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CNN Wolf Blitzer Reports

New Information on Alleged Connection Between Saddam Hussein and Osama bin Laden, Have Seven Most Wanted al Qaeda Suspects Been Sighted in Europe? CIA Director George Tenet Resigns, Interview with Australian Prime Minister John Howard, "New York Times" Columnist and Author Thomas Friedman on outsourcing U.S. jobs

Aired June 03, 2004 - 17:00   ET

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

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


(BEGIN VIDEOTAPE)
WOLF BLITZER, HOST: Happening now. New information emerging about an alleged connection between Saddam Hussein and Osama bin Laden. But doubts remain.

Also, we're getting word of sightings of some of the seven most wanted al Qaeda suspects.

Stand by for hard news on WOLF BLITZER REPORTS.

Spy chief surprise.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's been a strong leader in the war on terror. And I will miss him.

BLITZER: So why would CIA director George Tenet suddenly step down?

Appeal to the allies. Will they lend a hand in Iraq?

UNIDENTIFIED MALE: It is the worst time imaginable for allies to be showing any weakness.

BLITZER: I'll speak with Australian Prime Minister John Howard.

Outsourcing. American jobs move overseas. Is that somehow good for Americans? The prize-winning journalist and author Thomas Friedman says yes. I'll ask him why.

Soldiers' story.

UNIDENTIFIED MALE: All (UNINTELLIGIBLE) this stink. It was the odor of death.

BLITZER: He helped liberate Europe. Six decades later, he's going back to receive thanks.

ANNOUNCER: This is WOLF BLITZER REPORTS for Thursday, June 3, 2004.

(END VIDEOTAPE) BLITZER: It was a move that stunned official Washington. President Bush announced suddenly today the CIA director George Tenet is stepping down.

(BEGIN VIDEO CLIP)

BUSH: He told me he was resigning for personal reasons. I told him I'm sorry he's leaving. He's done a superb job on behalf of the American people.

(END VIDEO CLIP)

BLITZER: Joining us now our national security correspondent David Ensor who's been following all of the details leading up to this -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, the surprise is not so much that he's leaving. We've known that for the last year or so, Wolf. He's said to many including myself that he was tired. It's a pressure cooker job. The surprise is the timing.

(BEGIN VIDEOTAPE)

ENSOR (voice-over): George Tenet says he only told the president at 7:00 Wednesday night that he wants to leave office in mid-July after seven years as director of Central Intelligence.

GEORGE TENET, CIA DIRECTOR: While Washington and the media will put many different faces on the decision, it was a personal decision. And had only one basis and fact. The well-being of my wonderful family. Nothing more and nothing less. Nine years ago when I became the deputy director a wonderful young man sitting in the front row was in the second grade and he came right up to my belt. I just saw a picture of the day that Judge Friesz (ph) swore me in and he's grown up to be...

ENSOR: Tenet is well liked by many Republicans and Democrats, but the 9/11 attacks by al Qaeda came on his watch, by definition an intelligence failure. So was the case at the U.N. for going to war to stop Iraq's weapons of mass destruction, weapons that have yet to be found.

SEN. RICHARD SHELBY (R), ALABAMA: The record is there that there have been more failures on his watch as director of CIA, massive failures in intelligence than anybody I know.

TENET: We're not perfect, but one of the best kept secrets is that we are very, very, very good. Whatever our shortcomings, the American people know that we constantly evaluate our performance, always strive to do better and always tell the truth.

ENSOR: Tenet's deputy John McLaughlin, a career CIA man will take over in July as acting director. Officials say President Bush is unlikely to want to subject himself to bruising confirmation hearings for a new director before the elections.

(END VIDEOTAPE)

ENSOR: Some are suggesting that Tenet may want to go before the 9/11 commission report and reports from Hill committees on Iraq WMD that sources say are highly critical of the intelligence community and possibly of Tenet as well, but stressing the personal nature of Tenet's decision to go, a senior intelligence official tells me that in August Tenet hopes to be looking at colleges with his high school senior son -- Wolf.

BLITZER: Thank you very much, David Ensor, national security correspondent.

President Bush dropped the CIA bombshell as he departed for Europe. So what is the White House saying behind the scenes about Tenet's departure? Our White House correspondent Dana Bash is joining us now from the president's first stop in Europe namely Rome -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the White House says that the president didn't try to convince George Tenet not to resign, but they also flat out deny that he was pushed out. When Mr. Bush told his senior staff this morning about the resignation he sent out an edict that no one should contribute to the public speculation about why George Tenet is leaving.

However, privately Bush aides do hope that this will help in the president's efforts to put the continuous negative news about Iraq behind him, help him both politically at home and here in Europe. The theme of this trip here in Europe is fence-mending with war opponents. Of course, opponents of the Iraq war and Mr. Bush, of course, needs them to find a new resolution, a new U.N. resolution and the president will have some tough meetings here. He's going to meet with the pope at the Vatican tomorrow and then he's going on to France.

The White House privately hopes that this resignation that he's carrying with him will help him to convince these leaders and the world that the bad news, if you will, and the man who perhaps some think personified the bad news about Iraq will be put behind him -- Wolf.

BLITZER: Our White House correspondent Dana Bash in Rome. Thank you very much, Dana.

Here's more information on George Tenet. He sent almost seven years as the director of Central Intelligence under both Democratic and Republican presidents. Before the CIA he spent time as a legislative aide to Democratic senators and then as a top-level staffer on the Senate intelligence committee. He's a Georgetown University graduate, the son of Greek immigrants who grew up in Queens, New York.

The intelligence failures of the past are still being investigated and hotly debated, but the CIA also must focus now on new challenges that are ahead. Our Tom Foreman is joining us now with that part of the story -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Well, Wolf, for all of the buzzing here in Washington today about Tenet's resignation, some people in the intelligence community, the spy business are looking closely at the CIA itself trying to figure out if the agency is in trouble.

(BEGIN VIDEOTAPE)

FOREMAN (voice-over): The still unfound weapons of mass destruction, the testing of nuclear weapons by Pakistan and India, the rise of Osama bin Laden and the way he has eluded capture, all are events that have raised the question, should the CIA have been better informed? Peter Earnest is a 36-year veteran of the CIA and now head of the International Spy Museum.

PETER EARNEST, FMR. CIA OFFICER: The answer is simple, yes. That's what an intelligence service capability is. It's the capability of perceiving threat, of identifying it, of analyzing it, of making policymakers aware of it. Clearly, we did not.

FOREMAN: Tenet himself made it clear he was concerned about spy capabilities, particularly in the Arab world. Although the CIA will not release specifics under Tenet, more Arabic-speaking officers were recruited. More cooperative agreements were established with foreign intelligence services, but spying on governments which the CIA was made for and learning what small individual terrorist groups are planning are wildly different things.

RONALD KESSLER, AUTHOR, "INSIDE THE CIA": The really hard thing is how do you get the information in the first place? How do you convince someone to rat on someone like bin Laden? That is so difficult and that just requires years of work, patience, money.

FOREMAN: Adding to the problem according to some Arab-Americans is a basic cultural gap.

JAMES ZOGBY, ARAB AMERICAN INSTITUTE: We see Arabs as an objectified problem. We see the culture as less than ours. We see them as more violent than we are.

FOREMAN: And you think that makes it hard to gather intelligence.

ZOGBY: I think very hard. It makes us very susceptible and very prone to bad intelligence.

FOREMAN: And fixing that problem, by all accounts, would take a very long time.

(END VIDEOTAPE)

FOREMAN: So the simple truth is whether you like George Tenet or not and he has fans and detractors all over Washington, the simple truth is the agency he was in front of is going through enormous changes now, looking at all of the things it needs to do because they know Americans don't have as much confidence as they would like them to have right now in our intelligence-gathering capabilities -- Wolf.

BLITZER: Tom Foreman, thanks very much.

Today as Senator John Kerry praised George Tenet saying he worked extremely hard on behalf of the nation. In the past Kerry has also called for Tenet's resignation. During a campaign swing in Missouri Kerry said the blame for serious intelligence shortcomings since before 9/11 should not be directed only at Tenet. And in a written statement Kerry said this, "there is no question, however, that there have been significant intelligence failures and the administration has to accept responsibility for those failures. Sometimes with change comes opportunity. This is an opportunity for the president to lead."

Joining us now with his special insight on Tenet's resignation, the former CIA case officer Bob Baer. He's the author of two best- selling books, "Sleeping With the Devil: How Washington Sold Our Soul for Saudi Crude" and "See No Evil." Bob, thanks very much for joining us. What's your immediate take on the decision of George Tenet to step down?

ROBERT BAER, FORMER CIA OFFICER: I think we have to take him at his word. He's had a rough seven years. He had 9/11. He had the WMD, the new scandals that are coming out, prisoner abuse. He's tired. He's got two bruising reports that are going to come out of Congress about WMD and 9/11. He said maybe it's time for me to step aside and if they have to reform the intelligence community, I might be in the way. I might be an obstacle.

BLITZER: How does he leave the CIA right now? What shape is the U.S. intelligence community in?

