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CNN Live At Daybreak

Deadline for Iraqi Constitution Draft; Gaza Withdrawal Begins

Aired August 15, 2005 - 06:00   ET

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

KELLY WALLACE, CNN CORRESPONDENT: It is Monday, August 15.
Holdouts in Gaza and Israeli soldiers arrive to show them the way out. Some protesters met those soldiers as they showed up with eviction notices this morning. We have got a live report coming up.

Also, Iraqi interim leaders approach a deadline -- can they get a constitution finished? We go live to Baghdad in just a few minutes.

From the Time Warner Center in New York, this is DAYBREAK and I'm Kelly Wallace in today for Carol Costello.

Good morning, everyone.

Thanks so much for waking up with us.

Chad Myers will have your forecast in just a moment.

Also ahead, a new spin on an old adage -- keep your friends close and your enemies closer. Some companies want hackers working on the inside.

And a gallon of gas is up, up and away. Are other goods you buy experiencing a bump in prices, as well? We'll check it out.

But first, these stories now in the news.

Israeli soldiers are handing out eviction notices in Gaza. Some of the residents who ignored the deadline to leave clashed with soldiers and police. We'll have a live report from Gaza a little later this hour.

Family members are heading to the site of a plane crash near Athens, Greece today. They will be called upon to identify some of the 121 passengers and crew who died in Sunday's crash. Greek officials say many of the recovered bodies were frozen solid.

Japan offers an apology on the 60th anniversary of its surrender to end World War 2. Prime Minister Junichiro Koizumi expressed his condolences for the victims of Japan's colonization during the war years.

Time to get a check of weather.

Chad in Atlanta -- Chad, what's it looking like today?

CHAD MYERS, CNN METEOROLOGIST: Much cooler for you. (WEATHER REPORT)

WALLACE: Well, we are just about four hours away from the deadline for Iraq's new draft constitution. But here's the question -- will the document be done on time?

Iraqi leaders tell CNN they are confident it will be finished.

CNN's Aneesh Raman joining us from Baghdad now -- Aneesh, is there any chance, though, they won't get this done on this day?

ANEESH RAMAN, CNN CORRESPONDENT: Well, Kelly, good morning.

It's turning rapidly into a situation of it depends on who you speak to. Various members of the national assembly coming out in the past hour, each with their own interpretation of whether a compromise can be reached on what has emerged as the main stumbling block, the issue of federalism.

The Kurd and Shia coalition would like working in the constitution that does allow for various autonomous governments in Iraq. The Kurds have a majority population in the north. The Shia have the same in the south. Both those areas, though, also where the majority of Iraq's oil is. So oil revenue becomes a key eliminate to any discussion of federalism.

The Sunnis, of course, worry that this would diminish the central government's authority and also, perhaps, weaken Iraq as a whole. They want this entire conversation sidelined, dealt with by a parliament that would come into power at the end of this year. The Kurds, on the other end, want as much as they can in this document, in this constitution, for assurances of their autonomy. So that's essentially where we gather things stand right now.

Some specifics have been worked out in terms of border security and small points of the oil revenue. But the mechanics of this remain unresolved and that is what is crippling the process. That is what could derail it all. And the stakes here are incredibly high -- Kelly.

WALLACE: Yes, the stakes are so high, Aneesh.

What if these problems don't get resolved today, they don't come up with a draft constitution? What's the impact there, in particular, on the violence in the country?

RAMAN: Exactly. There is essentially two. One is the logistical and the legal, which is that this government, if the deadline is not met today, would essentially be dissolved. You'll recall, by August 1st they had to activate an extension on this process. They chose not to. So if they don't get a draft document today, they become a caretaker government. A new national assembly is voted into power in mid-December and this whole process starts anew.

But perhaps more troubling, Kelly, is, as you say, the signal it would send to the insurgency here, in terms of political turmoil, that has been the basis of pressure from the U.S., as well as from the international community, keen to keep these time lines, the political timeline on check so that the stability can be brought to this country. And the desperate hope remains, Kelly, among all Iraqis, that the insurgency can be curbed if more moments like this take place. That's what we're waiting to see, if it happens, in just a few hours -- Kelly.

WALLACE: Aneesh, thanks so much.

Aneesh Raman reporting from Baghdad.

Coming up at the bottom of the hour, we will take a closer look at the expected role of women in the new Iraq. So stay tuned for that.

Insurgent attacks and eroding support have led some to once again use the word quagmire to describe U.S. involvement in Iraq. Quagmire, of course, is a term often associated with the Vietnam War.

Former Secretary of State Henry Kissinger says he's afraid that isn't the only similarity between the two conflicts.

