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Lou Dobbs Tonight

U.S. Hands Power to Iraqis Two Days Early; U.S. Marine Being Held by Terrorists

Aired June 28, 2004 - 18:00   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.


ANNOUNCER: Tonight, the United States hands over power to the Iraqis two days early in a secret ceremony in Baghdad.
(BEGIN VIDEO CLIP)

L. PAUL BREMER, U.S. ADMINISTRATOR OF CPA: The future of Iraq belongs to you, the Iraqi people.

(END VIDEO CLIP)

ANNOUNCER: Tonight, former secretary of state Henry Kissinger will join us to give us his assessment of the new Iraqi government and its chances of defeating the insurgents.

A U.S. Marine is missing in Iraq. Terrorists say they are holding him hostage. The Marine's family pleads for his freedom.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We pray and we plead for his safe released, and we ask all people of the world to join us in our prayers.

(END VIDEO CLIP)

ANNOUNCER: A major setback for the Bush administration in the war on terror. The Supreme Court rules that suspected terrorists can challenge their detention in U.S. courts.

And Iraq, Homeland Security, North Korea -- critics say they're all significant policy reversals that undermine U.S. credibility around the world. We'll have a special report.

This is LOU DOBBS TONIGHT for Monday, June 28. Here now for an hour of news, debate and opinion is Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening.

The United States today handed over sovereignty to Iraq 15 months after President Bush ordered U.S. troops to overthrow Saddam Hussein. The secret ceremony today took place two days earlier than planned to prevent any efforts by insurgents to disrupt the transfer of power. But today was marked by continued violence. Insurgents killed a British soldier and wounded two others in the Southern city of Basra.

We begin our coverage tonight with Christiane Amanpour in Baghdad. (BEGIN VIDEOTAPE)

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT (voice-over): At precisely 10:26 this morning, Baghdad time, Paul Bremer became the ex-U.S. administrator.

BREMER: "We welcome Iraq's steps to take its rightful place of equality and honor among the free nations of the world. Sincerely, L. Paul Bremer, ex-administrator of the Coalition Provisional Authority.

AMANPOUR: Then Bremer presented the blue-bound document, the legal transfer of sovereignty, to Iraq's new interim government. For a momentous occasion, it was understated, taking place in a small room in the prime minister's new office.

GHAZI AL-YAWAR, IRAQI PRESIDENT: This is a historical day. We fought transfer of sovereignty to the Iraqi government and the Iraqi people.

AMANPOUR: Bremer had signed the order in his own office earlier in the morning. As he said farewell to his staff on the way to the handover ceremony, he also carried a letter to Prime Minister Allawi from President George Bush formally requesting that diplomatic ties be restored between Iraq and the United States. They were broken in January 1991 just before the first Gulf War.

Bremer went from the ceremony to a helicopter, which took him out of occupation headquarters, the green zone, that had been his office and home for the past 14 months. He then boarded a plane out of Iraq and out of this job.

As Bremer was in the air, the rest of the Cabinet was sworn in. Allawi set out his agenda with a wide range of promises on everything from services to the economy, democracy and especially security. He offered a pardon for any Iraqi insurgents and former Saddam loyalists who did not have blood on their hands, that in return for information and cooperation in fingering the terrorists.

While he has repeatedly said he would impose emergency security measures, that's expected to fall short of full martial law. Allawi has yet to detail his security plan. It could include curfews and a ban on public gathering.

(on camera): A brand-new Iraqi flag now flies over this green zone, and this is once again sovereign Iraqi territory. But this country is also swept up in the terror of the insurgency, and so the mood can best be summed up as hoping for the best and preparing for the worst.

Christiane Amanpour, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: President Bush today said the Iraqi people finally have their country back after decades of brutal rule. President Bush, speaking at a NATO summit in Turkey, said terrorists will not prevent growth of Iraqi democracy.

Senior White House Correspondent John King reports from Istanbul, Turkey.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): It was a tightly held secret as the president arrived from Monday's NATO summit session.

Then this note from his national security adviser, "Iraq is sovereign." Mr. Bush scribbled his reaction in the margin, "Let freedom reign!" Then a glance at his watch to mark the moment and a celebratory handshake with the leader at his side from the beginning of the Iraq debate.

This time, no banners to declaring mission accomplished, but, while Mr. Bush was more subdued, he was optimistic and by no means apologetic.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We pledge to end a dangerous regime, to free the oppressed, and to restore sovereignty. We have kept our word.

KING: The president called the early transfer of power a tribute to Iraq's new government and a message to those behind the violent insurgency.

BUSH: Their bombs and attacks have not prevented Iraqi sovereignty, and they will not prevent Iraqi democracy.

KING: From a legal standpoint, occupation over after 14 months, but 138,000 U.S. and 12,000 British troops remain, and Prime Minister Blair warned of difficult and dangerous days ahead.

TONY BLAIR, BRITISH PRIME MINISTER: We'll stay for as long as it takes to make sure that that support is there for them so that we help them to that freedom and democracy they want to see.

KING: The NATO alliance quickly pledged help training Iraqi security forces. Not too long ago, Mr. Bush had hoped for NATO troops, not just training, but he compromised in the face of familiar opposition.

JACQUES CHIRAC, FRENCH PRESIDENT (through interpreter): It is not the vocation of NATO to intervene in Iraq.

(END VIDEOTAPE)

KING: Sovereignty ahead of schedule gained steam about a week ago, U.S. officials say, and Iraq's new prime minister gave the final approval of that late Sunday night, telling the Bush administration the sooner he took power, the sooner he could begin to tackle the serious security problems in Iraq.

And, Lou, now that the political handover is complete, U.S. officials tell us they expect the United States will give legal custody of Saddam Hussein to the new Iraqi government within a matter of days. But we also are told that U.S. military forces will continue to help guard the former Iraqi leader. As one official told me today, we want to make sure he stands trial and is not snuck out a back door or strung up a flagpole -- Lou.

DOBBS: John, thank you very much.

John King, our senior White House correspondent, with the president in Istanbul, Turkey.

Iraq's new government will stay in office until early next year when Iraq will hold its first nationwide elections. But the interim government will have only limited powers and American troops will continue to lead the fight against insurgents.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN BUSINESS CORRESPONDENT (voice-over): Interim Iraqi Prime Minister Iyad Allawi today called on all Iraqis to help fight insurgents. The success of the interim government depends on it.

IYAD ALLAWI, IRAQI INTERIM PRIME MINISTER: I call on all of the heroes of the past to eradicate the foreign terrorists that are killing our people and destroying our country.

PILGRIM: Iraqi citizens themselves have become targets, not just the coalition troops. Car bombs last week in one day killed more than 100 and wounded more than 300. Ninety percent were Iraqis.

NILE GARDINER, HERITAGE FOUNDATION: The key goal of the terrorists will be to spark off a major civil war between the three ethnic groups, and that, of course, is a key goal of a lot of the terrorist activity at the moment.

PILGRIM: So the short-term goal of the interim government will be stopping terrorism, but the longer-term challenges are the ethnic divisions.

PATRICK BASHAM, CATO INSTITUTE: The ethnic and religious divisions in Iraq are the number one problem going forward in trying to build any kind of liberal democracy. The divisions are deep, they are very serious, and, as we're seeing on a daily basis, they are increasingly violent.

PILGRIM: But some regional experts say there is a way to structure the government after general elections to cut down on ethnic divisions.

MICHAEL RUBIN, AMERICAN ENTERPRISE INSTITUTE: If people generally have local rule -- and, by this, I don't mean independence or even autonomy -- but, I mean, local city councils making decisions instead of bureaucrats in Baghdad, that's what ensures stability in the future of Iraq, and, if Kurdish areas are governed over by Kurds, and Turkmen areas are governed over by Turkmen, Sunni and Shia likewise, that's how you're going to get stability.

(END VIDEOTAPE)

PILGRIM: One of the top priorities for the Iraqi government is making sure the oil infrastructure remains intact. Losses from previous attacks on the oil facilities were put at $1 billion, and oil revenues will be needed to rebuild the country and finance the new government -- Lou.

DOBBS: An important step forward. Kitty, thank you very much.

Kitty Pilgrim.

Today's handover ceremony overshadowed the fate of a U.S. Marine reported kidnapped in Iraq. An Arab television network broadcast a videotape of a man wearing a military uniform who displayed a Marine Corps identification card. But the U.S. military has not confirmed that a Marine has been captured.

Brent Sadler reports from Baghdad.

(BEGIN VIDEOTAPE)

BRENT SADLER, CNN BEIRUT BUREAU CHIEF: Even as sovereignty was being passed to the interim Iraqi government, death threats were hanging over the heads of five hostages -- one U.S. Marine, three Turks and a Pakistani -- all Muslims.

The abducted American, Corporal Wassef Ali Hassoun, is of Lebanese origin, from the 1st Marine Expeditionary Force. He vanished a week ago. A videotape first aired by an Arab satellite channel showed a blindfolded man wearing military fatigues with a Kurd sword held over his head. A little known militant group called Islamic Reaction claims they'll behead the Marine unless prisoners in Iraq are released.

Corporal Hassoun's family in West Jordan, Utah, have identified him, but U.S. military officials have only confirmed he's listed as missing.

