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CNN Live At Daybreak

Iraq's New Government; OPEC Meeting; Peterson Murder Trial; Doctor's Orders; Silicone Settlement

Aired June 02, 2004 - 05:30   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 culture, she's just the latest jewel in Australia's sparkling crown mate (ph). Jennifer Hawkins is the new Miss Universe. She's a 20-year-old model and choreographer. Miss USA was the first runner up -- Chad.
(WEATHER REPORT)

COSTELLO: All right. Thank you -- Chad.

CHAD MYERS, CNN METEOROLOGIST: You're welcome.

COSTELLO: The resignation of the Iraqi Governing Council after an interim caretaker government was announced is seen as a good sign by the White House. Sovereignty may be on a faster track than first imagined. But what does it mean to the more than 130,000 U.S. troops in Iraq?

Jamie McIntyre has more on that for you.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): In a day when the new interim Iraqi government was announced, a deadly car bomb ripped through the Baghdad offices of a pro-American Kurdish group not far from coalition headquarters. It underscored that while Iraq's new leaders bristle at the U.S. occupation, for now, they still need U.S. troops.

IYAD ALLAWI, IRAQI PRIME MINISTER-DESIGNATE (through interpreter): We will need the partnership of the NNF (ph) to defeat the enemies of Iraq who do not wish for us stability, prosperity and peace.

MCINTYRE: The old U.S.-appointed Iraqi Governing Council unexpectedly stepped aside as soon as the new government was announced, and that, Pentagon officials say, may put the transition on a faster track, allowing the U.S. military to shift the mission from the anti-insurgent offensives to protecting Iraq's leaders and economic infrastructure. The plan, officials say, is to make Iraq's military another coalition partner with its input based like any other coalition member on the capabilities it provides.

BUSH: There may be times when the Iraqis say we can handle this ourselves, get out of the way, we're plenty capable of moving in to secure a town or to secure a situation. MCINTYRE: For the U.S. military, protecting the new government will be a top priority, especially considering the head of the old Governing Council was assassinated just two weeks ago.

ROBERT MAGINNIS (RET.), U.S. ARMY: We're going to be a quick reaction force, as necessary. We're going to try to kind of turn offensive operations away and turn and try to protect the infrastructure, the oil, the electricity and, of course, these 33 bodies that are now the so-called interim, you know, government.

MCINTYRE: Pentagon sources say the U.S. efforts to strike a cease-fire deal with the radical cleric Muqtada al-Sadr's militia reflects a shift in strategy, too. Allowing Iraqis to bring him to justice later is another way, U.S. officials say, to build support for the new Iraqi government.

But even as it seeks to move away from offensive operations, the U.S. military insists it will continue to respond forcefully to attacks, and no one is suggesting the 138,000 U.S. troops will be able to come home until after the Iraqi elections next year.

(END VIDEOTAPE)

COSTELLO: Iraqi leader Ahmed Chalabi told an Iranian official that the U.S. had broken Iran's secret communications code. That's according to published and broadcast reports. Chalabi is a former ally of the Bush administration. He had provided information about weapons of mass destruction to the Bush administration, which was used to justify the war. That information has now come under suspicion. U.S. funding for his group, the Iraqi National Congress, was cut off last month. Chalabi says he didn't know any secret information related to Iran so he could not have spilled anything.

Let's talk more about the Iranian intelligence code with our senior international editor Eli Flournoy.

ELI FLOURNOY, CNN SENIOR INTERNATIONAL EDITOR: Yes, this is a remarkable revelation. I mean what this means if this is true that Chalabi disclosed to an Iranian intelligence official that the United States had in fact broken the intelligence code, it means that the United States now is forced to be in the position of admitting that it did break the code and has been monitoring Iranian intelligence for some time. We don't know how -- we don't know how long.

COSTELLO: Well, and the big question is, how did Ahmed Chalabi know that the United States had broken this secret code? Who gave him that information?

FLOURNOY: Well according to the report in the "New York Times," it gives detail about, again, according to an intercepted intelligence communique, the Iranians say that they were told by Chalabi that he found this out from a senior administration official, who was drunk at the time, who gave him -- who gave him this information. And then after that, the Iranians sent a bogus communique to test whether the United States had in fact intercepted it. But since the United States already knew that the -- that the -- that the Iranian -- they already knew the Iranian code, so they didn't respond to the bogus communique which would have sent them looking for weapons.

COSTELLO: Just an amazing story. So apparently the U.S. government asked the "New York Times" to hold off on the story. But as it started leaking into other media outlets, the "New York Times" went with the story. Was that the last straw with Ahmed Chalabi when the U.S. finally figured out that he was not really our friend?

