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CNN Live At Daybreak

Attempts at Solving Najaf Conflict; Financial Impact of RNC in NYC

Aired August 26, 2004 - 05:00   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.


CAROL COSTELLO, CNN ANCHOR: At this hour, Muslim faithful targeted in a suburb of Najaf. Can a leading cleric bring peace to a city and to a nation in crisis?
It is Thursday, August 26.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, a deadly attack in Iraq this morning during what was supposed to be a peace rally. At least 25 are dead, dozens more hurt after mortars or rockets hit a mosque in Kufa. People had gathered there to protest the fighting in nearby Najaf. It's not clear who fired the mortars.

And there have been more attacks this morning on Iraqi peace demonstrators. Snipers opened fire on them as they marched from Kufa to Najaf. Several were hurt.

At Guantanamo Bay, prosecutors say he was once a bodyguard for Osama bin Laden. A Yemeni man is facing a pretrial hearing today. He'll be the third terrorist suspect arraigned there this week.

Back in the States, four homes burned, 350 others threatened, that's what firefighters are facing south of Reno, Nevada as they battle a fast moving wildfire. Officials say a man who was targeting shooting sparked the blaze.

To the forecast center now and Chad -- good morning.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: Peace efforts are under way in Iraq this morning, but they are being met with deadly violence.

Joining us now with the latest, CNN's Diana Muriel.

She's live in Baghdad.

Bring us up to date with what's been happening there. DIANA MURIEL, CNN CORRESPONDENT: Carol, what's been happening is that thousands of Iraqis have responded to this call from the Grand Ayatollah al-Sistani to come to Najaf and to rescue, as his aides have put it, the holy shrine of Imam Ali, which has been the scene of intense fighting for the past three weeks between the Mehdi Militia loyal to Muqtada al-Sadr, this junior renegade cleric, and U.S.-backed Iraqi forces.

Now, thousands of people arrived in Kufa, which is a suburb about 10 kilometers to the northeast of Najaf and the old city of Najaf, where the shrine is located. They've come under attack twice so far this Thursday morning.

The first attack was a series of mortars, three mortars, which were fired on the Kufa Mosque, two hitting inside the mosque compound, one falling outside. We understand from the interior ministry and from the health ministry here in Baghdad that 25 people were killed and 60 wounded.

Many people have been taking refuge in that mosque, as well, people who had left the holy city of Najaf because of the fighting and others who had come to respond to this call from the Grand Ayatollah.

Then a group of demonstrators moved from the Kufa Mosque compound, heading toward Najaf itself. There's a road which connects the two districts. And they were fired on by sniper fire, according to our producer on the ground there, Kianne Sadeq, and also, from what we could hear from her microphone, we were picking up the sound of machine gun fire, as well, in that area.

The people retreated to the sides of the road, took shelter where they could. We understand that several people were wounded, but we don't have any clear numbers yet from that scene. And others decided to go back toward Kufa as others stayed where they were.

We then heard that the police had given clearance to the demonstrators that they could continue their march toward Najaf, their peaceful demonstration toward Najaf. We understand from Kianne that some people have decided to do that.

In the meantime, the Grand Ayatollah al-Sistani is on his way from Basra in the south of the country, where he arrived on Wednesday after coming back from London, where he'd been receiving treatment for a heart condition. He's called on his followers to come to Najaf. He's in a convoy that's on its way there, not expected to arrive for another six hours or so.

We've heard from the governor of Najaf, Adnan al-Zurufi. He says in a statement that there will be a 24 hour cease-fire when the Grand Ayatollah al-Sistani arrives in Najaf, which is expected to be around 7:00 in the evening local time. He says that the local authorities, the Iraqi authorities, will secure safe passage for the officers of al-Sadr, Muqtada al-Sadr, this renegade cleric, and those of al- Sistani, to allow for talks between the two sides. And he says that U.S. forces and Iraqi forces will stay in their positions in the meantime. If there is an agreement between the two sides, he says that the militias operating in that area should hand over their weapons. But if there is no agreement, the governor of Najaf says that military operations will resume.

He also added, and we haven't been able to independently verify this, Carol, that those people who were responsible for the mortar attack on the Kufa Mosque, he has blamed "terrorist organizations from al Qaeda in the Najaf area." But as I say, we haven't been able to independently confirm that -- Carol.

COSTELLO: I was just going to ask you who fired on that mosque. They're saying al Qaeda did. But aren't there plenty of supporters of Muqtada al-Sadr in that area?

MURIEL: That's right, Carol. This mosque, Kufa Mosque, is traditionally where Muqtada al-Sadr gives his Friday prayers and makes his Friday sermon. Now, he hasn't been seen for some days. It's not even clear that he's still in Najaf. Rumors are circulating that he may have fled to the north of the country. But he certainly hasn't been seen.

