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Lou Dobbs Tonight

More Explosions in Iraq as Key Insurgent Captured; Secret Intelligence Branch of Pentagon Revealed; State Department Increases Efforts to Catch bin Laden

Aired January 24, 2005 - 18:00   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.


(BEGIN VIDEOTAPE)
KITTY PILGRIM, HOST (voice-over): Tonight, bombs and ballots. Insurgents target the Iraqi prime minister's headquarters. Iraq says it's captured a top radical Islamist. Will terrorists stop the Iraqi elections?

BRIG. GEN. ERV LESSEL, DEPUTY OPERATIONS DIRECTOR, MULTINATIONAL FORCES: The Iraqis will not be deterred by this violence.

PILGRIM: Red star rising: a top U.S. company is exporting more than a billion dollars worth of intellectual property and technology to China. Tonight, why the deal could threaten our national security.

Broken borders. The federal government is failing to secure our borders. And now some state lawmakers are fighting back against the invasion of illegal aliens.

UNIDENTIFIED MALE: They know that to be poor in America is a lot better than being poor someplace else.

PILGRIM: And United States of Europe? Donald Rumsfeld, take note. Why old Europe could threaten America's global supremacy. That's the view of the author of a provocative new book. He's my guest tonight.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, January 24. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight the Iraqi government says it has captured a top lieutenant of al Qaeda's leader in Iraq. The arrest comes as American and Iraqi troops step up their offensive against insurgents. Elections are less than a week away.

The Iraqi government announced the arrest just after a suicide bomber detonated a huge car bomb in Baghdad. The target was the Iraqi prime minister's political headquarters.

(BEGIN VIDEOTAPE) PILGRIM (voice-over): Twelve people were wounded in today's car bombing. The blast struck a security checkpoint near the Iraqi national accords office in central Baghdad. Ten policemen were among the wounded. U.S. military officials expect the violence to escalate.

LESSEL: Just in the past few days, there's been a 50 percent decrease in the number of attacks by these insurgents. We think it's a calm before the storm, that they're unable to sustain the level of attacks that they've had, but they're saving up for something more spectacular in the days preceding elections and on election day.

PILGRIM: The al Qaeda leader in Iraq, Abu Musab al-Zarqawi, claimed responsibility for today's attack.

Shortly afterwards, the Iraqi government announced the capture of one of Zarqawi's senior aids. Abu Omar al-Kurdi is blamed for over 30 car bombings, including the attack on the U.N.'s headquarters in Iraq in August 2003.

With the Iraqi election less than a week away, officials expect as many as 14 million people to vote.

JOHN NEGROPONTE, U.S. AMBASSADOR TO IRAQ: No effort is being spared to provide the kind of security conditions that will enable as many people as possible in those areas to vote. This includes extraordinary security measures.

Pilgrim: Despite the increased security, polling stations are still a prime target of the insurgents. This school was attacked by mortar fire. There were no casualties. One student's father came to survey the damage.

UNIDENTIFIED MALE: This school is an election center, and the damage after this coward work, that we will have the election at the end of this month (ph).

(END VIDEOTAPE)

PILGRIM: Today the Army announced it had plans to keep as many as 120,000 soldier in Iraq for the next two years. The troops will train Iraqi forces and help them fight against insurgents.

Well, in Iraq tonight, the Pentagon is running a secret intelligence operation that's independent of the CIA. Defense officials say the intelligence unit is working with Special Forces on anti-terrorism operations around the world. The Pentagon denies the unit is operating outside the law or in competition with the CIA.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN CORRESPONDENT: Before U.S. Special Forces went into Afghanistan in October of 2001, they had to wait for the CIA to scope out the situation, prompting Defense Secretary Donald Rumsfeld to fire off an urgent memo to joint chiefs chairman Richard Myers.

As reported Sunday by the "Washington Post," Rumsfeld's memo asked if "the Defense Department is lacking a capability we need. Maybe," Rumsfeld ruminated. The Pentagon ought not to be in a position of near total dependence on the CIA."

The result, a senior Pentagon official confirms, was a plan implemented over the past two years to beef up the Defense Intelligence Agency's so-called human intelligence unit, now renamed the strategic support branch. The idea is for the Pentagon to have its own spies who can operate alongside U.S. commandos such as Delta Force or Navy SEALs, on clandestine operations.

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: What you do is you take as much intelligence as you can, piece it together to give you the best read of the battlefield before you send people into harm's way. This is very prudent.

MCINTYRE: The Pentagon strongly denies the most controversial aspects of the "Washington Post" report, insisting that Defense Secretary Donald Rumsfeld is not in a turf battle with the CIA, nor bending the rules, nor hiding the newly expanded unit from Congress.

Pentagon spokesman Larry DiRita issued a statement saying, "There is no unit that is directly reportable to the secretary of defense for clandestine operations." And insisting the "actions are being taken within existing statutory authorities." And that the Pentagon "remains in regular consultation with the relevant committee in Congress and with other agencies, including the CIA."

But many members of Congress, including some on the intelligence committees, seem taken by surprise.

SEN. CHUCK HAGEL (R-NE), INTELLIGENCE COMMITTEE: Certainly, the intelligence committee will be asking about that and looking at it. The concern I always have in these matters, as well as others, when it comes to power and government: too much power concentrated in too few hands.

(END VIDEOTAPE)

MCINTYRE: At this hour, Kitty several top Pentagon officials, including the undersecretary defense for intelligence have been dispatched to Capitol Hill to clear up what they say is a misunderstanding. They're making the case that the Pentagon is not asking for any expanded role or to do anything it hasn't done in the past, only to do the kind of human intelligence it's always done in a better, more organized fashion -- Kitty.

PILGRIM: Thanks very much, Jamie McIntyre.

Later in the broadcast, I'll be talking about the Pentagon's so- called spies as one of these country's most respected national security experts, Frank Gaffney.

Well, one of the key targets for U.S. spies and special operations troops is al Qaeda's leader, Osama bin Laden. Well, tonight there's word the U.S. government is considering a huge increase in the bounty for bin Laden's capture.

State Department correspondent Andrea Koppel reports.

(BEGIN VIDEOTAPE)

ANDREA KOPPEL, CNN CORRESPONDENT (voice-over): In an effort to heat up a trail that's gone cold, the State Department is considering doubling the bounty on Osama bin Laden from $25 million to $50 million.

In addition, the State Department says a new ad began appearing this month in one of Pakistan's most widely read newspapers and will eventually expand to radio and TV. It targets Pakistanis in border areas, where bin Laden and some of his top operatives, including his deputy, Ayman al-Zawahiri and Taliban leader Mullah Omar, may be hiding, reminding Pakistanis they could make up to $25 million for tips leading to an arrest or conviction.

JOHN ASHCROFT, ATTORNEY GENERAL: Since the September 11 attacks...

KOPPEL: Since the so-called Rewards for Justice program launched its post-9/11 most wanted list, it's had limited success. One of the biggest al Qaeda arrests occurred in March 2003, when Khalid Shaikh Mohammed, a bin Laden deputy, and one of the masterminds of 9/11, was captured alive in Pakistan.

While in July 2003, the U.S. paid a $30 million reward to an Iraqi informant after Saddam Hussein's two sons died in a shootout with American forces.

The State Department defended its record.

ADAM ERELI, STATE DEPARTMENT SPOKESPERSON: How should I put it? The tread line is clearly -- is clearly in our favor, if you consider the fact that most of the al Qaeda leaders are either dead or in jail.

KOPPEL: But critics say the State Department's expectation that tribal based societies like Pakistan and Afghanistan will turn over bin Laden or other top al Qaeda operatives if, in fact, they are there, is misguided.

WALTER PATRICK LANG, FORMER MIDEAST INTELLIGENCE SPECIALIST: The idea of calling the equivalent of an 800 number or something in order to turn somebody in is about as alien to that kind of tribal society as I can imagine.

(END VIDEOTAPE)

KOPPEL: The philosophy behind the latest media blitz, to make sure Pakistanis know how to contact U.S. authorities to collect their reward. As for doubling the $25 million bounty on bin Laden, the State Department says that's a decision for Secretary of State designate Condoleezza Rice -- Kitty. PILGRIM: Thanks very much, Andrea Koppel.

The global war on terror was one of the key issues in a top-level meeting today between the United States and Britain. Secretary of state designate Condoleezza Rice met British Foreign Secretary Jack Straw at the White House. The meeting comes at a critical time in relations between the United States and Europe.

White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN CORRESPONDENT: Well, Kitty, a critical time for the U.S. and Europe indeed. But also a critical time for British Prime Minister Tony Blair, the president's top ally in Europe, who, of course, faces elections in just a few months, where Iraq will be a critical part of his success there.

And Iraq, of course, did dominate the meeting here at the White House today between British Foreign Secretary Jack Straw and Condoleezza Rice, who is all but certain to be his counterpart at the State Department in -- probably by the end of the week.

Now, administration sources say they talked about what will come next after the elections in six days. Also talked about the Mideast and getting the U.S. more involved in the peace process there. That is something that Great Britain pushes this administration on quite frequently.

One other thing they talked about was a move afoot at the European Union to lift an arms embargo against China. The U.S., this White House, is very much opposed to that. Jack Straw has said it might happen as soon as this summer. Condoleezza Rice, we're told, pressed him to make that not happen.

And this is noteworthy because it comes as many are questioning whether the U.S. position on relations with China could change after the president's inaugural address where he called for an end to tyranny, and, of course, the White House since then has been trying to say it was not a shift in policy at all.

And even the president's father got into the mix.

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: I haven't read what they are reading into it, but they certainly ought to not read into it any arrogance on the part of the United States. They ought to see that here's a president who wants to deal with them and has wanted to deal with them.

(END VIDEO CLIP)

BASH: And that, of course, was the 41st president, surprising reporters here at the White House in the briefing room where he was giving a tour to a Boston Red Sox owner.

