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LOU DOBBS TONIGHT

Saudi Arabia Gives Islamist Terrorists Final Chance to Surrender; U.S. Olympic Uniforms Not Made in the USA

Aired June 23, 2004 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Tonight, an ultimatum and an offer of amnesty. Saudi Arabia gives radical Islamist terrorists a final chance to surrender or face the full force of Saudi law.
(BEGIN VIDEO CLIP)

CROWN PRINCE ABDULLAH, SAUDI ARABIA (through interpreter): We announce for the last time that we're opening the door of forgiveness and return to righteousness.

(END VIDEO CLIP)

DOBBS: We'll have a live report from Riyadh.

I'll also talk about the significance of the Saudi ultimatum for the war on terror. I'll be talking with three leading experts on Saudi Arabia.

A dramatic new account of the invasion of Iraq from the perspective of some of the most battle-hardened troops in the Marine Corps. Author Evan Wright joins me.

In Exporting America tonight, our Olympic athletes will be proudly representing this country in Athens this summer, but, incredibly, those athletes will be wearing uniforms not made in the USA.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I think that American products should be made right here in America, especially when you're representing us worldwide.

(END VIDEO CLIP)

DOBBS: And in Face Off tonight, Accenture won a massive Homeland Security contract, although the company is headquartered overseas. I'll be joined by two lawmakers who will debate this highly controversial deal, Congressman Tom Davis, Congressman Marion Berry.

ANNOUNCER: This is LOU DOBBS TONIGHT for Wednesday, June 23. Here now for an hour of news, debate and opinion is Lou Dobbs.

DOBBS: Good evening. Saudi Arabia today issued an ultimate to radical Islamist terrorists who are trying to overthrow the Saudi government and force Westerners to leave the country. The Saudi crown prince gave the al Qaeda terrorists one month to surrender with an offer of amnesty for terrorists who turn themselves in. The ultimatum comes nearly a week after terrorists beheaded an American contractor, Paul Johnson.

Nic Robertson reports from the Saudi capital of Riyadh -- Nic.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Lou, the offer came in an extraordinary announcement on Saudi television, a four-minute address by Crown Prince Abdullah, the de facto ruler here. He told everyone listening right across this nation that al Qaeda members should turn themselves in. They have one month to do it, to find the righteous path back to forgiveness. He said that...

(BEGIN VIDEO CLIP)

CROWN PRINCE ABDULLAH (through interpreter): Everyone who belongs to the group that did itself such a disservice, including those who were not arrested during the recent terror attacks, will have the chance to go back to God and review themselves. Whoever admits of guilt and gives himself in willingly during a period of one month from the date of this speech, that person is safe and will be treated based on God's law.

(END VIDEO CLIP)

ROBERTSON: The statement went on to say that any al Qaeda members that didn't respect this offer, didn't try to deal with the government could face the full force of the government.

This is being interpreted here, as sources tell us, as the government taking a timely opportunity with the killing of an al Qaeda leader last week, to try and reach out to younger members of al Qaeda, as al Qaeda here in Saudi Arabia tries to form a new leadership and gather support.

A timely move, according to sources here -- Lou.

DOBBS: Nic, thank you very much.

Nic Robertson reporting live from Riyadh.

Joining me now to discuss this new Saudi ultimatum and the offer of amnesty and what it could mean for the war on radical Islamist terrorism are three leading experts on the Middle East and Saudi Arabia.

Craig Unger is the author of "House of Bush, House of Saud"; Stephen Cohen, president of the Institute for Middle East Peace and Development; and Ambassador Frank Wisner, who rose to the highest ranks of U.S. diplomatic service during a distinguished career overseas and in this country.

Good to have you all here. FRANK WISNER, FORMER U.S. AMBASSADOR TO EGYPT: Thank you, Lou.

DOBBS: I'm going to turn to you first, Craig. This development looks like a shift, a significant shift, in Saudi policy towards terrorism within Saudi Arabia.

CRAIG UNGER, AUTHOR, "HOUSE OF BUSH, HOUSE OF SAUD": Well, I don't really know about that. I see the kingdom as being pulled in two directions at once. That is, on the one hand, they'll announce new reforms. On the other hand, they will jail reformers.

On the one hand, Prince Bandar will issue edicts against al Qaeda, and, the next day, Crown Prince Abdullah will say that Zionists were actually responsible for some of the bombings. So I see it as going in two directions at once and that there's enormous instability.

And what scares me is that, well, is this signal the endgame of the long-term relationship between Saudi Arabia and the United States that has been so important.

DOBBS: Your thoughts, Steve?

STEPHEN COHEN, PRESIDENT, INSTITUTE FOR MIDDLE EAST PEACE AND DEVELOPMENT: I think that it's very important that the crown prince has taken the personal responsibility for this fight, and I think that's a very positive thing.

I think that the fact that they were successful in killing one of the leaders of al Qaeda in Saudi Arabia last week indicates that they feel a little more confident in being able to talk directly to the people. The crown prince decided today to go directly to them.

