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CNN Live At Daybreak

Civilian Contractor Beheaded in Iraq; Recapping Yesterday's Testimony on Capitol Hill in Iraqi Prisoner Abuse Scandal

Aired May 12, 2004 - 05:00   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 Pennsylvania family's nightmare and a warning to Washington played out before hooded killers in Iraq.
It is Wednesday, May 12.

This is DAYBREAK.

And good morning to you.

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

Here are the latest headlines for you now.

The body of Nicholas Berg, the American beheaded in Iraq, could be returned to the United States today. His killers say his death is, in part, retaliation for the abuse of Iraqi prisoners.

British Prime Minister Tony Blair can expect some tough questions when he goes before parliament two hours from now. He'll be asked about accusations that one of his ministers misled parliament about British troops abusing Iraqis.

And new this morning, American helicopter gunships over Karbala today. As many as 25 militia members loyal to radical Shiite cleric Muqtada al-Sadr have been killed. Seven coalition troops have been wounded in the fighting.

Is this man an American terrorist? Twenty-six-year-old Ryan Anderson faces a military hearing at Fort Lewis, Washington today. He's accused of trying to pass information on troop strength and tactics to al Qaeda.

Now to the forecast center and Chad -- good morning.

CHAD MYERS, CNN CORRESPONDENT: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: America is reacting this morning to the beheading of an American civilian contractor in Iraq. The last time American civilians were killed in Iraq, their bodies were dragged through the streets of Falluja and Americans responded with anger. This morning, the pot is stirred again. American Michael Berg is beheaded -- Nicholas Berg, rather -- is beheaded, the gruesome act posted on a Web site. Friends gathered outside the Westchester, Pennsylvania home of Berg's parents last night. We begin our coverage with Maria Hinojosa in Westchester.

(BEGIN VIDEOTAPE)

MARIA HINOJOSA, CNN CORRESPONDENT: Outside of the Berg household, the international media has assembled, trying to understand who was Nick Berg. But the family remains in silence and in seclusion.

On Tuesday, the family learned the news that the death of their son was made public by his executioners and they were overcome by anguish as they were told that the gruesome murder is on a Web site and captured in graphic detail.

Nick Berg was held by a group allegedly ties -- allegedly with ties to al Qaeda. On the tape, Berg is asked to identify himself and his captors then read a statement and then the horrible act unfolds -- Berg, wearing an orange jumpsuit with his hands and feet tied, was kicked to the ground screaming. There is a struggle and then his hooded captors held Nick Berg's severed head up to the camera.

Now, 26-year-old Nick Berg repaired communications towers and went to Baghdad in December and then again in March, looking for work. He was also a strong supporter of the war effort, according to his father, who spoke on Sunday before he knew of his son's death.

MICHAEL BERG, VICTIM'S FATHER: He just really wanted to be part of something that was important. He supported the administration's being in Iraq. He supported everything that they were doing and he wanted to help, and he wanted to help in a positive way, by building rather than breaking down.

HINOJOSA: Nick Berg had planned to return to the United States March 30, but he was detained by Iraqi police and then transferred to U.S. authorities. His parents were visited by the FBI at the time, but given no more information. So they sued Donald Rumsfeld and the Defense Department for holding their son without due process.

He was released in Iraq on April the 6 and was not heard from again until April 9 and not heard from again after that.

The Berg family was told by the State Department that the body of their son is in Kuwait and could arrive in the United States as early as today.

Maria Hinojosa, CNN, Westchester, Pennsylvania.

(END VIDEOTAPE)

COSTELLO: At the White House, spokesman Scott McClellan says those who carried out Berg's execution will be pursued vigorously. He adds: "Our thoughts and prayers are with the victim and his family."

And during a campaign stop in Orlando, Florida, Senator John Kerry says his reaction to the beheading is, quoting here, "outrage, pure outrage." And here's more of what Kerry had to say.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: No matter what happened, no act of terror is ever legitimate under any circumstances anywhere at any time. And I think it will harden the resolve of a lot of Americans to make certain that the terrorists won't get away with it, even as we move to address obvious problems that have existed in Iraq.

(END VIDEO CLIP)

COSTELLO: You probably recall the killing of American journalist Daniel Pearl in Pakistan. His killing was videotaped, as well. His widow, Mariane Pearl, is speaking out about Berg's death. Here's what she told an audience in Milwaukee. She said: "It's a horrendous murder similar to the one Danny went through and proof that violence leads to violence. The cycle of violence is not likely to end."

What is your reaction to the beheading of Nicholas Berg? We want to know. Should the U.S. military pull out or intensify the fight in Iraq?

E-mail us your opinions. We'll read some of the responses on the air. Of course, the address is daybreak@cnn.com. That's daybreak@cnn.com.