Meanwhile, a 72-hour clock is ticking on the threatened executions of three Turkish nationals. Video of their horrific captivity was shown Saturday.

Their abductors are understood to be loyal to the most wanted Iraqi terror suspect Abu Musab al-Zarqawi, and they warn the Turks will also be beheaded unless Turkey stops doing business in Iraq, a threat that also applies to a Pakistani driver who's held by yet another militant group.

Brent Sadler, CNN, Baghdad.

(END VIDEOTAPE) DOBBS: We'll have much more on Iraq just ahead. I'll be joined by former secretary of state Henry Kissinger who says the early transfer of power shows the fragile nature of the U.S. position in Iraq.

Nearly 150,000 American troops are still in Iraq fighting insurgents. How long will those troops have to stay? We'll have a report from the Pentagon.

And the Supreme Court gives terror suspects new rights to challenge the Bush administration and the war on terror. Our Senior Legal Analyst Jeffrey Toobin will join us.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: President Bush today said U.S. troops will stay in Iraq for as long as they are needed to stabilize the country. The transfer of power is not expected to change the number of American troops stationed in Iraq. However, it could alter their mission.

Pentagon Correspondent Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): As the interim government vows a crackdown on insurgents, U.S. and coalition forces will walk a delicate line between staying on the attack and yet stepping back to let Iraqi security forces lead the way.

DONALD RUMSFELD, SECRETARY OF DEFENSE: My guess is that every day the security forces of the Iraqi government will get stronger and stronger, and we will be helping them to do that.

STARR: A senior defense official tells CNN, however, that if an Iraqi security crackdown itself becomes violent or Iraqi martial law is imposed U.S. troops may exercise what is called the red card option, the military term for declining to join in a coalition operation.

Right now, that does not seem likely, sources say. But, in recent days, the insurgency itself clearly has grown in size and sophistication, posing a greater threat. Getting better intelligence to defeat a coordinated insurgency will dictate U.S. operations perhaps well into 2006.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: We're going to have some more bloody weeks and months ahead. I do not expect that things are going to get a lot better any time soon.

(END VIDEOTAPE)

STARR: And, Lou, U.S. forces desperately now want to show that Iraqi security forces can begin to handle the security situation there. But, by all indications, it's going to be months, perhaps well into next year, before there is real change on the ground -- Lou.

DOBBS: Barbara, thank you very much.

Barbara Starr reporting from the Pentagon.

Joining me now to discuss the impact of the handover on American troops in Iraq is General David Grange from Chicago, our Chicago bureau tonight.

General Grange, your thoughts about what this does to the U.S. military mission in Iraq?

BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: Well, I mean, the support to the campaign in Iraq's going to continue. There's not going to be any letup. There will be more training missions to train up the civil defense, military and police forces.

But there will always be a U.S. backdrop, a backdrop to back up these fledgling Iraqi forces, as well as go after high-value targets of insurgent terrorist cells throughout Iraq.

DOBBS: And the involvement of the new Iraqi government in military operations -- your best judgment about the effect there?

GRANGE: Well, the new -- the interim government will issue orders, and, actually, I think it will be well received that the orders come from a -- though interim -- Iraqi leaders instead of U.S. coalition-led force. I think it will be accepted on the street.

The perception, to some degree, is that this is still put in place by the Americans. But it will be, I think, better received by the people on the street, and I think that will take some of the pressure off the U.S. with the attitudes inside and around the cities.

I think U.S. forces will also start moving out of the city somewhat and be more in a periphery than they were in the past.

DOBBS: And the length of time, you think, will be required for the American troops to remain there? We were told in Bosnia that that -- in Kosovo that American troops would be out forthwith, and, today, they remain.

GRANGE: Well, Lou, I think what you're going to see is a good- sized force up through past the elections, somewhere around January '05, probably up through next summer, but -- and then I think that unless something drastic changes everything, you'll start seeing a phase-down. But I think you're going to see forces somewhere in Iraq for years and years to come, well past '06.

DOBBS: General David Grange, as always, good to talk with you.

GRANGE: My pleasure, Lou.

DOBBS: That brings us to the topic of tonight's poll. The question: Do you believe the successful handover of sovereignty to Iraq is a political victory for President Bush? Yes or no? Please cast your vote at cnn.com/lou. We'll have results for you later in the broadcast.

Tonight's thought is on democracy. "The spirit of democracy cannot be established in the midst of terrorism, whether governmental or popular." Those the words of Mohandas Gandhi.

This week will mark another milestone in the exploration of Saturn. The Cassini spacecraft is set to enter Saturn's orbit Wednesday after a seven-year journey. Cassini will pass through Saturn's rings and begin an orbit that will last four years. The craft has already captured stunning images of the rings of Saturn. It's now expected to send back more pictures and data on Saturn and its 31 satellites and moons. NASA launched the nuclear-powered Cassini from Cape Canaveral, Florida, in 1997.

Still ahead hereby tonight, French President Jacques Chirac tells President Bush to mind his own business. We'll have that story from the NATO summit.

Iraqi sovereignty comes two days earlier than expected. Former secretary of state Henry Kissinger joins me with his analysis of the surprising timing and the prospects of the future in the Middle East.

And then, some might call it high flexibility from the Bush administration. Critics call those decisions flip-flops. Policy changes from Iraq to North Korea and what they could mean for the rest of the world and perceptions of the Bush administration's foreign policy. We'll have a special report.

All of that and a great deal more still ahead here.

(COMMERCIAL BREAK)

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

DOBBS: In tonight's Campaign Journal, Vice President Cheney campaigned for a congressional candidate in Hebron, Kentucky, and gave supporters an update on the war on terror.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: Tyranny and violence in Afghanistan and Iraq and the rise of democracy in the heart of the Middle East will be a crucial setback for international terrorism. Because we're strong and resolute, Iraq will never go back to the camp of tyranny and terror. And America will never go back to the false comforts of the world before 9/11.

(END VIDEO CLIP)

DOBBS: Senator John Kerry spoke to reporters at the Baltimore airport today. He applauded the work of American troops in Iraq, but emphasized the need for a broader international presence.

(BEGIN VIDEO CLIP) SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL CHARACTER: It is critical that the president get real support, not resolutions, not words, but real support of sufficient personnel, troops and money to assist in the training of security forces in order to be able to guarantee a rapid, real transition and, most importantly, in order to be able to provide adequate security on the ground.

(END VIDEO CLIP)

DOBBS: And Senator Kerry today canceled an appearance at the U.S. Conference of Mayors because he refused to cross a picket line. The picket line, established and organized by Boston's police patrolmen's association. The union is protesting unresolved contract issues between police and the city.

Before the war in Iraq, the Bush administration questioned the role of the United Nations and NATO, but the Bush administration later changed its stance. This week, President Bush is working on improving relations with allies at the NATO summit in Turkey. It's just one of several major policy reversals since President Bush took office, as Lisa Sylvester now reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): President Bush has taken a hard-line stance...

BUSH: The focus right now is on Osama bin Laden, no question about it. He's the prime suspect.

SYLVESTER: ... only to back way from it a few months later.

BUSH: I don't know where he is, nor do -- you know, I just don't spend that much time on him.

You can't distinguish between al Qaeda and Saddam when you talk about the war on terror.

We've had no evidence that Saddam Hussein was involved with the September the 11th.

SYLVESTER: The White House opposed the creation of a Homeland Security Department, then changed its mind; was against a 9/11 commission, then was for it; originally insisted on the deBaathification of the Iraqi Army, and then relented. Ahmed Chalabi, once a White House darling, then had his home raided by U.S. forces.

The latest flip flop came last week with North Korea. After months of insisting that the United States would not give in to blackmail and extend any up front concessions to North Korea, the Bush administration offered energy aid and a security guarantee.

Critics say the policy shifts carry a cost.

SCOTT LILLY, CENTER FOR AMERICAN PROGRESS: A great power needs to know what it can do and what it can't do and not to make claims or have rhetoric that extends its reach.

SYLVESTER: White House supporters argue these aren't policy reversals, it's compromise.

CHARLIE BLACK, REPUBLICAN STRATEGIST: Some people might see these thing as policy reversals. What they are is tactical changes in order to make the policies work.

SYLVESTER: Or political reality catching up, as in the case of Iraq. The United States, once prepared to go it alone, has learned it's easier with the help of the United Nations and NATO.

(END VIDEOTAPE)

SYLVESTER: The big question is: Will voters hold these policy reversals against President Bush? His father had a big political flip-flop -- "Read my lips. No new taxes" -- and paid for it on Election Day -- Lou.

DOBBS: Lisa, thank you.

Well, no flip flops by France. Paris,in fact, has been a vocal and frequent constant critic of U.S. policy in Iraq. Today, President Chirac told President Bush to mind his own business on another key foreign policy issue: the future of Turkey. President Chirac said President Bush has no right to ask the European Union to admit Turkey as a member.

(BEGIN VIDEO CLIP)

CHIRAC (through interpreter): If President Bush really said that in the way that I read, then not only did he go too far, but he went into territory that isn't his. It is not his purpose and his goal to give any advice to the E.U., and, in this area, it was a bit as if I were to tell Americans how they should handle the relationship with Mexico.

