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CNN Live At Daybreak

Inflaming Incidents in Iraq; More Gaza Deaths

Aired May 20, 2004 - 06:30   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: In Israel, Marwan Barghouti, the leader of a Palestinian uprising, has been convicted in the murder -- of murder, rather, in the deaths of three Israelis.
In money news, Dominos Pizza is preparing its initial public stock offering of a little more than 24 million shares. The estimated share price will be about 15 to 17 bucks.

In sports, the Calgary Flames will play for the Stanley Cup. The Flames beat the San Jose Shark 3-1 in game 6 of the Western Conference finals. They'll play either Tampa Bay or Philadelphia.

In culture, it's now down to two. Singer Jasmine Trias (ph) was voted off "American Idol" last night. That leaves Fantasia Barino (ph) and Diana DiGarmo (ph) to duke it out for the final round.

(WEATHER BREAK)

COSTELLO: Well, you knew it would happen. This morning, it has. Two new pictures surfaced in the Iraq prison abuse scandal. They appear to show American soldiers gloating over a body on ice. In one, Specialist Charles Graner is seen smiling. You see him there giving the thumbs up. In the other, Specialist Sabrina Harmon (ph), a member of his same unit, she's smiling, too.

We don't know who the dead man is yet. The pictures have not yet been authenticated, but the soldiers who appear in them already face charges in the scandal.

These pictures surfaced during Specialist Jeremy Sivits' court- martial in Iraq.

Also in Iraq this morning, questions surrounding an attack close to the Syrian border. We know about 40 Iraqis were killed. But were they attending a wedding or something more sinister?

Our senior international editor, David Clinch, is here to tell us more of what we've learned about that this morning.

DAVID CLINCH, CNN SENIOR INTERNATIONAL EDITOR: Right. This is the wedding party incident. The United States is saying that they were attacking a group of militants near the Syrian border. They say their ground troops actually found equipment, money, passports relating to Syrian militants.

But in the meantime, in exactly the same area, Iraqis are saying that a house was hit, where they, the locals say, a wedding was going on.

We've seen the pictures. A lot of people dead. Iraqis locally saying up to 40, including children. There are some horrific pictures of young babies, young children, women and men killed.

We do not know the facts yet. The U.S. military is saying they're looking into it.

COSTELLO: But they're going to have a...

CLINCH: But they say they hit militants.

COSTELLO: They're going to have a press conference later, aren't they? And might we see those things they confiscated?

CLINCH: Well, we do know that they intend to show them to us, whether it'll be at that press conference, the daily, General Kimmitt and Mr. Senor will be having a press conference in Baghdad today. We know they'll be asked about this. There are a lot of questions.

COSTELLO: Let's switch to Ahmed Chalabi.

CLINCH: Another...

COSTELLO: This is really strange.

CLINCH: Well, another thing they'll be asked about today. Ahmed Chalabi, the head of the Iraqi National Congress, a man we've been hearing about for years before this latest war in Iraq, who was in exile outside of Iraq pushing for the U.S. and world to put pressure on Saddam Hussein. He is now a member of the Iraqi Governing Council, had been looked upon all the way through the war as a Pentagon favorite. Very recently that attitude has changed.

We've heard reports that he and his group were a source of a lot of the information about weapons of mass destruction that haven't shown up. We have confirmed within the last few weeks that the U.S. has withdrawn the tens of thousands of dollars they were supplying his group every month.

COSTELLO: $400,000 a month.

CLINCH: Correct.

COSTELLO: But, today, they raid his house?

CLINCH: Into his house and his very large compound in Baghdad. U.S. troops and Iraqi police -- we have seen ourselves, we'll be getting the pictures shortly -- moving into the compound and his house, taking away computers and files.

We're also told -- and this is not confirmed by the U.S. -- we've been told by his son that they went into his home and, according to his son, held a gun to Chalabi's head.

Now, we've heard claims from Chalabi's people before that have not turned out to be true. We're going to ask serious questions about that, but we do know that the raid happened, and we do know that files and computers have been taken away.

COSTELLO: Interesting.

CLINCH: Now, Chalabi is a man who is very controversial. He was a banker and had been convicted of a banking...

COSTELLO: Scandal.

CLINCH: ... scandal in Jordan. So, there are lots of reasons why they may be looking into him.

COSTELLO: We'll get more into that a little later. Thank you David. Appreciate it.

More Palestinian deaths reported this morning in southern Gaza. Palestinian security forces say six people were killed overnight in Israeli military operations in Rafah.

CNN's John Vause is at the Israeli border town of Kerem Shalom. He joins us live.

John -- bring us up-to-date.

JOHN VAUSE, CNN CORRESPONDENT: Carol, we know that four Israeli battalions are now moving through the Rafah neighborhoods of Brasil (ph) and Salom (ph). That's more than 1,000 Israeli troops on the ground. They say they are taking fire from automatic weapons, as well as anti-tank missiles.