Yes, it's an al-Sadr stronghold, but there doesn't seem to be any violence between the supporters of al-Sistani and those of al-Sadr who are congregating in that area. Witnesses on the ground have blamed the Iraqis, they've blamed the U.S. forces. But we heard from a general, from General Lessel, who is the deputy director of operations in the area, and he says that U.S. forces have not been conducting military operations in that area for the past 24 hours and they have categorically denied that they are to blame for the mortars that fell in the Kufa Mosque and the Kufa Mosque compound earlier today -- Carol.

COSTELLO: And it would only be smart, Diana, for U.S. forces to stand back and watch what unfolds and not to get involved.

MURIEL: That's right. This is an extraordinarily tense situation. The Grand Ayatollah commands enormous respect, Carol, here in Iraq. He is the most senior Shia cleric, one of only five living Grand Ayatollahs. One observer said that this man can mobilize millions and it certainly seems that at least he's mobilizing thousands.

Thousands of people are coming from all over Iraq to gather in Kufa and outside Najaf to wait for the Grand Ayatollah to arrive and to make a peaceful march to the shrine, where they hope that the keys of the shrine will be handed over to their Grand Ayatollah.

We have to see whether or not there will be a peaceful resolution of this. But in the meantime, the U.S. forces, and now, we hear from the governor of Najaf, the Iraqi forces, are withdrawing slightly to the side, although they're maintaining their positions, their operational positions. They're not giving those up, but they're going to stay in the background until they see what happens when the Grand Ayatollah al-Sistani arrives in Najaf later on Thursday -- Carol.

COSTELLO: Diana Muriel live from Baghdad this morning.

Thank you.

We'll get back to you if the situation warrants.

More than 40 incidents of abuse, some of which amount to torture, that is the finding of the latest report on the Iraqi prisoner abuse scandal. The report from Major General George Fay also says some military intelligence officials may be linked to the abuse.

Another military investigator says plenty of rules were broken.

(BEGIN VIDEO CLIP)

GEN. PAUL KERN, LEAD INVESTIGATOR: We learned there were leaders in Abu Ghraib who knew about this misconduct, knew better and did nothing. Some soldiers behaved improperly because they were confused by their experiences and direction. And we found that we violated our own regulations by allowing ghost detainees in our detention facilities.

(END VIDEO CLIP)

COSTELLO: CNN Radio's Dick Uliano joins us in the next hour of DAYBREAK for more on the Fay Report.

The conflict in Iraq is taking its toll back here in the States. The father of a Marine killed in Iraq is in the hospital this morning with severe burns. Police in Hollywood, Florida say the man got into the van of the Marines, who told him of his son's death, and then he set the van on fire.

(BEGIN VIDEO CLIP)

CAPT. TONY RODE, HOLLYWOOD, FLORIDA POLICE: At one point he actually goes into the garage, picks up a can of gasoline and/or a propane tank, runs toward the vehicle, snatches the vehicle window and sets the U.S. governmental vehicle on fire. He's still inside the vehicle as it's fully engulfed in flames.

(END VIDEO CLIP)

COSTELLO: The three Marines managed to pull the man from the burning van and then put out the flames.

On to politics now, President Bush hits the campaign trail early this morning. He's got a rally in Las Cruces, New Mexico, and then it's on to Farmington and Albuquerque for more campaign events. New Mexico is one of the 17 so-called battleground states.

Senator Kerry hosts a town hall meeting in Anoka, Minnesota, this morning. He'll be talking about health care. After that, he heads to Los Angeles for a fundraiser in Santa Monica, and then he'll spend the night in San Francisco.

The Republican National Convention opens next week in New York City and city officials anticipate big business. That's despite the Democratic gathering being such a drag for much of Boston.

Our Allan Chernoff has a look at what businesses in the Big Apple might expect.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): New York may be overwhelmingly Democratic, but fundraising for the Republican convention is bipartisan. Members of both parties have pulled out their checkbooks to deliver a record amount.

LEWIS EISENBERG, CO-CHAIR, NEW YORK CITY HOST COMMITTEE: Somewhere in the area of $70 million. We have had participation from Republicans, Democrats, individuals, corporations, large donations, very large donations.

CHERNOFF: It doesn't hurt that the IRS treats donations to convention host committees as charitable contributions. They're tax deductible. The fundraisers' list reads like a who's who of corporate America -- Pfizer Chief Executive Hank McKinnell, Goldman Sachs' CEO Henry Paulsen, Citigroup Chairman Sandy Weil. Each brought in at least $5 million.

Lowes Hotels' CEO Jonathan Tisch, a well known Democrat, raised more than $2.5 million with his pitch.

JONATHAN TISCH, CEO, LOWES HOTELS: I would appreciate your writing a check for the host committee, which is bipartisan, and even though it's supporting a Republican based event, there are hundreds of thousands of New Yorkers that will benefit through your company's generosity.

