to be heard. There may well be an independent inquiry set up to determine the causes of the deaths of these 12 and, indeed, it may be possible to force the Ministry of Defense here in the U.K. to accept legal responsibility for their deaths.

He says that some of these cases are deeply distressing, even shocking. One woman is alleged to have been shot in the head while eating supper with her family at home, when snipers moved into the building. Another man was said to have been killed while he was at morning prayers. The families are deeply upset by this. More cases are coming forward. It may be that as many as 17 are heard in front of the high court here in London.

But the Ministry of Defense, for its part, says that it is not legally responsible for the deaths of these Iraqi civilians -- Carol.

COSTELLO: Diana Muriel in London.

Now to Chris Burns, live in Landstuhl, Germany, where Tom Hamill has been undergoing treatment since he escaped his captors -- Chris.

CHRIS BURNS, CNN CORRESPONDENT: Well, Carol, Thomas Hamill is here. He can't quite go home yet, so home has come to him. His wife, Kellie, arrived yesterday and this is their first full day together. She brought him his favorite cowboy boots, jeans and red shirt, and last night she had promised him a steak and chocolate cake dinner last night that she would cook here at the hospital. So a little bit of homecoming to Thomas Hamill.

Though he's remaining here not for surgery. The surgery on the bullet wound in his arm is going to have to be done back in the States. But here he's undergoing counseling for the trauma that he went through during three weeks in captivity after his fuel convoy was hijacked. He's also talking to intelligence people who are trying to figure out what might have happened to the two missing coworkers and the American soldier who remains, or at last work, remained captive. We saw his videotape from his captors, anyway. So that is under -- that is going on in the next day or so.

There is word that he might return some time today or tomorrow, though it's not very clear. Today we were here watching some of the wounded soldiers arriving from Iraq. Quite a dramatic scene to watch that, very moving. We followed one of the lieutenants who was wounded in the feet after his Humvee was blown up near, in Baghdad a few days ago, actually yesterday, I believe. He said that he does plan to go back to Iraq once he's patched up, though there are others who are not quite so anxious, according to a chaplain we talked to -- back to you.

COSTELLO: No surprise there.

Chris Burns in Germany.

And finally to Matthew Chance, live in Jerusalem.

And illegal settlements in the Palestinian territories -- tell us more, Matthew.

MATTHEW CHANCE, CNN CORRESPONDENT: Well, that's right, Carol, another scandal in Israel, where it's emerged that the country's housing ministry has, over recent years, been illegally funneling millions of dollars into the construction of unauthorized Jewish outposts in the occupied Palestinian territories.

Now, for several years, Jewish settlers have been establishing dozens of these outposts, many of them not much more than a few mobile homes on top of barren hillsides. Officially, the Israeli government is committed to taking them all down, but critics have long accused successive Israeli governments of actually secretly nurturing these small, often remote Jewish communities by providing them with basic amenities.

This latest internal Israeli report seems to be concrete evidence of that -- Carol.

COSTELLO: Matthew Chance live in Jerusalem.

For more on all of these stories, go to cnn.com for the latest headlines.

Stories across America this Thursday, cooler weather and diminishing winds are helping firefighters battle blazes in Southern California. Hundreds of residents will return to their homes today. More than 26,000 acres have burned. At least 14 homes have been destroyed.

New York Governor George Pataki says groundbreaking for what will be the world's tallest building will be on July 4. The 1,776 skyscraper will rise from the ashes of the World Trade Center site. Pakistani calls the planned skyscraper the Freedom Tower. You still have a chance. No one had the winning ticket in last night's $172 million Power Ball drawing, so the top prize now goes to $205 million. The next drawing is Saturday.

Still to come on DAYBREAK, the invisible threat in the United States -- cyber terrorism and attacks on the nation's infrastructure.

Plus...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Those are the things that keep me awake and those are very real possibilities.

(END VIDEO CLIP)

COSTELLO: The real threats and the people protecting the nation's networks.

Plus, the candidates, the fundraising, the stump speeches -- when you add it all up, who's really ahead six months out from election day?

And we'll take some pressure off this Thursday morning. You get a lesson in pressure washing before you tackle the task on your own.

This is DAYBREAK for May 6.

(COMMERCIAL BREAK)

COSTELLO: Your news, money, weather and sports.