Former Army chopper pilot Michael Durant was a hostage of gunmen in Somalia. He, too, was threatened with death, but lived. You can hear what he has to say about the fears of being a hostage. That'll be in the eight o'clock Eastern hour of "American Morning."

The U.S. military is investigating another incident of alleged abuse, this time in Afghanistan. The "New York Times" is reporting that an Afghan police officer was stripped naked and beaten on an American base south of Kabul. The U.S. ambassador to Afghanistan says it's the first time the military or the embassy had heard about the claim. The "Times" quotes the officer, who says, "They were taunting me and laughing and asking very rude questions like which animal did I like having sex with and which animal do you want us to bring in for you to have sex w."

On Capitol Hill today, senators will get to view additional photos and videos documenting more abuses of Iraqi prisoners. The Pentagon is still deciding if it will release the new material. The two star general who investigated the abuse appeared before the Senate Armed Services Committee.

Our Jamie McIntyre has more on that for you.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): The abuse of Iraqi prisoners was the result of individual, not institutional lapses according to the Army general whose investigation earned him a command performance on Capitol Hill.

MAJOR GEN. ANTONIO TAGUBA, U.S. ARMY: Sir, we did not find any evidence of a policy or a direct order given to these soldiers to conduct what they did. I believe that they did it on their own volition.

MCINTYRE: Taguba faulted the leadership at the prison, beginning with the military police brigade commander Brigadier General Janis Karpinski and the military intelligence brigade commander Colonel Thomas Pappas but went no higher.

TAGUBA: Failure in leadership, sir, from the brigade commander on down, lack of discipline, no training whatsoever and no supervision.

MCINTYRE: Pappas, the intelligence brigade commander, was given tactical control of the prison last November but the Pentagon denied that gave him command of the prison guards.

SEN. EVAN BAYH (D), ARMED SERVICES COMMITTEE: What exactly does that mean? How do you have control over a facility but not the people who are running it?

STEPHEN CAMBONE, UNDERSECRETARY OF DEFENSE FOR INTELLIGENCE: The same way that...

BAYH: Were they in charge of the plumbing or the...

CAMBONE: No, sir. Well, in the same way that you have a building supervisor who doesn't tell the tenants how to do their business.

MCINTYRE: A lawyer for one of the accused claims this picture of abuse shows prison guards working with military intelligence personnel despite Taguba's findings that there were no orders to the guards. Senators question the idea that this was simply a result of informal low-level cooperation.

SEN. CARL LEVIN (D), MICHIGAN: The collars used on prisoners, the dogs and the cameras did not suddenly appear out of thin air. These acts of abuse were not the spontaneous actions of lower ranking enlisted personnel who lacked the proper supervision.

(END VIDEOTAPE)

COSTELLO: And in today's "Washington Post," General Janis Karpinski says her superiors made the decisions that opened the doors to abuse at the Abu Ghraib Prison in Iraq. Karpinski was removed from her post as prisons chief and she was formally reprimanded. The "Post" is reporting that General Karpinski says General Geoffrey Miller and General Ricardo Sanchez overruled her concerns about the military intelligence takeover and the use of deadly force.

The fight for Iraq needs billions more of your tax dollars, $25 billion more, to be exact. And today, Secretary of Defense Donald Rumsfeld and Joint Chiefs Chairman Richard Myers will go to the Senate to ask for it. Officials say the war is costing the United States nearly $5 billion a month. Last year, law makers approved $87 billion for war and reconstruction costs in Iraq and Afghanistan.

And there is fighting going on in the Iraqi city of Karbala this morning. Listen.

(AUDIO CLIP FROM KARBALA)

COSTELLO: U.S. soldiers are battling fighters loyal to radical cleric Muqtada al-Sadr.

Our Karl Penhaul is watching that, but he also has more on the beheading of Nicholas Berg -- good morning.

KARL PENHAUL, CNN CORRESPONDENT: Hi, there, Carol.

Yes, just to bring you up to date with the latest that we know about the situation regarding Nicholas Berg, we've spoken briefly to U.S. officials this morning. They say that they had no knowledge of any demands made by the hostage takers, although in that video that was posted on an al Qaeda linked Web site, the hostage takers do say that they had called for some kind of deal in which they would have swapped Nicholas Berg for some of the prisoners being held at the Abu Ghraib Prison.

But as I say, U.S. officials saying that they were not aware of any such deal.

They have promised, though, a press briefing later on this afternoon, where they have promised to give us more details about what they know about Nicholas Berg, why he was in the country and exactly what he was doing.

Now, as we've seen from those pictures you've just shown, fighting again this morning in the city of Karbala, one of the most holy cities for Iraq's Shiite Muslim majority. We understand that the U.S. military, U.S. troops reached within about a third of a mile of some of the holiest shrines there. That was when they stormed a morgue that had been turned into a mosque and took the fighting to members of the Mahdi Army militia loyal to the firebrand cleric, Muqtada al-Sadr.

