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CNN Live At Daybreak

Passage of Intelligence Reform Bill and Reaction; Security in Saudi Arabia in Wake of Attack on U.S. Consulate in Jeddah

Aired December 08, 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: Straight ahead on DAYBREAK, the biggest overhaul of U.S. intelligence in more than half a century. The House has passed it finally. Now it is the Senate's turn.
Also, it was a time when many U.S. cities ran out of coffins. Coffins. Could it happen again?

And going after the mob. Italy cracks down on a mafia turf war.

It is Wednesday, December 8.

This is DAYBREAK.

And good morning to you.

From the Time Warner Center in New York, I'm Carol Costello.

Thank you for waking up with us.

Now in the news, Congress moves forward on intelligence reform. The House has passed a sweeping reform bill. The Senate is expected to approve it today. The voting ends a two week deadlock.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're digging pieces of rusted scrap metal and compromised ballistic glass...

DONALD RUMSFELD, SECRETARY OF DEFENSE: ... which the vehicles are being armored.

(END VIDEO CLIP)

COSTELLO: He held a Q&A session with U.S. troops in Kuwait and we're going to get more on that story a little later when we take you live to Kuwait, or to the Middle East, I should say, for more information.

They've worked on it for more than year. Now the wraps have come off. Today, the British and Irish prime ministers unveil a peace plan for Northern Ireland. But a dispute over disarming the IRA could threaten it.

And desperate for aid in the northern Philippines, U.S. Navy helicopters are rushing relief to villages ravaged by storms. Recent storms have left hundreds dead. The survivors are short on water and medicine.

To the forecast center and Rob Marciano, in for Chad Myers this morning -- good morning.

ROB MARCIANO, CNN METEOROLOGIST: Good morning, Carol.

That storm that's now well out of the Philippines has scooted across the Pacific Ocean. And, as a matter of fact, it's slamming or will be slamming into the West Coast of the U.S. with some heavy rain and heavy winds, as well.

(WEATHER REPORT)

COSTELLO: Back to our top story now.

Big changes in store for the nation's intelligence community. The Senate is expected to send the intelligence reform bill to President Bush today. Here are some of the details for you. The measure creates a national director of intelligence. It also establishes a counter-terrorism center. The bill lays out new priorities for intelligence gathering and it beefs up U.S. border security by adding thousands more border guards.

President Bush, as you know, prodded law makers to get moving on that intelligence bill, especially those in his own party.

Is this a sign of things to come as the president embarks on a second term?

CNN White House correspondent Dana Bash has more for you.

(BEGIN VIDEO TAPE)

DANA BASH, CNN CORRESPONDENT (voice-over): An emotional President Bush at Camp Pendleton to thank Marines hard hit by the Iraq war. No mention of it here, but this is also a commander-in-chief upbeat at word he avoided a political embarrassment back in Washington. Intelligence agency reforms he backed are finally on the way to his desk.

SEN. SUSAN COLLINS, (R-ME), CHAIR GOVERNMENTAL AFFAIRS COMMITTEE: The president's personal involvement clearly makes a difference. In this case, it determined the fate of this very important legislation.

BASH: Privately, many involved in the intelligence debate complain the president engaged too late. It's a problematic first term pattern, say some, who hope he learned a lesson for tougher challenges awaiting him.

TIMOTHY ROEMER, 9/11 COMMISSION MEMBER: The president said in the days after the election that he was willing to use political capital on Social Security reform and tax reform. If he would have lost this, however, it really would erode some of that capital.

BASH: White House sources concede this early legislative victory was crucial for a president trying to use the post-election period to build support to help push his ambitious second term agenda in a divided America.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I think this does help set the stage for the second term because it shows what we can get done when we work together in a bipartisan way.

BASH: But the president's fight with fellow Republicans, not Democrats, on intelligence reform exposes a harsh reality. A bigger GOP Congress does not mean a rubber stamp.

REP. MIKE PENCE (R), INDIANA: This Congress, which saw its majority grow and received a mandate from the American people for fiscal discipline, limited government and traditional moral values. And we will work toward that vision with the president, occasionally disagreeing with the president on how that vision is worked out.

BASH (on camera): The intelligence bill has near unanimous support among Democrats. That's a luxury the president will not have for some of the monumental changes he wants to tackle in his second term, like tax code and Social Security reform, areas where Republicans have big differences when it comes to specifics.

Dana Bash, CNN, the White House.

(END VIDEO TAPE)

COSTELLO: Calling in the troops -- the Pentagon is sending more Marines into Saudi Arabia. An anti-terrorism team is moving into Jeddah after Monday's consulate attack. A Marine spokesman says the teams typically include 50 Marines who are experts in security and in conducting raids in urban areas.