FLOURNOY: Well it appears to be so. I mean as we have reported the Ahmed Chalabi, his offices a couple of weeks ago were raided. Some information was taken from his offices. And then just over the weekend, they asked him to close his office in Ramadi. And we haven't really heard from him. Of course we didn't hear his name amongst the new interim government list. And so he has kind of disappeared off the map. And he was a major, major player, of course, and very close to the Bush administration.

COSTELLO: Well you certainly didn't see him in those news conference surrounding the new Iraqi interim government.

FLOURNOY: No, absolutely not.

COSTELLO: No.

Now, quickly now, I know there was another suicide car bombing in Baghdad just a short time ago.

FLOURNOY: That is correct. Reuters is reporting that there was a car bomb. And in fact, they have -- they had a team on the scene who is an eyewitness. Car bomb has said there are a number of casualties, including several dead. We're still trying to find out more. Our team is on the way to the scene from Baghdad, so we'll be hearing more about that situation and we'll find out what exactly is going on.

COSTELLO: Well we'll let you get back to it. Eli, thank you very much.

One day and counting, OPEC oil ministers meeting in Beirut tomorrow to consider boosting crude oil production. That, of course, would bring down oil and gas prices.

And as CNN's Jim Boulden reports, Saudi Arabia plays a key role in deciding what happens next.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN CORRESPONDENT (voice-over): He's no rock star, but Saudi Arabia's oil minister Ali al-Naimi reached celebrity status when the oil price started its relentless rise. Saudi Arabia is the world's largest producer of oil. And with 260 billion barrels in the ground, it has vastly more proven oil reserves than any other country. Still, Saudi Arabia is sticking to one line, oil prices must come down.

Oil watchers say Saudi's petrol-dependent economy will only survive if consuming nations, like the United States, China and Japan, stay hooked on cheap oil.

GARY ROSS, PIRA ENERGY: Saudi Arabia has 30 percent of the world's crude reserves. They are very concerned about the long-term demand for oil. So they don't like very high oil prices and they are going to do their best to try and get this price down.

BOULDEN: Saudi didn't wait for the rest of OPEC to approve its recent move to pump more oil, leading many to say Saudi Arabia is more concerned with keeping Washington happy.

ANGUS MCPHAIL, ING FINANCIAL MARKETS: I would say that there's probably an informal pact between the Saudis and the U.S. whereby the Americans say look, you know we've got -- we've got an election coming up. If we're going to win that election, we can't have U.S. gasoline prices at $3 the barrel.

BOULDEN: So why then does the oil price stay so high? Continued attacks on Saudi oil workers leads to fear that oil deliveries could be disrupted by terrorism or other factors, though the U.S. energy secretary does not buy that argument given last year's actual disruptions.

SPENCER ABRAHAM, ENERGY SECRETARY: Well a year ago, we actually had real reductions in production from Venezuela, Nigeria and Iraq and the price did not get as high as it is today.

BOULDEN: The U.S. says the answer is more supply from OPEC countries. But even OPEC admits it does not have the power it had in the 1970s.

PURNOMO YUSGIANTORO, OPEC PRESIDENT: Well, you know it is really beyond OPEC control, you know, because you have the OPEC that only have about 58 percent of the market share and then the remaining share is contra (ph) about 60 percent standing from a non-OPEC's producers.

BOULDEN: And prices haven't fallen much in recent weeks, even though oil markets know OPEC, through Saudi Arabia, is already pumping more oil.

(on camera): And that's partly because the more oil that OPEC produces, the less oil reserves there are in the ground to meet any future uptick in demand. So prices at the pump could remain high as long as consumers continue to demand more and more oil.

Jim Boulden, CNN, London.

(END VIDEOTAPE)

COSTELLO: And our Brent Sadler will join us live from Beirut in the next hour with more on OPEC's affect on oil prices, and he will also have Arab reaction for you.

In stories 'Across America' this Wednesday, either someone has a really big after Memorial Day barbecue planned or maybe it's possibly something more ominous. The FBI in San Antonio has issued a nationwide alert for two stolen tanker trucks filled with thousands of gallons of propane. The agency says it has no information the theft is linked to terrorists.

A blow to anti-abortion forces, a federal judge in San Francisco rules the law banning late-term abortions is unconstitutional. The ruling affects about 900 Planned Parenthood clinics. Those clinics perform about half the 1.3 million abortions each year in this country.

In Dallas, Mohamed and Ahmed Ibrahim are celebrating their third birthday apart. The twins were born joined at the tops of their head. They underwent separation surgery nearly eight months ago. A golf tournament is now being organized to help raise money for the family so they can return to Egypt.

