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PAULA ZAHN NOW

Did Chalabi Sell Out United States?; Defense Speaks in Scott Peterson Murder Trial

Aired June 2, 2004 - 20:00   ET

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


(BEGIN VIDEOTAPE)
PAULA ZAHN, CNN ANCHOR (voice-over): An award-winning foreign correspondent.

BOB SIMON, CBS NEWS: Bob Simon, CBS News.

ZAHN: On assignment in the first Gulf War.

SIMON: Everyone in the hotel we're staying in has been ordered down into the shelters with gas masks.

ZAHN: Captured by Saddam's army.

SIMON: It's been a long and a difficult 40 days and 40 nights.

ZAHN: Tonight, Bob Simon held captive.

And did Ahmad Chalabi sell out the U.S.? Did he leak top-secret intelligence to Iran? And if he did, how much damage has been done?

Also, opening statements for the defense in Scott Peterson's murder trial.

(END VIDEOTAPE)

ZAHN: Good evening. Welcome. Thanks so much for being with us tonight.

Over the past five weeks, the name Abu Ghraib has been etched into our minds as that place where Americans abused Iraqi prisoners. But for the people of Iraq, Abu Ghraib has a much longer and much darker history. It is where thousands of Iraqis were beaten, tortured and executed during Saddam's regime. There were a few Americans who were unfortunate enough to have been imprisoned there, too.

One of them is CBS news correspondent Bob Simon. For 40 days during the first Gulf War, Simon was held captive by Saddam's regime, a chilling chapter in a distinguished career and the focus of part two of our series "Held Captive."

(BEGIN VIDEOTAPE)

SIMON: The communists blocking the road are dug into the wastelands just south of... ZAHN: For almost 40 years, CBS correspondent Bob Simon has been reporting from the world's most dangerous places, from Vietnam to the Gulf.

SIMON: Everyone in the hotel we're staying in has been ordered down into the shelters with gas masks.

ZAHN: In 1991, his assignment was the Persian Gulf War, a frustrating experience for a reporter who covered Vietnam, where journalists were free to roam the battle zones. In the Gulf War, the U.S. kept reporters miles away from the fighting. Always the journalist, Simon and his crew ventured out on their own.

SIMON: An elite unit on a classified mission 50 miles north of the massing American forces within clear view of Iraqi forces in Kuwait.

ZAHN: Five days into the war, Bob Simon and his CBS team were taken prisoner by Iraqi forces near the Saudi-Kuwaiti border. This was the last report he filed.

SIMON: This desolate road is destined to become a main battleground in the war which is already waging not very far from here.

Bob Simon, CBS News, in no-man's land in Saudi Arabia and Kuwait.

ZAHN: It was here in no-man's land that traces of their vehicle and camera gear were found, including footprints in the sand. Immediately, CBS News staffers began searching for their colleagues.

UNIDENTIFIED MALE: OK, if you hear of anything, reach us there.

DON DECESARE, CBS NEWS: We're doing everything that we can think to have persuade the authorities there that the people they're holding are bone fide journalists of long-standing credential and that the best thing for them do is release them.

ZAHN: Throughout his career, Bob Simon has always gone after the big story. And that sometimes meant taking risks.

FRANCOISE SIMON, WIFE OF BOB SIMON: They're experienced. They're strong. They will cope. Then there's in the back of your mind that maybe you're not always lucky.

ZAHN: After 40 days in captivity, 40 days of beatings and interrogations and time inside Saddam's notorious Abu Ghraib prison, Simon and his crew were released.

SIMON: It has been a long and a difficult 40 days and 40 nights. This is a story that could have ended another way, but it has had a happy ending. The pain I know I caused my loved ones, I'll try to make up for it in every way I can. And I thank God that the four of us are alive.

(END VIDEOTAPE) ZAHN: And joining us now, Bob Simon of CBS News.

Good to see you.

SIMON: Thanks.

ZAHN: So I vividly remember the debate in the newsroom the day you were captured. There were those of us that were rooting you on, way to go, Bob. You know, you worked under ominous rules. They wouldn't let you cover the war. All we were getting was the sanitized view back home. And then there were folks in the newsroom that thought you were an idiot. Which of the two is it?

SIMON: I think they were both right.

We were trying to get the story of what was going on in the war. We had been they successful. We did a pretty story by escaping from the pool, the organized pool the day before we got captured. It was a sort of story that hadn't been told because the military was controlling our movements that much.

But I was also an idiot. We went a little bit too far and we went in the wrong direction. And we trusted Saudis who told us that there weren't any Iraqis for five miles. And it turns out that they there were about 50 yards away. And we got taken.

ZAHN: When you replay that in your head today, do you feel like you got seduced in some way?

SIMON: No, I feel like it was hubris. I feel that I got what I deserved, both out of stupidity and out of just pushing the envelope further than it should be pushed.

ZAHN: And who got hurt the most, your family, who was terrified that you were going to get killed?

