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CNN WOLF BLITZER REPORTS

Karl Rove and CIA Leak; Joe Wilson Interview; Douglas Feith Interview; Middle East Tensions; London Terror Investigation

Aired July 14, 2005 - 17:00   ET

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


WOLF BLITZER, CNN HOST: Happening now, the battle over Karl Rove and the CIA leak intensifying. There are new accusations and recriminations.
Stand by for hard news on WOLF BLITZER REPORTS.

The ambassador. His wife is at the center of a criminal probe consuming Washington. Who leaked her name? Was it retaliation? And what role did the White House play? Ambassador Joe Wilson is our guest.

The strategist. He was a top Pentagon planner of the war in Iraq and the war on terror. What does he make of the current violence? I'll ask the undersecretary of Defense, Douglas Feith.

Terror tribute. People around Britain and Europe fall silent in memory of terror victims as police confirm the identity of a suspected bomber.

ANNOUNCER: This is WOLF BLITZER REPORTS for Thursday, July 14, 2005.

BLITZER: Thanks very much for joining us. There's a new development in the investigation into the terror bombings in London. U.S. officials with detailed knowledge of the probe tell CNN the fourth suspected suicide bomber has now been identified.

CNN's Matthew Chance is in London with more on the investigation.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN CORRESPONDENT (voice-over) The face of the man police say was responsible for the London bus bombing. Just one of the explosions that shocked the British capital a week ago. Identified as has Hasib Hussein, he's just 18. Photographed by security cameras at Luton Train Station on the day of the attacks. He's wearing a backpack, which police believed concealed his bomb.

Before the bus attack in which 13 people died, Hussein is known to have been at King's Cross Station in London with three other bombing suspects. But police say his movements from there remain unclear.

PETER CLARKE, POLICE ANTI-TERRORISM BRANCH: The question I'm asking the public is did you see this man at King's Cross? Was he alone or with others? Do you know the route he took from the station? Did you see him get on to a number 30 bus? And if you did, where and when was that?

CHANCE: And police appeals for information from the public have also taken to the London streets. They're distributing leaflets asking for any information about the bombers. They're also confirming the identity of another suspect, she Shahzad Tanweer, 22 years old from Leeds, pictured here as a school back in 1995. He's believed to be responsible for the Aldgate bombing, which killed seven.

The third suspect, Mohammed Sidique Khan, who is 30, has not yet been officially named. But the primary school teacher, pictured here at his wedding, has been identified to CNN by police sources. He was married with a child. Police say they're investigating links with the Edgware Road explosion, but forensic teams have no conclusive evidence yet that he died there.

Matthew Chance, CNN, London.

(END VIDEOTAPE)

BLITZER: Thousands of people in London came to a standstill today in silent tribute to the victims of the attacks. The two minutes of silence were broken only by the tolling of Big Ben. The city's famous Trafalgar Square was packed. Even London's popular black taxicabs pulled to the side of the roads. Among those taking part, Queen Elizabeth II and Prime Minister Tony Blair. Remembrances took place elsewhere around Europe and the world.

Here in this country, the chief justice, William Rehnquist, is out of the hospital and back at home. Rehnquist, who has thyroid cancer, was released from a Virginia hospital earlier today after two nights for treatment of a fever. His age -- he's 80 years old -- and illness have triggered speculation he'll step down from the Supreme Court before the start of the next session in October. Rehnquist has said nothing about his future.

NASA now says the launch of the Space Shuttle Discovery could happen as soon as Sunday afternoon, but it will be a more likely put off until later next week or beyond. The first shuttle launch since the Columbia disaster back in 2003 was supposed to lift off yesterday. The launch was scrubbed with two-and-a-half hours left in the countdown because of a faulty fuel sensor.

Here in Washington, Democrats are keeping up the pressure on President Bush over the firestorm involving his top political adviser, Karl Rove and the leak of a CIA operative's name.

Our White House correspondent, Dana Bash, standing by with the latest at the White House. Dana?

DANA BASH, CNN CORRESPONDENT: Hi, Wolf. Well, some Republicans are quietly wondering whether or not this whole thing will disrupt their agenda. Others are quietly wondering whether or not there's, in fact, another shoe to drop. As for the president, he orchestrated a made-for-cameras show of support for Karl Rove today.

(BEGIN VIDEOTAPE) BASH (voice-over): The president usually takes this walk alone. Not today. A message here in pictures he has not yet sent with words. He's standing by Karl Rove.

But what Democrats see is a chance to chip away at a political asset Rove spent years building -- the president as someone you can trust.

