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CNN Wolf Blitzer Reports

Second American is Beheaded in Iraq; Kerry Talks Tough; Bush Vows to Stand Firm in Face of Terrorism; Interview with interim Iraqi Prime Minister Iyad Allawi, Ed Gillespie, Terry McAuliffe; New American Indian Museum Opens in Washington, D.C.

Aired September 21, 2004 - 17:00   ET

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


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


WOLF BLITZER, HOST: Happening now, terror strikes twice in Iraq. The second American is beheaded.
And a rebuttal to President Bush. Tough talk from the Democratic presidential candidate.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: This president hitched his wagon to the ideologues and we are paying a price for that today.

BLITZER: ...on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Let me just make a quick statement.

BLITZER (voice-over): Determination. President Bush vows to stand firm in the face of terrorism.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The proper response to difficulty is not to retreat. It is to prevail.

BLITZER: No lack of confidence in that regard from Iraq's leader.

UNIDENTIFIED MALE: We are determined to win and we are going to win.

BLITZER: I'll speak with Prime Minister Iyad Allawi.

Document dispute. Is the Bush administration fanning the flames?

UNIDENTIFIED MALE: The White House is raising questions about this because they don't want to answer questions.

BLITZER: I'll ask the chairman of the Democratic and Republican parties.

Celebrating a heritage. But the nation's newest museum may house a controversial view of history.

ANNOUNCER: This is WOLF BLITZER REPORTS for Tuesday, September 21, 2004. (END VIDEOTAPE)

BLITZER: Hello from New York. For the second time in two days, Islamist terrorists in Iraq say they've beheaded an American hostage and now they're threatening to kill a third man unless their demands are met. Our senior international correspondent Walter Rodgers is in Baghdad. He has late developments -- Walter.

WALTER RODGERS, CNN SR. INTL. CORRESPONDENT: Hello, Wolf. The Islamist militants did, indeed, issue a statement saying, "Thank god, the lions of Fawad and Jihad have slaughtered yet another American hostage." The tenor of their statement makes it clear these Muslim militants very clearly see themselves involved in a religious war against the west or at least the United States and Great Britain. They did not name the victim whom they killed but the only remaining American was Jack Hensley, 48 years old, of Atlanta, Georgia. He's survived by a wife and daughter. A short while ago we're told that a body, a headless body, has been found in Baghdad. We're presuming at this point that that is Hensley's.

One of the three -- only one of the three remaining western hostages in the group that were abducted last Thursday is now alive. That is Kenneth John Bigley. He is a Briton. He is 62 years old. The Islamist militants say they will kill him, too, although interestingly, they did not put a 24-hour deadline on when he will be executed. Again, Bigley is the last of those remaining hostages. This string of executions began Monday of this week when the Islamist militant -- militants affiliated with Abu Musab Zarqawi executed Eugene Armstrong in a very grizzly videotape -- Wolf.

BLITZER: Walter Rodgers with that sad gruesome news from Baghdad. Thank you, Walter, very much.

One week after the United Nations Secretary-General Kofi Annan called the U.S.-led invasion of Iraq illegal, President Bush defended it today in a speech over at the United Nations General Assembly here in New York. Our senior U.N. correspondent Richard Roth joining us now live with details of that -- Richard.

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Yes, Wolf. Things weren't as combative as a couple years ago between the U.S. president and the members of the general assembly. But this was a very cold reception the U.S. leader received here at the U.N.

(BEGIN VIDEOTAPE)

ROTH (voice-over): A relieved President Bush after addressing the world, not his typical friendly campaign audience, but that didn't stop Mr. Bush from defending his decision to invade Iraq after countless U.N. resolutions.

BUSH: When we say serious consequences for the sake of peace, there must be serious consequences.

ROTH: A more forceful appeal this year from the president for troops and funding for the new leaders in Iraq, such as Prime Minister Allawi making his first U.N. appearance.

BUSH: The U.N. and its member-nations must respond to Prime Minister Allawi's request and do more to help build an Iraq that is secure, democratic, federal, and free.

ROTH: But there's great resistance. None of the countries in the room have yet answered the U.S. and U.N. calls for more troops to help protect U.N. personnel sent to help stage an election. French President Jacques Chirac inside the U.N. the night before did not stick around to listen to the president. He says that Pandora's Box has been opened in Iraq.

The president championed progress though in Iraq and Afghanistan and urged leaders to fight terrorists before they come to their countries. But the 191 members of the U.N. can't even agree on the definition of terrorism, so President Bush called for a new definition of security which he said should be based on democracy and the rights of mankind.

BUSH: Eventually there is no safe isolation from terror networks or failed states that shelter them or outlaw regimes or weapons of mass destruction.

ROTH: Before the speech, President Bush met with Kofi Annan. The secretary general said last week the war in Iraq was illegal, but it was described as a cordial session with President Bush telling the secretary general, "you are a good man" and thanking him for help on elections in Iraq and Afghanistan.

In his opening remarks to the General Assembly, Annan did not directly challenge the U.S., but said no country is above the law.

KOFI ANNAN, U.N. SECRETARY-GENERAL: Yet today the rule of law is at risk around the world. Again and again we see laws shamelessly disregarded.

(END VIDEOTAPE)

ROTH: As for reaction to President Bush, several ministers thought that they appreciated that the tone was less defiant. Others thought it was really aimed at the American electorate. And, Wolf, if that audience buys it, President Bush will back here for a fifth time when the United Nations celebrates its 60th anniversary -- Wolf.

BLITZER: Richard Roth at the U.N. Thanks, Richard, very much.

The Democratic presidential nominee, John Kerry, wasted no time. He continued to criticize President Bush's handling of the Iraq war. Kerry is on the campaign trail today in Florida. That's where we find our national correspondent, Bob Franken -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: And Wolf, here you had his opponent, President Bush dominating the world stage, so the question was for the campaign, how to upstage the president a little bit. And the answer was to do something that John Kerry has not done for a while, hold a news conference. But it was really a reason to talk about Iraq again. The campaign has decided that that is the issue that is the potential winning issue, even one that would overshadow health care, which was the subject of the meeting that was to be held here in Jacksonville. And all of this after President Bush said that Kerry had hardly any credibility about Iraq. Kerry said the credibility problem is the president's.

(BEGIN VIDEOTAPE)

KERRY: Iraq is in crisis, and the president needs to live in the world of reality, not in a world of fantasy spin. At the United Nations today, the president failed to level with the world's leaders. Moments after Kofi Annan, the secretary general, talked about the difficulties in Iraq, the president of the United States stood before a stony-faced body and barely talked about the realities at all of Iraq. After lecturing them, instead of leading them, to understand how we are all together with a stake in the outcome of Iraq, I believe the president missed an opportunity of enormous importance for our nation and for the world. He does not have the credibility to lead the world and he did not and will not offer the leadership in order to do what we need to do to protect our troops, to be successful, and win the war on terror in an effective way.

(END VIDEOTAPE)

FRANKEN: So, forgetting the substance of the debate over Iraq, the debate has really come down, Wolf, to one scornful comment being met by another scornful comment -- Wolf.

BLITZER: Bob Franken in Jacksonville, Florida. Thanks, Bob, very much.

President Bush met here in New York with the interim Iraqi Prime Minister Iyad Allawi. Our White House correspondent Dana Bash is joining us now, picking up that part of the story -- Dana.

DANA BASH, WHITE HOUSE CORRESPONDENT: Wolf, the White House is making no secret of the fact that they think that the prime minister of Iraq, the interim prime minister of Iraq, can make an argument much better even than the president can about the fact that they believe that things really aren't that bad in Iraq. In fact, in a meeting before the cameras with the two men, Mr. Bush even went so far as to dismiss a report from his own intelligence agencies about how they see the realty on the ground. It's of course a classified report that became public last week that and said best case scenario in Iraq was to have an unstable political environment, economic environment. Worst case scenario, a civil war.

(BEGIN VIDEO CLIP)

BUSH: The CIA laid out a -- several scenarios that said life could be lousy, life could be OK, life could be better, and they were just guessing as to what the conditions might be like.

(END VIDEO CLIP)

BASH: Now he dismissed that report as just guessing and didn't answer a follow up about whether or not he still trusts his intelligence information. However the big picture here is that Senator Kerry, of course, is accusing the president of painting a rosy picture that really doesn't exist on the ground in Iraq and the president was asked some questions there. You heard Bob Franken say John Kerry hasn't answered questions in a while. Mr. Bush has not done so in about a month. He did so today. He was not asked a political question, yet he chose to answer some questions in the context of the campaign, taking an opportunity to slam John Kerry on Iraq and also did not answer a question about Republicans in his own party saying that his Iraq policy is troubled. He simply said that at least they're supporting him and not John Kerry -- Wolf.

BLITZER: All right. Dana Bash in New York, thanks very much.

To our viewers, here's your chance to weigh in on this story. Our web question of the day is this, in hindsight, was it a mistake for the U.S. to invade Iraq without the backing of the U.N. security council? You can vote. Go to CNN.com/wolf. We'll have the results for you later in this broadcast.