SIMON: Yes, I think the family got hurt the most. It wasn't pleasant for any of us. It wasn't pleasant for me. But at least I knew I was alive. I didn't think that was a state that was going to continue very long, but at any moment I knew I was alive.

In fact at one very critical moment after the prison we were in got bombed, Peter Bluff, my colleague from London, and I were just shouting at each other. We didn't know that either one of us were alive. We were in adjoining cells, but we didn't know it. We were just shouting at each other, we're not dead yet. And that was precisely the sentiment, that we weren't dead yet. We never really expected to get out of it alive, but we weren't dead yet.

ZAHN: You were moved a number of times during your captivity. What was the worst part of what you had to endure?

SIMON: Actually, I think the worst part, worse than the interrogations, which weren't fun, and the beatings, which weren't fun, and the threats to kill me, which were even less fun, I think ironically the most abiding bad thing was the hunger. They starved us deliberately. And when you are starving, you just become totally obsessed with food.

ZAHN: So you got nothing?

SIMON: No, we got about a piece of bread a day and enough to keep us alive, enough water to keep us alive. But it was so bad, so little that I couldn't get -- I could never get my mind off of food. When I would try to bring it to something else, something, whatever, I could keep my mind there just for a couple of minutes maybe and then it would gravitate back to a pastrami sandwich.

ZAHN: Do you hallucinate when you're that hungry?

SIMON: No, you don't hallucinate. You're just envisioning it all the time. You're picturing it. You're fantasizing it.

ZAHN: But wasn't there one point in your captivity where some of the guards took pity on you and actually snuck you some food? There was one account that had them sneaking you in dates.

SIMON: Yes, there was one. In fact, one of the things you do remember, even many years later, are the very few acts of human kindness that happen when you're in such dire straits. And there was one guard who one day gave me two dates through the window in the solid steel door, where they would just look at us. I was alone in there. It was solitary confinement.

ZAHN: Were you afraid they were poisoned?

SIMON: No, I didn't suspect that. I didn't. And it was because I saw him and I saw his face and I -- he just seemed kindly. So he gave me two dates and I treasured those dates like I've never treasured anything.

ZAHN: That has got to change you in a profound way.

SIMON: I think it changed me profoundly for about 72 hours after I was released. And then I think character is a very powerful force. And it just disabled me.

ZAHN: At one point, one of your interrogators pushed the fact that you were Jewish. And you say that you don't think that that was so much born out of anti-Semitism, but their suspicion that in some way you were looking for Mossad?

SIMON: No, the point is, they didn't know. We were captured on my journalist credentials because of a kindly soldier who gave me the credentials. When he asked me my religion -- this was weeks earlier in August -- when he asked me my religion, I said Jewish. And he said, son, I don't think you want to put this down on this I.D., not in Saudi Arabia, Kuwait, Iraq.

So I said, OK. So I put down Protestant. So when I was captured, I had a credential that said American Protestant. If it had said Jewish on it, they would have killed me very quickly, because, again, not so much I think out of anti-Semitism, because in fact I didn't encounter that much anti-Semitism per se in Iraq. It is that their mind-set, if you're Jewish, you've got to work for the Mossad.

And that's how they think. And it was only after three weeks of interrogations, when I kept on denying it -- I said, I'm an American, you know, like that, and I'm a Protestant, but a nonbeliever, etcetera. And then they held me into an interrogation one day and said, we've got it. We've found out. It took us too long, but we know that you're Jewish and you're based in Israel.

So your trial begins the day after tomorrow. I didn't think they were going to send over Alan Dershowitz to defend me. I knew I was dead. But they pretty much told me that I -- they didn't have to tell me. But that night is when we got bombed. So this careless bombing ultimately saved me once again.

ZAHN: When you look back on the number of times you could have been killed, what is it ultimately you think that saved your life?

SIMON: Luck, dumb luck.

ZAHN: We're going to take a quick break now.

When we come back, more with CBS news correspondent Bob Simon. I will ask him about his time as a prisoner in Iraq's notorious Abu Ghraib prison.

(COMMERCIAL BREAK)

ZAHN: And we're back now with CBS News correspondent Bob Simon, who was taken prisoner by the Iraqis during the 1991 Gulf War.

Take us back to the period of time in captivity where you were held at Abu Ghraib. What do you remember about that experience?

SIMON: I remember quite a bit.

Now, Abu Ghraib in fact ironically wasn't the worst of it. The worst of it was when we were held in the Mukhabarat headquarters, the intelligence headquarters of the Iraqi secret police in downtown Baghdad. That's when we were in -- all three of us -- in solitary confinement, where we didn't know that each other was there. But we were -- we found out later -- in small cells where you couldn't even see the fingers of your hand because it was dark 24 hours a day and total, aside from a piece of bread a day, starvation and constant, very brutal interrogations.