(BEGIN VIDEO CLIP)

HENRY KISSINGER, FORMER SECRETARY OF STATE: For me, the tragedy of Vietnam was the divisions that occurred in the United States that made it im -- in the end, impossible to achieve an outcome that was compatible with the sacrifices that had been made.

(END VIDEO CLIP)

WALLACE: U.S. military investigators are trying to determine if insurgents were planning to use chemical weapons. Potentially dangerous chemicals were found at an abandoned storage site near Mosul. Investigators say there isn't enough information just yet from the site to make that determination.

Seven more American soldiers were killed in separate attacks in Iraq over the weekend. And that brings the death toll to 1,850 since the beginning of the war. Fifty-two of those deaths have come this month.

President Bush's Texas neighbor has had enough of Cindy Sheehan's camp out against the Iraq war.

Larry Mattlage fired a couple of shots into the air Sunday, promoting a visit from the Secret Service and McClennan County deputies. Mattlage says he's tired of the growing legions of anti-war protesters.

(BEGIN VIDEO CLIP)

LARRY MATTLAGE, PRESIDENT BUSH'S NEIGHBOR: Look, when they first came out here, I was sympathetic to their cause, right? They, as American citizens, have a right to march, to protest. But it's like company. If you had your brother-in-law in your house for five days, wouldn't it start stinking after a while? You're ready for him to go home, won't you?

Five weeks of this is too much. We live here. It's our community.

(END VIDEO CLIP)

WALLACE: Mattlage claims he was "getting ready for dove season" by firing off those shots. McClennan County Sheriff Larry Lynch says Mattlage broke no laws, but he would like for all involved to use restraint.

Here is a look at some of the other stories CNN will be covering for you this week.

If you didn't already know it, today is tax day part two. That is right, it is the deadline for people who filed for extensions last time around. So, file away if you filed for an extension.

On Tuesday, World Youth Day marks the first trip of Pope Benedict XVI. As many as 800,000 people are expected for the Catholic celebration in Cologne, Germany.

We will also be watching the sentencing of Dennis Rader on Wednesday. Rader already pleaded guilty to 10 counts of murder in the BTK serial murders. He's expected to get life in prison.

On Thursday, troops from Russia and China will participate in their first ever joint military exercise. As many as 100,000 troops are expected to take part in Peace Mission 2005.

On Friday, a Virginia judge will preside over the extradition hearing for convicted sniper John Allen Muhammad. The State of Maryland wants to try Muhammad for six murders. He is already on death row in Virginia.

Still to come on DAYBREAK this Monday morning, at about 10 past the hour, we'll have more on the withdrawal from Gaza. We will hear how the families around the settlements are handling this huge change to the way they live and do business.

Also, many U.S. oil refineries are back at full capacity. But will that have any effect on the price you pay for gas? That's coming up at about 20 after in "Business Buzz."

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

(COMMERCIAL BREAK)

WALLACE: And back to our troops, the pullout from Gaza.

Thousands of Jewish settlers getting eviction notices on this day. They must depart their homes by midnight Tuesday. And when they leave, there are big issues to consider back in Gaza. For one, their departure will likely have a profound effect on the local economy.

CNN's Hala Gorani takes an informal survey.

(BEGIN VIDEO TAPE)

HALA GORANI, CNN CORRESPONDENT (voice-over): Over the last five years, Abu Abdallah has had to fire 90 percent of the workers of his beachfront restaurant in Gaza. Haifa Restaurant is across the road from the Jewish settlement of Nezarim. Road closures and military incursions virtually wiped out business here.

ABU ABDALLAH, GAZA RESTAURANT OWNER: The intifada here has destroyed the economy because we are very close to Nezarim. So the people can't come to eat here, to enjoy food and to eat. And the road is closed all the time.

GORANI: Abu Abdallah says a small handful of customers are coming back.

(on camera): But if the Israeli disengagement will help businesses like Haifa Restaurant, the economy as a whole, experts say, won't improve unless trade can flow easily across the border, like here at the Karney Crossing (ph), east of Gaza City.

(voice-over): That's because most of Gaza's GDP relies on trade of textiles and agricultural products.

MOHAMMED SAMHOURI, PALESTINIAN ECONOMIC ADVISER: If your borders are controlled by someone else, you cannot compete in this world. You cannot get your products to their final destination on the right terms, at the right price, at the right quality. That is not the case right now.

GORANI: This Gaza factory makes floor tiles. Its biggest market used to be Israel. But owner Sameh Khozendar tells me his trucks are sometimes held up at the border for three days and that the Israeli pullout probably won't change things much.

