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THE SITUATION ROOM

GM Prepares to Lay Off Tens of Thousands; Weekend Raid Sparks Speculation About Zarqawi's Fate

Aired November 21, 2005 - 16:59   ET

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


WOLF BLITZER, CNN ANCHOR: It's almost 5:00 p.m. here in Washington, and you're in THE SITUATION ROOM, where news and information from around the world arrive at one place at the same time.
Happening now, it's 5:00 p.m. in Doraville, Georgia, where hundreds of GM workers have learned they're among tens of thousands the company is planning to lay off in a massive restructuring that will shut down entire plants. We'll show you where.

And it's 1:00 a.m. Tuesday in Iraq, where a weekend raid sparked speculation about the death of Abu Musab al-Zarqawi. What's the fate of the most wanted terrorist in Iraq?

And it's 5:00 p.m. on Capitol Hill, where his call for an immediate withdrawal from Iraq sparked some of the most bitter debate yet on the war. The decorated former Marine, Congressman John Murtha, he's standing by to be our guest live this hour.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

We begin with a very important story. The world's largest automaker taking desperate measures right now, hoping to end its desperate times. General Motors announcing plant closings and tens of thousands of layoffs which it hopes will stop the company from hemorrhaging billions of dollars.

CNN's Ali Velshi is standing by live in New York with more on this story.

But let's begin with CNN's Betty Nguyen. She's outside a GM plant in Georgia with more on the layoffs. Betty?

BETTY NGUYEN, CNN ANCHOR: Wolf, it's a dark and gloomy day out here. It's been this way all day long. And it really does match the mood here.

Doraville, Georgia, the plant you see behind me, is just one of three that are set to go off line. Some 2,900 employee here will lose their job by 2008. They are among thousands who learned today, just three days before Thanksgiving, that they will soon be out of work.

(BEGIN VIDEOTAPE)

RICK WAGONER, CHAIRMAN AND CEO GENERAL MOTORS: This is tough medicine for us, and I think it's tough medicine for everybody involved with our company.

NGUYEN (voice over): The new chairman and CEO of General Motors announcing a major restructuring, including new layoffs, part of an effort to stem billions of dollars in losses and make the world's largest automaker profitable once again. The so called turnaround plan will affect about a dozen- facilities across North America.

As a result, GM will shed some 30,000 jobs. That's 5,000 more than previously announced. The company hopes the combined closures and layoffs will save $7 billion a year by the end of 2006.

The GM assembly plant in Doraville, Georgia, a working class suburb just north of Atlanta, is one of three that will close. For workers, it's not entirely unexpected.

UNIDENTIFIED MALE: I think it's been coming for about the past five, 10 years. We knew it was going to close, just didn't know when. And we're just hoping we can get our retirement time in before it closes.

UNIDENTIFIED FEMALE: We know we were like number one on the list to be closed. The economy is bad, so you just have to find something else to do.

NGUYEN: Along with Doraville, assembly plants in Oklahoma City; Lansing, Michigan; and Oshawa, Ontario, will also close, while plants in Spring Hill, Tennessee, and Moraine, Ohio, will see shift reductions.

Other GM facilities, including parts and service operations will shut down, eliminating jobs in Portland, St. Louis, Ypsilanti, Flint, Pittsburgh, and St. Catharines, Ontario.

(END VIDEOTAPE)

NGUYEN: So while the news is not good, it is not unexpected either. The question now centers around how will these employees be paid, because GM does have a contract with the United Auto Workers Union which prevents layoffs before September, 2007. Which means, despite all of these cuts, some 30,000, these workers will still have to be paid job or no job -- Wolf.

BLITZER: Betty Nguyen reporting for us. Thanks, Betty, very much.

Let's bring in CNN's Ali Velshi. He has more on this GM announcement. He's joining us from New York with the "Bottom Line." What does it say to you, Ali?

ALI VELSHI, CNN ANCHOR: Well, Betty's absolutely right. We've discussed this before, Wolf. This has not been unexpected. In fact, most people thought that GM was going to lay off 25,000 people, but 30,000 is a bit of a surprise. But this is the company that was once the most valuable company in America. In 1955, it was the first company in the world to make more than a billion dollars in a year. And this has since 1931 been the biggest car company in the world. They make the most cars. All of that is coming to an end now. This was a desperate attempt to stave off bankruptcy. Delphi, the number one auto parts maker for GM, which GM used to own, declared bankruptcy a little over a month ago. GM might be stuck with an $11 billion bill for the health care of the Delphi workers. It's paid almost $6 billion this year in health care for its own workers. It is crippled under the weight of its pension and health care benefits, and people just aren't buying the cars the way they used to.

Wolf.