And then the American Air Force bombed that prison. I later -- much later, years, in fact, just a couple of years ago, interviewed the American general who ordered the bombing. And he told me that Saudi intelligence, if that isn't an oxymoron, had told him that we prisoners were in another part of that building. So he bombed where he thought we weren't, but we were, not just the three of us, but all the Air Force -- the four of us -- but all the Air Force pilots as well.

(CROSSTALK)

ZAHN: So you cheated death a number of times.

SIMON: We all did. And I have had a few reunions with the pilots. And we just stand there drinking and reflecting on how miraculous it was that we survived. Then they moved us to Abu Ghraib.

ZAHN: And tell us about that experience. What did you see?

SIMON: Abu Ghraib was, for me -- when I first got there, I was thrilled. I thought it was great.

ZAHN: Why?

SIMON: Because I was in a cell with six other people. After a couple of days, you learn that solitary confinement isn't all bad.

ZAHN: And these other people you were being held with were Americans or who were they?

SIMON: No, they were six Kurdish peasants and one Kuwaiti diplomat who ended up saving my life again. And there was light in the cell. And there was a window looking outside. And I could see birds. We weren't allowed to look out the window, but we could -- a barred window.

And there were regular bars. You could look out at the rest of the prison, whereas back in my solitary confinement cell, it was a solid steel door. And we weren't getting starved. The food wasn't great. I wouldn't recommend it. But we were getting a meal a day.

ZAHN: You had caloric intake.

SIMON: Yes.

ZAHN: Were you aware of the history of what transpired at that prison?

SIMON: No, we didn't know where we were.

ZAHN: You had no idea.

SIMON: At least when we got there. The Kuwaiti diplomat told me after a while that two it was the largest prison in the Middle East.

And interrogations continued there. And in fact when I saw the first pictures on "60 Minutes II" of the pictures of the Iraqis getting interrogated there, my first thought, my first feeling was an outpouring of sympathy for the poor Iraqis, who were getting similar treatment to what we got.

And the way I usually deal with these painful feelings is humor and gallows humor, literally gallows humor, if you will. And my first thought, I remember, when I saw the pictures was, oh, that's what that black hood looks like from the outside. I only knew it from the inside.

ZAHN: Only a newsman could view that situation that way. SIMON: Well, I don't know.

But what the pictures don't communicate -- they show you what it looks like. They don't tell you what it smells like. And having your head inside that black hood, you also sort of realize that starvation has its advantages, because you -- if you had any food in your stomach, it would be very unpleasant.

ZAHN: How much are you still haunted by those 40 days?

SIMON: I'll tell you, not much.

But the stories of the last -- is it month now -- they've -- I think they've reminded all of us who were there and brought up some other sort of very unpleasant thoughts as well. When I was being subjected to this treatment, when these guards were torturing me, is I guess the word for it, when you're being tortured, you're not angry because you're afraid.

ZAHN: So you're beaten into submission, basically.

SIMON: No, I mean, when you're being beaten or tortured, call it what you will, A, you're in so much pain, and, B, you're afraid. And you can't be angry and afraid at the same time. Try it. It can't be done.

But when I would get back to my cell and had time to think -- and there's lots of time in a dark cell -- I was never angry at the guys who were beating me up. I was angry at Saddam Hussein. I knew that the guys who were beating me up were just cogs in a system. And the system came from the top. So I found it rather astonishing and very disquieting the last few weeks -- I'm sure that the Iraqis who were being abused in Abu Ghraib were thinking the same thing.

It is not these guys who are mishandling us. It is a system. It goes to the top.

ZAHN: Having been subjected to what you were subjected to at Abu Ghraib, do you think you do have an understanding of what led those soldiers to mistreat the Iraqi prisoners the way they did?

SIMON: Yes, I think it is the system. I don't think -- I think that if -- I don't mean to get pedantic, but there has never been, to my knowledge -- and I'm something of a history buff -- a military occupation that didn't involve abuses such as this.

Look at the French in Algeria. Look at the Israelis on the West Bank. Look at the Romans in Gaul. A military occupation involves people getting really messed over. Abuse goes with military occupation. The minute you decide to invade and occupy, you know this is going to happen, unless, I guess, you take very strenuous type measures against it.

ZAHN: Well, we appreciate your joining us tonight and glad to see you back on the air doing all the fine work you're doing on "60 Minutes II." SIMON: Thank you.

ZAHN: See you on TV again. Bye, Bob.

And tomorrow, our special series continues with the story of tremendous courage. American businesswoman Mary Quin was ambushed and taken hostage by rebels in the Middle East. She will tell us how she survived.

When we come back, an Army reservist who worked at Abu Ghraib talks about allegations of abuse at the prison.

And then a little bit later on in the hour, once, they paid him millions. Now the government levels serious new accusations against Ahmad Chalabi.

And new names, new faces at the top in Iraq, two very different views of President Bush's goals coming up.