BAER: My sense is that it never made the transition from the Cold War which I think it did a pretty good job to weapons of mass destruction, terrorists and these very messy problems. It's a tough bureaucracy to control. It's big. You have five -- very difficult.

BLITZER: Is it getting better? Are they making improvements?

BAER: Yes, they are, but the problem is it takes up to ten years to build a new cadre. Tenet didn't have enough time. We're going to need, as he said, another five years to really start getting to tackle these problems.

BLITZER: You've been a big proponent over the years of the so- called human intelligence. Not necessarily electronic or satellite reconnaissance, photography, but getting sources inside terror cells. As far as you know, is the U.S. doing a better job at that?

BAER: It's about the same as when I left the CIA in 1997.

BLITZER: When you left the CIA, that was years ago and that was pitiful.

BAER: It was pitiful. We still don't know what's going on inside the mosques inside Saudi Arabia where those 15 Saudis were recruited.

BLITZER: What's so hard about recruiting spies to tell the U.S. what's going on?

BAER: These people we're dealing with are true believers. They are not inclined to spy for the CIA. We have to get out of this recruiting from the suburban mall culture and get some really different, varied people, workplace 2015, all sorts of people. We've got to get out in the world and start listening and put more people out there, more resources and more patience as well.

BLITZER: Bob Baer, thank you very much.

BAER: Thank you.

BLITZER: To our viewers, here's your chance to weigh in on this important story. Our web question of the day is this. "Did political factors influence CIA director George Tenet's resignation?" You can vote right now. Go to CNN.com/wolf. We'll have the results a little bit later in this broadcast.

In a moment, a developing story we're following. Possible sightings of al Qaeda suspects overseas. Also ahead.

(BEGIN VIDEO CLIP)

JOHN HOWARD, PRIME MINISTER OF AUSTRALIA: The thing that binds us together more than anything else is a common belief in certain fundamental values.

(END VIDEO CLIP)

BLITZER: Why Australia's prime minister is supporting President Bush on Iraq when so many others are not.

A controversial connection. A new book that sheds new light on Saddam Hussein and his alleged connection to Osama bin Laden.

And this...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It was the gloomiest, most horrible place.

(END VIDEO CLIP)

BLITZER: Raw emotions. We'll look back at a hard-fought battle and some lost friends.

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: Now to a leader who's taken heat at home for sending troops to join the coal mission Iraq. Today the Australian Prime Minister John Howard met with President Bush at the White House. The prime minister met with me right after.

(BEGIN VIDEOTAPE)

BLITZER: Prime Minister, welcome to the United States. Thanks very much for joining us.

As we speak, you just met with the president. Is there any daylight between the Australian position and the U.S. position as far as troop deployments, post-June 30 in Iraq?

JOHN HOWARD, AUSTRALIAN PRIME MINISTER: No, there isn't. There's no -- (UNINTELLIGIBLE) our objectives are the same and we both welcome the formation of the Iraqi Interim Government.

This is a huge step forward because you have Iraqis being identified not only by their own people, but by the rest of the world as the leaders of that country. And this is a very necessary step down the path to a Democratic Iraq in the future.

BLITZER: Australia like Britain, the key allies of the U.S. going into the war in Iraq. What is your understanding right now as to how this interim government in Iraq could force a withdrawal of coalition forces if that's what they wanted to do?

HOWARD: Well, that is academic. They're not going to because the security situation requires the continued presence of the coalition. And, of course, in troop numbers is overwhelming American, although there are significant numbers from other countries, particularly the British. And we have a small force there as well. But realistic...

BLITZER: Let me interrupt for a second, with all due respect. If there's full sovereignty for this Iraqi government starting July 1, theoretically, and it is theoretically, they could say get out and you have to get out. Is that right?

HOWARD: Well obviously, we're not going to stay if we're not wanted. The point I'm making is we'll continue to be wanted until the security situation stabilizes and until there is both the leadership and the security wherewithal inside Iraq from local sources to keep the security.

We have no desire to occupy a foreign country. And if I were an Iraqi I would want to run my own country as soon as possible. But given the history of what's occurred, the security situation will need to be stabilized and that will need the help of the coalition.

BLITZER: What is your understanding of the definition of full sovereignty in the period after June 30 before the elections scheduled for January of next year? Full sovereignty in Iraq? What does that mean to you?

HOWARD: What it means is that -- I mean theoretically, they could ask people to go. But the reality is it's not going to happen.

BLITZER: Will they control their oil, for example?

HOWARD: Well of course, they have their oil. Of course, they have. And there's been never been an intention of the coalition to take Iraq's oil. Iraq's oil belongs to the Iraqi people. That's always been my view. And they need it to help in the rebuilding process.

We didn't go there to ran sack the assets of that country. We went there to -- as part of a coalition to deal with somebody who'd been in serial non-compliance with the nation's resolutions and had been a very bad, loathsome dictator who murdered his people.

BLITZER: How surprised are you that in the year since the war, of the year plus since the war, no significant stockpiles of chemical or biological or nuclear weapons have been found in Iraq?

HOWARD: Well, I along with everybody else, I'm surprised because the intelligence on that seemed very strong. We've certainly found evidence of WMD programs. We've certainly found plenty of evidence from the Iraq Survey Group of the continuing desire on the part of Saddam Hussein to maintain a capacity to develop chemical and biological weapons.

And that work continues. But the intelligence we had at the time was very strong. Otherwise, we would have had a different view.

BLITZER: There's a suggestion here in the United States now, as you well know, that Ahmad Chalabi, among others, an Iraqi exile leader, basically sold the U.S. and the coalition a bill of goods as far as Iraqi WMD is concerned.

HOWARD: Well, so far as Australia is concerned we didn't have any contact with Chalabi, to my recollection. Obviously, we do a lot of our intelligence advice from both the Americans and the British. But the intelligence advice was not entirely based on what Mr. Chalabi said.

BLITZER: How popular or unpopular is this Australian role in Iraq right now back home?

HOWARD: Well it's less popular than now than it was a few months ago because we've really gone through a bad months or six weeks. We've had the upsurge in violence, we've had the prisoner abuse issue. It's been a low point the last four or six weeks. And naturally public opinion has shifted to a negative stance. But we're now looking forward to the next stage.

And the naming of the interim government is so important because here are Iraqis coming up to the crease, or the plate, as you'd call it. And really saying well we're prepared to lead. We're prepared to identify with the aspirations of the Iraqi people.

BLITZER: How surprised were you, speaking of intelligence, that as we speak right now we're just getting word that George Tenet, the CIA director, has suddenly resigned?

HOWARD: Well, I've been in politics long enough to -- never to get too surprised by anything.

But George has done a fantastic job as head of the CIA. I don't know his reasons. And until they're amplified, there's really not much more I can say except to record my gratitude to him for the wonderful intelligence cooperation that took place between the CIA and the intelligence agencies in Australia during his term.

BLITZER: No bitterness that the Australian government may have been misled by the U.S. intelligence community going into the war?

HOWARD: I don't feel any bitterness because I know that intelligence is an inexact science. And it wasn't only American intelligence, but there was quite a lot of British intelligence. Much of which came from different sources.

Intelligence can never get 100 percent correct. And intelligence is an input for policy making and intelligence is not for policy making itself.

(END VIDEOTAPE)

BLITZER: The Australian Prime Minister John Howard speaking with me earlier today.

Looking for the leaker. The president and now the vice president are calling in their lawyers as investigators try to find out who outed the CIA operative? Also ahead.

U.S. troops and Shiite gunmen clash again in Kufa.

And American jobs move abroad. Could outsourcing actually be a good thing? The journalist Tom Friedman of the "New York Times" says yes. I'll ask him why.

(COMMERCIAL BREAK)

BLITZER: In Iraq today a major boost for the new interim government. The country's most influential Shiite leader the Grand Ayatollah Ali al-Sistani is throwing his support behind the new government that assumes power when the United States and the coalition are set to hand over sovereignty on June 30. Sistani previously had called for national elections to determine the new government.

In Baghdad, though, one person was killed, four were wounded when five mortar rounds exploded near the Italian embassy. Police say the person killed was an Iraqi and three of the wounded were Iraqi children.

More fighting erupted today between Shiite militiamen and U.S. forces in the holy city of Kufa. The U.S. military said about 30 insurgents who were using a school as a mortar base were killed. It was the eighth straight day of clashes despite a supposed deal reached last week to stop the fighting in the stronghold of the radical cleric Muqtada al-Sadr.

CNN has learned the Vice President Dick Cheney will consult a Washington attorney if he needs legal counsel in the CIA leak investigation. This comes after President Bush confirmed he had spoken already with a lawyer as well. Our justice correspondent Kelli Arena picks up this part of the story -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, the vice president says he will consult with his longtime Washington attorney Terence O'Donnell (ph) if it's necessary. The president meanwhile explained to reporters why he consulted with a lawyer himself.

(BEGIN VIDEO CLIP)

BUSH: This is a criminal matter. It's a serious matter. I've met with an attorney to determine whether or not I need his advice and if I deem I need his advice I'll probably hire him.