BLITZER: And how did it impact the value of the stock today?

VELSHI: Well, strangely enough, the stock hasn't suffered much, because a lot of people were betting on the fact that GM would crumble under the weight of its debt and its problems. Right now, a lot of investors saying, you know what? GM needed to take some drastic measures, they've done it. The stock has stabilized.

BLITZER: Ali, thank you very much.

VELSHI: OK.

BLITZER: Ali Velshi with the "Bottom Line."

Let's move on to the boiling debate over the Iraq war. There were two speeches today. The vice president, Dick Cheney, calling Congressman John Murtha a friend. I'll get Congressman Murtha's reaction. He'll be live here in THE SITUATION ROOM shortly.

But today's other speech came moments ago from Democratic Senator John Kerry.

CNN's Andrea Koppel is joining us now live from the White House with more. Andrea?

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, the vice president's speech came just days after the White House had attacked Democratic Congressman John Murtha for his calling on the White House to withdraw Iraqi troops -- U.S. troops from Iraq within the next six months. Vice President Cheney using his speech today not only to call Jack Murtha a friend, but also to continue what's really become a new strategy of this White House, to take on their mostly Democratic critics for accusing President Bush of skewing prewar intelligence in Iraq.

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES: A few politicians are suggesting these brave Americans were sent into battle for a deliberate falsehood. This is revisionism of the most corrupt and shameless variety. It has no place anywhere in American politics much less in the United States Senate.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), MASSACHUSETTS: And once again, the vice president of the United States is denying his own actions in the course of the war in Iraq. Today, the vice president once again asserted that Congress saw the same intelligence that the White House did. That is just plain flat not true.

(END VIDEO CLIP)

KOPPEL: Democratic Senator John Kerry there.

Another senior Democrat, Joe Biden of Delaware, today basically called the administration on the mat, Wolf, said that it must have a plan for Iraq, how to get out of Iraq. And he also said that misrepresenting intelligence has caused essentially a national security debacle.

Wolf.

BLITZER: Andrea Koppel at the White House. Andrea, thank you very much.

Joe Biden issuing a very detailed program proposal for how to deal with the situation in Iraq before the Council on Foreign Relations in New York.

It could be a major development in the hunt for the feared terrorist Abu Musab al-Zarqawi, who's wanted dead or alive.

Let's get some more now from our senior international correspondent Nic Robertson. He's standing by in Baghdad. It's a complicated, confusing story on the fate of Abu Musab al- Zarqawi, Nic. What do we know?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: We know that the police got a tip-off in the northern town of Mosul on Saturday about a group of insurgents. They went, surrounded a house, told the neighbors to leave, got in a pitched gun battle with the insurgents.

After four hours, the insurgents' ammunition run out -- ran out. Rather than quit, they detonated explosives in the house.

When the police went in, there were eight insurgents there, all badly damaged and dead from the -- from the rubble, the debris and the force of the explosion. Because they put up such a fight, that got people thinking maybe one of them is Abu Musab al-Zarqawi.

The U.S. says it is now doing DNA analysis and fingerprint analysis of those eight bodies there. And we also -- but we understand from the governor of Mosul province and the deputy governor, they are telling us what they are hearing is Zarqawi isn't among the dead. But at the moment, that investigation, as far as we know, Wolf, is still going on.

BLITZER: The DNA investigation continuing, the entire investigation continuing. Sources here in Washington skeptical as well. Nic, thank you very much.

Identifying whether Abu Musab al-Zarqawi is dead or alive involves a real-life CSI. Tonight, here in THE SITUATION ROOM at 7:00 p.m. Eastern, our Mary Snow will tell us how a crime scene investigation figures into this hunt for Zarqawi. That's coming up, 7:00 p.m. Eastern tonight.

Coming up right now, Jack Cafferty. He's in THE SITUATION ROOM all the time. Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: That would be a nice holiday gift it they got -- if they killed that dirt bag, wouldn't it?

BLITZER: That would be nice. Wouldn't it?

CAFFERTY: Yes. What are you doing for Thanksgiving?

BLITZER: I'll be down in Tampa.

CAFFERTY: Tampa, Florida. Do you have family there?

BLITZER: My wife's family -- yes, my wife's family.

CAFFERTY: And you cook a big traditional Thanksgiving dinner?

BLITZER: I don't personally do that, but someone does.

CAFFERTY: No, no, I understand. Someone.

BLITZER: My sister-in-law.

CAFFERTY: You just show up to eat it?

BLITZER: That's correct.

CAFFERTY: Our job is to be at the table to help eat that stuff.

BLITZER: That's correct.