(COMMERCIAL BREAK)

ZAHN: We have just heard about CBS News correspondent Bob Simon's experiences in Abu Ghraib prison. It is a name that was largely unknown to most of us until this year's allegations of U.S. troops abuse of Iraqi prisoners.

Military and congressional investigations into what happened and why it happened are still under way. However, we're beginning to get some additional insights from people who worked at the prison and are now home and talking about what they saw.

Among them is specialist David Monath, a reservist who was an intelligence analyst at Abu Ghraib from late September of 2003 until this past February.

Specialist David Monath joins us now.

Good to see you.

SPEC. DAVID MONATH, U.S. ARMY: It's very nice to be here.

ZAHN: So you were at the prison at the time when most of this alleged abuse happened.

MONATH: Yes.

ZAHN: Did you witness any of it personally?

MONATH: No.

I think none of us, outside of the individuals who were directly involved, witnessed anything. If we had, we would certainly have reported that immediately to our superiors, as the very courageous Specialist Darby did when he turned the information over.

ZAHN: You didn't hear anything about it? MONATH: We knew that there were certain improprieties, but we had no idea of the extent of the improprieties. We knew that, at one point, a female prisoner had been asked to expose herself in front of soldiers. We were told nothing more about the situation and we were told that the individuals involved had been demoted or transferred.

Found out later that a linguist had been fired, a linguist that sent a picture that I think you're going to display later.

ZAHN: Are you convinced then that -- or were you convinced then that everything then was being done to stop these alleged improprieties?

MONATH: Absolutely.

ZAHN: Or did you still have concerns that you might not be given the whole truth about what was going on?

MONATH: I definitely got the impression that the Army, when it found out about these improprieties, was bringing its full weight to stopping them.

Colonel Pappas immediately imposed a number of very strict sanctions on the activities that M.P.s and interrogators were allowed to conduct in interrogations. He changed the hours. Most of these things appear to have happened at night. We weren't told the details at the time, but we knew the hours. So they restricted the types and the length of the interrogations that could take place.

ZAHN: But you would be the first to admit there was a tremendous amount of pressure to get as much intelligence as possible?

MONATH: Absolutely.

ZAHN: What evidence did you see of that kind of pressure?

MONATH: Well, direct evidence from people that you may have already talked to. Individuals such as Colonel Pappas, Major General Barbara Fast, who was in charge of intelligence for the theater, they were telling us to put out information as soon as it was available in any form, actually regardless of whether or not it was finalized or in any way corroborated.

ZAHN: So was it pressure of performance? Were you told that if you didn't get X amount of intelligence, that you would lose your job or...

MONATH: Well, one of my fellow soldiers on one of General Fast's visits to Abu Ghraib heard her say that she was very interested in quantity, not quality. That's the kind of thing you never expect to hear. You just see people act that out.

But she directly said that. And so we were under a tremendous amount of pressure, and the people above us. And the interrogators were taking very rough notes they had just made sketches of in the interrogation booths and was being told by Colonel Pappas, ordered to disseminate this as actionable intelligence, meaning that soldiers should go out and conduct operations based on that intelligence.

My direct superior, an enlisted E6 at the time, actually had to stand up to one of the majors at the prison and say, I can't follow that order because we WERE being asked to do improper things with intelligence.

ZAHN: Well, let's talk about that for a moment. The argument of quantity over quality, you were the guy that looked at this stuff.

MONATH: Certainly.

ZAHN: What was the quality of what you analyzed?

MONATH: Well, in general, the quality was very good, except that it was in many cases incomplete.

The thing about human intelligence is that you have to look at it from a number of different sources. It is not like taking a picture of a tank and saying, OK, we have one tank at location X. It is the testimony of numerous potentially unreliable sources who look at things through their own perspectives, can be possibly mistaken. And you have to ask a number of people different things to back up each other's information, send people out to verify that on the spot. And the interrogators and we analysts were not being given the ability to do that.

ZAHN: Let's talk for a moment about the use of dogs in interrogations, photos of dogs being used to intimidate prisoners. And we have some pictures of that.

MONATH: Yes, ma'am.

ZAHN: Was it your understanding that this was an accepted practice of intelligence gathering?

MONATH: Yes, the interrogators actually were very happy when we had a canine M.P. unit move to the prison, because one of the approaches that had been previously unavailable to them, the use of dogs to frighten prisoners, was now something that they could pursue.

However, there were strict guidelines about the way you were able to use the dogs. They had to be muzzled, they had to be leashed so that they couldn't actually damage a prisoner in any way. The problem you're going see with the pictures when you look at it is that the dog isn't muzzled. As far as I know, using a dog just by itself is completely acceptable.

ZAHN: And how much chatter was there about this among folks like you, who had the job to analyze this intelligence that was supposed to be gotten out of these interrogations?

MONATH: Well, much chatter.