HOWARD DEAN, CHAIRMAN, DNC: Who do you value more, Mr. President, the security of the American people or your political cronies? Will you keep your word, Mr. President?

BASH: Over and over, Democrats hearken back to a Bush promise to fire anyone involved in outing the covert identity of Valerie Plame, even though the jury's still out on whether that's what Rove really did. Bush opponents want to make the debate about credibility. Because they already see it eroding.

In a poll taken just before the latest developments, only 41 percent of Americans give Mr. Bush a good rating on being honest and straightforward, his lowest on this question since becoming president.

Privately, even some Bush loyalists fear the White House is engulfed in a familiar dilemma.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: I don't want to get into commenting on things in the context of an ongoing investigation.

An ongoing investigation.

An ongoing investigation.

I don't want to jeopardize anything in the investigation.

BASH: Letting a legal, not a political strategy, guide the White House message.

Another Bush problem, GOP strategists admit, the Democrats' attack is simple -- keep your word, fire Karl Rove -- easy to fit on protest signs organized by MoveOn.org outside the White House.

On the other hand, the Rove lines of defense -- like he was talking off the record and he actually didn't use the covert agent's name -- are much harder to explain.

(END VIDEOTAPE)

BASH (on camera): And in an attempt to make sure the story doesn't lose momentum, Senate Democrats are offering legislation on the floor today that would make it so that federal employees who had leaked any kind of classified information would lose their security clearance. That could come up for a vote later today, Wolf.

And in a statement just out by Senator Bill Frist, the Republican leader, he said that this is basically a partisan attack and said he's very upset the Democrats are trying to add this to the Homeland Security bill, which is what they're trying to do on the Senate floor as we speak.

BLITZER: Dana Bash at the White House. Thank you, Dana, very much.

Some say it's a burgeoning scandal on the scale of Watergate. Others dismiss it as partisan sniping. Whatever else it may be, the controversy surrounding the leak is an intriguing and complex story.

Here's how it all began.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): In his January, 2003 State of Union speech, President Bush building the case for war with Iraq, insinuated Saddam Hussein was trying to build nuclear weapons. March 20, coalition forces invade Iraq. May 1, the president announces major operations are over.

On July 6, 2003, Joe Wilson, the former U.S. ambassador to Gabon wrote in a "New York Times" opinion piece that he traveled to Africa in February, 2002, to investigate similar allegations for the CIA. His conclusion, it was -- quote -- "highly doubtful that such a transaction would have occurred."

On July 14, CNN political analyst Robert Novak wrote in his "Chicago Sun-Times" column, Wilson never worked for the CIA, but his wife, Valerie Plame, is an agency operative on weapons of mass destruction. Two senior administration officials told me that Wilson's wife suggested sending him to Niger to investigate.

And that's where the possible criminal case begins. Under a 1982 law, it's a crime to reveal the name of an undercover CIA agent.

But the burden of proof is high. Among other things, the disclosure must reveal the identity of a covert agent. It must be intentional. It must be made by someone with authorized access to classified information. And the source must be aware that the information disclosed will reveal the identity of the covert agent. In September, 2003, nearly three months after Novak's column, the Justice Department opened an investigation.

There were early suspicions that the White House was behind the leak. Perhaps the president's top adviser, Karl Rove. Press Secretary Scott McClellan was dismissive.

And the president said he welcomed an investigation and promised action.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... any person has violated the law, that person will be taken care of.

BLITZER: In December, 2003, Special Prosecutor Patrick Ffitzgerald was appointed to find out who leaked Plame's identity. Over the course of the next 18 months, top administration officials were questioned, including Rove, Vice President Cheney, and even the president himself.

In August, 2004, at the Republican National Convention, in an interview with CNN, Rove denied he was responsible.

KARL ROVE, PRESIDENTIAL ADVISER: I didn't know her name. I didn't leak her name.

BLITZER: Prosecutors also went after journalists who had Plame's identity leaked to them -- "Time" magazine's Matthew Cooper who wrote an article on the story, and the "New York Times'" Judith Miller who researched one but never published it.

But after the Supreme Court refused to hear the journalists' requests to shield them from prosecution, Cooper's employer, Time Inc., which is owned by CNN's parent company, cooperated with the prosecutor, turning over notes which revealed that Karl Rove was Cooper's source, which Cooper himself later confirmed. Miller is currently in jail for refusing to cooperate with the grand jury.

The White House immediately went into a no-comment mode, putting up a wall of silence that has yet to be broken.

BUSH: We're in the midst of an ongoing investigation, and I will be more than happy to comment further once the investigation is completed.

