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CNN LATE EDITION WITH WOLF BLITZER

Interview With Colin Powell; Interview With Nabil Sha'ath; Interview With Ehud Olmert

Aired January 9, 2005 - 12:00   ET

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


WOLF BLITZER, CNN ANCHOR: It's noon in Washington, 9:00 a.m. in Los Angeles, 7:00 p.m. on the West Bank and midnight in Banda Aceh, Indonesia. Wherever you're watching from around the world, thanks very much for joining us on "LATE EDITION."
We'll have my interview with Secretary of State Colin Powell in a just a few minutes.

First, let's get a quick check of what's in the news right now.

(NEWSBREAK)

BLITZER: Thanks, Fredricka.

Let's head out to the Middle East where Palestinians have been voting to choose a successor to the late Yasser Arafat. The stakes and expectations are enormous. CNN's John Vause is in the West Bank city of Ramallah. He's joining us now with the latest. John, how is it going?

JOHN VAUSE, CNN CORRESPONDENT: Hello, Wolf. Election officials here have announced that polls will stay open for another two hours. They were meant to close just a few minutes ago, but they say there have been problems with Israeli checkpoints. They claim that many Palestinians have been unable to make it to polling booths around the West Bank. And also they say there have been problems in East Jerusalem.

However, international observers on the ground say in the West Bank, at least, it's been relatively smooth running.

But East Jerusalem has been a problem. Former U.S. President Jimmy Carter described the scene there earlier this morning as chaos, and he contacted the Israeli Prime Minister Ariel Sharon to work out the situation. Last we heard that situation had been resolved.

But voter turnout has been fairly low. The last report we had was around 35 percent. Now 1.8 million Palestinians have the right to decide who will be the next president of the Palestinian authority.

The former Prime Minister Mahmoud Abbas is expected to win, but, Wolf, everybody will be looking at the margin of victory, as well as the voter turnout.

Wolf? BLITZER: And in terms of violence against those turning out to vote from Hamas or others who wanted to boycott this election, has there been any example of that?

VAUSE: There has been a report of a shooting Khan Yunis in the refugee camp in Gaza. We're yet to confirm that. But it appears that it's been relatively quiet all day long, Wolf.

BLITZER: John Vause reporting for us. We'll be checking back with him, obviously, throughout the day.

Thanks, John, very much.

Let's head out to southern Asia now where the painstaking task of recovering from the deadly tsunami of two weeks ago is pressing ahead. CNN's John King is following the story. He's joining us now from one of the hardest hit areas, if not the hardest hit area, Banda Aceh in Indonesia.

How is it going there, John?

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Well, Wolf, mixed signals if you will. We went out to the market today, and you could see some people trying to have a sense of normalcy. Things will never be normal here again, but getting about their business at the market.

But downtown, a great amount of cleanup debris going on. It is just phenomenal. You still see cars as if they had been dropped off the tops of buildings. They are simply crushed. Bicycles and still, sadly, teams recovering the bodies all around the downtown area.

So quite a significant challenge ahead. You see aid workers pouring in by the dozens and the hundred, the military airlift bringing in relief supplies. Most of that, officials say, is going pretty well.

You hear complaints from time to time about the slowness in getting permission from the Indonesian military to go to certain remote areas that still have not received aid. You hear complaints about air traffic control backups, but all things considered, given the scope of this operation, both military officials we have spoken to and aid workers we have spoken to say things are going relatively well so far, in their view. No reports of any widespread medical problems in the refugee camps.

Obviously, the effort continuing. The most urgent need now is to develop a network on the ground, a logistical network, if you will. The trucks and everything else necessary to get the supplies to people in some areas west of here -- you still can't reach them by car or it takes hours and hours and do so. They are still dependent on helicopters to get them supplies.

Wolf?

BLITZER: John, you've been out in the region now for about a week, almost a week. Anecdotally, when you speak with people out there, what are their attitudes, specifically toward the United States, in this relief operation?

KING: Well, for the most part, on the street, and we saw this in the market today, we stopped by one of these refugee camps today, people are saying very nice things about the United States, how grateful they are for the help.

And this could down the road become a very delicate political issue here. It is here in Aceh, of course, there is a separatist movement, the Free Aceh movement, that wants to break off from Indonesia and become an independent state.

And the Indonesian government is clearly concerned about the influx of foreigners, whether they be American troops, Australian troops, all these aid workers coming in. It is very hard to get a visa to come into these parts.

So certainly the government is watching this very closely to see what influence this would have on the delicate politics here.

And, Wolf, as we watch all this on week two, heading into the beginning of the third week after the tsunami struck, we are of course seeing new video played on Indonesian television today of the tsunami.

And it is simply devastating when you watch it. Words cannot describe what you see in terms of the wreckage and the debris on the ground. And in this new video you see cars simply being tossed about by the power of this wave.

And if you go downtown and see the aftermath, you might understand when you see this new video, and how powerful it looks, how it just moves things that weigh hundreds of thousands of pounds. Just blowing them through the streets like a breeze blowing a crumb.

You go downtown now still two weeks later, and you see the aftermath of that. Some heavy equipment downtown, even some elephants called in to help clean up the sites, but this is a task, just simply the cleanup, that will take months, if not longer, given what you see on the ground here.

People still wandering the streets; again, you can go to the market in one minute and see some busyness, some bustling activity, people trying to get to their lives. But if you go downtown, Wolf, the detestation of what you see in these pictures is still so evident and it will be so for quite some time.

BLITZER: Just when you think you've seen it all, you got these new images, these new pictures -- we've been showing these pictures to our viewers around the world, John. You get some more. What an awesome, awesome sight, a horrible sight indeed.

We'll continue to show those new pictures throughout this hour and next hour here on "LATE EDITION."

Thanks very much, John King, reporting from Aceh.

Colin Powell is returning to the United States from his final international mission as the United States Secretary of State.

Today he was in Kenya for the signing of a peace agreement formally ending Sudan's civil war. But he spent much of the week getting a firsthand look at the tsunami-ravaged areas in South Asia.

I spoke with Secretary Powell earlier today about the tsunami relief efforts and much more.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Secretary, thanks very much for joining us. Let's talk about the tsunami disaster first. $350 million pledged so far. How much more do you think will be needed?

COLIN POWELL, SECRETARY OF STATE: I really don't know, Wolf. There's been a tremendous outpouring from the international community, so the total amount available is probably over $6 billion by now, to include a lot of private contributions.

We will be making an assessment over time to see what is needed, and if $350 million isn't enough, I'm sure the president will try to get more into the account. But we've only committed roughly $50 to $60 million of that $350 so far.

What we have to do is to make sure that we're providing assistance based on what is needed and providing money based on what is needed, not just flooding all of these places and accounts with supplies that may not be needed or financial assistance that may not be required yet.

So we ought to do this in a rather deliberate way and not just focus on the size of the money that's been contributed (ph).

BLITZER: Do you have any assessment how long it's going to take to get the lives of these people in these areas sort of back on track? Are we talking months, many, many years? What is your assessment, based on what you saw firsthand?

POWELL: Each country was different, frankly. If you look at Phuket, the resort area of Thailand, I expect that will come up rather quickly, in a matter of months. When you go to a place like Banda Aceh, however, in Indonesia, in the northern part of Indonesia and Sumatra, I think that's going to be years. Literally, a good section of that city was just scraped to the ground as if bulldozers went over it and scraped everything down, gone, nothing left of foundation. So it will take years for Banda Aceh to be rebuilt.

BLITZER: The Financial Times in London had an editorial. Among other things, it said this on Friday, it said: "Enough, enough, enough. The competition between rich world governments to outdo each other in pledging aid to tsunami-stricken Asia is turning grotesque." It went on to say: "Rather than lavishing special favors on the tsunami zone, global leaders should cease the moment to broaden the debate to what can be done to alleviate human suffering around the world."