U.S. military authorities are telling us that between 20 and 25 members of the Mahdi Army were killed in that fighting. Hospital authorities in Karbala have said that they know of seven dead and 15 others wounded -- Carol.

COSTELLO: Karl, I don't know if you've been able to get out and about this morning to ask about Iraqi reaction to the Nicholas Berg beheading.

Have you been able to get around and talk to people?

PENHAUL: So far the thing here, because that video was posted on the Web site and the full version wasn't shown, as far as we understand, on any of the Arabic language broadcasts, action has -- reaction has been somewhat muted so far. We are talking, though, to people in Internet cafes, talking to see if they have seen that video. But I think on the whole, talking to the few people that we have so far, a general condemnation of this kind of thing. Many people that we've spoken to feel that this is very much against the general tenets of Islam, although they do share the general outrage about the U.S. treatment of prisoners in Abu Ghraib, which the hostage takers say motivated this act -- Carol.

COSTELLO: Karl Penhaul live in Baghdad this morning.

It is painful at the pumps. We know you feel it when you fill up. DAYBREAK will look at what's fueling the price hikes.

Plus, the rising cost of college. Will finances cheat your child out of a good education? You may be surprised at who's being left out.

And it's three months and counting to the Olympics. Will Athens be ready? We'll have a live report for you.

And that chump change at the vending machine may be causing big problems for kids, so now schools are changing course.

All that and much more, coming up on DAYBREAK.

(COMMERCIAL BREAK)

COSTELLO: Your news, money, weather and sports.

It is 5:15 Eastern.

Here's what's all new this morning.

The body of Nicholas Berg, the American civilian whose beheading in Iraq was videotaped, could be returned to the States today. His killers say he was executed in retaliation for abuse of Iraqi prisoners.

Today, the Pentagon is giving all 100 U.S. senators three hours to view the pictures and videos of Iraqi prisoner abuse. The senators will not be allowed to keep the images or make copies.

In money news, the government says gas prices could spurt above $2 a gallon in June. And that's for regular. That would be the highest in U.S. history. Experts say higher oil costs, higher demand and mergers in the oil industry are to blame.

In the NBA playoffs, the New Jersey Nets, well, they win by bating the Detroit Pistons last night. The final score 94-79. The teams are tied 2-2 in the seven game series.

In culture, Celine Dion has canceled three performances this week in Las Vegas. She has a sprained neck and doctors want her to rest until at least Saturday -- Chad.

(WEATHER REPORT) COSTELLO: Those are the latest headlines for you.

The price of crude oil has shot past $40 a barrel for the first time in about 14 years, and we just told you what that's done to gas prices here.

But let's head live to London to check the international markets there and also the gas prices -- good morning, Robyn Curnow.

ROBYN CURNOW, CNN CORRESPONDENT: Hi, there.

Well, I think if you had to describe the oil prices, they're very hot. Obviously just, not as up to that $40 a barrel mark as you guys have over there in Wall Street. But here the London futures for crude oil trading just over $37 a barrel. High, high prices that are really concerning many investors.

But let's just find out what the International Energy Agency said. They say these high prices are being fueled because there's been a rapid demand, an expansion of a global economy, particularly in China. And this is fueling demand and the prices. And that's what they say.

OPEC also coming out and saying they're going to try and encourage their members to increase supplies so that maybe they can stabilize oil prices. But still, these high oil prices weighing down on the markets.

As you can see, real concerns about the high oil prices, that it might trigger some sort of inflationary measures. Also, still lingering concerns about a U.S. interest rate hike in the next few months -- back to you, Carol.

COSTELLO: Robyn Curnow live in London for us this morning.

So how high will it go? It seems like everybody's asking that question about the pumped up price of gas. It's high on the minds of the people in Santa Barbara, California. Take a look at those prices. A gas station posting a price of $3.11 a gallon. High gas prices will be the focus of a Senate committee hearing today in Washington. And with Memorial Day just over two weeks away, our Chris Huntington looks at what's fueling the high octane hikes.

(BEGIN VIDEOTAPE)

CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): Americans are fuming at the pumps.

UNIDENTIFIED FEMALE: I think that the gas prices are ridiculous.

UNIDENTIFIED MALE: I'm not very happy with it.

UNIDENTIFIED FEMALE: It seems like it's high all around the country, but particularly here in San Francisco.

HUNTINGTON: According to the Department of Energy, the national average price for unleaded regular is now $1.94 a gallon. That's the highest price in history and $0.45 more than a year ago. And the DOE projects that next month, the average [price will top $2 a gallon.

In California, which requires special gas formulations, $2 a gallon would be a bargain.

GUY CARUSO, ENERGY INFORMATION ADMINISTRATION: The main heart of the matter is supply and demand, both at the crude oil level and the global -- in our global system, and also, more specifically, the gasoline market in this country.