And as CNN senior international correspondent Nic Robertson reports, a busy crowded city is what they will face in Jeddah.

(BEGIN VIDEO TAPE)

NIC ROBERTSON, CNN CORRESPONDENT (voice-over): Saudi police pull onto the busy road running round the U.S. consulate. A brief tour of the main thoroughfares around the compound, which occupies a city block, reveals security has been stepped up.

(on camera): Interior ministry officials suggest the location of the consulate could have contributed to the attack. It's proximity to these main roads running right along the perimeter wall has meant that the security cordon couldn't be pushed any further back.

JAMES C. OBERWETTER, U.S. AMBASSADOR TO SAUDI ARABIA: To the Saudi security forces...

ROBERTSON (voice-over): At a media briefing, the U.S. ambassador appeared to endorse that view, confirming the al Qaeda team had been close enough to study security procedures.

OBERWETTER: They clearly understood how our cars entered the compound and in my view had scoped it out. ROBERTSON: He described how the attackers' car tried to follow a consular vehicle, but was blocked from entering the compound by a security barrier.

OBERWETTER: The terrorists exited the car and began to engage the local Saudi staff at the gate, who returned fire. And a great firefight broke out at the front gate. Regrettably, the terrorists were not taken down there and were able to access the compound.

ROBERTSON: From his hospital bed, one of the 10 wounded consular staff told of what happened next.

UNIDENTIFIED MALE: They shoot the main door. They entered our office inside. After that, they were making shouts and they broke the other room's door. Then they shoot our main room doors. After that, we are four people inside. Then they ask him to wake up, get up. Then we were pulled up the door and then they're asking where is the Americans?

ROBERTSON: Most Americans were next to the plume of smoke in the chancellery building, which, although attacked, was not breached, the ambassador said, praising both U.S. and Saudi security forces for saving lives.

OBERWETTER: They attempted to take the car.

ROBERTSON: Even before the review of Monday's attack is completed, though, he predicted security changes.

OBERWETTER: Obviously, the events of yesterday show a need for improvement.

ROBERTSON: Saudi security officials expect it could be some time before their investigation is done. Regardless of theirs or U.S. progress in establishing what went wrong, the consulate is expected to reopen in the next few days.

(END VIDEO TAPE)

ROBERTSON: Well, Carol, we've also learned that Saudi security officials had discussed with embassy officials here the possibility of relocating the consulate in the past. It had come up in discussions -- Carol.

COSTELLO: So, are they going to do that? That's a serious consideration? They might actually move the consulate?

ROBERTSON: It doesn't seem to me that there's a plan in works at the moment so far as we know. And such moves, I have been told by diplomats here, can take up to 10 years. But certainly the security there is going to be examined and ultimately one can see that if that's the solution, then obviously there will have to be a lot of planning if that was to happen.

COSTELLO: I know that 50 Marines are on the way, but what's being done right now to improve security -- Nic? ROBERTSON: A lot more vigilance at the walls of the compound. We were outside there yesterday. There's no way that you can park a vehicle outside. The police there and the security outside on the perimeter of the consulate are very much on their, are sort of in a sort of leaning forward posture, if you will. They won't let anything sit idle -- no cars, no pedestrian traffic to loiter right around the consulate.

So, and the armored vehicles are at the gates. There are policemen with heavy machine guns. So there is very tight security and people are being very vigilant at the moment.

COSTELLO: And I know many Americans live in Jeddah, Nic.

What advice is the Saudi government giving to them for their protection?

ROBERTSON: Well, the Saudi government is telling U.S. citizens and other Western expatriate workers here, look, we're doing everything we can to combat the terrorism. We feel that the country is safe. The State Department is saying that U.S. citizens should really consider very carefully and desist from travel within Saudi Arabia. They're saying that there's a possibility of further attacks and that people should be very aware of it.

But having talked to residents here in Jeddah, U.S. residents here, they are concerned when they see an attack like this. They live their normal lives. They were recently comfortable in secure compounds where they live and where they go to work. And this was something that worried them. But they, at the moment, it's not a trigger for them to leave. But, yes, it does worry them, they say.

COSTELLO: Nic Robertson reporting live from Saudi Arabia this morning.

Thank you.

Turning now to Iraq.

We're learning more this morning about an ominous message from a key CIA officer. It's sounding alarms in Baghdad and in Washington.

More now from CNN national security correspondent David Ensor.

(BEGIN VIDEO TAPE)

DAVID ENSOR, CNN CORRESPONDENT (voice-over): The classified cable from the outgoing CIA station chief in Baghdad warns that the situation is deteriorating and is likely to continue to do so. It warns of more violence, say U.S. officials, and sectarian fighting among Iraq's Sunnis, Shia and Kurds unless there are clear improvements soon in the control of the Iraqi government and in the economy. Bad news for the Bush administration.