The way you would use a dog in that instance is, of course, to frighten a prisoner. It growls. It's very big. It looks threatening. And people are more likely to talk when they're nervous for their own personal safety. The thing is, because of American standards of prisoner safety and the Geneva Conventions, you can't actually hurt prisoners in that way. But it is acceptable to use psychological pressure on them.

ZAHN: We appreciate your joining us tonight to help us better understand what you saw when you were there.

MONATH: Thank you very much.

ZAHN: Thank you so much, David Monath. And good luck to you in your new life. I know you might get called back to Iraq. Good luck if you do.

Coming up next, new allegations against Ahmad Chalabi. Did he give incredibly sensitive U.S. intelligence to Iran?

And then the president gives Air Force Academy grads his vision of the war in Iraq. Two reviews coming up.

(COMMERCIAL BREAK)

ZAHN: Today, more details emerged about the top secret information that Ahmed Chalabi allegedly gave Iran. The Bush administration has told lawmakers on Capitol Hill that the CIA will investigate the matter. The FBI meanwhile, is trying to find out who allegedly gave the information to the former Iraqi exile. It is a stark change from the way Washington used to treat Chalabi.

(BEGIN VIDEOTAPE)

ZAHN (voice-over): Before the war, Chalabi's Iraqi National Congress was on the Pentagon payroll, funneling information to the U.S. about Saddam Hussein. And the CIA reportedly funded Chalabi's efforts to overthrow Saddam.

It was information from Chalabi's group that helped lead to the Bush administration's decision to invade Iraq. Many place their bets on Chalabi as the country's next leader. But all that changed two weeks ago, when the U.S. cut off funding to the INC and Iraqi security forces raided Chalabi's Baghdad compound.

U.S. officials accuse Chalabi of passing U.S. secrets to Iran. They also said one of Chalabi's associates may be an Iranian intelligence agent. Chalabi denies the charges and accused the CIA of a smear campaign.

AHMED CHALABI, IRAQI NATIONAL CONGRESS: Never did. Neither I, nor any of INC official provide any classified information. And we would not do it to a country that the United States feels that it is not friendly to them.

ZAHN: Today things look even worse for Ahmed Chalabi. CNN sources confirm that U.S. officials now believe that Chalabi let Iranians know that the U.S. had cracked their intelligence code. That code supplied U.S. intelligence with information about Iran's covert operations inside Iraq and around the world. (END VIDEOTAPE)

ZAHN: Today, Chalabi again denied any wrongdoing. He told the Associated Press that he had no such information about the U.S. Tonight, the Iraqi National Congress will also respond to the accusations.

And joining us now from Washington, INC spokesman Entifadh Qanbar. Thanks for joining us tonight, Sir.

ENTIFADH QANBAR, INC SPOKESMAN: Thank you, Paula.

ZAHN: So, Mr. Chalabi has denied ever telling the Iranians that the U.S. cracked the Iranian code. Are you going to tell us tonight that he was never in possession of that information?

QANBAR: He was never in possession of this information and he never passed information to the Iranians. And to prove that, we are ready for a congressional investigation. Mr. Chalabi is ready to come and testify under oath.

Today we fired a letter to the honorables Ashcroft and Mueller that the FBI -- requesting to investigate this matter. Ahmed Chalabi, again, offer his testimony under oath to resolve this matter. We need to have a due process to clear the facts.

ZAHN: OK. Then, Mr. Qanbar, how are you going to prove that? Because the charges are quite specific. Sources have told CNN that Mr. Chalabi gave the information about the secret codes to an Iranian intelligence official. And that the U.S. then intercepted a cable that this official sent back to Iran describing the conversation. Are you going to say that this is all a CIA fabrication?

QANBAR: I didn't say that. But it is quite unbelievable that the Iranians would send a message that they knew was broken saying that Chalabi give them this code. And that's what this investigation is about. This is a due process.

We cannot believe any allegation just coming from CIA or other source. We have to investigate it. We knew for a fact that Chalabi or any of Chalabi's associates did not give this information.

And, by the way, this allegation so far are not formal, not substantiated and not attributed. The only thing we know of, General Myers testified in front of Congress saying that INC intelligence helped to save Iraqi lives -- American lives, sorry.

ZAHN: To your knowledge, did Mr. Chalabi ever have any meetings with anybody in Iranian intelligence?

QANBAR: Dr. Chalabi had meetings across the board in the Iranian government. Our relation with Iran transparent. We have an office in Tehran funded by the American money that we were getting through the Iraq Liberation Act. And nothing was hidden.

Our relation with Iran is a friendly, our relation with the United States is strategic, ally. And we do not have the habit or the practice to pass information in this way.

By the way, "TIME" magazine yesterday put out the news of 12 points memorandum, 7 pages, put together in April to overcome Chalabi, to overthrow Chalabi. This is part of this scheme and it is clearly coming out now.