CAFFERTY: All right. Here's an idea for some U.S. politicians, Wolf. They may want to take a page from Thailand's playbook. The Thai prime minister says he's going to give up talking to news media there because the planets are not aligned in his favor. Thaksin Shinawatra says that he's not going to answer any more reporters' questions until next year, when Mercury is aligned with his star.

Critics say, of course, that it's all about politics, not astrology. They charge the prime minister is trying to muzzle a free press.

Hey, you know, this is -- could be a first. It might give some American politicians an idea.

The question is this. What is the best excuse for a politician not to talk to the media? You can email us at CaffertyFile@CNN.com and we'll read some of your thoughts. Got to wait for Mercury to line up with his star. No more news conferences.

BLITZER: When the moon is in the seventh house and all of that.

CAFFERTY: Yes, all of that stuff. The Age of Aquarius.

BLITZER: That's a first for me. All right, Jack. Thanks very much.

CAFFERTY: All right. See you in a bit.

BLITZER: Straight ahead here in THE SITUATION ROOM, his call for an immediate withdrawal from Iraq took the heated debate over the war to a new red-hot level. The Democratic congressman, John Murtha, he'll join us live here in THE SITUATION ROOM.

Also, my interview with the Defense secretary, Donald Rumsfeld. You'll want to hear what he has to say about pre-war intelligence, WMD and a lot more.

Plus, a political earthquake in Israel. The prime minister, Ariel Sharon, doing something no sitting prime minister has ever done before. We'll tell you what it was and what it means.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Over the past few days, Congressman John Murtha, Democrat of Pennsylvania, has had a bulls-eye on his back, targeted by critics for his call for a quick withdrawal from Iraq. Today the Democrat is sounding fed up and frustrated by what he calls the ridiculous attempts to get back at him politically.

Congressman Murtha is joining us now from his home state of Pennsylvania. He's in his home town of Johnstown. Thank you very much, Congressman, for joining us.

REP. JOHN MURTHA (D), PENNSYLVANIA: Nice to be here, Wolf.

BLITZER: Let's go through an immediate issue right now. Your Democrat colleague in the Congress, Senator Hillary Clinton, from New York State, quoted by the AP as saying an immediate withdrawal, in her words, would be a big mistake. "I think that would cause more problems for us in America. It will matter to us if Iraq totally collapses into a civil war." She's afraid it could become another Afghanistan, in effect.

What do you say to her and other Democrats who have a problem with a withdrawal as you recommend over the next six months?

MURTHA: Yes. Yes, what I've said, Wolf, and I believe this very strongly, there will be less terrorism.

Just because the president, just because the White House says there's going to be more terrorism if we withdraw doesn't make it so. He said there's going to be weapons of mass destruction. They said oil was going to pay for it. They said there was an al Qaeda connection. That's not necessarily true.

I predict the opposite. I think there will be less terrorism. We've become the target. We're the ones that have become the enemy. Eighty percent of the people there believe that we shouldn't be there, we shouldn't be occupiers. Forty-five percent think it's justified to attack America.

Now, let me tell you something. In 1963, Senator -- or Secretary McNamara predicted that we'd be out of there in two years. We had 2,200 casualties in 1965, two years later after he made that prediction.

BLITZER: You're talking about Vietnam?

MURTHA: From that time on -- I'm talking about Vietnam. From that time on, we had 53,000 casualties. I'm trying to prevent another Vietnam.

BLITZER: Listen to what the vice president, your old friend, Dick Cheney, said today.

(BEGIN VIDEO CLIP)

CHENEY: Recently my friend and former colleague, Jack Murtha, called for a complete withdrawal of American forces now serving in Iraq, with a draw-down to begin at once. I disagree with Jack and believe his proposal would not serve the best interest of this nation. But he's a good man, a Marine, a patriot, and he's taking a clear stand in an entirely legitimate discussion.

(END VIDEO CLIP)

BLITZER: Has he called you, the vice president, to discuss this issue?

MURTHA: Well, Dick Cheney and I, we are old friends. I used to talk to him every day when I was chairman of the committee and when we were in the '91 war. As a matter of fact, I would say, let's get this moving. And he would say, not until Schwarzkopf is ready.

So we are old friends, but he hasn't called me yet. But I'm sure he will. I'm convinced that he will come around to my position. This war cannot be won militarily. We have to turn it over to the Iraqis. The Iraqis would let us fight this war forever.

I'm convinced the only way it's going to be won is politically. I said 18 months ago either mobilize totally or get out. A year ago I said you can't win it militarily. I'm saying the same. I'm saying re- deploy to the periphery so that if we have a terrorist camp that's built up that might threaten the United States we can go back in. And I'm saying in a time that's practicable. When they say withdraw immediately, they kind of are stretching this whole thing. But I'm saying the immediate start of a re-deployment. BLITZER: What did you mean last week when you suggested that because he had five deferments, Dick Cheney, never served in the military during Vietnam, he really wasn't qualified to discuss these issues?