And as you mentioned, overnight medical sources within Rafah say six Palestinians were killed after an Israeli air strike. Witnesses on the ground say an Israeli Apache helicopter fired at least four missiles into a residential building.

Also, a 3-year-old boy apparently killed, died after a heart attack, apparently dying from shock after shelling from a tank in his neighborhood.

That brings the death toll after these three days of operations to 40 -- 41 if you count the 3-year-old boy. At least 10 people were killed yesterday during a demonstration.

Israel confirms that a helicopter fired a missile to try and disperse the crowd. Israel says that missile landed in a nearby field. When that didn't work, it says one tank opened fire, firing four shells at an abandoned building. Palestinians, though, say this was nothing short of a massacre, and it's brought widespread international criticism of Israel, demands that it end its operation. But so far, no sign that the Israelis intend on pulling out of Rafah -- Carol.

COSTELLO: John Vause reporting live from Israel near the -- reporting live from Israel this morning. Thank you, John Vause. Coming up on DAYBREAK, a company tries to make kids' lunches a little more interesting -- munchies with a message. But will parents bite? That's ahead in our business buzz.

Plus, a change-up in baseball, but not the usual kind. We'll talk to a baseball guru about some possible moves in the majors.

And then, a tale of lost, then found. Wait until you hear what almost happened to this multimillion-dollar instrument.

(COMMERCIAL BREAK)

COSTELLO: Time for a little business buzz now. A food company is making a joke out of its potato chips, while a number of bread companies are getting angry about your eating habits.

We'll explain. Actually, Carrie Lee will explain live from the Nasdaq Marketsite.

Good morning.

CARRIE LEE, CNN FINANCIAL NEWS: Well, let's start with the potato chip story. Pringles, which is made by Procter & Gamble, are soon going to print trivia questions on their potato chips. It's going to be comprised of red and blue ink. The ink is made of food coloring, so it is safe, basically running through a machine.

Here's an example of what they're going to look like. Trivia question, answer upside down on the back.

Industry experts who follow the food industry say the idea is certainly original. We'll see if kids like it. It's kind of interesting, because kids have very different ideas about what they like versus adults. You know, the Heinz colored ketchup, the green ketchup and all of those other colors that came out recently have been very successful.

So, we'll see how this idea does. The first batch is going to hit store shelves, Carol, next month.

COSTELLO: I can't wait.

LEE: Yes. But we'll see. We'll see. Maybe people can learn a little bit as they eat. See how many carbs are in those things. How many carbs are on this chip now? They're not going to have questions like that, I'm sure.

COSTELLO: It just kind of takes the fun out of eating chips.

A quick look at the futures before you go.

LEE: Oh, OK. I just wanted to give you a quick update on the bread story. Basically, the bread industry is launching a campaign, tentatively titled, "bread, it's essential." The latest industry to fight the low-carb craze that's been hitting the nation. A quick check on futures. Things are looking pretty flat right now. High oil prices, rising concern among investors, pretty much this whole week. We're getting close to those intra-day all-time highs we hit on Monday, once again early this morning. We did see, in fact, some selling late in the session yesterday. Oil prices, interest rate hike fears, and the situation in Iraq weighing on investors' minds once again.

That's all from here.

COSTELLO: All right, thank you, Carrie Lee, reporting live from the Nasdaq Marketsite.

You heard David Clinch say it a little earlier. We do have new pictures to show you of a raid in Baghdad on Ahmed Chalabi's home. Let's go to those pictures right now.

Just a short time ago, we found out that coalition forces and Iraqi police were raiding the home of this Iraqi Governing Council member and former favorite of the Pentagon. Don't know what they're looking for exactly in Ahmed Chalabi's house, but we understand they have confiscated a computer and some documents. Of course, we're trying to figure this out.

To help us do that, we'd like to go live to D.C. now and General Daniel Christman, retired General Daniel Christman.

Thank you for joining us, general.

LT. GEN. DANIEL CHRISTMAN, U.S. ARMY (RET.): Thanks, Carol.

COSTELLO: What do you make of that?

CHRISTMAN: It is a very, very strange development. As we know, Ahmed Chalabi has a very checkered background. This is a crucial moment for any Iraqi politician. Less than six weeks to go until 1 July transfer, politicians maneuvering themselves to best advantage themselves for the long term. This may well be in response to some bizarre behavior by Chalabi. Who knows?

His compound, as David said, is enormous. This could also be simply an assault on some elements of Chalabi's tribe, his friends. We'll have to wait to see what Mark Kimmitt says later on today.

COSTELLO: It does, general, bring up some disturbing questions, because the United States, in part, depended on intelligence from Chalabi in going to war with Iraq.

CHRISTMAN: They did. And, of course that intelligence, at least so far, has proved wanting. So, again, I go back to the point, Carol, this is a very, very checkered background for Ahmed Chalabi. And these developments, I think, are really pretentious in terms of what it says about his future here beyond 1 July.