The fallout over those controversial CBS News documents. Accusations are flying. Who's behind the controversy? We'll hear from both the Bush and Kerry campaigns. Plus this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We cannot and should not be left alone in this fight.

(END VIDEO CLIP)

BLITZER: One on one with Iraq's new leader. His thoughts about his country's battle against terrorists and the upcoming U.S. presidential election. Will he tell us which candidate he supports?

And later, a new exhibit paying tribute to the American Indian. Why some images you may expect to see are not necessarily on display.

(COMMERCIAL BREAK)

BLITZER: CBS News now admits the documents may be fake, but that isn't the end of the controversy over the network's report questioning President Bush's National Guard service. Some Republicans now question whether the Kerry campaign is tied to the scandal, but Kerry campaign officials have their own suspicions.

(BEGIN VIDEO CLIP)

JOE LOCKHART, KERRY CAMPAIGN ADVISER: The campaign had nothing to do with these documents, nothing to do with this story. And two, you have to question the motives of those people who are raising these questions.

(END VIDEO CLIP)

BLITZER: Howard Kurtz of the "Washington Post" and the host of "CNN'S RELIABLE SOURCES" is joining us now with details of this fresh fall. It's gone to another level right now, now that CBS News and Dan Rather have said they're sorry, the whole political arena becomes very very agitated. Tell our viewers why, Howie.

HOWARD KURTZ, "THE WASHINGTON POST": It's really become fodder in the presidential campaign because for the first time, you have a CBS News employee, Dan Rather's producer Mary Mapes acting as a go- between with the Kerry campaign in a way that most news organizations would find highly improper and in fact a CBS News spokeswoman told me today, Wolf, that this was a violation of CBS News standards and will be investigated.

BLITZER: Tell our viewers exactly what she did or she didn't do.

KURTZ: I was going to back up and say that. Mary Mapes made a phone call to Joe Lockhart, senior adviser to the Kerry campaign who we just saw in that clip, and asked him if he would talk to a source, the source we now know, Bill Burkett, the former Texas National Guardsman who provided these documents, these apparently now bogus documents to "60 Minutes" and she told Lockhart that Burkett had been very helpful on this National Guard story and would he please talk to him. Lockhart made the phone call. Lockhart tells me that the guy talked to him for five minutes, gave him advice about how to run the campaign but did not get into the National Guard or these disputed documents.

So he doesn't see anything wrong with what he did but journalistically this raises yet new questions that go along with all the old questions about how CBS was duped on this matter.

BLITZER: Because among conservatives and critics of CBS News this will merely inflame them and suggest that CBS News might have been in bed with the Kerry campaign.

KURTZ: And I think that's a perfectly fair point for them to make. I don't know who else at CBS News knew about this. Their spokeswoman told me that there was no deal made, but Mary Mapes was an experienced producer there and for her to be acting as a go-between with the Kerry campaign, you'd have to be surprised if it didn't draw fire from the likes of Ed Gillespie, the Republican chairman and Dan Bartlett, the White House communications director.

On the other side, Terry McAuliffe, the Democratic chairman was out today and will probably talk to you, Wolf, trying to revive the issue not of the CBS story but of the issue of President Bush's National Guard service. So this has become front and center now in the campaign.

BLITZER: Howard Kurtz, doing excellent reporting on this story for us, for the "Washington Post." Thanks very much, Howie, for that.

Is either campaign behind the CBS News document controversy? There have been allegations that one or the other might be. The chairman of both of the parties, the Democratic and the Republican parties, that is, they will join us live. That's coming up next.

Also ahead.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If we, God forbid, fail in Iraq, then we'll have Washington, London, Paris, Cairo, everywhere will burn.

(END VIDEO CLIP)

BLITZER: Strong words from the interim Iraqi Prime Minister Iyad Allawi, who's in the United States on a mission. I spoke with him here in New York earlier today. That's coming up.

And devastating floods. The death toll rising in Haiti. Hundreds dead. Thousands homeless.

(COMMERCIAL BREAK)

BLITZER: So was the Kerry campaign involved in the CBS News document scandal? Is the White House using the controversy to avoid answering questions about the president's National Guard service? The chairman of both parties scheduled to meet with us now. Ed Gillespie, the chairman of the Republican Party is here. We hope to speak to Terry McAuliffe when he shows up.

I'll begin with you, Ed. What is your specific allegation that you're making against the Kerry campaign right now?

ED GILLESPIE, RNC CHAIRMAN: What I've said is that the CBS acknowledgement that the documents are inauthentic answers one question, but it raises a series of others. And I have to tell you, I was stunned to wake up today and read in the newspaper that the Kerry campaign, a senior adviser, had been in touch with CBS before the story ran. And according to Bill Burkett, who apparently supplied the documents, as a condition of going public with these false documents, the condition was for him to talk with the Kerry campaign. CBS put the Kerry campaign in touch with him. A senior adviser talked...

BLITZER: But that -- let me interrupt. Let me interrupt that for a second. But isn't that a criticism you have of CBS News more than you have of the Kerry campaign?

GILLESPIE: Well, the question to the Kerry campaign is what did they know and when did they know it? And the Kerry campaign and the DNC both of course have made a "character-based critique," which is Boston talk for "character assassination," the new strategy of the campaign. And it was based on -- it seems increasingly clear, it was based on the release of these documents, whether they knew them to be false or not, I don't know. It's possible they didn't know they were false, but they obviously knew about them in advance and based a whole campaign strategy around them that has now been discredited.

And I think the question is, what was the nature of the conversations between Bill Burkett and Senator Max Cleland one of Senator Kerry's most ardent supporters and surrogates? What was the nature of the conversations between Joe Lockhart and CBS? Joe Lockhart is senior campaign adviser for Senator Kerry and... BLITZER: Both Lockhart and Cleland insist it was very innocent. They got a call from this guy, they answered it. They answered -- he answered -- they answered his questions very briefly, but they had no knowledge of these documents, certainly had nothing to do with getting these documents into the hands of CBS News. That's what Cleland and what Joe Lockhart insist.

GILLESPIE: But Bill Burkett says that as a condition of his going forward to go public with his -- with these documents, he needed to talk to the Kerry campaign. CBS put him in touch with them. And so in fact, did -- was there an agreement that -- between CBS and the Kerry campaign that that would be the case? I just think there are a lot of questions here, Wolf, and they come down to essentially, what did the Kerry campaign know and when did they know it? What did they base their strategy on and why do they continue to pursue a strategy on discredited documents? And now it turns out today too we learned that Senator Kerry was aware of the conversation between Joe Lockhart and Bill Burkett as well.

BLITZER: A lot of people knew that "60 MINUTES" was working on a piece on the president's service in the Texas Air National Guard. That was no secret. We've known about that -- a lot of people knew about that, all of us speculated about it for weeks before it aired. You knew about it as well.

GILLESPIE: No, I did not, Wolf. I heard about it when Dan Bartlett was notified by "60 MINUTES" or reached out to "60 MINUTES" and heard about it...

BLITZER: You mean you didn't know that Ben Barnes was giving an interview to "60 MINUTES" to Dan Rather days before that aired?

GILLESPIE: I think I heard it the day before. But remember these documents that were handed to Dan Bartlett were handed to Dan Bartlett hours before he went on. It's clear to me now or it seems clear that others maybe in the other camp were aware of the documents well in advance of their appearing or being produced and given to Dan Bartlett at the White House.

BLITZER: So basically what -- you're just raising questions. You have no evidence, hard evidence, at least not yet, that the Kerry campaign or the Democratic Party had any role whatsoever in manufacturing or producing these apparently phony documents?

GILLESPIE: No, Wolf. And as I noted, we talked about it Sunday on your show, and I have noted that Terry was very precise in saying that we had nothing to do with the production of the documents, but that doesn't mean to say that he did not -- you asked him point blank, do you know anything about the documents? He said, we had nothing to do with the production. We don't know what they had to do with the dissemination of them perhaps. I think that's a legitimate question.

But again, look, they based a whole campaign attack, this "character-based critique," as they call it, or "character assassination," as most Americans would call it, on these documents. And Terry has been out there talking about "Operation Fortunate Son" and "Sealords II" and all this skullduggery based on what are clearly now discredited documents and they continue to level these charges, continue to try to smear the president. And like I said, I think there are very serious questions, journalistically, yes, as Howard Kurtz pointed out, but in terms of the campaign and its involvement and its role as well.

BLITZER: Well, we're going to pursue those questions, we're going to speak to Terry McAuliffe, that's coming up. We had technical problems getting him, but hopefully he's going to be there once we take a commercial -- after we take this commercial break. Ed Gillespie, thanks very much for joining us.

GILLESPIE: I look forward to watching. Thank you. I'll set my VCR.

BLITZER: Well, you don't have to set your VCR. You can wait two minutes and you will -- hopefully, you'll be able to see it. We're also going to covering other stories: The Iraqi leader says things are back to normal but he also says terrorists are flooding into his country. Will the elections in Iraq scheduled for January go forward? Up next my interview with the prime minister, Ayad Allawi.