Here's what's all new this morning.

A spokeswoman for the International Red Cross says the agency was aware of infractions at the Abu Ghraib Prison months ago and she says Red Cross officials repeatedly asked U.S. authorities to take corrective action.

President Bush is asking Congress for $25 billion more for military operations in Iraq and Afghanistan. The chairman of the House Appropriations Committee says even $25 billion won't be enough, though.

In money news, oil prices are now at a 13-year high. This latest surge is blamed on worries about the security of the Mideast oil supply and fears about a gas shortage here in the U.S. this summer.

In sports, Spiderman is going out to the ball game. Ads for the new movie, "Spiderman 2," will be placed on top of bases at major league ball parks next month.

And in culture, take a look -- there it is, Picasso's "Boy With A Pipe." It's beautiful, isn't it? Well, it's...

MYERS: I don't know. Is it beautiful? COSTELLO: Oh, I love that.

MYERS: It's just expensive.

COSTELLO: Well, it should be. It's broken all records for an auction painting. It sold for $104 million at Sotheby's. It's a Picasso!

MYERS: I know, but could you imagine like "Starry Night" and what that would bring, if that thing brought $104 million? On my gosh.

COSTELLO: That would be amazing.

MYERS: That would be unbelievable.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

Across the Arab world, President Bush's TV appearance on two Arab networks is being dissected. The headlines are out in the Arab newspapers today.

How was the president received?

Our Rula Amin live in Beirut to tell us what the reaction is this morning -- good morning, Rula.

RULA AMIN, CNN CORRESPONDENT: Good morning, Carol.

Most of the people didn't have high expectations. However, they were curious to know what did the president have to say to them. And this is what he told them in one interview on one of these Arabic language networks.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want to tell the people of the Middle East that the practices that took place in that prison are abhorrent and they don't represent America. They represent the actions of a few people. Secondly, it's important for people to understand that in a democracy that there will be a full investigation. We want to know the truth.

(END VIDEO CLIP)

AMIN: Now, for most people, these words were not enough. People who even believed that the president was serious and that he was sincere in his attempt to bring those responsible to justice said that they wanted an apology, at least an apology. That's what we heard from different analysts, from newspapers across the Arab world, people saying at least he should have apologized.

Now, there are those who didn't believe anything of what he said, who thought that this was not an isolated incident. They believe that this was part of a larger pattern, that it demonstrates an anti-Arab policy by this specific administration. And those people were really very skeptical that he would have anything to say to change their hearts and minds. They feel that the damage has been done. There was no way that he could have said anything to change their mind...

COSTELLO: Rula...

AMIN: At the same time -- yes, Carol?

COSTELLO: Rula, you know, I just, you know, you say that they wanted to hear an apology. But, you know, many Americans say that we haven't heard any apologies, really, from the Arab world for 9/11 or from the torture of Americans in Iraq. And that just doesn't wash with some Americans, I should say.

AMIN: No, Carol, we asked those people on the street, when they said they wanted an apology, they said they are used, in a way, people in the Arab world are used to prisoners being tortured by their own governments. And we said your own leaders don't apologize for such pictures. And what their response was is that they know that their leaders are autocratic, are non-democratic, they're dictatorships. But they expect from the American democracy an apology. And that's how they perceive this.

They think that what happened is very big and they need a dramatic step from the president to show that he was serious and that he was sincere in his condemnation -- Carol.

COSTELLO: Rula Amin live in Beirut, Lebanon this morning.

We've got some new information just released in the last few hours about the president's approval ratings and how John Kerry compares to him in the latest Gallup polls. Stick around for the story behind those new numbers.

(COMMERCIAL BREAK)

CARRIE LEE, CNN CORRESPONDENT: ... the NASDAQ market site.

Investors saw a mixed market session at the close on Wednesday. The Dow Jones Industrials lower by six points. The NASDAQ adding six. The S&P 500 gaining about two points. Muted reaction despite a stronger than expected report for April on the services or non- manufacturing sector of our economy.

