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CNN Live Saturday

Kerry Calls For Bush To Renounce Swift Boat Ads; Sadr Supporters Still Control Imam Ali Mosque; Iraqi Olympic Soccer Team Denounces Latest Bush Ad

Aired August 21, 2004 - 14:00   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.


FREDRICKA WHITFIELD, CNN ANCHOR: It is 2:00 p.m. in Washington, 10:00 p.m. in Najaf, Iraq. I'm Fredricka Whitfield. Welcome to CNN LIVE SATURDAY. Ahead this hour, the fighting intensifies in Najaf. The latest on efforts to end the standoff at one of the holiest sites in Iraq.
Also:

JILL DOUGHERTY, CNN CORRESPONDENT: A mission in Vietnam 35 years ago moves to the center of debate in this presidential race.

WHITFIELD: And later, caught on tape, allegations of racism at one of the nation's biggest homebuilders. Those stories in a moment, but first, here are other stories now in the news.

A former prime minister of Bangladesh was slightly injured today when several grenades exploded while she was finishing a speech during an opposition party rally. Four people were killed and hundreds of others wounded. Officials say the former prime minister was the target of that attack.

Another surprise showing by the Iraqi soccer team at the Olympics. Iraq defeated Australia, 1-0, advancing to the semifinals. Earlier the Iraqi team was expected to lose in the first round but instead beat Portugal, 4-2.

On Florida's southwest coast well over 240,000 residents are still without power more than a week after Hurricane Charley hit. Officials say it will be several more days before electricity is fully restored. The storm is blamed for at least 25 deaths. Keeping you informed, CNN, the most trusted name in news.

The fight for Iraq is centered this hour in Najaf. Sporadic fighting has been reported outside the Imam Ali Mosque between U.S. forces, Iraqi fighters as well as those loyal to radical cleric Muqtada al-Sadr. CNN's Matthew Chance is on the telephone with us from Najaf with the latest. Matthew?

MATTHEW CHANCE, CNN CORRESPONDENT: Fredricka, thank you. And according to the U.S. military here in Najaf, they've called a temporary suspension of their military operations in and around the old city of Najaf where much of that ferocious fighting has been taking place over the past two weeks or more between U.S. forces and the Mehdi army, loyal, of course, to the radical Shia cleric Muqtada al-Sadr. CNN has gone inside the mosque once more to get some pictures and try to get a bit of clarity on who actually controls it. It seems for the most part, it's supporters of Muqtada al-Sadr who are still very much in control inside the Imam Ali Mosque, one of the holiest shrines in Shia Islam. Our cameraman took pictures of many people inside that mosque, women and children among them. Many of them--apparently unarmed. And so that's obviously an added complication to the situation as it develops here.

There are diplomatic efforts underway to try to bring to a peaceful end this standoff between the Mehdi Army inside and the U.S. forces and Iraqi forces that are surrounding it. Diplomatic efforts have centered around a handing of jurisdiction of the mosque to the highest Shia religious authority in Iraq, the representatives of the Grand Ayatollah Ali al-Sistani. They, though, said because of the terrible security situation around the mosque at the moment, they're not able to take responsibility for it.

And so while there are sort of chances being given for this diplomatic process to advance itself, every day that passes, every hour that passes, the military authorities, both Iraqi and U.S. are growing increasingly impatient with the situation. Fredricka?

WHITFIELD: Matthew Chance, thanks for that update on the telephone from Najaf.

Well, now a look at other stories making news around the world. A Palestinian man has been shot dead by Israeli soldiers near Gaza City. The Israelis say the man was entering a no-man's land near a Jewish settlement and that an explosive device was found near the body. Palestinian sources called him an armed militant.

Four people in Spain have been injured in two bombings linked to a Basque separatist group. It happened in two villages on Spain's north Atlantic coast, now full of vacationers. The bombs were planted in trash cans. No serious damage is being reported.

Grenades exploded near the former prime minister of Bangladesh as she was finishing a speech at an opposition rally in Dhaka. She was slightly injured. Four people died and hundreds were wounded.

In the war on terror, Pakistani troops are on the hunt for suspected al-Qaeda militants. Pakistan launched the offensive near two suspected terrorist hideouts near the rugged Afghan border. This is just the latest in several military counterterrorism operations against al-Qaeda fugitives in recent months. For more on the terror efforts in that region, we're joined by John Parachini, who is a policy analyst with the Rand Corporation. Good to see you, Mr. Parachini.

JOHN PARACHINI, RAND CORPORATION: Nice to be with you.

WHITFIELD: Alright, well, how do you gauge progress in this war on terrorism involving both Pakistan and Afghanistan?

PARACHINI: Well, I think it's mixed. In the last couple weeks, there's been a major takedown of a significant al-Qaeda operative who some have described as the al-Qaeda switchboard. Computer specialist. But as we can see from the operations that you're just reporting that it's a long-term effort. There are going to be back and forth struggles between Pakistani military forces on the Pakistani side and U.S. forces on the Afghan side and former Taliban and al-Qaeda fighters in between. The terrain is extremely rugged there. And the warlords and tribal communities there often host and hide people who are on the run and it makes it very difficult for our forces and for Pakistani forces.