Plus, big trouble for big tobacco. Why the government says cigarette makers are guilty of misleading consumers.

And the date is now set. Martha Stewart behind bars in just a matter of weeks.

(COMMERCIAL BREAK)

BLITZER: We just heard from Ed Gillespie, the chairman of the Republican Party. Let's hear from Terry McAuliffe, the chairman of the Democratic Party. He's joining us on the phone.

We had some technical problems. But better to hear from you than not hear from you at all, Terry McAuliffe. You heard the allegations made by Ed Gillespie that there's a lot of suspicious activity going on, connections between Bill Burkett, the guy who leaked these so- called documents to CBS News, and the Kerry campaign, the Democratic Party.

Give us your response.

TERRY MCAULIFFE, DNC CHAIRMAN: Let me be unequivocally clear.

There was no involvement, no dissemination, no involvement with these documents at all by anybody involved in the John Kerry for president or the Democratic National Committee, period. This is a smokescreen, Wolf. We still have the basic issues that George Bush has not answered about why he didn't take a physical and that he used preferential treatment to get in. And we don't know where he was for months at a time in 1972 and 1973. We had nothing to do with these documents in any way, shape or form.

BLITZER: What was the nature of the phone conversations between Bill Burkett, the guy who gave these apparently phony documents to CBS News, and Joe Lockhart from the Kerry campaign and former Senator Max Cleland, a strong supporter of John Kerry?

MCAULIFFE: Wolf, as you know, in a presidential campaign, we get literally thousands of calls a day, many people who say they have important information.

And Joe Lockhart had a two- or three-minute conversation which did not discuss any documents at all, talked about that John Kerry needed to fight more and so forth. We have these. Everybody has these all day. But as it relates to these documents, there is not a shred of evidence. "The New York Post" today reports that Roger Stone, an old dirty trickster from the Nixon days, may have been involved in the production of these documents.

We were not involved in any way, shape or form.

BLITZER: Well, are you going further now in suggesting that this could have been, in some sort of conspiratorial way, a Republican dirty trick against John Kerry?

MCAULIFFE: Well, I'm just reporting what "The New York Post" said today. They were the ones who said it. But, that, I can only tell you what "The New York Post" said.

I can unequivocally tell you, Wolf, as it relates to the DNC or anyone else, we had nothing to do with these documents in any way, shape or form. And the bottom line is, the basic issue, that George Bush misled and lied to the American public about his military record, stand today. And I, as you know, Wolf, have been talking about these issues for eight months. I have been consistent. And, obviously, what I talk about relates to the Associated Press stories, "The Boston Globe."

"The New York Times" this week did a devastating piece on George Bush's military record, as well as "The U.S. News & World Report."

BLITZER: Well, what about relations or any involvement of the Democratic Party or the Kerry campaign working with the producer at CBS News or others at CBS News in getting this story out? What do you know, if anything, about that?

MCAULIFFE: Absolutely no involvement at all with CBS, unequivocally, flat denial, no ifs, ands or buts about it, no dealings at all with CBS as it relates to these documents.

BLITZER: Because, as you know, on Sunday, you made a point of -- nobody at the Democratic Party had any role in the production of these documents. Gillespie is saying you never said anything about disseminating or anything else involving these documents. Now you're flatly saying there was no involvement whatsoever?

MCAULIFFE: Let me be crystal clear. I said production of documents, because people were talking about the documents.

Let me even take it a step further, no involvement in the dissemination. Let's be crystal clear, no involvement at all with these documents. Let's go back. I have questions. Mine are legitimate questions raised, as I say, by "The New York Times," by the "Boston Globe," the Associated Press, "U.S. News."

George Bush misled, has lied to us from the Oval Office about his military record. I stand by those questions. I stand today. I've been talking about them for eight months, unrelated anything at all to do with CBS.

BLITZER: Terry McAuliffe, the chairman of the Democratic Party, thanks very much for joining us.

MCAULIFFE: You bet.

BLITZER: Let's get a quick check of some other stories now in the news.

A landmark lawsuit is under way, with the federal government suing the tobacco industry for $280 billion. Prosecutors accuse cigarette makers of racketeering and conspiracy to downplay the hazards of smoking. The trial is expected to last six months.

It looks like Martha Stewart will begin serving her five-month prison term in just over two weeks. A judge has ordered her to report to prison October 8. Last week, Stewart asked the court to expedite the process, saying she now wanted to get it now all over with.

Keeping you informed, CNN, the most trusted name in news.

My special interview with Iraq's new leader, the prime minister, Iyad Allawi, that's coming up next.

Also, hope is fast fading in Haiti after massive flooding causes a massive amount of deaths. Up next, the recovery after the tropical storm Jeanne.

Plus this, history and heritage. The nation's newest museum paints a picture of the past. Some say, however, it's not exactly an accurate one.

(COMMERCIAL BREAK)

BLITZER: Facing a savage insurgency at home, the interim Iraqi prime minister, Iyad Allawi, took his place at the United Nations today.

Among the world leaders gathered here in New York, his job is arguably one of the toughest and one of the riskiest. I spoke with him earlier today here in New York at his hotel.

(BEGIN VIDEOTAPE)

BLITZER: The CIA, the National Intelligence Estimate that recently was presented to the president in July, now widely reported, offers a pretty pessimistic short- and long-term assessment of what's happening in Iraq. Worst case scenario, civil war unfolding between Sunnis and Shia.

IYAD ALLAWI, IRAQI INTERIM PRIME MINISTER: I don't think this is accurate. There are no problems between Shia and Sunnis and Kurds and Arabs and Turkmen.

BLITZER: Yes, but historically, there has been a lot of them.

ALLAWI: Well, tensions, yes, every now and then. But usually we have no problems of ethnic or religious nature in Iraq.

What we have now really is a confrontation between the Iraqi people and the friends of Iraq, and between murderers, terrorists and insurgents who are trying to inflict and to stop life in Iraq. And to stop the progress towards democracy and to undermine this process.

But we are determined to win and we are going to win and we are winning. Unfortunately the media is not reporting this. And on the contrary what the media is doing is giving oxygen for the terrorists...

BLITZER: But...

(CROSSTALK)

BLITZER: ... if an American is beheaded in Iraq...

(CROSSTALK)

BLITZER: ... or if there is a car bombing, we have to report that.

ALLAWI: This should increase our resolve to fight terrorism. If we, God forbid, fail in Iraq, then you will have Washington, New York, London, Paris, Cairo, everywhere, all burn. So the fight now, this global terrorism is fighting -- they are fighting very hard in Iraq. We are going to confront them and we are going to win.

BLITZER: What did you think of John Kerry's proposals yesterday to deal with Iraq?

ALLAWI: Unfortunately I haven't seen it yet to make a comment. Plus, I don't want to get involved in internal American matters.

BLITZER: By coming here at this time and speaking in Washington, speaking at the U.N., in the midst of -- just weeks before the election, some are saying you're already interfering in domestic American politics.

ALLAWI: No, I'm not. I am attending the General Assembly and I am coming to paid my thanks to the American people and to the American government and to the Congress. The United States have helped Iraq tremendously, is helping Iraq now. It helped us in liberating ourselves from Saddam and tyranny in the region. The United States is playing a very constructive in peace and progress in Iraq.

So really, we ought to thank the United States and the sacrifices that the United States have been making in Iraq. And we see ourselves as allies and partners of the United States and Great Britain and other friendly nations as well.

BLITZER: Do you have a preference between Bush and Kerry?

ALLAWI: No. It's the American people who decide, really. We are interested in having America as our ally and partner in peace and stability in the world and the region.

BLITZER: I ask the question because yesterday John Kerry said that if he were elected and he undertook these four steps that he laid out, he believes by next summer the U.S. could start withdrawing troops from Iraq and within four years all U.S. troops could be out of Iraq. That would be, in his words, a realistic aim.

Is that something you think is realistic?

ALLAWI: It's possible. This is what we are working for. This is what the current American administration is working towards. The multinational forces are not in Iraq to stay forever. They are there to help us to build our security and to build our capabilities to face terrorism.

So really this is something that is agreed upon already.

BLITZER: Saddam Hussein, you suggested on Sunday that he and his associates, the trials, the war crimes trials against him could begin as early as October. That's a month from now.

ALLAWI: The trial is.

BLITZER: You believe that Saddam Hussein himself could -- the trial against him could begin that early, or others associated?

ALLAWI: Other associated will be tried and hopefully he will immediately follow.

BLITZER: So when do you think the actual trial of Saddam could held?

ALLAWI: Late October, November we will start the trial.

BLITZER: Salem Chalabi was in charge of the legal process. He was facing some criminal charges. What's the status of Salem Chalabi and Ahmed Chalabi, your colleague in the Iraqi -- formerly in the Iraqi government?

ALLAWI: Yes, well, Salem has resigned his post. And he is currently -- I don't know, I think he is in Baghdad.