MURTHA: Well, a lot of people like what I said. And I said that heated, and I feel bad about that, actually, because Dick Cheney was in Congress for 10 years. He really has served this country, and he's been a public servant, where he would be making a lot more money outside.

So I'm trying to bring this thing back to the real world. I'm trying to talk about the substance, not the vitriolic -- even myself get into arguments that we shouldn't be saying.

They're softening their position, Wolf. That's what we need. We need a bipartisan solution to this.

It can't be won on the ground. The Russians couldn't beat them in Afghanistan. The French couldn't win in Algeria. We couldn't win in Vietnam. If you read the book "1776" by David McCullough, you realize how tough it was to beat the best army of the times, and we were insurgents. So I'm convinced that we're going to come -- I predict we'll have our troops out of there very shortly after the election this year.

BLITZER: After the election of next year. You mean a year from now?

MURTHA: I'm talking about our election, the U.S. election.

BLITZER: A year from now?

MURTHA: A year from now.

BLITZER: So you're saying that a year from now, all 150,000 U.S. troops will be out of Iraq, or most of them?

MURTHA: I would say most of them would be out of there. They could have them all out of there.

We are the targets. Every convoy that has to re-supply our troops is a target. McNamara predicted in '63 two more years, and we had -- we had 2,200 casualties. There were 53,000 casualties since 1965.

BLITZER: But...

MURTHA: I don't want another Vietnam.

BLITZER: The president, the vice president, the secretary of Defense, what they're saying, though, is that if the United States, in their words, cuts and runs, this will be open season on Americans all over the world. It will advertise America's weakness.

MURTHA: Wolf, what did they say about weapons of mass destruction? What did they say about al Qaeda connection? What did they say about oil paying for it? What did they say about welcoming us with open arms and throwing rose petals? Just because they say it doesn't make it so. I've been more right than they have.

BLITZER: Congressman, I'm going to have you stand by. I want to continue this conversation, but we have to take a quick break.

Much more of my conversation with Congressman Murtha on troop withdrawals from Iraq. That's coming up.

Plus, we'll get a very different perspective on the overall U.S. mission in Iraq. My interview with the Defense secretary, Donald Rumsfeld, about the war and the way the Bush administration justified it.

All of that coming up.

(COMMERCIAL BREAK)

BLITZER: Let's continue our conversation with Democratic Congressman John Murtha of Pennsylvania.

You tell a very emotional story, Congressman Murtha, about when you're at a military hospital meeting some of the wounded who have come back from Iraq. I know you've spent a lot of time in Iraq, you've studied the issue. But on an emotional level, you've been motivated largely by what you've seen resulting from this war, the U.S. casualties.

MURTHA: Wolf, there's no question about it. And let me tell you this, I've got an emotional outpouring of support.

Eighty percent of the people that called my office supported what I'm doing. I get standing ovation when I walk in a place like I did this morning.

I mean, the public is way ahead of the Congress on this, way ahead of the White House on this. The people want a solution, they want a plan. And hopefully we'll be able to work something out.

BLITZER: Was there one incident at Walter Reed, the Army medical hospital, that motivated you in taking this 180-degree statement?

MURTHA: Well, I think it was a combination of going to Iraq and seeing that they don't have enough troops to secure the border, the Marines that are along the Syrian border. They don't have enough troops to secure it. They go into a place, then they have to leave it. And the problem is, when you go into a place, you shatter that place, you push all the people out. You've got 60 percent unemployment.

So I saw those tactics were making us the enemy. Then I come home and I see young folks, how they don't like the Iraqis, they don't trust the Iraqis. I hear them -- I heard one young fellow that said to me -- and this is maybe the point where I really thought there had to be a change. He started talking about how well Iraqis were doing when I was asking him how well they're doing. He said, well, they're really doing much better. And then -- then after a while, I realized he was talking about the insurgents.

And I thought, Jesus, this is -- this is -- and then I looked at the criteria for success that Rumsfeld was supposed to come up with. Everything is flat -- the oil production, the electricity, the water supply, and 60 percent unemployment.

Only the Iraqis can win this. We have to give them incentive. They'll let us fight forever. We have to make them take over their own country.

BLITZER: Congressman, your Republican colleague from Ohio, Jean Schmidt, she's a freshman, basically suggested you're a coward for saying this. And the White House on Friday basically said -- the White House press secretary, equated you to the liberal filmmaker Michael Moore. What do you say to those kinds of attacks?