And I think that what he was saying was not only to those who are part of al Qaeda, but to the wider circle of people who have some sympathy with them and who are an important part of the problem for Saudi Arabia to make sure that most of the people are with the government when they go after the terrorists.

They want to make sure that this does not produce an internal war. They want to make sure that this is the government overwhelmingly supported by its people in destroying the terrorist movement.

DOBBS: Mr. Wisner, is it your judgment that this is a significant shift in strategy, nor is it, in point of fact, a reaction to a government that finds itself under desperate pressure?

WISNER: No, I think this is basically very good news for the United States, and that is that the Saudis are determined to root out the terror cells that are disruptive in the country, threatening the regime and targeting Americans and American interests in Saudi Arabia.

This is the basic good news. I believe the Saudis have been on this track since the first attacks by the terrorists against foreign communities in Saudi Arabia several weeks ago. But I think they're serious and, therefore, I believe it's on track, it's something we need to encourage.

And it's going to take a long time. We can't count on the struggle against terror inside of Saudi Arabia being solved quickly.

DOBBS: Craig, you talked about the relationship between the United States and Saudi Arabia perhaps being destabilized. Your best judgment, your best analysis?

UNGER: Well, I'm really thinking in the near term; that is, in the next year or two. You see a number of factors. There will be a succession crisis in Saudi Arabia coming up. That is, Crown Prince Abdullah is 80 years old. So there are real questions there.

You have the ascendancy of China with soaring energy needs, and it will be competing with the United States as a rival for Saudi's -- for trading with Saudi Arabia. So there are issues like that that are in the works.

DOBBS: One of the issues, as Craig lays out here, no one, it seems, in discussing the Middle East or specifically Iraq, Saudi Arabia, Kuwait, want to talk about the central issue, and that is oil, and oil is absolutely critical to this economy, Western economies, China, as Craig suggested. How large a role do we expect those considerations to play? Do we expect to see, Stephen, a significant shift in U.S. strategy?

COHEN: I think that the United States' relationship with Saudi Arabia and the importance of Saudi oil to the United States has not changed. I think it's been understood by American presidents since Franklin Roosevelt met with the Saudi king towards the end of World War II, and I think that that hasn't changed, and I think there's just too much silly talk about our being able to jettison this relationship. I think it's not sensible.

DOBBS: Not sensible? Do you concur?

WISNER: I think it's not sensible. I think Steve's absolutely right. It's not just about oil, though. The American relationship with the Middle East, more broadly our quest for peace and stability in the Middle East, rests on key American relationships with Israel, with Egypt, and notably with Saudi Arabia. We need the Saudis to be part of the triangle that supports our presence in the region, and, therefore, our relationship with the Saudis is just critical.

DOBBS: Two basic initiatives within the U.S. foreign policy in the Middle East for decades has been Israel and oil, particularly Saudi oil. If there is, in all of this, any lesson about democratization in the region, as the Bush administration articulated it more than a year ago, what is it?

WISNER: Well, democratization, I believe, is a long-term American goal. We all ought to work for it. But I also believe it can't be imposed on the Middle East. The Middle East is a hugely varied scene, and it will -- democracy will emerge carefully with quiet encouragement, but not by bullying.

DOBBS: Craig Unger, Stephen Cohen, thank you very much.

Ambassador Frank Wisner, thank you.

WISNER: Thank you.

UNGER: Thank you.

COHEN: Thank you.

DOBBS: Britain tonight says it now expects Iran to release those eight captured British Marines tomorrow. The Iranians arrested those Marines in the Shatt al-Arab Waterway between Iran and Iraq earlier in the week, Iran says the British Marines apparently strayed into Iranian waters by mistake. The Marines were delivering a patrol boat to the new Iraqi river patrol service.

In Iraq today, an explosion killed an Iraqi national guardsman and wounded four other Iraqi soldiers. Those troops trying to diffuse a bomb in the northern city of Mosul when it exploded. There were no American casualties. The U.S. military today said an air strike on a terrorist safehouse in Fallujah last night killed 20 foreign fighters. That safehouse was used by followers of Abu Musab al-Zarqawi, al Qaeda's leader in Iraq.

In Washington today, Secretary of State Colin Powell swore in the new U.S. ambassador to Iraq, John Negroponte. Ambassador Negroponte will be in charge of the American embassy in Baghdad after the hand- over of power to the Iraqis on June 30. Ambassador Negroponte, obviously, his previous post serving as ambassador to the United Nations.

The United States today abandoned its effort to convince the U.N. Security Council to shield American troops from international criminal courts. U.S. diplomats said they failed to win enough support to pass a resolution that would have given American troops immunity from prosecution for war crimes.

(BEGIN VIDEO CLIP)

JAMES CUNNINGHAM, U.S. DEPUTY AMBASSADOR TO THE U.N.: In the absence of a new resolution, the United States will need to take into account the risk of ICC review when determining contributions to U.N.- authorized or established operations.