CHERNOFF: The host committee confirms Michael Bloomberg, a Democrat until he changed parties to run for mayor, has given at least $5 million of his own money, as has David Rockefeller, former chief of Chase Manhattan Bank. And many of New York's biggest companies are contributors, including Time Warner, CNN's parent, which is spending $1.5 million to host a party for the media.

There's no limit on donations to a convention host committee. Political watchdogs claim that's a campaign finance loophole.

STEVE WEISSMAN, CAMPAIGN FINANCE INSTITUTE: The real problem is that there may be a sense of obligation by the presidential candidate and the party to do something for the companies that gave the money.

CHERNOFF: The host committee president, also a Democrat, maintains contributions are good for the city.

KEVIN SHEEKEY, PRESIDENT, NEW YORK CITY HOST COMMITTEE: It is really important for every resident in New York, every employer, every employee, to do what they can to sell this city as a city where people will want to work. And I think the people that have given the host committee money understand that.

CHERNOFF (on camera): What's good for New York in this case is also good for the Republicans. Money from the nation's biggest Democratic city could well provide the convention boost to help President Bush get reelected.

Allan Chernoff, CNN Financial News, New York.

(END VIDEOTAPE)

COSTELLO: An anti-war group will not be allowed to hold a protest in Central Park on Sunday, the day before the Republicans convene. A state judge has ruled there's not enough time to ensure public safety and protect the park from damage.

CNN, of course, will have this convention covered from beginning to end. Our prime time coverage begins Monday night at 7:00 Eastern, 4:00 Pacific time.

Still to come this hour on DAYBREAK, we'll take a close look at what your homeland security tax dollars are paying for even in the most far flung parts of this country.

And the big stories in Athens are on the track today. We'll get a running Olympic update for you, just ahead.

But first, here's a look at what else is making news this Thursday morning.

(COMMERCIAL BREAK)

COSTELLO: Wall Street will open in positive territory this morning. A drop in oil prices fueled a rally.

The Dow is up 83 points.

The Nasdaq up 24.

The S&P 500 up 8 1/2 points.

In the international markets, Japan's Nikkei closed down, well, just slightly, a short time ago.

London's FTSE is trading up more than 17 points.

And the Paris CAC also up about 26 1/2 points.

Your news, money, weather and sports.

It's 5:17 Eastern.

Here's what's all new this morning.

Snipers open fire on Iraqis making their way from Kufa to the city of Najaf. Several of these marchers were wounded. This comes hours after a mortar attack on a mosque in Kufa left two dozen people dead. It is not clear who is responsible for either attack.

Flight data recorders from two downed Russian airliners are being examined in Moscow. Russian officials say preliminary investigations of the two nearly simultaneous crashes do not suggest a terror attack, but that has not been ruled out, either.

In money news, oil prices are down. Crude opens today below $44, but all of this could change given reports about multiple attacks on oil pipelines in southern Iraq that happened late yesterday. Fears over a supply disruption should drive -- could drive prices higher when trading opens today.

In culture, Donald Trump's runner-up apprentice is poised to take over as a full fledged real estate mogul. Kwame Jackson is the driving force behind a $3.8 billion development deal in Maryland.

In sports, Olympian Marion Jones qualified for today's long jump in her second attempt. Jones also gets an unexpected shot at a second medal after being named to the women's 400 meter relay team -- Chad.

MYERS: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you this morning.

The Census Bureau will tell us four hours from now how many Americans have no health insurance. Millions of people work fulltime but are not insured.

Details on that now from Chris Huntington of CNN Financial News.

(BEGIN VIDEOTAPE)

CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): Patricia Orzano owns a 7-11 in Massapequa, New York, and she used to have no trouble providing health care coverage for her eight fulltime workers.

PATRICIA ORZANO, 7-11 FRANCHISE OWNER: Five years ago, I had a complete medical, dental, hospitalization plan for my employees that wanted it. And they either paid minimal $20 a week or nothing.

HUNTINGTON: But that's changed because of her skyrocketing insurance costs.

ORZANO: Just recently, the last couple of years, we have not been able to afford health care coverage for our employees. The rising costs each year, they used to go up 5 percent, but each year now it's 10 to 20 percent. And the premiums are just outlandish.

HUNTINGTON: And that puts Orzano's workers, like Frank Martin, in a terrible bind.

FRANK MARTIN: I really can't afford to see a doctor. If I'm working fulltime, I deserve some coverage.

HUNTINGTON: That situation is alarmingly common.

(on camera): According to Families USA, a health care advocacy group funded by private foundations, there are more than 13 million low income working Americans who do not get health care coverage through their jobs and they're also ineligible for public assistance programs like Medicaid simply because they have a job.

KATHLEEN STOLL, FAMILIES USA: If you don't have employer-based coverage and you don't have eligibility for Medicaid, you're really in a bad place. You may not be able to get any health insurance coverage at all.