SAMEH KHOZENDAR, KHOZENDAR SONS COMPANY: If we cannot bring it easily from outside to our factory and easily to expert our goods to the West Bank and Israel, it will not change anything.

GORANI: Back at Haifa Restaurant, though, there is optimism in the air. When the settlers go, so will the roadblocks and the insecurity.

ABDALLAH: I feel that we will return back to work way and we have prepared for that.

GORANI: Preparing for the future by hiring back five waiters. And Abu Abdallah is having a new sign put up at the door. In Arabic and English, the words read "welcome."

Hala Gorani, CNN, Gaza.

(END VIDEO TAPE)

WALLACE: Your news, money, weather and sports. It is exactly 15 minutes after the hour and here is what is all new this morning.

Iraq's deadline to draft a new constitution is less than four hours away. The role of Islamic law and incorporating the concerns of the Sunni Muslim minority appear to be the biggest obstacles.

In money, as if you don't know this already, we are paying more and more at the pump. Gas prices have gone up $0.20 over three weeks. An average gallon of regular unleaded gas now costs $2.50.

In culture, the Broadway musical based on the life of John Lennon has opened. Wife Yoko Ono was there on opening night. One interesting feature of the musical, five different actors portray the legendary singer.

In sports, Rafael Palmeiro's return to baseball after a 10-day suspension for steroids got mixed reviews from the fans. Orioles' faithful gave the slugger both cheers and jeers. Palmeiro went hitless and Baltimore lost 7-6 to Toronto.

A controversial subject there -- Chad.

MYERS: Yes, a little bit. You know, he's going to have to get over that. Maybe the fans will absolutely forget about it. I'm sure they will, a couple of weeks, maybe two or three weeks, whatever it takes. As soon as he starts hitting again, they'll all be fans of him again.

(WEATHER REPORT)

WALLACE: Well, "Just In Time" magazine this week, the economic and demographic surge of Hispanics in America. More than 41 million, according to the 2000 Census. Among the most influential Hispanics, according to "Time," Attorney General Alberto Gonzalez, New Mexico Governor Bill Richardson, Los Angeles Mayor-Elect Antonio Villaraigosa. And how about celebrities like Jennifer Lopez and Salma Hayek? And perhaps another up and comer in politics, the president's nephew, George Prescott Bush.

A "Time" survey of Latinos found that 54 percent believe a Latino or Hispanic will be nominated for president or vice president in 2012.

Still to come on this Monday edition of DAYBREAK, not in my backyard. That's an American attitude some say will have to change if oil refineries are going to rescue us from the high price of gas.

And paid to hack -- why are some companies inviting cyber code crackers to work on the inside?

But first, we want to say good morning to Boston, where Sunday's storms left a lot of you powerless. I hope that tower is coming back.

DAYBREAK will be right back.

(COMMERCIAL BREAK) WALLACE: Time now for a little "Business Buzz."

Still talking -- Qwest Communications and one of its largest unions are natural gas a new contract. The current one with the Communications Workers of America expired on Saturday. Among the key issues, health care and benefits for nearly 25,000 employees.

British Airways anticipates being near full operations today after a strike Thursday and Friday stranded thousands of passengers. The strike by food caterers, backed later by ground crews, forced the shut down of operations for the carrier at Heathrow Airport in London.

Well, trouble at the nation's oil refineries is contributing to record high oil prices.

Carrie Lee joining us now to explain what is going on.

CARRIE LEE, CNN CORRESPONDENT: In case you haven't heard about this, right, Kelly?

WALLACE: Right. We haven't -- we've heard just a little bit about that.

LEE: It's been such a huge story. Well, you probably know that before crude oil becomes gasoline or home heating oil, it has to be refined. Well, the problem is some U.S. refineries are operating at near maximum capacity, and that leaves no room for error. Well, two recent fires at a refinery in Texas forced the shut down of that plant and hurt supply across the country.

So, why don't oil companies just build more refineries? Well, NIMBYS -- not in my backyard. Everyone benefits from refineries, but no one wants one in their neighborhood. So right now only one planned refinery is moving forward outside of Phoenix. But that facility is not expected to refine a drop of oil until 2010.

Meanwhile, oil companies are expected to spend $20 billion on equipment between 2000 and 2010, but that isn't going to do much to expand output. Those improvements are going to simply bring the refineries in line with new environmental standards.

Kelly, the fact that we're operating so close to maximum capacity, one little glitch, one problem and that would send prices higher. They are coming down a bit, but closing very close to $67 a barrel on Friday.