WHITFIELD: Well, there is a lot of cooperation going on between Pakistan and U.S. military and diplomatic forces. And so you have to wonder, is this a relationship that has the legs long-term, or might the volatility of that region jeopardize this relationship?

PARACHINI: There's a very important question because Pakistan really is responsible for two of the most significant security challenges the international community has experienced in the last decade. One is obviously their relationship with the Taliban and the rise of al-Qaeda in Afghanistan. And the other is the AQ Khan nuclear network. So this is really a test of can Pakistan become a responsible international citizen, and thus far, under the Musharraf government, it seems as though it's really making the case.

The problem is, this is a volatile region. Pakistan is a country that is very fragile. There are some long-term challenges here related to its economy, its educational system, and its political institutions that will really determine whether or not they're able to partner with us in an effective way over the long-term that I'm afraid it's going to take.

WHITFIELD: There was some vital information, however, that did come from some recent arrests, including that have Muhammad Khan. Do you feel some encouragement about the kind of information, the willingness for some of these suspects who are being arrested to talk, to share their info?

PARACHINI: There's no question that this was an important takedown of an al-Qaeda operative. But we should not confuse an individual event with a single person with a longer term problem that we have. Al-Qaeda has metastasized in many ways and it really is a global jihadist movement of which al-Qaeda is a significant part but of which there are other aspirants and fighters who answer to the same call as al-Qaeda but operate in other regions around the globe.

WHITFIELD: And now, what about Afghanistan? They have an upcoming election. There's been a lot of concern about which way that election might go, particularly since Hamid Karzai has a fairly cooperative, very good relationship with the U.S. And some say that might work against him.

PARACHINI: The political development of Afghanistan and its stability is critical to U.S. interests in the region. Karzai has been a good ally of the United States and indeed, he's been a good leader of Afghanistan, helping to bring that country back from the terrible ravages of a decade of fighting. The question is whether or not he can effectively do that.

There continues to be struggles between different warlords in the south and southeastern part of Afghanistan. And in fact, our ambassador recently negotiated between two factions just earlier this week. So Karzai has a formidable task ahead of him and much hangs in the balance between now and this fall when there is an election.

WHITFIELD: Alright. And it's John Parachini, isn't it? I mispronounced that earlier, Parachini. Alright John Parachini, thanks so much for joining us from the Rand Corporation in Washington.

PARACHINI: Glad to be with you.

WHITFIELD: The battle for the White House is getting nastier as Election Day draws closer. John Kerry is on the offensive, asking the Federal Election Commission to force a veterans group to drop ads that challenge his service in Vietnam. The group, Swift Boat Veterans for Truth is behind the ads. It mixes clips of a young Kerry talking about war atrocities in testimony before Congress back in 1971 with images of veterans condemning his remarks. The Kerry campaign accuses the group of violating the law.

(BEGIN VIDEO CLIP)

TAD DEVINE, KERRY CAMPAIGN SENIOR STRATEGIST: These attacks need to be answered directly because they are going after John Kerry with lies and distortions and they're doing it with people who are nothing more than front people for the Bush campaign.

(END VIDEO CLIP)

WHITFIELD: Senator Kerry says President Bush should condemn the ads and the Democratic nominee says Bush wants the veteran groups quote, "to do his dirty work." Well, some Vietnam veterans who support Kerry are speaking out in the capital of Vietnam.

At a news conference yesterday in Hanoi, members of the group praised Kerry's service and called President Bush a draft dodger. President Bush's campaign advisors deny any involvement in the Swift Boat Veterans for Truth ads.

And as the President spends the weekend away from Washington, his campaign is calling on Kerry to join Bush in pushing for an end to all ads funded by unrestricted donations. CNN's Jill Dougherty is with us now from Crawford, Texas. What brought this all about -- Jill?

DOUGHERTY: You know, Fredricka, really, it's quite amazing when you think of it, that this military mission in Vietnam 35 years ago led by John Kerry as a young man would suddenly become one of the key debates in this presidential race.

Senator Kerry, of course, the object of attack ads alleging that he lied to get military medals, and now, support is coming from Kerry from a navy swift boat commander who served with Kerry and was there during that mission, and he is William Rood, he is the editor on the metropolitan desk of the "Chicago Tribune," breaking 35 years of silence and Rood says that quote, "The critics have taken pains to say that they are not trying to cast doubts on the merit of what others did, but their version of events has splashed doubt on all of us. It's gotten harder and harder for those of us who were there to listen to accounts we know to be untrue, especially when they come from people who were not there."

That again is William Rood who was with the "Chicago Tribune" who served at the same time with John Kerry. Meanwhile, the vice presidential Democratic candidate, John Edwards, is saying that this is a moment of truth for President Bush. Quote, "We want to hear these three words, stop these ads."

Now, President Bush and the Bush campaign have made it very clear that they say there is no connection between those ads and the White House or the campaign. They say the President himself has been the object of those ads, $62 million worth of them and that they condemn all such ads that are funded by soft money.

But political analysts definitely say that this controversy is ending up hurting John Kerry more than it is hurting President Bush, and especially it's taking him off message, unable to talk about the things that he wants to talk about, which would be the economy and Iraq -- Fredricka.