ZAHN: But if you believe this is a scheme, you also have to concede that the Bush administration had an awful lot riding on Mr. Chalabi. And it was just up until a couple of weeks ago that the U.S. government was paying him over $300,000 a month for his cooperation. People are having trouble tonight, including myself, understanding how this could possibly be a CIA plot given all of that.

QANBAR: Well, we didn't work with the CIA. And we had a bad relation with the CIA since the mid '90s. By the way, this is not the first time, in 1996, 5 members, senior members, of the INC accused of spying to Iran and spying to Saddam where they were put in 4 years in prison in California. And then they were released after Jim Woolsey, the former director of the CIA defended them and found that the so- called secret evidence was not existing and they were released after 4 years in prison. After it was found that these allegations were not true.

ZAHN: Mr. Qanbar, we've got to leave it there this evening. Thank you very much for joining us. Appreciate your time.

QANBAR: Thank you.

ZAHN: If Ahmed Chalabi did have top secret U.S. information, how did he get it and who would have been in the position to give it to him? To answer these questions, let's turn to former CIA officer Robert Baer who joins us now from Washington. He's the author of "Sleeping With the Devil: How Washington Sold Our Soul For Saudi Crude." Always good to see you, Bob, welcome.

ROBERT BAER, AUTHOR, FRM. CIA OFFICER: Good evening, Paula.

ZAHN: Let's go through some of the details of the stories that are surfacing. They are quite incredible. There is even an account in the "New York Times" today which suggests that Chalabi believed that the American official who gave him this incredibly sensitive intelligence was drunk. Is any of this story plausible to you?

BAER: It's plausible, but I'm dismayed to be reading this on the front page of the "New York Times" and to be discussing this on television. We're talking about potential, you know, sources and methods here. And this is -- this is a strange way to conduct intelligence is in the public like this.

But it is -- the accusations are extremely serious. I'm not talking against Mr. Chalabi, but whoever gave this information to Mr. Chalabi. He has no security clearances. He gets no briefings, classified briefings, and he gets no paper. I don't think he would know what a secret was, because he's not part of that culture.

ZAHN: So, how many people would have access to that kind of information, Bob?

BAER: What the "New York Times" describes, a handful. A lot of this stuff is not disseminated, is top secret. The press is described this as a secret compartmented intelligence. It is very limited. The rules are absolutely strict. And the laws are very straightforward. You go jail if you pass this stuff out. So someone -- if this story is true at all, passing information of this quality out should go jail.

ZAHN: How damaging is this source, the loss of this source of intelligence?

BAER: Any information that is described as especially compartmented intelligence, extremely dangerous, it could cause the loss of American lives.

ZAHN: How tough will it be to figure out how this information, if it ends up being true, ended up in Mr. Chalabi's hands?

BAER: In my experience in Washington, there is only been one successful leak investigation and one prosecution. Generally they're not.

ZAHN: And why is that?

BAER: You normally have to catch somebody passing paper that they can use and the chain of evidence to put somebody away.

ZAHN: And you say people cover their tracks better than that?

BAER: Well, if this is -- as the "New York" describes, the information it was done and all sorts of explanations for it. It would be very difficult for the FBI to bring a case, or identify anybody without paper involved.

ZAHN: There is another interesting part to this story, Bob, because news organizations withheld the information about the codes for about ten days at the request of intelligence officials because it appeared the Iranians were going to continue to use the codes. Why wouldn't Iran have stopped using those codes right away?

BAER: I don't know anything about current codes. But, you know getting into these wilderness of mirrors on intelligence doesn't take you anywhere. Here is what I think. The fact that the charges have been brought, somebody in this government thinks they've got solid information that somebody in the Pentagon or the CIA or state department spilled secrets. I don't think the CIA would launch this investigation or the FBI unless they had good evidence. Mr. Chalabi is well respected by a lot of people in this administration. Still, it is a political liability to open an investigation like this unless there is some good evidence.

ZAHN: And how does this affect intelligence gathering from here on in?

BAER: We lose sources and methods. They're very hard to come by. So if there is a terrorist attack being planted in any part of the world and some source or a method was given to the Iranians we will not be clued into that operation, we can't stop it. These things are really hard to get.

ZAHN: If this ends up being true, it makes you pretty angry.

BAER: It makes me furious. When I left the CIA, they sat me down, they said you will never talk about the following things other than what is written in the national security law, which is very explicit.

ZAHN: Robert Baer, thank you for sharing your insights with us tonight.

Coming up next, the Iraq war and its place in history. The president says it is one of the nation's great struggles. Two political observers give us their professional take.

And then the defense begins to show its cards in the Scott Peterson murder trial.

(COMMERCIAL BREAK)

ZAHN: President Bush today gave a second in a series of speeches intended to explain and clarify his goals in Iraq and in the war on terror. During a commencement address at the Air Force Academy in Colorado, the president outlined four strategies he says will lead to victory over terrorism.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: First, we are using every available tool to dismantle, disrupt and destroy terrorists and their organizations. Secondly, we are denying terrorist places of sanctuary or support. The power of terrorists is multiplied when they have safe havens to gather and train recruits. Third, we're using all the elements of our national power to deny terrorists the chemical, biological and nuclear weapons they seek. Fourth and finally we are denying the terrorists the ideological victories they seek by working for freedom and reform in the broader Middle East.