For stocks this morning, futures right now are pointing to a pretty solidly weaker open. We do have a couple of economic reports out early this morning that could give us some direction. A look at new faces in the unemployment line for last week. That is, weekly jobless claims coming out at 8:30 Eastern. The number expected to come in at 335,000 filings. Also, we'll look at a look at retail sales from our big retailers in the nation, reporting same store sales, sales at stores open at least one year, that is, for the month of April. And then finally we'll get a first look at first quarter productivity. And this is a look at the measure of goods and services produced from our nation's workers. So all of this could give us some direction.

Of course, we could see again, though, a muted reaction today, one day ahead of the big jobs report that comes out Friday morning. The unemployment rate for April expected to have held steady at 5.7 percent. Our economy is expected to have added 165,000 jobs.

But right now futures are looking like a weak open for stocks this Thursday morning.

And that's the latest business news.

DAYBREAK will be right back.

(COMMERCIAL BREAK)

COSTELLO: I'm telling you, 50 million people are expected to watch the "Friends" finale tonight. (COMMERCIAL BREAK)s with 30 second ads going for, what, two million bucks?

MYERS: Two million bucks. So you've got to figure there's going to be at least eight minutes of (COMMERCIAL BREAK)s, probably. So that's 16 (COMMERCIAL BREAK)s. They're going to make $32 million in one show.

COSTELLO: Crazy.

MYERS: At least.

COSTELLO: I think the average for CSI for a very popular show, a 30 second ad costs $450,000. So that's your comparison.

MYERS: There you go.

COSTELLO: We've been soliciting your e-mails, asking you what's the big deal about "Friends." People are having "Friends" parties tonight.

MYERS: Not these people.

COSTELLO: Well, this one's kind of nice.

MYERS: OK, then.

COSTELLO: This is from John in Flushing, New York.

MYERS: Right.

COSTELLO: He said: "I think "Friends" had such an impact with my generation, X, because it was everything we wanted to be when we finally took that leap after graduating college or leaving our parents' house. I just wish I could find an apartment like Monica's." And afford it.

MYERS: Yes, for what she was paying.

"I'd say good riddance but I'm sure they'll replace it with some other brain numbing show, perhaps a quaint little comedy about NASCAR drivers and the hijinks that ensues with their red-necked white trash friends."

COSTELLO: Oh, that's a nice one, Chad. Leave it to you to pick out that one to read.

MYERS: The NASCAR one. I wouldn't mind a show about NASCAR, you know?

COSTELLO: I am sure -- I'm sure it's coming some time.

Here's what's all new in the next half hour of DAYBREAK.

The president and the senator -- who's ahead in the polls and what's behind those numbers six months before the election?

And what do you need to know about the worm that's slithering its way around cyberspace?

And then all of you do-it-yourselfers stay tuned. Chad and our Home Depot expert will tell us how to use a pressure washer.

MYERS: Correctly.

(COMMERCIAL BREAK)

COSTELLO: From the abuse of prisoners in Iraq, to the shaky peace process, the Middle East is at the top of the president's agenda today.

Good morning to you.

From the CNN global headquarters in Atlanta, I'm Carol Costello.

Here are the latest headlines for you now. in Baghdad this morning, a suicide car bomber exploded near the green zone, where the coalition has its headquarters. A U.S. soldier and six Iraqis were killed.

Donald Rumsfeld is preparing for his testimony before the Senate Armed Services Committee. The defense secretary goes to Capitol Hill tomorrow morning for a public session on the abuse of Iraqi prisoners.

Cool weather and low winds are helping firefighters battle those southern California wildfires. More than 26,000 acres have burned. More than a dozen homes have been destroyed -- Chad.

MYERS: Carol, the key that you just said there about the low winds was what we were talking about this morning up in the weather office. This really could have been a very damaging couple of days, with winds at 30 to 40 miles per hour, like sometimes you get those Santa Anas. There was literally no wind with these fires at all, 10, maybe, miles per hour, even at times in the heat of the day some of those winds were generated by the fires themselves. But it's a lot better off than it could have been.

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Aired May 6, 2004 - 06:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: A suicide bombing on the edge of a neighborhood thought to be one of the safer neighborhoods in Baghdad.
And good morning to you.

From the CNN global headquarters in Atlanta, I'm Carol Costello.

Here are the latest headlines for you right now.

Flames and thick smoke rise from the scene of today's car bombing near Baghdad's green zone. A U.S. soldier and six Iraqis were killed. We're going to take you to Baghdad for a full report in just a minute.