HUNTINGTON: Stoll and others wrestling with health care reform point to several problems creating this no coverage zone -- outdated Medicaid eligibility rules that deny coverage to working families; a dizzying array of state laws that require insurance plans to cover expensive elective medical procedures and the fact that small, independent businesses cannot pool together to share insurance costs.

President Bush supports small business insurance pooling, but the Small Business Health Fairness Act that passed the House last year is stalled in the Senate. Democratic presidential nominee John Kerry wants the government to subsidize premiums for catastrophic health coverage. Both plans make for good stump speeches, but so far good stump speeches, but so far haven't done much for Patricia Orzano, nor her employee.

(END VIDEOTAPE)

COSTELLO: And that leads us to our e-mail Question of the Day. What do you feel is more important, whether it be medical benefits, company perks or long-term investigate, as in a 401(k), what makes a job attractive to you? We want to know. We want your e-mails this morning. Send them to us at daybreak@cnn.com. That's daybreak@cnn.com.

We wanted to show you a live picture from Najaf. There is smoke pouring from the city. I'm not exactly sure where that smoke is coming from. But it comes on a day when hundreds, thousands of people are marching on the city of Najaf in a peace march. In nearby Kufa, we know that a mosque there was hit and 25 people were killed. And then, as the peace march moved on, snipers opened fire and several people were wounded there.

We don't think that the peace marchers have gotten into Najaf just yet, but they want to drive those supporters of Muqtada al-Sadr, that radical cleric, out of the mosque there. So, things are heating up in Najaf. And as events warrant, of course, we'll bring them to you.

Hot stories making news on the Web, too, straight ahead.

And the war in Iraq takes center stage in Times Square. The war cost number crunch just ahead.

You are watching DAYBREAK for a Thursday.

(COMMERCIAL BREAK) COSTELLO: Time to check our Web clicks this morning. We're always interested in what you're looking on when you look onto cnn.com.

The number one most clicked on story this morning, a very sad story.

MYERS: Yes, the van, the father was notified that his son was killed in Iraq and then he went out to the U.S. government van and set it on fire. And we can't figure out whether he was unfortunately caught in the van or was he actually trying to commit suicide in the van? I just, I, the story doesn't write it well.

It says here, the police statement said, "Unfortunately, the man was caught in the fire."

COSTELLO: Well, they don't know either, probably.

MYERS: But on the top it says he was sitting in the van when it caught on fire. So, I'm not sure.

COSTELLO: Well, the three Marines that were in the house with the man's wife came out and rescued this man and he's in the hospital this morning.

MYERS: Yes.

COSTELLO: But that's on cnn.com if you want to read more about it.

The number two clicked on story on our Web, California holds a big garage sale.

MYERS: Lots of scissors.

COSTELLO: Yes, can you believe the number of scissors for sale?

MYERS: That's because they're confiscated at the airports.

COSTELLO: Oh.

MYERS: Because people have them in their bags.

COSTELLO: That's right. That's true.

MYERS: So, now they're all for sale.

COSTELLO: Governor Schwarzenegger is holding a big garage sale and they're selling all kinds of items that have been confiscated by the police and items...

MYERS: But not his Hummer.

COSTELLO: Not his Hummer, no. Items that are laying around city offices and stuff, to raise money for California.

MYERS: Yes.

COSTELLO: And some of the stuff is on eBay.

MYERS: There's a '95 Ford Mustang that's up to $5,800 right now.

COSTELLO: A pretty good idea.

MYERS: Yes.

COSTELLO: The third most clicked on story, Abercrombie & Fitch does it again, poking fun at West Virginia. I just think this is mean. They put out...

MYERS: That's the old one. "It's all relative in West Virginia."

COSTELLO: No, that's the old one. The new one, they have this T-shirt out. This one says, "West Virginia: No lifeguard at the gene pool." And gene is spelled G-E-N-E. West Virginia, as you might expect, is very angry about this and calling for a boycott of Abercrombie & Fitch.

MYERS: They have a couple from Kentucky, too. "Electricity in almost every town." And then, "Wisconsin cuts the cheese."

COSTELLO: Ha, ha, ha, yes.

MYERS: They're poking fun at all of the places, by the way. Wisconsin not taking it well. West Virginia is not taking it well.

COSTELLO: They're not poking fun at every state, just those three select states.

MYERS: Correct.

COSTELLO: Here's what's all new in the next half hour of DAYBREAK.

It is the match that really matters. But can the U.S. sweethearts of soccer bring home the gold? We'll take you live to Athens.

Homeland security or politics -- Washington is spending billions of your tax dollars to protect you against another terrorist attack, but can you put a price on human life? We'll crunch the numbers for you ahead.

And Iraq in turmoil -- hundreds of al-Sistani supporters come under mortar fire in Kufa. We'll get the latest from that region in a live report.

This is DAYBREAK for Thursday.