WHITFIELD: Alright. Jill Dougherty in Crawford, Texas. Thanks so much. And we'll examine the ads controversy a little bit in greater detail coming up later.

Well, they have turned into a surprise contender at the Summer Games in Athens, but a recent political move by the Bush campaign is turning a few heads on the Iraqi national soccer team. We'll have details.

Also, don't look now, but oil prices are on the rice again. We'll find out what it all means for you at the gas pump in the next few weeks.

AMANDA ESKRIDGE, SUING HOMEBUILDER FOR DISCRIMINATION: John Wieland is such a respected, influential, prominent company in the Atlanta area, that it carried a level of prestige with it. I just didn't understand because I know that I met the qualifications. I knew that. I was being told that as I went through the process.

WHITFIELD: One of the nation's top builders accused of creating a wall of separation between sales agents and their clients. That story coming up.

(COMMERCIAL BREAK)

WHITFIELD: At the Athens Olympics, the darlings of the Games, the Iraqi soccer team, the men's team beat Australia in the quarterfinals today, 1-0. The Cinderella story of the games is creating quite a bit of excitement and now political controversy, as well. Here's CNN's Heidi Collins.

(BEGIN VIDEOTAPE) HEIDI COLLINS, CNN CORRESPONDENT (voice-over): They have become the dream team of this Olympics. Iraq's soccer team making its way to the quarterfinals. Something to celebrate, even in the U.S. A reference to Iraqi athletes competing in Athens even made it to one of President Bush's latest ads called "Victory."

UNIDENTIFIED FEMALE (voice-over): At this Olympics, there will be two more free nations and two fewer terrorist regimes.

COLLINS: A direct reference to the U.S. military operations that toppled the Taliban in Afghanistan and Saddam Hussein in Iraq. To the Bush/Cheney camp, this ad is a celebration of the freedom that the U.S. helped foster. But it's infuriated some of the athletes who represent Iraq at the Olympics who view it as a political manipulation to help President Bush's reelection bid.

Like Salih Sadir from Najaf, a midfielder for Iraq's national team who scored his team's only goal yesterday. After the game, he had a message for President Bush. "Iraq as a team does not want Mr. Bush to use us for the presidential campaign," Sadir told Sportslllustrated.com. "He can find another way to advertise himself."

The Iraqi soccer coach had even harsher words. He said, quote, "My problems are not with the American people. They are with what America has done in Iraq, destroy everything." Heidi Collins, CNN, New York.

(END VIDEOTAPE)

WHITFIELD: The tone of the presidential campaign took a nasty turn this week overall. A TV commercial from a group called Swift Boat Veterans for Truth dominated political news. John Kerry says the group is a front for the Bush campaign. He's filing a complaint with the Federal Election Commission over the ad which questions his service in the Vietnam War. Bush advisors accuse Kerry of losing his cool. Ron Brownstein is a CNN political analyst and columnist for the "L.A. Times" and joins us from Washington. Good to see you, Ron.

RON BROWNSTEIN, CNN POLITICAL ANALYST: Hi, Fredricka.

WHITFIELD: I do want to ask you about the ad involving the Iraqi soccer team in a moment, but first, let's continue on with the ads from the veterans who are criticizing John Kerry. Well, some are saying he brought it on him himself by using his record 35 years ago as a pivotal platform. Is that a fair criticism?

BROWNSTEIN: Well I think that--I don't know if anybody brought on the kind of ad that he's received, at least the first one which has faced serious questions about its credibility over the last week in reports in a variety of papers, the "New York Times", the "Washington Post," the "L.A. Times" and, of course, the thing you mentioned earlier from the editor at the "Chicago Tribune."

But, in fact, both candidates have contributed to kind of a backward looking atmosphere in this campaign. John Kerry has put out a very detailed agenda about what he would do over the next four years, but at his convention, he chose to focus much more on his service in Vietnam 35 years ago, and similarly from the President in the last several months as he's been actively campaigning, he has focused more on defending his decisions of the first term and raising questions about Kerry's Senate career than outlining what he is going to do in the next four years.

And you take all that and you add to it this intense controversy over the swift boat ads and you feel this campaign is on the verge of being hijacked by the past, and really, the very distant past.

WHITFIELD: And now there's the logic that John Kerry shouldn't have waited two weeks to allow these ads to infiltrate the airwaves for all of that time without saying anything and now decidedly coming out against them.

BROWNSTEIN: A couple of things you can say about this. First, obviously the Kerry campaign has to be worried about the impact of this, and the clearest example is their own action. Forget what they say. They started off wanting to stay off the air, not buy any television ads in August to save money for September and October because of a quirk in the campaign finance law; they have to make their general election money last for three months. They've reversed that decision and gone on the air to counter these ads. That's the clearest indication they're worried about it.

Now, you can say, though, that escalating this attack, one thing we've seen in the last six or seven months is every brick in this campaign gets a brick in return. And I think it is inevitable that as these questions are being raised about what John Kerry did in the Vietnam era, the Democrat groups who are outraged by this are going to escalate their attacks on President Bush for his own decisions in that period, again, taking away from the kind of forward-looking debate that in the end I think most Americans would rather have.