President Bush sends a message to the Middle East in his meeting today with Jordan's King Abdullah. The president is expected to encourage Palestinians and Israelis to return to the bargaining table.

The wife of former Enron finance chief Andrew Fastow is expected to plead guilty today to a misdemeanor charge of filing a false tax return. Lea Fastow faces up to one year in prison.

And hundreds of Southern Californians return to their homes this morning, or what's left of them, as a change in the weather slows the wildfires. More than 26,000 acres have burned, at least 14 homes destroyed -- Chad.

CHAD MYERS, CNN CORRESPONDENT: It is getting better out there, Carol. Temperatures are going to cool down today, but they're really going to get cool tomorrow.

(WEATHER REPORT)

COSTELLO: No break from the violence in Iraq. A suicide car bomber kills seven people, an American soldier and six Iraqis. That happened in Baghdad earlier this morning.

Let's head live there now to find out more from Ben Wedeman -- hello, Ben. BEN WEDEMAN, CNN CORRESPONDENT: Hi, Carol.

Well, coalition officials say this bomb bears all the hallmarks of Abu Musab al-Zarqawi, that Jordanian man who's believed to have ties with Osama bin Laden's al Qaeda network. The bomb went off at about 7:30 local time at a U.S. manned checkpoint just outside the so- called green zone, which, of course, is where the U.S.-led coalition is headquartered. The blast killed seven people, five Iraqi civilians, one U.S. soldier and the suicide bomber, whose nationality we actually don't know at this point. Twenty-five people were also wounded by the blast. That includes three Iraqi policemen and two U.S. soldiers.

Now, the bomb apparently was made or contained artillery rounds. Many fragments of those shells found around the site of the blast. This is the first car bomb in Baghdad since March 17, when a blast went off outside a hotel, killing seven people -- Carol.

COSTELLO: I also wanted to ask you about the Arab reaction to President Bush's appearance on two Arab television networks -- tell us, Ben.

WEDEMAN: Well, the Iraqi reaction has been mixed. Some people reacting positively, saying that he's come out, he's dealing frankly and openly with the problem and that he has said that those involved in the abuse will be punished. On the other hand, there are many others who say it simply isn't enough, that they -- many people noted that there was not a frank apology from the president for this incident. And, in fact, I have a Baghdad newspaper with me right now from -- it's called "Dar-es-Salaam." That's from the Islam Iraqi Islamic Party. It says that an apology is not enough for the torture of -- yes, the torture of Iraqi prisoners.

So a lot of different reaction. Obviously, the United States still has a long way to go before it restores its previous credibility here in Iraq -- Carol.

COSTELLO: Ben Wedeman live in Baghdad this morning.

The International Red Cross says it repeatedly asked U.S. authorities to take action on prisoner abuse at Iraq's Abu Ghraib Prison before the recent revelations. The Red Cross began visiting that prison last year.

And there are more pictures coming out showing Americans allegedly abusing Iraqi prisoners. Take a look at what's on the front page of the "Washington Post" this morning. It shows Private First Class Lynndie England holding a leash tied to a naked man at the Abu Ghraib Prison. Yes, that's the same soldier shown in the other set of infamous photos. England's friends and relatives tell the "Post" the pictures must have been staged. A friend says England wouldn't pull a dog by its neck, let alone drag a human across the floor. And England's mother says her daughter told her, "I was in the wrong place at the wrong time."

President Bush says the Pentagon needs more money to carry on its work in Iraq and Afghanistan. That tops our situation report this morning.

He's asking Congress for an additional $25 billion. House Appropriations Chairman Bill Young says that's not enough, though.

A bipartisan group of senators is suggesting the prison where Iraqi prisoners were abused should be torn down. They say the prison is a symbol of Saddam Hussein's reign of torture and now an embarrassment for the U.S. military.

A senior administration official says the president has scolded Defense Secretary Donald Rumsfeld. The president, we're told, was not very happy to learn the details of the prisoner abuse scandal from watching television.

Families of Iraqis killed in British custody demand answers. An American held captive prepares for the long awaited trip home. And Israel is accused of building illegally in the West Bank. Other big stories making headlines around the globe this morning.

We've got Diana Muriel in London, Chris Burns in Germany, John Vause in the Middle East.