HUNTINGTON: Demand for gasoline is running at a record pace and SUVs are a major factor. Gasoline supplies are a bit tighter, as well, and that's because imports are down, as overseas refineries shift their production to the new, cleaner burning fuels required by laws in the United States. And crude oil prices, which account for nearly half of the cost of a retail gallon of gas, are up 50 percent in the past year, as the global economic rebound has boosted demand.

But oil analyst Fadel Gheit insists fear over supply interruptions is another factor driving crude prices higher.

FADEL GHEIT, OPPENHEIMER & COMPANY: Eighty percent or more of the spoke in oil prices in the last year or so was basically because of fear.

HUNTINGTON: Last week's terrorist attack at the Saudi port of Yanbu further fueled those fears. As for gasoline prices, Gheit points out that U.S. refiners are benefiting from supply concerns to book record profits. One of the leading U.S. refiners says wholesale gasoline prices are high only because demand is outstripping supply. But Gheit insists there is plenty of gasoline to go around.

GHEIT: There is absolutely no gasoline hostage or tight supply or whatever. It's all perception.

HUNTINGTON: There may be some relief in sight. Saudi Arabia says it will urge OPEC to boost crude oil production and offshore refiners are increasing the production of new grades of gasoline. By the way, current gas prices adjusted for inflation are about the same as those our grandparents paid in the 1950s.

Chris Huntington, CNN Financial News, New York.

(END VIDEOTAPE)

COSTELLO: And if gas prices have you fuming, you may want to go diesel. Consider these facts. Some 40 percent of new cars sold in Europe are diesel compared to only one percent in the United States. In 2007, new emissions standards will require diesel to burn 90 percent cleaner than it does today. Already, diesel is 30 percent more efficient than gas, gets more miles to the gallon and is cleaner.

It makes you wonder, doesn't it?

A horrific act caught on tape. Was it an act of revenge for terrorists on a tirade? We'll have reaction to the gruesome pictures.

And in light of these developments, should the U.S. military pull out or intensify the fight? Many of you are e-mailing us this morning just to vent. You can do that, too. Our address daybreak@cnn.com, daybreak@cnn.com.

(COMMERCIAL BREAK)

COSTELLO: An American beheaded. Nicholas Berg's final moments. His father says Berg's executioners likely knew his son was Jewish and that probably sealed his fate. Those who killed him say it was to avenge the abuse of Iraqi prisoners. Whatever the reason, it was horrific and there was a resounding condemnation for it.

Here's Senator John McCain.

(BEGIN VIDEO CLIP FROM CNN'S "LARRY KING LIVE")

SEN. JOHN MCCAIN (R), ARIZONA: To state the obvious, Larry, it's been a very bad week. It's terrible. It's awful. We'll track down these killers and we'll get 'em. And we will bring them to the kind of justice that we adhere to, and that is a trial. And then we will make sure that they receive the punishment that they deserve for this heinous crime.

(END VIDEO CLIP)

COSTELLO: We've been soliciting your e-mail this morning. Many of you are e-mailing us at daybreak@cnn.com. Many are angry and saddened. I'm going to read a few of your e-mail responses right now.

This from Nicole (ph). She says: "Intensify the war effort. I do not feel we should pull out when these awful things are happening to our people. It will just encourage more whenever we go into a country to help out."

This from Nancy. She says: "Go ahead and show every single abuse photo out of Abu Ghraib. After seeing the subhuman behavior of the Iraq soldiers, show away. The beheading of this poor man brings the war back into focus. The U.S. is dealing with a subhuman."

This from Eric (ph). He says: "It takes five hooded men to overpower one tied man in order to make themselves feel like big, strong men? Yes, it's true that the prisoner abuse in Iraq was terrible, but it did not warrant the killing of that innocent man. I hope they are one day redeemed in the eyes of the god that they worship before they killed that man. The violence has to stop."

And this from Russ. He says: "To allow this unfortunate act of murder to have any influence on U.S. policy is to play the game of the terrorists and to cede them control of our foreign policy."

Keep them coming, daybreak@cnn.com.

All new in the next half hour of DAYBREAK, will you be able to afford your child's college education? It's a primary concern for many parents this time of year. We'll see who bears the biggest burden of higher education and what some students are doing about it.

And a couple of quarters here, a few dimes there -- it all adds up to the school vending machine. Now some schools are trying to make those snacks better for your kids.

We'll be back.

(BEGIN VIDEOTAPE)

GERRI WILLIS, CNN CORRESPONDENT: Looking for a financial tip that's good as gold? The precious metal has been providing some of the best investment returns over the last 12 months. Prices for an ounce of gold are in the $400 range. That's a mark not seen since the mid-1990s. The pros use gold as a hedge against inflation. But the decline in the value of the dollar may also be attracting fans.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

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Aired May 12, 2004 - 05:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: A Pennsylvania family's nightmare and a warning to Washington played out before hooded killers in Iraq.
It is Wednesday, May 12.