COSTELLO: Don't think he'll be on the Iraqi Governing Council much longer. CHRISTMAN: It does not look positive.

COSTELLO: No, not at all.

Let's talk about this attack in western Iraq on supposedly a wedding party. The coalition forces say it wasn't a wedding party. It was some sort of safe house for insurgents. What do you make of that?

CHRISTMAN: Carol, I think this illustrates in so many ways what military analysts call the "fog of war." We saw a very similar incident actually in Afghanistan, if you recall, almost two years, some firing in celebratory fashion that apparently led to some attacks from the air against those firing on the ground.

What we'll have to wait to see on this, Carol, is what the evidence reveals, whether there is gun camera footage, whether there is a forward air controller that has evidence on this, what the details on the ground show in terms of these passports and the munitions that were found, and, of course on-scene witnesses.

Mark Kimmitt has said, the coalition has said we'll take a look at this very, very hard in terms of the investigations in the coming months and try to get to the bottom of this. But it really is a tragic development.

COSTELLO: Another topic. There are new pictures of prisoner abuse out this morning. Three generals, Abizaid, Sanchez and Miller, appeared before a Senate subcommittee to answer questions about if orders were handed down. I'd like you to listen to an exchange between Senator Reed and General Sanchez.

CHRISTMAN: Sure.

(BEGIN VIDEO CLIP)

SEN.JACK REED (D), RHODE ISLAND: Today's "USA Today," there is a report that you ordered or approved the use of sleep deprivation, intimidated by guard dogs, excessive noise and inducing fear as an interrogation method for a prisoner in Abu Ghraib prison. Is that correct?

LT. GEN. RICARDO SANCHEZ, U.S. ARMY: Sir, that may be correct that it's in a news article, but I never approved any of those measures to be used within the CJTF-7 at any time in the last year.

(END VIDEO CLIP)

COSTELLO: But wasn't his name on those rules of interrogation that was come up by someone?

CHRISTMAN: Well, they said yesterday, Carol, it was actually a very revealing series of testimonies yesterday afternoon. What happened apparently is a young Army captain put together these rules of engagement. At the very bottom of those rules of engagement it said, Geneva Conventions apply throughout the entire joint task force, and any activity that goes beyond the Geneva-approved activities had to be approved by General Sanchez. And Sanchez and his lawyer said they did approve one set of actions, and that was extended segregation more than 30 days. Beyond that, he claims nothing was approved that went beyond the Geneva Conventions.

So, this is one of the many areas that these six investigations under way right now has to analyze.

COSTELLO: Well, and, General, in light of what you've heard so far, will any top-ranking official suffer repercussions from this prison abuse scandal?

CHRISTMAN: I think it's very likely. We've seen one brigadier general already, General Karpinski, charged in this allegation of abuse. And further, Carol, General Abizaid, whom I know very, very well, has said that we will take this investigation as far as it takes us to the very, very top if necessary. The Army inspector general, General Mapichek (ph), has also looked at this very carefully and in a very preliminary way has said there is no systematic pattern, no culture of abuse that's present.

But regardless, the Army, I'm convinced, will take this as far as it goes, and if it goes very high, to senior flag officer rank, then that will be the consequence, and those individuals will suffer the consequences.

COSTELLO: We'll have to wait to see what happens, of course. General Daniel Christman joining us live from D.C. this morning. Many thanks to you.

CHRISTMAN: Thank you.

Your news, money, weather and sports. It is 6:47 Eastern. Here's what's all new this morning.

Another U.S. soldier has been killed and three more wounded in a grenade attack. It happened in central Baghdad. That raises the U.S. death toll in Iraq to 794.

The trial of Oklahoma City bombing conspirator Terry Nichols resumes a few hours from now. Defense attorneys are getting ready to rest their case. In earlier testimony, a former FBI scientist said a current FBI scientist lied during his testimony.

In money news, workers at the nation's second-largest local telephone company, SBC, are planning a four-day strike. Their union is fighting over health care, job security, pension and wage issues. The strike is set to begin tomorrow.

In sports, check out team soccer star Freddy Adu (ph). He scores his first stunner. There it is! It's two days before his high school graduation this happened. Despite the big goal, Adu's (ph) D.C. United team lost to the Los Angeles Galaxy.

In culture, Sylvester Stallone is jumping into the nutrition business big time. He's launching a line of health products, which include what else? Low-carb pudding. It also included energy- enhancing pills. You should start seeing those items at your local GNC stores next month.

(WEATHER BREAK)

COSTELLO: Those are the latest headlines for you.

We'll be back with much more on DAYBREAK. You stay right there.

(COMMERCIAL BREAK)

COSTELLO: Major League baseball head honchos are meeting today to discuss a number of issues; among them, a possible move from Montreal to somewhere. For years, a handful of cities have been haggling to be the brand-new home of the Montreal Expos. At the front of the class, Washington, D.C., but if you live in Washington, you've heard that one before.