(END VIDEOTAPE)

BLITZER (on camera): And coming up next, I'll speak with one man at the center of all of this. Ambassador Joe Wilson will join us next for a one-on-one interview.

Later, demolition disaster. A sudden building collapse in New York City traps a baby and four others. We'll have details.

And we'll also have the latest update on Hurricane -- yes, Hurricane Emily. The new update just out this hour. Find out where forecasters think the storm is now headed. Stay with us.

(COMMERCIAL BREAK)

BLITZER: More now on the controversy involving President Bush's top political adviser Karl Rove, and the leak of a CIA operative's name. In an interview with CNN's Richard Roth earlier today, former President Bill Clinton defended two of the key people at the center of the political storm, former U.S. Ambassador Joe Wilson and his CIA agent wife Valerie Plame Wilson. But he stopped short on doing what some fellow Democrats have done, call on President Bush to fire Rove.

(BEGIN VIDEOTAPE)

BILL CLINTON, FORMER U.S. PRESIDENT: I like Joe Wilson, the man who was the target of the wrath of somebody in the administration. But he didn't vote for me in '92. He voted for former President Bush and he said so publicly. He's a career diplomat. He didn't deserve to have his career ruined and his wife didn't, because he wouldn't say what they wanted him to say, which was that in Niger they sent uranium yellow cake to Iraq. He knew there was no evidence about it, and he wasn't going to lie about it. And he shouldn't be punished for it.

But I don't know who did it. And I'm not going to say anything until we know what the facts are. And I don't think anybody else should. We should let the facts come out.

(END VIDEOTAPE)

BLITZER: We're joined here in Washington by Ambassador Joe Wilson.

Mr. Ambassador, welcome back to CNN.

JOE WILSON, FORMER AMBASSADOR: Nice to be with you, Wolf.

BLITZER: You saw this RNC, Republican National Committee, briefing paper that has been released today: Joe Wilson's top worst inaccuracies and misstatements. Basically, they accuse you of lying on a bunch of various issues related to this case. We're going to go through some of them.

But what do you make of the effort to smear you right now?

WILSON: Well, it strikes me that it's typical of a Rove-type operation. "Slime and defend" is what it's been called in the past.

But the fact of the matter is, of course, that this is not a Joe Wilson or Valerie Wilson issue. This is an issue of whether or not somebody leaked classified information to the press, who then published it, thereby putting covert operations and a covert officer at some risk.

BLITZER: All right. Let's go through some of the charges that have been made against you. For example, on Tuesday I interviewed Ken Mehlman, the chairman of the Republican Party, and he said that -- let me read to you specifically what he said:

"I think, according to what we learned this past weekend, I think what Karl Rove said turned out to be right. Joe Wilson's story was not accurate. It was based on a false premise and he tried to discourage the writing of an inaccurate story based on the false premise," that false premise being that Vice President Dick Cheney asked you to go to Niger to investigate these charges of enriched uranium shipments going to Iraq.

WILSON: Well, of course, if you look back at the original article I wrote, I said it was the Vice President's Office who expressed an interest in following up on this particular matter.

The vice president himself later said that he himself had asked about it. I've never said it was the vice president who sent me. It's clear in the article. And, indeed, it's clear in an interview that you did with me last year. And if you run the tape on that, you'll see that what the statement that they used was chopped out of the...

BLITZER: But, basically, you still hold to the notion that the whole idea of sending someone to Niger originated in the Vice President's Office?

WILSON: No, no, no, no, no. The idea of sending someone to Niger originated in response to a request from the Office of the Vice President -- that's how I was briefed -- that required an answer.

The decision was made by the operations people at the CIA, after a meeting that I had with the analytical community, to ask me if I would go and help answer some of the questions that still remained so that we would better understand the situation.

And let me also say that raising the question was perfectly legitimate. Indeed, it was an important question to raise. The vice president would have been derelict in not raising it.

Had, in fact, there been evidence of uranium sales from Niger to Iraq, it would have demonstrated conclusively that Saddam Hussein was attempting to reconstitute his nuclear weapons program. The fact that there wasn't evidence to that effect should have reassured the U.S. government that, at least on this side, there was no evidence.

BLITZER: All right. So at least you agree -- and I know you have in the past as well -- that the vice president never directly asked you to go or asked that anyone go, namely his staff just wanted some answers and it was the CIA's decision to then send -- dispatch -- someone to try to get some firsthand information?

WILSON: That's correct. And I've said that in my op-ed, and I've said it in an interview here, and I've said it every time since.

BLITZER: Now, the Senate Intelligence Committee report, as you well know, suggested this -- and I'll read to you what they say -- "Interviews and documents provided to the committee indicate that his wife, a CPD employee, suggested his name for the trip" - Counter- Proliferation Division over at the CIA.