WHITFIELD: So you have to wonder who really is being hurt the most if you've now got the Bush camp who are saying this is Kerry losing his cool and you've got the John Kerry camp saying, these ads are funded in some roundabout way by the Bush administration. So aren't both sides really being harmed in all of this.

BROWNSTEIN: Well, I think in the short run, it has probably hurt Kerry more than Bush. You look at the polls and also, you look at the Kerry reaction. I do think, though, that this is a terrain that is going to be difficult terrain for President Bush.

The fact is, John Kerry did volunteer to serve in Vietnam. President Bush chose to serve in the National Guard. Democrats, I think, are going to come back at this very hard, and I think we're going to see a lot of questioning about what the President did and of course, all those unanswered questions about his own service in the National Guard. So, in the short run, I think it has hurt Kerry but we're in the middle innings here, Fredricka.

WHITFIELD: All right, and now on to other ads, the most recent ad being put out by the Bush camp using Iraqi soccer team members- soccer team members who have already come out and said they don't like the idea of being used as political manipulation tools.

So we've seen this kind of criticism before, particularly when President Bush had some campaign ads using him at Ground Zero. Are we looking at one or two ads that are really one and the same, the same kind of motivation?

BROWNSTEIN: Well, I think the comments from the Iraqi soccer players is a reminder that the occupation is a very, you know, is received very ambivalently in Iraq. While people are gratified to see Saddam Hussein gone, there is a lot of resistance, not only the violent resistance but even among those sort of rank and file concerned about having an occupying army in their country. That's only natural.

On the other hand, I think it's equally natural that the President is going to try to accentuate the positive on the war in Iraq and certainly having a free Iraq that can send this team to the Olympics is something to counter the images that we see on television every night of violence in Najaf or bombs going off in Baghdad.

So I think it's inevitable the President is doing it. I don't really see anything too out of bounds in it, but I think that the comments are a reminder of why this has proven so much tougher than many in the administration expected.

WHITFIELD: Alright. Ron Brownstein in Washington, thanks so much for joining us both as a CNN contributor as well as "L.A. Times."

BROWNSTEIN: Thank you.

WHITFIELD: Oil prices are on the rise and that means higher prices at the pump this week. We'll find out if there's any relief in sight. Also, jurors in the Scott Peterson double murder trial heard hours of taped conversations between him and his mistress, Amber Frey. Who does this help? We'll find out in our legal roundtable.

(COMMERCIAL BREAK)

WHITFIELD: Oil prices flirted with $50 a barrel this week before closing in the $48 range. CNN financial correspondent Ali Velshi is in Washington with more on that. Hi, Ali.

ALI VELSHI, CNN FINANCIAL CORRESPONDENT: Fredricka, good to see you again. Crude oil, that $50 would be 50 percent higher than it was at the beginning of the year. But automobile fuel is actually down from its high which it hit in May, $2.06 a gallon. So today drivers are paying about 15 percent more to fill up their car than they were a year ago.

For argument's sake, let's say the $5 more to fill your tank is 15 percent. So five bucks you're paying, you love your car way too much to park it. So you eat the cost and you probably don't consciously change your spending habits.

But come in from the summer heat and start thinking about this that you're looking at. Your heating bill, your home heating bill. The average American home costs about $630 a year for heating and cooling and you pay that monthly or maybe once every couple of months.

So if home heating oil follows the price of crude oil, a 50 percent increase means $330 more to heat the average home, that's 100 bucks more on a bill than it was the same time last year. And that's when you start have to making decisions to go out to dinner less or postpone a trip. And enough people across America doing that, Fredricka, ends up hurting the economy.

WHITFIELD: Alright, but what happens if you don't have a big old house or a big old car?

VELSHI: Well, a couple things happen. First of all, you're exposed to energy through everything you buy. If you ship a parcel, you pay a fuel surcharge. If you buy a plane ticket, you pay a fuel surcharge. But even more basic than that, I spoke to an oil analyst who says guys like to me who like to eat, we should pay particular attention.

(BEGIN VIDEO CLIP)

PETER BEUTEL, OIL ANALYST: If you're buying a vegetable that's out of season in your state, it's probably going to come from California or Florida. They need energy to plant, to harvest, irrigate, to ship it by truck or rail, to refrigerate it, to light the stores where you buy it.

(END VIDEO CLIP)

VELSHI: And if you think things are tough, I just want to let you know in Britain right now, gas for cars is reaching about four pounds a gallon, that's $7.26. So all is not lost, Fredricka.

WHITFIELD: No kidding. Serious incentive to just walk or do the Tube...

VELSHI: Absolutely.

WHITFIELD: ...for a while in London. All right, thanks a lot, Ali.

VELSHI: Yes.

WHITFIELD: So you've saved for college tuition, but what about all those little extras like books, food? It all adds up. Dollar Signs takes your calls and your e-mails at 4:30 Eastern time. Find out how to prepare for those college extras and where you can cut the corners. Send your questions to us at dollarsigns@cnn.com or you can call us at 1-800-807-2620.

Taking a back seat to help a teammate live out an Olympic dream. Ahead, we're live from Athens with the latest from the Summer Games.