So, let's head live to D.C. and "USA Today's" baseball expert, Mel Antonen.

Good morning, Mel.

MEL ANTONEN, "USAY TODAY": Good morning. How are you?

COSTELLO: I'm fine. Look, will the brain trust of the Major League Baseball make a decision on a new home for the Expos finally?

ANTONEN: I think they are. You know, we've been hearing about it for two or three years. But I think this is the year that they're going to decide, at least that's what they're saying.

The issue, though, is it's very difficult -- it's a very difficult business these days. Baseball is not making a lot of money, and they're looking for a good sweetheart deal. And the mood across the country is that those sweetheart deals are hard to come by.

COSTELLO: Well, let's talk about the sweetheart deal, because Washington, D.C. has been vying for this team for years. I remember doing stories five years ago on this. The catch is, is the city council won't make a deal unless baseball promises D.C. a team. And baseball won't make a deal unless the D.C. council makes a deal. So, who is in the right?

ANTONEN: Well, I think D.C. is in the right. I think that if D.C. says that -- I think that if D.C. says, if you give us a team, we'll work out the financing. And I think baseball has to trust the D.C. government. I think, though, that within the D.C. government, there's going to be some very serious politics. The mayor is saying that we can get -- that D.C. can get the financing in place, where a lot of the council members aren't sure how it's going to get done.

But I think Major League Baseball has to take a step of faith and say if the Washington, D.C. area says we can come up with a team -- we can come up with the money and the financing package, you'd better listen to them. COSTELLO: Well, certainly the fans have some disposable income in that area. But isn't Peter Angelos, the owner of the Baltimore Orioles, getting in the way? It's not in his best interest to have a team so close by, is it?

ANTONEN: No, it really isn't. I mean, you might fix the Montreal problem in moving the Expos to Washington; then you might hurt the Orioles. I mean, the Orioles depend on about 20 to 25 percent of their ticket sales from the Washington/northern Virginia area. And so, that makes it very difficult. It's going to be hard for the Orioles to do a profitable business. It's hard enough as it is, let alone another team just 30 or 40 miles away.

So, yes, it's difficult, and Peter Angelos, the owner of the Orioles, is going to -- he's going to be very difficult to deal with on this, and I think baseball is sympathetic to his plight. So, it's a very difficult issue. I don't know.

COSTELLO: We will be listening...

ANTONEN: There are a lot of concerns.

COSTELLO: We will be listening today, as you will. Mel Antonen from "USA Today" joining us live on DAYBREAK. Thank you.

OK, we want to talk about some Bible proofreading now, because what a segue that is.

ROB MARCIANO, METEOROLOGIST: Exactly. Well, they may be praying to get the team down there, you know?

COSTELLO: That's a good one!

MARCIANO: It's been a long time since the (UNINTELLIGIBLE) were in town.

COSTELLO: Actually, there is a place called Peach Tree Editorial and Proofreading. That's a company that proofreads new copies of the Bible. And more and more are being published each day, because, you know, the Bible is the No. 1 selling book in the country -- in the world actually.

MARCIANO: And they keep building hotels, and we need Bibles in every hotel room.

COSTELLO: Exactly. You're so cynical this morning.

MARCIANO: No, I'm not.

COSTELLO: No, they find a lot of mistakes in the copy from the editor. Let's take a look at one of the examples that they caught.

MARCIANO: OK.

COSTELLO: This one said, "Go and sin on more." And the proofreaders caught that one, Rob. MARCIANO: Yes, that would be the opposite of what John was trying to say.

COSTELLO: "Go and sin no more."

Another big mistake they caught in the latest new copy of the Bible, "I will that women adorn themselves in modern apparel."

MARCIANO: This is from Victoria's Secret or the Bible?

COSTELLO: Exactly.

MARCIANO: Modest, Carol.

COSTELLO: Yes, modest apparel. So, thank goodness for the people of Peach Tree in Peach Tree City, Georgia, right here in the Peach State.

Rob and I will give a mug away when we come back. But first, here are the latest headlines for you.

(COMMERCIAL BREAK)

COSTELLO: It's been a wild show, hasn't it?

MARCIANO: You know, and yesterday we didn't have time to give away a mug. I feel like we're cheating the public.

COSTELLO: Well, let's give away a mug -- well, we'll give it away tomorrow.

MARCIANO: All right.

COSTELLO: If you answer the questions right.

MARCIANO: Here is today's question. Mel Antonen from "USA Today" said, which Major League team could move to Washington or the northern Virginia area?

And the second question is what famous author's papers were sold at auction?

COSTELLO: Oh, for $1.8 million.

MARCIANO: A mealy $1.8 million.

COSTELLO: And, of course we will name the winner tomorrow. Daybreak@CNN.com. That's Daybreak@CNN.com.

(WEATHER BREAK)

COSTELLO: That does it for us. I'm Carol Costello, with Rob Marciano. "AMERICAN MORNING" starts right now.