But the point, Kitty, is that the White House is still trying to explain, clarify that the U.S. -- the position is that the president supports, of course, freedom around the world, but his inaugural address was not meant to signal any change in policy -- Kitty.

PILGRIM: All right. Thank you very much.

Dana Bash.

Well, still to come, the battle over abortion. Democrats try to define their position on one of the most divisive issues in this country.

And "Deadly Storm." Much of the Northeast is still digging out, and we'll tell you when the next snowstorm is likely to strike the region.

(COMMERCIAL BREAK)

PILGRIM: Today marks the 32nd anniversary of Roe v. Wade, the landmark Supreme Court decision that legalized abortion. Now the ruling remains one of the most contentious issues in America today. The abortion debate has now spread to the top ranks of the Democratic Party.

Congressional Correspondent Ed Henry reports.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): With opponents of abortion rights marching on Washington, President Bush was eager to send a clear signal to a voting block pivotal to his reelection.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I appreciate so very much your work toward building a culture of life.

HENRY: Democratic leaders were not quite as sure footed when asked what message they wanted to send to the protesters.

SEN. HARRY REID (D), MINORITY LEADER: The way we feel about this is that we think that abortion should be rare, that we feel that anything that we can do to prevent unwanted pregnancies -- it's a step ahead.

HENRY: Mindful that some in rural America believe the party is out of the mainstream on abortion, Democrats are struggling to recast their approach to the hot-button issue. That task could be complicated by the fact that Harry Reid opposes abortion rights, which puts him at odds with the vast majority of his party.

But liberal activists and senators insist Reid's rise to power helps. It shows the party has a big tent.

RALPH NEAS, PEOPLE FOR THE AMERICAN WAY: We have respect for his personal feelings and know that he does not allow his personal feelings to interfere with his responsibilities as party leader. SEN. DICK DURBIN (D), ILLINOIS; The fact that Harry Reid, who has a pro-life position, is our leader in the Senate says that there is no litmus test in the Democratic Party.

HENRY: That notion has been challenged by Tim Roehmer, a candidate for chairman of the Democratic National Committee. He's angrily accused other candidates of using his opposition to abortion rights against him.

And there is still deep division among Catholic Democrats. The American Life League is now running an ad urging local bishops to enforce canon law and deny Holy Communion to 72 House and Senate Democrats who support abortion rights.

JUDIE BROWN, AMERICAN LIFE LEAGUE: Until such time as they have publicly sought forgiveness for their support of abortion, they should not be receiving Holy Communion.

(END VIDEOTAPE)

HENRY: Democrats are now trying to shift the debate by promoting adoption as an alternative to abortion. They're also pushing several bills, including increased health coverage for pregnant women and new money to cut teen pregnancies -- Kitty.

PILGRIM: All right. Thank you very much.

Ed Henry.

Well, abortion is just one of the many critically important issues on Capitol Hill, and Senate Democrats have laid out a very different list of priorities than Republicans have on many critical issues.

Joe Johns reports.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): There are high hopes for getting something done in the Senate this year.

SEN. BILL FRIST (R), MAJORITY LEADER: I hope that we continue and we will continue to reflect our desire, our willingness to work together. It's what I think -- I know the American people want.

JOHNS: But judging from their top priorities announced Monday, Republicans and Democrats start out miles apart as the new Congress gets down to work this week. Putting the hardest job first, Republicans placed revamping Social Security at the top of the list.

SEN. RICK SANTORUM (R), PENNSYLVANIA; I'm hopeful -- in fact, optimistic -- that we'll have some brave souls on the other side join some brave souls on this side and take on a task that we know is before us and have the courage to do it the right way.

JOHNS: But Democrats fail to see the urgency and didn't even make this presidential priority one of their goals.

REID: We have said that if he wants to do something to help in the out-years -- and Senator Durbin outlined that -- we'll be happy to take a look at that. But this isn't a crisis. So why should we be lurching forward?

JOHNS: Besides Social Security reform, Republicans are looking to make the tax cuts from the president's first term permanent, and they're proposing a slew of health, safety and security measures.

Democrats are renewing the call to increase the number of Army troops and Marines by 40,000. They want to increase education funding. And like Republicans, they're calling for new measures to make health care more affordable.

But there's already disagreement on the focus. Still, items not on either party's priority list could dominate, including judicial nominations.

REID: The president should every day hope that he gets the same cooperation from us he got last time.

JOHNS: And conservatives will keep pushing social and cultural issues like abortion and the gay marriage amendment.

(on camera): On the other hand, an early piece of legislation expected on the Senate floor is class action reform. Even Democrats expect it to pass the Senate as long as it goes through the regular committee process, a chance for a bipartisan kickoff to the legislative calendar.

Joe Johns, CNN, Capitol Hill.

(END VIDEOTAPE)

PILGRIM: Well, don't be surprised today if you hear the line "Sounds like someone has a case of the Mondays."

Well, it turns out today, January 24, is not only the worst Monday of the year, but the worst day of the year. That's according to one British psychologist, who has mathematically calculated when misery peaks, and his formula accounts for things like weather, debt, salary, low motivational levels and the need to take action.

Well, that formula was designed to help travel agents analyze vacation trends because most people book a tropical getaway when they really need to get away.

Still to come, millions of people in the Northeast dig out from a massive snowstorm in frigid temperatures.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: This is New England. Stay out for as long as you can, go in, get warm, come back out again.

(END VIDEO CLIP)

PILGRIM: Next, we'll tell you when forecasters say the next storm will hit.

And then "60 Years Late." How the United Nations is finally talking about the Holocaust.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: At least 16 people were killed in a massive snowstorm that struck the Northeast this weekend, and now forecasters say another storm could hit this week.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Millions of Americans are still digging out after a winter storm dumped up to three feet of snow in parts of the Northeast. Thousands are still without power on Cape Cod and southeastern Massachusetts.

Hurricane-force winds hampered clean-up efforts with high drifts and white-out conditions, and, with snow this deep, you want more than just a shovel. Good news if you sell snow blowers.

Boston's Logan Airport lost power just hours after it had resumed operations. Thousands of flights up and down the East Coast were canceled over the weekend.

In New York City, a family deals with a deadly tragedy. A snow plow struck and killed a 10-year-old girl playing in a snow bank.

In Massachusetts, the governor has declared a state of emergency and advised people to stay home.

Some are managing to enjoy the weather.

UNIDENTIFIED FEMALE: This is New England. Stay out for as long as you can, go in, get warm, come back out again.

PILGRIM: From Maine to Virginia, many schools were closed, giving kids a chance for some winter fun.

The cold front has reached as far south as Florida, hitting residents and crops with freezing temperatures.

And it may not be over yet. Forecasters expecting more snow to hit the Northeast by Wednesday.

(END VIDEOTAPE)

PILGRIM: Well, fortunately, the new snow is expected to come in inches, not feet.

A dangerously close call on a busy stretch of highway in Alabama this morning. A pilot and two passengers in a hot air balloon were lucky to walk away after they were forced to make an emergency landing on Interstate 65 in Birmingham. The pilot told police high winds blew the balloon off course.

"Secret Spies." Why the Pentagon is running its own clandestine intelligence operation separate from the CIA. A leading national security expert will join us.

And remembering the legendary Johnny Carson.

(BEGIN VIDEO CLIP)

JOHNNY CARSON, LATE-NIGHT TELEVISION SHOW HOST: I bid you a very heartfelt good night.

(END VIDEO CLIP)

PILGRIM: We'll be right back.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: In a moment, I'll talk with a former top defense official about the Pentagon's secret spies.

But, first, these stories.

Attorney General John Ashcroft today said good-bye to the Justice Department. Ashcroft praised his staff for their work after the September 11 attacks. President Bush nominated White House Counsel Alberto Gonzales to replace Ashcroft.

Whether it's paper or plastic, shoppers in San Francisco may soon be paying for their grocery bags. The city's commission on the environment is expected to recommend a charge of 17 cents a bag. Environmentalists say the goal is to eliminate waste, not to make people pay more for groceries.

The Supreme Court today rejected an appeal from Florida Governor Jeb Bush to intervene in the battle over a comatose woman. The parents and husband of Terri Schiavo are fighting over whether to keep her on life support. She suffered brain damage from an eating disorder 15 years ago.

The United Nations today is marking the 60th anniversary of the liberation of Nazi concentration camps. This is the first time the U.N.'s General Assembly has ever held a session on the Holocaust. The Nazis killed six million Jews and millions of other people.

Senior United Nations Correspondent Richard Roth reports.

(BEGIN VIDEOTAPE)

RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT (voice-over): It's the 60th anniversary of the beginning of the liberation of the Nazi death camps, but the world organization founded because of World War II had never commemorated the moment.

DAN GILLERMAN, ISRAELI AMBASSADOR TO U.N.: I think that maybe we are at the point in history where the changes in the world are reflected also at the United Nations.

ROTH: U.N. members stood to remember, but a considerable number of countries did not attend. Israelis and Jewish supporters charge a majority of U.N. countries exhibit bias against Israel. Thirty years ago in the same assembly call, a resolution was passed stating Zionism was racism.

MAX LIEBMANN, HOLOCAUST SURVIVOR: Finally, it was time that -- because, after all, when you listen to some of these meetings at the United Nations, all they are doing is provocating anti-Semitism.

ROTH: Auschwitz survivor Elie Wiesel got the opportunity to speak directly to countries which could have acted.

ELIE WIESEL, AUSCHWITZ SURVIVOR: Had the allies bombed the railway lines leading to Birkenau in the time when the Hungarians Jews were there, killed 10,000 a day, our tragedy might have been avoided and its scope surely diminished.

ROTH: The U.N. leader noted acts of horrible inhumanity are occurring these days, too, including Darfur, Sudan.