(END VIDEO CLIP)

DOBBS: No word tonight on what the White House thinks about President Chirac's latest statement.

My next guest says the surprise timing of the handover in Iraq shows how precarious the security situation is in the country. Henry Kissinger served as secretary of state under Presidents Nixon and Ford and joins us now.

Good to have you here.

HENRY KISSINGER, FORMER SECRETARY OF STATE: Good to be here.

DOBBS: Moving the handover up by two days, it doesn't sound like much, but it is significant, in your judgment?

KISSINGER: Well, it's a significant event in the evolution of Iraq, moving it up, because we wanted to distract the attention of the terrorists. It's a sign that the security situation needs a lot of improvement.

DOBBS: Yet the Bush administration has been absolutely adamant that they would not turn over Saddam Hussein until they were satisfied with the security situation in Iraq. Now we have just learned from our White House correspondent, John King, that they plan to hand Saddam over to the interim government perhaps within days.

KISSINGER: Well, that seems to be a (UNINTELLIGIBLE) issue to the Iraqi population that has been oppressed by Saddam, but my understanding is that he will be still guarded by American forces so that they can't be hopefully -- and I'm sure there isn't -- any danger of his being liberated by any of these terrorist groups.

DOBBS: We know that 150,000 troops will remain, American troops, just about will remain in Iraq for the next eight to 10 months, perhaps longer. Is there, in your judgment, a reason to have a specific deadline for a significant drawdown of those troops within Iraq?

KISSINGER: I think there will be and there should be an internal deadline. I think it's a mistake to establish a deadline because -- a public deadline because then it will create all kinds of pressures on the government concerned, and it will also create a temptation for the terrorists and for the insurrectionists to wait until that moment and then attack.

So it is -- we will have to establish for ourselves and also the public certain criteria that should be made over a period of time, and we should use those as a device to withdraw American troops.

DOBBS: The president, as you know, is in Istanbul for the NATO summit. President Chirac of France publicly rebuffing him today for suggesting that the E.U. open up broad negotiations and deep negotiations with Turkey to admit it as a full member.

Your reaction, first to the idea that turkey should be a member of NATO is -- excuse me -- a member of the European Union -- it's hardly what we would most of us understand to be Europe -- and, secondly, Chirac's statement?

KISSINGER: Well, it's a sensitive domestic issue in France and Germany because of the Muslim issue, but the Chirac proposition that the United States has no right to express any opinion on the internal arrangement of Europe which is, A, a close partner and which we have saved in two world wars from its own follies, it's an example -- it's a symptom of the fundamental problem in European-American relations, especially as far as France is concerned.

DOBBS: And Germany?

KISSINGER: Well, Germany has been leaning towards France in recent months, but it's not as inherent an aspect of the German situation as it is of the current French situation. But Germany has backed France on many of these issues.

DOBBS: The French for two centuries -- for more than two centuries, allies of the United States. There is a bond in our cultures, but they are -- at least (UNINTELLIGIBLE) playing very tough and very hard with the United States. What is their goal, in your best analysis?

KISSINGER: They're trying to establish a European identity and they define the European identity by what is not American. Because there are not that many other common aspects between Romania and Norway, which are part of the European Union. Secondly, on many of these issues, I think, for example, that they are as aware of the dangers of the radical victory in Iraq as we are, and more reason to be because 10 percent of the population is Muslim and they cannot want to encourage radicals in their population. But they seem to think that we will prevail on our own, so that they get a free ride and separating from us without having to pay the consequences.

DOBBS: This attitude on part of France, the unilateral latitude on the part of the Bush administration early on, what does it suggest to us as to what should be the relationship between the United States, the NATO nations, the European Union?

Is NATO an alliance that has outlived its usefulness?

Is there a new relationship to be built between the United States and the European Union?

KISSINGER: The NATO built in the fear of Soviet invasion obviously has -- is no longer fully relevant. But the common domestic institutions and the common history should really bring about a closer Atlantic ties. And what the European view of (UNINTELLIGIBLE) doesn't seem to understand, that if Europe separates from the United States, it will have returned to a pre-1914 world in which individual states are looking for their own interests and Europe, with all of its constitutional problems to have to throw itself into such a series of dilemmas would be unfortunate for them and it would not be desirable for us. So, we should work in an Atlantic relationship. But as we are moving towards a more multilateral approach, it is important for the Europeans to give up some of these righteous attitudes they have display.

DOBBS: Well, there has been much righteousness in international relations over the course of the past few years, and much of the sense of the righteousness blamed on the Bush administration, but it's a shared attitude amongst the European countries. But talking about the multilateralism that seems to be the current initiative of the Bush administration, as Lisa Sylvester just reported, when one goes back over this administration, admittedly and in all fairness, the Bush administration's been confronted by an inordinate number of challenges.

Whether one looks at 9/11, worldwide recession, the war on terror, Afghanistan, Iraq but there are have been many policy reversals on the part of this administration, the most recent in North Korea in which we're providing precisely what the -- attempting apparently to provide precisely what the North Koreans asked for at the outset, that is, a security guarantee and energy aid.

KISSINGER: I'm basically a supporter of the Bush administration.

DOBBS: Sure.

KISSINGER: I don't agree with the policy shift in North Korea because we should not be offering in advance a reward for stopping the violation of an agreement. I believe our original position on Korea was right. On the European debate on multilateralism they put the issue in procedure terms, how many meetings take place. But the essence of multilateralism, is are there common purposes?

And if a country has been attacked, as we have, and faces what it considers major threats, it cannot be simply settled on procedural grounds. There has to be some evolution of common purposes. I think the administration is making big efforts to try to bring this about whatever rhetoric may have been at the beginning.

DOBBS: Why has it taken them so long to begin these initiatives?

We're in the mid obviously of a presidential election year, much of this is precisely what Senator Kerry started talking about during the beginning of the Iowa Caucuses.

KISSINGER: Well, the initial debate with Europe occurred in large part because the German chancellor decided in his election campaign, before we had actually done anything, to win the election on an anti-American (UNINTELLIGIBLE). Then Chirac joined it and then I think some of our rhetoric could have been moderate.

DOBBS: And we should point out both President Chirac and Gerhard Schroeder, their parties are in deep, deep political trouble in both their respective countries, Germany and France.

Henry Kissinger, thank you, sir.

KISSINGER: Glad to be here.

DOBBS: A reminder now to vote in our poll. The question, do you believe the successful handover of sovereignty to Iraq is a political victory for President Bush, yes or no?

Please, cast your vote at cnn.com/lou. We'll have the results later in the broadcast.

Taking a look now at some of "Your Thoughts," many of you writing in about the handover of sovereignty in Iraq.

B. Nelson of San Angelo, Texas, "I am very happy Iraq is free, however, I was under the impression our troops were sent to find and destroy WMD's and terrorist to make the USA safer. What happened to the basic reason we went to war and our young men died for?"

Martin in Dolan, Arizona, "What exactly was handed over? Does the construction of more than a dozen permanent U.S. military bases in Iraq constitute sovereignty?"

Lawrence in Missouri, "I suggest we spend less time trying to establish democracy in Iraq and war about salvaging it right here at home."

Allen Rivers in Caramel, Indiana, "The early handover of Iraq was real coup for the Bush administration. Terrorist anxiously awaiting the June 30 date to cause more chaos and mayhem, where out foxed. However, the success of Iraq as a democracy will be up the Iraqis not Americans."

Please send us "Your Thoughts" at loudobbs@cnn.com.

Coming up next the Supreme Court hands down several key rulings that could have a defining impact on the war on terror. And it is a day of sharp reversal for the Bush administration.

Our senior legal analyst Jeffrey Toobin joins me.

Also ahead, Iraqis take control of their country as coalition administration -- administrators take their leave. "Time" magazine senior correspondent, Michael Weiskopf will join me.

And not exactly modern medicine. The FDA today approves a centuries-old treatment for some very common health problems. We'll have that story and a great deal more coming right up.

(COMMERCIAL BREAK)

DOBBS: We've just received disturbing news tonight about fate of an American soldier captured by Iraqi insurgents in April. The Arab television network Al Jazeera says it has received a statement from a group claiming it's killed Private Matt Maupin. Private Maupin was reported missing after insurgents attacked his fuel convoy out side Baghdad back on April 9th. Insurgents released a videotape showing Private Maupin just about a week later. Two senior Pentagon officials tell CNN tonight there is no way to tell the identity of the victim apparently seen on a videotape accompanying that statement. We'll have more on this breaking story as developments come in to us.

Well, turning to the Supreme Court today, the high court ruled on three major terrorism cases. The high court said the prisoners held as enemy combatants in the United States war on terror are entitled to a day in court. In two separate cases, the Supreme Court said the United States does have the right to hold American citizens and foreign nationals without charges. The Court, however, went on to say those prisoners are entitled to challenge their treatment in a U.S. court.

And in a third major terrorism case, the Justices ruled on a technicality, sidestepping the merits of that case. In a narrow decision, the Supreme Court said the case of suspected dirty bomber Jose Padilla must be filed in South Carolina -- where he is being held -- instead of New York, where the case was originally filed.

Joining me now for more on these decisions, CNN's senior legal analyst Jeffrey Toobin. Jeffrey, these are -- it strike me -- as major decisions.