WALLACE: And what impact in this -- these record prices for oil having on the markets and the futures, as well?

LEE: Well, it certainly did last week. The Dow lost 85 points. We did end a little bit higher for the week.

This morning, futures are looking mixed.

But oil front and center, I think, is going to be the thing to affect stocks today and maybe for the near-term going forward. WALLACE: And later we're going to talk about whether we're all going to be paying the price with other products because of the high price of oil and gas.

LEE: That's right. And that's going to trickle into corporate profits and that could affect their results for this quarter, as well.

WALLACE: All right, Carrie Lee with the "Business Buzz."

Good to see you here.

LEE: You, too.

WALLACE: Thanks so much.

LEE: OK.

WALLACE: In today's age of high technology, more and more companies are vulnerable to hackers. Now, the firms are fighting back in an unconventional way.

Take a look at how bad the problem is. Carnegie Mellon University found in 1988 six -- there were six reports of computer system attacks. Well, that grew to more than 2,000 reports in 1995 and almost 138,000 reports of attacks last year.

Some frustrated computer security firms are now offering to pay hackers to find loopholes in their company's computer systems. That's right.

And the whole idea is to get help from responsible hackers, known as "white hats," to help fight off the malicious "black hats."

Joining us from Atlanta to talk about all of this is Brian Grow of "Business Week."

Brian, thanks for being with us today.

My first question, isn't there something wrong here with computer companies paying hackers -- these are the people that have frustrated companies, caused them problems for years -- isn't there something wrong here?

BRIAN GROW, "BUSINESS WEEK": Well, Kelly, there is a significant trade in software flaws and the exploits -- that's the malicious code -- designed to exploit them. And there's also a significant practice among the "white hat" hackers to post their information to Web sites that often leaves companies scrambling.

So this is an effort to bring that information out of the underground and into the light, so to speak.

Yes, there's a problem in the sense that you always face the risk of so-called double agents, people who could be paying for information they have, getting paid for information that they have on the one hand, while, on the other hand, seeking to use it for malicious purposes.

But the feeling is that there's so much of this unharnessed research in the underground that this is, as one executive put it, the way of the future.

WALLACE: How much are we seeing this happening right now? I mean how many companies? Is it kind of like a pilot situation, where some companies are watching others to see how it works and if it's successful, and then will follow suit?

GROW: Well, there's only two companies right now that are doing it. One is a company called iDefense, which really pioneered the practice through its so-called vulnerability contributor program. But the newest program is one going to be launched this week, in fact, by a company called Tipping Point with a program called the Zero Day Initiative. And, in fact, there's a lot of buzz in the hacker community that the Zero Day Initiative could actually be a very attractive program because the feeling is you could actually make a living off of it. So you could get paid significantly for the information that you give.

And, by the way, it's very interesting, the Zero Day Initiative is like a frequent flier program in the sense that for every dollar that you get paid, you get a point. And with those points, you can reach certain levels -- bronze, silver, gold and platinum -- and you can win bonuses and free trips to hacker conferences in Las Vegas.

WALLACE: Incredible stuff here, Brian.

But here is the question again, going back to these "black hats," who are the malicious hackers, and the "white hats," who are the responsible ones.

Again, how can a company really know for sure if it's dealing with a responsible hacker or if it's dealing with someone, like you said, a double agent, who could be sort of wanting to get money from the company and then turning around and saying hey, look at this stuff that I came up with about how to crack this company's code?

GROW: It's difficult. The Tipping Point executives say that they're going to conduct background checks. They'll require photo I.D.s. They won't be allowed to use online money transfers, where identities can be masked. There will be an effort to verify who these individuals are.

And both programs say that they will not work with anyone that they know has done harm.

At the same time, we know that identity theft is a key component of what the hackers do, so they/'re very skilled at masking, in fact, who they are. So there's always a risk.

But the view is that if they can get some information out of the underground, off of the dark side of the Web and into the light, then it's a benefit for the companies that are often left scrambling when this information either hits a Web site and a vulnerability is known and someone is trying to exploit it or they're just facing the attacks of malicious hackers.

WALLACE: Well, Brian, times are definitely a changing.

Brian Grow with "Business Week," joining us from Atlanta.

Thanks for sharing your insights with us.

GROW: Thanks, Kelly.

WALLACE: We appreciate it.

Still to come on this Monday edition of DAYBREAK, it is a question that always seems to spark a heated debate -- how did life begin? Now, one Ivy League school weighs in.

And what will the women of Iraq have to say about their country's new constitution? A live interview coming up.

This is DAYBREAK for a Monday.

Don't go away.

(COMMERCIAL BREAK)

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