And a week after Hurricane Charley slammed Florida, thousands remain without power. The latest on the cleanup efforts and the recovery straight ahead.

(COMMERCIAL BREAK)

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Aired August 21, 2004 - 14:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: It is 2:00 p.m. in Washington, 10:00 p.m. in Najaf, Iraq. I'm Fredricka Whitfield. Welcome to CNN LIVE SATURDAY. Ahead this hour, the fighting intensifies in Najaf. The latest on efforts to end the standoff at one of the holiest sites in Iraq.
Also:

JILL DOUGHERTY, CNN CORRESPONDENT: A mission in Vietnam 35 years ago moves to the center of debate in this presidential race.

WHITFIELD: And later, caught on tape, allegations of racism at one of the nation's biggest homebuilders. Those stories in a moment, but first, here are other stories now in the news.

A former prime minister of Bangladesh was slightly injured today when several grenades exploded while she was finishing a speech during an opposition party rally. Four people were killed and hundreds of others wounded. Officials say the former prime minister was the target of that attack.

Another surprise showing by the Iraqi soccer team at the Olympics. Iraq defeated Australia, 1-0, advancing to the semifinals. Earlier the Iraqi team was expected to lose in the first round but instead beat Portugal, 4-2.

On Florida's southwest coast well over 240,000 residents are still without power more than a week after Hurricane Charley hit. Officials say it will be several more days before electricity is fully restored. The storm is blamed for at least 25 deaths. Keeping you informed, CNN, the most trusted name in news.

The fight for Iraq is centered this hour in Najaf. Sporadic fighting has been reported outside the Imam Ali Mosque between U.S. forces, Iraqi fighters as well as those loyal to radical cleric Muqtada al-Sadr. CNN's Matthew Chance is on the telephone with us from Najaf with the latest. Matthew?

MATTHEW CHANCE, CNN CORRESPONDENT: Fredricka, thank you. And according to the U.S. military here in Najaf, they've called a temporary suspension of their military operations in and around the old city of Najaf where much of that ferocious fighting has been taking place over the past two weeks or more between U.S. forces and the Mehdi army, loyal, of course, to the radical Shia cleric Muqtada al-Sadr. CNN has gone inside the mosque once more to get some pictures and try to get a bit of clarity on who actually controls it. It seems for the most part, it's supporters of Muqtada al-Sadr who are still very much in control inside the Imam Ali Mosque, one of the holiest shrines in Shia Islam. Our cameraman took pictures of many people inside that mosque, women and children among them. Many of them--apparently unarmed. And so that's obviously an added complication to the situation as it develops here.

There are diplomatic efforts underway to try to bring to a peaceful end this standoff between the Mehdi Army inside and the U.S. forces and Iraqi forces that are surrounding it. Diplomatic efforts have centered around a handing of jurisdiction of the mosque to the highest Shia religious authority in Iraq, the representatives of the Grand Ayatollah Ali al-Sistani. They, though, said because of the terrible security situation around the mosque at the moment, they're not able to take responsibility for it.

And so while there are sort of chances being given for this diplomatic process to advance itself, every day that passes, every hour that passes, the military authorities, both Iraqi and U.S. are growing increasingly impatient with the situation. Fredricka?

WHITFIELD: Matthew Chance, thanks for that update on the telephone from Najaf.

Well, now a look at other stories making news around the world. A Palestinian man has been shot dead by Israeli soldiers near Gaza City. The Israelis say the man was entering a no-man's land near a Jewish settlement and that an explosive device was found near the body. Palestinian sources called him an armed militant.

Four people in Spain have been injured in two bombings linked to a Basque separatist group. It happened in two villages on Spain's north Atlantic coast, now full of vacationers. The bombs were planted in trash cans. No serious damage is being reported.

Grenades exploded near the former prime minister of Bangladesh as she was finishing a speech at an opposition rally in Dhaka. She was slightly injured. Four people died and hundreds were wounded.

In the war on terror, Pakistani troops are on the hunt for suspected al-Qaeda militants. Pakistan launched the offensive near two suspected terrorist hideouts near the rugged Afghan border. This is just the latest in several military counterterrorism operations against al-Qaeda fugitives in recent months. For more on the terror efforts in that region, we're joined by John Parachini, who is a policy analyst with the Rand Corporation. Good to see you, Mr. Parachini.

JOHN PARACHINI, RAND CORPORATION: Nice to be with you.

WHITFIELD: Alright, well, how do you gauge progress in this war on terrorism involving both Pakistan and Afghanistan?

PARACHINI: Well, I think it's mixed. In the last couple weeks, there's been a major takedown of a significant al-Qaeda operative who some have described as the al-Qaeda switchboard. Computer specialist. But as we can see from the operations that you're just reporting that it's a long-term effort. There are going to be back and forth struggles between Pakistani military forces on the Pakistani side and U.S. forces on the Afghan side and former Taliban and al-Qaeda fighters in between. The terrain is extremely rugged there. And the warlords and tribal communities there often host and hide people who are on the run and it makes it very difficult for our forces and for Pakistani forces.