(END VIDEO CLIP)

DOBBS: The United States had previously said absent that immunity, as it has enjoyed for years, that there would be a review of funding.

Major developments tonight in another international crisis. The United States has offered North Korea economic incentives and security guarantees to end its nuclear weapons program. The move tonight is a dramatic reversal of U.S. policy toward North Korea, a country that President Bush once declared to be part of the axis of evil. Kitty Pilgrim reports. (BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN BUSINESS CORRESPONDENT (voice-over): The U.S. offer of incentives is brand new, a complete departure from the hard- line approach that called North Korea part of the axis of evil and refused to give in to "nuclear blackmail."

Now there are rewards for North Korea giving up its nuclear program. Even if they're rejected, many think the approach may be tailored to demonstrate to allies -- Russia, Japan, China and South Korea -- U.S. willingness to solve the issue diplomatically.

IAN BREMMER, PRESIDENT, EURASIA GROUP: That's clearly what the Bush administration is looking for right now. They do not want this to devolve into a crisis before the elections. They're hoping that they can get more pressure from the multilateral group, from the international community, sooner rather than later, without raising any escalation.

PILGRIM: The biggest incentive offered to North Korea is much- needed fuel oil. The United States would provisionally agree not to attack North Korea. In return, North Korea must fully disclose its nuclear program, stop all nuclear activities, and allow inspectors to return. Analysts say when the hard-line didn't work, a new approach was needed.

KURT CAMPBELL, CENTER FOR STRATEGIC INTERNATIONAL STUDIES: There is an interest in at least trying to do diplomacy with North Korea with no blinders on, with a full appreciation that they cheat, that they do things behind the scenes.

We should acknowledge that, but also appreciate that it is probably in their best interest to try to find a way to see if we can do business with this regime that really, in many respects, is completely reprehensible.

(END VIDEOTAPE)

PILGRIM: Now many analysts say the Bush administration is anxious to show progress on North Korea in advance of the elections. North Korea also has its eye on the November U.S. presidential elections. The hard-line approach was expected to change if there was a change of administration. Now it seems the hard-line approach has changed already -- Lou.

DOBBS: And correct me if I'm wrong, Kitty. This change in policy, this reversal, was carried out without any acknowledgment by the Bush administration that there had been a 180-degree change in policy.

PILGRIM: That's exactly right, and it is quite a departure from what they were saying initially. It is perhaps a complete different approach because all others have failed.

DOBBS: Kitty Pilgrim.

Thank you.

That brings us to the subject of tonight's poll. Do you believe the Bush administration should offer security and energy aid to North Korea in exchange for an end to its nuclear program? Yes or no? Cast your vote at cnn.com/lou. We'll have the results of that poll later in the broadcast.

Still ahead tonight, American athletes heading to the Athens Olympics with uniforms that weren't made in the USA. We'll have a SPECIAL REPORT in Exporting America tonight.

And Congressman Frank Wolf will be here to tell us why he says the federal government should spend millions of dollars to study offshore outsourcing by corporate America.

And a new book written by an anonymous high-level CIA official says the United States is losing the war against radical Islamist terrorists. We'll have that special report. Our National Security Correspondent David Ensor.

And airports around this country consider whether the federal government's overhaul of airport security has made them any safer.

All of those stories and a great deal more coming right up.

(COMMERCIAL BREAK)

DOBBS: Tonight, the exporting of America and a tremendous source of pride for this nation, the United States Olympic team. The summer games in Athens begin in less than two months now, and U.S. Olympians will be wearing uniforms not made in the USA.

Peter Viles reports.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT voice-over): It doesn't get much more patriotic than this -- the flag, the anthem, American athletes at the Olympic village wearing those Canadian uniforms made in China. What? Well, that's right. At the opening ceremonies in Athens, our Olympic athletes will wear a Canadian brand, Roots, clothing made in China and, on the medal stand, if they win, a German brand, Adidas, which makes apparel in Malaysia and Vietnam.

UNIDENTIFIED MALE: From a patriotic standpoint, I don't think it's too cool. It's like the U.S. Air Force or the Army saying, yes, let's buy, you know, Chinese-made products and put our troops in that versus having American people make them.

UNIDENTIFIED FEMALE: I totally see stuff wrong for that. I think that American products should be made right here in America, especially when you're representing us worldwide.

VILES: The United States Olympic Committee says it prefers American brands, and, in competition, many U.S. athletes will wear American brands. But the committee also looks for merchandise that will sell to raise money to fund Olympic training, and, right now, Canada-based Roots is a hot brand. Its berets were the toast of Salt Lake City two years ago, and it has new berets designed for Athens.

JIM GRICE, U.S. OLYMPIC COMMITTEE: Given that we have a preference for U.S. Olympic companies, we also need to consider that our athletes have a huge impact on what we do, and, simply put, they love the Roots product.

VILES: American companies have made Olympic uniforms in the past -- notably, Reebok, Levis and Champion. But licensing contracts are risky. The apparel company typically guarantees a certain dollar amount of royalties to the Olympic Committee and then is on its own to sell enough Olympic gear to cover that.