And you've denied that your wife was the one who came up with the idea to send you

WILSON: It's not so much that I've denied it. It was the CIA itself that denied it a week after the Novak article came out, well before I was ever in a position to acknowledge that my wife worked for the CIA.

And indeed, regrettably, the staff at the Senate Select Committee on Intelligence did not call the CIA to find out their official position. But a year before, "Newsday" reporters Knut Royce and Tim Phelps did, and this is what the CIA told them:

"A senior intelligence officer confirmed that Plame was a Directorate of Operations undercover officer who worked alongside the operations officers who asked her husband to travel to Niger. But he said she did not recommend her husband to undertake the Niger assignment.

"They" -- the officers who did ask Wilson to check the uranium story -- "were aware of who she was married to, which is not surprising. There are people elsewhere in the government who are trying to make her look like she was the one who was cooking this up for some reason. I can't figure out who it would be."

BLITZER: You wrote a separate letter, which we've read, to the chairman, vice chairman of the Senate Intelligence Committee, making these points.

Did you ever get a response to them? Because their conclusion was very hard and fast, that it was your wife who came up with the idea.

WILSON: One of the things I asked them to do was go out and re- interview an officer who they had quoted as saying that she had dropped my name into the hat or she had suggested me. He went to see her and said that he had not said that and he wished for an opportunity to correct the record. As far as I know, they never did.

But the response to your direct question...

BLITZER: What would have been so bad if your wife would have recommended you to go to Niger for this investigation.

WILSON: Of course, from my perspective, it wouldn't have been bad at all. This was a legitimate request to answer a national security question. I was well qualified to do so. Indeed as the Senate Select Committee report says, I had made a trip in 1999 to Niger to look into other uranium-related matters, so I was well known to the CIA.

BLITZER: I want you to take a breath, because we're going to take a breath ourselves. We're going to take a quick break. We have more questions to ask Ambassador Joe Wilson. He's sticking around. Please stay with us.

Also coming up, the man who played a major role in planning the Iraq War, the undersecretary of Defense. Doug Feith. He is standing by as well. He'll be my guest.

And later, closing in on al Qaeda in Iraq. Coalition forces say they've nabbed two key aides to Abu Musab al Zarqawi.

And rescued from the rubble. Firefighters dig brick by brick by brick to save a baby trapped when a wall collapses. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

And we're back with the former U.S. ambassador, Joe Wilson. His wife is the former CIA operative whose name was leaked to reporters, possibly illegally.

Let's talk a little bit about the politics of this. On September 30, 2003, you were quoted in the "Washington Post" as saying, "at the end of the day, it's of keen interest to me to see whether or not we can get Karl Rove frog-marched out of the White House in handcuffs."

That's almost two years ago you were saying Karl Rove should be arrested. On the basis of what were you saying it then?

WILSON: Well, it was a statement that I'd made at a meeting in Seattle. And as my wife later told me, she thought I'd gone a little over the top, so I took the handcuffs off. But I believed then and I believe now that -- and I know that Karl Rove was, in fact, engaged in pushing the Novak story, including calling a reporter and saying, "Wilson's wife is fair game."

I find that to be an outrageous abuse of power from a senior White House official, certainly worthy of frog-marching out of the White House. In handcuffs? Probably not. Out of handcuffs? Certainly.

BLITZER: But you don't want to name that reporter who told you that?

WILSON: It was Chris Matthews of "Hardball."

BLITZER: He said that he had spoken with...

WILSON: He called me up as soon as he got off the phone. He called me up and he said, "I just got off the phone with Karl Rove. He says your wife is fair game."

BLITZER: Do you believe that Karl Rove committed a crime?

WILSON: I don't know. That's in the hands of the special counsel. Clearly, the CIA, in referring it to the Justice Department, believed that a possible crime needed to be investigated. And that is what set off the investigation and that is where we are now.

Two years later, after the president had said he wanted everybody to cooperate with the Justice Department investigation, we've had to go up to the Supreme Court to get the release of the confidentiality waiver for a journalist. We've got one journalist who has been through agony before he was released and we have another journalist languishing in jail. It is time for those sources to step forward and accept responsibility for what they've said to these journalists.

BLITZER: You know, you're being accused of being a political hack, a Democrat, a supporter of John Kerry, someone who is simply seeking to score political points.

WILSON: Well, let me tell you, I reserve the right to participate fully in the selection of my country's leaders. That's a right that every American has.

Let me make a couple of points.