The defense gets its turn today to present opening statements in the Scott Peterson murder trial. Yesterday, prosecutors pointed out inconsistencies in Peterson's story and showed pictures that drew gasps and tears.

CNN's David Mattingly wraps up day one.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT (voice-over): Scott Peterson's relationship with Amber Frye clearly important in the prosecution's case against him. A phone conversation recorded by Frye on New Year's Eve catches Scott lying about being in Europe.

Scott Peterson did not look as prosecutor Rick Distaso showed the jury pictures of him with girlfriend Amber Frye. Distaso detailed how wife Laci attended a Christmas party alone while Scott and Amber attended a party together in formal attire.

When confronted with these pictures, Distaso says Peterson told investigators "is that supposed to be me?" Peterson's family emerged from court unshaken waiting for the defense to take its turn.

UNIDENTIFIED MALE: Same stuff.

UNIDENTIFIED MALE: Same thing, nothing new. No evidence.

UNIDENTIFIED FEMALE: Except that he referred to it as a game.

MATTINGLY: But Peterson's affair is only part of a litany of deception and inconsistencies according to Distaso who said for the first time that Peterson claimed he left his home Christmas Eve morning at 9:30 but cell phone tower records show he was still at home.

Peterson told two people that night he went golfing when he later told investigators he went fishing and Distaso also said that the cover to Peterson's boat was covered with gasoline capable of dissolving any evidence of DNA.

In one moment of emotion, Laci Peterson's father Dennis was brought to tears when a picture of a smiling, pregnant Laci was shown to the court. And then came the most painful display of all. The prosecution showed the jury autopsy photos of Laci and her unborn child they call Conner, getting the jump on the defense by explaining Laci's body was dumped in San Francisco Bay with her baby still inside her.

David Mattingly, CNN, Redwood City, California.

(END VIDEOTAPE)

COSTELLO: In the next hour of DAYBREAK, a reservist's sacrifice.

(BEGIN VIDEO CLIP)

LT. COL. ROBERT HALE, SURGEON: I'll be sitting there in my cot by myself, just thinking about what they are doing and how much -- how much pain they are going through because they need me. But for now, I need to be here.

(END VIDEO CLIP)

COSTELLO: A military doctor finds himself torn between his family and the victims of war.

Plus, want a lift? Well the pick me up you need could be just a swallow away, but is stuff like Red Bull really good for you? In the next hour of DAYBREAK, we'll get the goods on those high-energy drinks.

This is DAYBREAK for Wednesday.

(COMMERCIAL BREAK)

COSTELLO: Your news, money, weather and sports. It is 5:46 Eastern Time. Here is what's all new this morning.

A revised resolution is being circulated around the United Nations this morning, the U.S. and Britain now calling for multinational forces to leave Iraq by the end of 2005.

More tension again in Rafah. Palestinian sources tell us Israeli troops are back at it, demolishing homes in a southern Gaza refugee camp. Last week, Israeli troops were looking for tunnels used to smuggle weapons from Egypt.

In money news, Sony pulls the plug on a type of handheld computer. It says it's going to stop selling PDAs in the United States and focus instead on the cell phone market.

In sports, the Giants had a 10-game winning streak going, but it stops there. The Arizona Diamondbacks handed San Francisco its first loss in 11 games with a 6-5 victory.

In culture, Michael Moore's latest documentary is going to make it into U.S. theaters after all. Harvey and Bob Weinstein are forming a special company to distribute "Fahrenheit 9/11." It debuts June 25 -- Chad. MYERS: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: I think the thunder is going to wake people up early.

MYERS: Absolutely.

COSTELLO: Thank you, Chad.

Those are the latest headlines for you.

The war on terror is costing you billions, but many American families are paying an even higher price. There are thousands of them. And in one case, doctor's orders means losing almost everything, including financial security at home.

Here is CNN's Thelma Gutierrez.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): In California, a son misses his father. Across the world, the father is saving lives. It is a family's sacrifice for the military one doctor volunteered for. He's a renowned surgeon from California.

LT. COL. ROBERT HALE, SURGEON: This is a terrorist of tests.

GUTIERREZ: Working under extreme conditions in Afghanistan.

It is a tiring tough job for Dr. Robert Hale, a surgeon who specializes in facial and oral surgery. It is the first time in his life he's come face-to-face with victims of war.

HALE: Very, very brave. Very, very brave.

GUTIERREZ: Lieutenant Colonel Hale was a reserve visit activated for duty back in October. He hasn't been home since.

HALE: It was different for me. But I keep in mind why I'm here to help American and coalition forces and innocent civilians that get in the line of fire.