FLYNT LEVERETT, FORMER CIA ANALYST: They are literally between a rock and a hard place right now and I think that's an accurate reading of the situation. And I think the CIA is doing its job to paint that picture as accurately and as vividly as it can for policymakers.

ENSOR: U.S. officials say the CIA cable's assessment is mixed in that it calls the Iraqi people resilient and says political progress toward elections is being made. But the station chief's bleak tone overall is in marked contrast with some of the administration's public statements on Iraq.

RUMSFELD: The schools are open. The hospitals are open. The clinics are open. The stock market is open. The currency is stable. An awful lot's going well.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The terrorists will be defeated, Iraq will be free and the world will be more secure.

ENSOR: Bush administration officials could hardly be pleased by the leak of an unvarnished CIA assessment.

U.S. Ambassador John Negroponte, U.S. officials say, added a dissenting note, saying he thinks the cable does not give enough credit to coalition efforts against Iraqi insurgents. The cable was widely distributed in the government, though, so the leak could have come from a number of places.

LEVERETT: People leak in this town for a lot of different reasons. My experience is actually that the CIA leaks a lot less than most of the policy agencies in town do.

ENSOR (on camera): Despite the uproar recently about intelligence chief Porter Goss's memo to staff saying they should "support the Bush administration," officials note that Goss approved distributing the CIA station chief's warnings around the government. There was, after all, another line in that Goss memo. It said to CIA officials that their job is to tell truth to power and let the facts speak for themselves.

David Ensor, CNN, Washington.

(END VIDEO TAPE)

COSTELLO: Still ahead on DAYBREAK, Donald Rumsfeld holds a town hall meeting in Kuwait. Hear what happened during an intense Q&A with U.S. troops.

Plus, there's a war being waged against the mafia in Italy. We'll visit a town where gang fights have left dozens dead this year.

And this year's flu season is nothing compared to the flu pandemic of 1918. That story still ahead.

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

(BEGIN VIDEO TAPE)

OLIVER RYAN, WRITER, "FORTUNE": And this was one of our unanimous choices, the 7280 from Nokia. It looks like a kind of a large square lipstick, although small for a cell phone, large for a lipstick, and has a little mirror on it and a rotary dial. And the big innovation here, which is why we loved it, is that they got rid of the key pad. You simply dial by speaking or by scrolling through names that are in its memory.

It's not for everyone. But we imagine people going out socially who don't have big bags that they're carrying are going to love this thing. Apple products are always very satisfying from a design point of view. The G5 is no exception. There's, in fact, only one cable, which is the power cord, that goes into this thing. It's got a wireless, it's built in, a blue tooth wireless, so the keyboard and the mouse don't need cables. For designers and students and a lot of others, even regular home users, I think it's a great solution.

(END VIDEO TAPE)

(COMMERCIAL BREAK)

(STOCK MARKET REPORT)

COSTELLO: Your news, money, weather and sports.

It is 5:18 Eastern.

Here's what's all new this morning.

It is 5:18 Eastern.

Here's what's all new this morning.

Five Indiana Pacers' players may be charged today for their role in last month's NBA brawl in Detroit. Five Detroit fans are also facing assault and battery charges.

British and Irish officials are unveiling an updated peace plan, but the IRA may not be totally on board. The IRA has agreed to restart their disarmament but will not allow pictures to be taken of it.

In money news, IBM has sold the majority of its personal computer business to Lenovo, China's biggest computer maker. Lenovo will take over manufacturing and development in a deal worth nearly $2 billion. IBM will retain a small stake in the PC business.

In culture, the legendary La Scala Opera House has reopened in Milan after an $80 million renovation. The 226-year-old venue has hosted such greats as singer Maria Callas and composers Verdi and Puccini.

In sports, the Dallas Mavericks beat the short-handed Minnesota Timberwolves 97-87, even though Wolves star Kevin Garnett had 32 points. The Wolves were without starting guard Latrell Sprewell. Sprewell has been suspended for the game after shouting an obscenity at a female fan during a game last week. And, Rob, he called her a rather unpleasant name.

MARCIANO: But was she goading him? Was that you, Carol, again?

COSTELLO: It was me.

MARCIANO: Were you poking fun at the highly paid professionals?

COSTELLO: No, I was just commenting on his uniform.

MARCIANO: Latrell Sprewell suspended. Shocking.