(COMMERCIAL BREAK)

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Aired August 26, 2004 - 05:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: At this hour, Muslim faithful targeted in a suburb of Najaf. Can a leading cleric bring peace to a city and to a nation in crisis?
It is Thursday, August 26.

This is DAYBREAK.

And good morning to you.

From the CNN Global Headquarters in Atlanta, I'm Carol Costello.

Now in the news, a deadly attack in Iraq this morning during what was supposed to be a peace rally. At least 25 are dead, dozens more hurt after mortars or rockets hit a mosque in Kufa. People had gathered there to protest the fighting in nearby Najaf. It's not clear who fired the mortars.

And there have been more attacks this morning on Iraqi peace demonstrators. Snipers opened fire on them as they marched from Kufa to Najaf. Several were hurt.

At Guantanamo Bay, prosecutors say he was once a bodyguard for Osama bin Laden. A Yemeni man is facing a pretrial hearing today. He'll be the third terrorist suspect arraigned there this week.

Back in the States, four homes burned, 350 others threatened, that's what firefighters are facing south of Reno, Nevada as they battle a fast moving wildfire. Officials say a man who was targeting shooting sparked the blaze.

To the forecast center now and Chad -- good morning.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: Peace efforts are under way in Iraq this morning, but they are being met with deadly violence.

Joining us now with the latest, CNN's Diana Muriel.

She's live in Baghdad.

Bring us up to date with what's been happening there. DIANA MURIEL, CNN CORRESPONDENT: Carol, what's been happening is that thousands of Iraqis have responded to this call from the Grand Ayatollah al-Sistani to come to Najaf and to rescue, as his aides have put it, the holy shrine of Imam Ali, which has been the scene of intense fighting for the past three weeks between the Mehdi Militia loyal to Muqtada al-Sadr, this junior renegade cleric, and U.S.-backed Iraqi forces.

Now, thousands of people arrived in Kufa, which is a suburb about 10 kilometers to the northeast of Najaf and the old city of Najaf, where the shrine is located. They've come under attack twice so far this Thursday morning.

The first attack was a series of mortars, three mortars, which were fired on the Kufa Mosque, two hitting inside the mosque compound, one falling outside. We understand from the interior ministry and from the health ministry here in Baghdad that 25 people were killed and 60 wounded.

Many people have been taking refuge in that mosque, as well, people who had left the holy city of Najaf because of the fighting and others who had come to respond to this call from the Grand Ayatollah.

Then a group of demonstrators moved from the Kufa Mosque compound, heading toward Najaf itself. There's a road which connects the two districts. And they were fired on by sniper fire, according to our producer on the ground there, Kianne Sadeq, and also, from what we could hear from her microphone, we were picking up the sound of machine gun fire, as well, in that area.

The people retreated to the sides of the road, took shelter where they could. We understand that several people were wounded, but we don't have any clear numbers yet from that scene. And others decided to go back toward Kufa as others stayed where they were.

We then heard that the police had given clearance to the demonstrators that they could continue their march toward Najaf, their peaceful demonstration toward Najaf. We understand from Kianne that some people have decided to do that.

In the meantime, the Grand Ayatollah al-Sistani is on his way from Basra in the south of the country, where he arrived on Wednesday after coming back from London, where he'd been receiving treatment for a heart condition. He's called on his followers to come to Najaf. He's in a convoy that's on its way there, not expected to arrive for another six hours or so.

We've heard from the governor of Najaf, Adnan al-Zurufi. He says in a statement that there will be a 24 hour cease-fire when the Grand Ayatollah al-Sistani arrives in Najaf, which is expected to be around 7:00 in the evening local time. He says that the local authorities, the Iraqi authorities, will secure safe passage for the officers of al-Sadr, Muqtada al-Sadr, this renegade cleric, and those of al- Sistani, to allow for talks between the two sides. And he says that U.S. forces and Iraqi forces will stay in their positions in the meantime. If there is an agreement between the two sides, he says that the militias operating in that area should hand over their weapons. But if there is no agreement, the governor of Najaf says that military operations will resume.

He also added, and we haven't been able to independently verify this, Carol, that those people who were responsible for the mortar attack on the Kufa Mosque, he has blamed "terrorist organizations from al Qaeda in the Najaf area." But as I say, we haven't been able to independently confirm that -- Carol.

COSTELLO: I was just going to ask you who fired on that mosque. They're saying al Qaeda did. But aren't there plenty of supporters of Muqtada al-Sadr in that area?

MURIEL: That's right, Carol. This mosque, Kufa Mosque, is traditionally where Muqtada al-Sadr gives his Friday prayers and makes his Friday sermon. Now, he hasn't been seen for some days. It's not even clear that he's still in Najaf. Rumors are circulating that he may have fled to the north of the country. But he certainly hasn't been seen.