BLITZER: People accuse him of conspiracy and murder.

ALLAWI: There are some accusations. I don't know what he is accused of, really, so far, because the judicial system is completely independent in Iraq. And this is one of the positive signs of democracy starting in Iraq, about the judicial system is completely separated.

BLITZER: So he's out of it, but what about Ahmed Chalabi?

ALLAWI: Ahmed is in Iraq now.

BLITZER: Is he accused of any wrongdoing?

ALLAWI: There was an accusation. I think they settled in court for the problems. I'm not sure, really, what happened. We don't interfere in the judicial system at all in Iraq.

BLITZER: Let's get back to the election. You need the United Nations to be involved. You're here in New York right now. You're going to be addressing the U.N. The security situation, as bad as it seemingly is, how do you expect U.N. officials to go in there and monitor and help organize elections scheduled for January? Kofi Annan is reluctant to send them.

ALLAWI: They should really be trying to help more. There are international organizations already in Iraq. There are aid organizations already in Iraq operating throughout the country. There are many foreigners who are still in Iraq. If security is not that good, definitely.

But this puts further burden on the United Nations a member country and developing its capability. And to go forward in the process of elections. I think...

BLITZER: Did -- you heard Kofi Annan say the war was illegitimate.

ALLAWI: I heard him say so, yes. I don't agree with what he said. I think it was taken totally out of context. I'm going to meet with him and to find out exactly why and what was said. But let me tell you something which is very important.

What we see now in Iraq, destruction and undermining the progress of Iraq and threatening peace and stability in Iraq, as part of Saddam's regime, or what is left of Saddam's regime, we see atrocities that have been committed in Iraq including the possession of weapons of mass destruction which was used against the Iraqi people.

This all goes back to Saddam's regime. To remove tyranny and to help Iraqis to implement democracy is something very vital, really, for Iraq, for peace and stability and a very vital region in the world. And this is why the help of the United Nations, of the United States, or other civilized nations is so important.

We cannot and should not be left alone. It is a fight which is bigger than our capacity and bigger than our capabilities. And who brought this result, what we are facing now, the seeds were when Saddam was around were planted.

BLITZER: We're almost out of time. But a question about you personally. You've spoken about four assassination attempts against you recently. How worried are you about your own personal safety?

ALLAWI: Well, I am worried, frankly. This is a job that has to be done, where I've dedicated to our country. We know that we are winning. The attempts are because of the desperation of our enemies. We are winning. We will continue to make headway. We will continue to win. And we will bring democracy to Iraq and peace to the region and to the world.

And again I would thank all the nations which stood with us and are standing with us now shoulder to shoulder. Most importantly, the United States and Great Britain and the United Kingdom and other peace-loving nations.

BLITZER: Can you clarify one historic footnote, curiosity about your past? At one point you were involved in the Baath Party.

ALLAWI: Yes. Yes.

BLITZER: Then they tried to kill you. You spent almost a year in a hospital recuperating from that assassination attempt.

What happened? What caused you to split with Saddam Hussein and the Baath Party many years ago?

ALLAWI: In fact, the reason of the split, I took part in the seizure of power in 1968. I was a medical student, but as we got into power, and then we believed that we were taking Iraq onto a democratic path, it turned out to be that we are and -- were tyrants, rather than democrats.

And this is what caused the split. And the confrontation inside Iraq started when I was still there. And then I left Lebanon, and continued with my fight deviation and tyranny, and so we won with the help of the international community.

BLITZER: Did Saddam Hussein personally order your death?

ALLAWI: Yes.

BLITZER: So you must hate him?

ALLAWI: Well, I hate him not because he ordered my death warrant, but I hate him because he ruined the country, and he ruined the peace, and he ruined the chances for a very, important country who could have played a very significant role in peace and progress in the entire region.

BLITZER: And you got word recently from him that he was begging you for mercy.

ALLAWI: Well, he is a coward. He have -- you know, he ultimately was found in a hole under the ground. He did not have the dignity to surrender gracefully. This shows how committed against humanity he is, and he was, and this is yet again a victory for civilization, and for peace-loving countries and peace-loving people.

BLITZER: Do you want him dead?

ALLAWI: It depends on the judicial system in Iraq. Whatever verdict they pass, we will respect.

BLITZER: You have an enormous challenge ahead of you. Good luck to you, Mr. Prime Minister.

(CROSSTALK)

ALLAWI: Thank you very much.

BLITZER: Thanks very much for joining us.

ALLAWI: Thank you.

(END VIDEOTAPE)

BLITZER: Iyad Allawi speaking with me earlier today here in New York at his hotel. He's here attending United Nations meetings. He will be in Washington later in the week addressing a joint session of the U.S. Congress as well.

Other news we're following, the death toll in Haiti has now risen to 691 following those floods blamed on Tropical Storm Jeanne. Half of Haiti's third largest city is still underwater. And reports say not a single house in the city escaped damage. After hitting Haiti over the weekend, Jeanne remains out to sea near the Bahamas.

America's first culture takes a place of honor on the National Mall.

(BEGIN VIDEO CLIP)

CHAD SMITH, PRINCIPAL CHIEF, CHEROKEE NATION: It creates a sense of pride, that we're not only a people of the past.

(END VIDEO CLIP)

BLITZER: We'll take you live to the opening of the Smithsonian treasure, the Museum of the American Indian.

(COMMERCIAL BREAK)

BLITZER: There is a magnificent new structure in the nation's capital dedicated to the traditions and culture of the original Americans.

Let's go live to CNN's Brian Todd. He's on the National Mall in Washington -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, it's been a wonderful scene here all day, huge crowds. As you can see, there's a nice gathering here for a performance of a Native American singer and guitar player.

It has been like this virtually all day for the opening of the National Museum of the American Indian. This museum is spectacular in many ways. But like many museums of its kind, its ultimate success may come down to interpretations of how culture and history are presented.

(BEGIN VIDEOTAPE) TODD (voice-over): On one of the last sections of prime real estate on Washington's greatest expanse, thousands of Native Americans evoke the storied moments of their past and the beginning of a new era. The National Museum of the American Indian is a moving tribute to the first inhabitants of the Western Hemisphere.

SMITH: It creates a sense of pride that we're not only a people of the past, but we're a people of the present, and even more so, we're going to be a people of the future.

TODD: Chad Smith traveled about 1,500 miles for this. As leader of the Cherokee Nation, he's inspired by what's called the curvilinear limestone architecture, the breathtaking sculpture and artwork, some dating back thousands of years.

SMITH: And people will leave here with not a sense of loss. They'll leave here with a sense of hope.

TODD (on camera): The celebration of Native American culture here is evident, the symbols powerful. But if you come here looking to get a vivid, graphic sense of the Indian's struggle, of the wars and slaughters of the 18th and 19th centuries, you won't find it.

(voice-over): Very few photographs, no portraits, no dramatizations of Indian resistance to the white American settlement drive in the 1800s and the massacres that ensued. There are references in text to the killings and displacement, displays of treaties betrayed, weapons used. But the closest you'll get to a visual of the notorious battle of Wounded Knee, where more than 200 Sioux Indians were cut down by the U.S. Army, is a display of the book "Bury My Heart at Wounded Knee."

BRUCE BERNSTEIN, NATIONAL MUSEUM OF THE AMERICAN INDIAN: That's the way the outside world, the non-Indian world has always spoken about the violence which has beset the Native world. From the Native standpoint, that might not be the same way they want that depicted.

TODD: Museum officials say they visited more than 30 Native American communities and say the consensus was, don't dwell on Indian victimization. But in a structure that occupies 250,000 square feet and costs nearly $220 million, why is there no hall of heroes? An entire section features Senator Ben Nighthorse Campbell and his jewelry-making skill. But neither we, nor an assistant director could find one picture of Sitting Bull, the great Dakota Sioux chief, arguably the most famous Native American leader.

We found a rifle surrendered by Geronimo, but no illustration of the legendary Apache warrior. We asked a historian, is this an omission?

DAVID J. SILVERMAN, PROFESSOR, GEORGE WASHINGTON UNIVERSITY: Most of the stories that we Americans tell ourselves about the great Indian leaders are tragic stories. And these leaders invariably fail in the end, fighting a losing, but worthy battle. Clearly, that's not a story that this museum was interested in telling.

(END VIDEOTAPE)

TODD: Now, those stories may yet be told. Museums do evolve and some exhibits rotate. For now, the cultural vibrancy, of art, folk tales and music is the real draw here.

We have one last footnote. A couple of hours ago on the Senate floor, I don't know if this is the only time this has ever happened, but the only Native American senator, Ben Nighthorse Campbell, spoke to his colleagues on the floor in full Indian regalia. It's quite a sight on this very historic day -- Wolf.

BLITZER: Brian Todd reporting from the National Mall on this museum -- thanks, Brian, very much.

And we'll have the results of our Web question of the day, that's coming up next.

(COMMERCIAL BREAK)

BLITZER: Here's how you're weighing in our Web question of the day. Take a look at the results. Remember, though, this is not a scientific poll.