COSTELLO: Yes.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

Let's talk about Ohio, shall we? That's the state that put President Bush over the top in November. Well, it is one step closer to a recount this morning. The recount requests are expected to arrive at counties across the state today. Green and libertarian parties are behind this move. They allege election irregularities, including uncounted provisional ballots. County election boards now have to agree to the recount for it to actually go forward. The final tally shows President Bush won the battleground state by nearly 119,000 votes.

That actually brings us to our E-mail Question of the Morning because, you know, it's the presidential election that doesn't seem to end, although maybe it should. It's not like it's close in Ohio, 119,000 votes. So we ask you this morning, the Ohio election results, should the appeals stop? We want to hear from you this morning. E- mail us. Daybreak@cnn.com. That's daybreak@cnn.com.

U.S. troops are getting some answers from Defense Secretary Donald Rumsfeld. He gave a pep talk to National Guard and Reserve soldiers in Kuwait today and he fielded questions in an unusual town hall style session. That's the focus of our look beyond the sound bite.

Here's an exchange between Rumsfeld and a soldier concerned about the lack of potentially life saving armored vehicles.

Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Our soldiers have been fighting in Iraq for coming up on three years. A lot of us are getting ready to move north relatively soon. Our vehicles are not armored. We're digging pieces of rusted scrap metal and compromised ballistic glass that's already been shot up, dropped, busted, picking the best out of this scrap to put on our vehicles to take into combat. We do not have proper armament vehicles to carry with us north.

RUMSFELD: I talked to the general coming out here about the pace at which the vehicles are being armored. They have been brought from all over the world, wherever they're not needed, to a place here where they are needed. I'm told that they're being, the Army is -- I think it's something like 400 a month are being done. And it's essentially a matter of physics. It isn't a matter of money. It isn't a matter on the part of the Army of desire. It's a matter of production and capability of doing it.

(END VIDEO CLIP)

COSTELLO: Rumsfeld also told the troops to discount critics of the war in Iraq.

And hear more of what Donald Rumsfeld told troops about the lack of equipment and how he handled the stop loss question. More from this town hall meeting for you after the break.

And a Olympic athlete probed for steroid use. Five medals up for grabs.

You are watching DAYBREAK for a Wednesday.

(COMMERCIAL BREAK)

COSTELLO: Time for our DAYBREAK "Eye-Openers."

This videotape is at the heart of an Alabama high school basketball scandal. What you see is the B.C. Rain high school team beating a player who broke team rules and threatened to quit. You see them hauling away on that kid? The coach, who was watching the event, and 10 players, were suspended last month. The coach also faces dismissal.

Oregon leads the nation in a very dubious category, methamphetamine use. In fact, the rate of girls 17 and under being treated for meth abuse has jumped 57 percent over the past five years. And that's why Oregon congressmen are planning to push federal legislation that could curb meth production.

In Louisiana, an 8-year-old girl was suspended after bringing suspected alcoholic Jell-O shots to her elementary school. Yes, Jell- O shots. The girl says her mother made them and wanted her to sell them at the school to make money for Christmas. Oh, jeez. We do not make this stuff up. The sheriff's department is testing the Jell-O to see if it actually contained alcohol.

Speaking of Christmas, ever wonder what Christmas trees and some Hollywood wives have in common? Well, I know it's time to laugh some more, so let's check out Jay Leno in this late night laugh.

(BEGIN VIDEO CLIP FROM "THE TONIGHT SHOW WITH JAY LENO," COURTESY NBC)

JAY LENO, HOST: Picking out a Christmas tree is a lot like getting married to a trophy wife in Beverly Hills, you know what I'm saying? Really. Like you bring her home, put a lot of fancy jewelry on her, a couple of weeks kick it to the curb. So long to you.

They raised the price of admission to Disney World to $59.75. They have a new sign, your wallet must be this big to get in. I know the rides are fun, but $60? Isn't that a lot? You know, for that kind of money, you should get a lap dance from Tinkerbell, OK?

(END VIDEO CLIP)

COSTELLO: Which would be a difficult task.

Rob, are you there?

I just wanted to show you something in the "New York Post" this morning.

MARCIANO: What do you have?

COSTELLO: Donald Trump is going to give his girl, his pending bride, a $1.5 million diamond ring, 13 karats. He's not actually paying for it, though. The diamond company is. And he's going to feature their jewelry on "The Apprentice."

MARCIANO: Oh, you see, the rich -- now the rich people are getting things for free. So is he, like the Christmas tree, going to kick her to the curb after the holidays or?

COSTELLO: Oh, man, I bet she takes that ring with her.

MARCIANO: Probably. Probably.

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

The Italian government is cracking down on organized crime in Naples. We'll take a look at the mafia turf war.

Plus, are pit bulls bad to the bone? One Canadian city is considering a ban on the breed.