Yes, it's an al-Sadr stronghold, but there doesn't seem to be any violence between the supporters of al-Sistani and those of al-Sadr who are congregating in that area. Witnesses on the ground have blamed the Iraqis, they've blamed the U.S. forces. But we heard from a general, from General Lessel, who is the deputy director of operations in the area, and he says that U.S. forces have not been conducting military operations in that area for the past 24 hours and they have categorically denied that they are to blame for the mortars that fell in the Kufa Mosque and the Kufa Mosque compound earlier today -- Carol.

COSTELLO: And it would only be smart, Diana, for U.S. forces to stand back and watch what unfolds and not to get involved.

MURIEL: That's right. This is an extraordinarily tense situation. The Grand Ayatollah commands enormous respect, Carol, here in Iraq. He is the most senior Shia cleric, one of only five living Grand Ayatollahs. One observer said that this man can mobilize millions and it certainly seems that at least he's mobilizing thousands.

Thousands of people are coming from all over Iraq to gather in Kufa and outside Najaf to wait for the Grand Ayatollah to arrive and to make a peaceful march to the shrine, where they hope that the keys of the shrine will be handed over to their Grand Ayatollah.

We have to see whether or not there will be a peaceful resolution of this. But in the meantime, the U.S. forces, and now, we hear from the governor of Najaf, the Iraqi forces, are withdrawing slightly to the side, although they're maintaining their positions, their operational positions. They're not giving those up, but they're going to stay in the background until they see what happens when the Grand Ayatollah al-Sistani arrives in Najaf later on Thursday -- Carol.

COSTELLO: Diana Muriel live from Baghdad this morning.

Thank you.

We'll get back to you if the situation warrants.

More than 40 incidents of abuse, some of which amount to torture, that is the finding of the latest report on the Iraqi prisoner abuse scandal. The report from Major General George Fay also says some military intelligence officials may be linked to the abuse.

Another military investigator says plenty of rules were broken.

(BEGIN VIDEO CLIP)

GEN. PAUL KERN, LEAD INVESTIGATOR: We learned there were leaders in Abu Ghraib who knew about this misconduct, knew better and did nothing. Some soldiers behaved improperly because they were confused by their experiences and direction. And we found that we violated our own regulations by allowing ghost detainees in our detention facilities.

(END VIDEO CLIP)

COSTELLO: CNN Radio's Dick Uliano joins us in the next hour of DAYBREAK for more on the Fay Report.

The conflict in Iraq is taking its toll back here in the States. The father of a Marine killed in Iraq is in the hospital this morning with severe burns. Police in Hollywood, Florida say the man got into the van of the Marines, who told him of his son's death, and then he set the van on fire.

(BEGIN VIDEO CLIP)

CAPT. TONY RODE, HOLLYWOOD, FLORIDA POLICE: At one point he actually goes into the garage, picks up a can of gasoline and/or a propane tank, runs toward the vehicle, snatches the vehicle window and sets the U.S. governmental vehicle on fire. He's still inside the vehicle as it's fully engulfed in flames.

(END VIDEO CLIP)

COSTELLO: The three Marines managed to pull the man from the burning van and then put out the flames.

On to politics now, President Bush hits the campaign trail early this morning. He's got a rally in Las Cruces, New Mexico, and then it's on to Farmington and Albuquerque for more campaign events. New Mexico is one of the 17 so-called battleground states.

Senator Kerry hosts a town hall meeting in Anoka, Minnesota, this morning. He'll be talking about health care. After that, he heads to Los Angeles for a fundraiser in Santa Monica, and then he'll spend the night in San Francisco.

The Republican National Convention opens next week in New York City and city officials anticipate big business. That's despite the Democratic gathering being such a drag for much of Boston.

Our Allan Chernoff has a look at what businesses in the Big Apple might expect.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): New York may be overwhelmingly Democratic, but fundraising for the Republican convention is bipartisan. Members of both parties have pulled out their checkbooks to deliver a record amount.

LEWIS EISENBERG, CO-CHAIR, NEW YORK CITY HOST COMMITTEE: Somewhere in the area of $70 million. We have had participation from Republicans, Democrats, individuals, corporations, large donations, very large donations.

CHERNOFF: It doesn't hurt that the IRS treats donations to convention host committees as charitable contributions. They're tax deductible. The fundraisers' list reads like a who's who of corporate America -- Pfizer Chief Executive Hank McKinnell, Goldman Sachs' CEO Henry Paulsen, Citigroup Chairman Sandy Weil. Each brought in at least $5 million.

Lowes Hotels' CEO Jonathan Tisch, a well known Democrat, raised more than $2.5 million with his pitch.

JONATHAN TISCH, CEO, LOWES HOTELS: I would appreciate your writing a check for the host committee, which is bipartisan, and even though it's supporting a Republican based event, there are hundreds of thousands of New Yorkers that will benefit through your company's generosity.