I'll be back in Washington tomorrow. Thanks very much for joining us.

"LOU DOBBS TONIGHT" starts right now.

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


Aired September 21, 2004 - 17:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, HOST: Happening now, terror strikes twice in Iraq. The second American is beheaded.
And a rebuttal to President Bush. Tough talk from the Democratic presidential candidate.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: This president hitched his wagon to the ideologues and we are paying a price for that today.

BLITZER: ...on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Let me just make a quick statement.

BLITZER (voice-over): Determination. President Bush vows to stand firm in the face of terrorism.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The proper response to difficulty is not to retreat. It is to prevail.

BLITZER: No lack of confidence in that regard from Iraq's leader.

UNIDENTIFIED MALE: We are determined to win and we are going to win.

BLITZER: I'll speak with Prime Minister Iyad Allawi.

Document dispute. Is the Bush administration fanning the flames?

UNIDENTIFIED MALE: The White House is raising questions about this because they don't want to answer questions.

BLITZER: I'll ask the chairman of the Democratic and Republican parties.

Celebrating a heritage. But the nation's newest museum may house a controversial view of history.

ANNOUNCER: This is WOLF BLITZER REPORTS for Tuesday, September 21, 2004. (END VIDEOTAPE)

BLITZER: Hello from New York. For the second time in two days, Islamist terrorists in Iraq say they've beheaded an American hostage and now they're threatening to kill a third man unless their demands are met. Our senior international correspondent Walter Rodgers is in Baghdad. He has late developments -- Walter.

WALTER RODGERS, CNN SR. INTL. CORRESPONDENT: Hello, Wolf. The Islamist militants did, indeed, issue a statement saying, "Thank god, the lions of Fawad and Jihad have slaughtered yet another American hostage." The tenor of their statement makes it clear these Muslim militants very clearly see themselves involved in a religious war against the west or at least the United States and Great Britain. They did not name the victim whom they killed but the only remaining American was Jack Hensley, 48 years old, of Atlanta, Georgia. He's survived by a wife and daughter. A short while ago we're told that a body, a headless body, has been found in Baghdad. We're presuming at this point that that is Hensley's.

One of the three -- only one of the three remaining western hostages in the group that were abducted last Thursday is now alive. That is Kenneth John Bigley. He is a Briton. He is 62 years old. The Islamist militants say they will kill him, too, although interestingly, they did not put a 24-hour deadline on when he will be executed. Again, Bigley is the last of those remaining hostages. This string of executions began Monday of this week when the Islamist militant -- militants affiliated with Abu Musab Zarqawi executed Eugene Armstrong in a very grizzly videotape -- Wolf.

BLITZER: Walter Rodgers with that sad gruesome news from Baghdad. Thank you, Walter, very much.

One week after the United Nations Secretary-General Kofi Annan called the U.S.-led invasion of Iraq illegal, President Bush defended it today in a speech over at the United Nations General Assembly here in New York. Our senior U.N. correspondent Richard Roth joining us now live with details of that -- Richard.

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT: Yes, Wolf. Things weren't as combative as a couple years ago between the U.S. president and the members of the general assembly. But this was a very cold reception the U.S. leader received here at the U.N.

(BEGIN VIDEOTAPE)

ROTH (voice-over): A relieved President Bush after addressing the world, not his typical friendly campaign audience, but that didn't stop Mr. Bush from defending his decision to invade Iraq after countless U.N. resolutions.

BUSH: When we say serious consequences for the sake of peace, there must be serious consequences.

ROTH: A more forceful appeal this year from the president for troops and funding for the new leaders in Iraq, such as Prime Minister Allawi making his first U.N. appearance.

BUSH: The U.N. and its member-nations must respond to Prime Minister Allawi's request and do more to help build an Iraq that is secure, democratic, federal, and free.

ROTH: But there's great resistance. None of the countries in the room have yet answered the U.S. and U.N. calls for more troops to help protect U.N. personnel sent to help stage an election. French President Jacques Chirac inside the U.N. the night before did not stick around to listen to the president. He says that Pandora's Box has been opened in Iraq.

The president championed progress though in Iraq and Afghanistan and urged leaders to fight terrorists before they come to their countries. But the 191 members of the U.N. can't even agree on the definition of terrorism, so President Bush called for a new definition of security which he said should be based on democracy and the rights of mankind.

BUSH: Eventually there is no safe isolation from terror networks or failed states that shelter them or outlaw regimes or weapons of mass destruction.

ROTH: Before the speech, President Bush met with Kofi Annan. The secretary general said last week the war in Iraq was illegal, but it was described as a cordial session with President Bush telling the secretary general, "you are a good man" and thanking him for help on elections in Iraq and Afghanistan.

In his opening remarks to the General Assembly, Annan did not directly challenge the U.S., but said no country is above the law.

KOFI ANNAN, U.N. SECRETARY-GENERAL: Yet today the rule of law is at risk around the world. Again and again we see laws shamelessly disregarded.

(END VIDEOTAPE)

ROTH: As for reaction to President Bush, several ministers thought that they appreciated that the tone was less defiant. Others thought it was really aimed at the American electorate. And, Wolf, if that audience buys it, President Bush will back here for a fifth time when the United Nations celebrates its 60th anniversary -- Wolf.

BLITZER: Richard Roth at the U.N. Thanks, Richard, very much.

The Democratic presidential nominee, John Kerry, wasted no time. He continued to criticize President Bush's handling of the Iraq war. Kerry is on the campaign trail today in Florida. That's where we find our national correspondent, Bob Franken -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: And Wolf, here you had his opponent, President Bush dominating the world stage, so the question was for the campaign, how to upstage the president a little bit. And the answer was to do something that John Kerry has not done for a while, hold a news conference. But it was really a reason to talk about Iraq again. The campaign has decided that that is the issue that is the potential winning issue, even one that would overshadow health care, which was the subject of the meeting that was to be held here in Jacksonville. And all of this after President Bush said that Kerry had hardly any credibility about Iraq. Kerry said the credibility problem is the president's.

(BEGIN VIDEOTAPE)

KERRY: Iraq is in crisis, and the president needs to live in the world of reality, not in a world of fantasy spin. At the United Nations today, the president failed to level with the world's leaders. Moments after Kofi Annan, the secretary general, talked about the difficulties in Iraq, the president of the United States stood before a stony-faced body and barely talked about the realities at all of Iraq. After lecturing them, instead of leading them, to understand how we are all together with a stake in the outcome of Iraq, I believe the president missed an opportunity of enormous importance for our nation and for the world. He does not have the credibility to lead the world and he did not and will not offer the leadership in order to do what we need to do to protect our troops, to be successful, and win the war on terror in an effective way.

(END VIDEOTAPE)

FRANKEN: So, forgetting the substance of the debate over Iraq, the debate has really come down, Wolf, to one scornful comment being met by another scornful comment -- Wolf.

BLITZER: Bob Franken in Jacksonville, Florida. Thanks, Bob, very much.

President Bush met here in New York with the interim Iraqi Prime Minister Iyad Allawi. Our White House correspondent Dana Bash is joining us now, picking up that part of the story -- Dana.

DANA BASH, WHITE HOUSE CORRESPONDENT: Wolf, the White House is making no secret of the fact that they think that the prime minister of Iraq, the interim prime minister of Iraq, can make an argument much better even than the president can about the fact that they believe that things really aren't that bad in Iraq. In fact, in a meeting before the cameras with the two men, Mr. Bush even went so far as to dismiss a report from his own intelligence agencies about how they see the realty on the ground. It's of course a classified report that became public last week that and said best case scenario in Iraq was to have an unstable political environment, economic environment. Worst case scenario, a civil war.

(BEGIN VIDEO CLIP)

BUSH: The CIA laid out a -- several scenarios that said life could be lousy, life could be OK, life could be better, and they were just guessing as to what the conditions might be like.

(END VIDEO CLIP)

BASH: Now he dismissed that report as just guessing and didn't answer a follow up about whether or not he still trusts his intelligence information. However the big picture here is that Senator Kerry, of course, is accusing the president of painting a rosy picture that really doesn't exist on the ground in Iraq and the president was asked some questions there. You heard Bob Franken say John Kerry hasn't answered questions in a while. Mr. Bush has not done so in about a month. He did so today. He was not asked a political question, yet he chose to answer some questions in the context of the campaign, taking an opportunity to slam John Kerry on Iraq and also did not answer a question about Republicans in his own party saying that his Iraq policy is troubled. He simply said that at least they're supporting him and not John Kerry -- Wolf.

BLITZER: All right. Dana Bash in New York, thanks very much.

To our viewers, here's your chance to weigh in on this story. Our web question of the day is this, in hindsight, was it a mistake for the U.S. to invade Iraq without the backing of the U.N. security council? You can vote. Go to CNN.com/wolf. We'll have the results for you later in this broadcast.

The fallout over those controversial CBS News documents. Accusations are flying. Who's behind the controversy? We'll hear from both the Bush and Kerry campaigns. Plus this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We cannot and should not be left alone in this fight.