(END VIDEO CLIP)

ARENA: The move is in response to the leak investigation into who revealed the name of CIA operative Valerie Plame, the wife of former ambassador Joe Wilson. A grand jury has been meeting for over four months now and has heard testimony from some current and former administration officials and several journalists have recently been subpoenaed. Individuals with knowledge of this case say that the focus of the investigation seems to be on the vice president's office and they believe the investigation is in its final stages -- Wolf.

BLITZER: Kelli, switching gears for a second. Supposedly some of the seven most wanted al Qaeda suspects have been sighted overseas?

ARENA: Well, according to the head of the counterterrorism office John Pistol, he says there have been some what they believe to be credible sightings of the seven individuals that they put those pictures out of just recently, the FBI is working with overseas partners to try to track them down.

BLITZER: Let's see if they do. Thank you very much.

Saddam Hussein and Osama bin Laden, new claims of a possible connection between the former dictator and the world's most wanted terrorist. We'll get to that. Also ahead...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The phenomena of outsourcing whether you like it or not, it is here.

(END VIDEO CLIP)

BLITZER: But who wins and who loses. The award-winning columnist Thomas Friedman has answers that may surprise you.

Plus back in business, it's lights, camera, action and the big screen in Afghanistan.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

It's one of the greatest intelligence mysteries facing the United States today. Was Saddam Hussein actually allied with Osama bin Laden? Did the Iraqi dictator help bin Laden in his attacks on the United States? Some people believe there is a connection. But, if so, where's the proof? Stephen Hayes of "The Weekly Standard" tries to answer that.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Stephen Hayes argues there were several potential connections between al Qaeda and Saddam Hussein's regime, one, a U.S. indictment of bin Laden in 1998 alleging that al Qaeda agreed to collaborate with Iraq on weapons of mass destruction. We asked President Clinton's secretary of state about that link.

MADELEINE ALBRIGHT, FORMER SECRETARY OF STATE: We did not think that, at least the things that I saw, that there was a link between Saddam Hussein and al Qaeda.

BLITZER: Hayes details a meeting in January of 2000 in Kuala Lumpur, Malaysia. That meeting, U.S. officials say, was attended by a man named Khalid al-Midhar. Greeting him as he arrived in the Malaysian capital, says Hayes, was a man Ahmed Hikmat Shakir.

Hayes says a man with the same name was an officer in Saddam Hussein's security force -- quote -- "Shakir walked al-Midhar to a waiting car, much as any facilitator would. But then, rather than bidding his VIP goodbye and returning to work, Shakir jumped in the car and accompanied al-Midhar to a condominium owned by an American- educated al Qaeda associate."

On September 11, Khalid al-Midhar was among the hijackers on American Airlines Flight 77 that slammed into the Pentagon. Hayes admits this alleged connection is not a smoking gun. And former White House counterterrorism chief Richard Clarke, asked about an overall link between al Qaeda and Saddam Hussein, said earlier this year: "We've looked at this issue for years. For years, we've look for a connection and there's just no connection."

(END VIDEOTAPE)

BLITZER: As you can see, there are people who believe that bin Laden and Saddam Hussein not only shared a hatred for the United States, but that they shared expertise and information as well.

Just a little while ago, I spoke with Stephen Hayes, the author of the new book entitled "The Connection."

(BEGIN VIDEOTAPE)

BLITZER: Stephen Hayes, thanks very much for joining us.

It seems conventional wisdom now to suggest there's no serious connection between Osama bin Laden and al Qaeda on the one hand and Saddam Hussein on the other. What do you believe?

STEPHEN HAYES, "THE WEEKLY STANDARD": Well, I think that you're right. The conventional wisdom has really developed and strengthened on that notion. And I, frankly, think it's wrong.

And if you look back at the conventional wisdom in 1998 and 1999, there were scores of stories in mainstream news media, in magazines, on the network television suggesting that there was in fact this link and that the link was meaningful and that it was a potential threat. And I think that they were right five years ago. The Clinton administration made this argument.

Senior Clinton officials made the argument. I think they were right then. I think the Bush administration is right to say this now.

BLITZER: You have no evidence, though, that Osama bin Laden ever actually met with Saddam Hussein?

HAYES: There's no evidence. There have been some reports, but I think they're not entirely credible or at least we haven't been able to verify them yet. But meetings have taken place among senior Iraqi intelligence officials.

Taha Yassin Ramadan, one of Saddam's top vice presidents, met with Ayman al-Zawahiri. Top al Qaeda leaders have met with top Iraqi

(CROSSTALK)

BLITZER: But do those meetings in and of themselves prove that there was an operational alliance, if you will, between Saddam Hussein on the one hand and Osama bin Laden on the other?

HAYES: No, they certainly don't prove anything at all. I think they are suggestive evidence. I mean, as one intelligence source says to me regularly, you don't meet with al Qaeda unless you're planning terrorist operations.

Now, I think it might be a little bit more complicated than that. It's possible that the Iraqi intelligence was spying on al Qaeda.

BLITZER: You know that Richard Clarke, the former counterterrorism adviser in both the Clinton and Bush administrations, says he has seen no evidence whatsoever linking al Qaeda to Saddam Hussein.

HAYES: Well, it's a curious statement because Richard Clarke himself middle in 1999 in an interview with "The Washington Post" that the U.S. government was -- quote, unquote -- "sure" that Iraq had provided a chemical weapons precursor to an al Qaeda-linked factory in Sudan. So I don't know how he explains that.

BLITZER: Is there any evidence as far as you know that would link Saddam Hussein or any other Iraqi to 9/11?

HAYES: I'd say there's evidence, but at this point it's highly speculative and needs further exploration. There's certainly no proof linking Saddam Hussein to September 11.

BLITZER: The meeting in Prague between an alleged al Qaeda operative, Mohamed Atta, who was involved obviously in 9/11, and an Iraqi intelligence agent, what is the latest on that supposed meeting that may or may not have ever occurred?

HAYES: Right. I think the way to put it is the way that George Tenet puts it in his public interviews, where he says we can't prove it, we can't disprove it. Now, George Tenet says something a little bit differently privately, where he has told colleagues and associates that he's reasonably certain that the meeting did in fact take place.

BLITZER: There's an Iraqi intelligence operative, Lieutenant Colonel Ahmed Hikmat Shakir, that you in your book have linked in some way to 9/11, the plotting for 9/11. Briefly tell us about that.

HAYES: Ahmed Hikmat Shakir was an Iraqi who got a job through a contact at the Iraqi Embassy in late and early 1999. He then hosted one of the September 11 hijackers, or escorted him through the Kuala Lumpur Airport, where he was ostensibly employed.

BLITZER: As a greeter, basically?

HAYES: As a greeter, yes.

He greeted VIPs and walked them through the paperwork process. Shakir then took Khalid al-Midhar, who crashed one of the planes into the Pentagon, to this al Qaeda summit, where U.S. intelligence officials believe that much of the planning for September 11 took place.

BLITZER: But that's not a smoking gun linking Saddam to 9/11?

HAYES: Not a smoking gun linking Saddam to 9/11.

But after the fact, Shakir was found. He was captured after September 11 and found with a wealth of information, contact information for high-ranking al Qaeda operatives. He was captured again by the Jordanians and the Iraqis put extraordinary pressure on the Jordanians to release him. So it appeared that there was...

BLITZER: And he's disappeared basically right now.

HAYES: He's disappeared into the

BLITZER: One quick final question. You have spent a lot of time the last few years investigating the intelligence community. Your thoughts on why George Tenet may have resigned today?

HAYES: Well, I think that the Senate Intelligence Committee report that's coming out shortly is critical of the CIA and critical of Mr. Tenet personally, as I understand it. So I think it will -- that's one of the reasons. You know, there may be personal reasons, as was stated publicly as well.

BLITZER: Stephen Hayes, the author of the new book "The Connection," thanks for joining us.

HAYES: Thanks, Wolf.

(END VIDEOTAPE)

BLITZER: Millions of American jobs are being shipped overseas right now.

(BEGIN VIDEO CLIP)

THOMAS FRIEDMAN, "THE NEW YORK TIMES": The playing field is being leveled and there's now technology to take many, many jobs.

(END VIDEO CLIP)

BLITZER: Why "New York Times" columnist Thomas Friedman says everyone can win with outsourcing.

Also, this:

(BEGIN VIDEO CLIP)

DANIEL FUNK, WORLD WAR II VETERAN: It was a gloomy, wet, cold, muddy, miserable place to be.

(END VIDEO CLIP)

BLITZER: Memories of war from a decorated veteran, why he's about to be honored again.

We'll get to all of that. First, though, a quick look at some other news making headlines around the world.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): OPEC members have agreed to raise oil production by two million barrels a day on July 1 and another 500,000 barrels in August. Many of the 11 members already are producing oil at or above the official quota limit of 23.5 million barrels. OPEC's president says the move is aimed at stabilizing prices.

A former prisoner's appeal. The Israeli technician who spent 18 years in prison for revealing secrets of Israel's nuclear program is asking the country's top court to ease restrictions imposed after he was freed. Mordechai Vanunu is barred from meeting with foreigners, leaving the country, or giving interviews about the reactor where he worked.