This is DAYBREAK.

And good morning to you.

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

Here are the latest headlines for you now.

The body of Nicholas Berg, the American beheaded in Iraq, could be returned to the United States today. His killers say his death is, in part, retaliation for the abuse of Iraqi prisoners.

British Prime Minister Tony Blair can expect some tough questions when he goes before parliament two hours from now. He'll be asked about accusations that one of his ministers misled parliament about British troops abusing Iraqis.

And new this morning, American helicopter gunships over Karbala today. As many as 25 militia members loyal to radical Shiite cleric Muqtada al-Sadr have been killed. Seven coalition troops have been wounded in the fighting.

Is this man an American terrorist? Twenty-six-year-old Ryan Anderson faces a military hearing at Fort Lewis, Washington today. He's accused of trying to pass information on troop strength and tactics to al Qaeda.

Now to the forecast center and Chad -- good morning.

CHAD MYERS, CNN CORRESPONDENT: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: America is reacting this morning to the beheading of an American civilian contractor in Iraq. The last time American civilians were killed in Iraq, their bodies were dragged through the streets of Falluja and Americans responded with anger. This morning, the pot is stirred again. American Michael Berg is beheaded -- Nicholas Berg, rather -- is beheaded, the gruesome act posted on a Web site. Friends gathered outside the Westchester, Pennsylvania home of Berg's parents last night. We begin our coverage with Maria Hinojosa in Westchester.

(BEGIN VIDEOTAPE)

MARIA HINOJOSA, CNN CORRESPONDENT: Outside of the Berg household, the international media has assembled, trying to understand who was Nick Berg. But the family remains in silence and in seclusion.

On Tuesday, the family learned the news that the death of their son was made public by his executioners and they were overcome by anguish as they were told that the gruesome murder is on a Web site and captured in graphic detail.

Nick Berg was held by a group allegedly ties -- allegedly with ties to al Qaeda. On the tape, Berg is asked to identify himself and his captors then read a statement and then the horrible act unfolds -- Berg, wearing an orange jumpsuit with his hands and feet tied, was kicked to the ground screaming. There is a struggle and then his hooded captors held Nick Berg's severed head up to the camera.

Now, 26-year-old Nick Berg repaired communications towers and went to Baghdad in December and then again in March, looking for work. He was also a strong supporter of the war effort, according to his father, who spoke on Sunday before he knew of his son's death.

MICHAEL BERG, VICTIM'S FATHER: He just really wanted to be part of something that was important. He supported the administration's being in Iraq. He supported everything that they were doing and he wanted to help, and he wanted to help in a positive way, by building rather than breaking down.

HINOJOSA: Nick Berg had planned to return to the United States March 30, but he was detained by Iraqi police and then transferred to U.S. authorities. His parents were visited by the FBI at the time, but given no more information. So they sued Donald Rumsfeld and the Defense Department for holding their son without due process.

He was released in Iraq on April the 6 and was not heard from again until April 9 and not heard from again after that.

The Berg family was told by the State Department that the body of their son is in Kuwait and could arrive in the United States as early as today.

Maria Hinojosa, CNN, Westchester, Pennsylvania.

(END VIDEOTAPE)

COSTELLO: At the White House, spokesman Scott McClellan says those who carried out Berg's execution will be pursued vigorously. He adds: "Our thoughts and prayers are with the victim and his family."

And during a campaign stop in Orlando, Florida, Senator John Kerry says his reaction to the beheading is, quoting here, "outrage, pure outrage." And here's more of what Kerry had to say.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: No matter what happened, no act of terror is ever legitimate under any circumstances anywhere at any time. And I think it will harden the resolve of a lot of Americans to make certain that the terrorists won't get away with it, even as we move to address obvious problems that have existed in Iraq.

(END VIDEO CLIP)

COSTELLO: You probably recall the killing of American journalist Daniel Pearl in Pakistan. His killing was videotaped, as well. His widow, Mariane Pearl, is speaking out about Berg's death. Here's what she told an audience in Milwaukee. She said: "It's a horrendous murder similar to the one Danny went through and proof that violence leads to violence. The cycle of violence is not likely to end."

What is your reaction to the beheading of Nicholas Berg? We want to know. Should the U.S. military pull out or intensify the fight in Iraq?

E-mail us your opinions. We'll read some of the responses on the air. Of course, the address is daybreak@cnn.com. That's daybreak@cnn.com.

Former Army chopper pilot Michael Durant was a hostage of gunmen in Somalia. He, too, was threatened with death, but lived. You can hear what he has to say about the fears of being a hostage. That'll be in the eight o'clock Eastern hour of "American Morning."