(END VIDEO CLIP)

BLITZER: One on one with Iraq's new leader. His thoughts about his country's battle against terrorists and the upcoming U.S. presidential election. Will he tell us which candidate he supports?

And later, a new exhibit paying tribute to the American Indian. Why some images you may expect to see are not necessarily on display.

(COMMERCIAL BREAK)

BLITZER: CBS News now admits the documents may be fake, but that isn't the end of the controversy over the network's report questioning President Bush's National Guard service. Some Republicans now question whether the Kerry campaign is tied to the scandal, but Kerry campaign officials have their own suspicions.

(BEGIN VIDEO CLIP)

JOE LOCKHART, KERRY CAMPAIGN ADVISER: The campaign had nothing to do with these documents, nothing to do with this story. And two, you have to question the motives of those people who are raising these questions.

(END VIDEO CLIP)

BLITZER: Howard Kurtz of the "Washington Post" and the host of "CNN'S RELIABLE SOURCES" is joining us now with details of this fresh fall. It's gone to another level right now, now that CBS News and Dan Rather have said they're sorry, the whole political arena becomes very very agitated. Tell our viewers why, Howie.

HOWARD KURTZ, "THE WASHINGTON POST": It's really become fodder in the presidential campaign because for the first time, you have a CBS News employee, Dan Rather's producer Mary Mapes acting as a go- between with the Kerry campaign in a way that most news organizations would find highly improper and in fact a CBS News spokeswoman told me today, Wolf, that this was a violation of CBS News standards and will be investigated.

BLITZER: Tell our viewers exactly what she did or she didn't do.

KURTZ: I was going to back up and say that. Mary Mapes made a phone call to Joe Lockhart, senior adviser to the Kerry campaign who we just saw in that clip, and asked him if he would talk to a source, the source we now know, Bill Burkett, the former Texas National Guardsman who provided these documents, these apparently now bogus documents to "60 Minutes" and she told Lockhart that Burkett had been very helpful on this National Guard story and would he please talk to him. Lockhart made the phone call. Lockhart tells me that the guy talked to him for five minutes, gave him advice about how to run the campaign but did not get into the National Guard or these disputed documents.

So he doesn't see anything wrong with what he did but journalistically this raises yet new questions that go along with all the old questions about how CBS was duped on this matter.

BLITZER: Because among conservatives and critics of CBS News this will merely inflame them and suggest that CBS News might have been in bed with the Kerry campaign.

KURTZ: And I think that's a perfectly fair point for them to make. I don't know who else at CBS News knew about this. Their spokeswoman told me that there was no deal made, but Mary Mapes was an experienced producer there and for her to be acting as a go-between with the Kerry campaign, you'd have to be surprised if it didn't draw fire from the likes of Ed Gillespie, the Republican chairman and Dan Bartlett, the White House communications director.

On the other side, Terry McAuliffe, the Democratic chairman was out today and will probably talk to you, Wolf, trying to revive the issue not of the CBS story but of the issue of President Bush's National Guard service. So this has become front and center now in the campaign.

BLITZER: Howard Kurtz, doing excellent reporting on this story for us, for the "Washington Post." Thanks very much, Howie, for that.

Is either campaign behind the CBS News document controversy? There have been allegations that one or the other might be. The chairman of both of the parties, the Democratic and the Republican parties, that is, they will join us live. That's coming up next.

Also ahead.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If we, God forbid, fail in Iraq, then we'll have Washington, London, Paris, Cairo, everywhere will burn.

(END VIDEO CLIP)

BLITZER: Strong words from the interim Iraqi Prime Minister Iyad Allawi, who's in the United States on a mission. I spoke with him here in New York earlier today. That's coming up.

And devastating floods. The death toll rising in Haiti. Hundreds dead. Thousands homeless.

(COMMERCIAL BREAK)

BLITZER: So was the Kerry campaign involved in the CBS News document scandal? Is the White House using the controversy to avoid answering questions about the president's National Guard service? The chairman of both parties scheduled to meet with us now. Ed Gillespie, the chairman of the Republican Party is here. We hope to speak to Terry McAuliffe when he shows up.

I'll begin with you, Ed. What is your specific allegation that you're making against the Kerry campaign right now?

ED GILLESPIE, RNC CHAIRMAN: What I've said is that the CBS acknowledgement that the documents are inauthentic answers one question, but it raises a series of others. And I have to tell you, I was stunned to wake up today and read in the newspaper that the Kerry campaign, a senior adviser, had been in touch with CBS before the story ran. And according to Bill Burkett, who apparently supplied the documents, as a condition of going public with these false documents, the condition was for him to talk with the Kerry campaign. CBS put the Kerry campaign in touch with him. A senior adviser talked...

BLITZER: But that -- let me interrupt. Let me interrupt that for a second. But isn't that a criticism you have of CBS News more than you have of the Kerry campaign?

GILLESPIE: Well, the question to the Kerry campaign is what did they know and when did they know it? And the Kerry campaign and the DNC both of course have made a "character-based critique," which is Boston talk for "character assassination," the new strategy of the campaign. And it was based on -- it seems increasingly clear, it was based on the release of these documents, whether they knew them to be false or not, I don't know. It's possible they didn't know they were false, but they obviously knew about them in advance and based a whole campaign strategy around them that has now been discredited.

And I think the question is, what was the nature of the conversations between Bill Burkett and Senator Max Cleland one of Senator Kerry's most ardent supporters and surrogates? What was the nature of the conversations between Joe Lockhart and CBS? Joe Lockhart is senior campaign adviser for Senator Kerry and... BLITZER: Both Lockhart and Cleland insist it was very innocent. They got a call from this guy, they answered it. They answered -- he answered -- they answered his questions very briefly, but they had no knowledge of these documents, certainly had nothing to do with getting these documents into the hands of CBS News. That's what Cleland and what Joe Lockhart insist.

GILLESPIE: But Bill Burkett says that as a condition of his going forward to go public with his -- with these documents, he needed to talk to the Kerry campaign. CBS put him in touch with them. And so in fact, did -- was there an agreement that -- between CBS and the Kerry campaign that that would be the case? I just think there are a lot of questions here, Wolf, and they come down to essentially, what did the Kerry campaign know and when did they know it? What did they base their strategy on and why do they continue to pursue a strategy on discredited documents? And now it turns out today too we learned that Senator Kerry was aware of the conversation between Joe Lockhart and Bill Burkett as well.

BLITZER: A lot of people knew that "60 MINUTES" was working on a piece on the president's service in the Texas Air National Guard. That was no secret. We've known about that -- a lot of people knew about that, all of us speculated about it for weeks before it aired. You knew about it as well.

GILLESPIE: No, I did not, Wolf. I heard about it when Dan Bartlett was notified by "60 MINUTES" or reached out to "60 MINUTES" and heard about it...

BLITZER: You mean you didn't know that Ben Barnes was giving an interview to "60 MINUTES" to Dan Rather days before that aired?

GILLESPIE: I think I heard it the day before. But remember these documents that were handed to Dan Bartlett were handed to Dan Bartlett hours before he went on. It's clear to me now or it seems clear that others maybe in the other camp were aware of the documents well in advance of their appearing or being produced and given to Dan Bartlett at the White House.

BLITZER: So basically what -- you're just raising questions. You have no evidence, hard evidence, at least not yet, that the Kerry campaign or the Democratic Party had any role whatsoever in manufacturing or producing these apparently phony documents?

GILLESPIE: No, Wolf. And as I noted, we talked about it Sunday on your show, and I have noted that Terry was very precise in saying that we had nothing to do with the production of the documents, but that doesn't mean to say that he did not -- you asked him point blank, do you know anything about the documents? He said, we had nothing to do with the production. We don't know what they had to do with the dissemination of them perhaps. I think that's a legitimate question.

But again, look, they based a whole campaign attack, this "character-based critique," as they call it, or "character assassination," as most Americans would call it, on these documents. And Terry has been out there talking about "Operation Fortunate Son" and "Sealords II" and all this skullduggery based on what are clearly now discredited documents and they continue to level these charges, continue to try to smear the president. And like I said, I think there are very serious questions, journalistically, yes, as Howard Kurtz pointed out, but in terms of the campaign and its involvement and its role as well.

BLITZER: Well, we're going to pursue those questions, we're going to speak to Terry McAuliffe, that's coming up. We had technical problems getting him, but hopefully he's going to be there once we take a commercial -- after we take this commercial break. Ed Gillespie, thanks very much for joining us.

GILLESPIE: I look forward to watching. Thank you. I'll set my VCR.

BLITZER: Well, you don't have to set your VCR. You can wait two minutes and you will -- hopefully, you'll be able to see it. We're also going to covering other stories: The Iraqi leader says things are back to normal but he also says terrorists are flooding into his country. Will the elections in Iraq scheduled for January go forward? Up next my interview with the prime minister, Ayad Allawi.

Plus, big trouble for big tobacco. Why the government says cigarette makers are guilty of misleading consumers.