Flight delays. A computer failure at Britain's National Air Traffic Control Center temporarily grounded all aircraft in the country. That delayed thousands of travelers and raised new concerns over the safety of the aging system.

Lights, camera, action. The largest movie theater in Afghanistan is back in business. Shut down by the Taliban in the late 1990s, the Ariana has undergone a $1 million renovation.

And that's our look around the world.

(END VIDEOTAPE)

(COMMERCIAL BREAK) BLITZER: When it comes to the situation in Iraq, the Pulitzer Prize-winning "New York Times" columnist Thomas Friedman has spoken clearly and passionately about the matter. Now he's taking on another controversial subject, outsourcing.

I talked with him earlier today about outsourcing, Iraq and today's surprise resignation of the CIA director.

(BEGIN VIDEOTAPE)

BLITZER: Tom Friedman, thanks very much for joining us.

Let's talk about George Tenet. This was a surprise, the timing of this announcement today. What do you make of it?

FRIEDMAN: Well, it is a stunner, very much, Wolf. Why now? Why really in the sunset of this administration? And I think we have got to learn more about this story. Is it in any way related to the other big breaking story from yesterday, that, somehow, someone in our intelligence community compromised to Ahmad Chalabi, the Iraqi opposition leader, the fact that we had broken secret Iranian codes and Chalabi allegedly conveyed that to the Iranians?

I don't know if it's related to that story. I have no inside information, but this is a shock. In general, a lot of people have been upset with Tenet for the fact that he told the president, according to Bob Woodward, that it was a slam dunk we'd find WMD in Iraq. But my own experience with Tenet is that he was a straight-up guy who I thought was very professional, had a real insight into the world, and was a good director of central intelligence, in my limited experience.

BLITZER: The biggest criticisms of George Tenet being, one, that he probably got it wrong on the WMD in Iraq and that he failed to connect the dots leading up to 9/11. Maybe no one could have connected those dots. A lot of people are -- most people are smarter, obviously, with hindsight.

I would have thought that he would have resigned earlier, given those failures, as opposed to right now. But you're right. We have a lot to learn as to what may have caused him to resign at this particular point.

How surprised were you, though, Tom, as someone who supported the war going into the war, that there has been this failure to find any significant stockpiles of WMD in Iraq?

FRIEDMAN: Well, as you know, because we talked about it, Wolf, I supported the war, but not because of WMD. I wrote before the war that I didn't believe that Saddam had any weapons of mass destruction that threatened us, that that was not a justification for going to Iraq, and the president should not take the nation into war to Iraq on what I called in a column before the war on the wings of a lie.

What I did believe very strongly, though, in is the importance of regime change in Iraq, of partnering with the Iraqi people to try to produce a decent progressive government there that could help tilt both Iraq and the whole region on to a different track. I believed that before the war in the importance of that in order to win this war of ideas in the Arab and Muslim world today against the advocates of intolerance and terrorism.

I believed it before the war. I still believe it today. I still believe that there is a chance, especially with the appointment of this new Iraqi government, of a decent outcome there. It is going to take time. It is going to be two steps forward, one step back. But I do not believe all is lost and I believe we should be patient here.

BLITZER: Is all lost on the Israeli-Palestinian front?

FRIEDMAN: Oh, man.

You know, Wolf, that is such a mess that I really don't even know thou disentangle it anymore. You know, all one could hope is that Prime Minister Sharon will be able to push through his cabinet against his own extremists his plan for a unilateral withdrawal from Gaza and the Palestinians will rise to that occasion and produce in Gaza a decent government of their own that can handle that territory.

BLITZER: It's a pretty depressing situation, given how close they were only a few years ago.

Let's talk a little bit about this important documentary that will air tonight on the Discovery Channel, "Outsourcing." A lot of Americans have a hard time understanding why you would think this is a good idea, to take jobs that people in the United States have and export them, in effect, and let people of India or China or Mexico have these jobs. How do you explain that theory to Americans who lose their jobs?

FRIEDMAN: Well, first of all, to anyone who loses their job as a result of outsourcing, either to India or, as David Rothkopf says, outsourcing to the past, which is when your job is taken over by technology because someone put a voice-mail machine in your telephone, we have to take that very seriously, because, when you lose your job, Wolf, the unemployment rate isn't 4 percent. It's 100 percent.

And my own feeling is, we need government policies. We need to be talking about this right now to cushion people in those situations and help them transition to other jobs, hopefully educated, reeducated and upgraded jobs that will allow them to continue to advance their standard of living.

But the phenomena of outsourcing, whether you like it or not, it is here and it is here not because someone woke up in the morning and said, hey, let's send your job to India. There's people who will do it cheaper. It's here because of technological changes just in the last few years. The world is being, I like to say flattened. The playing field is being leveled.

And there's now technology to take many, many jobs, disaggregate them, send out to either India or to Boston that part of the job that can be done most efficiently and most cheaply and then reassemble it back in headquarters. That's the technological moment we're in. It's going to affect everybody. And we need to be talking about it in this campaign and designing the right economic and government policies to deal with it.

BLITZER: Should the federal government be giving tax credits to companies that export these jobs?

FRIEDMAN: I don't think we should be encouraging anyone to be, you know, exporting these jobs, per se, but, at the same time let's look at what's happened between America and India in the last decade. Our trade, our exports to India, that is the products made by American workers in American companies that are sent to India, have doubled in the last decade, Wolf. That's created a lot of jobs here.

You can't hope to increase our exports to India if Indians don't have jobs that allow them to also import things. And while they're doing low-end jobs, the stuff we're exporting tends to be computer, software, financial services, insurance, high-end jobs that produce high-end jobs here. That's the theory of free trade. It hasn't been abolished.

BLITZER: It's a controversial subject and it's not going to go away. Thomas Friedman has an important documentary on it tonight on the Discovery Channel 10:00 p.m. Eastern. We'll be watching.

Thanks, Tom.

FRIEDMAN: Thank you, Wolf.

(END VIDEOTAPE)

BLITZER: A World War II veteran about to be honored.

(BEGIN VIDEO CLIP)

FUNK: I'm going to my division reunion in September and they'll all know it's there because it belongs to them.

(END VIDEO CLIP)

BLITZER: Recalling the heroism and horror at war on the battlefield. Our series "Memories of War" right after this.

(COMMERCIAL BREAK)

BLITZER: Tonight, a group of veterans from the Washington, D.C., area leaves for France, where they'll receive the French Legion of Honor Medal this weekend as part of the celebrations marking the 60th anniversary of D-Day. For some, it's reviving memories of heroism and horror.

Here's CNN's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): Daniel Funk got rejected by the Marines because he couldn't see well enough. Determined to join the fight, he ended up an artillery mechanic with the Army's 28th Infantry Division fixing pins and wheels on huge cannons, landed in France weeks after D-Day and never got injured. But don't think his road was easy. Don't think he can't relate to combat, like the day he did land at Normandy.

FUNK: Oh, the beach was stink -- it was the odor of death. Even before we got off the ship, about a mile, a mile and a half out into the channel, you started to pick up that terrible odor.

TODD: From there, some of the war's most storied advances carried Dan Funk and his division with them, the hedgerows of northern France, where the retreating Germans fought for every inch, the liberation of Paris, which Funk says was just a route to another battle, although a pleasant one.

FUNK: Oh, the people over there were happy and joyful. And they threw everything at us, tomatoes. And the girls were wonderful.

TODD: Soon, the U.S. Army would push to the border or between Germany and Belgium. Then Funk moved to the Battle of the Bulge.

FUNK: It was a gloomy, wet, cold, muddy, miserable place to be.

TODD: Funk had his close calls, go scraped and shelled, but made it to Germany for war's end, won liberation medals from France, Belgium and Luxembourg. This week in Paris, he gets one more, France's highest award, the Legion of Honor.

FUNK: I'm going to my division reunion in September and they'll all know it's there because it belongs to them.

OK. I have to take a smoke.

(LAUGHTER)

(END VIDEOTAPE)

TODD: Dan Funk now on his way to France. Tomorrow, you'll meet an extraordinary guy who was in that first wave on D-Day at the cliffs of Omaha Beach, just a few yards from where you are going to be sitting tomorrow, Wolf.

BLITZER: All right, Brian Todd, thanks very much. We'll be reporting tomorrow live from Normandy.

A scary moment in today's final round of the National Spelling Bee. That's ahead.

(COMMERCIAL BREAK)

BLITZER: Take a look. Here's how you're weighing in on our "Web Question of the Day." Remember this, is not a scientific poll.

It takes a special kind of person to be able to spell alopecoid, particularly when you're under pressure. And 13-year-old Akshay Buddiga certainly was under pressure. He was a contestant in the National Spelling Bee when he fell lightheaded and fell. To the audience amazement, he managed to pick himself up and go on to spell alopecoid. It means fox like, by the way. He didn't win, though.

(BEGIN VIDEO CLIP)

DAVID TIDMARSH, CONTESTANT: I'll talk through this. A-U-T...

(END VIDEO CLIP)

BLITZER: That honor went to 14-year-old David Tidmarsh of Indiana. He spelled autochthonous. It means originating where it is found. Our congratulations to both young men.