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Aired May 20, 2004 - 06:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: In Israel, Marwan Barghouti, the leader of a Palestinian uprising, has been convicted in the murder -- of murder, rather, in the deaths of three Israelis.
In money news, Dominos Pizza is preparing its initial public stock offering of a little more than 24 million shares. The estimated share price will be about 15 to 17 bucks.

In sports, the Calgary Flames will play for the Stanley Cup. The Flames beat the San Jose Shark 3-1 in game 6 of the Western Conference finals. They'll play either Tampa Bay or Philadelphia.

In culture, it's now down to two. Singer Jasmine Trias (ph) was voted off "American Idol" last night. That leaves Fantasia Barino (ph) and Diana DiGarmo (ph) to duke it out for the final round.

(WEATHER BREAK)

COSTELLO: Well, you knew it would happen. This morning, it has. Two new pictures surfaced in the Iraq prison abuse scandal. They appear to show American soldiers gloating over a body on ice. In one, Specialist Charles Graner is seen smiling. You see him there giving the thumbs up. In the other, Specialist Sabrina Harmon (ph), a member of his same unit, she's smiling, too.

We don't know who the dead man is yet. The pictures have not yet been authenticated, but the soldiers who appear in them already face charges in the scandal.

These pictures surfaced during Specialist Jeremy Sivits' court- martial in Iraq.

Also in Iraq this morning, questions surrounding an attack close to the Syrian border. We know about 40 Iraqis were killed. But were they attending a wedding or something more sinister?

Our senior international editor, David Clinch, is here to tell us more of what we've learned about that this morning.

DAVID CLINCH, CNN SENIOR INTERNATIONAL EDITOR: Right. This is the wedding party incident. The United States is saying that they were attacking a group of militants near the Syrian border. They say their ground troops actually found equipment, money, passports relating to Syrian militants.

But in the meantime, in exactly the same area, Iraqis are saying that a house was hit, where they, the locals say, a wedding was going on.

We've seen the pictures. A lot of people dead. Iraqis locally saying up to 40, including children. There are some horrific pictures of young babies, young children, women and men killed.

We do not know the facts yet. The U.S. military is saying they're looking into it.

COSTELLO: But they're going to have a...

CLINCH: But they say they hit militants.

COSTELLO: They're going to have a press conference later, aren't they? And might we see those things they confiscated?

CLINCH: Well, we do know that they intend to show them to us, whether it'll be at that press conference, the daily, General Kimmitt and Mr. Senor will be having a press conference in Baghdad today. We know they'll be asked about this. There are a lot of questions.

COSTELLO: Let's switch to Ahmed Chalabi.

CLINCH: Another...

COSTELLO: This is really strange.

CLINCH: Well, another thing they'll be asked about today. Ahmed Chalabi, the head of the Iraqi National Congress, a man we've been hearing about for years before this latest war in Iraq, who was in exile outside of Iraq pushing for the U.S. and world to put pressure on Saddam Hussein. He is now a member of the Iraqi Governing Council, had been looked upon all the way through the war as a Pentagon favorite. Very recently that attitude has changed.

We've heard reports that he and his group were a source of a lot of the information about weapons of mass destruction that haven't shown up. We have confirmed within the last few weeks that the U.S. has withdrawn the tens of thousands of dollars they were supplying his group every month.

COSTELLO: $400,000 a month.

CLINCH: Correct.

COSTELLO: But, today, they raid his house?

CLINCH: Into his house and his very large compound in Baghdad. U.S. troops and Iraqi police -- we have seen ourselves, we'll be getting the pictures shortly -- moving into the compound and his house, taking away computers and files.

We're also told -- and this is not confirmed by the U.S. -- we've been told by his son that they went into his home and, according to his son, held a gun to Chalabi's head.

Now, we've heard claims from Chalabi's people before that have not turned out to be true. We're going to ask serious questions about that, but we do know that the raid happened, and we do know that files and computers have been taken away.

COSTELLO: Interesting.

CLINCH: Now, Chalabi is a man who is very controversial. He was a banker and had been convicted of a banking...

COSTELLO: Scandal.

CLINCH: ... scandal in Jordan. So, there are lots of reasons why they may be looking into him.

COSTELLO: We'll get more into that a little later. Thank you David. Appreciate it.

More Palestinian deaths reported this morning in southern Gaza. Palestinian security forces say six people were killed overnight in Israeli military operations in Rafah.

CNN's John Vause is at the Israeli border town of Kerem Shalom. He joins us live.

John -- bring us up-to-date.

JOHN VAUSE, CNN CORRESPONDENT: Carol, we know that four Israeli battalions are now moving through the Rafah neighborhoods of Brasil (ph) and Salom (ph). That's more than 1,000 Israeli troops on the ground. They say they are taking fire from automatic weapons, as well as anti-tank missiles.