And the date is now set. Martha Stewart behind bars in just a matter of weeks.

(COMMERCIAL BREAK)

BLITZER: We just heard from Ed Gillespie, the chairman of the Republican Party. Let's hear from Terry McAuliffe, the chairman of the Democratic Party. He's joining us on the phone.

We had some technical problems. But better to hear from you than not hear from you at all, Terry McAuliffe. You heard the allegations made by Ed Gillespie that there's a lot of suspicious activity going on, connections between Bill Burkett, the guy who leaked these so- called documents to CBS News, and the Kerry campaign, the Democratic Party.

Give us your response.

TERRY MCAULIFFE, DNC CHAIRMAN: Let me be unequivocally clear.

There was no involvement, no dissemination, no involvement with these documents at all by anybody involved in the John Kerry for president or the Democratic National Committee, period. This is a smokescreen, Wolf. We still have the basic issues that George Bush has not answered about why he didn't take a physical and that he used preferential treatment to get in. And we don't know where he was for months at a time in 1972 and 1973. We had nothing to do with these documents in any way, shape or form.

BLITZER: What was the nature of the phone conversations between Bill Burkett, the guy who gave these apparently phony documents to CBS News, and Joe Lockhart from the Kerry campaign and former Senator Max Cleland, a strong supporter of John Kerry?

MCAULIFFE: Wolf, as you know, in a presidential campaign, we get literally thousands of calls a day, many people who say they have important information.

And Joe Lockhart had a two- or three-minute conversation which did not discuss any documents at all, talked about that John Kerry needed to fight more and so forth. We have these. Everybody has these all day. But as it relates to these documents, there is not a shred of evidence. "The New York Post" today reports that Roger Stone, an old dirty trickster from the Nixon days, may have been involved in the production of these documents.

We were not involved in any way, shape or form.

BLITZER: Well, are you going further now in suggesting that this could have been, in some sort of conspiratorial way, a Republican dirty trick against John Kerry?

MCAULIFFE: Well, I'm just reporting what "The New York Post" said today. They were the ones who said it. But, that, I can only tell you what "The New York Post" said.

I can unequivocally tell you, Wolf, as it relates to the DNC or anyone else, we had nothing to do with these documents in any way, shape or form. And the bottom line is, the basic issue, that George Bush misled and lied to the American public about his military record, stand today. And I, as you know, Wolf, have been talking about these issues for eight months. I have been consistent. And, obviously, what I talk about relates to the Associated Press stories, "The Boston Globe."

"The New York Times" this week did a devastating piece on George Bush's military record, as well as "The U.S. News & World Report."

BLITZER: Well, what about relations or any involvement of the Democratic Party or the Kerry campaign working with the producer at CBS News or others at CBS News in getting this story out? What do you know, if anything, about that?

MCAULIFFE: Absolutely no involvement at all with CBS, unequivocally, flat denial, no ifs, ands or buts about it, no dealings at all with CBS as it relates to these documents.

BLITZER: Because, as you know, on Sunday, you made a point of -- nobody at the Democratic Party had any role in the production of these documents. Gillespie is saying you never said anything about disseminating or anything else involving these documents. Now you're flatly saying there was no involvement whatsoever?

MCAULIFFE: Let me be crystal clear. I said production of documents, because people were talking about the documents.

Let me even take it a step further, no involvement in the dissemination. Let's be crystal clear, no involvement at all with these documents. Let's go back. I have questions. Mine are legitimate questions raised, as I say, by "The New York Times," by the "Boston Globe," the Associated Press, "U.S. News."

George Bush misled, has lied to us from the Oval Office about his military record. I stand by those questions. I stand today. I've been talking about them for eight months, unrelated anything at all to do with CBS.

BLITZER: Terry McAuliffe, the chairman of the Democratic Party, thanks very much for joining us.

MCAULIFFE: You bet.

BLITZER: Let's get a quick check of some other stories now in the news.

A landmark lawsuit is under way, with the federal government suing the tobacco industry for $280 billion. Prosecutors accuse cigarette makers of racketeering and conspiracy to downplay the hazards of smoking. The trial is expected to last six months.

It looks like Martha Stewart will begin serving her five-month prison term in just over two weeks. A judge has ordered her to report to prison October 8. Last week, Stewart asked the court to expedite the process, saying she now wanted to get it now all over with.

Keeping you informed, CNN, the most trusted name in news.

My special interview with Iraq's new leader, the prime minister, Iyad Allawi, that's coming up next.

Also, hope is fast fading in Haiti after massive flooding causes a massive amount of deaths. Up next, the recovery after the tropical storm Jeanne.

Plus this, history and heritage. The nation's newest museum paints a picture of the past. Some say, however, it's not exactly an accurate one.

(COMMERCIAL BREAK)

BLITZER: Facing a savage insurgency at home, the interim Iraqi prime minister, Iyad Allawi, took his place at the United Nations today.

Among the world leaders gathered here in New York, his job is arguably one of the toughest and one of the riskiest. I spoke with him earlier today here in New York at his hotel.

(BEGIN VIDEOTAPE)

BLITZER: The CIA, the National Intelligence Estimate that recently was presented to the president in July, now widely reported, offers a pretty pessimistic short- and long-term assessment of what's happening in Iraq. Worst case scenario, civil war unfolding between Sunnis and Shia.

IYAD ALLAWI, IRAQI INTERIM PRIME MINISTER: I don't think this is accurate. There are no problems between Shia and Sunnis and Kurds and Arabs and Turkmen.

BLITZER: Yes, but historically, there has been a lot of them.

ALLAWI: Well, tensions, yes, every now and then. But usually we have no problems of ethnic or religious nature in Iraq.

What we have now really is a confrontation between the Iraqi people and the friends of Iraq, and between murderers, terrorists and insurgents who are trying to inflict and to stop life in Iraq. And to stop the progress towards democracy and to undermine this process.

But we are determined to win and we are going to win and we are winning. Unfortunately the media is not reporting this. And on the contrary what the media is doing is giving oxygen for the terrorists...

BLITZER: But...

(CROSSTALK)

BLITZER: ... if an American is beheaded in Iraq...

(CROSSTALK)

BLITZER: ... or if there is a car bombing, we have to report that.

ALLAWI: This should increase our resolve to fight terrorism. If we, God forbid, fail in Iraq, then you will have Washington, New York, London, Paris, Cairo, everywhere, all burn. So the fight now, this global terrorism is fighting -- they are fighting very hard in Iraq. We are going to confront them and we are going to win.

BLITZER: What did you think of John Kerry's proposals yesterday to deal with Iraq?

ALLAWI: Unfortunately I haven't seen it yet to make a comment. Plus, I don't want to get involved in internal American matters.

BLITZER: By coming here at this time and speaking in Washington, speaking at the U.N., in the midst of -- just weeks before the election, some are saying you're already interfering in domestic American politics.

ALLAWI: No, I'm not. I am attending the General Assembly and I am coming to paid my thanks to the American people and to the American government and to the Congress. The United States have helped Iraq tremendously, is helping Iraq now. It helped us in liberating ourselves from Saddam and tyranny in the region. The United States is playing a very constructive in peace and progress in Iraq.

So really, we ought to thank the United States and the sacrifices that the United States have been making in Iraq. And we see ourselves as allies and partners of the United States and Great Britain and other friendly nations as well.

BLITZER: Do you have a preference between Bush and Kerry?

ALLAWI: No. It's the American people who decide, really. We are interested in having America as our ally and partner in peace and stability in the world and the region.

BLITZER: I ask the question because yesterday John Kerry said that if he were elected and he undertook these four steps that he laid out, he believes by next summer the U.S. could start withdrawing troops from Iraq and within four years all U.S. troops could be out of Iraq. That would be, in his words, a realistic aim.

Is that something you think is realistic?

ALLAWI: It's possible. This is what we are working for. This is what the current American administration is working towards. The multinational forces are not in Iraq to stay forever. They are there to help us to build our security and to build our capabilities to face terrorism.

So really this is something that is agreed upon already.

BLITZER: Saddam Hussein, you suggested on Sunday that he and his associates, the trials, the war crimes trials against him could begin as early as October. That's a month from now.

ALLAWI: The trial is.

BLITZER: You believe that Saddam Hussein himself could -- the trial against him could begin that early, or others associated?

ALLAWI: Other associated will be tried and hopefully he will immediately follow.

BLITZER: So when do you think the actual trial of Saddam could held?

ALLAWI: Late October, November we will start the trial.

BLITZER: Salem Chalabi was in charge of the legal process. He was facing some criminal charges. What's the status of Salem Chalabi and Ahmed Chalabi, your colleague in the Iraqi -- formerly in the Iraqi government?

ALLAWI: Yes, well, Salem has resigned his post. And he is currently -- I don't know, I think he is in Baghdad.

BLITZER: People accuse him of conspiracy and murder.

ALLAWI: There are some accusations. I don't know what he is accused of, really, so far, because the judicial system is completely independent in Iraq. And this is one of the positive signs of democracy starting in Iraq, about the judicial system is completely separated.