(END VIDEOTAPE)

VILES: The bottom line here is the Olympic Committee acts like a typical American business in these deals, which often means having those USA uniforms made in cheap overseas labor markets -- Lou.

DOBBS: China, Malaysia, where else?

VILES: Malaysia, Vietnam.

DOBBS: Remarkable.

VILES: And some of the Roots stuff is made in Canada.

DOBBS: Well, that's terrific, if you happen to be Canadian.

VILES: Sure.

DOBBS: We love Canadians.

VILES: Sure do.

DOBBS: But -- we love everybody, actually, but we kind of love America, too.

VILES: And these Canadian neighbors to the north, the Roots company, they have a contract for 2008 as well.

DOBBS: Well, I love the idea of the entrepreneurial instincts of Roots, but, at the same time, one has to question why the Olympic Committee is taking the lowest possible denominator into account here. The second part is I think we should point out, in all apparel, 95 percent of that which consumers in this country buy is, after all, foreign made. So it's a little tough.

VILES: So, even if they take an American brand, such as Nike or Champion, there's a good chance that American product, American- branded product, is made overseas.

DOBBS: Outstanding.

Appreciate it, Pete. Peter Viles.

DOBBS: Well, my next guest says the American people need a lot more information about the exporting of America, the outsourcing of American jobs the cheap overseas labor markets.

Congressman Frank Wolf today helped secure a $2 million grant to study the effect of offshore outsourcing to India, China and other cheap labor markets. This funding is part of a Commerce Department appropriations bill that is expected to go before the full House next month.

Congressman Wolf is chairman of the House Commerce, Justice and State Appropriations Subcommittee, joining us tonight from Washington, D.C.

Congressman, good to have you with us.

REP. FRANK WOLF (R), VIRGINIA: Good to be with you.

DOBBS: You are a rare person, if I may say, in Congress right now. You actually want to know the facts fully before moving ahead? I have to compliment you and just say do you feel a little unique?

WOLF: Well, I'm worried about the country, and I know there's been stories. I personally think offshoring is a problem. I hear both sides saying it is a problem, it is a problem, it's not a problem, and I wanted to get the information.

And so what we have done is we have asked the National Academy of Public Administration, totally nonpartisan, been in operation for 30 years -- we used the same group when we reformed the FBI -- to look at this and come back and give us the information both with regard to manufacturing jobs and also with regard to high-tech jobs.

There's another element too. If young people are seeing that our jobs are going offshore, they may not want to major in mathematics or physics or chemistry or computer sciences.

DOBBS: Right. As a matter of fact in computer sciences, enrollments at the major universities down, as you know, Congressman, 23 percent from...

WOLF: They are down.

DOBBS: ... a year ago, to just support your point. When that study is completed, will we know how many jobs are actually being outsourced to cheap overseas labor markets, and how long will it take?

WOLF: The study will take probably six to nine months. The National Academy will have to gather all of the data, but we should know everything because we're going to ask them to find out how many jobs have gone abroad, how many high-tech jobs, how many manufacturing jobs, where have they gone.

And, also, in this issue, with regard to China, there's sort of a moral dimension here because, as you may know, China has several Catholic bishops in jail. They're persecuting the Protestant Church. They're persecuting the Buddhists in Tibet. I've been in Tibet to see the persecution. They're persecuting Muslims. They have slave labor camps.

So there's a certain moral dimension to this, in addition to the economic dimension.

DOBBS: Now there's no question that we have very successfully compartmentalized our perspective on China in commerce and politics, human rights, and trade. The question, I guess, that is natural at this point: How much opposition did you have to finding -- putting forward this legislation to find out exactly what is going on?

WOLF: Not very much. We reported it out of committee today. There was a unanimous vote on the overall bill. This subject never came up. We told members that it was in, but nobody objected to it, and we will bring it up on the floor probably the first or second week of July, and I expect it will pass, and, hopefully, the Senate will take it.

I mean, why would anyone be opposed to find out if there's a problem, how bad the problem is, what we can do about it, if there's a problem in schools and education, so -- but we had no opposition today.

DOBBS: Well, that's outstanding because the people who have studied it to this point, as you know, Congressman Wolf, are the ITAA, the Chamber of Commerce, McKinsey, people who either enable or are directly involved in outsourcing, and, lo' and behold, they don't see it as problem. Meanwhile, hundreds of thousands of Americans who have lost their jobs do.

We'll -- to just give your effort a boost, we'll donate all of our data that we've accumulated here on our list of companies exporting America to the effort, and we appreciate your effort and congratulate you.

WOLF: Good. Thank you very much, Lou.

DOBBS: Congressman Frank Wolf.

Thank you.

Just ahead, on the campaign trail, Senator John Kerry accuses President Bush and Republicans of dividing the nation. We'll have that report.

And the U.S. government awards Accenture a potentially $10 billion contract, but Accenture, of course, is a foreign-based company, and that controversial contract is at the center of our debate in tonight's Face Off.