(END VIDEO CLIP)

ZAHN: The president says all four parts of the strategy are now being tested in Iraq. Joining me from Washington to look at that is Peter Beinart of the "New Republic." With me here in New York is John Fund of the "Wall Street Journal." Always good to see you, gentlemen, welcome. So, Peter, I know you're not given to saying many nice things about the president's speeches. Did you hear anything new here today?

PETER BEINART, "THE NEW REPUBLIC": No. I didn't. There was actually one line that really stuck out for me. The president said some people have criticized us after September 11 for going after the terrorists because that stirs up a hornet's nest and I thought you know what, these guys still don't get it. That is fundamentally dishonest. Nobody is saying that. No Democrats are saying that. Democrats have been saying that Iraq wasn't where the terrorists were. And I felt unless -- until this administration starts finally being honest about what the debate is, they will continue to lose the trust of the American people.

ZAHN: John Fund, I can't read your expression. Was the president fundamentally dishonest?

JOHN FUND, "WALL STREET JOURNAL": The Iraqi terrorists were there. They weren't the ones who attacked us on September 11, although there are lots of connections with Iraq to international terrorism. If you want to look at just the people who attacked us on September 11 and say we don't have to go after any other terrorists, that's shortsighted...

BEINART: Nobody is saying that. John, who said that? Give me one name.

FUND: The same people who said we shouldn't go into Iraq, said they had nothing to do with the terrorist threat. It does have something to do with the terrorist threat...

BEINART: Now you're restating it. Nobody has said that we should have only gone after the terrorists who specifically attacked us on 9/11. That's a ridiculous straw man of the type that conservatives have been throwing up for several years now. The truth is a lot of Democrats argue...

(CROSSTALK)

BEINART: I read those magazines frequently. Nobody has said that. What people have said is that they felt that the central terrorist problems were not in Iraq, that Saddam's terrorist type were very tenuous and there were a whole list of countries that had stronger terrorist connections than Iraq did under Saddam Hussein.

ZAHN: There have been people, as you know, within the administration who have even admitted that any ties, suggested ties between Saddam Hussein and the 9/11 hijackers were greatly exaggerated. You admit that, don't you?

FUND: One of the people who says there may be such ties is the new prime minister of Iraq, Mr. Allawi. He said that last December. He said we still have a lot more to learn about what Saddam Hussein did. By the way, one of the things that the president pointed out today he is said the new prime minister of Iraq thanked the United States for liberating Iraq. This government not only has some legitimacy as being independent of us, but it also remembers that Iraqis are much better off now than they were under Saddam Hussein.

(CROSSTALK)

ZAHN: Peter, the president spoke with hope about this new interim government. Condoleezza Rice came out later and said that the U.S. is basically turned or the situation has turned the corner. Has it?

BEINART: No. No, it hasn't. With all due respect this is a very difficult business. But nominating the key guy, someone known throughout the region as having CIA connections was not a smart move. I don't think anyone would suggest that. The basic problem here is that we don't -- there is no security in Iraq because the United States has not deployed enough forces and has not gotten enough from the rest of the world and that the Iraqis are not (UNINTELLIGIBLE) to do it for themselves. This new government is not going to change that.

FUND: Peter, the headlines in Iraq are that the new government is not something that the U.N. and the U.S. cooked up.

BEINART: It is something that the governing council wanted. The governing council has zero legitimacy in Iraq. Have you looked at the polls, John? The government council has no legitimacy whatsoever. The idea that it is a good thing if the governing council hijack this process because it is made up of Iraqis, it's made up of Iraqis who lack legitimacy with their own people, that's why we're replacing it. The idea that that is a good turn of events is ridiculous.

ZAHN: Quick final thought. I want to move you along. Six months, you elections and then what, everything is cured?

FUNDS: No, then we'll know who really represents the Iraqi people.

ZAHN: I want to take you all back to the issue of this war on terror. The president, yesterday, said that Iraq was the central front of the war on terror. Let's listen to what Senator John Kerry said. He took exception to that earlier today.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: I don't think it is the main front in the war on terror. The main front in the war on terror is in 60 countries around the world with al Qaeda and a host of other radical organizations, some of which are in countries that are our friends.

(END VIDEO CLIP)

ZAHN: Is Iraq terror central or not, John Fund?

FUND: No longer because we have taken it over and kicked the terrorists out except the ones that are fighting and killing our troops there. We have got them pinned down. I think we have -- I think we literally have turned a corner in Iraq and we are now breaking up their cells in many other countries.

ZAHN: Do we have a pindown, Peter?