Let's begin with Diana.

DIANA MURIEL, CNN CORRESPONDENT: Well, Carol, we've been speaking with Phil Schneider, who's the lawyer who represents the 12 Iraqi families who say that their loved ones were killed by British soldiers there after May the 1st, which is technically when the war was declared over. He was at the high court in London yesterday to produce the witness statements. He says that next week he expects to have these test cases go forward to be heard. There may well be an independent inquiry set up to determine the causes of the deaths of these 12 and, indeed, it may be possible to force the Ministry of Defense here in the U.K. to accept legal responsibility for their deaths.

He says that some of these cases are deeply distressing, even shocking. One woman is alleged to have been shot in the head while eating supper with her family at home, when snipers moved into the building. Another man was said to have been killed while he was at morning prayers. The families are deeply upset by this. More cases are coming forward. It may be that as many as 17 are heard in front of the high court here in London.

But the Ministry of Defense, for its part, says that it is not legally responsible for the deaths of these Iraqi civilians -- Carol.

COSTELLO: Diana Muriel in London.

Now to Chris Burns, live in Landstuhl, Germany, where Tom Hamill has been undergoing treatment since he escaped his captors -- Chris.

CHRIS BURNS, CNN CORRESPONDENT: Well, Carol, Thomas Hamill is here. He can't quite go home yet, so home has come to him. His wife, Kellie, arrived yesterday and this is their first full day together. She brought him his favorite cowboy boots, jeans and red shirt, and last night she had promised him a steak and chocolate cake dinner last night that she would cook here at the hospital. So a little bit of homecoming to Thomas Hamill.

Though he's remaining here not for surgery. The surgery on the bullet wound in his arm is going to have to be done back in the States. But here he's undergoing counseling for the trauma that he went through during three weeks in captivity after his fuel convoy was hijacked. He's also talking to intelligence people who are trying to figure out what might have happened to the two missing coworkers and the American soldier who remains, or at last work, remained captive. We saw his videotape from his captors, anyway. So that is under -- that is going on in the next day or so.

There is word that he might return some time today or tomorrow, though it's not very clear. Today we were here watching some of the wounded soldiers arriving from Iraq. Quite a dramatic scene to watch that, very moving. We followed one of the lieutenants who was wounded in the feet after his Humvee was blown up near, in Baghdad a few days ago, actually yesterday, I believe. He said that he does plan to go back to Iraq once he's patched up, though there are others who are not quite so anxious, according to a chaplain we talked to -- back to you.

COSTELLO: No surprise there.

Chris Burns in Germany.

And finally to Matthew Chance, live in Jerusalem.

And illegal settlements in the Palestinian territories -- tell us more, Matthew.

MATTHEW CHANCE, CNN CORRESPONDENT: Well, that's right, Carol, another scandal in Israel, where it's emerged that the country's housing ministry has, over recent years, been illegally funneling millions of dollars into the construction of unauthorized Jewish outposts in the occupied Palestinian territories.

Now, for several years, Jewish settlers have been establishing dozens of these outposts, many of them not much more than a few mobile homes on top of barren hillsides. Officially, the Israeli government is committed to taking them all down, but critics have long accused successive Israeli governments of actually secretly nurturing these small, often remote Jewish communities by providing them with basic amenities.

This latest internal Israeli report seems to be concrete evidence of that -- Carol.

COSTELLO: Matthew Chance live in Jerusalem.

For more on all of these stories, go to cnn.com for the latest headlines.

Stories across America this Thursday, cooler weather and diminishing winds are helping firefighters battle blazes in Southern California. Hundreds of residents will return to their homes today. More than 26,000 acres have burned. At least 14 homes have been destroyed.

New York Governor George Pataki says groundbreaking for what will be the world's tallest building will be on July 4. The 1,776 skyscraper will rise from the ashes of the World Trade Center site. Pakistani calls the planned skyscraper the Freedom Tower. You still have a chance. No one had the winning ticket in last night's $172 million Power Ball drawing, so the top prize now goes to $205 million. The next drawing is Saturday.

Still to come on DAYBREAK, the invisible threat in the United States -- cyber terrorism and attacks on the nation's infrastructure.

Plus...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Those are the things that keep me awake and those are very real possibilities.