I'll be in Normandy tomorrow for a special WOLF BLITZER REPORTS.

"LOU DOBBS TONIGHT" starts right now.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


Aired June 3, 2004 - 17:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
WOLF BLITZER, HOST: Happening now. New information emerging about an alleged connection between Saddam Hussein and Osama bin Laden. But doubts remain.

Also, we're getting word of sightings of some of the seven most wanted al Qaeda suspects.

Stand by for hard news on WOLF BLITZER REPORTS.

Spy chief surprise.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's been a strong leader in the war on terror. And I will miss him.

BLITZER: So why would CIA director George Tenet suddenly step down?

Appeal to the allies. Will they lend a hand in Iraq?

UNIDENTIFIED MALE: It is the worst time imaginable for allies to be showing any weakness.

BLITZER: I'll speak with Australian Prime Minister John Howard.

Outsourcing. American jobs move overseas. Is that somehow good for Americans? The prize-winning journalist and author Thomas Friedman says yes. I'll ask him why.

Soldiers' story.

UNIDENTIFIED MALE: All (UNINTELLIGIBLE) this stink. It was the odor of death.

BLITZER: He helped liberate Europe. Six decades later, he's going back to receive thanks.

ANNOUNCER: This is WOLF BLITZER REPORTS for Thursday, June 3, 2004.

(END VIDEOTAPE) BLITZER: It was a move that stunned official Washington. President Bush announced suddenly today the CIA director George Tenet is stepping down.

(BEGIN VIDEO CLIP)

BUSH: He told me he was resigning for personal reasons. I told him I'm sorry he's leaving. He's done a superb job on behalf of the American people.

(END VIDEO CLIP)

BLITZER: Joining us now our national security correspondent David Ensor who's been following all of the details leading up to this -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Well, the surprise is not so much that he's leaving. We've known that for the last year or so, Wolf. He's said to many including myself that he was tired. It's a pressure cooker job. The surprise is the timing.

(BEGIN VIDEOTAPE)

ENSOR (voice-over): George Tenet says he only told the president at 7:00 Wednesday night that he wants to leave office in mid-July after seven years as director of Central Intelligence.

GEORGE TENET, CIA DIRECTOR: While Washington and the media will put many different faces on the decision, it was a personal decision. And had only one basis and fact. The well-being of my wonderful family. Nothing more and nothing less. Nine years ago when I became the deputy director a wonderful young man sitting in the front row was in the second grade and he came right up to my belt. I just saw a picture of the day that Judge Friesz (ph) swore me in and he's grown up to be...

ENSOR: Tenet is well liked by many Republicans and Democrats, but the 9/11 attacks by al Qaeda came on his watch, by definition an intelligence failure. So was the case at the U.N. for going to war to stop Iraq's weapons of mass destruction, weapons that have yet to be found.

SEN. RICHARD SHELBY (R), ALABAMA: The record is there that there have been more failures on his watch as director of CIA, massive failures in intelligence than anybody I know.

TENET: We're not perfect, but one of the best kept secrets is that we are very, very, very good. Whatever our shortcomings, the American people know that we constantly evaluate our performance, always strive to do better and always tell the truth.

ENSOR: Tenet's deputy John McLaughlin, a career CIA man will take over in July as acting director. Officials say President Bush is unlikely to want to subject himself to bruising confirmation hearings for a new director before the elections.

(END VIDEOTAPE)

ENSOR: Some are suggesting that Tenet may want to go before the 9/11 commission report and reports from Hill committees on Iraq WMD that sources say are highly critical of the intelligence community and possibly of Tenet as well, but stressing the personal nature of Tenet's decision to go, a senior intelligence official tells me that in August Tenet hopes to be looking at colleges with his high school senior son -- Wolf.

BLITZER: Thank you very much, David Ensor, national security correspondent.

President Bush dropped the CIA bombshell as he departed for Europe. So what is the White House saying behind the scenes about Tenet's departure? Our White House correspondent Dana Bash is joining us now from the president's first stop in Europe namely Rome -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the White House says that the president didn't try to convince George Tenet not to resign, but they also flat out deny that he was pushed out. When Mr. Bush told his senior staff this morning about the resignation he sent out an edict that no one should contribute to the public speculation about why George Tenet is leaving.

However, privately Bush aides do hope that this will help in the president's efforts to put the continuous negative news about Iraq behind him, help him both politically at home and here in Europe. The theme of this trip here in Europe is fence-mending with war opponents. Of course, opponents of the Iraq war and Mr. Bush, of course, needs them to find a new resolution, a new U.N. resolution and the president will have some tough meetings here. He's going to meet with the pope at the Vatican tomorrow and then he's going on to France.

The White House privately hopes that this resignation that he's carrying with him will help him to convince these leaders and the world that the bad news, if you will, and the man who perhaps some think personified the bad news about Iraq will be put behind him -- Wolf.

BLITZER: Our White House correspondent Dana Bash in Rome. Thank you very much, Dana.

Here's more information on George Tenet. He sent almost seven years as the director of Central Intelligence under both Democratic and Republican presidents. Before the CIA he spent time as a legislative aide to Democratic senators and then as a top-level staffer on the Senate intelligence committee. He's a Georgetown University graduate, the son of Greek immigrants who grew up in Queens, New York.

The intelligence failures of the past are still being investigated and hotly debated, but the CIA also must focus now on new challenges that are ahead. Our Tom Foreman is joining us now with that part of the story -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Well, Wolf, for all of the buzzing here in Washington today about Tenet's resignation, some people in the intelligence community, the spy business are looking closely at the CIA itself trying to figure out if the agency is in trouble.

(BEGIN VIDEOTAPE)

FOREMAN (voice-over): The still unfound weapons of mass destruction, the testing of nuclear weapons by Pakistan and India, the rise of Osama bin Laden and the way he has eluded capture, all are events that have raised the question, should the CIA have been better informed? Peter Earnest is a 36-year veteran of the CIA and now head of the International Spy Museum.

PETER EARNEST, FMR. CIA OFFICER: The answer is simple, yes. That's what an intelligence service capability is. It's the capability of perceiving threat, of identifying it, of analyzing it, of making policymakers aware of it. Clearly, we did not.

FOREMAN: Tenet himself made it clear he was concerned about spy capabilities, particularly in the Arab world. Although the CIA will not release specifics under Tenet, more Arabic-speaking officers were recruited. More cooperative agreements were established with foreign intelligence services, but spying on governments which the CIA was made for and learning what small individual terrorist groups are planning are wildly different things.

RONALD KESSLER, AUTHOR, "INSIDE THE CIA": The really hard thing is how do you get the information in the first place? How do you convince someone to rat on someone like bin Laden? That is so difficult and that just requires years of work, patience, money.

FOREMAN: Adding to the problem according to some Arab-Americans is a basic cultural gap.

JAMES ZOGBY, ARAB AMERICAN INSTITUTE: We see Arabs as an objectified problem. We see the culture as less than ours. We see them as more violent than we are.

FOREMAN: And you think that makes it hard to gather intelligence.

ZOGBY: I think very hard. It makes us very susceptible and very prone to bad intelligence.

FOREMAN: And fixing that problem, by all accounts, would take a very long time.

(END VIDEOTAPE)

FOREMAN: So the simple truth is whether you like George Tenet or not and he has fans and detractors all over Washington, the simple truth is the agency he was in front of is going through enormous changes now, looking at all of the things it needs to do because they know Americans don't have as much confidence as they would like them to have right now in our intelligence-gathering capabilities -- Wolf.

BLITZER: Tom Foreman, thanks very much.

Today as Senator John Kerry praised George Tenet saying he worked extremely hard on behalf of the nation. In the past Kerry has also called for Tenet's resignation. During a campaign swing in Missouri Kerry said the blame for serious intelligence shortcomings since before 9/11 should not be directed only at Tenet. And in a written statement Kerry said this, "there is no question, however, that there have been significant intelligence failures and the administration has to accept responsibility for those failures. Sometimes with change comes opportunity. This is an opportunity for the president to lead."

Joining us now with his special insight on Tenet's resignation, the former CIA case officer Bob Baer. He's the author of two best- selling books, "Sleeping With the Devil: How Washington Sold Our Soul for Saudi Crude" and "See No Evil." Bob, thanks very much for joining us. What's your immediate take on the decision of George Tenet to step down?

ROBERT BAER, FORMER CIA OFFICER: I think we have to take him at his word. He's had a rough seven years. He had 9/11. He had the WMD, the new scandals that are coming out, prisoner abuse. He's tired. He's got two bruising reports that are going to come out of Congress about WMD and 9/11. He said maybe it's time for me to step aside and if they have to reform the intelligence community, I might be in the way. I might be an obstacle.

BLITZER: How does he leave the CIA right now? What shape is the U.S. intelligence community in?

BAER: My sense is that it never made the transition from the Cold War which I think it did a pretty good job to weapons of mass destruction, terrorists and these very messy problems. It's a tough bureaucracy to control. It's big. You have five -- very difficult.

BLITZER: Is it getting better? Are they making improvements?