BLITZER: So he's out of it, but what about Ahmed Chalabi?

ALLAWI: Ahmed is in Iraq now.

BLITZER: Is he accused of any wrongdoing?

ALLAWI: There was an accusation. I think they settled in court for the problems. I'm not sure, really, what happened. We don't interfere in the judicial system at all in Iraq.

BLITZER: Let's get back to the election. You need the United Nations to be involved. You're here in New York right now. You're going to be addressing the U.N. The security situation, as bad as it seemingly is, how do you expect U.N. officials to go in there and monitor and help organize elections scheduled for January? Kofi Annan is reluctant to send them.

ALLAWI: They should really be trying to help more. There are international organizations already in Iraq. There are aid organizations already in Iraq operating throughout the country. There are many foreigners who are still in Iraq. If security is not that good, definitely.

But this puts further burden on the United Nations a member country and developing its capability. And to go forward in the process of elections. I think...

BLITZER: Did -- you heard Kofi Annan say the war was illegitimate.

ALLAWI: I heard him say so, yes. I don't agree with what he said. I think it was taken totally out of context. I'm going to meet with him and to find out exactly why and what was said. But let me tell you something which is very important.

What we see now in Iraq, destruction and undermining the progress of Iraq and threatening peace and stability in Iraq, as part of Saddam's regime, or what is left of Saddam's regime, we see atrocities that have been committed in Iraq including the possession of weapons of mass destruction which was used against the Iraqi people.

This all goes back to Saddam's regime. To remove tyranny and to help Iraqis to implement democracy is something very vital, really, for Iraq, for peace and stability and a very vital region in the world. And this is why the help of the United Nations, of the United States, or other civilized nations is so important.

We cannot and should not be left alone. It is a fight which is bigger than our capacity and bigger than our capabilities. And who brought this result, what we are facing now, the seeds were when Saddam was around were planted.

BLITZER: We're almost out of time. But a question about you personally. You've spoken about four assassination attempts against you recently. How worried are you about your own personal safety?

ALLAWI: Well, I am worried, frankly. This is a job that has to be done, where I've dedicated to our country. We know that we are winning. The attempts are because of the desperation of our enemies. We are winning. We will continue to make headway. We will continue to win. And we will bring democracy to Iraq and peace to the region and to the world.

And again I would thank all the nations which stood with us and are standing with us now shoulder to shoulder. Most importantly, the United States and Great Britain and the United Kingdom and other peace-loving nations.

BLITZER: Can you clarify one historic footnote, curiosity about your past? At one point you were involved in the Baath Party.

ALLAWI: Yes. Yes.

BLITZER: Then they tried to kill you. You spent almost a year in a hospital recuperating from that assassination attempt.

What happened? What caused you to split with Saddam Hussein and the Baath Party many years ago?

ALLAWI: In fact, the reason of the split, I took part in the seizure of power in 1968. I was a medical student, but as we got into power, and then we believed that we were taking Iraq onto a democratic path, it turned out to be that we are and -- were tyrants, rather than democrats.

And this is what caused the split. And the confrontation inside Iraq started when I was still there. And then I left Lebanon, and continued with my fight deviation and tyranny, and so we won with the help of the international community.

BLITZER: Did Saddam Hussein personally order your death?

ALLAWI: Yes.

BLITZER: So you must hate him?

ALLAWI: Well, I hate him not because he ordered my death warrant, but I hate him because he ruined the country, and he ruined the peace, and he ruined the chances for a very, important country who could have played a very significant role in peace and progress in the entire region.

BLITZER: And you got word recently from him that he was begging you for mercy.

ALLAWI: Well, he is a coward. He have -- you know, he ultimately was found in a hole under the ground. He did not have the dignity to surrender gracefully. This shows how committed against humanity he is, and he was, and this is yet again a victory for civilization, and for peace-loving countries and peace-loving people.

BLITZER: Do you want him dead?

ALLAWI: It depends on the judicial system in Iraq. Whatever verdict they pass, we will respect.

BLITZER: You have an enormous challenge ahead of you. Good luck to you, Mr. Prime Minister.

(CROSSTALK)

ALLAWI: Thank you very much.

BLITZER: Thanks very much for joining us.

ALLAWI: Thank you.

(END VIDEOTAPE)

BLITZER: Iyad Allawi speaking with me earlier today here in New York at his hotel. He's here attending United Nations meetings. He will be in Washington later in the week addressing a joint session of the U.S. Congress as well.

Other news we're following, the death toll in Haiti has now risen to 691 following those floods blamed on Tropical Storm Jeanne. Half of Haiti's third largest city is still underwater. And reports say not a single house in the city escaped damage. After hitting Haiti over the weekend, Jeanne remains out to sea near the Bahamas.

America's first culture takes a place of honor on the National Mall.

(BEGIN VIDEO CLIP)

CHAD SMITH, PRINCIPAL CHIEF, CHEROKEE NATION: It creates a sense of pride, that we're not only a people of the past.

(END VIDEO CLIP)

BLITZER: We'll take you live to the opening of the Smithsonian treasure, the Museum of the American Indian.

(COMMERCIAL BREAK)

BLITZER: There is a magnificent new structure in the nation's capital dedicated to the traditions and culture of the original Americans.

Let's go live to CNN's Brian Todd. He's on the National Mall in Washington -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, it's been a wonderful scene here all day, huge crowds. As you can see, there's a nice gathering here for a performance of a Native American singer and guitar player.

It has been like this virtually all day for the opening of the National Museum of the American Indian. This museum is spectacular in many ways. But like many museums of its kind, its ultimate success may come down to interpretations of how culture and history are presented.

(BEGIN VIDEOTAPE) TODD (voice-over): On one of the last sections of prime real estate on Washington's greatest expanse, thousands of Native Americans evoke the storied moments of their past and the beginning of a new era. The National Museum of the American Indian is a moving tribute to the first inhabitants of the Western Hemisphere.

SMITH: It creates a sense of pride that we're not only a people of the past, but we're a people of the present, and even more so, we're going to be a people of the future.

TODD: Chad Smith traveled about 1,500 miles for this. As leader of the Cherokee Nation, he's inspired by what's called the curvilinear limestone architecture, the breathtaking sculpture and artwork, some dating back thousands of years.

SMITH: And people will leave here with not a sense of loss. They'll leave here with a sense of hope.

TODD (on camera): The celebration of Native American culture here is evident, the symbols powerful. But if you come here looking to get a vivid, graphic sense of the Indian's struggle, of the wars and slaughters of the 18th and 19th centuries, you won't find it.

(voice-over): Very few photographs, no portraits, no dramatizations of Indian resistance to the white American settlement drive in the 1800s and the massacres that ensued. There are references in text to the killings and displacement, displays of treaties betrayed, weapons used. But the closest you'll get to a visual of the notorious battle of Wounded Knee, where more than 200 Sioux Indians were cut down by the U.S. Army, is a display of the book "Bury My Heart at Wounded Knee."

BRUCE BERNSTEIN, NATIONAL MUSEUM OF THE AMERICAN INDIAN: That's the way the outside world, the non-Indian world has always spoken about the violence which has beset the Native world. From the Native standpoint, that might not be the same way they want that depicted.

TODD: Museum officials say they visited more than 30 Native American communities and say the consensus was, don't dwell on Indian victimization. But in a structure that occupies 250,000 square feet and costs nearly $220 million, why is there no hall of heroes? An entire section features Senator Ben Nighthorse Campbell and his jewelry-making skill. But neither we, nor an assistant director could find one picture of Sitting Bull, the great Dakota Sioux chief, arguably the most famous Native American leader.

We found a rifle surrendered by Geronimo, but no illustration of the legendary Apache warrior. We asked a historian, is this an omission?

DAVID J. SILVERMAN, PROFESSOR, GEORGE WASHINGTON UNIVERSITY: Most of the stories that we Americans tell ourselves about the great Indian leaders are tragic stories. And these leaders invariably fail in the end, fighting a losing, but worthy battle. Clearly, that's not a story that this museum was interested in telling.

(END VIDEOTAPE)

TODD: Now, those stories may yet be told. Museums do evolve and some exhibits rotate. For now, the cultural vibrancy, of art, folk tales and music is the real draw here.

We have one last footnote. A couple of hours ago on the Senate floor, I don't know if this is the only time this has ever happened, but the only Native American senator, Ben Nighthorse Campbell, spoke to his colleagues on the floor in full Indian regalia. It's quite a sight on this very historic day -- Wolf.

BLITZER: Brian Todd reporting from the National Mall on this museum -- thanks, Brian, very much.

And we'll have the results of our Web question of the day, that's coming up next.

(COMMERCIAL BREAK)

BLITZER: Here's how you're weighing in our Web question of the day. Take a look at the results. Remember, though, this is not a scientific poll.

I'll be back in Washington tomorrow. Thanks very much for joining us.

"LOU DOBBS TONIGHT" starts right now.

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