Those stories and much more still ahead on DAYBREAK.

(COMMERCIAL BREAK)

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Aired December 8, 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: Straight ahead on DAYBREAK, the biggest overhaul of U.S. intelligence in more than half a century. The House has passed it finally. Now it is the Senate's turn.
Also, it was a time when many U.S. cities ran out of coffins. Coffins. Could it happen again?

And going after the mob. Italy cracks down on a mafia turf war.

It is Wednesday, December 8.

This is DAYBREAK.

And good morning to you.

From the Time Warner Center in New York, I'm Carol Costello.

Thank you for waking up with us.

Now in the news, Congress moves forward on intelligence reform. The House has passed a sweeping reform bill. The Senate is expected to approve it today. The voting ends a two week deadlock.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're digging pieces of rusted scrap metal and compromised ballistic glass...

DONALD RUMSFELD, SECRETARY OF DEFENSE: ... which the vehicles are being armored.

(END VIDEO CLIP)

COSTELLO: He held a Q&A session with U.S. troops in Kuwait and we're going to get more on that story a little later when we take you live to Kuwait, or to the Middle East, I should say, for more information.

They've worked on it for more than year. Now the wraps have come off. Today, the British and Irish prime ministers unveil a peace plan for Northern Ireland. But a dispute over disarming the IRA could threaten it.

And desperate for aid in the northern Philippines, U.S. Navy helicopters are rushing relief to villages ravaged by storms. Recent storms have left hundreds dead. The survivors are short on water and medicine.

To the forecast center and Rob Marciano, in for Chad Myers this morning -- good morning.

ROB MARCIANO, CNN METEOROLOGIST: Good morning, Carol.

That storm that's now well out of the Philippines has scooted across the Pacific Ocean. And, as a matter of fact, it's slamming or will be slamming into the West Coast of the U.S. with some heavy rain and heavy winds, as well.

(WEATHER REPORT)

COSTELLO: Back to our top story now.

Big changes in store for the nation's intelligence community. The Senate is expected to send the intelligence reform bill to President Bush today. Here are some of the details for you. The measure creates a national director of intelligence. It also establishes a counter-terrorism center. The bill lays out new priorities for intelligence gathering and it beefs up U.S. border security by adding thousands more border guards.

President Bush, as you know, prodded law makers to get moving on that intelligence bill, especially those in his own party.

Is this a sign of things to come as the president embarks on a second term?

CNN White House correspondent Dana Bash has more for you.

(BEGIN VIDEO TAPE)

DANA BASH, CNN CORRESPONDENT (voice-over): An emotional President Bush at Camp Pendleton to thank Marines hard hit by the Iraq war. No mention of it here, but this is also a commander-in-chief upbeat at word he avoided a political embarrassment back in Washington. Intelligence agency reforms he backed are finally on the way to his desk.

SEN. SUSAN COLLINS, (R-ME), CHAIR GOVERNMENTAL AFFAIRS COMMITTEE: The president's personal involvement clearly makes a difference. In this case, it determined the fate of this very important legislation.

BASH: Privately, many involved in the intelligence debate complain the president engaged too late. It's a problematic first term pattern, say some, who hope he learned a lesson for tougher challenges awaiting him.

TIMOTHY ROEMER, 9/11 COMMISSION MEMBER: The president said in the days after the election that he was willing to use political capital on Social Security reform and tax reform. If he would have lost this, however, it really would erode some of that capital.

BASH: White House sources concede this early legislative victory was crucial for a president trying to use the post-election period to build support to help push his ambitious second term agenda in a divided America.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I think this does help set the stage for the second term because it shows what we can get done when we work together in a bipartisan way.

BASH: But the president's fight with fellow Republicans, not Democrats, on intelligence reform exposes a harsh reality. A bigger GOP Congress does not mean a rubber stamp.

REP. MIKE PENCE (R), INDIANA: This Congress, which saw its majority grow and received a mandate from the American people for fiscal discipline, limited government and traditional moral values. And we will work toward that vision with the president, occasionally disagreeing with the president on how that vision is worked out.

BASH (on camera): The intelligence bill has near unanimous support among Democrats. That's a luxury the president will not have for some of the monumental changes he wants to tackle in his second term, like tax code and Social Security reform, areas where Republicans have big differences when it comes to specifics.

Dana Bash, CNN, the White House.

(END VIDEO TAPE)

COSTELLO: Calling in the troops -- the Pentagon is sending more Marines into Saudi Arabia. An anti-terrorism team is moving into Jeddah after Monday's consulate attack. A Marine spokesman says the teams typically include 50 Marines who are experts in security and in conducting raids in urban areas.

And as CNN senior international correspondent Nic Robertson reports, a busy crowded city is what they will face in Jeddah.