(END VIDEO CLIP)

COSTELLO: The real threats and the people protecting the nation's networks.

Plus, the candidates, the fundraising, the stump speeches -- when you add it all up, who's really ahead six months out from election day?

And we'll take some pressure off this Thursday morning. You get a lesson in pressure washing before you tackle the task on your own.

This is DAYBREAK for May 6.

(COMMERCIAL BREAK)

COSTELLO: Your news, money, weather and sports.

Here's what's all new this morning.

A spokeswoman for the International Red Cross says the agency was aware of infractions at the Abu Ghraib Prison months ago and she says Red Cross officials repeatedly asked U.S. authorities to take corrective action.

President Bush is asking Congress for $25 billion more for military operations in Iraq and Afghanistan. The chairman of the House Appropriations Committee says even $25 billion won't be enough, though.

In money news, oil prices are now at a 13-year high. This latest surge is blamed on worries about the security of the Mideast oil supply and fears about a gas shortage here in the U.S. this summer.

In sports, Spiderman is going out to the ball game. Ads for the new movie, "Spiderman 2," will be placed on top of bases at major league ball parks next month.

And in culture, take a look -- there it is, Picasso's "Boy With A Pipe." It's beautiful, isn't it? Well, it's...

MYERS: I don't know. Is it beautiful? COSTELLO: Oh, I love that.

MYERS: It's just expensive.

COSTELLO: Well, it should be. It's broken all records for an auction painting. It sold for $104 million at Sotheby's. It's a Picasso!

MYERS: I know, but could you imagine like "Starry Night" and what that would bring, if that thing brought $104 million? On my gosh.

COSTELLO: That would be amazing.

MYERS: That would be unbelievable.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

Across the Arab world, President Bush's TV appearance on two Arab networks is being dissected. The headlines are out in the Arab newspapers today.

How was the president received?

Our Rula Amin live in Beirut to tell us what the reaction is this morning -- good morning, Rula.

RULA AMIN, CNN CORRESPONDENT: Good morning, Carol.

Most of the people didn't have high expectations. However, they were curious to know what did the president have to say to them. And this is what he told them in one interview on one of these Arabic language networks.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want to tell the people of the Middle East that the practices that took place in that prison are abhorrent and they don't represent America. They represent the actions of a few people. Secondly, it's important for people to understand that in a democracy that there will be a full investigation. We want to know the truth.

(END VIDEO CLIP)

AMIN: Now, for most people, these words were not enough. People who even believed that the president was serious and that he was sincere in his attempt to bring those responsible to justice said that they wanted an apology, at least an apology. That's what we heard from different analysts, from newspapers across the Arab world, people saying at least he should have apologized.

Now, there are those who didn't believe anything of what he said, who thought that this was not an isolated incident. They believe that this was part of a larger pattern, that it demonstrates an anti-Arab policy by this specific administration. And those people were really very skeptical that he would have anything to say to change their hearts and minds. They feel that the damage has been done. There was no way that he could have said anything to change their mind...

COSTELLO: Rula...

AMIN: At the same time -- yes, Carol?

COSTELLO: Rula, you know, I just, you know, you say that they wanted to hear an apology. But, you know, many Americans say that we haven't heard any apologies, really, from the Arab world for 9/11 or from the torture of Americans in Iraq. And that just doesn't wash with some Americans, I should say.

AMIN: No, Carol, we asked those people on the street, when they said they wanted an apology, they said they are used, in a way, people in the Arab world are used to prisoners being tortured by their own governments. And we said your own leaders don't apologize for such pictures. And what their response was is that they know that their leaders are autocratic, are non-democratic, they're dictatorships. But they expect from the American democracy an apology. And that's how they perceive this.

They think that what happened is very big and they need a dramatic step from the president to show that he was serious and that he was sincere in his condemnation -- Carol.

COSTELLO: Rula Amin live in Beirut, Lebanon this morning.

We've got some new information just released in the last few hours about the president's approval ratings and how John Kerry compares to him in the latest Gallup polls. Stick around for the story behind those new numbers.

(COMMERCIAL BREAK)

CARRIE LEE, CNN CORRESPONDENT: ... the NASDAQ market site.