The U.S. military is investigating another incident of alleged abuse, this time in Afghanistan. The "New York Times" is reporting that an Afghan police officer was stripped naked and beaten on an American base south of Kabul. The U.S. ambassador to Afghanistan says it's the first time the military or the embassy had heard about the claim. The "Times" quotes the officer, who says, "They were taunting me and laughing and asking very rude questions like which animal did I like having sex with and which animal do you want us to bring in for you to have sex w."

On Capitol Hill today, senators will get to view additional photos and videos documenting more abuses of Iraqi prisoners. The Pentagon is still deciding if it will release the new material. The two star general who investigated the abuse appeared before the Senate Armed Services Committee.

Our Jamie McIntyre has more on that for you.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): The abuse of Iraqi prisoners was the result of individual, not institutional lapses according to the Army general whose investigation earned him a command performance on Capitol Hill.

MAJOR GEN. ANTONIO TAGUBA, U.S. ARMY: Sir, we did not find any evidence of a policy or a direct order given to these soldiers to conduct what they did. I believe that they did it on their own volition.

MCINTYRE: Taguba faulted the leadership at the prison, beginning with the military police brigade commander Brigadier General Janis Karpinski and the military intelligence brigade commander Colonel Thomas Pappas but went no higher.

TAGUBA: Failure in leadership, sir, from the brigade commander on down, lack of discipline, no training whatsoever and no supervision.

MCINTYRE: Pappas, the intelligence brigade commander, was given tactical control of the prison last November but the Pentagon denied that gave him command of the prison guards.

SEN. EVAN BAYH (D), ARMED SERVICES COMMITTEE: What exactly does that mean? How do you have control over a facility but not the people who are running it?

STEPHEN CAMBONE, UNDERSECRETARY OF DEFENSE FOR INTELLIGENCE: The same way that...

BAYH: Were they in charge of the plumbing or the...

CAMBONE: No, sir. Well, in the same way that you have a building supervisor who doesn't tell the tenants how to do their business.

MCINTYRE: A lawyer for one of the accused claims this picture of abuse shows prison guards working with military intelligence personnel despite Taguba's findings that there were no orders to the guards. Senators question the idea that this was simply a result of informal low-level cooperation.

SEN. CARL LEVIN (D), MICHIGAN: The collars used on prisoners, the dogs and the cameras did not suddenly appear out of thin air. These acts of abuse were not the spontaneous actions of lower ranking enlisted personnel who lacked the proper supervision.

(END VIDEOTAPE)

COSTELLO: And in today's "Washington Post," General Janis Karpinski says her superiors made the decisions that opened the doors to abuse at the Abu Ghraib Prison in Iraq. Karpinski was removed from her post as prisons chief and she was formally reprimanded. The "Post" is reporting that General Karpinski says General Geoffrey Miller and General Ricardo Sanchez overruled her concerns about the military intelligence takeover and the use of deadly force.

The fight for Iraq needs billions more of your tax dollars, $25 billion more, to be exact. And today, Secretary of Defense Donald Rumsfeld and Joint Chiefs Chairman Richard Myers will go to the Senate to ask for it. Officials say the war is costing the United States nearly $5 billion a month. Last year, law makers approved $87 billion for war and reconstruction costs in Iraq and Afghanistan.

And there is fighting going on in the Iraqi city of Karbala this morning. Listen.

(AUDIO CLIP FROM KARBALA)

COSTELLO: U.S. soldiers are battling fighters loyal to radical cleric Muqtada al-Sadr.

Our Karl Penhaul is watching that, but he also has more on the beheading of Nicholas Berg -- good morning.

KARL PENHAUL, CNN CORRESPONDENT: Hi, there, Carol.

Yes, just to bring you up to date with the latest that we know about the situation regarding Nicholas Berg, we've spoken briefly to U.S. officials this morning. They say that they had no knowledge of any demands made by the hostage takers, although in that video that was posted on an al Qaeda linked Web site, the hostage takers do say that they had called for some kind of deal in which they would have swapped Nicholas Berg for some of the prisoners being held at the Abu Ghraib Prison.

But as I say, U.S. officials saying that they were not aware of any such deal.

They have promised, though, a press briefing later on this afternoon, where they have promised to give us more details about what they know about Nicholas Berg, why he was in the country and exactly what he was doing.

Now, as we've seen from those pictures you've just shown, fighting again this morning in the city of Karbala, one of the most holy cities for Iraq's Shiite Muslim majority. We understand that the U.S. military, U.S. troops reached within about a third of a mile of some of the holiest shrines there. That was when they stormed a morgue that had been turned into a mosque and took the fighting to members of the Mahdi Army militia loyal to the firebrand cleric, Muqtada al-Sadr.