GUTIERREZ: Here the work is non-stop.

HALE: There is no comparison. The California practice, I get calls for one patient at a time, not where we have mass casualties, where we have as many as 18 patients coming in at once.

GUTIERREZ: While Dr. Hale is saving lives here, his own is changing radically at home. In this surgery center North Ridge, California is what Dr. Hale calls the crowning achievement of his career. It took him 18 years to get to this point but his surgery center cannot function without him, so the Hales have no choice. They have to lay off staff and put it up for sale. SUE ELLEN HALE, HALE'S WIFE: It's hard because everywhere I look, he's here. Everything that's in this surgery center was something he built.

GUTIERREZ: Sue Ellen Hale that says family's income took an 85 percent hit.

SUE ELLEN HALE: When you're a doctor, you're the only sole person. If you're not there, you're not generating any income.

GUTIERREZ: They took out a small business disaster loan and made lifestyle changes. The biggest disaster this distance.

HALE: I'll be sitting in my tent and thinking about what they're doing, and how much pain they're going through. Because they need me. For now I need to be here.

TYLER HALE, HALE'S SON: He's helped me and he's helping other kids. And I know that they need him as much as I need him.

AUSTIN HALE, HALE'S SON: I am just sad and I miss him.

GUTIERREZ: The kids say they're not sure when they'll see their father again, but they say what he's doing is important and that's the reason their dad became a doctor.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

COSTELLO: 'Health Headlines' for you this morning.

The next time you're in a lot of traffic, consider this, it can be bad for your heart as well as your lungs. The American Heart Association says air pollution can cause heart disease. The group says even though high blood pressure causes more heart attacks, air pollution is still a serious risk factor.

Speaking of air pollution, people who smoke pipes are five times more likely to get lung cancer than people who don't use tobacco and they have four times the risk of throat cancer. That's according to the U.S. Cancer Society.

And here is one that just may cause you to shutter. Researchers say junk foods make up nearly a third of the calories in American's diets, soft drinks, desserts, pastries, all that stuff. The head of the study says it's no wonder there's an obesity epidemic in this country.

Well the Dow Corning Company is getting ready to pay settlements on claims from people who say they developed health problems because of silicone breast implants. The company does not make those implants anymore. And in fact, they have been banned since 1992.

CNN medical correspondent Holly Firfer has more for you.

(BEGIN VIDEOTAPE)

HOLLY FIRFER, CNN MEDICAL CORRESPONDENT (voice-over): Pamela Noonan-Saraceni has been waiting nine years for a check from Dow Corning to cover more than $50,000 worth of medical expenses from what she says are complications due to her silicone breast implants.

PAMELA NOONAN-SARACENI, CLAIMANT: I've got chronic fatigue syndrome. I have fibromyalgia. I have irritable bowel syndrome. I deal with chronic shingles.

FIRFER: Noonan-Saraceni joined more than 170,000 other women who have also filed claims against the implant maker and who will be receiving, in about two weeks, settlement checks ranging from $2,000 to $250,000. Dow Corning says that $3.2 billion settlement however, does not admit liability.

Although studies have shown little evidence that silicone implants cause major diseases, like cancer and lupus, the FDA says it is concerned about some rare diseases like fibromyalgia for which a link has not been conclusively ruled out.

DIANA ZUCKERMAN, NATIONAL CENTER FOR POLICY RESEARCH FOR WOMEN & FAMILIES: Most of the studies have been conducted on women who had implants for as short as one month or six months or maybe three or four or five years, and it seems that most of the problems happen after that.

FIRFER: In a statement, Dow Corning says "we are confident that the science shows a clear picture today, through more than 30 independent studies, government and court-appointed panels and numerous court decisions, that breast implants are not associated with disease."

Silicone implants have been banned by the FDA since 1992, except for those who need reconstructive surgery or agree to be part of a government approved study.

Not everyone is worried, however. LaDonna Lasko got saline transplants for cosmetic reasons and just recently had them replaced with silicone.

LADONNA LASKO, IMPLANT RECIPIENT: I don't (ph) feel like they are a risk. So I went with what I felt like would be best for me.

FIRFER: Holly Firfer, CNN, Atlanta.

(END VIDEOTAPE)

COSTELLO: For more on this or any other health story, head to our Web site. The address, CNN.com/health.

Lakhdar Brahimi issues a challenge this morning. He tells the Iraqi people to give their new government a chance. We'll see what else was on his agenda in just a minute. You stay tuned.

(COMMERCIAL BREAK) COSTELLO: Good morning to you. From the CNN Global Headquarters in Atlanta, I'm Carol Costello. Thank you for joining DAYBREAK.

Here is what's happening right now.