KOFI ANNAN, U.N. SECRETARY GENERAL: It is easy to see that something must be done, to say exactly what, when and how and to do it is much more difficult.

ROTH: In the audience, Josephine Prins, who was transported by the Nazis to another camp before the Russian army could liberate Auschwitz. She came to the U.N. with her concentration camp number, a memory on her arm. She thinks the U.N. should do more to live up to its original goals. As for this Holocaust remembrance...

JOSEPHINE PRINS, AUSCHWITZ SURVIVOR: It is too little much too late because we are all dead.

(END VIDEOTAPE)

ROTH: Other survivors such as Ellie Vizel (ph) said, despite everybody saying never again, U.N. member countries have watched genocide and crimes against humanity in Bosnia, Cambodia, Rwanda, and now Darfur in Sudan -- Kitty.

PILGRIM: Thanks very much, Richard Roth.

Well, 60 years after the liberation of the Nazi concentration camps, my next guest says Europe is emerging as the world's next superpower. T.R. Reid has written a new book. It's called "The United States of Europe, The New Superpower and the End of American Supremacy." He is the Rocky Mountain bureau chief for the "Washington Post" and he joins me tonight from Denver. Thanks for joining us tonight.

T. R. REID, "THE UNITED STATES OF EUROPE": Hi, Kitty. I love this show.

PILGRIM: Thank you. I have to ask you. You borrowed a term from Churchill, the United States of Europe. What do you mean by that?

REID: What happened is after World War II the nations of Europe were afraid they'd have another brutal war on the continent. Churchill said, we need a new model. We've got to re-organize our ancient continent, and he looked at America. He said, we have to build a sort of United States of Europe. They've done it. 25 countries there have ceded powers to a central government in Brussels and Europe today looks a lot like the United States. Last fall I drove from the Arctic Circle to the Mediterranean. I went through eight countries, never saw a border guard, never changed currency. It's like driving from Maryland to North Carolina.

PILGRIM: Given the history of that continent, that's something to be celebrated. Yet why does it have to mean it's the end of American supremacy? Why not have two superpowers?

REID: I agree with that. I think they do want to be the second superpower. The term that sort of academics in Europe use is the counterweight. They want to be the counterweight to American political and financial power around the world. Their argument is this unipolar, one superpower world is unstable. So they're going to be number two.

PILGRIM: I notice you mention political and economic, and yet the defense burden is still on the United States. Can a group of countries be a superpower without picking up their own defense tab?

REID: Terrific question. That's their big gamble. They're gambling that they can be a superpower in the 21st century without military power. And you know what? Right now, they're pulling it off because they have a sugar daddy in the world, Kitty, and that's you and me. American taxpayers, we're paying 70 percent of the cost of NATO. We have 100,000 American troops based in Europe. It's a sweet deal for them. They don't have to spend money on the military because we're doing it for them. So they can pour money into this lavish welfare state of theirs.

PILGRIM: Today we see Condoleezza Rice meeting with Jack Straw at the White House, presumably talking about transatlantic relations, also lifting the embargo on Chinese arms sales, which Britain is -- there are considerable things that are still -- that the United States and Europe are still at odds over. The issues have not gone away, have they?

REID: Yes. And I think this decision of theirs that they're now going to sell guns to China, or weapons to China, which we're totally against, demonstrates this counterweight notion. America can say anything it wants. Europe now has more people than we do. It has more GDP, more trade, it gives away more foreign aid. They feel they can stand up to us and say no, and that's exactly what they're doing on China, including Tony Blair's Britain.

PILGRIM: Is it not necessary, however, that we cooperate in the war on global terror?

REID: I think we have to. I completely agree with that. And the Europeans have done a pretty good job of tracking down al Qaeda members. More al Qaeda members have been tried and jailed in Europe than in the United States. And that's what Blair said. Tony Blair went to see George W. Bush right after Bush was reelected, and I think he's kind of pushing him. He said, you've got to get to Europe and make amends. Sure enough, George Bush is going to Brussels on February 21.

PILGRIM: Mr. Blair faces an election. Will that change the balance as Britain as one of our allies?

REID: No. Blair is going to win. Mark it here. I said it first. Blair is definitely going to win. But he has more trouble than he would otherwise because, you know, they call him Bush's poodle. They think he's too much a tool of Bush. So he too, like the other European leaders, needs to stand up to America. I think that's a large part of the dynamic here in creating the second superpower, so that they can say to their voters, I said no to the White House.

PILGRIM: Let me push you a bit on the economic power too, as Europe expands and the EU expands with some poorer countries joining the ranks. Will they be able to be as much of an economic superpower, or will not those countries be a drag on the engine, the economic engine of Europe?

REID: At first they're a drag. But that's what people said when Ireland and Greece, very poor countries and Portugal joined the EU. Those countries now have terrific growth rates. Their engine is helping to push the EU.

So, yes, I think it's going to be a struggle at first, but over time, having that huge market, the EU with 25 countries is now the biggest single market in the world, I think that's a plus for them over time.

PILGRIM: One of the things you talk about is the moral passion of Europe, and yet it seems to many in this country that the moral passion of Europe in the last year or so has been just to be against the United States. What is the true moral passion of Europe?

REID: Well, I talked about this welfare state. You know, in Europe, university education is free. The doctor comes to your house. You never see a bill. They pay 80 percent of your salary when you retire. If you have a baby, the government will pay you for a year to stay home and raise the child. They call that the European social model. I think model is an important term. They think they have figured out correctly the relationship between government and the people, which is government ought to be there, tax the rich and be there to help people who are in trouble. And they want to expand that model to the rest of the world. They call us cold and aloof and uncaring. And I think that's the passion driving them. And then the other passion, frankly, is to be the non-America. To be the non- military political economic force in the world. That's what they want to do.

PILGRIM: That certainly seems very apparent. It's a great read, very fascinating premise. T.R. Reid, author of "The United States of Europe." Thank you for being with us.

REID: Thank you, Kitty. It was delightful.

PILGRIM: Today marks the beginning of no name-calling week in thousands of schools across the country. Thousands of schools are taking part in the second annual event, organized by the Gay, Lesbian, and Straight Education Network. This group says the week aims to stop name calling of all kinds. The event is based on the novel "The Misfits." It's about four middle schoolers who run for student council on a no name calling platform.

The country is mourning the loss of a true legend tonight. Johnny Carson died yesterday at the age of 79. Carson was, of course, the host of NBC's "Tonight Show" for 30 years. His outrageous comedy skits and quick wit made him part of daily life for millions of American families. Carson died of emphysema at his Malibu, California home. For much more on the life and legacy of Johnny Carson, watch his long-time friend and colleague Ed McMahon tonight on "LARRY KING LIVE," 9:00 p.m. Eastern.

Still to come, cracking down on illegal aliens. How the state where most illegal aliens crossed into this country is fighting back. That's next.

And then why the government says it might have to stop running a survey that successfully tracks illegal alien in this country. We'll tell you about it. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The state of Arizona is the hardest hit by the invasion of illegal aliens into this country. And now one state lawmaker is leading the effort to fight back. Casey Wian reports from Phoenix, Arizona.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): As an Arizona deputy sheriff for nearly a quarter century, Russell Pearce has been shot while arresting gang members and won a Medal of Valor. Now he's a state lawmaker, leading a crackdown on what he calls an invasion of illegal aliens.

RUSSELL PEARCE, ARIZONA STATE HOUSE: Not all of them come here for a job. You have a bloated welfare system. They know that to be poor in America is a lot better than being poor someplace else. And this system can't sustain that. Just can't sustain what's going on, the violent crimes, the homicides, the drug trafficking, the home invasions, the carjackings. I mean, Americans had about all they're going to take, I suspect. WIAN: Pearce is sponsoring 11 bills to either restrict state benefits for illegal aliens or toughen sanctions against those who violate immigration laws. They include denying illegal aliens free tuition at state colleges, denying bail to criminal illegal aliens, granting local law enforcement the power to arrest immigration outlaws, and revoking the business license of those who employ illegal aliens.

In November, Arizona voters approved Proposition 200, which restricts illegal alien welfare benefits. That, political analysts say, means the latest bills are more likely to pass.

DAVID BERMAN, ASU PUBLIC POLICY INSTITUTE: A keen politician realizes that people are venting their frustrations over a problem, and that you better just listen to them, and you might go along with them because the people have spoken.

WIAN: The most controversial proposal would make English Arizona's official language and prevents state signs and documents from being printed in another tongue.

ALFREDO GUTIERREZ, CO-CHAIR, NO ON PROP 200: We're not talking about border policy. We're talking about post-border policy. We're talking about focusing on the Hispanic community as a whole.

PEARCE: Those folks that are fighting this are the same folks that believe in open borders, don't want assimilation, don't want the laws enforced, absolutely have no respect for America, or our culture, or our language, or our laws.

WIAN (on camera): Supporters of Arizona's proposed anti-illegal alien law say nearly all of them would be unnecessary if the federal government did its job, securing the nation's borders and enforcing laws already on the books.

Casey Wian, CNN, Phoenix.

(END VIDEOTAPE)

PILGRIM: One of the most successful border protection programs will be suspended as of January 30th, and that's the busiest time of year for illegal border crossings. A federal contract for unmanned aerial vehicles that patrol the Arizona-Mexico border will expire, and as of now, there are no replacement programs confirmed. Officials say the program is being suspended to evaluate its effectiveness. In the first six months of the program, unmanned aerial vehicles helped catch over 1,200 illegal aliens, and they also helped track down nearly 3,000 pounds of marijuana.

Another successful program is also about to be suspended. The Department of Labor is threatening to end funding for the only survey which tracks the migrant worker population in this country. More than half of those workers are illegal aliens. Bill Tucker reports.