JEFFREY TOOBIN, CNN'S SENIOR LEGAL ANALYST: Major decisions, really in the history of the Supreme Court. You could see in the -- in reading these decisions, they're citing precedence going back to 1500s. They realized how significant these issues were. And these are going to be talked about for decades.

DOBBS: There is a certain -- and I'm going to speak only from personal opinion, but any time a court upholds a decision that an American citizen, irrespective of the charge, can be held without charges. I find that deeply concerning. Yet, at the same time, the court said they have a right -- such a prisoner has a right to challenge an American court. That seems somewhat inconsistent.

TOOBIN: It does seem somewhat inconsistent, but I think the real news in today's opinion were the way the Bush administration was rebuked by almost the entire court in the Hamdi case -- Hamdi is the American citizen seized in Afghanistan.

Eight justices said his treatment by the administration has been unlawful. That's pretty remarkable. And what they said was, in both of the Guantanamo case and the Hamdi case, these individuals get their day in court. They get a lawyer. They have to have the opportunity to challenge the terms of their confinement, and that's something the Bush administration has fought every step of the way.

DOBBS: So, this is a reversal for the Bush administration's policy on such detainees -- i.e. American citizens being detained as terrorists. But at same time, is there a schedule, a period of time that's finite in which the United States government can hold an American citizen, detained for terrorism charges?

TOOBIN: Absolutely not. In fact, that's one of the many mysteries left by these decisions. For example, how long can they be held? We don't know. Once they are given the right to a proceeding, what kind of proceeding are they entitled to? What does the government have to prove in order to keep them in prison?

Those very important questions are not resolved at all. And those undoubtedly will be the next step as these cases return to the trial courts.

DOBBS: All right, Jeffrey, one final question. As to U.S. citizens, they still retain their rights, but somewhat indefinite the period in which they can be held without charges. Non-American citizens, where does this leave them?

TOOBIN: Non-American citizens, all of the internees in Guantanamo are non-American citizens, and they have the right to some sort of hearing. So, both American citizens and non-American citizens are covered by these rulings.

And what the Court is saying is that, you know, there is not a category of citizens who are outside of the law, who simply cannot get lawyers, who cannot challenge their confinement. Everybody has that right. And I think that's the main message of today's decisions.

DOBBS: Jeffrey Toobin, as always, thank you.

TOOBIN: Thank you.

DOBBS: The Food and Drug Administration today added a new treatment to its list of approved medical devices -- medical devices, but this device is not the typical medical instrument, nor is it particularly new, in fact.

This medical device -- yes, that's what the FDA calls it -- is actually a blood-sucking leech. That's right, the FDA today said leeches are cleared to be marketed as medical devices. They are apparently an effective treatment for a number of ailments, including blocked veins and the pooling of blood after skin grafts. By the way, the request to approve the use of blood-sucking leeches came from a company based in France.

Still ahead -- we'll share some of your thoughts on U.S. intelligence and more on today's handover of sovereignty in Iraq. Senior correspondent from "TIME" Magazine, Michael Weiskopf, is my guest.

We'll be back in just a moment.

(COMMERCIAL BREAK)

DOBBS: My next guest says Iraq's Interim Prime Minister, Iyad Allawi, is in a difficult position. He says Allawi needs to strike a balance between tightening security and maintaining individual freedom for the Iraqi people.

Joining me now is "TIME" Magazine's senior correspondent, Michael Weiskopf. Good to have you here, Michael.

MICHAEL WEISKOPF, SENIOR CORRESPONDENT, "TIME" MAGAZINE: Good to see you, Lou.

DOBBS: This difficult position, this tight spot for Allawi, it's shared, in point of fact, by all of the Iraqi people -- is it not?

WEISKOPF: It is, indeed. Security's been the main issue really since we swept through there 15 months ago, Lou, and it has become more and more of a challenge as time has gone on. And what Allawi now faces is a difficult choice between slapping down emergency measures which are unpopular with the Iraqis and reminiscent of this Saddam regime -- unpopular with the United States, as well -- and on the other hand, permitting the expansion of these terrorist groups in parts of the country that have not yet been pacified.

DOBBS: That pacification, that stabilization of Iraq, is going to require American troops -- in the opinion, at least, of General David Grange -- for some time to come, years and years.

What do you think is necessary, Michael? Because you've spent a great deal of time there, you understand the situation as well as anyone. What's going to be required to introduce that kind of stability and to bring about an orderly society?

WEISKOPF: Certainly, a clear-cut Iraqi control of that government. And this, again, is difficult so long as there are 160,000 coalition troops there's, 140,000 of them American. The other important issue is employment. And with 25% to 60% of that country still unemployed, everyone walking the street there is a potential terrorist.

DOBBS: And Dr. Allawi, as you know, today made much of his government, the interim government's efforts to deal with employment. Is there anything in particular the United States can do?

Obviously we're spending billions of dollars there. We have tens of thousands of troops there. Is there anything we can do in the way of investment? Is there an approach we can take that can be helpful in the -- in a short order of fashion?

WEISKOPF: Well, certainly employing as many Iraqis as possible in the huge reconstruction projects we have planned, everything from water purification to enhancement of the oil industry. At one point, our government was promising hundreds of thousands of jobs to go to Iraqis.

However, the level of complexity and sophistication has required many of the companies doing them to seek employment -- employees outside and be very good to be bring in as many Iraqis as possible.

DOBBS: You were embedded with U.S. troops in Iraq. You also have a sense of the Iraqis' view of American troops. What is going to be required: A, to introduce the level of security necessary for a democracy to take root; and what can be done to better relations between American forces who will be there for sometime and the Iraqi people, if anything?

WEISKOPF: A shifting of balance to the Iraqi security forces -- and this is, of course, problematic because they, at this point, remain largely untrained, lots of amateurs in that group, and poorly equipped. And the important thing will be for the United States to give up a little control and shift it to the Iraqis. And this puts the U.S. Military in the dangerous position of having to seat control, which it has had in real totality up until now -- even in selection of targets, presumably will now have to coordinate those efforts with an Iraqi military presence.

DOBBS: Your reporting from Iraq, your knowledge of the country, its people, the forces that work there, the Shia, the Sunni, the Kurds, as they are creating a -- hopefully, one hopes, a pluralistic government.

What are your thoughts tonight, your assessment of where the United States is in its policy toward Iraq, the future of Iraq? Are you hopeful? Do you sense brighter, better times ahead, or are you -- are you concerned?

WEISKOPF: This is a very fragile and volatile period, Lou, regardless of whether or not the U.S. stays indefinitely, simply because the insurgency there now is broadening tremendously in scope, moving beyond the end of just ridding the country of U.S. troops to perhaps turning all of Iraq into a center for international Jihad or holy war.

And what you've got now is the integration within the militant ranks of foreign fighters. You have a large swearing of allegiance to a man by the name of al-Zarqawi, who is considered to be the al Qaeda agent in Iraq. You have the detainees from places like Abu Ghraib joining up.

And their insurgency is loose-knit enough for them to blend into societies like Fallujah, for instance -- which has been a loss for us for a long time -- but more importantly to other places, like Ba'qubah and Samarra, other Sunni areas that remain unpacified -- and set up fiefdoms, much like happened in both Pakistan and Afghanistan where we lose and Iraqi military loses control on the ground.

DOBBS: Michael Weiskopf, good to have you here. Thank you.

WEISKOPF: Thanks, Lou.

DOBBS: Still ahead here tonight -- the investment rush to China has hit a new level tonight. We'll have that story for you. China's latest gain coming at the expense of, guess what, the United States. We'll have that special report next.

(COMMERCIAL BREAK)

DOBBS: Stocks today barely moved on Wall Street: the Dow down 15; the NASDAQ down almost 6; the S&P fell a point.

Startling new numbers tonight on a changing trend in foreign investment affecting this country and you and me. Christine Romans with the story -- Christine?

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, companies rushed to invest in China last year, and China overtook the U.S. in foreign direct investment.

China attracted $53 billion in foreign direct investment last year according to the OECD; $40 billion came to the U.S., dramatically lower than the 72 billion the year before. Exclude tax haven Luxembourg, and China now tops the list of foreign direct investment.

Analysts say companies are simply eager to cash in on China's cheaper labor and raw materials. And companies are cutting back their investments in the U.S., Japan, Britain, and Germany, Lou.

DOBBS: More good news on the Chinese/U.S. relationship. Christine, thank you. Christine Romans.

Still ahead -- the results of our poll tonight. And a reminder to check our Web site of the complete list of more than 800 companies that we've now confirmed to be exporting American jobs. CNN.COM/LOU.

We'll be right back.

(COMMERCIAL BREAK) DOBBS: The results now of our poll: 12% of you say the successful handover of sovereignty to Iraq is a political victory for President Bush; 88% of you say you do not believe that.

We thank you for being with us tonight. Please be here tomorrow. Former Secretary of State Madeleine Albright joins us to talk about the handover of power in Iraq and the challenges facing the new Iraqi government.

And should President Bush choose a new running mate? The editor of the "Des Moines Register," James Gannon, says Vice President Cheney should step aside for the good of his party. Mr. Gannon will be our guest tomorrow. Please join us.