And as you mentioned, overnight medical sources within Rafah say six Palestinians were killed after an Israeli air strike. Witnesses on the ground say an Israeli Apache helicopter fired at least four missiles into a residential building.

Also, a 3-year-old boy apparently killed, died after a heart attack, apparently dying from shock after shelling from a tank in his neighborhood.

That brings the death toll after these three days of operations to 40 -- 41 if you count the 3-year-old boy. At least 10 people were killed yesterday during a demonstration.

Israel confirms that a helicopter fired a missile to try and disperse the crowd. Israel says that missile landed in a nearby field. When that didn't work, it says one tank opened fire, firing four shells at an abandoned building. Palestinians, though, say this was nothing short of a massacre, and it's brought widespread international criticism of Israel, demands that it end its operation. But so far, no sign that the Israelis intend on pulling out of Rafah -- Carol.

COSTELLO: John Vause reporting live from Israel near the -- reporting live from Israel this morning. Thank you, John Vause. Coming up on DAYBREAK, a company tries to make kids' lunches a little more interesting -- munchies with a message. But will parents bite? That's ahead in our business buzz.

Plus, a change-up in baseball, but not the usual kind. We'll talk to a baseball guru about some possible moves in the majors.

And then, a tale of lost, then found. Wait until you hear what almost happened to this multimillion-dollar instrument.

(COMMERCIAL BREAK)

COSTELLO: Time for a little business buzz now. A food company is making a joke out of its potato chips, while a number of bread companies are getting angry about your eating habits.

We'll explain. Actually, Carrie Lee will explain live from the Nasdaq Marketsite.

Good morning.

CARRIE LEE, CNN FINANCIAL NEWS: Well, let's start with the potato chip story. Pringles, which is made by Procter & Gamble, are soon going to print trivia questions on their potato chips. It's going to be comprised of red and blue ink. The ink is made of food coloring, so it is safe, basically running through a machine.

Here's an example of what they're going to look like. Trivia question, answer upside down on the back.

Industry experts who follow the food industry say the idea is certainly original. We'll see if kids like it. It's kind of interesting, because kids have very different ideas about what they like versus adults. You know, the Heinz colored ketchup, the green ketchup and all of those other colors that came out recently have been very successful.

So, we'll see how this idea does. The first batch is going to hit store shelves, Carol, next month.

COSTELLO: I can't wait.

LEE: Yes. But we'll see. We'll see. Maybe people can learn a little bit as they eat. See how many carbs are in those things. How many carbs are on this chip now? They're not going to have questions like that, I'm sure.

COSTELLO: It just kind of takes the fun out of eating chips.

A quick look at the futures before you go.

LEE: Oh, OK. I just wanted to give you a quick update on the bread story. Basically, the bread industry is launching a campaign, tentatively titled, "bread, it's essential." The latest industry to fight the low-carb craze that's been hitting the nation. A quick check on futures. Things are looking pretty flat right now. High oil prices, rising concern among investors, pretty much this whole week. We're getting close to those intra-day all-time highs we hit on Monday, once again early this morning. We did see, in fact, some selling late in the session yesterday. Oil prices, interest rate hike fears, and the situation in Iraq weighing on investors' minds once again.

That's all from here.

COSTELLO: All right, thank you, Carrie Lee, reporting live from the Nasdaq Marketsite.

You heard David Clinch say it a little earlier. We do have new pictures to show you of a raid in Baghdad on Ahmed Chalabi's home. Let's go to those pictures right now.

Just a short time ago, we found out that coalition forces and Iraqi police were raiding the home of this Iraqi Governing Council member and former favorite of the Pentagon. Don't know what they're looking for exactly in Ahmed Chalabi's house, but we understand they have confiscated a computer and some documents. Of course, we're trying to figure this out.

To help us do that, we'd like to go live to D.C. now and General Daniel Christman, retired General Daniel Christman.

Thank you for joining us, general.

LT. GEN. DANIEL CHRISTMAN, U.S. ARMY (RET.): Thanks, Carol.

COSTELLO: What do you make of that?

CHRISTMAN: It is a very, very strange development. As we know, Ahmed Chalabi has a very checkered background. This is a crucial moment for any Iraqi politician. Less than six weeks to go until 1 July transfer, politicians maneuvering themselves to best advantage themselves for the long term. This may well be in response to some bizarre behavior by Chalabi. Who knows?

His compound, as David said, is enormous. This could also be simply an assault on some elements of Chalabi's tribe, his friends. We'll have to wait to see what Mark Kimmitt says later on today.

COSTELLO: It does, general, bring up some disturbing questions, because the United States, in part, depended on intelligence from Chalabi in going to war with Iraq.

CHRISTMAN: They did. And, of course that intelligence, at least so far, has proved wanting. So, again, I go back to the point, Carol, this is a very, very checkered background for Ahmed Chalabi. And these developments, I think, are really pretentious in terms of what it says about his future here beyond 1 July.