(BEGIN VIDEOTAPE) BILL TUCKER, CNN CORRESPONDENT (voice-over): The typical farm worker is a 31-year-old male, Hispanic, most likely married with a child and earning less than $12,000 a year from farm work. Just over half of all farm workers are also here illegally. Nearly 80 percent of the workers are from Mexico, very few of whom speak or read English.

We know all of this for only one reason. The National Agricultural Workers Survey, or NAWS.

GREGORY SCHELL, FLORIDA LEGAL SERVICES: This is the only set of data that provides us with a rich demographic view of who the immigrants are, and it gives us a basis to make some informed decisions with respect to immigration. Everything else is anecdotal.

TUCKER: The survey is also the basis on which roughly a billion dollars in education, health and social aid program money is distributed. So why would we stop collecting such useful information? Budget. The Department of Labor says it cannot afford to continue funding this survey, which cost it about $2 million a year. To that end, the department is talking with other agencies about taking over responsibility for the survey.

VERONICA STIVDENT, DEPARTMENT OF LABOR: We plan to continue our discussions with agencies to find the best home for the NAWS survey and to make sure that we continue the NAWS survey in the best way possible, to maximize its utility to its users.

TUCKER: But as of yet, no other agency has agreed to take on the responsibility.

(END VIDEOTAPE)

TUCKER: Now, this survey is the only one of its type. It's ironic that its future would seem in doubt just at a time when we are beginning a national debate on the immigration reform and policy, Kitty.

PILGRIM: Bill, who's in favor of discontinuing this, and why?

TUCKER: Well, ironically, nobody is in favor of discontinuing it. People on both sides of the immigration issue say we need this study because it gives us a factual basis on which to base future policy and decisions. So you can go to the either side of the immigration debate, and you'll find fierce defenders, people saying we cannot quit doing this.

The Department of Labor, in its defense, its discretionary spending is at a premium. We can't afford it. Somebody else needs to pick up the tab. Cut of the budget.

PILGRIM: Very clear. Thanks for bringing it to us. Bill Tucker.

Well, today the Department of Homeland Security undersecretary for borders and transportation announced that he will step down. Asa Hutchinson submitted his letter of resignation to the president a short time ago. This resignation is effective March 1st. Hutchinson says -- said he's disappointed he was not selected as homeland security secretary after Tom Ridge resigned. Hutchinson has not said what he plans to do next.

Coming up, spies like us. The Pentagon is running a secret intelligence operation that is independent of the CIA, and I'll be joined by one of the country's most respected national security experts, Frank Gaffney.

And "Red Star Rising." A $1 billion technology deal with China that could put our national security at risk.

(COMMERCIAL BREAK)

PILGRIM: Returning now to one of our top stories. The Pentagon has confirmed it's been operating a secret intelligence gathering unit for the last two years. The Defense Department says the unit is not in competition with the CIA. And joining me now is the former assistant defense secretary under President Reagan. Frank Gaffney is the founder and president of the Center for Security Policy, and he joins me from Washington.

And Frank, thanks very much for joining us to give us some insight into this.

The DOD did have a human intelligence unit, the Defense Intelligence Agency. This is different, isn't it?

FRANK GAFFNEY, FORMER ASSISTANT DEFENSE SECRETARY: No, I don't think so. I think that this is a tailoring of certain skills that are needed to support the special operations forces. But I really must tell you, Kitty, I think this is much ado about not very much. When you look at the kinds of operations these guys are performing, many of them in very difficult circumstances, to have those sorts of tailored human intelligence skills available to them on a regular and intimate basis is, I think, just common sense. And -- far from this being a hit on Don Rumsfeld, I think it's a credit to him that he understood this problem, recognized it, asked people to begin addressing it long before the 9/11 Commission came along and said, you know, we need a lot more human intelligence capabilities.

PILGRIM: This was almost instantly decried as a play for dominance by Donald Rumsfeld. You don't see it as that, do you?

GAFFNEY: Well, what I see this as is really part of a succession of efforts to take down Don Rumsfeld. For the life of me, I can't figure this out. People think that the war against the terrorists were confronting and the Islamic fascists that are enabling what they're doing and the states that are sponsoring them is going to go better without the most competent secretary of defense in my lifetime? I don't think so. And I don't understand why this sort of death of a thousand cuts that continuously is played out portraying leaked memos and stories like this in the worst possible light to inflame the Hill, to inflame the media isn't seen as really just a series of hit and run attacks against Don Rumsfeld that I hope will not succeed. PILGRIM: There is great discussion over this not being under Congressional oversight.

Do you think that's an issue, or is this a false issue?

GAFFNEY: Again, I think this is simply wrong. When Bart Gellman wrote this piece in the "Washington Post" on Sunday, which stirred this latest brewhaha up, it was briefed or presented to members of the Intelligence Committee, members of the Armed Services Committee, and they didn't recognize it. It's not because they hadn't been briefed about the program. It's just this didn't bear any resemblance to what the program really is. It's a tailored human intelligence support activity that has, I believe, gotten the appropriate oversight and enjoys the proper support because it makes sense. It's what our troops need.

PILGRIM: Some experts I've been speaking to say this does make sense because the defense guys are in the field and they're actually able to gather intelligence as they do their normal course of work. Does this not make sense to you? And then carry that information back and coordinate it with CIA operatives.

Is this the way ideally it should work?

GAFFNEY: Absolutely. Look, we don't have an excess of human assets collecting intelligence. And you're absolutely right, military personnel who are being inserted into some of these back waters around the world, where Islamists and others are operating are in a unique position to collect intelligence. And, yes, as that intelligence is collected and brought back for analysis, I'm confident -- and I understand that Porter Goss has said as much even just today, believes that this kind of additional capability, far from being competitive with the CIA in an unhealthy way, is an augmentation of the CIA's activities. And competition in exactly the way we would want intelligence to be performed.

PILGRIM: Much of the reform of the Intelligence Agency has been to coordinate between different units. This might be a step in the right direction, or do you see this as fractionalizing the efforts more.

GAFFNEY: Well, Kitty, I'm not a huge fan of this idea that we need to consolidate all intelligence. That was the -- basically the lowest common denominator that came out of this defense, or intelligence reform bill last year. In reality, we need more competition in terms of collection of information and moving it up the tape so that people can take advantage of the best data that's out there. And I think this can be very much a contributor to solving the kinds of problems we've clearly got. Not only at the tactical level where the troops are, but at the theater and even at the strategic level, where we all need to have these answers available to us.

PILGRIM: Frank, while I have you, slight shift of topic. We have Condoleezza Rice meeting today with Jack Straw. Transatlantic cooperation is critical in the global fight on terror. And in fact, we've turned up a few terror cells in Germany and in London just recently. How -- what is your assessment on how we're doing with that?

GAFFNEY: Well, look, the Europeans have a serious problem of their own in this regard. They have every incentive to cooperate with us because these are people who are promising to, you know, detonate dirty bombs or chemical weapons and the like in Europe. I'm encouraged about the cooperation there. I'm discouraged about the idea that these guys are actually doing something useful in Iran, where I think they're simply propping up a dangerous regime and giving it time to build nuclear weapons. I'm very concerned about something I gather they also talked about, which is the Europeans' decision to arm communist China in ways that may wind up being used against American forces if we have to defend Taiwan. This is not an unalloyed success story, I'm afraid, of transatlantic cooperation. We need more of it.

PILGRIM: All right. Thanks very much for being with us tonight, Frank Gaffney of the Center for Security Policy. Thank you, Frank.

Well, another possible security concern tonight is IBM's deal to sell its PC unit to China's Lenovo for more than a billion dollars. That deal has been approved by federal antitrust officials, but now U.S. regulators must decide whether the move could endanger our national security.

Christine Romans has the report.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): A deal like this was bound to kick up dust in Washington. A $1 billion plus sale of intellectual property and technology to China, an unprecedented transfer to the Chinese of 25 years of IBM research and development. Now, the Treasury Department's committee on foreign investments, known in Washington as CFIUS (PH), is conducting a national security review.

MICHAEL WESSEL, U.S.-CHINA ECON. & SEC. REVIEW COMM.: They've got real concerns about this transaction. A the CFIUS review is a national security review, both traditional security issues as well as economic security. And the administration again, with the sale of missile technology to Iran by Chinese companies, is starting to shine a much brighter light on this, and that's really necessary.

ROMANS: At issue, a North Carolina IBM facility that IBM says develops next generation technology for PCs. IBM says it is cooperating with all government agencies and has filed the required legal notice with the Committee on Foreign Investments. The Treasury Department would not comment, saying it would be illegal to do so. But some analysts say they doubt IBM would have gotten this far without the tacit approval already from Washington.

MARK STAHLMAN, CARIS & CO.: I believe that literally IBM went to Washington to discuss this deal before they went to the Chinese. The second place they went was Beijing, and the third place they went was actually to the Lenovo offices.

ROMANS: That's why the regulatory snag caught the Chinese by surprise. Many thought this was a done deal.

(END VIDEOTAPE)

ROMANS: Now, one analyst told us he doubted there were many state secrets being given away to China in this PC deal. But clearly some in Washington are worried that 25 years of sensitive technology research and development is being exported and Lenovo is -- has a big stake by the Chinese government.

PILGRIM: Thanks very much, Christine Romans.

Well, "Tonight's Thought" is on defending this country in times of crisis.

"To act coolly, intelligently and prudently in perilous circumstances is the test of a man and also a nation."

Still ahead, a preview of what's ahead tomorrow.

(COMMERCIAL BREAK)

PILGRIM: Thanks for being with us tonight. Tomorrow the chairman of the House Arms Services Committee joins us to talk about the Iraqi elections.

And then two leading senators are fighting to save American jobs by forcing China to play fair.

For all of us here, good night from New York. "ANDERSON COOPER 360" is next, live from Amman, Jordan.

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


Aired January 24, 2005 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, HOST (voice-over): Tonight, bombs and ballots. Insurgents target the Iraqi prime minister's headquarters. Iraq says it's captured a top radical Islamist. Will terrorists stop the Iraqi elections?