For all of us here, good night from New York. "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


Aired June 28, 2004 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Tonight, the United States hands over power to the Iraqis two days early in a secret ceremony in Baghdad.
(BEGIN VIDEO CLIP)

L. PAUL BREMER, U.S. ADMINISTRATOR OF CPA: The future of Iraq belongs to you, the Iraqi people.

(END VIDEO CLIP)

ANNOUNCER: Tonight, former secretary of state Henry Kissinger will join us to give us his assessment of the new Iraqi government and its chances of defeating the insurgents.

A U.S. Marine is missing in Iraq. Terrorists say they are holding him hostage. The Marine's family pleads for his freedom.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We pray and we plead for his safe released, and we ask all people of the world to join us in our prayers.

(END VIDEO CLIP)

ANNOUNCER: A major setback for the Bush administration in the war on terror. The Supreme Court rules that suspected terrorists can challenge their detention in U.S. courts.

And Iraq, Homeland Security, North Korea -- critics say they're all significant policy reversals that undermine U.S. credibility around the world. We'll have a special report.

This is LOU DOBBS TONIGHT for Monday, June 28. Here now for an hour of news, debate and opinion is Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening.

The United States today handed over sovereignty to Iraq 15 months after President Bush ordered U.S. troops to overthrow Saddam Hussein. The secret ceremony today took place two days earlier than planned to prevent any efforts by insurgents to disrupt the transfer of power. But today was marked by continued violence. Insurgents killed a British soldier and wounded two others in the Southern city of Basra.

We begin our coverage tonight with Christiane Amanpour in Baghdad. (BEGIN VIDEOTAPE)

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT (voice-over): At precisely 10:26 this morning, Baghdad time, Paul Bremer became the ex-U.S. administrator.

BREMER: "We welcome Iraq's steps to take its rightful place of equality and honor among the free nations of the world. Sincerely, L. Paul Bremer, ex-administrator of the Coalition Provisional Authority.

AMANPOUR: Then Bremer presented the blue-bound document, the legal transfer of sovereignty, to Iraq's new interim government. For a momentous occasion, it was understated, taking place in a small room in the prime minister's new office.

GHAZI AL-YAWAR, IRAQI PRESIDENT: This is a historical day. We fought transfer of sovereignty to the Iraqi government and the Iraqi people.

AMANPOUR: Bremer had signed the order in his own office earlier in the morning. As he said farewell to his staff on the way to the handover ceremony, he also carried a letter to Prime Minister Allawi from President George Bush formally requesting that diplomatic ties be restored between Iraq and the United States. They were broken in January 1991 just before the first Gulf War.

Bremer went from the ceremony to a helicopter, which took him out of occupation headquarters, the green zone, that had been his office and home for the past 14 months. He then boarded a plane out of Iraq and out of this job.

As Bremer was in the air, the rest of the Cabinet was sworn in. Allawi set out his agenda with a wide range of promises on everything from services to the economy, democracy and especially security. He offered a pardon for any Iraqi insurgents and former Saddam loyalists who did not have blood on their hands, that in return for information and cooperation in fingering the terrorists.

While he has repeatedly said he would impose emergency security measures, that's expected to fall short of full martial law. Allawi has yet to detail his security plan. It could include curfews and a ban on public gathering.

(on camera): A brand-new Iraqi flag now flies over this green zone, and this is once again sovereign Iraqi territory. But this country is also swept up in the terror of the insurgency, and so the mood can best be summed up as hoping for the best and preparing for the worst.

Christiane Amanpour, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: President Bush today said the Iraqi people finally have their country back after decades of brutal rule. President Bush, speaking at a NATO summit in Turkey, said terrorists will not prevent growth of Iraqi democracy.

Senior White House Correspondent John King reports from Istanbul, Turkey.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): It was a tightly held secret as the president arrived from Monday's NATO summit session.

Then this note from his national security adviser, "Iraq is sovereign." Mr. Bush scribbled his reaction in the margin, "Let freedom reign!" Then a glance at his watch to mark the moment and a celebratory handshake with the leader at his side from the beginning of the Iraq debate.

This time, no banners to declaring mission accomplished, but, while Mr. Bush was more subdued, he was optimistic and by no means apologetic.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We pledge to end a dangerous regime, to free the oppressed, and to restore sovereignty. We have kept our word.

KING: The president called the early transfer of power a tribute to Iraq's new government and a message to those behind the violent insurgency.

BUSH: Their bombs and attacks have not prevented Iraqi sovereignty, and they will not prevent Iraqi democracy.

KING: From a legal standpoint, occupation over after 14 months, but 138,000 U.S. and 12,000 British troops remain, and Prime Minister Blair warned of difficult and dangerous days ahead.

TONY BLAIR, BRITISH PRIME MINISTER: We'll stay for as long as it takes to make sure that that support is there for them so that we help them to that freedom and democracy they want to see.

KING: The NATO alliance quickly pledged help training Iraqi security forces. Not too long ago, Mr. Bush had hoped for NATO troops, not just training, but he compromised in the face of familiar opposition.

JACQUES CHIRAC, FRENCH PRESIDENT (through interpreter): It is not the vocation of NATO to intervene in Iraq.

(END VIDEOTAPE)

KING: Sovereignty ahead of schedule gained steam about a week ago, U.S. officials say, and Iraq's new prime minister gave the final approval of that late Sunday night, telling the Bush administration the sooner he took power, the sooner he could begin to tackle the serious security problems in Iraq.

And, Lou, now that the political handover is complete, U.S. officials tell us they expect the United States will give legal custody of Saddam Hussein to the new Iraqi government within a matter of days. But we also are told that U.S. military forces will continue to help guard the former Iraqi leader. As one official told me today, we want to make sure he stands trial and is not snuck out a back door or strung up a flagpole -- Lou.

DOBBS: John, thank you very much.

John King, our senior White House correspondent, with the president in Istanbul, Turkey.

Iraq's new government will stay in office until early next year when Iraq will hold its first nationwide elections. But the interim government will have only limited powers and American troops will continue to lead the fight against insurgents.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN BUSINESS CORRESPONDENT (voice-over): Interim Iraqi Prime Minister Iyad Allawi today called on all Iraqis to help fight insurgents. The success of the interim government depends on it.

IYAD ALLAWI, IRAQI INTERIM PRIME MINISTER: I call on all of the heroes of the past to eradicate the foreign terrorists that are killing our people and destroying our country.

PILGRIM: Iraqi citizens themselves have become targets, not just the coalition troops. Car bombs last week in one day killed more than 100 and wounded more than 300. Ninety percent were Iraqis.

NILE GARDINER, HERITAGE FOUNDATION: The key goal of the terrorists will be to spark off a major civil war between the three ethnic groups, and that, of course, is a key goal of a lot of the terrorist activity at the moment.

PILGRIM: So the short-term goal of the interim government will be stopping terrorism, but the longer-term challenges are the ethnic divisions.

PATRICK BASHAM, CATO INSTITUTE: The ethnic and religious divisions in Iraq are the number one problem going forward in trying to build any kind of liberal democracy. The divisions are deep, they are very serious, and, as we're seeing on a daily basis, they are increasingly violent.

PILGRIM: But some regional experts say there is a way to structure the government after general elections to cut down on ethnic divisions.

MICHAEL RUBIN, AMERICAN ENTERPRISE INSTITUTE: If people generally have local rule -- and, by this, I don't mean independence or even autonomy -- but, I mean, local city councils making decisions instead of bureaucrats in Baghdad, that's what ensures stability in the future of Iraq, and, if Kurdish areas are governed over by Kurds, and Turkmen areas are governed over by Turkmen, Sunni and Shia likewise, that's how you're going to get stability.

(END VIDEOTAPE)

PILGRIM: One of the top priorities for the Iraqi government is making sure the oil infrastructure remains intact. Losses from previous attacks on the oil facilities were put at $1 billion, and oil revenues will be needed to rebuild the country and finance the new government -- Lou.

DOBBS: An important step forward. Kitty, thank you very much.

Kitty Pilgrim.

Today's handover ceremony overshadowed the fate of a U.S. Marine reported kidnapped in Iraq. An Arab television network broadcast a videotape of a man wearing a military uniform who displayed a Marine Corps identification card. But the U.S. military has not confirmed that a Marine has been captured.

Brent Sadler reports from Baghdad.

(BEGIN VIDEOTAPE)

BRENT SADLER, CNN BEIRUT BUREAU CHIEF: Even as sovereignty was being passed to the interim Iraqi government, death threats were hanging over the heads of five hostages -- one U.S. Marine, three Turks and a Pakistani -- all Muslims.

The abducted American, Corporal Wassef Ali Hassoun, is of Lebanese origin, from the 1st Marine Expeditionary Force. He vanished a week ago. A videotape first aired by an Arab satellite channel showed a blindfolded man wearing military fatigues with a Kurd sword held over his head. A little known militant group called Islamic Reaction claims they'll behead the Marine unless prisoners in Iraq are released.

Corporal Hassoun's family in West Jordan, Utah, have identified him, but U.S. military officials have only confirmed he's listed as missing.

Meanwhile, a 72-hour clock is ticking on the threatened executions of three Turkish nationals. Video of their horrific captivity was shown Saturday.