Is that a fair criticism?

POWELL: I think it's a wise observation, in that while we focus on the tsunami victims now, and a few months ago it was the victims of the crisis in Darfur, let's not overlook the fact that there are people in need throughout the world, whether it's in the Congo, the Darfur region of the Sudan or in Liberia or in Haiti or now in the area hit by the tsunami.

There is a need for the entire world to focus on providing assistance to developing nations and the nations that have been hit by catastrophes.

The United States has always had that approach, and in the four years of President Bush's administration, we've significantly increased disaster assistance. We've significantly increased development assistance.

Last year, we gave away $2.4 billion for disaster assistance throughout the world, and that was 40 percent of the entire world's contribution. So the United States is certainly sensitive to that point.

BLITZER: Are you concerned, Mr. Secretary, that so much money will be going to the tsunami disaster zone that not enough will go to the Sudan, to other parts of Africa and the battle against AIDS and other critical humanitarian issues?

POWELL: We have to be on guard against that. In terms of the United States position, we're protecting our other accounts.

But when you have an immediate crisis like this, you have to draw down from those accounts in the knowledge that you'll replenish them through supplemental funding.

So it's going to be very important for the Congress to be ready to provide the president the supplemental funding needed for the tsunami victims so that it doesn't come at the expense of other crises around the world.

But let me make one other point. Even though we have committed $350 million, not all of that money immediately gets spent. That is also the case with the billions of dollars that have been committed by the international community.

And some charitable organizations have already said, "please, stop sending us anymore money," because they don't want to have so much money that they can't use it effectively, or it takes away from donations to other crisis areas of the world.

BLITZER: Mr. Secretary, you're in Nairobi, Kenya now. You've been focusing in on the issue of genocide in Sudan. Though, Saturday, when you were asked whether genocide was still being committed in the Darfur province of Sudan, you declined to say that it was still being committed.

Could you clarify whether or not genocide right now is continuing in Darfur?

POWELL: Yes, I was being very, frankly, precise with the answer because when I made genocide declaration back in September, what I said was genocide had occurred and was continuing, and that was based on analyses and teams that I sent over that reported back to me in September.

Since September, as a result of our declaration of a genocide situation as we saw it, the United Nations has been conducting its investigation and had a commission working on it. The U.N. commission will issue its report in about a week's time.

And so I felt it was appropriate right now to stick with the facts as I had them in September and wait for the U.N. report next week.

But there's no doubt in my mind that the kinds of incidents, the kind of tragedies we saw last year, which led to my September declaration, those things are continuing. We still see people being pushed out of their homes. We still see a conflict under way.

The conflict has slowed down a bit for the moment, but it is not over by any means.

So what I was trying to do is to be consistent with what I said in September and as I knew the situation in September and to wait for the U.N. report that's coming out in a week or so.

BLITZER: Mr. Secretary, as we speak right now, Palestinians are voting on the West Bank and in Gaza for a new president of the Palestinian Authority.

Based on the preliminary reports you're getting, are things moving along smoothly?

POWELL: The preliminary reports I've gotten suggest that things are going well, but I must say I'm not in real-time on this.

I know there was some concern about people getting through checkpoints and getting access to voting places, but I hope all of that will be resolved, and the Palestinian people are able to vote in great numbers. We're expecting a significant turnout: 70, 75 percent. And that would be an important statement, Palestinian people coming forward to decide how they wish to be led in the future with a new president.

So this is a moment of opportunity for both sides, and I hope we have a good, solid, fair election, and I'm looking forward to hearing from our election teams on the ground.

BLITZER: Mr. Secretary, there was some concern expressed by the Israelis in particular earlier in the week that these comments by Mahmoud Abbas, the man widely expected to win these Palestinian elections, he's quoted as saying, "we mourn the souls of our martyrs who were killed today by the tank shells of the Zionist enemy in Beit Lahiya." The reference to the Zionist enemy does not necessarily bode well. These Israelis are concerned with his commitment to reviving the peace process.

Are you familiar with those comments?

POWELL: I'm familiar with them, and they are of concern to me as well. But I think in the heat of the campaign, certain things get said.

What's going to be important is not what was said in the campaign but what happens after the campaign is over, and what is said after the campaign, what actions are taken after the campaign. And a number of Israeli officials have made that same observation, that we don't like the rhetoric, of some concern, but it's more important to see what kind of rhetoric comes after the campaign and what kind of actions are taken after the campaign.

BLITZER: The former National Security Adviser Brent Scowcroft this week raised some eyebrows here in Washington, referring to the January 30th scheduled elections in Iraq. He said this on Friday, he was quoted in The Washington Post as having said: "The Iraqi elections, rather than turning out to be a promising turning point, have the great potential for deepening the conflict. Indeed, we may be seeing an incipient civil war in Iraq at the present time."

I wonder if you'd want to comment on what the former national security adviser had to say.

POWELL: Well, the alternative then is not to have an election and not to give the Iraqi people choice or to delay the election for some indefinite period.

Our position and the position of the Iraqi interim government and the overwhelming desire of the Iraqi people is to have this election. The U.N. stands behind this election now, as do the neighbors of Iraq.

And so we're going to go forward and have the election, and we hope that the election will provide insight into the thinking of the Iraqi people and give the Iraqi people the opportunity to decide how they're going to be governed in the selection of the transitional national assembly.

Now, we have always said that this is not going to be the end of the insurgency. The insurgency is going to continue. The insurgency is going to have to be defeated, defeated by Iraqi forces, coalition forces, but we also hope it will be defeated by the reality that the Iraqi people now have a government that they elected and they can call their own. And maybe this will give them the will to start pushing back on these terrorists and murderers and elements of the old regime that are not part of the future but are part of the past.

And so even though there are dangers ahead, the way to meet those dangers, not to walk away from an election but walk into this election and do everything we can to provide the security conditions needed to have a successful election. BLITZER: One final question, Mr. Secretary, before I let you go. Newsweek, in the new issue that's just coming out now says, "the Pentagon is considering what they call the Salvador (ph) option, an option to put U.S. Special Forces in Iraq to lead assassination, hit teams or kidnapping teams to deal with Iraqi insurgents, to work together with Kurds in particular and Shiites in particular, against Sunni insurgents."

A, have you heard about this, and B, what do you think about it?

POWELL: I haven't seen the report, and I'm not familiar with the plan that the report makes reference to, so I'd have to refer you to the Pentagon for answers on it. I'm just not familiar with it here in Nairobi, Wolf.

BLITZER: I understand. Have a safe trip back to the United States. We'll look forward to seeing you back here. Good luck to you.

POWELL: Thanks very much, Wolf, and thanks to your courtesies over the last four years. I'm heading off now to a great signing ceremony, a comprehensive peace agreement between the SPLM in the south of Sudan and the government in the north, and this war hopefully is now coming to an end, and we can begin the peace, and also turn our attention once again to solving the crisis in Darfur. Thanks, Wolf.

(END VIDEOTAPE)

BLITZER: The secretary of state of the United States speaking with me earlier today.

Just ahead, a key day for Palestinians and potentially for the Middle East peace process. I'll speak live with the top Palestinian official about today's election.

Also, we'll get an assessment from two U.S. senators now on the ground in the Middle East: Democrat Joe Biden and Republican John Sununu. They met earlier today with the presidential candidate Mahmoud Abbas.

And later, tsunami relief efforts underway to put the spotlight on the U.N. as the U.N. tries to meet its global challenges. We'll get some special insight from two former diplomats: the former U.S. Secretary of State Henry Kissinger and the former U.S. ambassador to the United Nations Richard Holbrooke.

Much more "LATE EDITION" coming up.