BRIG. GEN. ERV LESSEL, DEPUTY OPERATIONS DIRECTOR, MULTINATIONAL FORCES: The Iraqis will not be deterred by this violence.

PILGRIM: Red star rising: a top U.S. company is exporting more than a billion dollars worth of intellectual property and technology to China. Tonight, why the deal could threaten our national security.

Broken borders. The federal government is failing to secure our borders. And now some state lawmakers are fighting back against the invasion of illegal aliens.

UNIDENTIFIED MALE: They know that to be poor in America is a lot better than being poor someplace else.

PILGRIM: And United States of Europe? Donald Rumsfeld, take note. Why old Europe could threaten America's global supremacy. That's the view of the author of a provocative new book. He's my guest tonight.

(END VIDEOTAPE)

ANNOUNCER: This is LOU DOBBS TONIGHT for Monday, January 24. Here now for an hour of news, debate and opinion, sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening.

Tonight the Iraqi government says it has captured a top lieutenant of al Qaeda's leader in Iraq. The arrest comes as American and Iraqi troops step up their offensive against insurgents. Elections are less than a week away.

The Iraqi government announced the arrest just after a suicide bomber detonated a huge car bomb in Baghdad. The target was the Iraqi prime minister's political headquarters.

(BEGIN VIDEOTAPE) PILGRIM (voice-over): Twelve people were wounded in today's car bombing. The blast struck a security checkpoint near the Iraqi national accords office in central Baghdad. Ten policemen were among the wounded. U.S. military officials expect the violence to escalate.

LESSEL: Just in the past few days, there's been a 50 percent decrease in the number of attacks by these insurgents. We think it's a calm before the storm, that they're unable to sustain the level of attacks that they've had, but they're saving up for something more spectacular in the days preceding elections and on election day.

PILGRIM: The al Qaeda leader in Iraq, Abu Musab al-Zarqawi, claimed responsibility for today's attack.

Shortly afterwards, the Iraqi government announced the capture of one of Zarqawi's senior aids. Abu Omar al-Kurdi is blamed for over 30 car bombings, including the attack on the U.N.'s headquarters in Iraq in August 2003.

With the Iraqi election less than a week away, officials expect as many as 14 million people to vote.

JOHN NEGROPONTE, U.S. AMBASSADOR TO IRAQ: No effort is being spared to provide the kind of security conditions that will enable as many people as possible in those areas to vote. This includes extraordinary security measures.

Pilgrim: Despite the increased security, polling stations are still a prime target of the insurgents. This school was attacked by mortar fire. There were no casualties. One student's father came to survey the damage.

UNIDENTIFIED MALE: This school is an election center, and the damage after this coward work, that we will have the election at the end of this month (ph).

(END VIDEOTAPE)

PILGRIM: Today the Army announced it had plans to keep as many as 120,000 soldier in Iraq for the next two years. The troops will train Iraqi forces and help them fight against insurgents.

Well, in Iraq tonight, the Pentagon is running a secret intelligence operation that's independent of the CIA. Defense officials say the intelligence unit is working with Special Forces on anti-terrorism operations around the world. The Pentagon denies the unit is operating outside the law or in competition with the CIA.

Senior Pentagon correspondent Jamie McIntyre reports.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN CORRESPONDENT: Before U.S. Special Forces went into Afghanistan in October of 2001, they had to wait for the CIA to scope out the situation, prompting Defense Secretary Donald Rumsfeld to fire off an urgent memo to joint chiefs chairman Richard Myers.

As reported Sunday by the "Washington Post," Rumsfeld's memo asked if "the Defense Department is lacking a capability we need. Maybe," Rumsfeld ruminated. The Pentagon ought not to be in a position of near total dependence on the CIA."

The result, a senior Pentagon official confirms, was a plan implemented over the past two years to beef up the Defense Intelligence Agency's so-called human intelligence unit, now renamed the strategic support branch. The idea is for the Pentagon to have its own spies who can operate alongside U.S. commandos such as Delta Force or Navy SEALs, on clandestine operations.

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: What you do is you take as much intelligence as you can, piece it together to give you the best read of the battlefield before you send people into harm's way. This is very prudent.

MCINTYRE: The Pentagon strongly denies the most controversial aspects of the "Washington Post" report, insisting that Defense Secretary Donald Rumsfeld is not in a turf battle with the CIA, nor bending the rules, nor hiding the newly expanded unit from Congress.

Pentagon spokesman Larry DiRita issued a statement saying, "There is no unit that is directly reportable to the secretary of defense for clandestine operations." And insisting the "actions are being taken within existing statutory authorities." And that the Pentagon "remains in regular consultation with the relevant committee in Congress and with other agencies, including the CIA."

But many members of Congress, including some on the intelligence committees, seem taken by surprise.

SEN. CHUCK HAGEL (R-NE), INTELLIGENCE COMMITTEE: Certainly, the intelligence committee will be asking about that and looking at it. The concern I always have in these matters, as well as others, when it comes to power and government: too much power concentrated in too few hands.

(END VIDEOTAPE)

MCINTYRE: At this hour, Kitty several top Pentagon officials, including the undersecretary defense for intelligence have been dispatched to Capitol Hill to clear up what they say is a misunderstanding. They're making the case that the Pentagon is not asking for any expanded role or to do anything it hasn't done in the past, only to do the kind of human intelligence it's always done in a better, more organized fashion -- Kitty.

PILGRIM: Thanks very much, Jamie McIntyre.

Later in the broadcast, I'll be talking about the Pentagon's so- called spies as one of these country's most respected national security experts, Frank Gaffney.

Well, one of the key targets for U.S. spies and special operations troops is al Qaeda's leader, Osama bin Laden. Well, tonight there's word the U.S. government is considering a huge increase in the bounty for bin Laden's capture.

State Department correspondent Andrea Koppel reports.

(BEGIN VIDEOTAPE)

ANDREA KOPPEL, CNN CORRESPONDENT (voice-over): In an effort to heat up a trail that's gone cold, the State Department is considering doubling the bounty on Osama bin Laden from $25 million to $50 million.

In addition, the State Department says a new ad began appearing this month in one of Pakistan's most widely read newspapers and will eventually expand to radio and TV. It targets Pakistanis in border areas, where bin Laden and some of his top operatives, including his deputy, Ayman al-Zawahiri and Taliban leader Mullah Omar, may be hiding, reminding Pakistanis they could make up to $25 million for tips leading to an arrest or conviction.

JOHN ASHCROFT, ATTORNEY GENERAL: Since the September 11 attacks...

KOPPEL: Since the so-called Rewards for Justice program launched its post-9/11 most wanted list, it's had limited success. One of the biggest al Qaeda arrests occurred in March 2003, when Khalid Shaikh Mohammed, a bin Laden deputy, and one of the masterminds of 9/11, was captured alive in Pakistan.

While in July 2003, the U.S. paid a $30 million reward to an Iraqi informant after Saddam Hussein's two sons died in a shootout with American forces.

The State Department defended its record.

ADAM ERELI, STATE DEPARTMENT SPOKESPERSON: How should I put it? The tread line is clearly -- is clearly in our favor, if you consider the fact that most of the al Qaeda leaders are either dead or in jail.

KOPPEL: But critics say the State Department's expectation that tribal based societies like Pakistan and Afghanistan will turn over bin Laden or other top al Qaeda operatives if, in fact, they are there, is misguided.

WALTER PATRICK LANG, FORMER MIDEAST INTELLIGENCE SPECIALIST: The idea of calling the equivalent of an 800 number or something in order to turn somebody in is about as alien to that kind of tribal society as I can imagine.

(END VIDEOTAPE)

KOPPEL: The philosophy behind the latest media blitz, to make sure Pakistanis know how to contact U.S. authorities to collect their reward. As for doubling the $25 million bounty on bin Laden, the State Department says that's a decision for Secretary of State designate Condoleezza Rice -- Kitty. PILGRIM: Thanks very much, Andrea Koppel.

The global war on terror was one of the key issues in a top-level meeting today between the United States and Britain. Secretary of state designate Condoleezza Rice met British Foreign Secretary Jack Straw at the White House. The meeting comes at a critical time in relations between the United States and Europe.

White House correspondent Dana Bash reports -- Dana.

DANA BASH, CNN CORRESPONDENT: Well, Kitty, a critical time for the U.S. and Europe indeed. But also a critical time for British Prime Minister Tony Blair, the president's top ally in Europe, who, of course, faces elections in just a few months, where Iraq will be a critical part of his success there.

And Iraq, of course, did dominate the meeting here at the White House today between British Foreign Secretary Jack Straw and Condoleezza Rice, who is all but certain to be his counterpart at the State Department in -- probably by the end of the week.

Now, administration sources say they talked about what will come next after the elections in six days. Also talked about the Mideast and getting the U.S. more involved in the peace process there. That is something that Great Britain pushes this administration on quite frequently.

One other thing they talked about was a move afoot at the European Union to lift an arms embargo against China. The U.S., this White House, is very much opposed to that. Jack Straw has said it might happen as soon as this summer. Condoleezza Rice, we're told, pressed him to make that not happen.

And this is noteworthy because it comes as many are questioning whether the U.S. position on relations with China could change after the president's inaugural address where he called for an end to tyranny, and, of course, the White House since then has been trying to say it was not a shift in policy at all.

And even the president's father got into the mix.

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: I haven't read what they are reading into it, but they certainly ought to not read into it any arrogance on the part of the United States. They ought to see that here's a president who wants to deal with them and has wanted to deal with them.

(END VIDEO CLIP)

BASH: And that, of course, was the 41st president, surprising reporters here at the White House in the briefing room where he was giving a tour to a Boston Red Sox owner.