BAER: Yes, they are, but the problem is it takes up to ten years to build a new cadre. Tenet didn't have enough time. We're going to need, as he said, another five years to really start getting to tackle these problems.

BLITZER: You've been a big proponent over the years of the so- called human intelligence. Not necessarily electronic or satellite reconnaissance, photography, but getting sources inside terror cells. As far as you know, is the U.S. doing a better job at that?

BAER: It's about the same as when I left the CIA in 1997.

BLITZER: When you left the CIA, that was years ago and that was pitiful.

BAER: It was pitiful. We still don't know what's going on inside the mosques inside Saudi Arabia where those 15 Saudis were recruited.

BLITZER: What's so hard about recruiting spies to tell the U.S. what's going on?

BAER: These people we're dealing with are true believers. They are not inclined to spy for the CIA. We have to get out of this recruiting from the suburban mall culture and get some really different, varied people, workplace 2015, all sorts of people. We've got to get out in the world and start listening and put more people out there, more resources and more patience as well.

BLITZER: Bob Baer, thank you very much.

BAER: Thank you.

BLITZER: To our viewers, here's your chance to weigh in on this important story. Our web question of the day is this. "Did political factors influence CIA director George Tenet's resignation?" You can vote right now. Go to CNN.com/wolf. We'll have the results a little bit later in this broadcast.

In a moment, a developing story we're following. Possible sightings of al Qaeda suspects overseas. Also ahead.

(BEGIN VIDEO CLIP)

JOHN HOWARD, PRIME MINISTER OF AUSTRALIA: The thing that binds us together more than anything else is a common belief in certain fundamental values.

(END VIDEO CLIP)

BLITZER: Why Australia's prime minister is supporting President Bush on Iraq when so many others are not.

A controversial connection. A new book that sheds new light on Saddam Hussein and his alleged connection to Osama bin Laden.

And this...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It was the gloomiest, most horrible place.

(END VIDEO CLIP)

BLITZER: Raw emotions. We'll look back at a hard-fought battle and some lost friends.

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: Now to a leader who's taken heat at home for sending troops to join the coal mission Iraq. Today the Australian Prime Minister John Howard met with President Bush at the White House. The prime minister met with me right after.

(BEGIN VIDEOTAPE)

BLITZER: Prime Minister, welcome to the United States. Thanks very much for joining us.

As we speak, you just met with the president. Is there any daylight between the Australian position and the U.S. position as far as troop deployments, post-June 30 in Iraq?

JOHN HOWARD, AUSTRALIAN PRIME MINISTER: No, there isn't. There's no -- (UNINTELLIGIBLE) our objectives are the same and we both welcome the formation of the Iraqi Interim Government.

This is a huge step forward because you have Iraqis being identified not only by their own people, but by the rest of the world as the leaders of that country. And this is a very necessary step down the path to a Democratic Iraq in the future.

BLITZER: Australia like Britain, the key allies of the U.S. going into the war in Iraq. What is your understanding right now as to how this interim government in Iraq could force a withdrawal of coalition forces if that's what they wanted to do?

HOWARD: Well, that is academic. They're not going to because the security situation requires the continued presence of the coalition. And, of course, in troop numbers is overwhelming American, although there are significant numbers from other countries, particularly the British. And we have a small force there as well. But realistic...

BLITZER: Let me interrupt for a second, with all due respect. If there's full sovereignty for this Iraqi government starting July 1, theoretically, and it is theoretically, they could say get out and you have to get out. Is that right?

HOWARD: Well obviously, we're not going to stay if we're not wanted. The point I'm making is we'll continue to be wanted until the security situation stabilizes and until there is both the leadership and the security wherewithal inside Iraq from local sources to keep the security.

We have no desire to occupy a foreign country. And if I were an Iraqi I would want to run my own country as soon as possible. But given the history of what's occurred, the security situation will need to be stabilized and that will need the help of the coalition.

BLITZER: What is your understanding of the definition of full sovereignty in the period after June 30 before the elections scheduled for January of next year? Full sovereignty in Iraq? What does that mean to you?

HOWARD: What it means is that -- I mean theoretically, they could ask people to go. But the reality is it's not going to happen.

BLITZER: Will they control their oil, for example?

HOWARD: Well of course, they have their oil. Of course, they have. And there's been never been an intention of the coalition to take Iraq's oil. Iraq's oil belongs to the Iraqi people. That's always been my view. And they need it to help in the rebuilding process.

We didn't go there to ran sack the assets of that country. We went there to -- as part of a coalition to deal with somebody who'd been in serial non-compliance with the nation's resolutions and had been a very bad, loathsome dictator who murdered his people.

BLITZER: How surprised are you that in the year since the war, of the year plus since the war, no significant stockpiles of chemical or biological or nuclear weapons have been found in Iraq?

HOWARD: Well, I along with everybody else, I'm surprised because the intelligence on that seemed very strong. We've certainly found evidence of WMD programs. We've certainly found plenty of evidence from the Iraq Survey Group of the continuing desire on the part of Saddam Hussein to maintain a capacity to develop chemical and biological weapons.

And that work continues. But the intelligence we had at the time was very strong. Otherwise, we would have had a different view.

BLITZER: There's a suggestion here in the United States now, as you well know, that Ahmad Chalabi, among others, an Iraqi exile leader, basically sold the U.S. and the coalition a bill of goods as far as Iraqi WMD is concerned.

HOWARD: Well, so far as Australia is concerned we didn't have any contact with Chalabi, to my recollection. Obviously, we do a lot of our intelligence advice from both the Americans and the British. But the intelligence advice was not entirely based on what Mr. Chalabi said.

BLITZER: How popular or unpopular is this Australian role in Iraq right now back home?

HOWARD: Well it's less popular than now than it was a few months ago because we've really gone through a bad months or six weeks. We've had the upsurge in violence, we've had the prisoner abuse issue. It's been a low point the last four or six weeks. And naturally public opinion has shifted to a negative stance. But we're now looking forward to the next stage.

And the naming of the interim government is so important because here are Iraqis coming up to the crease, or the plate, as you'd call it. And really saying well we're prepared to lead. We're prepared to identify with the aspirations of the Iraqi people.

BLITZER: How surprised were you, speaking of intelligence, that as we speak right now we're just getting word that George Tenet, the CIA director, has suddenly resigned?

HOWARD: Well, I've been in politics long enough to -- never to get too surprised by anything.

But George has done a fantastic job as head of the CIA. I don't know his reasons. And until they're amplified, there's really not much more I can say except to record my gratitude to him for the wonderful intelligence cooperation that took place between the CIA and the intelligence agencies in Australia during his term.

BLITZER: No bitterness that the Australian government may have been misled by the U.S. intelligence community going into the war?

HOWARD: I don't feel any bitterness because I know that intelligence is an inexact science. And it wasn't only American intelligence, but there was quite a lot of British intelligence. Much of which came from different sources.

Intelligence can never get 100 percent correct. And intelligence is an input for policy making and intelligence is not for policy making itself.

(END VIDEOTAPE)

BLITZER: The Australian Prime Minister John Howard speaking with me earlier today.

Looking for the leaker. The president and now the vice president are calling in their lawyers as investigators try to find out who outed the CIA operative? Also ahead.

U.S. troops and Shiite gunmen clash again in Kufa.

And American jobs move abroad. Could outsourcing actually be a good thing? The journalist Tom Friedman of the "New York Times" says yes. I'll ask him why.

(COMMERCIAL BREAK)

BLITZER: In Iraq today a major boost for the new interim government. The country's most influential Shiite leader the Grand Ayatollah Ali al-Sistani is throwing his support behind the new government that assumes power when the United States and the coalition are set to hand over sovereignty on June 30. Sistani previously had called for national elections to determine the new government.

In Baghdad, though, one person was killed, four were wounded when five mortar rounds exploded near the Italian embassy. Police say the person killed was an Iraqi and three of the wounded were Iraqi children.

More fighting erupted today between Shiite militiamen and U.S. forces in the holy city of Kufa. The U.S. military said about 30 insurgents who were using a school as a mortar base were killed. It was the eighth straight day of clashes despite a supposed deal reached last week to stop the fighting in the stronghold of the radical cleric Muqtada al-Sadr.

CNN has learned the Vice President Dick Cheney will consult a Washington attorney if he needs legal counsel in the CIA leak investigation. This comes after President Bush confirmed he had spoken already with a lawyer as well. Our justice correspondent Kelli Arena picks up this part of the story -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, the vice president says he will consult with his longtime Washington attorney Terence O'Donnell (ph) if it's necessary. The president meanwhile explained to reporters why he consulted with a lawyer himself.

(BEGIN VIDEO CLIP)

BUSH: This is a criminal matter. It's a serious matter. I've met with an attorney to determine whether or not I need his advice and if I deem I need his advice I'll probably hire him.

(END VIDEO CLIP)

ARENA: The move is in response to the leak investigation into who revealed the name of CIA operative Valerie Plame, the wife of former ambassador Joe Wilson. A grand jury has been meeting for over four months now and has heard testimony from some current and former administration officials and several journalists have recently been subpoenaed. Individuals with knowledge of this case say that the focus of the investigation seems to be on the vice president's office and they believe the investigation is in its final stages -- Wolf.