One, I was a George Herbert Walker Bush ambassador.

Two, I made my trip out to Niger because I was asked to investigate a national security matter.

Three, my trip out to Niger took place eight months before I ever spoke out on the Iraq war.

And four, when I did speak out, in an article in October of 2002, I acknowledged that weapons of mass destruction were the thereat. I offered my views based on my two-and-a-half years in Iraq, including as charge d'affaires in Baghdad during the first Gulf War.

And as a consequence of the article I wrote, I received a letter from the first President Bush. Let me just read part of it to you, if I may.

BLITZER: This was a letter you received when?

WILSON: I received this on October 25, 2002, at the very beginning of the serious debate on what U.S. policy toward Iraq should be, eight months after I made a trip to Niger, and eight months before my wife's identity was compromised.

He says, "Dear Joe: I read your fascinating article, and I agree with a lot of it. I am not sure Saddam Hussein will back down in the face of this latest challenge, but I certainly hope he will. Further, let me conclude by saying thank you very much for your letter. Further, I have great respect for you and for your service to our country. I hope you know that. Warm regards, George Bush."

BLITZER: But the other argument that's been made against you is that you've sought to capitalize on this extravaganza, having that photo shoot with your wife, who was a clandestine officer of the CIA, and that you've tried to enrich yourself writing this book and all of that.

What do you make of those accusations, which are serious accusations, as you know, that have been leveled against you?

WILSON: My wife was not a clandestine officer the day that Bob Novak blew her identity.

BLITZER: But she hadn't been a clandestine officer for some time before that?

WILSON: That's not anything that I can talk about. And, indeed, I'll go back to what I said earlier, the CIA believed that a possible crime had been committed, and that's why they referred it to the Justice Department.

She was not a clandestine officer at the time that that article in "Vanity Fair" appeared. And I have every right to have the American public know who I am and not to have myself defined by those who would write the sorts of things that are coming out, being spewed out of the mouths of the RNC...

BLITZER: Who did you vote for in 2000?

WILSON: In 2000? I voted for Al Gore. In 1992, I voted for George Bush.

BLITZER: The first President George... WILSON: That's correct.

BLITZER: But you gave money to both campaigns.

WILSON: I believe passionately in the right of citizens and the responsibility of citizens to participate in the choice of their political leaders. I believed that...

BLITZER: Valerie, your wife, still has a job at the CIA.

WILSON: She has gone back to it.

But let me go back to this. I also contributed to the Bush-Cheney campaign in 2000, because I believed that Mr. Bush and Mr. Cheney would make better Republican leaders than Mr. McCain. I regret that decision. I'd like to get my money back. But I voted for Al Gore.

BLITZER: One final question. What's going to happen, in your opinion, when all the dust settles?

WILSON: Well, I believe that the special counsel will have the last word on this. And I have full faith in the institutions of our government and in the personal qualities of Pat Fitzgerald and of the FBI team that is working to support him.

BLITZER: So if -- and this is the final question -- if there are no charges leveled against Karl Rove, will you apologize to him?

WILSON: I believe Karl Rove should be fired. I believe Karl Rove should be fired because I believe it's an outrageous abuse of power for somebody sitting in an office next to the president of the United States to be personally engaged in a smear campaign against citizens of this country.

BLITZER: And his argument that he was simply trying to correct the record, that Matt Cooper was going down the wrong trail when -- Matt Cooper of "Time" magazine -- when he was suggesting that Vice President Cheney recommended that you go on the trip...

WILSON: If you go back and you take a look at what he was suggesting, he was suggesting that -- he was saying that more information would be forthcoming.

The information that came out of the White House the day after my article appeared, and a week after Rove apparently leaked to Cooper, was that the 16 words did not rise to the level of inclusion in the State of the Union address.

The following week, Stephen Hadley -- coincidentally -- happened to find two faxes and a memo of a telephone conversation, which caused him to offer his resignation, because they had put those 16 words in the State of the Union address.

There's two irrefutable facts. The 16 words in the State of the Union address, and my wife's identity was compromised. And Joe Wilson was not responsible for either of those. BLITZER: All right. We'll leave it at that.

Joe Wilson, the former ambassador to a couple countries in Africa and the former acting ambassador in Iraq.

Thanks for joining us.

WILSON: Thanks, Wolf, very much.

BLITZER: And when we come back, another hurricane rapidly intensifying right now in the Caribbean. We'll tell you about Emily's latest projected path. Plus, a three-judge panel in Aruba rules whether or not two brothers can be re-arrested in the case of that missing Alabama student.