(BEGIN VIDEO TAPE)

NIC ROBERTSON, CNN CORRESPONDENT (voice-over): Saudi police pull onto the busy road running round the U.S. consulate. A brief tour of the main thoroughfares around the compound, which occupies a city block, reveals security has been stepped up.

(on camera): Interior ministry officials suggest the location of the consulate could have contributed to the attack. It's proximity to these main roads running right along the perimeter wall has meant that the security cordon couldn't be pushed any further back.

JAMES C. OBERWETTER, U.S. AMBASSADOR TO SAUDI ARABIA: To the Saudi security forces...

ROBERTSON (voice-over): At a media briefing, the U.S. ambassador appeared to endorse that view, confirming the al Qaeda team had been close enough to study security procedures.

OBERWETTER: They clearly understood how our cars entered the compound and in my view had scoped it out. ROBERTSON: He described how the attackers' car tried to follow a consular vehicle, but was blocked from entering the compound by a security barrier.

OBERWETTER: The terrorists exited the car and began to engage the local Saudi staff at the gate, who returned fire. And a great firefight broke out at the front gate. Regrettably, the terrorists were not taken down there and were able to access the compound.

ROBERTSON: From his hospital bed, one of the 10 wounded consular staff told of what happened next.

UNIDENTIFIED MALE: They shoot the main door. They entered our office inside. After that, they were making shouts and they broke the other room's door. Then they shoot our main room doors. After that, we are four people inside. Then they ask him to wake up, get up. Then we were pulled up the door and then they're asking where is the Americans?

ROBERTSON: Most Americans were next to the plume of smoke in the chancellery building, which, although attacked, was not breached, the ambassador said, praising both U.S. and Saudi security forces for saving lives.

OBERWETTER: They attempted to take the car.

ROBERTSON: Even before the review of Monday's attack is completed, though, he predicted security changes.

OBERWETTER: Obviously, the events of yesterday show a need for improvement.

ROBERTSON: Saudi security officials expect it could be some time before their investigation is done. Regardless of theirs or U.S. progress in establishing what went wrong, the consulate is expected to reopen in the next few days.

(END VIDEO TAPE)

ROBERTSON: Well, Carol, we've also learned that Saudi security officials had discussed with embassy officials here the possibility of relocating the consulate in the past. It had come up in discussions -- Carol.

COSTELLO: So, are they going to do that? That's a serious consideration? They might actually move the consulate?

ROBERTSON: It doesn't seem to me that there's a plan in works at the moment so far as we know. And such moves, I have been told by diplomats here, can take up to 10 years. But certainly the security there is going to be examined and ultimately one can see that if that's the solution, then obviously there will have to be a lot of planning if that was to happen.

COSTELLO: I know that 50 Marines are on the way, but what's being done right now to improve security -- Nic? ROBERTSON: A lot more vigilance at the walls of the compound. We were outside there yesterday. There's no way that you can park a vehicle outside. The police there and the security outside on the perimeter of the consulate are very much on their, are sort of in a sort of leaning forward posture, if you will. They won't let anything sit idle -- no cars, no pedestrian traffic to loiter right around the consulate.

So, and the armored vehicles are at the gates. There are policemen with heavy machine guns. So there is very tight security and people are being very vigilant at the moment.

COSTELLO: And I know many Americans live in Jeddah, Nic.

What advice is the Saudi government giving to them for their protection?

ROBERTSON: Well, the Saudi government is telling U.S. citizens and other Western expatriate workers here, look, we're doing everything we can to combat the terrorism. We feel that the country is safe. The State Department is saying that U.S. citizens should really consider very carefully and desist from travel within Saudi Arabia. They're saying that there's a possibility of further attacks and that people should be very aware of it.

But having talked to residents here in Jeddah, U.S. residents here, they are concerned when they see an attack like this. They live their normal lives. They were recently comfortable in secure compounds where they live and where they go to work. And this was something that worried them. But they, at the moment, it's not a trigger for them to leave. But, yes, it does worry them, they say.

COSTELLO: Nic Robertson reporting live from Saudi Arabia this morning.

Thank you.

Turning now to Iraq.

We're learning more this morning about an ominous message from a key CIA officer. It's sounding alarms in Baghdad and in Washington.

More now from CNN national security correspondent David Ensor.

(BEGIN VIDEO TAPE)

DAVID ENSOR, CNN CORRESPONDENT (voice-over): The classified cable from the outgoing CIA station chief in Baghdad warns that the situation is deteriorating and is likely to continue to do so. It warns of more violence, say U.S. officials, and sectarian fighting among Iraq's Sunnis, Shia and Kurds unless there are clear improvements soon in the control of the Iraqi government and in the economy. Bad news for the Bush administration.