(COMMERCIAL BREAK)

BLITZER: Our web question of the week asks this: Do you think U.S. participation in the tsunami relief effort will help improve its image in the Muslim world? You can vote right now. Go to cnn.com/lateedition. We'll have the results later in this program.

Coming up, the Palestinian Cabinet minister Nabil Shaath about what we can expect from today's historic elections, the Palestinians going to the polls to elect a new president.

You're watching "LATE EDITION," the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: History on the march in the Middle East today, with Palestinians voting for a successor to their late leader, Yasser Arafat.

Two members of the United States Senate Foreign Relations Committee are in the region monitoring events: Republican John Sununu of New Hampshire and Democrat Joseph Biden of Delaware. They're joining us from Jerusalem.

And let me begin with you, Senator Biden. How does it look like these Palestinian elections have gone so far?

SEN. JOSEPH BIDEN (D), DELAWARE: I think they have gone fine so far. You know, this is an occupied territory. So any judgment as to how an election would go in such a territory is going to be slightly different than if it were not that way.

But I was amazed at how organized the Palestinian election authority was, how competent they were in setting up their polling places and the poll workers they had.

We interviewed -- partially intervened and interviewed voters as they were coming -- actually standing right in the room in which they were voting, asked them if they felt intimidated by Hamas, by the Israelis, by anyone. The answer was no. There was no sense of intimidation.

A little bit different situation in East Jerusalem: As you know, Wolf, the '96 agreement, there is a way in which there's a different method of voting there. They can only vote so many people at, I think it was six post office places and then you have to go outside of East Jerusalem to vote.

There's a little bit of a mixup there, but I think it was more of a typical glitch that occurs in a complicated election than it was malice on anyone's part.

All in all, I've been, quite frankly, impressed, and with both the way the Palestinians have conducted themselves and the cooperation of the Israelis in trying to accommodate the process.

BLITZER: Senator Sununu, what about you? what's your assessment?

SEN. JOHN SUNUNU (R), NEW HAMPSHIRE: Well, we traveled together. I think having spoken to the same people, having been to the same polling places and Joe and I having talked about this, our perception is pretty similar.

I think it's important to recognize, as you said at the top of the show, it's an historic event, hundreds of thousands of Palestinians went to the polls today in a peaceful process. They had a strong, peaceful election, organized just 60 days after the death of Yasser Arafat; seven candidates free to travel across the West Bank and Gaza, taking their message to the people.

And what's important is that with a good turnout, we're going to have a president chosen by the Palestinian people that can carry their voice and be that credible negotiating partner that the Israelis are looking for in the peace process. It's important now that we lend support to the road map and the winning candidate as we hear the results this evening.

BLITZER: Senator Biden, everyone expects that Mahmoud Abbas will be elected the president of the Palestinian Authority. You've met with him now on several occasions. Do you believe he's a genuine partner in the peace process with the Israelis?

We're showing our viewers some pictures of Mahmoud Abbas, also known as Abu Mazen, voting earlier today.

BIDEN: I do. Again, John and I met with him today. We met with him for 45 minutes or an hour or so, and I believe he is committed.

I think he's going to have an awesomely difficult job, though, Wolf. He understands there's a genuine need for reform of his party, Fatah. He knows there's a genuine need for reform of what was the Palestinian Authority. He has to consolidate the security forces.

He knows he has to, my word, not his, "purge" a significant number of the leadership of those security forces and bring in new blood.

And I think, as John said, he deserves our help until he proves otherwise.

And I think he will -- I think he means to stop the violence. He means to end the intifada. He means to work as hard as he can to generate a security force that will allow his folks security on their streets as well as be partners in fighting terror.

But I think then he expects, as he should, that the Israelis will begin to move along the outlines of the road map, what the so-called quartet had put together; we're part of that.

And so, all in all, I am very favorably impressed with him. But as the old saying goes, the proof of the pudding's in the eating. I think he needs some help, though, right away, financially, and I think he needs some support right away.

BLITZER: Senator Sununu, he has plenty of problems, Mahmoud Abbas, Abu Mazen, not only problems potentially in negotiations with Israelis, but from within the Palestinian community.

Hamas, for example, other extremists have been boycotting these elections. They don't want any deal with Israel. Listen to what a couple of extremists told our Ben Wedeman earlier today.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE (through translator): This is not a real election because it is taking place under Israeli occupation.

UNIDENTIFIED MALE (through translator): Anyone, whoever he is, whatever his position, who tries to stop the militarization of the intifada, will get a bullet in his head.

(END VIDEO CLIP)

BLITZER: That sounds, by that masked gunman, as a direct threat to Abu Mazen, Mahmoud Abbas. What do you make of the problems that he faces from extremists within the Palestinian community who don't support any deal that would result in Israel remaining an independent Jewish state?

SUNUNU: That extremist fringe is obviously put off by the fact that Abu Mazen has made a commitment to turn his back against terrorism, to consolidate the security forces, to get rid of that extreme element in order to create real opportunity for the Palestinian people.

It's certainly ridiculous for the first speaker to suggest that the Palestinian people shouldn't exercise their own democratic right to choose their leadership, whether there is or isn't an occupation. They should take charge for their own leadership. They should be able to stand up and make their case to their people as they stand for election.

What has changed, I think, in the last year and a half since Abu Mazen was prime minister in August of last year is that he now has the political tools to achieve the goals that Senator Biden laid out to reform Fatah, to continue with the financial reforms, to consolidate the security services.

It is going to be very difficult, very challenging, but I hope he'll be assisted by a parliament that also brings their own mandate.

We have parliamentary elections just six months from now. I hope that that electoral process reinvigorates the Palestinian leadership and allows them to bring some new vision and energy to negotiations of a final peace settlement.

BLITZER: All right, Senator, stand by, I want to take a quick break. But we have much more to talk about, about these Palestinian elections, as well as the elections coming up in Iraq at the end of this month.

Also, we'll get analysis later this hour from the Israelis. The vice prime minister of Israel, Ehud Olmert, will join us as well.

And later, we'll talk to the leaders of the international aid groups on the rush to help tsunami victims. "LATE EDITION" continues right after this.

(COMMERCIAL BREAK) BLITZER: Welcome back to "LATE EDITION." Two members of the United States Foreign Relations Committee, John Sununu and Joseph Biden continuing our conversation with us; they're in Jerusalem.

Senator Biden, there's widespread expectation now the Bush administration will ask Congress to approve a hefty aid package to the Palestinians -- some talk already of $500 million with no strings attached. Will you support that kind of legislation?

BIDEN: I support immediate financial assistance to the newly elected Palestinian president. Now, I don't know what those numbers will be, and I don't know how it's going to be framed.

But I do think there's a sense of urgency, Wolf, to be able to empower the new Palestinian president to be able to provide the social services, for example, that Hamas is serving now.

You know, Hamas basically goes out in the community and says, "Look, we'll take care of your problem. We'll take care of your hospitalization. We'll take care of your education," and undermines the prospect that a popularly elected president is going to be able to govern.

And so I think we should be in there with financial help very quickly in addition to leading the effort, which the administration has already announced, later in the Spring to put together a donor's conference to be of assistance to this new Palestinian government.

BLITZER: But is $500 million, Senator Biden, something you would support?

BIDEN: Something I would consider. Again, I'd like to see what the administration has in mind and where it's going and how it's going.

But the bottom line is the new Palestinian Authority is in desperate need of financial assistance, and $500 million does not sound like a number that's out of line with their needs. But I'd want to see more, Wolf, rather than signing off on a blank check without talking to the administration.

I've spoken, Senator Sununu, with some of your Republican colleagues, who, of course, will try to support whatever the president requests from Congress, but they are a little bit concerned about giving this money, this assistance to the Palestinians, as a blank check without the kind of controls that the U.S. government might prefer. Where do you stand on this?