U.N. Special Envoy Lakhdar

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Aired June 2, 2004 - 05:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: In culture, she's just the latest jewel in Australia's sparkling crown mate (ph). Jennifer Hawkins is the new Miss Universe. She's a 20-year-old model and choreographer. Miss USA was the first runner up -- Chad.
(WEATHER REPORT)

COSTELLO: All right. Thank you -- Chad.

CHAD MYERS, CNN METEOROLOGIST: You're welcome.

COSTELLO: The resignation of the Iraqi Governing Council after an interim caretaker government was announced is seen as a good sign by the White House. Sovereignty may be on a faster track than first imagined. But what does it mean to the more than 130,000 U.S. troops in Iraq?

Jamie McIntyre has more on that for you.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): In a day when the new interim Iraqi government was announced, a deadly car bomb ripped through the Baghdad offices of a pro-American Kurdish group not far from coalition headquarters. It underscored that while Iraq's new leaders bristle at the U.S. occupation, for now, they still need U.S. troops.

IYAD ALLAWI, IRAQI PRIME MINISTER-DESIGNATE (through interpreter): We will need the partnership of the NNF (ph) to defeat the enemies of Iraq who do not wish for us stability, prosperity and peace.

MCINTYRE: The old U.S.-appointed Iraqi Governing Council unexpectedly stepped aside as soon as the new government was announced, and that, Pentagon officials say, may put the transition on a faster track, allowing the U.S. military to shift the mission from the anti-insurgent offensives to protecting Iraq's leaders and economic infrastructure. The plan, officials say, is to make Iraq's military another coalition partner with its input based like any other coalition member on the capabilities it provides.

BUSH: There may be times when the Iraqis say we can handle this ourselves, get out of the way, we're plenty capable of moving in to secure a town or to secure a situation. MCINTYRE: For the U.S. military, protecting the new government will be a top priority, especially considering the head of the old Governing Council was assassinated just two weeks ago.

ROBERT MAGINNIS (RET.), U.S. ARMY: We're going to be a quick reaction force, as necessary. We're going to try to kind of turn offensive operations away and turn and try to protect the infrastructure, the oil, the electricity and, of course, these 33 bodies that are now the so-called interim, you know, government.

MCINTYRE: Pentagon sources say the U.S. efforts to strike a cease-fire deal with the radical cleric Muqtada al-Sadr's militia reflects a shift in strategy, too. Allowing Iraqis to bring him to justice later is another way, U.S. officials say, to build support for the new Iraqi government.

But even as it seeks to move away from offensive operations, the U.S. military insists it will continue to respond forcefully to attacks, and no one is suggesting the 138,000 U.S. troops will be able to come home until after the Iraqi elections next year.

(END VIDEOTAPE)

COSTELLO: Iraqi leader Ahmed Chalabi told an Iranian official that the U.S. had broken Iran's secret communications code. That's according to published and broadcast reports. Chalabi is a former ally of the Bush administration. He had provided information about weapons of mass destruction to the Bush administration, which was used to justify the war. That information has now come under suspicion. U.S. funding for his group, the Iraqi National Congress, was cut off last month. Chalabi says he didn't know any secret information related to Iran so he could not have spilled anything.

Let's talk more about the Iranian intelligence code with our senior international editor Eli Flournoy.

ELI FLOURNOY, CNN SENIOR INTERNATIONAL EDITOR: Yes, this is a remarkable revelation. I mean what this means if this is true that Chalabi disclosed to an Iranian intelligence official that the United States had in fact broken the intelligence code, it means that the United States now is forced to be in the position of admitting that it did break the code and has been monitoring Iranian intelligence for some time. We don't know how -- we don't know how long.

COSTELLO: Well, and the big question is, how did Ahmed Chalabi know that the United States had broken this secret code? Who gave him that information?

FLOURNOY: Well according to the report in the "New York Times," it gives detail about, again, according to an intercepted intelligence communique, the Iranians say that they were told by Chalabi that he found this out from a senior administration official, who was drunk at the time, who gave him -- who gave him this information. And then after that, the Iranians sent a bogus communique to test whether the United States had in fact intercepted it. But since the United States already knew that the -- that the -- that the Iranian -- they already knew the Iranian code, so they didn't respond to the bogus communique which would have sent them looking for weapons.

COSTELLO: Just an amazing story. So apparently the U.S. government asked the "New York Times" to hold off on the story. But as it started leaking into other media outlets, the "New York Times" went with the story. Was that the last straw with Ahmed Chalabi when the U.S. finally figured out that he was not really our friend?