BLITZER: Kelli, switching gears for a second. Supposedly some of the seven most wanted al Qaeda suspects have been sighted overseas?

ARENA: Well, according to the head of the counterterrorism office John Pistol, he says there have been some what they believe to be credible sightings of the seven individuals that they put those pictures out of just recently, the FBI is working with overseas partners to try to track them down.

BLITZER: Let's see if they do. Thank you very much.

Saddam Hussein and Osama bin Laden, new claims of a possible connection between the former dictator and the world's most wanted terrorist. We'll get to that. Also ahead...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The phenomena of outsourcing whether you like it or not, it is here.

(END VIDEO CLIP)

BLITZER: But who wins and who loses. The award-winning columnist Thomas Friedman has answers that may surprise you.

Plus back in business, it's lights, camera, action and the big screen in Afghanistan.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

It's one of the greatest intelligence mysteries facing the United States today. Was Saddam Hussein actually allied with Osama bin Laden? Did the Iraqi dictator help bin Laden in his attacks on the United States? Some people believe there is a connection. But, if so, where's the proof? Stephen Hayes of "The Weekly Standard" tries to answer that.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Stephen Hayes argues there were several potential connections between al Qaeda and Saddam Hussein's regime, one, a U.S. indictment of bin Laden in 1998 alleging that al Qaeda agreed to collaborate with Iraq on weapons of mass destruction. We asked President Clinton's secretary of state about that link.

MADELEINE ALBRIGHT, FORMER SECRETARY OF STATE: We did not think that, at least the things that I saw, that there was a link between Saddam Hussein and al Qaeda.

BLITZER: Hayes details a meeting in January of 2000 in Kuala Lumpur, Malaysia. That meeting, U.S. officials say, was attended by a man named Khalid al-Midhar. Greeting him as he arrived in the Malaysian capital, says Hayes, was a man Ahmed Hikmat Shakir.

Hayes says a man with the same name was an officer in Saddam Hussein's security force -- quote -- "Shakir walked al-Midhar to a waiting car, much as any facilitator would. But then, rather than bidding his VIP goodbye and returning to work, Shakir jumped in the car and accompanied al-Midhar to a condominium owned by an American- educated al Qaeda associate."

On September 11, Khalid al-Midhar was among the hijackers on American Airlines Flight 77 that slammed into the Pentagon. Hayes admits this alleged connection is not a smoking gun. And former White House counterterrorism chief Richard Clarke, asked about an overall link between al Qaeda and Saddam Hussein, said earlier this year: "We've looked at this issue for years. For years, we've look for a connection and there's just no connection."

(END VIDEOTAPE)

BLITZER: As you can see, there are people who believe that bin Laden and Saddam Hussein not only shared a hatred for the United States, but that they shared expertise and information as well.

Just a little while ago, I spoke with Stephen Hayes, the author of the new book entitled "The Connection."

(BEGIN VIDEOTAPE)

BLITZER: Stephen Hayes, thanks very much for joining us.

It seems conventional wisdom now to suggest there's no serious connection between Osama bin Laden and al Qaeda on the one hand and Saddam Hussein on the other. What do you believe?

STEPHEN HAYES, "THE WEEKLY STANDARD": Well, I think that you're right. The conventional wisdom has really developed and strengthened on that notion. And I, frankly, think it's wrong.

And if you look back at the conventional wisdom in 1998 and 1999, there were scores of stories in mainstream news media, in magazines, on the network television suggesting that there was in fact this link and that the link was meaningful and that it was a potential threat. And I think that they were right five years ago. The Clinton administration made this argument.

Senior Clinton officials made the argument. I think they were right then. I think the Bush administration is right to say this now.

BLITZER: You have no evidence, though, that Osama bin Laden ever actually met with Saddam Hussein?

HAYES: There's no evidence. There have been some reports, but I think they're not entirely credible or at least we haven't been able to verify them yet. But meetings have taken place among senior Iraqi intelligence officials.

Taha Yassin Ramadan, one of Saddam's top vice presidents, met with Ayman al-Zawahiri. Top al Qaeda leaders have met with top Iraqi

(CROSSTALK)

BLITZER: But do those meetings in and of themselves prove that there was an operational alliance, if you will, between Saddam Hussein on the one hand and Osama bin Laden on the other?

HAYES: No, they certainly don't prove anything at all. I think they are suggestive evidence. I mean, as one intelligence source says to me regularly, you don't meet with al Qaeda unless you're planning terrorist operations.

Now, I think it might be a little bit more complicated than that. It's possible that the Iraqi intelligence was spying on al Qaeda.

BLITZER: You know that Richard Clarke, the former counterterrorism adviser in both the Clinton and Bush administrations, says he has seen no evidence whatsoever linking al Qaeda to Saddam Hussein.

HAYES: Well, it's a curious statement because Richard Clarke himself middle in 1999 in an interview with "The Washington Post" that the U.S. government was -- quote, unquote -- "sure" that Iraq had provided a chemical weapons precursor to an al Qaeda-linked factory in Sudan. So I don't know how he explains that.

BLITZER: Is there any evidence as far as you know that would link Saddam Hussein or any other Iraqi to 9/11?

HAYES: I'd say there's evidence, but at this point it's highly speculative and needs further exploration. There's certainly no proof linking Saddam Hussein to September 11.

BLITZER: The meeting in Prague between an alleged al Qaeda operative, Mohamed Atta, who was involved obviously in 9/11, and an Iraqi intelligence agent, what is the latest on that supposed meeting that may or may not have ever occurred?

HAYES: Right. I think the way to put it is the way that George Tenet puts it in his public interviews, where he says we can't prove it, we can't disprove it. Now, George Tenet says something a little bit differently privately, where he has told colleagues and associates that he's reasonably certain that the meeting did in fact take place.

BLITZER: There's an Iraqi intelligence operative, Lieutenant Colonel Ahmed Hikmat Shakir, that you in your book have linked in some way to 9/11, the plotting for 9/11. Briefly tell us about that.

HAYES: Ahmed Hikmat Shakir was an Iraqi who got a job through a contact at the Iraqi Embassy in late and early 1999. He then hosted one of the September 11 hijackers, or escorted him through the Kuala Lumpur Airport, where he was ostensibly employed.

BLITZER: As a greeter, basically?

HAYES: As a greeter, yes.

He greeted VIPs and walked them through the paperwork process. Shakir then took Khalid al-Midhar, who crashed one of the planes into the Pentagon, to this al Qaeda summit, where U.S. intelligence officials believe that much of the planning for September 11 took place.

BLITZER: But that's not a smoking gun linking Saddam to 9/11?

HAYES: Not a smoking gun linking Saddam to 9/11.

But after the fact, Shakir was found. He was captured after September 11 and found with a wealth of information, contact information for high-ranking al Qaeda operatives. He was captured again by the Jordanians and the Iraqis put extraordinary pressure on the Jordanians to release him. So it appeared that there was...

BLITZER: And he's disappeared basically right now.

HAYES: He's disappeared into the

BLITZER: One quick final question. You have spent a lot of time the last few years investigating the intelligence community. Your thoughts on why George Tenet may have resigned today?

HAYES: Well, I think that the Senate Intelligence Committee report that's coming out shortly is critical of the CIA and critical of Mr. Tenet personally, as I understand it. So I think it will -- that's one of the reasons. You know, there may be personal reasons, as was stated publicly as well.

BLITZER: Stephen Hayes, the author of the new book "The Connection," thanks for joining us.

HAYES: Thanks, Wolf.

(END VIDEOTAPE)

BLITZER: Millions of American jobs are being shipped overseas right now.

(BEGIN VIDEO CLIP)

THOMAS FRIEDMAN, "THE NEW YORK TIMES": The playing field is being leveled and there's now technology to take many, many jobs.

(END VIDEO CLIP)

BLITZER: Why "New York Times" columnist Thomas Friedman says everyone can win with outsourcing.

Also, this:

(BEGIN VIDEO CLIP)

DANIEL FUNK, WORLD WAR II VETERAN: It was a gloomy, wet, cold, muddy, miserable place to be.

(END VIDEO CLIP)

BLITZER: Memories of war from a decorated veteran, why he's about to be honored again.

We'll get to all of that. First, though, a quick look at some other news making headlines around the world.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): OPEC members have agreed to raise oil production by two million barrels a day on July 1 and another 500,000 barrels in August. Many of the 11 members already are producing oil at or above the official quota limit of 23.5 million barrels. OPEC's president says the move is aimed at stabilizing prices.

A former prisoner's appeal. The Israeli technician who spent 18 years in prison for revealing secrets of Israel's nuclear program is asking the country's top court to ease restrictions imposed after he was freed. Mordechai Vanunu is barred from meeting with foreigners, leaving the country, or giving interviews about the reactor where he worked.

Flight delays. A computer failure at Britain's National Air Traffic Control Center temporarily grounded all aircraft in the country. That delayed thousands of travelers and raised new concerns over the safety of the aging system.