COSTELLO: Don't think he'll be on the Iraqi Governing Council much longer. CHRISTMAN: It does not look positive.

COSTELLO: No, not at all.

Let's talk about this attack in western Iraq on supposedly a wedding party. The coalition forces say it wasn't a wedding party. It was some sort of safe house for insurgents. What do you make of that?

CHRISTMAN: Carol, I think this illustrates in so many ways what military analysts call the "fog of war." We saw a very similar incident actually in Afghanistan, if you recall, almost two years, some firing in celebratory fashion that apparently led to some attacks from the air against those firing on the ground.

What we'll have to wait to see on this, Carol, is what the evidence reveals, whether there is gun camera footage, whether there is a forward air controller that has evidence on this, what the details on the ground show in terms of these passports and the munitions that were found, and, of course on-scene witnesses.

Mark Kimmitt has said, the coalition has said we'll take a look at this very, very hard in terms of the investigations in the coming months and try to get to the bottom of this. But it really is a tragic development.

COSTELLO: Another topic. There are new pictures of prisoner abuse out this morning. Three generals, Abizaid, Sanchez and Miller, appeared before a Senate subcommittee to answer questions about if orders were handed down. I'd like you to listen to an exchange between Senator Reed and General Sanchez.

CHRISTMAN: Sure.

(BEGIN VIDEO CLIP)

SEN.JACK REED (D), RHODE ISLAND: Today's "USA Today," there is a report that you ordered or approved the use of sleep deprivation, intimidated by guard dogs, excessive noise and inducing fear as an interrogation method for a prisoner in Abu Ghraib prison. Is that correct?

LT. GEN. RICARDO SANCHEZ, U.S. ARMY: Sir, that may be correct that it's in a news article, but I never approved any of those measures to be used within the CJTF-7 at any time in the last year.

(END VIDEO CLIP)

COSTELLO: But wasn't his name on those rules of interrogation that was come up by someone?

CHRISTMAN: Well, they said yesterday, Carol, it was actually a very revealing series of testimonies yesterday afternoon. What happened apparently is a young Army captain put together these rules of engagement. At the very bottom of those rules of engagement it said, Geneva Conventions apply throughout the entire joint task force, and any activity that goes beyond the Geneva-approved activities had to be approved by General Sanchez. And Sanchez and his lawyer said they did approve one set of actions, and that was extended segregation more than 30 days. Beyond that, he claims nothing was approved that went beyond the Geneva Conventions.

So, this is one of the many areas that these six investigations under way right now has to analyze.

COSTELLO: Well, and, General, in light of what you've heard so far, will any top-ranking official suffer repercussions from this prison abuse scandal?

CHRISTMAN: I think it's very likely. We've seen one brigadier general already, General Karpinski, charged in this allegation of abuse. And further, Carol, General Abizaid, whom I know very, very well, has said that we will take this investigation as far as it takes us to the very, very top if necessary. The Army inspector general, General Mapichek (ph), has also looked at this very carefully and in a very preliminary way has said there is no systematic pattern, no culture of abuse that's present.

But regardless, the Army, I'm convinced, will take this as far as it goes, and if it goes very high, to senior flag officer rank, then that will be the consequence, and those individuals will suffer the consequences.

COSTELLO: We'll have to wait to see what happens, of course. General Daniel Christman joining us live from D.C. this morning. Many thanks to you.

CHRISTMAN: Thank you.

Your news, money, weather and sports. It is 6:47 Eastern. Here's what's all new this morning.

Another U.S. soldier has been killed and three more wounded in a grenade attack. It happened in central Baghdad. That raises the U.S. death toll in Iraq to 794.

The trial of Oklahoma City bombing conspirator Terry Nichols resumes a few hours from now. Defense attorneys are getting ready to rest their case. In earlier testimony, a former FBI scientist said a current FBI scientist lied during his testimony.

In money news, workers at the nation's second-largest local telephone company, SBC, are planning a four-day strike. Their union is fighting over health care, job security, pension and wage issues. The strike is set to begin tomorrow.

In sports, check out team soccer star Freddy Adu (ph). He scores his first stunner. There it is! It's two days before his high school graduation this happened. Despite the big goal, Adu's (ph) D.C. United team lost to the Los Angeles Galaxy.

In culture, Sylvester Stallone is jumping into the nutrition business big time. He's launching a line of health products, which include what else? Low-carb pudding. It also included energy- enhancing pills. You should start seeing those items at your local GNC stores next month.

(WEATHER BREAK)

COSTELLO: Those are the latest headlines for you.

We'll be back with much more on DAYBREAK. You stay right there.

(COMMERCIAL BREAK)

COSTELLO: Major League baseball head honchos are meeting today to discuss a number of issues; among them, a possible move from Montreal to somewhere. For years, a handful of cities have been haggling to be the brand-new home of the Montreal Expos. At the front of the class, Washington, D.C., but if you live in Washington, you've heard that one before.