MURTHA: Well, I try to deflect that. I try to say, look, let's stay on the substance of this thing. This is not what -- this is not about Jack Murtha. This is about the American public wanted a plan, an exit strategy for Iraq. That's what they want, and that's what it's all about. It's not about Jack Murtha.

So you know, she sent me a letter of apology. I accept the apology. The president has softened his position. And I think Vice President Cheney has -- thinks maybe there is something -- I hope that he calls some people to the White House, list ton listen to what I have to say and other people have to say, and they start thinking about, can we win this thing?

It can't be won militarily. The commanders tell you. There's nobody closer to these military brass than I am, Wolf. I listen to these guys all the time. They don't tell me what -- they say what they have to say. But when I talk to the troops, I get a different story. I get a story that we need to have a plan. And from the families, an outpouring from the families. Somebody called me from Brussels today, that's in NATO and said everybody in NATO agrees with me. Oh, I'm sure everybody doesn't agree. There's a lot of people that don't.

But it's just the beginning. This is just the beginning of re- deploying our troops.

BLITZER: Congressman, thanks so much for joining us. Good luck. We'll continue this conversation down the road.

MURTHA: Thanks very much, Wolf.

BLITZER: And up next, a very different perspective. My interview with the Defense secretary, Donald Rumsfeld. We have some tough questions for Rumsfeld on Iraq.Has the Pentagon disclosed all it knew about pre-war intelligence?

And political upheaval in Israel. The Israeli prime minister, Ariel Sharon, says he's leaving Likud, forming a new liberal movement. We'll tell you what's happening in Israel.

Stay with us. (COMMERCIAL BREAK)

BLITZER: Defense Secretary Donald Rumsfeld was a prime architect of the war in Iraq. So it stands to reason that many are now questioning his decisions and those made before the war.

I spoke with him yesterday on CNN's LATE EDITION.

(BEGIN VIDEOTAPE)

BLITZER: Let's talk about a big issue that's raging in Washington right now, prewar intelligence, how good it was, how bad it was. Everybody now recognizes it was pretty horrible.

Listen to what you said, Mr. Secretary, on January 20, 2003, two months before the war started.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: Large, unaccounted for stockpiles of chemical and biological weapons, including VX, sarin, mustard gas, anthrax, botulism and possibly smallpox. And he has an active program to acquire and develop nuclear weapons.

(END VIDEO CLIP)

BLITZER: All that was wrong, right?

RUMSFELD: No. It was correct. That there were large -- let me answer your question, Wolf.

BLITZER: But did he have a large, active program to acquire nuclear weapons?

RUMSFELD: Let me answer your question.

There were large, unaccounted for deposits. And that was the conclusion of the U.N. It was the conclusion that was -- they went through 17 resolutions. It was the conclusion of U.S. intelligence. And it was accurate to say that they were unaccounted for. That is a fact.

BLITZER: And what about he has an active program to acquire and develop nuclear weapons?

RUMSFELD: We have not been able to validate that on the ground.

BLITZER: That was a mistake?

RUMSFELD: And pre-war intelligence was clearly imperfect.

BLITZER: All right. Let's go to the next sound byte. Listen to what you said on September 26, 2002, several months before the war. Listen to this.

(BEGIN VIDEO CLIP, SEPTEMBER 26, 2002) RUMSFELD: We do have solid evidence of the presence in Iraq of al Qaeda members, including some that have been in Baghdad. We have what we consider to be very reliable reporting of senior-level contacts going back a decade and of possible chemical and biological agent training. When I say contacts, I mean between Iraq and al Qaeda.

(END VIDEO CLIP)

BLITZER: That was a mistake?

RUMSFELD: No. Zarqawi was in there. It was clearly -- there clearly were al Qaeda in and around Iraq.

BLITZER: You believe that to this day?

RUMSFELD: Zarqawi was physically in Baghdad.

BLITZER: But...

RUMSFELD: They were operating...

BLITZER: Was he then -- Abu Musab al-Zarqawi -- associated directly with al Qaeda?

RUMSFELD: No, probably not.

BLITZER: So why would you say that there was a connection between Iraq and al Qaeda?

RUMSFELD: Because the intelligence reported that there were al Qaeda that moved in and out of Iraq and had some connection with the Saddam Hussein regime.

BLITZER: That was on September 26, 2002.

RUMSFELD: Saddam Hussein -- Saddam...

BLITZER: The intelligence -- your intelligence in February 2002 said exactly the opposite. There was a DIA intelligence estimate that's now been declassified -- Senator Levin released it -- that said this. "It is possible he does not know" -- referring to this intelligence source - "does not know any further details. It is more likely this individual is intentionally misleading the debriefers. Ibn Shaykh al-Libi has been undergoing debriefs for several weeks and may be describing scenarios to the debriefers that he knows will retain their interest".