Airport screeners, a critical first line of defense against terrorists. Some changes may be in store for the way they do that vital job. We may be going backwards here. We'll tell you how the government is preparing to make that change.

Stay with us.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Here now for more news, debate and opinion, Lou Dobbs.

DOBBS: In tonight's campaign journal, Senator John Kerry spent the day in California where he lashed out at Republicans and called President Bush the most divisive president in modern history. Kerry, who has taken a slight lead over President Bush in several national polls, today spoke to the Service Employees International Union and laid out his first plan of action if elected president.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: The first legislation that I will fight for and challenge the Congress to pass, before it does anything else, is something that you have been demanding for a long time, something you've been setting the trend for in this country. I will introduce a bill that finally makes health care more affordable and accessible for all Americans.

(END VIDEO CLIP)

DOBBS: President Bush today combined business with campaign politics in Philadelphia. President Bush promoted his administration's efforts to fight AIDS at home and abroad and made Vietnam the 15th nation eligible for help under his global AIDS program. President Bush also managed to spend a few hours behind closed doors with wealthy donors, a meeting that netted about $1.5 million for the Republican National Committee.

And finally, following up on a story we reported to you last week, Congressman Chris Cannon of Utah defeated Matt Throckmorton in a bid for reelection to the House. The election gained national attention after it was revealed that one of Cannon's staffers asked illegal aliens to break the law and funnel money into Cannon's campaign.

Tonight, the federal government's overhaul of airport security following September 11 faces a critical test. Airports around the country are deciding now whether to stop using federal security screeners and to rehire those private security firms.

Jeanne Meserve reports.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): They wear a Transportation Security Administration uniform, meet TSA entrance and training requirements, and perform a TSA function. But at San Francisco International Airport, the passenger screeners are employees of a private security contractor, not the federal government. MICHAEL MCCARRON, SAN FRANCISCO INTERNATIONAL AIRPORT: From the airport's perspective, we're very, very pleased.

MESERVE: At San Francisco, a central video control room monitors all security lanes. If a clog develops, private screeners can be moved quickly.

MCCARRON: We don't have the same cumbersome rules federal employees are bound by, as far as where we put them. Hiring, the firing process is more efficient for a private contractor than the federal government.

MESERVE: San Francisco was one of five airports that, as part of a TSA test program, continued with private screeners when others were federalized. But Wednesday, other airports got guidance on how they too can opt out of using TSA screeners.

ASA HUTCHINSON, UNDERSECRETARY DEPT. OF HOMELAND SECURITY: The airport must form a for-profit, private company that meets the criteria established by law and by the TSA.

MESERVE: The TSA insists that federal security standards will be maintained and enforced everywhere, that private security vendors must win the approval of the TSA before they can bid for screening contracts and that they will remain under TSA supervision.

Though the majority of airports are likely to stick with TSA screeners, estimates are that between 40 and 100 will at least explore opting out. They have complained about an unresponsive TSA bureaucracy that has left them with too few screeners and long security lines.

(on camera): The point of federalizing screeners after 9/11 was to improve security. The Department of Homeland Security's inspector general says on that score, private and federal screeners perform about the same. In his words, equally poorly. Jeanne Meserve, CNN, Washington.

(END VIDEOTAPE)

DOBBS: The Bush administration today admitted several airlines secretly provided passenger information for a U.S. government screening system. The acting administrator of the transportation security administration, David Stone, said America West, Frontier and Continental Airlines all gave passenger information to the TSA. Stone also said two main reservation systems, Saber and Galileo provided names, addresses and even credit card information to the TSA. That screening system, under development, would run a background check on anyone who buys an airline ticket in an effort to find possible high hijackers.

In tonight's "Face-Off," the debate over the U.S. government's award of contracts to foreign companies. At issue, a Homeland Security contract that could be worth up to $10 billion, awarded to Bermuda based Accenture. On one side of the argument is Congressman Tom Davis of Virginia who supports the contract. Congressman Davis says the agreement with Accenture is a critical component of our homeland security effort and says the government must award contracts to the companies that deliver the best solution at the best price.

Congressman Marion Berry of Arkansas has a completely different view. He sponsored an amendment to take the contract away from Accenture, but it was killed in the House. Congressman Berry says Accenture sold its U.S. citizenship to reduce its tax liability. They both join us now. Good to have you with us.

REP. TOM DAVIS (R), VIRGINIA: Thank you.

DOBBS: Let me start with you, Congressman Davis. This Accenture contract, a Bermuda-based company, bidding against two U.S.-based companies. Why would you find that appealing?

DAVIS: Well, we had a corporate inversion part of the procurement, where companies that have left the U.S. and incorporated offshore were ineligible to bid. In the case of Accenture, there were 40 partnerships globally that decided to incorporate and incorporated in Bermuda. But all of the work is performed in the United States under this particular -- there's no offshoring of jobs. They are rated the best technically. And frankly in protecting our borders, I want to have the best technical solutions. And these are Americans, working on American soil, performing the jobs.