CHERNOFF: The host committee confirms Michael Bloomberg, a Democrat until he changed parties to run for mayor, has given at least $5 million of his own money, as has David Rockefeller, former chief of Chase Manhattan Bank. And many of New York's biggest companies are contributors, including Time Warner, CNN's parent, which is spending $1.5 million to host a party for the media.

There's no limit on donations to a convention host committee. Political watchdogs claim that's a campaign finance loophole.

STEVE WEISSMAN, CAMPAIGN FINANCE INSTITUTE: The real problem is that there may be a sense of obligation by the presidential candidate and the party to do something for the companies that gave the money.

CHERNOFF: The host committee president, also a Democrat, maintains contributions are good for the city.

KEVIN SHEEKEY, PRESIDENT, NEW YORK CITY HOST COMMITTEE: It is really important for every resident in New York, every employer, every employee, to do what they can to sell this city as a city where people will want to work. And I think the people that have given the host committee money understand that.

CHERNOFF (on camera): What's good for New York in this case is also good for the Republicans. Money from the nation's biggest Democratic city could well provide the convention boost to help President Bush get reelected.

Allan Chernoff, CNN Financial News, New York.

(END VIDEOTAPE)

COSTELLO: An anti-war group will not be allowed to hold a protest in Central Park on Sunday, the day before the Republicans convene. A state judge has ruled there's not enough time to ensure public safety and protect the park from damage.

CNN, of course, will have this convention covered from beginning to end. Our prime time coverage begins Monday night at 7:00 Eastern, 4:00 Pacific time.

Still to come this hour on DAYBREAK, we'll take a close look at what your homeland security tax dollars are paying for even in the most far flung parts of this country.

And the big stories in Athens are on the track today. We'll get a running Olympic update for you, just ahead.

But first, here's a look at what else is making news this Thursday morning.

(COMMERCIAL BREAK)

COSTELLO: Wall Street will open in positive territory this morning. A drop in oil prices fueled a rally.

The Dow is up 83 points.

The Nasdaq up 24.

The S&P 500 up 8 1/2 points.

In the international markets, Japan's Nikkei closed down, well, just slightly, a short time ago.

London's FTSE is trading up more than 17 points.

And the Paris CAC also up about 26 1/2 points.

Your news, money, weather and sports.

It's 5:17 Eastern.

Here's what's all new this morning.

Snipers open fire on Iraqis making their way from Kufa to the city of Najaf. Several of these marchers were wounded. This comes hours after a mortar attack on a mosque in Kufa left two dozen people dead. It is not clear who is responsible for either attack.

Flight data recorders from two downed Russian airliners are being examined in Moscow. Russian officials say preliminary investigations of the two nearly simultaneous crashes do not suggest a terror attack, but that has not been ruled out, either.

In money news, oil prices are down. Crude opens today below $44, but all of this could change given reports about multiple attacks on oil pipelines in southern Iraq that happened late yesterday. Fears over a supply disruption should drive -- could drive prices higher when trading opens today.

In culture, Donald Trump's runner-up apprentice is poised to take over as a full fledged real estate mogul. Kwame Jackson is the driving force behind a $3.8 billion development deal in Maryland.

In sports, Olympian Marion Jones qualified for today's long jump in her second attempt. Jones also gets an unexpected shot at a second medal after being named to the women's 400 meter relay team -- Chad.

MYERS: Good morning, Carol.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you this morning.

The Census Bureau will tell us four hours from now how many Americans have no health insurance. Millions of people work fulltime but are not insured.

Details on that now from Chris Huntington of CNN Financial News.

(BEGIN VIDEOTAPE)

CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): Patricia Orzano owns a 7-11 in Massapequa, New York, and she used to have no trouble providing health care coverage for her eight fulltime workers.

PATRICIA ORZANO, 7-11 FRANCHISE OWNER: Five years ago, I had a complete medical, dental, hospitalization plan for my employees that wanted it. And they either paid minimal $20 a week or nothing.

HUNTINGTON: But that's changed because of her skyrocketing insurance costs.

ORZANO: Just recently, the last couple of years, we have not been able to afford health care coverage for our employees. The rising costs each year, they used to go up 5 percent, but each year now it's 10 to 20 percent. And the premiums are just outlandish.

HUNTINGTON: And that puts Orzano's workers, like Frank Martin, in a terrible bind.

FRANK MARTIN: I really can't afford to see a doctor. If I'm working fulltime, I deserve some coverage.

HUNTINGTON: That situation is alarmingly common.

(on camera): According to Families USA, a health care advocacy group funded by private foundations, there are more than 13 million low income working Americans who do not get health care coverage through their jobs and they're also ineligible for public assistance programs like Medicaid simply because they have a job.

KATHLEEN STOLL, FAMILIES USA: If you don't have employer-based coverage and you don't have eligibility for Medicaid, you're really in a bad place. You may not be able to get any health insurance coverage at all.