U.S. military authorities are telling us that between 20 and 25 members of the Mahdi Army were killed in that fighting. Hospital authorities in Karbala have said that they know of seven dead and 15 others wounded -- Carol.

COSTELLO: Karl, I don't know if you've been able to get out and about this morning to ask about Iraqi reaction to the Nicholas Berg beheading.

Have you been able to get around and talk to people?

PENHAUL: So far the thing here, because that video was posted on the Web site and the full version wasn't shown, as far as we understand, on any of the Arabic language broadcasts, action has -- reaction has been somewhat muted so far. We are talking, though, to people in Internet cafes, talking to see if they have seen that video. But I think on the whole, talking to the few people that we have so far, a general condemnation of this kind of thing. Many people that we've spoken to feel that this is very much against the general tenets of Islam, although they do share the general outrage about the U.S. treatment of prisoners in Abu Ghraib, which the hostage takers say motivated this act -- Carol.

COSTELLO: Karl Penhaul live in Baghdad this morning.

It is painful at the pumps. We know you feel it when you fill up. DAYBREAK will look at what's fueling the price hikes.

Plus, the rising cost of college. Will finances cheat your child out of a good education? You may be surprised at who's being left out.

And it's three months and counting to the Olympics. Will Athens be ready? We'll have a live report for you.

And that chump change at the vending machine may be causing big problems for kids, so now schools are changing course.

All that and much more, coming up on DAYBREAK.

(COMMERCIAL BREAK)

COSTELLO: Your news, money, weather and sports.

It is 5:15 Eastern.

Here's what's all new this morning.

The body of Nicholas Berg, the American civilian whose beheading in Iraq was videotaped, could be returned to the States today. His killers say he was executed in retaliation for abuse of Iraqi prisoners.

Today, the Pentagon is giving all 100 U.S. senators three hours to view the pictures and videos of Iraqi prisoner abuse. The senators will not be allowed to keep the images or make copies.

In money news, the government says gas prices could spurt above $2 a gallon in June. And that's for regular. That would be the highest in U.S. history. Experts say higher oil costs, higher demand and mergers in the oil industry are to blame.

In the NBA playoffs, the New Jersey Nets, well, they win by bating the Detroit Pistons last night. The final score 94-79. The teams are tied 2-2 in the seven game series.

In culture, Celine Dion has canceled three performances this week in Las Vegas. She has a sprained neck and doctors want her to rest until at least Saturday -- Chad.

(WEATHER REPORT) COSTELLO: Those are the latest headlines for you.

The price of crude oil has shot past $40 a barrel for the first time in about 14 years, and we just told you what that's done to gas prices here.

But let's head live to London to check the international markets there and also the gas prices -- good morning, Robyn Curnow.

ROBYN CURNOW, CNN CORRESPONDENT: Hi, there.

Well, I think if you had to describe the oil prices, they're very hot. Obviously just, not as up to that $40 a barrel mark as you guys have over there in Wall Street. But here the London futures for crude oil trading just over $37 a barrel. High, high prices that are really concerning many investors.

But let's just find out what the International Energy Agency said. They say these high prices are being fueled because there's been a rapid demand, an expansion of a global economy, particularly in China. And this is fueling demand and the prices. And that's what they say.

OPEC also coming out and saying they're going to try and encourage their members to increase supplies so that maybe they can stabilize oil prices. But still, these high oil prices weighing down on the markets.

As you can see, real concerns about the high oil prices, that it might trigger some sort of inflationary measures. Also, still lingering concerns about a U.S. interest rate hike in the next few months -- back to you, Carol.

COSTELLO: Robyn Curnow live in London for us this morning.

So how high will it go? It seems like everybody's asking that question about the pumped up price of gas. It's high on the minds of the people in Santa Barbara, California. Take a look at those prices. A gas station posting a price of $3.11 a gallon. High gas prices will be the focus of a Senate committee hearing today in Washington. And with Memorial Day just over two weeks away, our Chris Huntington looks at what's fueling the high octane hikes.

(BEGIN VIDEOTAPE)

CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): Americans are fuming at the pumps.

UNIDENTIFIED FEMALE: I think that the gas prices are ridiculous.

UNIDENTIFIED MALE: I'm not very happy with it.

UNIDENTIFIED FEMALE: It seems like it's high all around the country, but particularly here in San Francisco.

HUNTINGTON: According to the Department of Energy, the national average price for unleaded regular is now $1.94 a gallon. That's the highest price in history and $0.45 more than a year ago. And the DOE projects that next month, the average [price will top $2 a gallon.

In California, which requires special gas formulations, $2 a gallon would be a bargain.

GUY CARUSO, ENERGY INFORMATION ADMINISTRATION: The main heart of the matter is supply and demand, both at the crude oil level and the global -- in our global system, and also, more specifically, the gasoline market in this country.