But the point, Kitty, is that the White House is still trying to explain, clarify that the U.S. -- the position is that the president supports, of course, freedom around the world, but his inaugural address was not meant to signal any change in policy -- Kitty.

PILGRIM: All right. Thank you very much.

Dana Bash.

Well, still to come, the battle over abortion. Democrats try to define their position on one of the most divisive issues in this country.

And "Deadly Storm." Much of the Northeast is still digging out, and we'll tell you when the next snowstorm is likely to strike the region.

(COMMERCIAL BREAK)

PILGRIM: Today marks the 32nd anniversary of Roe v. Wade, the landmark Supreme Court decision that legalized abortion. Now the ruling remains one of the most contentious issues in America today. The abortion debate has now spread to the top ranks of the Democratic Party.

Congressional Correspondent Ed Henry reports.

(BEGIN VIDEOTAPE)

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT (voice-over): With opponents of abortion rights marching on Washington, President Bush was eager to send a clear signal to a voting block pivotal to his reelection.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I appreciate so very much your work toward building a culture of life.

HENRY: Democratic leaders were not quite as sure footed when asked what message they wanted to send to the protesters.

SEN. HARRY REID (D), MINORITY LEADER: The way we feel about this is that we think that abortion should be rare, that we feel that anything that we can do to prevent unwanted pregnancies -- it's a step ahead.

HENRY: Mindful that some in rural America believe the party is out of the mainstream on abortion, Democrats are struggling to recast their approach to the hot-button issue. That task could be complicated by the fact that Harry Reid opposes abortion rights, which puts him at odds with the vast majority of his party.

But liberal activists and senators insist Reid's rise to power helps. It shows the party has a big tent.

RALPH NEAS, PEOPLE FOR THE AMERICAN WAY: We have respect for his personal feelings and know that he does not allow his personal feelings to interfere with his responsibilities as party leader. SEN. DICK DURBIN (D), ILLINOIS; The fact that Harry Reid, who has a pro-life position, is our leader in the Senate says that there is no litmus test in the Democratic Party.

HENRY: That notion has been challenged by Tim Roehmer, a candidate for chairman of the Democratic National Committee. He's angrily accused other candidates of using his opposition to abortion rights against him.

And there is still deep division among Catholic Democrats. The American Life League is now running an ad urging local bishops to enforce canon law and deny Holy Communion to 72 House and Senate Democrats who support abortion rights.

JUDIE BROWN, AMERICAN LIFE LEAGUE: Until such time as they have publicly sought forgiveness for their support of abortion, they should not be receiving Holy Communion.

(END VIDEOTAPE)

HENRY: Democrats are now trying to shift the debate by promoting adoption as an alternative to abortion. They're also pushing several bills, including increased health coverage for pregnant women and new money to cut teen pregnancies -- Kitty.

PILGRIM: All right. Thank you very much.

Ed Henry.

Well, abortion is just one of the many critically important issues on Capitol Hill, and Senate Democrats have laid out a very different list of priorities than Republicans have on many critical issues.

Joe Johns reports.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT (voice-over): There are high hopes for getting something done in the Senate this year.

SEN. BILL FRIST (R), MAJORITY LEADER: I hope that we continue and we will continue to reflect our desire, our willingness to work together. It's what I think -- I know the American people want.

JOHNS: But judging from their top priorities announced Monday, Republicans and Democrats start out miles apart as the new Congress gets down to work this week. Putting the hardest job first, Republicans placed revamping Social Security at the top of the list.

SEN. RICK SANTORUM (R), PENNSYLVANIA; I'm hopeful -- in fact, optimistic -- that we'll have some brave souls on the other side join some brave souls on this side and take on a task that we know is before us and have the courage to do it the right way.

JOHNS: But Democrats fail to see the urgency and didn't even make this presidential priority one of their goals.

REID: We have said that if he wants to do something to help in the out-years -- and Senator Durbin outlined that -- we'll be happy to take a look at that. But this isn't a crisis. So why should we be lurching forward?

JOHNS: Besides Social Security reform, Republicans are looking to make the tax cuts from the president's first term permanent, and they're proposing a slew of health, safety and security measures.

Democrats are renewing the call to increase the number of Army troops and Marines by 40,000. They want to increase education funding. And like Republicans, they're calling for new measures to make health care more affordable.

But there's already disagreement on the focus. Still, items not on either party's priority list could dominate, including judicial nominations.

REID: The president should every day hope that he gets the same cooperation from us he got last time.

JOHNS: And conservatives will keep pushing social and cultural issues like abortion and the gay marriage amendment.

(on camera): On the other hand, an early piece of legislation expected on the Senate floor is class action reform. Even Democrats expect it to pass the Senate as long as it goes through the regular committee process, a chance for a bipartisan kickoff to the legislative calendar.

Joe Johns, CNN, Capitol Hill.

(END VIDEOTAPE)

PILGRIM: Well, don't be surprised today if you hear the line "Sounds like someone has a case of the Mondays."

Well, it turns out today, January 24, is not only the worst Monday of the year, but the worst day of the year. That's according to one British psychologist, who has mathematically calculated when misery peaks, and his formula accounts for things like weather, debt, salary, low motivational levels and the need to take action.

Well, that formula was designed to help travel agents analyze vacation trends because most people book a tropical getaway when they really need to get away.

Still to come, millions of people in the Northeast dig out from a massive snowstorm in frigid temperatures.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: This is New England. Stay out for as long as you can, go in, get warm, come back out again.

(END VIDEO CLIP)

PILGRIM: Next, we'll tell you when forecasters say the next storm will hit.

And then "60 Years Late." How the United Nations is finally talking about the Holocaust.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: At least 16 people were killed in a massive snowstorm that struck the Northeast this weekend, and now forecasters say another storm could hit this week.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Millions of Americans are still digging out after a winter storm dumped up to three feet of snow in parts of the Northeast. Thousands are still without power on Cape Cod and southeastern Massachusetts.

Hurricane-force winds hampered clean-up efforts with high drifts and white-out conditions, and, with snow this deep, you want more than just a shovel. Good news if you sell snow blowers.

Boston's Logan Airport lost power just hours after it had resumed operations. Thousands of flights up and down the East Coast were canceled over the weekend.

In New York City, a family deals with a deadly tragedy. A snow plow struck and killed a 10-year-old girl playing in a snow bank.

In Massachusetts, the governor has declared a state of emergency and advised people to stay home.

Some are managing to enjoy the weather.

UNIDENTIFIED FEMALE: This is New England. Stay out for as long as you can, go in, get warm, come back out again.

PILGRIM: From Maine to Virginia, many schools were closed, giving kids a chance for some winter fun.

The cold front has reached as far south as Florida, hitting residents and crops with freezing temperatures.

And it may not be over yet. Forecasters expecting more snow to hit the Northeast by Wednesday.

(END VIDEOTAPE)

PILGRIM: Well, fortunately, the new snow is expected to come in inches, not feet.

A dangerously close call on a busy stretch of highway in Alabama this morning. A pilot and two passengers in a hot air balloon were lucky to walk away after they were forced to make an emergency landing on Interstate 65 in Birmingham. The pilot told police high winds blew the balloon off course.

"Secret Spies." Why the Pentagon is running its own clandestine intelligence operation separate from the CIA. A leading national security expert will join us.

And remembering the legendary Johnny Carson.

(BEGIN VIDEO CLIP)

JOHNNY CARSON, LATE-NIGHT TELEVISION SHOW HOST: I bid you a very heartfelt good night.

(END VIDEO CLIP)

PILGRIM: We'll be right back.

(COMMERCIAL BREAK)

ANNOUNCER: LOU DOBBS TONIGHT continues. Sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: In a moment, I'll talk with a former top defense official about the Pentagon's secret spies.

But, first, these stories.

Attorney General John Ashcroft today said good-bye to the Justice Department. Ashcroft praised his staff for their work after the September 11 attacks. President Bush nominated White House Counsel Alberto Gonzales to replace Ashcroft.

Whether it's paper or plastic, shoppers in San Francisco may soon be paying for their grocery bags. The city's commission on the environment is expected to recommend a charge of 17 cents a bag. Environmentalists say the goal is to eliminate waste, not to make people pay more for groceries.

The Supreme Court today rejected an appeal from Florida Governor Jeb Bush to intervene in the battle over a comatose woman. The parents and husband of Terri Schiavo are fighting over whether to keep her on life support. She suffered brain damage from an eating disorder 15 years ago.

The United Nations today is marking the 60th anniversary of the liberation of Nazi concentration camps. This is the first time the U.N.'s General Assembly has ever held a session on the Holocaust. The Nazis killed six million Jews and millions of other people.

Senior United Nations Correspondent Richard Roth reports.

(BEGIN VIDEOTAPE)

RICHARD ROTH, CNN SENIOR U.N. CORRESPONDENT (voice-over): It's the 60th anniversary of the beginning of the liberation of the Nazi death camps, but the world organization founded because of World War II had never commemorated the moment.

DAN GILLERMAN, ISRAELI AMBASSADOR TO U.N.: I think that maybe we are at the point in history where the changes in the world are reflected also at the United Nations.

ROTH: U.N. members stood to remember, but a considerable number of countries did not attend. Israelis and Jewish supporters charge a majority of U.N. countries exhibit bias against Israel. Thirty years ago in the same assembly call, a resolution was passed stating Zionism was racism.

MAX LIEBMANN, HOLOCAUST SURVIVOR: Finally, it was time that -- because, after all, when you listen to some of these meetings at the United Nations, all they are doing is provocating anti-Semitism.

ROTH: Auschwitz survivor Elie Wiesel got the opportunity to speak directly to countries which could have acted.

ELIE WIESEL, AUSCHWITZ SURVIVOR: Had the allies bombed the railway lines leading to Birkenau in the time when the Hungarians Jews were there, killed 10,000 a day, our tragedy might have been avoided and its scope surely diminished.