WHITFIELD: Well, there is a lot of cooperation going on between Pakistan and U.S. military and diplomatic forces. And so you have to wonder, is this a relationship that has the legs long-term, or might the volatility of that region jeopardize this relationship?

PARACHINI: There's a very important question because Pakistan really is responsible for two of the most significant security challenges the international community has experienced in the last decade. One is obviously their relationship with the Taliban and the rise of al-Qaeda in Afghanistan. And the other is the AQ Khan nuclear network. So this is really a test of can Pakistan become a responsible international citizen, and thus far, under the Musharraf government, it seems as though it's really making the case.

The problem is, this is a volatile region. Pakistan is a country that is very fragile. There are some long-term challenges here related to its economy, its educational system, and its political institutions that will really determine whether or not they're able to partner with us in an effective way over the long-term that I'm afraid it's going to take.

WHITFIELD: There was some vital information, however, that did come from some recent arrests, including that have Muhammad Khan. Do you feel some encouragement about the kind of information, the willingness for some of these suspects who are being arrested to talk, to share their info?

PARACHINI: There's no question that this was an important takedown of an al-Qaeda operative. But we should not confuse an individual event with a single person with a longer term problem that we have. Al-Qaeda has metastasized in many ways and it really is a global jihadist movement of which al-Qaeda is a significant part but of which there are other aspirants and fighters who answer to the same call as al-Qaeda but operate in other regions around the globe.

WHITFIELD: And now, what about Afghanistan? They have an upcoming election. There's been a lot of concern about which way that election might go, particularly since Hamid Karzai has a fairly cooperative, very good relationship with the U.S. And some say that might work against him.

PARACHINI: The political development of Afghanistan and its stability is critical to U.S. interests in the region. Karzai has been a good ally of the United States and indeed, he's been a good leader of Afghanistan, helping to bring that country back from the terrible ravages of a decade of fighting. The question is whether or not he can effectively do that.

There continues to be struggles between different warlords in the south and southeastern part of Afghanistan. And in fact, our ambassador recently negotiated between two factions just earlier this week. So Karzai has a formidable task ahead of him and much hangs in the balance between now and this fall when there is an election.

WHITFIELD: Alright. And it's John Parachini, isn't it? I mispronounced that earlier, Parachini. Alright John Parachini, thanks so much for joining us from the Rand Corporation in Washington.

PARACHINI: Glad to be with you.

WHITFIELD: The battle for the White House is getting nastier as Election Day draws closer. John Kerry is on the offensive, asking the Federal Election Commission to force a veterans group to drop ads that challenge his service in Vietnam. The group, Swift Boat Veterans for Truth is behind the ads. It mixes clips of a young Kerry talking about war atrocities in testimony before Congress back in 1971 with images of veterans condemning his remarks. The Kerry campaign accuses the group of violating the law.

(BEGIN VIDEO CLIP)

TAD DEVINE, KERRY CAMPAIGN SENIOR STRATEGIST: These attacks need to be answered directly because they are going after John Kerry with lies and distortions and they're doing it with people who are nothing more than front people for the Bush campaign.

(END VIDEO CLIP)

WHITFIELD: Senator Kerry says President Bush should condemn the ads and the Democratic nominee says Bush wants the veteran groups quote, "to do his dirty work." Well, some Vietnam veterans who support Kerry are speaking out in the capital of Vietnam.

At a news conference yesterday in Hanoi, members of the group praised Kerry's service and called President Bush a draft dodger. President Bush's campaign advisors deny any involvement in the Swift Boat Veterans for Truth ads.

And as the President spends the weekend away from Washington, his campaign is calling on Kerry to join Bush in pushing for an end to all ads funded by unrestricted donations. CNN's Jill Dougherty is with us now from Crawford, Texas. What brought this all about -- Jill?

DOUGHERTY: You know, Fredricka, really, it's quite amazing when you think of it, that this military mission in Vietnam 35 years ago led by John Kerry as a young man would suddenly become one of the key debates in this presidential race.

Senator Kerry, of course, the object of attack ads alleging that he lied to get military medals, and now, support is coming from Kerry from a navy swift boat commander who served with Kerry and was there during that mission, and he is William Rood, he is the editor on the metropolitan desk of the "Chicago Tribune," breaking 35 years of silence and Rood says that quote, "The critics have taken pains to say that they are not trying to cast doubts on the merit of what others did, but their version of events has splashed doubt on all of us. It's gotten harder and harder for those of us who were there to listen to accounts we know to be untrue, especially when they come from people who were not there."

That again is William Rood who was with the "Chicago Tribune" who served at the same time with John Kerry. Meanwhile, the vice presidential Democratic candidate, John Edwards, is saying that this is a moment of truth for President Bush. Quote, "We want to hear these three words, stop these ads."

Now, President Bush and the Bush campaign have made it very clear that they say there is no connection between those ads and the White House or the campaign. They say the President himself has been the object of those ads, $62 million worth of them and that they condemn all such ads that are funded by soft money.

But political analysts definitely say that this controversy is ending up hurting John Kerry more than it is hurting President Bush, and especially it's taking him off message, unable to talk about the things that he wants to talk about, which would be the economy and Iraq -- Fredricka.