DOBBS: Yes, but at the same time, Accenture is a derivative, as you know, of Arthur Andersen, based in Chicago and they made a decision for accounting and financial reporting reasons and tax reasons to be based in Bermuda. That is of no concern?

DAVIS: All of their American income -- in fact, they'll pay a higher rate on their taxes than their competitors in this particular contract of the money that goes into this particular procurement. This is a global economy, Lou, and when it comes to national defense and when it comes to protecting the homeland, I think we need to look at the best technical solutions around the globe and not settle for second best.

DOBBS: Congressman Berry, do you agree that Lockheed Martin and Computer Sciences are second rate companies?

REP. MARION BERRY, (D) ARKANSAS: No, I think...

DAVIS: I didn't say that either, Lou.

BERRY: ...they're capable of doing this job. Lou, this is a very simple issue. We've got a company, because of circumstances that they generally created for themselves made a conscious decision to renounce their American citizenship just to save some tax dollars, to avoid taxes, that they justly owe. To do that and move offshore, renounce their American citizenship and now they ask us to trust them with the $10 billion contract to control access to our borders. If anyone would renounce their American citizenship just for money, as Accenture did, and then expect us to trust them to control our borders, that is just too much of a stretch for me. I don't see how if you would sell your American citizenship, what else might you sell?

DAVIS: Lou, that's just a flat-out misstatement. They were never an American citizen to begin with. They were 40 different partnerships around the globe that decided to incorporate. And what they decided is that their German income would be paid in Germany on tax there. Their American income would be paid in America.

And I didn't say that Lockheed Martin or CSC, who has a large presence in my district, both of them do, are second-rate companies. It's just that the people who rated this looked at the solution offered, in this case by Accenture to be a superior product. These other companies are very good. And I think would provide very good solutions. But you have to look at the professionals that look at this to decide what is the best product and not you or me looking this over. I think we have to respect the process. It's not a corporate inversion. They were never American -- this was never an American corporation to begin with.

DOBBS: I'm quite aware of that.

DAVIS: And he said opposite. And I want to just set the record straight.

DOBBS: Surely, and we want to do that. Let me ask you both this, we're now looking at a country whose manufacturing base is declining. We're looking at serious national security issues on our borders. We are asking corporations to pay taxes to employ workers in this country. In many cases, they are not doing that. They are, in fact, exporting jobs. Why in the world would we not put a premium on American-based companies, significant premium on those businesses when it comes to our national security? It doesn't seem to me to be much different than missile defense, armaments for our servicemen and women. What should be the right criteria put in place for awarding U.S. government contracts? If I can start with you, Congressman Berry?

BERRY: Lou, right now, we have men and women on the battlefield. We have men and women dying on the battlefield. Those that return are going to go to work and have to pay taxes to pay for this contract. It is not even close to being fair or right to ask them to pay taxes and then turn around and take their tax money and give it to a company that chose to renounce their U.S. citizenship just so they could make a little bit more money. That just simply doesn't make any sense. I don't see how we could possibly be expected to take a company like that and have any faith in them doing the right kind of job.

DOBBS: Congressman Davis, you get the last word.

DAVIS: Well Lou, the Nestle company has 400 employees in Jonesboro, Arkansas, and sells to the U.S. Army. They're a Swiss company. Should we bar them from doing that? That's ridiculous. In this particular case, all of the work is going to be performed in the United States. It's going to be performed by Americans. Most of it by American companies that are located in the United States. In fact, the company that wins this is an American corporation, it just happens that the parent is located offshore.

But this is a global economy today. This is not a corporate inversion under the statutory limits. And we need to protect our borders with the best technical solutions that we can find and they were deemed the best in this case. We're running an $8 billion trade surplus in information technology. Trade surplus -- to invoke what Mr. Berry wants to do will invite retaliation around the globe and can jeopardize that surplus. And I don't want our information technology to go the way of our manufacturing base and be moving off. So, I think we made the right decision. And so did the House.

DOBBS: Congressman, I'd like to explore that number. You said that we have a technology trade surplus?

DAVIS: Information technology, I.T.

DOBBS: Ah, OK. Because we are now running a $30 billion trade deficit in technology along with a half trillion dollar deficit all the way around.

DAVIS: This is an I.T. contract, this is an I.T. contract and this is information technology.

DOBBS: And we've managed to drive that plus to what did you say, $6 billion within I.T.?

DAVIS: $8 billion in I.T. And this would invite retaliation.

DOBBS: Retaliation. I guess I would ask you Congressman, what kind of retaliation? We are spending half a trillion dollars more with our trading partners than they are with us. How does one retaliate effectively in that circumstance?

DAVIS: Well, the largest growth areas in my district and others right now are foreign markets, where we put information technology and do it for governments in France and England and China and other countries. And in these cases, if we were to lose these contracts that's a big growth industry for us. So we'd be driven out of those areas.