In effect, the DIA concluded this source, which alleged this Iraq-al Qaeda connection, was a fabricator.

RUMSFELD: There is no question that there are fabricators that operate in the intelligence world. And there's also no question you can find intelligence reports on every side of every issue.

When you look at the reams of intelligence information that the United States develops from different agencies, they gather from other friendly foreign liaison services, you can find in any given week intelligence that conflicts with each other. The implication that there's something amazing about that is just ridiculous.

BLITZER: But the basis of the intelligence...

RUMSFELD: We know intelligence is imperfect.

BLITZER: That's why the U.S. went to war: the WMD and the Iraq-al Qaeda connection that you alleged.

RUMSFELD: The reason the United States went to war, the president has announced and said it repeatedly. There were 17 resolutions in the U.N. that were ignored by Saddam Hussein. Our planes were being shot at on a regular basis in the Operation Southern Watch and Operation Northern Watch. Saddam Hussein was giving $25,000 to the families of suicide bombers. Iraq was on the terrorist list. Iraq had used chemical weapons against its own people and its neighbors.

BLITZER: But, Mr. Secretary, wasn't Iraq under Saddam Hussein in those days effectively contained by the United Nations, by the U.S., the no-fly zones, the economic sanctions, the diplomatic sanctions? Weren't they effectively contained? And certainly, with hindsight, Saddam Hussein did not pose much of a threat to the United States.

RUMSFELD: The -- you say was it effectively contained? It was certainly engaged in doing things that were harmful -- shooting at our airplanes, the only place in the world that was taking place. The United Nations -- ignoring 17 U.N. resolutions. The sanctions obviously were not working very well.

BLITZER: Let me...

RUMSFELD: Just let me answer your question. Just a minute.

BLITZER: Go ahead.

RUMSFELD: The sanctions were obviously not working very well, which sanctions tend not to after a long period of time. You've read what's been going on with the oil-for-food in the United Nations.

BLITZER: But based on the fact that the United States didn't find any stockpiles of weapons of mass destruction...

RUMSFELD: It's clear the intelligence was wrong.

BLITZER: And it's clear that he didn't really represent much of a threat.

RUMSFELD: If you're talking about whether or not the intelligence was correct, everyone has agreed it was not.

BLITZER: Here is the question that a lot of people want you to answer. Do you, as the Defense secretary, owe the American people an apology for all that bad intelligence?

RUMSFELD: Why would the Defense Department -- it's the intelligence community that made the intelligence. It was CIA and...

BLITZER: But the DIA had an intelligence operation. And you had a separate intelligence operation that Doug Feith, one of your top aides, was running.

RUMSFELD: It was not a separate intelligence organization. You've been reading the press too long.

BLITZER: What is the inspector general investigating now as far as Doug Feith and his intelligence operation?

RUMSFELD: I really don't know. But apparently over the weekend, somebody requested, a congressman or a senator requested I guess it's an I.G. investigation of whether or not something was amiss there. And they will do it. They'll have an investigation. They have the right to ask for it. The I.G. will do that, and we'll see what they say.

BLITZER: Do you believe anything was amiss?

RUMSFELD: No, indeed not. That's been looked at by the Senate Intelligence Committee. It's been looked at by the Silberman-Robb or the 9/11 Commission, I think -- one of the two.

BLITZER: Silberman-Robb.

RUMSFELD: It was Silberman-Robb?

(CROSSTALK)

BLITZER: They looked at the intelligence. But why do you...

RUMSFELD: There's been no evidence there.

BLITZER: So why is there a need for an inspector general...

RUMSFELD: I don't think there is. But when a congressman or a senator requests it, it happens.

(END VIDEOTAPE)

BLITZER: Still to come, more of my interview with the Defense secretary, Donald Rumsfeld. I will ask him about the current state of Iraq's insurgency. Does he agree with the vice president that it's now in its last throes?

And, over in Israel, a major development unfolding right now, the prime minister, Ariel Sharon, leaving his Likud party to form another party.

Stand by for details.

(COMMERCIAL BREAK)

BLITZER: More now of my interview with Defense Secretary Donald Rumsfeld and Joint Chiefs Chairman General Peter Pace.

(BEGIN VIDEOTAPE)

BLITZER: The vice president of the United States, at the end of May of this year, he was on LARRY KING LIVE. And this is what he said, General. Listen to this.

(BEGIN VIDEO CLIP, "LARRY KING LIVE")

CHENEY: I think the level of activity that we see today from a military standpoint, I think, will clearly decline. I think they're in the last throes, if you will, of the insurgency.