WHITFIELD: Alright. Jill Dougherty in Crawford, Texas. Thanks so much. And we'll examine the ads controversy a little bit in greater detail coming up later.

Well, they have turned into a surprise contender at the Summer Games in Athens, but a recent political move by the Bush campaign is turning a few heads on the Iraqi national soccer team. We'll have details.

Also, don't look now, but oil prices are on the rice again. We'll find out what it all means for you at the gas pump in the next few weeks.

AMANDA ESKRIDGE, SUING HOMEBUILDER FOR DISCRIMINATION: John Wieland is such a respected, influential, prominent company in the Atlanta area, that it carried a level of prestige with it. I just didn't understand because I know that I met the qualifications. I knew that. I was being told that as I went through the process.

WHITFIELD: One of the nation's top builders accused of creating a wall of separation between sales agents and their clients. That story coming up.

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WHITFIELD: At the Athens Olympics, the darlings of the Games, the Iraqi soccer team, the men's team beat Australia in the quarterfinals today, 1-0. The Cinderella story of the games is creating quite a bit of excitement and now political controversy, as well. Here's CNN's Heidi Collins.

(BEGIN VIDEOTAPE) HEIDI COLLINS, CNN CORRESPONDENT (voice-over): They have become the dream team of this Olympics. Iraq's soccer team making its way to the quarterfinals. Something to celebrate, even in the U.S. A reference to Iraqi athletes competing in Athens even made it to one of President Bush's latest ads called "Victory."

UNIDENTIFIED FEMALE (voice-over): At this Olympics, there will be two more free nations and two fewer terrorist regimes.

COLLINS: A direct reference to the U.S. military operations that toppled the Taliban in Afghanistan and Saddam Hussein in Iraq. To the Bush/Cheney camp, this ad is a celebration of the freedom that the U.S. helped foster. But it's infuriated some of the athletes who represent Iraq at the Olympics who view it as a political manipulation to help President Bush's reelection bid.

Like Salih Sadir from Najaf, a midfielder for Iraq's national team who scored his team's only goal yesterday. After the game, he had a message for President Bush. "Iraq as a team does not want Mr. Bush to use us for the presidential campaign," Sadir told Sportslllustrated.com. "He can find another way to advertise himself."

The Iraqi soccer coach had even harsher words. He said, quote, "My problems are not with the American people. They are with what America has done in Iraq, destroy everything." Heidi Collins, CNN, New York.

(END VIDEOTAPE)

WHITFIELD: The tone of the presidential campaign took a nasty turn this week overall. A TV commercial from a group called Swift Boat Veterans for Truth dominated political news. John Kerry says the group is a front for the Bush campaign. He's filing a complaint with the Federal Election Commission over the ad which questions his service in the Vietnam War. Bush advisors accuse Kerry of losing his cool. Ron Brownstein is a CNN political analyst and columnist for the "L.A. Times" and joins us from Washington. Good to see you, Ron.

RON BROWNSTEIN, CNN POLITICAL ANALYST: Hi, Fredricka.

WHITFIELD: I do want to ask you about the ad involving the Iraqi soccer team in a moment, but first, let's continue on with the ads from the veterans who are criticizing John Kerry. Well, some are saying he brought it on him himself by using his record 35 years ago as a pivotal platform. Is that a fair criticism?

BROWNSTEIN: Well I think that--I don't know if anybody brought on the kind of ad that he's received, at least the first one which has faced serious questions about its credibility over the last week in reports in a variety of papers, the "New York Times", the "Washington Post," the "L.A. Times" and, of course, the thing you mentioned earlier from the editor at the "Chicago Tribune."

But, in fact, both candidates have contributed to kind of a backward looking atmosphere in this campaign. John Kerry has put out a very detailed agenda about what he would do over the next four years, but at his convention, he chose to focus much more on his service in Vietnam 35 years ago, and similarly from the President in the last several months as he's been actively campaigning, he has focused more on defending his decisions of the first term and raising questions about Kerry's Senate career than outlining what he is going to do in the next four years.

And you take all that and you add to it this intense controversy over the swift boat ads and you feel this campaign is on the verge of being hijacked by the past, and really, the very distant past.

WHITFIELD: And now there's the logic that John Kerry shouldn't have waited two weeks to allow these ads to infiltrate the airwaves for all of that time without saying anything and now decidedly coming out against them.

BROWNSTEIN: A couple of things you can say about this. First, obviously the Kerry campaign has to be worried about the impact of this, and the clearest example is their own action. Forget what they say. They started off wanting to stay off the air, not buy any television ads in August to save money for September and October because of a quirk in the campaign finance law; they have to make their general election money last for three months. They've reversed that decision and gone on the air to counter these ads. That's the clearest indication they're worried about it.

Now, you can say, though, that escalating this attack, one thing we've seen in the last six or seven months is every brick in this campaign gets a brick in return. And I think it is inevitable that as these questions are being raised about what John Kerry did in the Vietnam era, the Democrat groups who are outraged by this are going to escalate their attacks on President Bush for his own decisions in that period, again, taking away from the kind of forward-looking debate that in the end I think most Americans would rather have.