DOBBS: Well, it looks like we've got about a half trillion dollars to play with there. That might be able to -- that would represent a sizable investment for domestic production and the creation of jobs.

DAVIS: I don't think you can mix manufacturing and I.T. I think they're different, Lou.

DOBBS: Then I will defer to your judgment on that. We're out of time. And I'll invite you back so we can squabble over there. Congressman Berry, thanks for being here. Congressman Davis, we thank you very much. DAVIS: Thank you.

BERRY: Thanks, Lou.

DOBBS: Coming up next, many of you were outraged about the use of private security guards in Iraq. We'll be hearing your thoughts later.

Also ahead, a startling new claim by a serving CIA official who is writing anonymously. And in that writing, says that the U.S. is losing the war against radical Islamist and global terrorists.

Plus the war in Iraq through the eyes of an embedded reporter with the U.S. Marines. Evan Wright, contributing editor "Rolling Stone" magazine, author of "Generation Kill" is my guest.

And new criticism tonight about Wal-Mart's treatment of female employees. Christine Romans with the story. Coming right up.

(COMMERCIAL BREAK)

DOBBS: A top CIA counter-terrorism officer has written a book that says the U.S. is losing the war on terror. The officer, who has served in the CIA for two decades, also criticizes the Bush administration's policy on Iraq. He says Saddam Hussein posed no immediate threat to the United States before the war in Iraq.

National security correspondent David Ensor with the report -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Lou, this new book, "Imperial Hubris," makes chilling reading. Mr. Anonymous -- and we have to call him that and nothing more -- insists that the West is losing the war on terror. I read one part of it and asked him what he meant by it. He said this "I write this book with a pressing certainty that al Qaeda will attack the continental United States again, that its next strike will be more damaging than 11 September, 2001 and could include the use of weapons of mass destruction." That from a senior U.S. intelligence analyst. I asked him why he is so sure.

(BEGIN VIDEO CLIP)

ANONYMOUS, AUTHOR, "IMPERIAL HUBRIS": Based on my experience, the experience of the people I worked with, we have not taken the measure of our opponent. We don't appreciate its flexibility, its size, its determination and sophistication. I think there's a certain amount of what can guys with turbans squatting in the desert do to the United States of America. I think we've just grossly underestimated this threat. And I think there's -- there's no more -- there's no more perfect validation of that contention was the -- than the fact that we went to a war in Iraq. I don't think we -- had we appreciated the threat bin Laden poses, to the U.S., we would have been satisfied with Mr. Lincoln's advice of one war at a time.

ENSOR: You say you think your own children may be involved in this war?

ANONYMOUS: I suspect that if we continue with status quo policies and status quo behavior, and a misunderstanding of the enemy, this war could continue far into my children's lifetime. And certainly, be fought more in the continental United States.

(END VIDEOTAPE)

ENSOR: Mr. Anonymous, Lou, says it's not a war on terrorism. It's a war about U.S. policies and that U.S. policies are going to have to change or the war will continue and expand -- Lou.

DOBBS: We were talking about this book. In point of fact, it's not a book yet. It's really in manuscript form, is it not?

ENSOR: Yes, I have the advanced galleys. I think it's coming out next week is my understanding.

DOBBS: OK, terrific. And vetted by the CIA, of course.

ENSOR: That's right.

DOBBS: David Ensor, national security correspondent. Thank you, David.

Now taking a look at some "Your Thoughts," many of you are writing in about the use of private security forces in Iraq.

Mary Crowell of Jacksonville, Florida, "It is no wonder that the present administration does not want to permanently increase our military; they are apparently planning to outsource our wars to the private sector."

Michael in Oveida, Florida, "Why is it so crazy to have private companies providing security. Name one thing besides our military that the government does a good job at."

And Gladys Ramirez (ph) of San Diego, California. "I would like to know why the border patrol uniforms are made in Mexico? How stupid can we be? Why doesn't the government listen to the people? They are giving our country away!"

R. Siton of Signal Mountain, Tennessee. "Outsourcing border patrol uniforms, now the military, why am I not surprised?"

Sends "Your Thoughts," e-mail us at loudobbs@cnn.com.

Coming right up Wal-Mart fights back against a major discrimination lawsuit. Christine Romans will have the story.

And a dramatic account of U.S. Marine Corps attack on Baghdad. Evan Wright, author of a controversial new book "Generation Kill" is our guest.

(COMMERCIAL BREAK) DOBBS: My guest tonight is the author of a controversial new book on the invasion of Iraq. Evan Wright, embedded with the Marines 1st Reconnaissance Battalion, one of the first units to reach Baghdad.

Evan's new book is entitled "Generation Kill: Devil Dogs, Icemen, Captain America, the New Face of American War."

Evan Wright joins us from Washington.

Evan...

EVAN WRIGHT, AUTHOR: Hi, Lou.

DOBBS: This terrific new book of yours, gritty, warts and all, U.S. Marines in combat. Some of those Marines disciplined as a result of some of the things you wrote.

Do you regret being quite so candid in some instances?