Their abductors are understood to be loyal to the most wanted Iraqi terror suspect Abu Musab al-Zarqawi, and they warn the Turks will also be beheaded unless Turkey stops doing business in Iraq, a threat that also applies to a Pakistani driver who's held by yet another militant group.

Brent Sadler, CNN, Baghdad.

(END VIDEOTAPE) DOBBS: We'll have much more on Iraq just ahead. I'll be joined by former secretary of state Henry Kissinger who says the early transfer of power shows the fragile nature of the U.S. position in Iraq.

Nearly 150,000 American troops are still in Iraq fighting insurgents. How long will those troops have to stay? We'll have a report from the Pentagon.

And the Supreme Court gives terror suspects new rights to challenge the Bush administration and the war on terror. Our Senior Legal Analyst Jeffrey Toobin will join us.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: President Bush today said U.S. troops will stay in Iraq for as long as they are needed to stabilize the country. The transfer of power is not expected to change the number of American troops stationed in Iraq. However, it could alter their mission.

Pentagon Correspondent Barbara Starr reports.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): As the interim government vows a crackdown on insurgents, U.S. and coalition forces will walk a delicate line between staying on the attack and yet stepping back to let Iraqi security forces lead the way.

DONALD RUMSFELD, SECRETARY OF DEFENSE: My guess is that every day the security forces of the Iraqi government will get stronger and stronger, and we will be helping them to do that.

STARR: A senior defense official tells CNN, however, that if an Iraqi security crackdown itself becomes violent or Iraqi martial law is imposed U.S. troops may exercise what is called the red card option, the military term for declining to join in a coalition operation.

Right now, that does not seem likely, sources say. But, in recent days, the insurgency itself clearly has grown in size and sophistication, posing a greater threat. Getting better intelligence to defeat a coordinated insurgency will dictate U.S. operations perhaps well into 2006.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: We're going to have some more bloody weeks and months ahead. I do not expect that things are going to get a lot better any time soon.

(END VIDEOTAPE)

STARR: And, Lou, U.S. forces desperately now want to show that Iraqi security forces can begin to handle the security situation there. But, by all indications, it's going to be months, perhaps well into next year, before there is real change on the ground -- Lou.

DOBBS: Barbara, thank you very much.

Barbara Starr reporting from the Pentagon.

Joining me now to discuss the impact of the handover on American troops in Iraq is General David Grange from Chicago, our Chicago bureau tonight.

General Grange, your thoughts about what this does to the U.S. military mission in Iraq?

BRIG. GEN. DAVID GRANGE, CNN MILITARY ANALYST: Well, I mean, the support to the campaign in Iraq's going to continue. There's not going to be any letup. There will be more training missions to train up the civil defense, military and police forces.

But there will always be a U.S. backdrop, a backdrop to back up these fledgling Iraqi forces, as well as go after high-value targets of insurgent terrorist cells throughout Iraq.

DOBBS: And the involvement of the new Iraqi government in military operations -- your best judgment about the effect there?

GRANGE: Well, the new -- the interim government will issue orders, and, actually, I think it will be well received that the orders come from a -- though interim -- Iraqi leaders instead of U.S. coalition-led force. I think it will be accepted on the street.

The perception, to some degree, is that this is still put in place by the Americans. But it will be, I think, better received by the people on the street, and I think that will take some of the pressure off the U.S. with the attitudes inside and around the cities.

I think U.S. forces will also start moving out of the city somewhat and be more in a periphery than they were in the past.

DOBBS: And the length of time, you think, will be required for the American troops to remain there? We were told in Bosnia that that -- in Kosovo that American troops would be out forthwith, and, today, they remain.

GRANGE: Well, Lou, I think what you're going to see is a good- sized force up through past the elections, somewhere around January '05, probably up through next summer, but -- and then I think that unless something drastic changes everything, you'll start seeing a phase-down. But I think you're going to see forces somewhere in Iraq for years and years to come, well past '06.

DOBBS: General David Grange, as always, good to talk with you.

GRANGE: My pleasure, Lou.

DOBBS: That brings us to the topic of tonight's poll. The question: Do you believe the successful handover of sovereignty to Iraq is a political victory for President Bush? Yes or no? Please cast your vote at cnn.com/lou. We'll have results for you later in the broadcast.

Tonight's thought is on democracy. "The spirit of democracy cannot be established in the midst of terrorism, whether governmental or popular." Those the words of Mohandas Gandhi.

This week will mark another milestone in the exploration of Saturn. The Cassini spacecraft is set to enter Saturn's orbit Wednesday after a seven-year journey. Cassini will pass through Saturn's rings and begin an orbit that will last four years. The craft has already captured stunning images of the rings of Saturn. It's now expected to send back more pictures and data on Saturn and its 31 satellites and moons. NASA launched the nuclear-powered Cassini from Cape Canaveral, Florida, in 1997.

Still ahead hereby tonight, French President Jacques Chirac tells President Bush to mind his own business. We'll have that story from the NATO summit.

Iraqi sovereignty comes two days earlier than expected. Former secretary of state Henry Kissinger joins me with his analysis of the surprising timing and the prospects of the future in the Middle East.

And then, some might call it high flexibility from the Bush administration. Critics call those decisions flip-flops. Policy changes from Iraq to North Korea and what they could mean for the rest of the world and perceptions of the Bush administration's foreign policy. We'll have a special report.

All of that and a great deal more still ahead here.

(COMMERCIAL BREAK)

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

DOBBS: In tonight's Campaign Journal, Vice President Cheney campaigned for a congressional candidate in Hebron, Kentucky, and gave supporters an update on the war on terror.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: Tyranny and violence in Afghanistan and Iraq and the rise of democracy in the heart of the Middle East will be a crucial setback for international terrorism. Because we're strong and resolute, Iraq will never go back to the camp of tyranny and terror. And America will never go back to the false comforts of the world before 9/11.

(END VIDEO CLIP)

DOBBS: Senator John Kerry spoke to reporters at the Baltimore airport today. He applauded the work of American troops in Iraq, but emphasized the need for a broader international presence.

(BEGIN VIDEO CLIP) SEN. JOHN F. KERRY (D-MA), PRESIDENTIAL CHARACTER: It is critical that the president get real support, not resolutions, not words, but real support of sufficient personnel, troops and money to assist in the training of security forces in order to be able to guarantee a rapid, real transition and, most importantly, in order to be able to provide adequate security on the ground.

(END VIDEO CLIP)

DOBBS: And Senator Kerry today canceled an appearance at the U.S. Conference of Mayors because he refused to cross a picket line. The picket line, established and organized by Boston's police patrolmen's association. The union is protesting unresolved contract issues between police and the city.

Before the war in Iraq, the Bush administration questioned the role of the United Nations and NATO, but the Bush administration later changed its stance. This week, President Bush is working on improving relations with allies at the NATO summit in Turkey. It's just one of several major policy reversals since President Bush took office, as Lisa Sylvester now reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): President Bush has taken a hard-line stance...

BUSH: The focus right now is on Osama bin Laden, no question about it. He's the prime suspect.

SYLVESTER: ... only to back way from it a few months later.

BUSH: I don't know where he is, nor do -- you know, I just don't spend that much time on him.

You can't distinguish between al Qaeda and Saddam when you talk about the war on terror.

We've had no evidence that Saddam Hussein was involved with the September the 11th.

SYLVESTER: The White House opposed the creation of a Homeland Security Department, then changed its mind; was against a 9/11 commission, then was for it; originally insisted on the deBaathification of the Iraqi Army, and then relented. Ahmed Chalabi, once a White House darling, then had his home raided by U.S. forces.

The latest flip flop came last week with North Korea. After months of insisting that the United States would not give in to blackmail and extend any up front concessions to North Korea, the Bush administration offered energy aid and a security guarantee.

Critics say the policy shifts carry a cost.

SCOTT LILLY, CENTER FOR AMERICAN PROGRESS: A great power needs to know what it can do and what it can't do and not to make claims or have rhetoric that extends its reach.

SYLVESTER: White House supporters argue these aren't policy reversals, it's compromise.

CHARLIE BLACK, REPUBLICAN STRATEGIST: Some people might see these thing as policy reversals. What they are is tactical changes in order to make the policies work.

SYLVESTER: Or political reality catching up, as in the case of Iraq. The United States, once prepared to go it alone, has learned it's easier with the help of the United Nations and NATO.

(END VIDEOTAPE)

SYLVESTER: The big question is: Will voters hold these policy reversals against President Bush? His father had a big political flip-flop -- "Read my lips. No new taxes" -- and paid for it on Election Day -- Lou.

DOBBS: Lisa, thank you.

Well, no flip flops by France. Paris,in fact, has been a vocal and frequent constant critic of U.S. policy in Iraq. Today, President Chirac told President Bush to mind his own business on another key foreign policy issue: the future of Turkey. President Chirac said President Bush has no right to ask the European Union to admit Turkey as a member.

(BEGIN VIDEO CLIP)

CHIRAC (through interpreter): If President Bush really said that in the way that I read, then not only did he go too far, but he went into territory that isn't his. It is not his purpose and his goal to give any advice to the E.U., and, in this area, it was a bit as if I were to tell Americans how they should handle the relationship with Mexico.

(END VIDEO CLIP)

DOBBS: No word tonight on what the White House thinks about President Chirac's latest statement.