And one of the key strategists in the war in Iraq, the undersecretary of Defense, Doug Feith. He's standing by to join us on the current wave of violence in Iraq. Stay with us.

(COMMERCIAL BREAK)

BLITZER: This story just coming into CNN. We've learned that Republican Congressman Randy Cunningham of California will announce he won't seek reelection. Cunningham has been under increasing scrutiny since it was revealed he sold a San Diego home to a defense contractor at a price much higher than comparable homes in the area.

Cunningham sits on the Defense Appropriations Subcommittee. The contractor later sold the house for a 700,000 loss. CNN has confirmed a grand jury now investigating that sale.

Let's check some other stories now in the news.

A panel of appeals judges in Aruba says 17-year-old suspect Joran Van Der Sloot can stay behind bars in connection with the disappearance of Natalee Holloway. The judges today ruled there's enough evidence to hold the teenager, but not enough to re-arrest his fellow suspects Satish and Deepak Kalpoe. Holloway vanished in late May while on a post-graduation trip to the resort island.

Hurricane Emily is gathering strength in the Eastern Caribbean, and has just been upgraded to a category 3 storm, bearing down on Jamaica. Emily's winds were clocked at 115 miles per hour. It's churning west/northwest after raking Trinidad and Tobago. Emily roared late yesterday over Grenada, where it's blamed for at least one death.

New York's fire commissioner says this morning's building collapse could have been much worse. Five pedestrians, including a 7- month-old infant, were hurt when a scaffolding and a wall of a one- story former grocery store simply came down on Manhattan's upper west side. All the injured are in stable condition.

A U.S. military spokesman says coalition forces have nabbed two suspected high ranking al Qaeda leaders in Iraq. Abu Seba and Abu Abdul Aziz are believed to have close ties to al Qaeda's number one man in Iraq, Abu Musab al Zarqawi. Authorities say both were arrested last weekend in separate raids.

Doug Feith was one of the key strategists leading up to the war in Iraq. He'll soon be leaving his position as undersecretary of Defense for policy. He's joining us now live here in our Washington studios.

Mr. Secretary, welcome to CNN. Welcome to our program.

DOUGLAS FEITH, UNDERSECRETARY OF DEFENSE FOR POLICY: Good to be with you.

BLITZER: Let's talk a little bit about the war in Iraq. And you were one of the key architects, one of the key planners.

If someone had told you before the war, in the weeks leading up to the war, that two-and-a-half years or so later, or two years later, 1,800 or so American troops would be dead, thousands of others would be injured, and the American taxpayers would have to shell out what's now approaching $300 billion with no end in sight, what would you have said?

FEITH: Our purpose in Iraq was to overthrow a regime that was a major threat to us, to the region, to the world. I think the world is much better off with the removal of Saddam Hussein. And I think it's an important contribution to our fight against international terrorism.

BLITZER: But did you anticipate the cost, what this would endure?

FEITH: Nobody thought that it was going to be a simple matter. The Iraq war was a large war against a regime that had a formidable military. Iraq is a country of 25 million people. It was clearly going to be a major effort.

And there have been terrible sacrifices and our forces have fought bravely. And the sacrifices are important...

BLITZER: I think everybody agrees with that. But did you ever, going into the war, in the weeks, the months leading up to the war, think it would lead to what it has led to?

FEITH: There was an understanding that this was a difficult undertaking. I think the war, the major combat part of the war, went swiftly and really quite brilliantly.

BLITZER: That's true. But the post-war has been unexpected.

FEITH: The insurgency has been a big challenge. And we are fighting it now with the kinds of successes you just reported, getting important al Qaeda people nabbed.

And what we see -- the key to operations of that kind is getting good intelligence from the Iraqis. And one of the things that we've seen is that the kind of strategy that we're pursuing, which includes working with the Iraqis on the development of a political process, is producing more intelligence and producing successes of that kind. BLITZER: As you know, you've been widely criticized for misplanning the events leading up to the war. General Shinseki, Eric Shinsheki, the Army chief of staff at the time, said this. Going into the war, he offered this assessment.

Listen to what he said. I'll read it to you: "I would say what's been mobilized to this point, something on the order of several hundred thousand soldiers are probably, you know, a figure that would be required" -- several hundred thousand soldiers.

Your boss, Paul Wolfowitz, the deputy secretary of Defense at the time, said that Shinseki was -- quote -- "wildly off the mark."

And Senator McCain, among many others, said you went in with too few troops, to try to get the job done on the cheap, and as a result, the troops now are paying the price for that miscalculation.

FEITH: One of the major things that was on the minds of the war planners was the danger of a long, protracted, major war.