FLOURNOY: Well it appears to be so. I mean as we have reported the Ahmed Chalabi, his offices a couple of weeks ago were raided. Some information was taken from his offices. And then just over the weekend, they asked him to close his office in Ramadi. And we haven't really heard from him. Of course we didn't hear his name amongst the new interim government list. And so he has kind of disappeared off the map. And he was a major, major player, of course, and very close to the Bush administration.

COSTELLO: Well you certainly didn't see him in those news conference surrounding the new Iraqi interim government.

FLOURNOY: No, absolutely not.

COSTELLO: No.

Now, quickly now, I know there was another suicide car bombing in Baghdad just a short time ago.

FLOURNOY: That is correct. Reuters is reporting that there was a car bomb. And in fact, they have -- they had a team on the scene who is an eyewitness. Car bomb has said there are a number of casualties, including several dead. We're still trying to find out more. Our team is on the way to the scene from Baghdad, so we'll be hearing more about that situation and we'll find out what exactly is going on.

COSTELLO: Well we'll let you get back to it. Eli, thank you very much.

One day and counting, OPEC oil ministers meeting in Beirut tomorrow to consider boosting crude oil production. That, of course, would bring down oil and gas prices.

And as CNN's Jim Boulden reports, Saudi Arabia plays a key role in deciding what happens next.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN CORRESPONDENT (voice-over): He's no rock star, but Saudi Arabia's oil minister Ali al-Naimi reached celebrity status when the oil price started its relentless rise. Saudi Arabia is the world's largest producer of oil. And with 260 billion barrels in the ground, it has vastly more proven oil reserves than any other country. Still, Saudi Arabia is sticking to one line, oil prices must come down.

Oil watchers say Saudi's petrol-dependent economy will only survive if consuming nations, like the United States, China and Japan, stay hooked on cheap oil.

GARY ROSS, PIRA ENERGY: Saudi Arabia has 30 percent of the world's crude reserves. They are very concerned about the long-term demand for oil. So they don't like very high oil prices and they are going to do their best to try and get this price down.

BOULDEN: Saudi didn't wait for the rest of OPEC to approve its recent move to pump more oil, leading many to say Saudi Arabia is more concerned with keeping Washington happy.

ANGUS MCPHAIL, ING FINANCIAL MARKETS: I would say that there's probably an informal pact between the Saudis and the U.S. whereby the Americans say look, you know we've got -- we've got an election coming up. If we're going to win that election, we can't have U.S. gasoline prices at $3 the barrel.

BOULDEN: So why then does the oil price stay so high? Continued attacks on Saudi oil workers leads to fear that oil deliveries could be disrupted by terrorism or other factors, though the U.S. energy secretary does not buy that argument given last year's actual disruptions.

SPENCER ABRAHAM, ENERGY SECRETARY: Well a year ago, we actually had real reductions in production from Venezuela, Nigeria and Iraq and the price did not get as high as it is today.

BOULDEN: The U.S. says the answer is more supply from OPEC countries. But even OPEC admits it does not have the power it had in the 1970s.

PURNOMO YUSGIANTORO, OPEC PRESIDENT: Well, you know it is really beyond OPEC control, you know, because you have the OPEC that only have about 58 percent of the market share and then the remaining share is contra (ph) about 60 percent standing from a non-OPEC's producers.

BOULDEN: And prices haven't fallen much in recent weeks, even though oil markets know OPEC, through Saudi Arabia, is already pumping more oil.

(on camera): And that's partly because the more oil that OPEC produces, the less oil reserves there are in the ground to meet any future uptick in demand. So prices at the pump could remain high as long as consumers continue to demand more and more oil.

Jim Boulden, CNN, London.

(END VIDEOTAPE)

COSTELLO: And our Brent Sadler will join us live from Beirut in the next hour with more on OPEC's affect on oil prices, and he will also have Arab reaction for you.

In stories 'Across America' this Wednesday, either someone has a really big after Memorial Day barbecue planned or maybe it's possibly something more ominous. The FBI in San Antonio has issued a nationwide alert for two stolen tanker trucks filled with thousands of gallons of propane. The agency says it has no information the theft is linked to terrorists.

A blow to anti-abortion forces, a federal judge in San Francisco rules the law banning late-term abortions is unconstitutional. The ruling affects about 900 Planned Parenthood clinics. Those clinics perform about half the 1.3 million abortions each year in this country.

In Dallas, Mohamed and Ahmed Ibrahim are celebrating their third birthday apart. The twins were born joined at the tops of their head. They underwent separation surgery nearly eight months ago. A golf tournament is now being organized to help raise money for the family so they can return to Egypt.