My next guest says the surprise timing of the handover in Iraq shows how precarious the security situation is in the country. Henry Kissinger served as secretary of state under Presidents Nixon and Ford and joins us now.

Good to have you here.

HENRY KISSINGER, FORMER SECRETARY OF STATE: Good to be here.

DOBBS: Moving the handover up by two days, it doesn't sound like much, but it is significant, in your judgment?

KISSINGER: Well, it's a significant event in the evolution of Iraq, moving it up, because we wanted to distract the attention of the terrorists. It's a sign that the security situation needs a lot of improvement.

DOBBS: Yet the Bush administration has been absolutely adamant that they would not turn over Saddam Hussein until they were satisfied with the security situation in Iraq. Now we have just learned from our White House correspondent, John King, that they plan to hand Saddam over to the interim government perhaps within days.

KISSINGER: Well, that seems to be a (UNINTELLIGIBLE) issue to the Iraqi population that has been oppressed by Saddam, but my understanding is that he will be still guarded by American forces so that they can't be hopefully -- and I'm sure there isn't -- any danger of his being liberated by any of these terrorist groups.

DOBBS: We know that 150,000 troops will remain, American troops, just about will remain in Iraq for the next eight to 10 months, perhaps longer. Is there, in your judgment, a reason to have a specific deadline for a significant drawdown of those troops within Iraq?

KISSINGER: I think there will be and there should be an internal deadline. I think it's a mistake to establish a deadline because -- a public deadline because then it will create all kinds of pressures on the government concerned, and it will also create a temptation for the terrorists and for the insurrectionists to wait until that moment and then attack.

So it is -- we will have to establish for ourselves and also the public certain criteria that should be made over a period of time, and we should use those as a device to withdraw American troops.

DOBBS: The president, as you know, is in Istanbul for the NATO summit. President Chirac of France publicly rebuffing him today for suggesting that the E.U. open up broad negotiations and deep negotiations with Turkey to admit it as a full member.

Your reaction, first to the idea that turkey should be a member of NATO is -- excuse me -- a member of the European Union -- it's hardly what we would most of us understand to be Europe -- and, secondly, Chirac's statement?

KISSINGER: Well, it's a sensitive domestic issue in France and Germany because of the Muslim issue, but the Chirac proposition that the United States has no right to express any opinion on the internal arrangement of Europe which is, A, a close partner and which we have saved in two world wars from its own follies, it's an example -- it's a symptom of the fundamental problem in European-American relations, especially as far as France is concerned.

DOBBS: And Germany?

KISSINGER: Well, Germany has been leaning towards France in recent months, but it's not as inherent an aspect of the German situation as it is of the current French situation. But Germany has backed France on many of these issues.

DOBBS: The French for two centuries -- for more than two centuries, allies of the United States. There is a bond in our cultures, but they are -- at least (UNINTELLIGIBLE) playing very tough and very hard with the United States. What is their goal, in your best analysis?

KISSINGER: They're trying to establish a European identity and they define the European identity by what is not American. Because there are not that many other common aspects between Romania and Norway, which are part of the European Union. Secondly, on many of these issues, I think, for example, that they are as aware of the dangers of the radical victory in Iraq as we are, and more reason to be because 10 percent of the population is Muslim and they cannot want to encourage radicals in their population. But they seem to think that we will prevail on our own, so that they get a free ride and separating from us without having to pay the consequences.

DOBBS: This attitude on part of France, the unilateral latitude on the part of the Bush administration early on, what does it suggest to us as to what should be the relationship between the United States, the NATO nations, the European Union?

Is NATO an alliance that has outlived its usefulness?

Is there a new relationship to be built between the United States and the European Union?

KISSINGER: The NATO built in the fear of Soviet invasion obviously has -- is no longer fully relevant. But the common domestic institutions and the common history should really bring about a closer Atlantic ties. And what the European view of (UNINTELLIGIBLE) doesn't seem to understand, that if Europe separates from the United States, it will have returned to a pre-1914 world in which individual states are looking for their own interests and Europe, with all of its constitutional problems to have to throw itself into such a series of dilemmas would be unfortunate for them and it would not be desirable for us. So, we should work in an Atlantic relationship. But as we are moving towards a more multilateral approach, it is important for the Europeans to give up some of these righteous attitudes they have display.

DOBBS: Well, there has been much righteousness in international relations over the course of the past few years, and much of the sense of the righteousness blamed on the Bush administration, but it's a shared attitude amongst the European countries. But talking about the multilateralism that seems to be the current initiative of the Bush administration, as Lisa Sylvester just reported, when one goes back over this administration, admittedly and in all fairness, the Bush administration's been confronted by an inordinate number of challenges.

Whether one looks at 9/11, worldwide recession, the war on terror, Afghanistan, Iraq but there are have been many policy reversals on the part of this administration, the most recent in North Korea in which we're providing precisely what the -- attempting apparently to provide precisely what the North Koreans asked for at the outset, that is, a security guarantee and energy aid.

KISSINGER: I'm basically a supporter of the Bush administration.

DOBBS: Sure.

KISSINGER: I don't agree with the policy shift in North Korea because we should not be offering in advance a reward for stopping the violation of an agreement. I believe our original position on Korea was right. On the European debate on multilateralism they put the issue in procedure terms, how many meetings take place. But the essence of multilateralism, is are there common purposes?

And if a country has been attacked, as we have, and faces what it considers major threats, it cannot be simply settled on procedural grounds. There has to be some evolution of common purposes. I think the administration is making big efforts to try to bring this about whatever rhetoric may have been at the beginning.

DOBBS: Why has it taken them so long to begin these initiatives?

We're in the mid obviously of a presidential election year, much of this is precisely what Senator Kerry started talking about during the beginning of the Iowa Caucuses.

KISSINGER: Well, the initial debate with Europe occurred in large part because the German chancellor decided in his election campaign, before we had actually done anything, to win the election on an anti-American (UNINTELLIGIBLE). Then Chirac joined it and then I think some of our rhetoric could have been moderate.

DOBBS: And we should point out both President Chirac and Gerhard Schroeder, their parties are in deep, deep political trouble in both their respective countries, Germany and France.

Henry Kissinger, thank you, sir.

KISSINGER: Glad to be here.

DOBBS: A reminder now to vote in our poll. The question, do you believe the successful handover of sovereignty to Iraq is a political victory for President Bush, yes or no?

Please, cast your vote at cnn.com/lou. We'll have the results later in the broadcast.

Taking a look now at some of "Your Thoughts," many of you writing in about the handover of sovereignty in Iraq.

B. Nelson of San Angelo, Texas, "I am very happy Iraq is free, however, I was under the impression our troops were sent to find and destroy WMD's and terrorist to make the USA safer. What happened to the basic reason we went to war and our young men died for?"

Martin in Dolan, Arizona, "What exactly was handed over? Does the construction of more than a dozen permanent U.S. military bases in Iraq constitute sovereignty?"

Lawrence in Missouri, "I suggest we spend less time trying to establish democracy in Iraq and war about salvaging it right here at home."

Allen Rivers in Caramel, Indiana, "The early handover of Iraq was real coup for the Bush administration. Terrorist anxiously awaiting the June 30 date to cause more chaos and mayhem, where out foxed. However, the success of Iraq as a democracy will be up the Iraqis not Americans."

Please send us "Your Thoughts" at loudobbs@cnn.com.

Coming up next the Supreme Court hands down several key rulings that could have a defining impact on the war on terror. And it is a day of sharp reversal for the Bush administration.

Our senior legal analyst Jeffrey Toobin joins me.

Also ahead, Iraqis take control of their country as coalition administration -- administrators take their leave. "Time" magazine senior correspondent, Michael Weiskopf will join me.

And not exactly modern medicine. The FDA today approves a centuries-old treatment for some very common health problems. We'll have that story and a great deal more coming right up.

(COMMERCIAL BREAK)

DOBBS: We've just received disturbing news tonight about fate of an American soldier captured by Iraqi insurgents in April. The Arab television network Al Jazeera says it has received a statement from a group claiming it's killed Private Matt Maupin. Private Maupin was reported missing after insurgents attacked his fuel convoy out side Baghdad back on April 9th. Insurgents released a videotape showing Private Maupin just about a week later. Two senior Pentagon officials tell CNN tonight there is no way to tell the identity of the victim apparently seen on a videotape accompanying that statement. We'll have more on this breaking story as developments come in to us.

Well, turning to the Supreme Court today, the high court ruled on three major terrorism cases. The high court said the prisoners held as enemy combatants in the United States war on terror are entitled to a day in court. In two separate cases, the Supreme Court said the United States does have the right to hold American citizens and foreign nationals without charges. The Court, however, went on to say those prisoners are entitled to challenge their treatment in a U.S. court.

And in a third major terrorism case, the Justices ruled on a technicality, sidestepping the merits of that case. In a narrow decision, the Supreme Court said the case of suspected dirty bomber Jose Padilla must be filed in South Carolina -- where he is being held -- instead of New York, where the case was originally filed.

Joining me now for more on these decisions, CNN's senior legal analyst Jeffrey Toobin. Jeffrey, these are -- it strike me -- as major decisions.