HUNTINGTON: Demand for gasoline is running at a record pace and SUVs are a major factor. Gasoline supplies are a bit tighter, as well, and that's because imports are down, as overseas refineries shift their production to the new, cleaner burning fuels required by laws in the United States. And crude oil prices, which account for nearly half of the cost of a retail gallon of gas, are up 50 percent in the past year, as the global economic rebound has boosted demand.

But oil analyst Fadel Gheit insists fear over supply interruptions is another factor driving crude prices higher.

FADEL GHEIT, OPPENHEIMER & COMPANY: Eighty percent or more of the spoke in oil prices in the last year or so was basically because of fear.

HUNTINGTON: Last week's terrorist attack at the Saudi port of Yanbu further fueled those fears. As for gasoline prices, Gheit points out that U.S. refiners are benefiting from supply concerns to book record profits. One of the leading U.S. refiners says wholesale gasoline prices are high only because demand is outstripping supply. But Gheit insists there is plenty of gasoline to go around.

GHEIT: There is absolutely no gasoline hostage or tight supply or whatever. It's all perception.

HUNTINGTON: There may be some relief in sight. Saudi Arabia says it will urge OPEC to boost crude oil production and offshore refiners are increasing the production of new grades of gasoline. By the way, current gas prices adjusted for inflation are about the same as those our grandparents paid in the 1950s.

Chris Huntington, CNN Financial News, New York.

(END VIDEOTAPE)

COSTELLO: And if gas prices have you fuming, you may want to go diesel. Consider these facts. Some 40 percent of new cars sold in Europe are diesel compared to only one percent in the United States. In 2007, new emissions standards will require diesel to burn 90 percent cleaner than it does today. Already, diesel is 30 percent more efficient than gas, gets more miles to the gallon and is cleaner.

It makes you wonder, doesn't it?

A horrific act caught on tape. Was it an act of revenge for terrorists on a tirade? We'll have reaction to the gruesome pictures.

And in light of these developments, should the U.S. military pull out or intensify the fight? Many of you are e-mailing us this morning just to vent. You can do that, too. Our address daybreak@cnn.com, daybreak@cnn.com.

(COMMERCIAL BREAK)

COSTELLO: An American beheaded. Nicholas Berg's final moments. His father says Berg's executioners likely knew his son was Jewish and that probably sealed his fate. Those who killed him say it was to avenge the abuse of Iraqi prisoners. Whatever the reason, it was horrific and there was a resounding condemnation for it.

Here's Senator John McCain.

(BEGIN VIDEO CLIP FROM CNN'S "LARRY KING LIVE")

SEN. JOHN MCCAIN (R), ARIZONA: To state the obvious, Larry, it's been a very bad week. It's terrible. It's awful. We'll track down these killers and we'll get 'em. And we will bring them to the kind of justice that we adhere to, and that is a trial. And then we will make sure that they receive the punishment that they deserve for this heinous crime.

(END VIDEO CLIP)

COSTELLO: We've been soliciting your e-mail this morning. Many of you are e-mailing us at daybreak@cnn.com. Many are angry and saddened. I'm going to read a few of your e-mail responses right now.

This from Nicole (ph). She says: "Intensify the war effort. I do not feel we should pull out when these awful things are happening to our people. It will just encourage more whenever we go into a country to help out."

This from Nancy. She says: "Go ahead and show every single abuse photo out of Abu Ghraib. After seeing the subhuman behavior of the Iraq soldiers, show away. The beheading of this poor man brings the war back into focus. The U.S. is dealing with a subhuman."

This from Eric (ph). He says: "It takes five hooded men to overpower one tied man in order to make themselves feel like big, strong men? Yes, it's true that the prisoner abuse in Iraq was terrible, but it did not warrant the killing of that innocent man. I hope they are one day redeemed in the eyes of the god that they worship before they killed that man. The violence has to stop."

And this from Russ. He says: "To allow this unfortunate act of murder to have any influence on U.S. policy is to play the game of the terrorists and to cede them control of our foreign policy."

Keep them coming, daybreak@cnn.com.

All new in the next half hour of DAYBREAK, will you be able to afford your child's college education? It's a primary concern for many parents this time of year. We'll see who bears the biggest burden of higher education and what some students are doing about it.

And a couple of quarters here, a few dimes there -- it all adds up to the school vending machine. Now some schools are trying to make those snacks better for your kids.

We'll be back.

(BEGIN VIDEOTAPE)

GERRI WILLIS, CNN CORRESPONDENT: Looking for a financial tip that's good as gold? The precious metal has been providing some of the best investment returns over the last 12 months. Prices for an ounce of gold are in the $400 range. That's a mark not seen since the mid-1990s. The pros use gold as a hedge against inflation. But the decline in the value of the dollar may also be attracting fans.

(END VIDEOTAPE)

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