And there was a premium on surprise, because there was -- General Franks had the view that if we could achieve surprise, we could get a shorter major combat period. And he came up with the idea of the smaller force.

We went to war with a smaller force than Saddam Hussein expected us to start with. We had achieved a tactical surprise. We had a much shorter war than a lot of people anticipated. And there were a lot of benefits...

BLITZER: But that's not the question. And we'll get to this, because I want to take a quick break, but what General Franks and others have been critical of you and other policymakers -- not military, policymakers -- at the Pentagon was that you didn't think through what happens after the major combat operations were done, what happens with the looting and all the other issues, the insurgency that has developed?

But I want to hold that thought and give you a chance to take a break, because we're going to take a break.

More of my interview with Undersecretary of Defense Doug Feith, right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're back with the undersecretary of Defense, Doug Feith, a key planner of the war in Iraq.

Here's what the former Army secretary said, Thomas White, in November, 2003, a couple of months, a few months after the end of major combat in Iraq.

He said this in the "New Yorker". He said, "Feith's team had the mindset that this would be a relatively straightforward, manageable task because this would be a war of liberation and therefore the reconstruction would be short-lived."

Is he right?

FEITH: No. I don't know where he got that from.

BLITZER: Did you, in your opinion, accurately assess the post-war kind of situation that would develop?

FEITH: There's a difference between planning and predicting. And we're not in the crystal ball business. What we did is planned to be able to handle different kinds of problems that would arise. And it was understood that when you have a tyranny like the Saddam Hussein regime and you get rid of it, there's going to be a big vacuum and there could be large problems. We also understood that we were liberating the country.

So we were trying to put ourselves in a position to handle anything.

BLITZER: Because the criticism has been that you were overly optimistic, Pollyanna-ish, in your assessment. At one point you were quoted as saying, or at least, you said during testimony -- this is before the war, actually, as the war was unfolding, the early days of the war, March 27, 2003 -- "If things go well, we'll be able to hand over to the Iraqis so there would be no need for U.N. participation."

FEITH: Well, we were interested in handing over responsibility to the Iraqis rather than the U.N., and that's, in fact, what we did.

BLITZER: But the argument is that if the U.S. had worked more effectively to bring the U.N. in on the takeoff, the U.N. would have been there on the landing as well.

FEITH: We worked very hard to get the U.N. in on the takeoff. We had a resolution in November of 2002 and the French blocked our ability to get a second resolution. We were working at...

BLITZER: So what was the biggest mistake that was made?

FEITH: Well, I think that the Iraq operation was done very well. I think that our forces have performed extremely well and I think that we've accomplished a great deal in a relatively short period of time. I mean, in two years, there has been enormous development of democratic political institutions in the country. We had an interim constitution created. We created the Iraqi interim government...

BLITZER: But the whole premise...

FEITH: And, Wolf, let me just say, the achievement of last January, when the Iraqis went to the polls -- on time, according to the schedule set down in the interim constitution -- was a gigantic achievement.

BLITZER: But when whole premise of the war, as you, yourself, said in the weeks leading up to the war, was to find and destroy weapons of mass destruction -- chemical, biological, nuclear capabilities -- none of which have existed.

FEITH: No, that's not accurate.

BLITZER: Well, let me read to you what you said the "New Yorker". At least you were quoted as saying, "By using military force -- what we would be using military power for, if we have to, would be the goals the president has talked about, particularly the elimination of the chemical and biological weapons, and preventing Iraq from getting nuclear weapons."

FEITH: Right. And the Iraqis -- the Saddam Hussein regime -- had chemical, biological and nuclear weapons programs. And, as you know, the Duelfer report concluded that.

BLITZER: But no stockpiles.

FEITH: What they didn't have is stockpiles.

BLITZER: Well that's a significant difference.

FEITH: Well, how significant it is, is an issue. As you know, if you have the ability -- if you have dual-use facilities, if you have the ability to produce insecticide or fertilizer, you have the ability to produce chemical and biological weapons stockpiles.

Saddam had the programs. He had the capability. He had developed them and used those weapons in the past.

I don't think you can take an enormous amount of comfort if you're the president of the United States and you're worried about Saddam Hussein possibly providing those kinds of weapons to terrorists, you can't take...

BLITZER: But that argument -- we have to wrap it up, because we're out of time -- but that argument, now, the one you're making, is a lot different than the one you made leading in.

You didn't talk about capabilities. You talked about stockpiles. You talked about actual weapons.

FEITH: In fact, we did talk about capabilities. Obviously, the intelligence community, unfortunately, made a significant error with respect to the stockpiles.