The defense gets its turn today to present opening statements in the Scott Peterson murder trial. Yesterday, prosecutors pointed out inconsistencies in Peterson's story and showed pictures that drew gasps and tears.

CNN's David Mattingly wraps up day one.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT (voice-over): Scott Peterson's relationship with Amber Frye clearly important in the prosecution's case against him. A phone conversation recorded by Frye on New Year's Eve catches Scott lying about being in Europe.

Scott Peterson did not look as prosecutor Rick Distaso showed the jury pictures of him with girlfriend Amber Frye. Distaso detailed how wife Laci attended a Christmas party alone while Scott and Amber attended a party together in formal attire.

When confronted with these pictures, Distaso says Peterson told investigators "is that supposed to be me?" Peterson's family emerged from court unshaken waiting for the defense to take its turn.

UNIDENTIFIED MALE: Same stuff.

UNIDENTIFIED MALE: Same thing, nothing new. No evidence.

UNIDENTIFIED FEMALE: Except that he referred to it as a game.

MATTINGLY: But Peterson's affair is only part of a litany of deception and inconsistencies according to Distaso who said for the first time that Peterson claimed he left his home Christmas Eve morning at 9:30 but cell phone tower records show he was still at home.

Peterson told two people that night he went golfing when he later told investigators he went fishing and Distaso also said that the cover to Peterson's boat was covered with gasoline capable of dissolving any evidence of DNA.

In one moment of emotion, Laci Peterson's father Dennis was brought to tears when a picture of a smiling, pregnant Laci was shown to the court. And then came the most painful display of all. The prosecution showed the jury autopsy photos of Laci and her unborn child they call Conner, getting the jump on the defense by explaining Laci's body was dumped in San Francisco Bay with her baby still inside her.

David Mattingly, CNN, Redwood City, California.

(END VIDEOTAPE)

COSTELLO: In the next hour of DAYBREAK, a reservist's sacrifice.

(BEGIN VIDEO CLIP)

LT. COL. ROBERT HALE, SURGEON: I'll be sitting there in my cot by myself, just thinking about what they are doing and how much -- how much pain they are going through because they need me. But for now, I need to be here.

(END VIDEO CLIP)

COSTELLO: A military doctor finds himself torn between his family and the victims of war.

Plus, want a lift? Well the pick me up you need could be just a swallow away, but is stuff like Red Bull really good for you? In the next hour of DAYBREAK, we'll get the goods on those high-energy drinks.

This is DAYBREAK for Wednesday.

(COMMERCIAL BREAK)

COSTELLO: Your news, money, weather and sports. It is 5:46 Eastern Time. Here is what's all new this morning.

A revised resolution is being circulated around the United Nations this morning, the U.S. and Britain now calling for multinational forces to leave Iraq by the end of 2005.

More tension again in Rafah. Palestinian sources tell us Israeli troops are back at it, demolishing homes in a southern Gaza refugee camp. Last week, Israeli troops were looking for tunnels used to smuggle weapons from Egypt.

In money news, Sony pulls the plug on a type of handheld computer. It says it's going to stop selling PDAs in the United States and focus instead on the cell phone market.

In sports, the Giants had a 10-game winning streak going, but it stops there. The Arizona Diamondbacks handed San Francisco its first loss in 11 games with a 6-5 victory.

In culture, Michael Moore's latest documentary is going to make it into U.S. theaters after all. Harvey and Bob Weinstein are forming a special company to distribute "Fahrenheit 9/11." It debuts June 25 -- Chad. MYERS: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: I think the thunder is going to wake people up early.

MYERS: Absolutely.

COSTELLO: Thank you, Chad.

Those are the latest headlines for you.

The war on terror is costing you billions, but many American families are paying an even higher price. There are thousands of them. And in one case, doctor's orders means losing almost everything, including financial security at home.

Here is CNN's Thelma Gutierrez.

(BEGIN VIDEOTAPE)

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): In California, a son misses his father. Across the world, the father is saving lives. It is a family's sacrifice for the military one doctor volunteered for. He's a renowned surgeon from California.

LT. COL. ROBERT HALE, SURGEON: This is a terrorist of tests.

GUTIERREZ: Working under extreme conditions in Afghanistan.

It is a tiring tough job for Dr. Robert Hale, a surgeon who specializes in facial and oral surgery. It is the first time in his life he's come face-to-face with victims of war.

HALE: Very, very brave. Very, very brave.

GUTIERREZ: Lieutenant Colonel Hale was a reserve visit activated for duty back in October. He hasn't been home since.

HALE: It was different for me. But I keep in mind why I'm here to help American and coalition forces and innocent civilians that get in the line of fire.

GUTIERREZ: Here the work is non-stop.