BEINART: You're living in la la land. There are far more terrorists -- al Qaeda people in Iraq today than there were before we went in. Everybody agrees that there's not even serious debate about that.

ZAHN: All right, gentlemen, we've got to leave it there. I guess we'll have to bring both of you back again sometime. Thanks for your time. When we come back, who killed Laci Peterson and her unborn child? The defense begins to reveal its strategy in the Peterson murder trial.

(COMMERCIAL BREAK)

ZAHN: Today in the Scott Peterson murder trial, it was the defense's turn to make opening statements. Attorney Mark Geragos tried to apply heavy layers of doubt the case against his client. Geragos told jurors the prosecution missed vital clues that may point to another killer or killers in the death of Laci Peterson and her unborn child.

Joining me now senior legal analyst, Jeffrey Toobin, in Redwood, California -- Redwood City, California Court TV reporter, Beth Karas, who is also covering the trial. Good to see both of you.

So, Beth, Mr. Geragos at one point said his client was stone cold innocent.

How convincing was he today?

BETH KARAS, COURT TV REPORTER: I'll tell you, he gave a one hour, 45 minute opening statement, very long, broke his own record of one hour in a prior case. And he told the jury that the evidence was going to show that this baby was born alive. That this baby did not die inside in utero inside it's mother in the water. He also told the jury they're going hear about five witnesses who spotted Laci Peterson or someone they thought was Laci Peterson in a suspicious van, suspicious characters around the time that she disappeared. His theory that she was abducted and held somewhere else for some time, the baby perhaps born and then they were killed.

ZAHN: Does that fly with you, Jeffrey Toobin, Mr. former prosecutor?

JEFFERY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, let's see if he can prove it he's right. But I mean, he's right, that if he can prove that this baby was born and I hate to sort of talk about these human beings as if they're as abstractions, but if he can prove that somehow Conner was born,

ZAHN: He's going to prove that by showing the umbilical cord was cut.

TOOBIN: Was cut as opposed to sort of fell off in the water, that completely exonerates his client. Because the prosecution theory is that he took her on Christmas Eve to this bay and threw her in the water, period.

ZAHN: What else did we learn about the defense's strategy through what he did not say today? TOOBIN: Well, the one thing, we didn't hear about Satanic cults. That was one theory floated by the defense that didn't appear. But it doesn't mean he couldn't raise it earlier. I think as usual with defense attorneys, quite appropriately, he's talking about what the evidence is not, as opposed to what it is. There is no eyewitness. There is no cause of death. There is no time of death. There is no -- physical evidence tying Scott Peterson to the murder scene. You know, those are good facts for the defense.

ZAHN: Beth, what else did you find intriguing today?

KARAS: Well, Mark Geragos addressed the relationship with amber Frey the woman that Scott Peterson had met and started dating from about a month, five weeks before Laci Peterson disappeared. And he said, look, he was not going to throw away his life for a woman he had four dates with. Basically it was a non-issue. In fact, he said, Scott Peterson was trying to keep her emotionally at bay. He was trying -- that she was the one obsessed and he was trying to keep her at bay at the time that Laci had disappeared and the weeks after. That of course doesn't explain the multiple telephone calls to Amber Frey and how we learned he was talking to her until 10 minutes before the December 31st candle light vigil for Laci. He was telling Amber Frey he was in Brussels on a business trip, continuing to lead a double life at least for some time. So there were things that went unsaid by Mark Geragos, the most striking perhaps being how did his client happen to be in the San Francisco Bay fishing on Christmas Eve, the very area where the biddies washed ashore a few months later.

ZAHN: And he also handled the accusation that his client didn't even like to fish. So went through the history of his fishing expeditions and why he kept on going back to the marina.

TOOBIN: That's why he took and hour and 45 minutes. I mean, both the prosecution and defense gave unusually detailed closing -- opening statements. But we have also an example of the unified theory of all scandals because there is a Martha Stewart angle to this case too.

ZAHN: Oh no, what's that all about in.

TOOBIN: He claimed -- the prosecution claimed that when -- Laci disappeared, Scott said she was watching the Martha Stewart show and it was a show about meringue, but the prosecution said he got the date wrong and Mark Geragos said no, he showed it in court today. He said there was meringue on the Martha Stewart show that day.

ZAHN: Do you know how to make meringue (UNINTELLIGIBLE)?

TOOBIN: I don't know how to (UNINTELLIGIBLE).

ZAHN: Neither do I.

Beth Karas, thank you for your time tonight.

Jeffrey Toobin, yours as well. Look forward to seeing both of you as this trial goes on. We'll be right back. (COMMERCIAL BREAK)

ZAHN: And that wraps it up for all of us here tonight. Thanks so much for being with us.

Tomorrow, "New York Times" columnist Thomas Friedman on the coming transfer of power in Iraq and the U.S. role thereafter, June 30. That's tomorrow.

Thanks for joining us tonight. "LARRY KING LIVE" is next. Have a great night.

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