We still don't know what happened to the stockpiles that Saddam had that we have not been able to find. I mean, nobody knows the mystery of how he got rid of them.

But the danger that he might provide the fruits of his WMD programs to terrorists was a danger that President Bush rightly decided to terminate.

BLITZER: We have to leave it there, unfortunately. We could go on, and maybe on a different occasion we will.

Doug Feith, I you know you're leaving the Pentagon soon. Thanks very much for joining us.

FEITH: Good to be with you.

BLITZER: Appreciate it.

British authorities are slowly sorting out events that led up to last week's deadly terror attacks. And they're asking for help. When we return, our world affairs analyst, William Cohen, he'll join us to weigh in on the latest on these investigations. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Tensions are heating up in the Middle East. CNN has confirmed Israeli helicopters have just launched seven missile strikes into Gaza. There are no immediate reports of casualties. The Israeli Army is not commenting on the reports at this time.

The strikes come in the wake of reports that Palestinian militants today, fired a series of homemade rockets into Israel from northern Gaza. Four rockets fell on an Israeli community north of Gaza, killing one woman and wounding another civilian. The Palestinian interior minister has ordered Palestinian security forces to use force on any militants who carry out similar attacks.

Joining us now with his thoughts on this developing story, as well as the London terror attacks, our world affairs analyst, a former Defense secretary, William Cohen. He's the chairman and CEO of the Cohen Group here in Washington.

Mr. Secretary, I think it's fair to say that the Israeli scheduled withdrawal from Gaza in mid August is problematic, given the tensions that are developing, not only for the Palestinians, but the Jewish settlers themselves.

WILLIAM COHEN, CNN WORLD AFFAIRS ANALYST: Well, this is has always been the challenge that Ariel Sharon, the prime minister, has faced, both from the left and the right, or the Palestinians and Israeli settlers. It's going to be hard. It's going to -- he has to maintain a steady course, understanding that he cannot tolerate the settlers from refusing to move and no more can he tolerate the Palestinians from launching attacks. So, it's a tough road he has to walk.

BLITZER: Let's talk about the London terror attacks last week -- the fact that they're homegrown, that they're British citizens, young men in Leeds, allegedly -- born in England. What does that say in terms of the overall war on terror?

COHEN: It says that there are no rear lines in this war. Everybody, every one of us, those in London, those here in the United States are on the front lines. None of us are safe from the scourge of terrorism.

And it means that all of us are now going to have to cooperate through intelligence sharing, not only within this country in breaking down the stovepipes and sharing information from the CIA and the FBI and the NSA and so forth, but also weaving a web of intelligence cooperation globally, because every single free citizen of the world is now under assault. And that means greater cooperation and not less.

BLITZER: Because this is going to pose for American law enforcement, a very difficult and delicate issue. How do you -- the best defense is intelligence; having the good information, infiltrating cells. But at the same time, you're dealing with, in our case, American citizens.

COHEN: You need a combination of things. Obviously, you have to play defense in the sense of trying to protect your citizens as much as possible through consequence management, managing catastrophe strikes.

You also have to go on the offense, which we're doing. But you have to go on the offense more on the intelligence field, than the military field. Most of the military people will tell you, you cannot win this war on the battlefield. It must be won through intelligence, but through the communities that are most at stake here.

For example, the Islamic clerics have to come out and start condemning the abuse and the misinterpretation and the calling for a holy war in the name of Islam. What they have to do is condemn this. So, you have to use intelligence, but you have to have the Islamic community condemn this kind of activity.

BLITZER: Mr. Secretary, we've got to leave it right there. Thanks very much as usual.

COHEN: OK. Thanks.

BLITZER: When we come back: They played the lottery together for five years and now Powerball pays big money to this small group of coworkers. We'll tell you their exciting story. That will be our "Picture of the Day." Stay with us.

(COMMERCIAL BREAK)

BLITZER: A windfall for some federal disaster workers and that makes our picture of the day. A $10 million Powerball jackpot was turned over to 14 of 15 FEMA employees who pooled their resources and won the June drawing. The ticket was purchased in West Virginia, although all but three winners actually live in Virginia. They took the cash option, which comes in to about $266,000 apiece after taxes. The windfall was delayed by a landfall for the 15th winner, who is working on disaster relief efforts for victims of Hurricane Dennis. FEMA: The Federal Emergency Management Agency. Good work to those guys. Thanks very much.

Remember you can always catch us weekdays at this time 5 p.m. Eastern. Until tomorrow, I'm Wolf Blitzer in Washington.

LOU DOBBS TONIGHT getting ready to take over. Lou's standing by in New York, right now -- Lou?

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