HUNTINGTON: Stoll and others wrestling with health care reform point to several problems creating this no coverage zone -- outdated Medicaid eligibility rules that deny coverage to working families; a dizzying array of state laws that require insurance plans to cover expensive elective medical procedures and the fact that small, independent businesses cannot pool together to share insurance costs.

President Bush supports small business insurance pooling, but the Small Business Health Fairness Act that passed the House last year is stalled in the Senate. Democratic presidential nominee John Kerry wants the government to subsidize premiums for catastrophic health coverage. Both plans make for good stump speeches, but so far good stump speeches, but so far haven't done much for Patricia Orzano, nor her employee.

(END VIDEOTAPE)

COSTELLO: And that leads us to our e-mail Question of the Day. What do you feel is more important, whether it be medical benefits, company perks or long-term investigate, as in a 401(k), what makes a job attractive to you? We want to know. We want your e-mails this morning. Send them to us at daybreak@cnn.com. That's daybreak@cnn.com.

We wanted to show you a live picture from Najaf. There is smoke pouring from the city. I'm not exactly sure where that smoke is coming from. But it comes on a day when hundreds, thousands of people are marching on the city of Najaf in a peace march. In nearby Kufa, we know that a mosque there was hit and 25 people were killed. And then, as the peace march moved on, snipers opened fire and several people were wounded there.

We don't think that the peace marchers have gotten into Najaf just yet, but they want to drive those supporters of Muqtada al-Sadr, that radical cleric, out of the mosque there. So, things are heating up in Najaf. And as events warrant, of course, we'll bring them to you.

Hot stories making news on the Web, too, straight ahead.

And the war in Iraq takes center stage in Times Square. The war cost number crunch just ahead.

You are watching DAYBREAK for a Thursday.

(COMMERCIAL BREAK) COSTELLO: Time to check our Web clicks this morning. We're always interested in what you're looking on when you look onto cnn.com.

The number one most clicked on story this morning, a very sad story.

MYERS: Yes, the van, the father was notified that his son was killed in Iraq and then he went out to the U.S. government van and set it on fire. And we can't figure out whether he was unfortunately caught in the van or was he actually trying to commit suicide in the van? I just, I, the story doesn't write it well.

It says here, the police statement said, "Unfortunately, the man was caught in the fire."

COSTELLO: Well, they don't know either, probably.

MYERS: But on the top it says he was sitting in the van when it caught on fire. So, I'm not sure.

COSTELLO: Well, the three Marines that were in the house with the man's wife came out and rescued this man and he's in the hospital this morning.

MYERS: Yes.

COSTELLO: But that's on cnn.com if you want to read more about it.

The number two clicked on story on our Web, California holds a big garage sale.

MYERS: Lots of scissors.

COSTELLO: Yes, can you believe the number of scissors for sale?

MYERS: That's because they're confiscated at the airports.

COSTELLO: Oh.

MYERS: Because people have them in their bags.

COSTELLO: That's right. That's true.

MYERS: So, now they're all for sale.

COSTELLO: Governor Schwarzenegger is holding a big garage sale and they're selling all kinds of items that have been confiscated by the police and items...

MYERS: But not his Hummer.

COSTELLO: Not his Hummer, no. Items that are laying around city offices and stuff, to raise money for California.

MYERS: Yes.

COSTELLO: And some of the stuff is on eBay.

MYERS: There's a '95 Ford Mustang that's up to $5,800 right now.

COSTELLO: A pretty good idea.

MYERS: Yes.

COSTELLO: The third most clicked on story, Abercrombie & Fitch does it again, poking fun at West Virginia. I just think this is mean. They put out...

MYERS: That's the old one. "It's all relative in West Virginia."

COSTELLO: No, that's the old one. The new one, they have this T-shirt out. This one says, "West Virginia: No lifeguard at the gene pool." And gene is spelled G-E-N-E. West Virginia, as you might expect, is very angry about this and calling for a boycott of Abercrombie & Fitch.

MYERS: They have a couple from Kentucky, too. "Electricity in almost every town." And then, "Wisconsin cuts the cheese."

COSTELLO: Ha, ha, ha, yes.

MYERS: They're poking fun at all of the places, by the way. Wisconsin not taking it well. West Virginia is not taking it well.

COSTELLO: They're not poking fun at every state, just those three select states.

MYERS: Correct.

COSTELLO: Here's what's all new in the next half hour of DAYBREAK.

It is the match that really matters. But can the U.S. sweethearts of soccer bring home the gold? We'll take you live to Athens.

Homeland security or politics -- Washington is spending billions of your tax dollars to protect you against another terrorist attack, but can you put a price on human life? We'll crunch the numbers for you ahead.

And Iraq in turmoil -- hundreds of al-Sistani supporters come under mortar fire in Kufa. We'll get the latest from that region in a live report.

This is DAYBREAK for Thursday.

(COMMERCIAL BREAK)

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