ROTH: The U.N. leader noted acts of horrible inhumanity are occurring these days, too, including Darfur, Sudan.

KOFI ANNAN, U.N. SECRETARY GENERAL: It is easy to see that something must be done, to say exactly what, when and how and to do it is much more difficult.

ROTH: In the audience, Josephine Prins, who was transported by the Nazis to another camp before the Russian army could liberate Auschwitz. She came to the U.N. with her concentration camp number, a memory on her arm. She thinks the U.N. should do more to live up to its original goals. As for this Holocaust remembrance...

JOSEPHINE PRINS, AUSCHWITZ SURVIVOR: It is too little much too late because we are all dead.

(END VIDEOTAPE)

ROTH: Other survivors such as Ellie Vizel (ph) said, despite everybody saying never again, U.N. member countries have watched genocide and crimes against humanity in Bosnia, Cambodia, Rwanda, and now Darfur in Sudan -- Kitty.

PILGRIM: Thanks very much, Richard Roth.

Well, 60 years after the liberation of the Nazi concentration camps, my next guest says Europe is emerging as the world's next superpower. T.R. Reid has written a new book. It's called "The United States of Europe, The New Superpower and the End of American Supremacy." He is the Rocky Mountain bureau chief for the "Washington Post" and he joins me tonight from Denver. Thanks for joining us tonight.

T. R. REID, "THE UNITED STATES OF EUROPE": Hi, Kitty. I love this show.

PILGRIM: Thank you. I have to ask you. You borrowed a term from Churchill, the United States of Europe. What do you mean by that?

REID: What happened is after World War II the nations of Europe were afraid they'd have another brutal war on the continent. Churchill said, we need a new model. We've got to re-organize our ancient continent, and he looked at America. He said, we have to build a sort of United States of Europe. They've done it. 25 countries there have ceded powers to a central government in Brussels and Europe today looks a lot like the United States. Last fall I drove from the Arctic Circle to the Mediterranean. I went through eight countries, never saw a border guard, never changed currency. It's like driving from Maryland to North Carolina.

PILGRIM: Given the history of that continent, that's something to be celebrated. Yet why does it have to mean it's the end of American supremacy? Why not have two superpowers?

REID: I agree with that. I think they do want to be the second superpower. The term that sort of academics in Europe use is the counterweight. They want to be the counterweight to American political and financial power around the world. Their argument is this unipolar, one superpower world is unstable. So they're going to be number two.

PILGRIM: I notice you mention political and economic, and yet the defense burden is still on the United States. Can a group of countries be a superpower without picking up their own defense tab?

REID: Terrific question. That's their big gamble. They're gambling that they can be a superpower in the 21st century without military power. And you know what? Right now, they're pulling it off because they have a sugar daddy in the world, Kitty, and that's you and me. American taxpayers, we're paying 70 percent of the cost of NATO. We have 100,000 American troops based in Europe. It's a sweet deal for them. They don't have to spend money on the military because we're doing it for them. So they can pour money into this lavish welfare state of theirs.

PILGRIM: Today we see Condoleezza Rice meeting with Jack Straw at the White House, presumably talking about transatlantic relations, also lifting the embargo on Chinese arms sales, which Britain is -- there are considerable things that are still -- that the United States and Europe are still at odds over. The issues have not gone away, have they?

REID: Yes. And I think this decision of theirs that they're now going to sell guns to China, or weapons to China, which we're totally against, demonstrates this counterweight notion. America can say anything it wants. Europe now has more people than we do. It has more GDP, more trade, it gives away more foreign aid. They feel they can stand up to us and say no, and that's exactly what they're doing on China, including Tony Blair's Britain.

PILGRIM: Is it not necessary, however, that we cooperate in the war on global terror?

REID: I think we have to. I completely agree with that. And the Europeans have done a pretty good job of tracking down al Qaeda members. More al Qaeda members have been tried and jailed in Europe than in the United States. And that's what Blair said. Tony Blair went to see George W. Bush right after Bush was reelected, and I think he's kind of pushing him. He said, you've got to get to Europe and make amends. Sure enough, George Bush is going to Brussels on February 21.

PILGRIM: Mr. Blair faces an election. Will that change the balance as Britain as one of our allies?

REID: No. Blair is going to win. Mark it here. I said it first. Blair is definitely going to win. But he has more trouble than he would otherwise because, you know, they call him Bush's poodle. They think he's too much a tool of Bush. So he too, like the other European leaders, needs to stand up to America. I think that's a large part of the dynamic here in creating the second superpower, so that they can say to their voters, I said no to the White House.

PILGRIM: Let me push you a bit on the economic power too, as Europe expands and the EU expands with some poorer countries joining the ranks. Will they be able to be as much of an economic superpower, or will not those countries be a drag on the engine, the economic engine of Europe?

REID: At first they're a drag. But that's what people said when Ireland and Greece, very poor countries and Portugal joined the EU. Those countries now have terrific growth rates. Their engine is helping to push the EU.

So, yes, I think it's going to be a struggle at first, but over time, having that huge market, the EU with 25 countries is now the biggest single market in the world, I think that's a plus for them over time.

PILGRIM: One of the things you talk about is the moral passion of Europe, and yet it seems to many in this country that the moral passion of Europe in the last year or so has been just to be against the United States. What is the true moral passion of Europe?

REID: Well, I talked about this welfare state. You know, in Europe, university education is free. The doctor comes to your house. You never see a bill. They pay 80 percent of your salary when you retire. If you have a baby, the government will pay you for a year to stay home and raise the child. They call that the European social model. I think model is an important term. They think they have figured out correctly the relationship between government and the people, which is government ought to be there, tax the rich and be there to help people who are in trouble. And they want to expand that model to the rest of the world. They call us cold and aloof and uncaring. And I think that's the passion driving them. And then the other passion, frankly, is to be the non-America. To be the non- military political economic force in the world. That's what they want to do.

PILGRIM: That certainly seems very apparent. It's a great read, very fascinating premise. T.R. Reid, author of "The United States of Europe." Thank you for being with us.

REID: Thank you, Kitty. It was delightful.

PILGRIM: Today marks the beginning of no name-calling week in thousands of schools across the country. Thousands of schools are taking part in the second annual event, organized by the Gay, Lesbian, and Straight Education Network. This group says the week aims to stop name calling of all kinds. The event is based on the novel "The Misfits." It's about four middle schoolers who run for student council on a no name calling platform.

The country is mourning the loss of a true legend tonight. Johnny Carson died yesterday at the age of 79. Carson was, of course, the host of NBC's "Tonight Show" for 30 years. His outrageous comedy skits and quick wit made him part of daily life for millions of American families. Carson died of emphysema at his Malibu, California home. For much more on the life and legacy of Johnny Carson, watch his long-time friend and colleague Ed McMahon tonight on "LARRY KING LIVE," 9:00 p.m. Eastern.

Still to come, cracking down on illegal aliens. How the state where most illegal aliens crossed into this country is fighting back. That's next.

And then why the government says it might have to stop running a survey that successfully tracks illegal alien in this country. We'll tell you about it. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: The state of Arizona is the hardest hit by the invasion of illegal aliens into this country. And now one state lawmaker is leading the effort to fight back. Casey Wian reports from Phoenix, Arizona.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): As an Arizona deputy sheriff for nearly a quarter century, Russell Pearce has been shot while arresting gang members and won a Medal of Valor. Now he's a state lawmaker, leading a crackdown on what he calls an invasion of illegal aliens.

RUSSELL PEARCE, ARIZONA STATE HOUSE: Not all of them come here for a job. You have a bloated welfare system. They know that to be poor in America is a lot better than being poor someplace else. And this system can't sustain that. Just can't sustain what's going on, the violent crimes, the homicides, the drug trafficking, the home invasions, the carjackings. I mean, Americans had about all they're going to take, I suspect. WIAN: Pearce is sponsoring 11 bills to either restrict state benefits for illegal aliens or toughen sanctions against those who violate immigration laws. They include denying illegal aliens free tuition at state colleges, denying bail to criminal illegal aliens, granting local law enforcement the power to arrest immigration outlaws, and revoking the business license of those who employ illegal aliens.

In November, Arizona voters approved Proposition 200, which restricts illegal alien welfare benefits. That, political analysts say, means the latest bills are more likely to pass.

DAVID BERMAN, ASU PUBLIC POLICY INSTITUTE: A keen politician realizes that people are venting their frustrations over a problem, and that you better just listen to them, and you might go along with them because the people have spoken.

WIAN: The most controversial proposal would make English Arizona's official language and prevents state signs and documents from being printed in another tongue.

ALFREDO GUTIERREZ, CO-CHAIR, NO ON PROP 200: We're not talking about border policy. We're talking about post-border policy. We're talking about focusing on the Hispanic community as a whole.

PEARCE: Those folks that are fighting this are the same folks that believe in open borders, don't want assimilation, don't want the laws enforced, absolutely have no respect for America, or our culture, or our language, or our laws.

WIAN (on camera): Supporters of Arizona's proposed anti-illegal alien law say nearly all of them would be unnecessary if the federal government did its job, securing the nation's borders and enforcing laws already on the books.

Casey Wian, CNN, Phoenix.

(END VIDEOTAPE)

PILGRIM: One of the most successful border protection programs will be suspended as of January 30th, and that's the busiest time of year for illegal border crossings. A federal contract for unmanned aerial vehicles that patrol the Arizona-Mexico border will expire, and as of now, there are no replacement programs confirmed. Officials say the program is being suspended to evaluate its effectiveness. In the first six months of the program, unmanned aerial vehicles helped catch over 1,200 illegal aliens, and they also helped track down nearly 3,000 pounds of marijuana.

Another successful program is also about to be suspended. The Department of Labor is threatening to end funding for the only survey which tracks the migrant worker population in this country. More than half of those workers are illegal aliens. Bill Tucker reports.