(END VIDEO CLIP)

BLITZER: The vice president said then, months ago, that the insurgency was in its last throes. Was he right?

GEN. PETER PACE, CHAIRMAN, JOINT CHIEFS OF STAFF: I think what you're seeing is, in fact, an insurgency that understands that the elections that took place in January, that the constitution that was written and approved in October, that the elections that are coming up next month represent to the insurgency a real threat.

As the Iraqi people determine for themselves their own free way ahead, the insurgents are in trouble. They know it. And they, therefore, are pulling out all their stops right now trying to attack not only coalition forces, but innocent men and women and children to try to get the Iraqi people to cower under fear.

BLITZER: Under the standard definition of last throes, based on the reporting that you're getting, that we're getting, it seems like the insurgency has escalated.

PACE: No, the insurgents are, in fact, being hit first militarily. They have taken very large losses in Mosul, in Ramadi, in Al Qaim, in Fallujah.

BLITZER: All these suicide bombings on a nearly daily basis, Mr. Secretary, aren't those insurgents?

PACE: The suicide bombings that are going after innocent civilians -- those are individuals going against innocent civilians, men, women and children.

BLITZER: Is that part of the insurgency?

PACE: Yes. They are murdering innocents in an attempt to dissuade the Iraqi people from voting and living their free lives.

BLITZER: Twenty-five hundred attacks since September. That's a lot of -- that doesn't sound like the last throes, Mr. Secretary.

RUMSFELD: It doesn't take a genius to strap on a suicide belt and go kill innocent people. And they're doing it, there's no question. And there's a lot of people dying in Iraq.

BLITZER: But it's not just -- it's very sophisticated IED attacks that are becoming much more sophisticated today than they were a year ago. Isn't that right?

RUMSFELD: There's no question that the lethality of the attacks has increased.

BLITZER: It does take some sophistication for that.

RUMSFELD: Indeed. But it doesn't take a genius to go kill people.

What's happening in that country is very interesting. They are making enormous progress. They have a constitution -- think of that. They're going to -- they voted for the constitution. They're going to have an election under that constitution in less than a month. That is an enormous accomplishment.

Now, will there be insurgents over a period of time thereafter? Sure. Will people be killed thereafter? Sure.

But over time, the number of tips that are coming in to the Iraqi security forces have soared, multiples of what they previously were getting. Why is that?

BLITZER: So you see light at the end of the tunnel?

RUMSFELD: I don't use that phrase. What I see is progress being made on the political side. I see progress being made with the Iraqi security forces. And I think that it's fine to have this debate. It's important to have the discussion.

But when we look back a year from now, we'll see that progress was, in fact, made, that the Iraqis will be taking greater and greater control of their country, that the security forces will be still larger and still more capable. And that will be a good thing for the world.

And all of this business about it's terrible, we're losing is simply not true. Those folks, the men and women in uniform over there are doing an absolutely superb job. And they're making progress. And they work they're doing is noble work. And we ought to be darned grateful to every single one of them.

BLITZER: We'll leave it on that note. Mr. Secretary, thanks very much.

General, thank you.

(END VIDEOTAPE)

BLITZER: Up next, a huge shakeup in Israel. The prime minister, Ariel Sharon, leaving his own party, which he helped found. We will show you why -- the former Defense secretary, William Cohen, standing by to help us understand what is going on?

And Thailand's prime minister says he's doing it because of the stars. What do you think is the best excuse for a politician not to talk to the news media? It's our question of the hour. Jack Cafferty going through your e-mails. Stay with us.

(COMMERCIAL BREAK)

BLITZER: It's nothing short of a political earthquake in Israel, where the prime minister, Ariel Sharon, has quit his own party.

Let's bring in CNN's Guy Raz. He's joining us live from Jerusalem. Guy, what is going on?

GUY RAZ, CNN CORRESPONDENT: Wolf, it's rapidly become a cliche, but this is very much an earthquake in Israeli political history.

In the past 24 hours, the governing coalition has collapsed. And, for the first time in Israeli history, a sitting prime minister, Ariel Sharon, has announced he will abandon his ruling party, the Likud, and form a brand new political movement, a centrist movement, with the hope of leading the next Israeli government.

(BEGIN VIDEOTAPE)

RAZ (voice-over): Why is this man smiling? Because Ariel Sharon is taking a big gamble that could have a big political payoff. Sharon has made Israeli political history by becoming the first sitting prime minister to abandon his ruling party, the Likud.

ARIEL SHARON, PRIME MINISTER OF ISRAEL (through translator): Staying in the Likud means wasting time on political squabbles, rather than acting on behalf of the state of Israel.