SUNUNU: Well, first, let's wait for the president to make a proposal. We don't know what it is.

We don't know how it might be directed. There are a lot of different ways to ensure that resources get to a single or a set of priorities.

But it is important to also recognize that the one area of reform where the Palestinians have probably made the greatest amount of progress over the last two years is in the area of the budget and financial transparency.

Mr. Fayyad, their finance minister, has done a great job in making the books more transparent. They've moved away, for example, from the cash payment for most of the security forces that is rife with corruption to a direct payment, direct deposit into accounts using checks. Those kinds of initiatives make it much easier to track funds, much easier to audit the books.

And that is something that both Mr. Fayyad and Abu Mazen are clearly committed to, being willing to show where investments are being made, set priorities and let their partners, whether it's the United States or the E.U. or the Gulf states know exactly how these investments are being made.

So I think we can provide this kind of assistance and even do so in a direct way as we did with the $20 million in the most recent budget cycle with a lot more confidence than we ever could have three or four years ago.

BLITZER: Senator Biden, do you believe the Iraqi elections, scheduled for January 30th, will go as smoothly, relatively smoothly, as these Palestinian elections have gone today?

BIDEN: No, I don't. I think it's much more difficult, Wolf.

I think the irony is we're sitting here trying to put together this Rubik's Cube of Palestinian/Israeli peace and yet the election process has gone much easier.

You are talking about a group of very sophisticated people, the Palestinians, who probably are the most eligible in all of the Arab world for democracy, most ready for it, most desirous of it. And contrary to what I find in my numerous trips into Iraq -- you and I have talked about this before -- I think we're going to find ourselves in a very difficult position in Iraq.

The elections are going to be much messier. We are left with a bad choice in holding elections and a worse choice of not holding it.

And I think there's going to be the whole question of whether or not the Sunnis participate, whether there's any legitimacy in the process if they don't, et cetera.

So I think it's a much more difficult deal in Iraq than here.

For example, Hamas -- everybody worried whether Hamas would physically attempt to disrupt these elections. They did not. Thus far -- now, we have another two hours to go. I don't want to jinx it. But there has been no interference.

I don't think you'll see anything like that in Iraq. I think you'll see the insurgents doing everything they can, including blowing up polling places, and the rest.

So I think it's a much more difficult circumstance in Iraq than it was here in the Gaza Strip and the West Bank.

BLITZER: And, Senator Sununu, that difficulty in Iraq was underscored.

I want to play for you a sound bite from what Lieutenant General Thomas Metz, the U.S. commander of the multinational forces in Iraq, said on Thursday, referring to the upcoming Iraqi elections.

(BEGIN VIDEO CLIP)

LIEUTENANT GENERAL THOMAS METZ: I can't guarantee that every person in Iraq that wants to vote, goes to a polling booth, and can do that safely. We're going to do everything possible to create that condition for them, but we are fighting an enemy who cares less who he kills, when he kills, and how he kills.

(END VIDEO CLIP)

BLITZER: And his fellow commander, U.S. Air Force Brigadier General Irv Lessel (ph), told the Associated Press this on Friday. He says, "I think a worst case is where they have a series of horrific attacks that cause mass casualties in some spectacular fashion in the days leading up to the elections. If you look over the last six months, they have steadily escalated the barbaric nature of the attacks."

How confident are you, Senator Sununu, that these Iraqi elections can even get off the ground?

SUNUNU: Well, I think that my confidence would have to be placed in those troops on the ground. They are committed to doing everything possible to ensure the safest election, the most secure polling places possible.

It's no surprise, I think it's fair to say it was predicted by most observers, that the insurgents would try to increase their level of violence, increase their level of disruption, as the election approached, because the one thing they don't want is what the Palestinian people chose here today: credible, duly elected leaders that represent the voice of their people. The insurgents don't want a democratic voice. They don't want representational government.

But we have to do everything possible to overcome these obstacles. The people of Afghanistan overcame huge obstacles in their recent elections. The people of Palestine here overcame huge obstacles. We had an election last year in Indonesia, the world's largest Muslim country.

There are great opportunities, if we can work with our Iraqi partners and give the people of Iraq an opportunity at the ballot box.

BLITZER: On the whole nature of the U.S. military deployment in Iraq, Senator Biden, listen to what General Barry McCaffrey, retired U.S. Army four-star general, told Time magazine. In the new issue of Time magazine, he says this. He says, "The Army's wheels are going to come off in the next 24 months. We are now in a period of considerable strategic peril. It's because Rumsfeld has dug in his heels and said, I cannot retreat from my position."

Do you agree with General Barry McCaffrey that the U.S. military is in peril right now because it's so overstretched?

BIDEN: It is overstretched. I agree with his assessment. I agree with his assessment of Secretary Rumsfeld.

I've been very straightforward on this for the last two years, with you, Wolf, and anyone who would listen. I think we have made -- our strategic judgment in Iraq has been lousy. I think our tactical approach has been lousy. And that's not our military, it's our civilian leadership.

And the last time I was in Iraq, which was about four weeks ago, Wolf, a three-star Marine general, as I was approaching the helicopter to leave a long briefing in a particular town -- I don't want to give him away -- said, "Anybody who tells you we have enough troops here, Senator, is a" -- and I want use the profanity -- "is a liar."

I have not met a single military person in Iraq in my four trips there, when you get them aside, who says they've had sufficient force to begin with and sufficient support from the Defense Department.

And so we are in peril. It is difficult. It's overstretched: 40 percent of our forces there are Reserve and National Guard.

And I think we're paying a terrible price for the way we went in. We went in with insufficient force, and insufficient legitimacy, and we've yet to establish that.

And it's not because -- as the Marines in Fallujah told me, "We can accomplish any goal you set for us, Senator; it's a question of securing our victory," and it's difficult to secure what they've won absent more force or a better trained Iraqi force. And we've quite frankly botched the training of the Iraqi force until very recently with a first-rate general who is now getting it under way.

BLITZER: I'll let you respond to that, Senator Sununu. Go ahead and weigh in.

SUNUNU: I think that we have big issues with the level of troop deployment. I think there are problems that you've raised, the problems that Senator Biden heard about on the ground during his visit to Iraq.

I am not a member of the Armed Services Committee. I wouldn't claim to know what the ideal ratio of troop deployment is -- either in Iraq or around the globe.

I think if our generals on the ground aren't being straight and direct with their commander in chief, we have a serious gap in communication that, ultimately, our security will suffer for.

BLITZER: We're completely out of time, but Senator Biden, you're on the Judiciary Committee. One unrelated question: Will you vote to confirm Alberto Gonzales as the next attorney general? BIDEN: I haven't made up my mind yet. I was disappointed he wasn't more candid. I like him. I know him. It's a great trade for my good friend John Ashcroft, but his lack of candor and the way he responded bothered me.

And, quite frankly, I had to leave to be heading here, and I did not hear the end of his testimony. That's what I'm going to be reviewing with my staff when I return on Monday -- on Tuesday, I should say. And I'm not certain, to be honest with you.

BLITZER: Senator Biden, Senator Sununu have a safe trip back to the United States. Thanks very much for joining us.

SUNUNU: Thank you, Wolf.

BLITZER: And up next, a check of what's making news right now from the disaster region in southern Asia.

Also ahead, what's Israel's next step following today's historic Palestinian presidential election? I'll speak with the Israeli Vice Prime Minister Ehud Olmert.

Stay with "LATE EDITION."

(COMMERCIAL BREAK)

BLITZER: Thanks to our viewers in the United States and around the world. Welcome back.

In just a few minutes I'll speak about today's historic Palestinian elections with the Palestinian cabinet minister, Nabil Sha'ath. First, though, let's get a quick review of what's in the news right now.