Lights, camera, action. The largest movie theater in Afghanistan is back in business. Shut down by the Taliban in the late 1990s, the Ariana has undergone a $1 million renovation.

And that's our look around the world.

(END VIDEOTAPE)

(COMMERCIAL BREAK) BLITZER: When it comes to the situation in Iraq, the Pulitzer Prize-winning "New York Times" columnist Thomas Friedman has spoken clearly and passionately about the matter. Now he's taking on another controversial subject, outsourcing.

I talked with him earlier today about outsourcing, Iraq and today's surprise resignation of the CIA director.

(BEGIN VIDEOTAPE)

BLITZER: Tom Friedman, thanks very much for joining us.

Let's talk about George Tenet. This was a surprise, the timing of this announcement today. What do you make of it?

FRIEDMAN: Well, it is a stunner, very much, Wolf. Why now? Why really in the sunset of this administration? And I think we have got to learn more about this story. Is it in any way related to the other big breaking story from yesterday, that, somehow, someone in our intelligence community compromised to Ahmad Chalabi, the Iraqi opposition leader, the fact that we had broken secret Iranian codes and Chalabi allegedly conveyed that to the Iranians?

I don't know if it's related to that story. I have no inside information, but this is a shock. In general, a lot of people have been upset with Tenet for the fact that he told the president, according to Bob Woodward, that it was a slam dunk we'd find WMD in Iraq. But my own experience with Tenet is that he was a straight-up guy who I thought was very professional, had a real insight into the world, and was a good director of central intelligence, in my limited experience.

BLITZER: The biggest criticisms of George Tenet being, one, that he probably got it wrong on the WMD in Iraq and that he failed to connect the dots leading up to 9/11. Maybe no one could have connected those dots. A lot of people are -- most people are smarter, obviously, with hindsight.

I would have thought that he would have resigned earlier, given those failures, as opposed to right now. But you're right. We have a lot to learn as to what may have caused him to resign at this particular point.

How surprised were you, though, Tom, as someone who supported the war going into the war, that there has been this failure to find any significant stockpiles of WMD in Iraq?

FRIEDMAN: Well, as you know, because we talked about it, Wolf, I supported the war, but not because of WMD. I wrote before the war that I didn't believe that Saddam had any weapons of mass destruction that threatened us, that that was not a justification for going to Iraq, and the president should not take the nation into war to Iraq on what I called in a column before the war on the wings of a lie.

What I did believe very strongly, though, in is the importance of regime change in Iraq, of partnering with the Iraqi people to try to produce a decent progressive government there that could help tilt both Iraq and the whole region on to a different track. I believed that before the war in the importance of that in order to win this war of ideas in the Arab and Muslim world today against the advocates of intolerance and terrorism.

I believed it before the war. I still believe it today. I still believe that there is a chance, especially with the appointment of this new Iraqi government, of a decent outcome there. It is going to take time. It is going to be two steps forward, one step back. But I do not believe all is lost and I believe we should be patient here.

BLITZER: Is all lost on the Israeli-Palestinian front?

FRIEDMAN: Oh, man.

You know, Wolf, that is such a mess that I really don't even know thou disentangle it anymore. You know, all one could hope is that Prime Minister Sharon will be able to push through his cabinet against his own extremists his plan for a unilateral withdrawal from Gaza and the Palestinians will rise to that occasion and produce in Gaza a decent government of their own that can handle that territory.

BLITZER: It's a pretty depressing situation, given how close they were only a few years ago.

Let's talk a little bit about this important documentary that will air tonight on the Discovery Channel, "Outsourcing." A lot of Americans have a hard time understanding why you would think this is a good idea, to take jobs that people in the United States have and export them, in effect, and let people of India or China or Mexico have these jobs. How do you explain that theory to Americans who lose their jobs?

FRIEDMAN: Well, first of all, to anyone who loses their job as a result of outsourcing, either to India or, as David Rothkopf says, outsourcing to the past, which is when your job is taken over by technology because someone put a voice-mail machine in your telephone, we have to take that very seriously, because, when you lose your job, Wolf, the unemployment rate isn't 4 percent. It's 100 percent.

And my own feeling is, we need government policies. We need to be talking about this right now to cushion people in those situations and help them transition to other jobs, hopefully educated, reeducated and upgraded jobs that will allow them to continue to advance their standard of living.

But the phenomena of outsourcing, whether you like it or not, it is here and it is here not because someone woke up in the morning and said, hey, let's send your job to India. There's people who will do it cheaper. It's here because of technological changes just in the last few years. The world is being, I like to say flattened. The playing field is being leveled.

And there's now technology to take many, many jobs, disaggregate them, send out to either India or to Boston that part of the job that can be done most efficiently and most cheaply and then reassemble it back in headquarters. That's the technological moment we're in. It's going to affect everybody. And we need to be talking about it in this campaign and designing the right economic and government policies to deal with it.

BLITZER: Should the federal government be giving tax credits to companies that export these jobs?

FRIEDMAN: I don't think we should be encouraging anyone to be, you know, exporting these jobs, per se, but, at the same time let's look at what's happened between America and India in the last decade. Our trade, our exports to India, that is the products made by American workers in American companies that are sent to India, have doubled in the last decade, Wolf. That's created a lot of jobs here.

You can't hope to increase our exports to India if Indians don't have jobs that allow them to also import things. And while they're doing low-end jobs, the stuff we're exporting tends to be computer, software, financial services, insurance, high-end jobs that produce high-end jobs here. That's the theory of free trade. It hasn't been abolished.

BLITZER: It's a controversial subject and it's not going to go away. Thomas Friedman has an important documentary on it tonight on the Discovery Channel 10:00 p.m. Eastern. We'll be watching.

Thanks, Tom.

FRIEDMAN: Thank you, Wolf.

(END VIDEOTAPE)

BLITZER: A World War II veteran about to be honored.

(BEGIN VIDEO CLIP)

FUNK: I'm going to my division reunion in September and they'll all know it's there because it belongs to them.

(END VIDEO CLIP)

BLITZER: Recalling the heroism and horror at war on the battlefield. Our series "Memories of War" right after this.

(COMMERCIAL BREAK)

BLITZER: Tonight, a group of veterans from the Washington, D.C., area leaves for France, where they'll receive the French Legion of Honor Medal this weekend as part of the celebrations marking the 60th anniversary of D-Day. For some, it's reviving memories of heroism and horror.

Here's CNN's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): Daniel Funk got rejected by the Marines because he couldn't see well enough. Determined to join the fight, he ended up an artillery mechanic with the Army's 28th Infantry Division fixing pins and wheels on huge cannons, landed in France weeks after D-Day and never got injured. But don't think his road was easy. Don't think he can't relate to combat, like the day he did land at Normandy.

FUNK: Oh, the beach was stink -- it was the odor of death. Even before we got off the ship, about a mile, a mile and a half out into the channel, you started to pick up that terrible odor.

TODD: From there, some of the war's most storied advances carried Dan Funk and his division with them, the hedgerows of northern France, where the retreating Germans fought for every inch, the liberation of Paris, which Funk says was just a route to another battle, although a pleasant one.

FUNK: Oh, the people over there were happy and joyful. And they threw everything at us, tomatoes. And the girls were wonderful.

TODD: Soon, the U.S. Army would push to the border or between Germany and Belgium. Then Funk moved to the Battle of the Bulge.

FUNK: It was a gloomy, wet, cold, muddy, miserable place to be.

TODD: Funk had his close calls, go scraped and shelled, but made it to Germany for war's end, won liberation medals from France, Belgium and Luxembourg. This week in Paris, he gets one more, France's highest award, the Legion of Honor.

FUNK: I'm going to my division reunion in September and they'll all know it's there because it belongs to them.

OK. I have to take a smoke.

(LAUGHTER)

(END VIDEOTAPE)

TODD: Dan Funk now on his way to France. Tomorrow, you'll meet an extraordinary guy who was in that first wave on D-Day at the cliffs of Omaha Beach, just a few yards from where you are going to be sitting tomorrow, Wolf.

BLITZER: All right, Brian Todd, thanks very much. We'll be reporting tomorrow live from Normandy.

A scary moment in today's final round of the National Spelling Bee. That's ahead.

(COMMERCIAL BREAK)

BLITZER: Take a look. Here's how you're weighing in on our "Web Question of the Day." Remember this, is not a scientific poll.

It takes a special kind of person to be able to spell alopecoid, particularly when you're under pressure. And 13-year-old Akshay Buddiga certainly was under pressure. He was a contestant in the National Spelling Bee when he fell lightheaded and fell. To the audience amazement, he managed to pick himself up and go on to spell alopecoid. It means fox like, by the way. He didn't win, though.

(BEGIN VIDEO CLIP)

DAVID TIDMARSH, CONTESTANT: I'll talk through this. A-U-T...

(END VIDEO CLIP)

BLITZER: That honor went to 14-year-old David Tidmarsh of Indiana. He spelled autochthonous. It means originating where it is found. Our congratulations to both young men.

I'll be in Normandy tomorrow for a special WOLF BLITZER REPORTS.

"LOU DOBBS TONIGHT" starts right now.

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