HALE: There is no comparison. The California practice, I get calls for one patient at a time, not where we have mass casualties, where we have as many as 18 patients coming in at once.

GUTIERREZ: While Dr. Hale is saving lives here, his own is changing radically at home. In this surgery center North Ridge, California is what Dr. Hale calls the crowning achievement of his career. It took him 18 years to get to this point but his surgery center cannot function without him, so the Hales have no choice. They have to lay off staff and put it up for sale. SUE ELLEN HALE, HALE'S WIFE: It's hard because everywhere I look, he's here. Everything that's in this surgery center was something he built.

GUTIERREZ: Sue Ellen Hale that says family's income took an 85 percent hit.

SUE ELLEN HALE: When you're a doctor, you're the only sole person. If you're not there, you're not generating any income.

GUTIERREZ: They took out a small business disaster loan and made lifestyle changes. The biggest disaster this distance.

HALE: I'll be sitting in my tent and thinking about what they're doing, and how much pain they're going through. Because they need me. For now I need to be here.

TYLER HALE, HALE'S SON: He's helped me and he's helping other kids. And I know that they need him as much as I need him.

AUSTIN HALE, HALE'S SON: I am just sad and I miss him.

GUTIERREZ: The kids say they're not sure when they'll see their father again, but they say what he's doing is important and that's the reason their dad became a doctor.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

COSTELLO: 'Health Headlines' for you this morning.

The next time you're in a lot of traffic, consider this, it can be bad for your heart as well as your lungs. The American Heart Association says air pollution can cause heart disease. The group says even though high blood pressure causes more heart attacks, air pollution is still a serious risk factor.

Speaking of air pollution, people who smoke pipes are five times more likely to get lung cancer than people who don't use tobacco and they have four times the risk of throat cancer. That's according to the U.S. Cancer Society.

And here is one that just may cause you to shutter. Researchers say junk foods make up nearly a third of the calories in American's diets, soft drinks, desserts, pastries, all that stuff. The head of the study says it's no wonder there's an obesity epidemic in this country.

Well the Dow Corning Company is getting ready to pay settlements on claims from people who say they developed health problems because of silicone breast implants. The company does not make those implants anymore. And in fact, they have been banned since 1992.

CNN medical correspondent Holly Firfer has more for you.

(BEGIN VIDEOTAPE)

HOLLY FIRFER, CNN MEDICAL CORRESPONDENT (voice-over): Pamela Noonan-Saraceni has been waiting nine years for a check from Dow Corning to cover more than $50,000 worth of medical expenses from what she says are complications due to her silicone breast implants.

PAMELA NOONAN-SARACENI, CLAIMANT: I've got chronic fatigue syndrome. I have fibromyalgia. I have irritable bowel syndrome. I deal with chronic shingles.

FIRFER: Noonan-Saraceni joined more than 170,000 other women who have also filed claims against the implant maker and who will be receiving, in about two weeks, settlement checks ranging from $2,000 to $250,000. Dow Corning says that $3.2 billion settlement however, does not admit liability.

Although studies have shown little evidence that silicone implants cause major diseases, like cancer and lupus, the FDA says it is concerned about some rare diseases like fibromyalgia for which a link has not been conclusively ruled out.

DIANA ZUCKERMAN, NATIONAL CENTER FOR POLICY RESEARCH FOR WOMEN & FAMILIES: Most of the studies have been conducted on women who had implants for as short as one month or six months or maybe three or four or five years, and it seems that most of the problems happen after that.

FIRFER: In a statement, Dow Corning says "we are confident that the science shows a clear picture today, through more than 30 independent studies, government and court-appointed panels and numerous court decisions, that breast implants are not associated with disease."

Silicone implants have been banned by the FDA since 1992, except for those who need reconstructive surgery or agree to be part of a government approved study.

Not everyone is worried, however. LaDonna Lasko got saline transplants for cosmetic reasons and just recently had them replaced with silicone.

LADONNA LASKO, IMPLANT RECIPIENT: I don't (ph) feel like they are a risk. So I went with what I felt like would be best for me.

FIRFER: Holly Firfer, CNN, Atlanta.

(END VIDEOTAPE)

COSTELLO: For more on this or any other health story, head to our Web site. The address, CNN.com/health.

Lakhdar Brahimi issues a challenge this morning. He tells the Iraqi people to give their new government a chance. We'll see what else was on his agenda in just a minute. You stay tuned.

(COMMERCIAL BREAK) COSTELLO: Good morning to you. From the CNN Global Headquarters in Atlanta, I'm Carol Costello. Thank you for joining DAYBREAK.

Here is what's happening right now.

U.N. Special Envoy Lakhdar

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