(NEWSBREAK)

BLITZER: Amid the devastation of the tsunami-stricken southern Asia region, there are growing concerns about security, particularly in Sri Lanka, where a clash between Christians and Hindus has left at least three people dead and more than two dozen others injured.

CNN's Satinder Bindra is following the recovery effort. He's joining us now live via video phone from Sri Lanka.

Satinder, what's the latest?

SATINDER BINDRA, CNN CORRESPONDENT: Well, Wolf, despite the sectarian clashes, what's top and center of everyone's mind is two things: relief, and then there's an incredible story about a survivor, a 60-year-old man pulled out of the rubble yesterday. This is 14 days after the tsunami struck.

The 60-year-old man is in a hospital just behind me. He's doing quite well. He's been put on a drip. He's been dehydrated, of course, and hasn't been able to speak much. But the man who found him insists this is an incredible story, and this man, the 60-year-old, (UNINTELLIGIBLE), is being hailed by many people here as the luckiest man alive.

Wolf?

BLITZER: Satinder Bindra with the latest from Sri Lanka for us.

Thanks, Satinder, very much.

I want to show our viewers some new video that we've just received here at CNN on what happened at Banda Aceh in Indonesia.

Look at these dramatic pictures that we've just received in. This is what happened in Indonesia as that tsunami hit the ground running in Indonesia.

Seventy-seven thousand people still missing in the wake of the tsunami disaster. Right now, close to 150,000 people in all the areas believed to have died; many, many others still missing.

But here you can see what kind of devastation as simply a river began to destroy everything as it moved in to Banda Aceh province in Indonesia.

We'll continue to show our viewers these pictures.

Although there's little doubt about who Palestinians will choose to succeed the late Yasser Arafat as their president, today's vote is widely viewed as a chance to give the Middle East peace process a fresh start.

Just a little while ago, I spoke with Palestinian cabinet minister Nabil Sha'ath in Gaza.

(BEGIN VIDEOTAPE)

BLITZER: Nabil Sha'ath, thanks very much for joining us on this historic day.

The polls about to close, among the Palestinians, how has it gone, based on what you can tell?

NABIL SHA'ATH, PALESTINIAN CABINET MINISTER: It has gone very well, Wolf. I am delighted the way the campaign went: a very positive campaign, absolutely no negative campaigning, and no violations whatsoever.

And today, the polling booths went extremely well -- very strict in terms of procedures, very transparent. And lots of observers: we have 800 foreign ones and about 20,000 (ph) Palestinian ones.

So, I believe everything went well. People are elated, really, that they were able, despite the occupation, to continue the democratic process and to elect a new president. BLITZER: The fact that you had to keep the polls open for an extra two hours, was that a major crisis or just something that you anticipated could happen, not necessarily a big deal?

SHA'ATH: No, it's not necessarily a big deal. Today was given as a national holiday to allow people to go to vote.

And that really let people to take it a little easy at the first hours of the morning, and though they started piling up in front of the booths late in the afternoon, and therefore they couldn't catch the 7 o'clock.

The law provides for an automatic possibility of extension of two hours. Beyond two hours, there has to be a meeting of the national committee for elections.

But they just extended it, the two hours necessary to get everybody waiting in line on the booths.

BLITZER: So, based on what you're telling me, the Israeli level of cooperation in easing the checkpoints, easing some of the other aspects of the military occupation, in order to allow the Palestinians to vote, I take it, was relatively good?

SHA'ATH: Well, it was never perfect, and especially here in Gaza, and in Jerusalem, in particular, but in other areas of the West Bank, it went reasonably well. In fact, the Israelis never intervened near the polling booths, or tried to coerce people to vote in a certain way or not to vote.

But it wasn't really that easy. Things in Gaza at times became difficult, with Israeli tanks rambling in, and in Jerusalem people took a long time to find out where they should be voting, because the Israelis made it a little difficult.

But, otherwise, things went OK.

BLITZER: What about turnout?

As you know, Hamas, other groups in the Palestinian community were calling for a boycott.

Based on what you could tell, how has the turnout been in Gaza and the West Bank and East Jerusalem?

SHA'ATH: Well, that, really, I cannot ascertain until the polling places close down in an hour and a half.

And so I think we will know later on today the percentages.

I know that Hamas tried to encourage people to boycott, and I thought it was really stupid, because nobody forced them to nominate themselves. This is a free -- free elections. But to ask people not to vote because they don't have a candidate, I thought was really disruptive and stupid. BLITZER: The Israelis earlier in the week, and Secretary of State Colin Powell on this program earlier today, expressed concern about this comment that Mahmoud Abbas, Abu Mazen, made earlier, on Tuesday, when he said, "We mourn the souls of our martyrs, who were killed today by the tank shells of the Zionist enemy in Beit Lehiya."

The reference to the Zionist enemies makes it sounds like he's opposed to some sort of revived negotiation with the Israelis. How concerned should the Israelis, and the Americans for that perspective, be?

SHA'ATH: No, I don't think he really meant that. What he meant was, those soldiers were acting as enemies when they went into Beit Lehiya and shot at the Palestinians. There was no referral to anything anti-Semitic, nor was there any referral to a desire not to go back to the negotiations.

Abu Mazen is on record as willing to go back to negotiations the day after the elections if he's elected. And I think he will carry that commitment if the Israelis are willing to do so. I have no doubt about his intentions.

BLITZER: What about the other picture that caused some concern, when he was on the shoulders of the leader of the Al Aqsa Martyrs Brigades, Zakariah Subeidi (ph), on December 30th, seeming to suggest that he was in the same camp, if you will, as the Al Aqsa Martyrs Brigade, which has claimed responsibility for several terrorist -- many terrorist actions against Israeli civilians.

How concerned should the West be about that?

SHA'ATH: Well, Abu Mazen was very clear, even when he became prime minister a year and a half ago, that he is going to work for a cease-fire, a total cease-fire that ends all violence and incitement of violence.

And to do that, he is appealing to all those who fought this confrontation in the last four years, to come down, to put their arms down, and to be involved in the peace process.

And therefore he never said he is going to fight them. He said he's going to try first to seriously bring them into line, put them on the peace process, and end violence of all sorts.

And that's what he's doing.

Now, if he fails in doing so, then the path becomes more difficult.

But I do anticipate that his call for a cease-fire will succeed, particularly if reciprocated by the Israelis.

BLITZER: So what happens now?

Now that he's about to be elected, they'll be a new Palestinian government. Walk us ahead the next few weeks. What do you envision happening in terms of trying to revive peace negotiations with the Israelis?

SHA'ATH: I know it's not going to be easy, and I heard Senator Biden and Senator Sununu, and I do agree with everything they said.

And I think there is a little bit too much optimism here on the Palestinian side that people expect that tomorrow on the 10th of January the peace process just goes back to action. And it's not going to be that easy.

But the United States can help. I mean, if President Bush tomorrow would issue an invitation to both leaders to come to the White House and discuss full implementation of the road map, I'm sure that is going to speed up action. But, without that, it's going to take some time.

Abu Mazen is going to work at re-creating contacts with the Israelis. He's going to continue his democratization and reform process and reformulation of his security forces. He's going to pursue the negotiations with Hamas and others in order to bring them to line in terms of the cease-fire.

But he needs help on getting the Israelis back to the table and to take the forces out of the West Bank and Gaza.

BLITZER: Let's hope this is the start of a new era in the Middle East. We'll have to wait and see.

Nabil Sha'ath, good luck to all the people, the Palestians and the Israelis, at this historic moment.

Thanks very much for joining us.

SHA'ATH: Thank you very much.

(END VIDEOTAPE)

BLITZER: And this reminder: Tomorrow I'll speak with Jimmy Carter, the former president of the United States, who has been there monitoring these Palestinian elections. Tomorrow a special interview noon Eastern here on CNN.