So, let's head live to D.C. and "USA Today's" baseball expert, Mel Antonen.

Good morning, Mel.

MEL ANTONEN, "USAY TODAY": Good morning. How are you?

COSTELLO: I'm fine. Look, will the brain trust of the Major League Baseball make a decision on a new home for the Expos finally?

ANTONEN: I think they are. You know, we've been hearing about it for two or three years. But I think this is the year that they're going to decide, at least that's what they're saying.

The issue, though, is it's very difficult -- it's a very difficult business these days. Baseball is not making a lot of money, and they're looking for a good sweetheart deal. And the mood across the country is that those sweetheart deals are hard to come by.

COSTELLO: Well, let's talk about the sweetheart deal, because Washington, D.C. has been vying for this team for years. I remember doing stories five years ago on this. The catch is, is the city council won't make a deal unless baseball promises D.C. a team. And baseball won't make a deal unless the D.C. council makes a deal. So, who is in the right?

ANTONEN: Well, I think D.C. is in the right. I think that if D.C. says that -- I think that if D.C. says, if you give us a team, we'll work out the financing. And I think baseball has to trust the D.C. government. I think, though, that within the D.C. government, there's going to be some very serious politics. The mayor is saying that we can get -- that D.C. can get the financing in place, where a lot of the council members aren't sure how it's going to get done.

But I think Major League Baseball has to take a step of faith and say if the Washington, D.C. area says we can come up with a team -- we can come up with the money and the financing package, you'd better listen to them. COSTELLO: Well, certainly the fans have some disposable income in that area. But isn't Peter Angelos, the owner of the Baltimore Orioles, getting in the way? It's not in his best interest to have a team so close by, is it?

ANTONEN: No, it really isn't. I mean, you might fix the Montreal problem in moving the Expos to Washington; then you might hurt the Orioles. I mean, the Orioles depend on about 20 to 25 percent of their ticket sales from the Washington/northern Virginia area. And so, that makes it very difficult. It's going to be hard for the Orioles to do a profitable business. It's hard enough as it is, let alone another team just 30 or 40 miles away.

So, yes, it's difficult, and Peter Angelos, the owner of the Orioles, is going to -- he's going to be very difficult to deal with on this, and I think baseball is sympathetic to his plight. So, it's a very difficult issue. I don't know.

COSTELLO: We will be listening...

ANTONEN: There are a lot of concerns.

COSTELLO: We will be listening today, as you will. Mel Antonen from "USA Today" joining us live on DAYBREAK. Thank you.

OK, we want to talk about some Bible proofreading now, because what a segue that is.

ROB MARCIANO, METEOROLOGIST: Exactly. Well, they may be praying to get the team down there, you know?

COSTELLO: That's a good one!

MARCIANO: It's been a long time since the (UNINTELLIGIBLE) were in town.

COSTELLO: Actually, there is a place called Peach Tree Editorial and Proofreading. That's a company that proofreads new copies of the Bible. And more and more are being published each day, because, you know, the Bible is the No. 1 selling book in the country -- in the world actually.

MARCIANO: And they keep building hotels, and we need Bibles in every hotel room.

COSTELLO: Exactly. You're so cynical this morning.

MARCIANO: No, I'm not.

COSTELLO: No, they find a lot of mistakes in the copy from the editor. Let's take a look at one of the examples that they caught.

MARCIANO: OK.

COSTELLO: This one said, "Go and sin on more." And the proofreaders caught that one, Rob. MARCIANO: Yes, that would be the opposite of what John was trying to say.

COSTELLO: "Go and sin no more."

Another big mistake they caught in the latest new copy of the Bible, "I will that women adorn themselves in modern apparel."

MARCIANO: This is from Victoria's Secret or the Bible?

COSTELLO: Exactly.

MARCIANO: Modest, Carol.

COSTELLO: Yes, modest apparel. So, thank goodness for the people of Peach Tree in Peach Tree City, Georgia, right here in the Peach State.

Rob and I will give a mug away when we come back. But first, here are the latest headlines for you.

(COMMERCIAL BREAK)

COSTELLO: It's been a wild show, hasn't it?

MARCIANO: You know, and yesterday we didn't have time to give away a mug. I feel like we're cheating the public.

COSTELLO: Well, let's give away a mug -- well, we'll give it away tomorrow.

MARCIANO: All right.

COSTELLO: If you answer the questions right.

MARCIANO: Here is today's question. Mel Antonen from "USA Today" said, which Major League team could move to Washington or the northern Virginia area?

And the second question is what famous author's papers were sold at auction?

COSTELLO: Oh, for $1.8 million.

MARCIANO: A mealy $1.8 million.

COSTELLO: And, of course we will name the winner tomorrow. Daybreak@CNN.com. That's Daybreak@CNN.com.

(WEATHER BREAK)

COSTELLO: That does it for us. I'm Carol Costello, with Rob Marciano. "AMERICAN MORNING" starts right now.

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