WRIGHT: Not a bit, Lou. I was -- I was embedded. It almost felt like I was a stowaway at the time. I was in the very lead Humvee of the entire Marine invasion force through central Iraq at many times. I disappeared inside this unit for a month and so, of course, a portrayal of being with a team of combat Marines is quite gritty. There are a lot of civilian casualties that they -- that I witnessed and it's quite profane too, as Marines are. So...

DOBBS: Those Marines occasionally being profane, if you would have it that way. Evan, also involved in deadly combat, and your readers will understand much of what happens in that context. But, in fact, the Marine Corp's done a reversal, hasn't it, in terms of the book?

WRIGHT: The point is that these Marines did not ask to have a reporter in their midst. They were assigned me as their reporter. Once they were very candid in my presence and I reported this as honestly as I could. The Marine Corps has come down and it is attempting to punish a few of these Marines.

DOBBS: They are still -- it was my understanding that they'd backed away from that, but they're going forward?

WRIGHT: It's my understanding that there is one marine in particular that they are putting pressure on to get to him leave the 1st Reconnaissance Battalion. A marine who, incidentally, was wounded in Fallujah recently.

DOBBS: That's a -- well, if I just say as a reader and one who's a fan of the marine corps, that's a shame. Because the men you described in your book deserve all our support. You're dealing straight on with the issue of war, sort of as a Hallmark card, as it's been put here. And it certainly is not that. Let me ask you something that, perhaps, is a little off base. What do you think of the idea, the fact that the media is not permitted to show those flag- draped coffins as our young men and women who have made the ultimate sacrifice return home? WRIGHT: I think information is good and I think the American public is mature enough for the information that comes out of war which includes a lot of unpleasant realities. And so it should be opened up.

DOBBS: Evan Wright. The book is "Generation Kill." We thank you very much for sharing your time and we appreciate your great work.

WRIGHT: Thank you, Lou.

DOBBS: That brings us to tonight's thought. "When the will defies fear, when duty throws the gauntlet down to fate, when honor scorns to compromise with death -- that is heroism." Those are the words of Robert Green Ingersoll.

A reminder now to vote in our poll. "Do you believe the Bush administration should offer security and energy aid to North Korea in exchange for an end to its nuclear program?" Yes or no. Please cast your vote at CNN.com/lou. We'll have the results for you coming right up.

Still ahead, more of your thoughts and the nation's largest retailer has new critics tonight and a new defense. Christine Romans with the story in just a moment.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Stocks higher on Wall Street today. The Dow up 84.5 points. The Nasdaq rose almost 27. The S&P up almost 10 points. Wal-Mart shares, however, down to what is now a six-month low, a day after a federal judge approved class action status for a discrimination suit against Wal-Mart. Christine Romans with the story -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Socially responsible mutual fund managers say we told you so. Calvert Funds dumped Wal-Mart shares four years ago after what it calls a pattern of labor problems. Many other fund managers told me they wouldn't touch Wal-Mart's stock. And Tim Smith, president of the Social Investment Forum says all investors should be concerned about the vulnerability of this company. 1.3 million workers, two-thirds are women, only 14 percent are top managers. Lou, 1.6 million women in this sex discrimination class action. The estimates start at a billion dollars for back pay if Wal- Mart loses. If it doesn't, what's the price of lost reputation, they ask?

Wal-Mart is fighting this suit. It's been brushing up its image in TV ads. But sex discrimination is not its only problem. It's battling lawsuits for locking in illegal alien workers, community outrage in California, allegations it lowers the standard of living wherever it expands and complaints about human rights for the workers who make its cheap products but undercut American manufacturers.

DOBBS: They've got low prices and a lot of variety. I thought I should say something positive at the end of that.

ROMANS: Some of the mutual fund managers say there has been progress, but it's been very recent progress and it's still not a reason yet for them to look at owning Wal-Mart share.

DOBBS: Six-month low in the stock. Markets are telling us a lot. Thanks a lot, Christine Romans.

Now more of your thoughts on e-voting and a bill Congress is considering, which requires all electronic voting machines to produce a paper record. John Traver of Maplewood, Minnesota. "How can a government that cannot count terrorist attacks and deaths with months to do it be assumed to be able to count votes on the first try." I would offer one is the federal government, the other your local government but...

Allan Lodinger of Houston, Texas. "If no one has anything to hide why wouldn't they all be for a paper trail for electronic voting?"

Pretty good question. Send us your thoughts as always at loudobbs@CNN.com.

Still ahead, we'll have the results of our poll tonight. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The results now of tonight's poll. The question, "do you believe the Bush administration should offer security and energy aid in North Korea in exchange for an end to its nuclear program?" 52 percent of you said yes, 48 percent said no.

We thank you for being with us tonight. Please join us tomorrow. The United States has been hit hard by outsourcing now one filmmaker has documented the trend in a new film, "American Jobs." That story and a great deal more tomorrow. Please join us. For all of us here, good night from New York City. "ANDERSON COOPER 360" is next.

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


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