Coming up this hour, we'll also get Israel's perspective on today's Palestinian vote. I'll speak live with Israel's Vice Prime Minister Ehud Olmert. That's coming up.

We'll also turn to another critical election just three weeks away in Iraq. Is the relentless insurgency jeopardizing a free and fair vote there? Special insight from two top former U.S. diplomats, Henry Kissinger, Richard Holbrooke. They're coming up next.

Stay with "LATE EDITION."

(COMMERCIAL BREAK)

BLITZER: Welcome back to "LATE EDITION." From the tsunami relief effort in south Asia to the Palestinian and upcoming Iraqi elections, the United States is starting the new year with a plate full of difficult, challenging international issues.

Joining us now to talk about the impact of all of these matters, two guests. Henry Kissinger, he served as the United States secretary of state under presidents Nixon and Ford. And Richard Holbrooke, he was the United States' ambassador the United Nations during the Clinton administration.

Gentlemen, welcome back to "LATE EDITION."

Dr. Kissinger, I'll begin with you. What should the U.S. government do? Right now the Bush administration -- Dr. Kissinger, if we still have you. There you are -- Dr. Kissinger, now that these Palestinian elections are almost over, what is the immediate priority on the U.S. agenda?

HENRY KISSINGER, FORMER SECRETARY OF STATE: I believe that actually the possibility of major progress is greater than it has been for about a decade.

The United States should begin conversations with its European allies and with moderate Arab regimes and, of course, after prior consultation with Israel to see whether some concrete proposals can be attached to this four-power road map.

I don't think that the Palestinians and Israelis alone are going to be able to settle it, and it requires that the Europeans help us with the moderate Arabs, that the moderate Arabs help us with the Palestinians and that we and the Israelis begin implementing the principals that we have mutually agreed on, which I believe can bring us fairly close to significant progress.

BLITZER: Ambassador Holbrooke, we heard the Nabil Sha'ath, the Palestinian cabinet minister, suggest just a few moments ago, it would be an excellent idea for President Bush to invite Mahmoud Abbas, Abu Mazen, together with Ariel Sharon, to Washington to the White House for a meeting. Is that a good idea or is that premature right now?

RICHARD HOLBROOKE, FORMER U.S. AMBASSADOR TO UNITED NATIONS: I'm not going to advise the president on things of that specificity. I think ultimately such face-to-face meetings will be required, but the election isn't over yet. Let's see how they settle in.

And let's recognize one thing -- and I agree with everything Henry Kissinger just said -- the really good news is that Arafat is gone. No one, in my view, could be worse than Arafat.

But there are rejectionists out there, Hamas and Hezbollah, who will continue the violence. It will be up to the new leadership to get that under control and that will be a very difficult project.

Meanwhile, the process, which Henry Kissinger talked about, which Senators Biden and Sununu talked about, is one well worth pursuing aggressively. BLITZER: Is there a moment, Dr. Kissinger, right now where the U.S. should come in with a significant aid package to the Palestinians -- half a billion dollars, some are already suggesting, $500 million -- in order to try to jump start this process?

KISSINGER: Well, (UNINTELLIGIBLE) think we have to jump start a peace process by a specific aid offer. To the degree that the Palestinians are carrying out some of the measures that were previously described, namely, bringing the insurgents and the intifada people under control, I think we should be very generous in our aid and I don't object to a -- I think a proposal at some point, at some early point, would be good.

But we should not show such an extreme urgency and eagerness until we have talked to the parties and made clear and understand that they are prepared to make significant moves on their own. And I would apply that to both parties.

BLITZER: Do you agree with that, Ambassador Holbrooke?

HOLBROOKE: I do, and we have -- the United States has to be very careful here that it does not get pulled into a process where, because of the election, which is good news, because of Arafat's departure, which is terrifically good news, we suddenly start putting unilateral pressure on Israel before we see what the new Palestinian leadership and its moderate Arab supporters and the Saudis are ready to do.

So we all agree, everyone, this is a tremendous, historic opportunity. But let's not start writing this peace agreement or thinking about new handshakes on the south lawn until we see what really is going to go on on the Palestinian side.

BLITZER: Dr. Kissinger, you raise an important matter when you say moderate Arab states should weigh in and try to advance the peace process. I assume you're referring to Egypt, Jordan, Saudi Arabia, other countries in the region. What specifically do you want them to do to help out?

KISSINGER: The Palestinians will have to make, in their terms, significant concessions. And of course the Israelis will have to make huge concessions in the sense that they will have to give up in a final settlement a significant part of the settlements that they have on the West Bank, beyond the borders that may be established in negotiations.

So it -- the moderate Arab states can provide a legitimacy for Abu Mazen which his own domestic opponents will make very difficult, to fully recognize Israel, to accept the reality that the final border cannot be exactly the 1967 border, but that there has to be some trade of territory, that the security fence will have to continue until there is genuine peace, but that Israel, on its side, will turn over the territory beyond the established borders to the control of the Palestinians.

BLITZER: All right. KISSINGER: I actually believe that something like these terms that were already discussed at Camp David by President Clinton, and have been advanced by the current administration, by the Bush administration, I believe that they can bring us quite close to an agreement, but I don't believe that the parties themselves, especially the Palestinians, can do it all by themselves.

BLITZER: Ambassador Holbrooke, the future of the Israeli- Palestinian conflict, this whole issue, could have a huge impact on the Iraq issue as well, including the upcoming Iraqi elections at the end of this month. Are you upbeat that, as smoothly as these elections occurred today, the Palestinian elections, relatively speaking, we might see a similar smooth election in Iraq on January 30th?

HOLBROOKE: With all due respect, Wolf, I don't think what's happening in the Palestinian election today will have any bearing on Iraq.

What's happening in Iraq is that two groups of enemies of the United States, one, al Qaeda, whose simple goal is to kill Americans -- and they can do it more easily now in Iraq than they could by flying airplanes into buildings in the United States at this moment -- and secondly, Sunnis, some Saddam loyalists, others just people who are afraid of a Shiite majority in Iraq, have combined to wreak horrendous havoc on the international effort in Iraq.

Thirty Americans died last week in Iraq. That is a very serious number.

And this election is going to be held. Anyone talking about postponement doesn't understand that the United States and its allies cannot afford the setback of postponing it. But its legitimacy, as Brent Scowcroft, Henry Kissinger's former deputy, said last week, its legitimacy is very, very skeptical at this point, problematical.

So I would simply say that what happened in Palestine today, which is encouraging, is not going to affect Iraq.

After the election, Wolf, comes the real issue: What is the United States going to do? Are we going to end up becoming the security force for a Shiite government, which in its heart of hearts dislikes us, but can't survive without us? We have some very difficult moments coming up in Iraq.

BLITZER: Like Brent Scowcroft, Dr. Kissinger, Zbigniew Brzezinski this past week also offered a very gloomy assessment of the U.S. situation in Iraq. He said this: "I do not think we can stay in Iraq in the fashion we're in now. We could stabilize Iraq if we are willing to put in 500,000 troops, spend $200 billion a year, probably have the draft, and have some kind of wartime taxation."

A very gloomy assessment from Zbigniew Brzezinski, and also from Brent Scowcroft. How pessimistic are you?

KISSINGER: Well, what Brzezinski is really saying is, we should pull out. And the consequences of that, I think, would be extraordinarily serious all over the world.

Brent Scowcroft is a friend of mine, a former deputy of mine, and I take him extremely seriously. But the problem that he describes is primarily in the Sunni area, so that 75 percent of the population of Iraq will probably be able to vote without maximum harassment.

Afterward, we will have the problem, the challenge that Dick Holbrooke described, namely: How does the majority that will emerge out of that election, and that is in any case the majority of the whole country, how will they implement what they may treat as the mandate they have received by the election?