JEFFREY TOOBIN, CNN'S SENIOR LEGAL ANALYST: Major decisions, really in the history of the Supreme Court. You could see in the -- in reading these decisions, they're citing precedence going back to 1500s. They realized how significant these issues were. And these are going to be talked about for decades.

DOBBS: There is a certain -- and I'm going to speak only from personal opinion, but any time a court upholds a decision that an American citizen, irrespective of the charge, can be held without charges. I find that deeply concerning. Yet, at the same time, the court said they have a right -- such a prisoner has a right to challenge an American court. That seems somewhat inconsistent.

TOOBIN: It does seem somewhat inconsistent, but I think the real news in today's opinion were the way the Bush administration was rebuked by almost the entire court in the Hamdi case -- Hamdi is the American citizen seized in Afghanistan.

Eight justices said his treatment by the administration has been unlawful. That's pretty remarkable. And what they said was, in both of the Guantanamo case and the Hamdi case, these individuals get their day in court. They get a lawyer. They have to have the opportunity to challenge the terms of their confinement, and that's something the Bush administration has fought every step of the way.

DOBBS: So, this is a reversal for the Bush administration's policy on such detainees -- i.e. American citizens being detained as terrorists. But at same time, is there a schedule, a period of time that's finite in which the United States government can hold an American citizen, detained for terrorism charges?

TOOBIN: Absolutely not. In fact, that's one of the many mysteries left by these decisions. For example, how long can they be held? We don't know. Once they are given the right to a proceeding, what kind of proceeding are they entitled to? What does the government have to prove in order to keep them in prison?

Those very important questions are not resolved at all. And those undoubtedly will be the next step as these cases return to the trial courts.

DOBBS: All right, Jeffrey, one final question. As to U.S. citizens, they still retain their rights, but somewhat indefinite the period in which they can be held without charges. Non-American citizens, where does this leave them?

TOOBIN: Non-American citizens, all of the internees in Guantanamo are non-American citizens, and they have the right to some sort of hearing. So, both American citizens and non-American citizens are covered by these rulings.

And what the Court is saying is that, you know, there is not a category of citizens who are outside of the law, who simply cannot get lawyers, who cannot challenge their confinement. Everybody has that right. And I think that's the main message of today's decisions.

DOBBS: Jeffrey Toobin, as always, thank you.

TOOBIN: Thank you.

DOBBS: The Food and Drug Administration today added a new treatment to its list of approved medical devices -- medical devices, but this device is not the typical medical instrument, nor is it particularly new, in fact.

This medical device -- yes, that's what the FDA calls it -- is actually a blood-sucking leech. That's right, the FDA today said leeches are cleared to be marketed as medical devices. They are apparently an effective treatment for a number of ailments, including blocked veins and the pooling of blood after skin grafts. By the way, the request to approve the use of blood-sucking leeches came from a company based in France.

Still ahead -- we'll share some of your thoughts on U.S. intelligence and more on today's handover of sovereignty in Iraq. Senior correspondent from "TIME" Magazine, Michael Weiskopf, is my guest.

We'll be back in just a moment.

(COMMERCIAL BREAK)

DOBBS: My next guest says Iraq's Interim Prime Minister, Iyad Allawi, is in a difficult position. He says Allawi needs to strike a balance between tightening security and maintaining individual freedom for the Iraqi people.

Joining me now is "TIME" Magazine's senior correspondent, Michael Weiskopf. Good to have you here, Michael.

MICHAEL WEISKOPF, SENIOR CORRESPONDENT, "TIME" MAGAZINE: Good to see you, Lou.

DOBBS: This difficult position, this tight spot for Allawi, it's shared, in point of fact, by all of the Iraqi people -- is it not?

WEISKOPF: It is, indeed. Security's been the main issue really since we swept through there 15 months ago, Lou, and it has become more and more of a challenge as time has gone on. And what Allawi now faces is a difficult choice between slapping down emergency measures which are unpopular with the Iraqis and reminiscent of this Saddam regime -- unpopular with the United States, as well -- and on the other hand, permitting the expansion of these terrorist groups in parts of the country that have not yet been pacified.

DOBBS: That pacification, that stabilization of Iraq, is going to require American troops -- in the opinion, at least, of General David Grange -- for some time to come, years and years.

What do you think is necessary, Michael? Because you've spent a great deal of time there, you understand the situation as well as anyone. What's going to be required to introduce that kind of stability and to bring about an orderly society?

WEISKOPF: Certainly, a clear-cut Iraqi control of that government. And this, again, is difficult so long as there are 160,000 coalition troops there's, 140,000 of them American. The other important issue is employment. And with 25% to 60% of that country still unemployed, everyone walking the street there is a potential terrorist.

DOBBS: And Dr. Allawi, as you know, today made much of his government, the interim government's efforts to deal with employment. Is there anything in particular the United States can do?

Obviously we're spending billions of dollars there. We have tens of thousands of troops there. Is there anything we can do in the way of investment? Is there an approach we can take that can be helpful in the -- in a short order of fashion?

WEISKOPF: Well, certainly employing as many Iraqis as possible in the huge reconstruction projects we have planned, everything from water purification to enhancement of the oil industry. At one point, our government was promising hundreds of thousands of jobs to go to Iraqis.

However, the level of complexity and sophistication has required many of the companies doing them to seek employment -- employees outside and be very good to be bring in as many Iraqis as possible.

DOBBS: You were embedded with U.S. troops in Iraq. You also have a sense of the Iraqis' view of American troops. What is going to be required: A, to introduce the level of security necessary for a democracy to take root; and what can be done to better relations between American forces who will be there for sometime and the Iraqi people, if anything?

WEISKOPF: A shifting of balance to the Iraqi security forces -- and this is, of course, problematic because they, at this point, remain largely untrained, lots of amateurs in that group, and poorly equipped. And the important thing will be for the United States to give up a little control and shift it to the Iraqis. And this puts the U.S. Military in the dangerous position of having to seat control, which it has had in real totality up until now -- even in selection of targets, presumably will now have to coordinate those efforts with an Iraqi military presence.

DOBBS: Your reporting from Iraq, your knowledge of the country, its people, the forces that work there, the Shia, the Sunni, the Kurds, as they are creating a -- hopefully, one hopes, a pluralistic government.

What are your thoughts tonight, your assessment of where the United States is in its policy toward Iraq, the future of Iraq? Are you hopeful? Do you sense brighter, better times ahead, or are you -- are you concerned?

WEISKOPF: This is a very fragile and volatile period, Lou, regardless of whether or not the U.S. stays indefinitely, simply because the insurgency there now is broadening tremendously in scope, moving beyond the end of just ridding the country of U.S. troops to perhaps turning all of Iraq into a center for international Jihad or holy war.

And what you've got now is the integration within the militant ranks of foreign fighters. You have a large swearing of allegiance to a man by the name of al-Zarqawi, who is considered to be the al Qaeda agent in Iraq. You have the detainees from places like Abu Ghraib joining up.

And their insurgency is loose-knit enough for them to blend into societies like Fallujah, for instance -- which has been a loss for us for a long time -- but more importantly to other places, like Ba'qubah and Samarra, other Sunni areas that remain unpacified -- and set up fiefdoms, much like happened in both Pakistan and Afghanistan where we lose and Iraqi military loses control on the ground.

DOBBS: Michael Weiskopf, good to have you here. Thank you.

WEISKOPF: Thanks, Lou.

DOBBS: Still ahead here tonight -- the investment rush to China has hit a new level tonight. We'll have that story for you. China's latest gain coming at the expense of, guess what, the United States. We'll have that special report next.

(COMMERCIAL BREAK)

DOBBS: Stocks today barely moved on Wall Street: the Dow down 15; the NASDAQ down almost 6; the S&P fell a point.

Startling new numbers tonight on a changing trend in foreign investment affecting this country and you and me. Christine Romans with the story -- Christine?

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, companies rushed to invest in China last year, and China overtook the U.S. in foreign direct investment.

China attracted $53 billion in foreign direct investment last year according to the OECD; $40 billion came to the U.S., dramatically lower than the 72 billion the year before. Exclude tax haven Luxembourg, and China now tops the list of foreign direct investment.

Analysts say companies are simply eager to cash in on China's cheaper labor and raw materials. And companies are cutting back their investments in the U.S., Japan, Britain, and Germany, Lou.

DOBBS: More good news on the Chinese/U.S. relationship. Christine, thank you. Christine Romans.

Still ahead -- the results of our poll tonight. And a reminder to check our Web site of the complete list of more than 800 companies that we've now confirmed to be exporting American jobs. CNN.COM/LOU.

We'll be right back.

(COMMERCIAL BREAK) DOBBS: The results now of our poll: 12% of you say the successful handover of sovereignty to Iraq is a political victory for President Bush; 88% of you say you do not believe that.

We thank you for being with us tonight. Please be here tomorrow. Former Secretary of State Madeleine Albright joins us to talk about the handover of power in Iraq and the challenges facing the new Iraqi government.

And should President Bush choose a new running mate? The editor of the "Des Moines Register," James Gannon, says Vice President Cheney should step aside for the good of his party. Mr. Gannon will be our guest tomorrow. Please join us.

For all of us here, good night from New York. "ANDERSON COOPER 360" is next.

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