(BEGIN VIDEOTAPE) BILL TUCKER, CNN CORRESPONDENT (voice-over): The typical farm worker is a 31-year-old male, Hispanic, most likely married with a child and earning less than $12,000 a year from farm work. Just over half of all farm workers are also here illegally. Nearly 80 percent of the workers are from Mexico, very few of whom speak or read English.

We know all of this for only one reason. The National Agricultural Workers Survey, or NAWS.

GREGORY SCHELL, FLORIDA LEGAL SERVICES: This is the only set of data that provides us with a rich demographic view of who the immigrants are, and it gives us a basis to make some informed decisions with respect to immigration. Everything else is anecdotal.

TUCKER: The survey is also the basis on which roughly a billion dollars in education, health and social aid program money is distributed. So why would we stop collecting such useful information? Budget. The Department of Labor says it cannot afford to continue funding this survey, which cost it about $2 million a year. To that end, the department is talking with other agencies about taking over responsibility for the survey.

VERONICA STIVDENT, DEPARTMENT OF LABOR: We plan to continue our discussions with agencies to find the best home for the NAWS survey and to make sure that we continue the NAWS survey in the best way possible, to maximize its utility to its users.

TUCKER: But as of yet, no other agency has agreed to take on the responsibility.

(END VIDEOTAPE)

TUCKER: Now, this survey is the only one of its type. It's ironic that its future would seem in doubt just at a time when we are beginning a national debate on the immigration reform and policy, Kitty.

PILGRIM: Bill, who's in favor of discontinuing this, and why?

TUCKER: Well, ironically, nobody is in favor of discontinuing it. People on both sides of the immigration issue say we need this study because it gives us a factual basis on which to base future policy and decisions. So you can go to the either side of the immigration debate, and you'll find fierce defenders, people saying we cannot quit doing this.

The Department of Labor, in its defense, its discretionary spending is at a premium. We can't afford it. Somebody else needs to pick up the tab. Cut of the budget.

PILGRIM: Very clear. Thanks for bringing it to us. Bill Tucker.

Well, today the Department of Homeland Security undersecretary for borders and transportation announced that he will step down. Asa Hutchinson submitted his letter of resignation to the president a short time ago. This resignation is effective March 1st. Hutchinson says -- said he's disappointed he was not selected as homeland security secretary after Tom Ridge resigned. Hutchinson has not said what he plans to do next.

Coming up, spies like us. The Pentagon is running a secret intelligence operation that is independent of the CIA, and I'll be joined by one of the country's most respected national security experts, Frank Gaffney.

And "Red Star Rising." A $1 billion technology deal with China that could put our national security at risk.

(COMMERCIAL BREAK)

PILGRIM: Returning now to one of our top stories. The Pentagon has confirmed it's been operating a secret intelligence gathering unit for the last two years. The Defense Department says the unit is not in competition with the CIA. And joining me now is the former assistant defense secretary under President Reagan. Frank Gaffney is the founder and president of the Center for Security Policy, and he joins me from Washington.

And Frank, thanks very much for joining us to give us some insight into this.

The DOD did have a human intelligence unit, the Defense Intelligence Agency. This is different, isn't it?

FRANK GAFFNEY, FORMER ASSISTANT DEFENSE SECRETARY: No, I don't think so. I think that this is a tailoring of certain skills that are needed to support the special operations forces. But I really must tell you, Kitty, I think this is much ado about not very much. When you look at the kinds of operations these guys are performing, many of them in very difficult circumstances, to have those sorts of tailored human intelligence skills available to them on a regular and intimate basis is, I think, just common sense. And -- far from this being a hit on Don Rumsfeld, I think it's a credit to him that he understood this problem, recognized it, asked people to begin addressing it long before the 9/11 Commission came along and said, you know, we need a lot more human intelligence capabilities.

PILGRIM: This was almost instantly decried as a play for dominance by Donald Rumsfeld. You don't see it as that, do you?

GAFFNEY: Well, what I see this as is really part of a succession of efforts to take down Don Rumsfeld. For the life of me, I can't figure this out. People think that the war against the terrorists were confronting and the Islamic fascists that are enabling what they're doing and the states that are sponsoring them is going to go better without the most competent secretary of defense in my lifetime? I don't think so. And I don't understand why this sort of death of a thousand cuts that continuously is played out portraying leaked memos and stories like this in the worst possible light to inflame the Hill, to inflame the media isn't seen as really just a series of hit and run attacks against Don Rumsfeld that I hope will not succeed. PILGRIM: There is great discussion over this not being under Congressional oversight.

Do you think that's an issue, or is this a false issue?

GAFFNEY: Again, I think this is simply wrong. When Bart Gellman wrote this piece in the "Washington Post" on Sunday, which stirred this latest brewhaha up, it was briefed or presented to members of the Intelligence Committee, members of the Armed Services Committee, and they didn't recognize it. It's not because they hadn't been briefed about the program. It's just this didn't bear any resemblance to what the program really is. It's a tailored human intelligence support activity that has, I believe, gotten the appropriate oversight and enjoys the proper support because it makes sense. It's what our troops need.

PILGRIM: Some experts I've been speaking to say this does make sense because the defense guys are in the field and they're actually able to gather intelligence as they do their normal course of work. Does this not make sense to you? And then carry that information back and coordinate it with CIA operatives.

Is this the way ideally it should work?

GAFFNEY: Absolutely. Look, we don't have an excess of human assets collecting intelligence. And you're absolutely right, military personnel who are being inserted into some of these back waters around the world, where Islamists and others are operating are in a unique position to collect intelligence. And, yes, as that intelligence is collected and brought back for analysis, I'm confident -- and I understand that Porter Goss has said as much even just today, believes that this kind of additional capability, far from being competitive with the CIA in an unhealthy way, is an augmentation of the CIA's activities. And competition in exactly the way we would want intelligence to be performed.

PILGRIM: Much of the reform of the Intelligence Agency has been to coordinate between different units. This might be a step in the right direction, or do you see this as fractionalizing the efforts more.

GAFFNEY: Well, Kitty, I'm not a huge fan of this idea that we need to consolidate all intelligence. That was the -- basically the lowest common denominator that came out of this defense, or intelligence reform bill last year. In reality, we need more competition in terms of collection of information and moving it up the tape so that people can take advantage of the best data that's out there. And I think this can be very much a contributor to solving the kinds of problems we've clearly got. Not only at the tactical level where the troops are, but at the theater and even at the strategic level, where we all need to have these answers available to us.

PILGRIM: Frank, while I have you, slight shift of topic. We have Condoleezza Rice meeting today with Jack Straw. Transatlantic cooperation is critical in the global fight on terror. And in fact, we've turned up a few terror cells in Germany and in London just recently. How -- what is your assessment on how we're doing with that?

GAFFNEY: Well, look, the Europeans have a serious problem of their own in this regard. They have every incentive to cooperate with us because these are people who are promising to, you know, detonate dirty bombs or chemical weapons and the like in Europe. I'm encouraged about the cooperation there. I'm discouraged about the idea that these guys are actually doing something useful in Iran, where I think they're simply propping up a dangerous regime and giving it time to build nuclear weapons. I'm very concerned about something I gather they also talked about, which is the Europeans' decision to arm communist China in ways that may wind up being used against American forces if we have to defend Taiwan. This is not an unalloyed success story, I'm afraid, of transatlantic cooperation. We need more of it.

PILGRIM: All right. Thanks very much for being with us tonight, Frank Gaffney of the Center for Security Policy. Thank you, Frank.

Well, another possible security concern tonight is IBM's deal to sell its PC unit to China's Lenovo for more than a billion dollars. That deal has been approved by federal antitrust officials, but now U.S. regulators must decide whether the move could endanger our national security.

Christine Romans has the report.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): A deal like this was bound to kick up dust in Washington. A $1 billion plus sale of intellectual property and technology to China, an unprecedented transfer to the Chinese of 25 years of IBM research and development. Now, the Treasury Department's committee on foreign investments, known in Washington as CFIUS (PH), is conducting a national security review.

MICHAEL WESSEL, U.S.-CHINA ECON. & SEC. REVIEW COMM.: They've got real concerns about this transaction. A the CFIUS review is a national security review, both traditional security issues as well as economic security. And the administration again, with the sale of missile technology to Iran by Chinese companies, is starting to shine a much brighter light on this, and that's really necessary.

ROMANS: At issue, a North Carolina IBM facility that IBM says develops next generation technology for PCs. IBM says it is cooperating with all government agencies and has filed the required legal notice with the Committee on Foreign Investments. The Treasury Department would not comment, saying it would be illegal to do so. But some analysts say they doubt IBM would have gotten this far without the tacit approval already from Washington.

MARK STAHLMAN, CARIS & CO.: I believe that literally IBM went to Washington to discuss this deal before they went to the Chinese. The second place they went was Beijing, and the third place they went was actually to the Lenovo offices.

ROMANS: That's why the regulatory snag caught the Chinese by surprise. Many thought this was a done deal.

(END VIDEOTAPE)

ROMANS: Now, one analyst told us he doubted there were many state secrets being given away to China in this PC deal. But clearly some in Washington are worried that 25 years of sensitive technology research and development is being exported and Lenovo is -- has a big stake by the Chinese government.

PILGRIM: Thanks very much, Christine Romans.

Well, "Tonight's Thought" is on defending this country in times of crisis.

"To act coolly, intelligently and prudently in perilous circumstances is the test of a man and also a nation."

Still ahead, a preview of what's ahead tomorrow.

(COMMERCIAL BREAK)

PILGRIM: Thanks for being with us tonight. Tomorrow the chairman of the House Arms Services Committee joins us to talk about the Iraqi elections.

And then two leading senators are fighting to save American jobs by forcing China to play fair.

For all of us here, good night from New York. "ANDERSON COOPER 360" is next, live from Amman, Jordan.

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