WHITFIELD: So you have to wonder who really is being hurt the most if you've now got the Bush camp who are saying this is Kerry losing his cool and you've got the John Kerry camp saying, these ads are funded in some roundabout way by the Bush administration. So aren't both sides really being harmed in all of this.

BROWNSTEIN: Well, I think in the short run, it has probably hurt Kerry more than Bush. You look at the polls and also, you look at the Kerry reaction. I do think, though, that this is a terrain that is going to be difficult terrain for President Bush.

The fact is, John Kerry did volunteer to serve in Vietnam. President Bush chose to serve in the National Guard. Democrats, I think, are going to come back at this very hard, and I think we're going to see a lot of questioning about what the President did and of course, all those unanswered questions about his own service in the National Guard. So, in the short run, I think it has hurt Kerry but we're in the middle innings here, Fredricka.

WHITFIELD: All right, and now on to other ads, the most recent ad being put out by the Bush camp using Iraqi soccer team members- soccer team members who have already come out and said they don't like the idea of being used as political manipulation tools.

So we've seen this kind of criticism before, particularly when President Bush had some campaign ads using him at Ground Zero. Are we looking at one or two ads that are really one and the same, the same kind of motivation?

BROWNSTEIN: Well, I think the comments from the Iraqi soccer players is a reminder that the occupation is a very, you know, is received very ambivalently in Iraq. While people are gratified to see Saddam Hussein gone, there is a lot of resistance, not only the violent resistance but even among those sort of rank and file concerned about having an occupying army in their country. That's only natural.

On the other hand, I think it's equally natural that the President is going to try to accentuate the positive on the war in Iraq and certainly having a free Iraq that can send this team to the Olympics is something to counter the images that we see on television every night of violence in Najaf or bombs going off in Baghdad.

So I think it's inevitable the President is doing it. I don't really see anything too out of bounds in it, but I think that the comments are a reminder of why this has proven so much tougher than many in the administration expected.

WHITFIELD: Alright. Ron Brownstein in Washington, thanks so much for joining us both as a CNN contributor as well as "L.A. Times."

BROWNSTEIN: Thank you.

WHITFIELD: Oil prices are on the rise and that means higher prices at the pump this week. We'll find out if there's any relief in sight. Also, jurors in the Scott Peterson double murder trial heard hours of taped conversations between him and his mistress, Amber Frey. Who does this help? We'll find out in our legal roundtable.

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WHITFIELD: Oil prices flirted with $50 a barrel this week before closing in the $48 range. CNN financial correspondent Ali Velshi is in Washington with more on that. Hi, Ali.

ALI VELSHI, CNN FINANCIAL CORRESPONDENT: Fredricka, good to see you again. Crude oil, that $50 would be 50 percent higher than it was at the beginning of the year. But automobile fuel is actually down from its high which it hit in May, $2.06 a gallon. So today drivers are paying about 15 percent more to fill up their car than they were a year ago.

For argument's sake, let's say the $5 more to fill your tank is 15 percent. So five bucks you're paying, you love your car way too much to park it. So you eat the cost and you probably don't consciously change your spending habits.

But come in from the summer heat and start thinking about this that you're looking at. Your heating bill, your home heating bill. The average American home costs about $630 a year for heating and cooling and you pay that monthly or maybe once every couple of months.

So if home heating oil follows the price of crude oil, a 50 percent increase means $330 more to heat the average home, that's 100 bucks more on a bill than it was the same time last year. And that's when you start have to making decisions to go out to dinner less or postpone a trip. And enough people across America doing that, Fredricka, ends up hurting the economy.

WHITFIELD: Alright, but what happens if you don't have a big old house or a big old car?

VELSHI: Well, a couple things happen. First of all, you're exposed to energy through everything you buy. If you ship a parcel, you pay a fuel surcharge. If you buy a plane ticket, you pay a fuel surcharge. But even more basic than that, I spoke to an oil analyst who says guys like to me who like to eat, we should pay particular attention.

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PETER BEUTEL, OIL ANALYST: If you're buying a vegetable that's out of season in your state, it's probably going to come from California or Florida. They need energy to plant, to harvest, irrigate, to ship it by truck or rail, to refrigerate it, to light the stores where you buy it.

(END VIDEO CLIP)

VELSHI: And if you think things are tough, I just want to let you know in Britain right now, gas for cars is reaching about four pounds a gallon, that's $7.26. So all is not lost, Fredricka.

WHITFIELD: No kidding. Serious incentive to just walk or do the Tube...

VELSHI: Absolutely.

WHITFIELD: ...for a while in London. All right, thanks a lot, Ali.

VELSHI: Yes.

WHITFIELD: So you've saved for college tuition, but what about all those little extras like books, food? It all adds up. Dollar Signs takes your calls and your e-mails at 4:30 Eastern time. Find out how to prepare for those college extras and where you can cut the corners. Send your questions to us at dollarsigns@cnn.com or you can call us at 1-800-807-2620.

Taking a back seat to help a teammate live out an Olympic dream. Ahead, we're live from Athens with the latest from the Summer Games.

And a week after Hurricane Charley slammed Florida, thousands remain without power. The latest on the cleanup efforts and the recovery straight ahead.

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