Investors saw a mixed market session at the close on Wednesday. The Dow Jones Industrials lower by six points. The NASDAQ adding six. The S&P 500 gaining about two points. Muted reaction despite a stronger than expected report for April on the services or non- manufacturing sector of our economy.

For stocks this morning, futures right now are pointing to a pretty solidly weaker open. We do have a couple of economic reports out early this morning that could give us some direction. A look at new faces in the unemployment line for last week. That is, weekly jobless claims coming out at 8:30 Eastern. The number expected to come in at 335,000 filings. Also, we'll look at a look at retail sales from our big retailers in the nation, reporting same store sales, sales at stores open at least one year, that is, for the month of April. And then finally we'll get a first look at first quarter productivity. And this is a look at the measure of goods and services produced from our nation's workers. So all of this could give us some direction.

Of course, we could see again, though, a muted reaction today, one day ahead of the big jobs report that comes out Friday morning. The unemployment rate for April expected to have held steady at 5.7 percent. Our economy is expected to have added 165,000 jobs.

But right now futures are looking like a weak open for stocks this Thursday morning.

And that's the latest business news.

DAYBREAK will be right back.

(COMMERCIAL BREAK)

COSTELLO: I'm telling you, 50 million people are expected to watch the "Friends" finale tonight. (COMMERCIAL BREAK)s with 30 second ads going for, what, two million bucks?

MYERS: Two million bucks. So you've got to figure there's going to be at least eight minutes of (COMMERCIAL BREAK)s, probably. So that's 16 (COMMERCIAL BREAK)s. They're going to make $32 million in one show.

COSTELLO: Crazy.

MYERS: At least.

COSTELLO: I think the average for CSI for a very popular show, a 30 second ad costs $450,000. So that's your comparison.

MYERS: There you go.

COSTELLO: We've been soliciting your e-mails, asking you what's the big deal about "Friends." People are having "Friends" parties tonight.

MYERS: Not these people.

COSTELLO: Well, this one's kind of nice.

MYERS: OK, then.

COSTELLO: This is from John in Flushing, New York.

MYERS: Right.

COSTELLO: He said: "I think "Friends" had such an impact with my generation, X, because it was everything we wanted to be when we finally took that leap after graduating college or leaving our parents' house. I just wish I could find an apartment like Monica's." And afford it.

MYERS: Yes, for what she was paying.

"I'd say good riddance but I'm sure they'll replace it with some other brain numbing show, perhaps a quaint little comedy about NASCAR drivers and the hijinks that ensues with their red-necked white trash friends."

COSTELLO: Oh, that's a nice one, Chad. Leave it to you to pick out that one to read.

MYERS: The NASCAR one. I wouldn't mind a show about NASCAR, you know?

COSTELLO: I am sure -- I'm sure it's coming some time.

Here's what's all new in the next half hour of DAYBREAK.

The president and the senator -- who's ahead in the polls and what's behind those numbers six months before the election?

And what do you need to know about the worm that's slithering its way around cyberspace?

And then all of you do-it-yourselfers stay tuned. Chad and our Home Depot expert will tell us how to use a pressure washer.

MYERS: Correctly.

(COMMERCIAL BREAK)

COSTELLO: From the abuse of prisoners in Iraq, to the shaky peace process, the Middle East is at the top of the president's agenda today.

Good morning to you.

From the CNN global headquarters in Atlanta, I'm Carol Costello.

Here are the latest headlines for you now. in Baghdad this morning, a suicide car bomber exploded near the green zone, where the coalition has its headquarters. A U.S. soldier and six Iraqis were killed.

Donald Rumsfeld is preparing for his testimony before the Senate Armed Services Committee. The defense secretary goes to Capitol Hill tomorrow morning for a public session on the abuse of Iraqi prisoners.

Cool weather and low winds are helping firefighters battle those southern California wildfires. More than 26,000 acres have burned. More than a dozen homes have been destroyed -- Chad.

MYERS: Carol, the key that you just said there about the low winds was what we were talking about this morning up in the weather office. This really could have been a very damaging couple of days, with winds at 30 to 40 miles per hour, like sometimes you get those Santa Anas. There was literally no wind with these fires at all, 10, maybe, miles per hour, even at times in the heat of the day some of those winds were generated by the fires themselves. But it's a lot better off than it could have been.

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