FLYNT LEVERETT, FORMER CIA ANALYST: They are literally between a rock and a hard place right now and I think that's an accurate reading of the situation. And I think the CIA is doing its job to paint that picture as accurately and as vividly as it can for policymakers.

ENSOR: U.S. officials say the CIA cable's assessment is mixed in that it calls the Iraqi people resilient and says political progress toward elections is being made. But the station chief's bleak tone overall is in marked contrast with some of the administration's public statements on Iraq.

RUMSFELD: The schools are open. The hospitals are open. The clinics are open. The stock market is open. The currency is stable. An awful lot's going well.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The terrorists will be defeated, Iraq will be free and the world will be more secure.

ENSOR: Bush administration officials could hardly be pleased by the leak of an unvarnished CIA assessment.

U.S. Ambassador John Negroponte, U.S. officials say, added a dissenting note, saying he thinks the cable does not give enough credit to coalition efforts against Iraqi insurgents. The cable was widely distributed in the government, though, so the leak could have come from a number of places.

LEVERETT: People leak in this town for a lot of different reasons. My experience is actually that the CIA leaks a lot less than most of the policy agencies in town do.

ENSOR (on camera): Despite the uproar recently about intelligence chief Porter Goss's memo to staff saying they should "support the Bush administration," officials note that Goss approved distributing the CIA station chief's warnings around the government. There was, after all, another line in that Goss memo. It said to CIA officials that their job is to tell truth to power and let the facts speak for themselves.

David Ensor, CNN, Washington.

(END VIDEO TAPE)

COSTELLO: Still ahead on DAYBREAK, Donald Rumsfeld holds a town hall meeting in Kuwait. Hear what happened during an intense Q&A with U.S. troops.

Plus, there's a war being waged against the mafia in Italy. We'll visit a town where gang fights have left dozens dead this year.

And this year's flu season is nothing compared to the flu pandemic of 1918. That story still ahead.

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

(BEGIN VIDEO TAPE)

OLIVER RYAN, WRITER, "FORTUNE": And this was one of our unanimous choices, the 7280 from Nokia. It looks like a kind of a large square lipstick, although small for a cell phone, large for a lipstick, and has a little mirror on it and a rotary dial. And the big innovation here, which is why we loved it, is that they got rid of the key pad. You simply dial by speaking or by scrolling through names that are in its memory.

It's not for everyone. But we imagine people going out socially who don't have big bags that they're carrying are going to love this thing. Apple products are always very satisfying from a design point of view. The G5 is no exception. There's, in fact, only one cable, which is the power cord, that goes into this thing. It's got a wireless, it's built in, a blue tooth wireless, so the keyboard and the mouse don't need cables. For designers and students and a lot of others, even regular home users, I think it's a great solution.

(END VIDEO TAPE)

(COMMERCIAL BREAK)

(STOCK MARKET REPORT)

COSTELLO: Your news, money, weather and sports.

It is 5:18 Eastern.

Here's what's all new this morning.

It is 5:18 Eastern.

Here's what's all new this morning.

Five Indiana Pacers' players may be charged today for their role in last month's NBA brawl in Detroit. Five Detroit fans are also facing assault and battery charges.

British and Irish officials are unveiling an updated peace plan, but the IRA may not be totally on board. The IRA has agreed to restart their disarmament but will not allow pictures to be taken of it.

In money news, IBM has sold the majority of its personal computer business to Lenovo, China's biggest computer maker. Lenovo will take over manufacturing and development in a deal worth nearly $2 billion. IBM will retain a small stake in the PC business.

In culture, the legendary La Scala Opera House has reopened in Milan after an $80 million renovation. The 226-year-old venue has hosted such greats as singer Maria Callas and composers Verdi and Puccini.

In sports, the Dallas Mavericks beat the short-handed Minnesota Timberwolves 97-87, even though Wolves star Kevin Garnett had 32 points. The Wolves were without starting guard Latrell Sprewell. Sprewell has been suspended for the game after shouting an obscenity at a female fan during a game last week. And, Rob, he called her a rather unpleasant name.

MARCIANO: But was she goading him? Was that you, Carol, again?

COSTELLO: It was me.

MARCIANO: Were you poking fun at the highly paid professionals?

COSTELLO: No, I was just commenting on his uniform.

MARCIANO: Latrell Sprewell suspended. Shocking.

COSTELLO: Yes.

(WEATHER REPORT)

COSTELLO: Those are the latest headlines for you.