And we will have to decide to what extent we want to be involved in what may become a civil war.

So, as this evolves, it will probably be necessary to bring about some regional autonomy in Iraq, and to give up the idea that there is one central government on the model of Saddam Hussein that can govern equally in every part of the country. But that is a challenge for after the election.

For now, it does no good to start debating about the difficulty of the election. It is now a necessity. The consequences of not having it would be much graver than any benefit we would get from delay. And we will then, hopefully as a united country, be able to deal with creating some political structure in Iraq which will permit a gradual withdrawal of American forces over a period of time.

BLITZER: Ambassador Holbrooke, the United Nations has been playing a critical role in the tsunami-ravaged areas, as you well know. And you're a proponent of the United Nations, having served there as the U.S. ambassador. Listen to what Kofi Annan said this week.

(BEGIN VIDEO CLIP)

KOFI ANNAN, U.N. SECRETARY-GENERAL: I think the U.N. has done lots of emergency work, and this is definitely one of the largest. And I think we are going to perform, and we're going to do it effectively, and I think the world now knows the worth of our organization.

(END VIDEO CLIP)

BLITZER: As you well know, Ambassador Holbrooke, there are plenty of politicians, others here in Washington and around the country who don't like the U.N. and would just as soon see it go away. They're especially concerned about the oil-for-food scandal that erupted involving Saddam Hussein taking lots of money, billions of dollars, presumably, from that humanitarian program.

You had a meeting in your house, in your residence, in New York in December, a strategy meeting to try to save the U.N., save Kofi Annan, for that matter. What's been the fallout since then?

HOLBROOKE: Well, you've asked about four questions, Wolf, and you've way overstated the meeting at my house.

After the presidential election, Kofi Annan consulted various people, among them myself, on what to do. Even though the people that we assembled at his request at my house about six weeks ago were overwhelmingly people who voted for the other guy, we all said to the secretary general that it was essential that he and the U.N., which had been perceived as perhaps leaning toward Senator Kerry during the election, had to clean up their act with Washington. They had to get on with the Bush administration for the simplest of reasons.

The U.N. is just a collection of its 191 members, and among them, one, the United States, its largest contributor, its founding nation, its host nation, is indispensable. An adversarial relationship between Washington and the U.N. only hurt the U.N.

The tsunami then hit, and the tsunami proved again that, love it or hate it, and I'm somewhere in between, the U.N. is indispensable. It is flawed.

And you just mentioned the audit issue. In today's New York Times, there's an article concerning the audits, which on the front page suggests some mismanagement and the need to have improved it. But if you read on in the article -- and I don't think the article is quite right the way it casts it -- the fact is that Paul Volker is quoted as saying, and I quote, "There is no flaming red flag, no smoking gun in this stuff," and that the internal audits don't prove anything.

As for the billions you just mentioned, there are $21 billion in some figures. That is completely wrong. Three-quarters of that amount was waived by presidents Bush and President Clinton. The actual number diverted is estimated by people like Mr. Duelfer and others at about $1.8 billion.

Now, I want to stress something, Wolf. I'm not here as a defense attorney for the U.N., which is, as I said, indispensable but is deeply flawed as well. The U.N. needs to improve its performance, and I know Kofi Annan, with two years committed, is making personnel changes to improve that. He has just brought in a new chief of staff.

But the point I want to stress is this: There's been a lot of piling on here, in the middle of which the U.N. has been at the center of tsunami relief, with America playing a major and I think highly commendable role.

BLITZER: We have to, unfortunately, leave it right there. Ambassador Holbrooke, thanks to you for joining us. Dr. Kissinger, always appreciate having you on the program as well.

KISSINGER: Thank you.

HOLBROOKE: Thank you.

BLITZER: Up next, a quick check of what's making news right now from the disaster region of southern Asia. Also ahead: What's Israel's next step following today's Palestinian presidential election? I'll speak live with Israeli Vice Prime Minister Ehud Olmert. Stay with "LATE EDITION."

(COMMERCIAL BREAK)

BLITZER: It's been exactly two weeks. The tsunami disaster since then has generated new levels around the world. But along with that, are continuing questions of how much aid is needed and how it's best delivered.

Joining us now three guests: in Geneva, Switzerland, Dr. David Nabarro, he heads crisis operation for the World Health Organization; in New York, Carol Bellamy -- she's executive director of UNICEF; and here in Washington, Marty Evans -- she's president of the American Red Cross.

Thanks to all of you for joining us.

Carol Bellamy, I'll begin with you. How's it going from your perspective two weeks into this crisis?

CAROL BELLAMY, UNICEF EXECUTIVE DIRECTOR: I think it's been an unprecedented response from the global community and aid is getting through. It's getting through quite well in some of the countries at this point; some of the countries taking full responsibility for leading; all of the countries, the governments themselves leading.

In Indonesia, however, that area, Aceh, is a very difficult area for access. We all have many more people on the ground, food, water getting through, but there are still problems in getting all the kinds of humanitarian responses that are needed.

BLITZER: From the perspective of the World Health Organization, Dr. Nabarro, how is it going from your perspective?

DAVID NABARRO, WORLD HEALTH ORGANIZATION: I'm pleased with the way in which governments and U.N. and, of course, all the nongovernmental organizations are working together as a partnership, in fact, as a set of partnerships within each country.

In Aceh, in Indonesia, we've got about 35 different organizations meeting at regular intervals to track health problems. They've identified cases of measles and initiated crash immunization programs, indeed with American Red Cross support.

And I'm also seeing signs that cases of diarrhea that are suspected to be cholera or dysentery, are being picked up and looked at and checked to see whether they might be the beginning of an epidemic.

But there are still some isolated spots from which we're not getting the information we need, and we're teaming up with the United States, its assets in the region, to finalize the complete assessments so that we can be sure to know what is happening everywhere. BLITZER: Marty Evans, the last time we spoke you told me the American Red Cross has raised $350 million, so far. I assume that the number has gone up since then. What is the latest number?

MARTY EVANS, AMERICAN RED CROSS: We've actually raised $150 million...

BLITZER: Excuse me, $150 million.

EVANS: ... and we estimate over the next several years that we could use about $400 million. And we are so pleased that the American public is responding so generously.

BLITZER: And do you believe you actually have the capability of distributing all that money? You think $400 million is your goal?

EVANS: We've made a commitment just this week to distribute about $134 million over the next six months. And we'll be working in partnership, not only with other Red Cross and Red Crescent organizations, but also with World Health, UNICEF, World Food Programme. And then the rest of the efforts that we expect to undertake will go over the next several years.

BLITZER: Carol Bellamy, there were disturbing indications in the past several days that some of the children that have been affected by this are being exploited for whatever purpose, perhaps even sexual, sex trafficking, if you will.

Give us your perspective. You look at this very closely, how concerned should the world be?

BELLAMY: Well, I think there should be some concerns. Children are truly the most vulnerable.

Children were very serious victims in this. We estimate at least a third of the people who died were children.

Many of the children have lost family members, and that is what is putting them in this quite vulnerable position right now.

A number of the reports that have come out, we don't believe can be substantiated. But there at least one case in Indonesia in which actually the police authorities have taken some people in for purposes of trafficking. And we know that there have been criminal syndicates in the region in the past.

What's going on to try to prevent this, a number of things. One, for example, the Indonesian government has put a temporary moratorium on the transporting of children out of the Aceh region. Thailand has similarly take a position.

Secondly, there is a process of trying to register children. And this is going on in all the countries right now to find out -- have they lost parents, one or both? Do they have other family members, because there is a long tradition of extended families of these countries? But it is clearly something to be concerned about; overblown a bit in reports, but something on which action needs to be taken to prevent it happening.

BLITZER: Dr. Nabarro, you touched on this earlier: an outbreak of disease, whether cholera or other horrible diseases that could kill presumably almost as many people as have already died in this tsunami disaster. Where exactly does this stand, the fear of an outbreak of major epidemics?

NABARRO: I said that if we could get our surveillance systems established within about two weeks of the disaster, when I was spoken to about this about a week ago, and I'm happy to report to you and to your viewers that I think we now do have a pretty good system throughout most of the disaster-affected area that will enable us to identify cases of acute infectious disease quickly, and mount a containment response that will certainly mean that we wouldn't get deaths on the scale that you just mentioned.

There's just this area of coastline, the west coast of northern Sumatra, which is still not fully covered. Once we've done that, then I'll be 100-percent confident.

BLITZER: What are you doing, Marty Evans, to assure all those millions of Americans who are contributing to the American Red Cross in huge numbers, that the money they give you -- and you're responsible for this -- that it's actually being translated into tangible assistance for the people most in need?

EVANS: We're doing that through not only our own direct employment -- we do have a long history of doing relief projects where we actually control the funds all the way to the point where they help the victims. We also are working with partners who have a long, long record of accountability for the appropriate use of funding, and we will track and audit those expenses all the way again to the end use. We'll report to the American public, and we are endeavoring to be just as transparent as humanly possible, so that our investors, those donors, know that their funds are making a difference.

BLITZER: Carol Bellamy, the children -- and you're responsible for the children, as the head of UNICEF -- are going to be scarred -- those who've lived through this horrible disaster -- for a long time to come.

What, if anything, does UNICEF do to deal with the psychological, the fallout from this horrible disaster?

BELLAMY: Enormous trauma that these children have experienced, and it will last, and there is truly a tsunami generation that we need to recognize.

But there is some things going on. Again, UNICEF, but working with partners, Red Cross, for example, is a good partner, Save the Children, other organizations; we are working with the various governments. We're working with the government agencies to do a number of things. First of all, as I said, trying to identify what the status and the situation of the child is.

Secondly, even in these camps that have been set up, while David and the WHO focusing very much on health, we are already looking at some of the trauma issues, and just bringing some, you know, things for the kids to play with will allow some reduction of the trauma.

Third and most importantly, you know, these children, most of them, were going to school. So getting schools started again, and, again, this goes to the spending of money. All of the money coming in isn't going to be spent just in the next month or two. It's going to take a period of time.

So helping them to get temporary schools started, perhaps using tents, use a school in the box, where we have the materials, and then down the long run bringing the schools back is a way to help the kids.

BLITZER: All right.

We have to leave it right there.

Carol Bellamy, to you, thanks very much. David Nabarro in Geneva, Marty Evans here in Washington, all of you doing critically important work, and our viewers around the world are grateful to you for that.

Up next, the Israeli view on today's Palestinian elections: What's at stake? I'll speak live with the Israeli vice prime minister, Ehud Olmert. He's standing by in Jerusalem.

"LATE EDITION" will be right back.

(COMMERCIAL BREAK)

BLITZER: Palestinians have been casting their votes all day, only about ten or so minutes left before the polls close in the West Bank, East Jerusalem, and Gaza. Will this latest turn in the road dramatically improve the prospects for peace in the region?

Joining us now from Jerusalem, the vice prime minister of Israel, Ehud Olmert.

Mr. Vice Prime Minister, thanks very much for joining us.

What's your bottom line assessment what this day means specifically for Israel?

EHUD OLMERT, ISRAELI VICE PRIME MINISTER: Well, Wolf, it certainly may turn out to be an historic day, but we have to be patient and wait and see.

These are elections and, I think, to the best of my understanding and knowledge of what's going on now, it's a democratic process, and this, in itself, is enormously important, because it proves to be the only democratic process which take place in any Arab country. And the Palestinians are moving ahead.

Now, the outcome, hopefully, as it looks, will make Abu Mazen, Mahmoud Abbas the new head of the Palestinian Authority. Now, after being elected, the main challenge is still ahead for him. Will he fight against the terrorists? Will he try to stop this bloody, violent war against the state of Israel? This is the main question.

This is what interests us. If he will do it...

(CROSSTALK)

BLITZER: What will your government, Mr. Minister -- I was going to say, what will your government, the government of Prime Minister Sharon, do to encourage him, to help Mahmoud Abbas undertake this new challenge?

OLMERT: Well, first of all, we were very helpful in facilitating this process on the first place, and I think it has been recognized by all the international inspectors coming to the region, including President Carter and former prime minister of France, Michel Rocard (ph). So we have made it possible.

I have just recently extended the voting in East Jerusalem for another two hours to allow all those who wanted to take part to participate in these elections, and we have pulled out our military presence in the territories to allow this process to go as smooth as possible.

We wouldn't do more, we were not supposed to do more at this point, because no one wanted to create any impression that Abu Abbas is corroborating with Israel, because that may not necessarily help him in the elections. Now, we are prepared...

(CROSSTALK)

BLITZER: Excuse me for a second. You mean Abu Mazen? You mean Abu Mazen?

OLMERT: Yes, Abu Mazen, Mahmoud Abbas. Yes. This is his name, Mahmoud Abbas. Abu Mazen is his nickname.

Now, right after the elections, we are prepared to make all the necessary adjustments, pending on one thing: Will the Palestinians start to fight against the violent terrorist organizations? This is the key question, everyone understands it.

So we will do everything to help the new president in this challenge, but it has to be his, first and foremost his. If he will be determined, if he will be absolutely committed to this, then it can open up for all kinds of arrangements and coordinations between us and the Palestinians toward a disengagement.

BLITZER: We heard the Palestinian cabinet minister on this show make a suggestion that President Bush shortly invite Mahmoud Abbas and Ariel Sharon to the White House to start this process, to try to revive negotiations. Is that a good idea? OLMERT: I think we shouldn't be impatient.

It's dangerous, because it may create inflated expectations that will not come true.

I think what Abu Mazen has to do first is to show, to prove, that he is determined to fight terror.

This is the main thing, because terror was the obstacle for everything that we tried to do in the last couple years, and I think it has failed the former effort that President Bush did two years ago when in Aqqaba (ph) when Abu Mazen was then elected Prime Minister of the Palestinian Authority.

So, I think we have to take it step by step in a very careful way: First, starting the war against terror by the Palestinian Authority. If that succeeds, it will open up for a coordination between us and then on the actual implementation of the disengagement, which is the main item on the international agenda, on the Middle East agenda. That is what we are trying to do.

BLITZER: The fact that Prime Minister Sharon is about to bring the Labor Party, which had been in the opposition, into a new, so- called national unity government, what does that say about Israel's direction in trying to work out a peace deal with the Palestinians?

OLMERT: Well, first of all, there is a commitment by Sharon, which has, I think, now been the main policy move in the last period in the Middle East. It was initiated by Sharon, and he's absolutely committed to carry on.

The inclusion of the Labor party in the new coalition, I think, gives additional proof to the commitment that Sharon has to push this in the right direction. The Labor Party would be a good partner, I believe, in the implementation process of the disengagement.

This is a very painful and very difficult process to be carried out in the state of Israel. You, I'm sure, heard about the divisions, about the disobedience among certain circles in the Israeli public about the stronger position of the settlers.

And we want to carry out, with the participation of the Labor Party in the government, we will have a stronger government and, I think, more unified government in approaching the disengagement.

BLITZER: Ehud Olmert, the vice prime minister of Israel, I'll say to you and I said to Nabil Sha'ath, good luck to all the Israelis, all the Palestinians at this historic moment.

OLMERT: Thank you.

BLITZER: We'll take another quick break. Up next, the results of our web question of the week. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Here are the results of our web question of the week. Take a look at this. Remember, though, it's not a scientific poll.

That's it for this "LATE EDITION." I'm Wolf Blitzer in Washington. Thanks very much for joining us.

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