Let's talk about Ohio, shall we? That's the state that put President Bush over the top in November. Well, it is one step closer to a recount this morning. The recount requests are expected to arrive at counties across the state today. Green and libertarian parties are behind this move. They allege election irregularities, including uncounted provisional ballots. County election boards now have to agree to the recount for it to actually go forward. The final tally shows President Bush won the battleground state by nearly 119,000 votes.

That actually brings us to our E-mail Question of the Morning because, you know, it's the presidential election that doesn't seem to end, although maybe it should. It's not like it's close in Ohio, 119,000 votes. So we ask you this morning, the Ohio election results, should the appeals stop? We want to hear from you this morning. E- mail us. Daybreak@cnn.com. That's daybreak@cnn.com.

U.S. troops are getting some answers from Defense Secretary Donald Rumsfeld. He gave a pep talk to National Guard and Reserve soldiers in Kuwait today and he fielded questions in an unusual town hall style session. That's the focus of our look beyond the sound bite.

Here's an exchange between Rumsfeld and a soldier concerned about the lack of potentially life saving armored vehicles.

Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Our soldiers have been fighting in Iraq for coming up on three years. A lot of us are getting ready to move north relatively soon. Our vehicles are not armored. We're digging pieces of rusted scrap metal and compromised ballistic glass that's already been shot up, dropped, busted, picking the best out of this scrap to put on our vehicles to take into combat. We do not have proper armament vehicles to carry with us north.

RUMSFELD: I talked to the general coming out here about the pace at which the vehicles are being armored. They have been brought from all over the world, wherever they're not needed, to a place here where they are needed. I'm told that they're being, the Army is -- I think it's something like 400 a month are being done. And it's essentially a matter of physics. It isn't a matter of money. It isn't a matter on the part of the Army of desire. It's a matter of production and capability of doing it.

(END VIDEO CLIP)

COSTELLO: Rumsfeld also told the troops to discount critics of the war in Iraq.

And hear more of what Donald Rumsfeld told troops about the lack of equipment and how he handled the stop loss question. More from this town hall meeting for you after the break.

And a Olympic athlete probed for steroid use. Five medals up for grabs.

You are watching DAYBREAK for a Wednesday.

(COMMERCIAL BREAK)

COSTELLO: Time for our DAYBREAK "Eye-Openers."

This videotape is at the heart of an Alabama high school basketball scandal. What you see is the B.C. Rain high school team beating a player who broke team rules and threatened to quit. You see them hauling away on that kid? The coach, who was watching the event, and 10 players, were suspended last month. The coach also faces dismissal.

Oregon leads the nation in a very dubious category, methamphetamine use. In fact, the rate of girls 17 and under being treated for meth abuse has jumped 57 percent over the past five years. And that's why Oregon congressmen are planning to push federal legislation that could curb meth production.

In Louisiana, an 8-year-old girl was suspended after bringing suspected alcoholic Jell-O shots to her elementary school. Yes, Jell- O shots. The girl says her mother made them and wanted her to sell them at the school to make money for Christmas. Oh, jeez. We do not make this stuff up. The sheriff's department is testing the Jell-O to see if it actually contained alcohol.

Speaking of Christmas, ever wonder what Christmas trees and some Hollywood wives have in common? Well, I know it's time to laugh some more, so let's check out Jay Leno in this late night laugh.

(BEGIN VIDEO CLIP FROM "THE TONIGHT SHOW WITH JAY LENO," COURTESY NBC)

JAY LENO, HOST: Picking out a Christmas tree is a lot like getting married to a trophy wife in Beverly Hills, you know what I'm saying? Really. Like you bring her home, put a lot of fancy jewelry on her, a couple of weeks kick it to the curb. So long to you.

They raised the price of admission to Disney World to $59.75. They have a new sign, your wallet must be this big to get in. I know the rides are fun, but $60? Isn't that a lot? You know, for that kind of money, you should get a lap dance from Tinkerbell, OK?

(END VIDEO CLIP)

COSTELLO: Which would be a difficult task.

Rob, are you there?

I just wanted to show you something in the "New York Post" this morning.

MARCIANO: What do you have?

COSTELLO: Donald Trump is going to give his girl, his pending bride, a $1.5 million diamond ring, 13 karats. He's not actually paying for it, though. The diamond company is. And he's going to feature their jewelry on "The Apprentice."

MARCIANO: Oh, you see, the rich -- now the rich people are getting things for free. So is he, like the Christmas tree, going to kick her to the curb after the holidays or?

COSTELLO: Oh, man, I bet she takes that ring with her.

MARCIANO: Probably. Probably.

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

The Italian government is cracking down on organized crime in Naples. We'll take a look at the mafia turf war.

Plus, are pit bulls bad to the bone? One Canadian city is considering a ban on the breed.

Those stories and much more still ahead on DAYBREAK.

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