RAZ: Sharon helped found Likud in 1973 and, for many years, led the right-wing flank of that party, opposing territorial concessions to Israel's Arab neighbors. But his turnabout decision to abandon Israeli settlements in Gaza was deeply unpopular among his party backbenchers, who say it's a capitulation to terrorism.

So Sharon has jumped ship, forming a new party of political centrists, one he describes as broadly liberal.

ARI SHAVIT, HA'ARETZ NEWSPAPER: He would like to shape Israel's border -- borders for the next generation. In order to do that, he must make great concessions in the West Bank. He must deal with the settlement problem in the West Bank as well. He couldn't have done that within the Likud.

RAZ: After the Labor party quit the coalition government on Sunday, Sharon asked the president of Israel to dissolve Parliament and call for early elections.

(END VIDEOTAPE)

RAZ: And, Wolf, those early elections are likely to take some time around mid-March of next year. Ariel Sharon will face challenges from both the left and the right.

On the right, former Prime Minister Benjamin Netanyahu will likely take the reins of Likud. And, on the left, Amir Peretz, a firebrand socialist, will attempt to lead his Labor party to electoral victory.

Wolf.

BLITZER: Always interesting, politics in Israel. Thanks very much, Guy Raz, reporting.

Let's get some analysis now of what's going on in Israel. For that, we turn to our world affairs analyst, the former Defense secretary William Cohen. He's chairman and CEO of The Cohen Group here in Washington. From the U.S. perspective, what does this mean?

WILLIAM COHEN, CNN WORLD AFFAIRS ANALYST AND FOMER SECRETARY OF DEFENSE: It means that Ariel Sharon has decided he's committed to the Road Map, something that President Bush has put forward, saying that there has to be a separate Palestinian state that lives side by side in peace with -- with Israel. And it occurred to Ariel Sharon that he was not going to be able to continue on that Road Map being hampered by his own party. So, he made a very historic decision he was going to break from that party.

It was interesting in your earlier colloquy with Jack Murtha, that there were people who called him basically a coward, or cut and running. And the same kind of charge is being made against Ariel Sharon, in the sense that here is a man who is simply appeasing terrorists. You can't do that to Ariel Sharon, given his history as a great warrior. And you couldn't do it to John Murtha, given his background as a great warrior.

So, I think that each are trying to -- different cases, but the notion of trying to find a centrist party -- I guess it's going to be called the party of responsibility, but a very historic move, saying, I can do more for peace by moving on this line of action as a new party, rather than hanging on or being held down by the old.

BLITZER: Given the fact the Bush administration support this so- called road map for peace between the Israelis and the Palestinians, if you're President Bush or Secretary of State Condoleezza Rice, you're rooting for Sharon or for the Labor party.

COHEN: Right.

BLITZER: You're not rooting for Benjamin Netanyahu, if he is -- if he becomes the leader of the Likud.

COHEN: That's correct. And there have already been indications that some 14 members, or nearly one-third of the Likud party, will stay with Ariel Sharon. No doubt he will have to build a coalition coming from the left as well to have a majority to work in the Knesset. But I would assume that President Bush will in fact lend his support for Ariel Sharon. And the likelihood is that, if he continues to move along this way, that he will have supporters from the right and left. But...

BLITZER: Are you happy or satisfied with the Palestinian side of this equation, what they have done since this new government of Mahmoud Abbas has been formed, the Palestinian Authority?

COHEN: Well, I met with Mahmoud Abbas when he was here in Washington, and impressed upon him the -- the need to have more effort devoted to security and to crack -- you know, cracking down on any terror attacks.

But we have to remember that we are in a position and the Israelis are in a position to empower Mahmoud Abbas, to help him develop economically now in the Gaza, where there has been a unilateral pullout, to put investments and to create jobs, to give hope to the Palestinians. That will enable him to say there is a better option than what Hamas wants. There is a better option and hope for you, if we can call upon the American people and the Israeli middle to push forward with this peace process.

BLITZER: Secretary Cohen, thanks for joining us.

COHEN: My pleasure.

BLITZER: And this just coming into CNN. He dropped the latest bombshell on the CIA leak investigation. Now journalist Bob Woodward of the "Washington Post" is speaking out in an exclusive interview with our Larry king.

Let's bring in CNN's Zain Verjee. She's live at the CNN Center in Atlanta with a preview. What did we learn, Zain?

ZAIN VERJEE, CNN ANCHOR: Wolf, Woodward, as you know, surprised everyone when he announced that an administration official had told him the name of a CIA operative back in June of 2003.

Now, that is a full month before the vice president's former chief of staff, Lewis Libby, allegedly leaked Plame's name to another reporter. Libby has since been charged in that investigation with perjury and obstruction of justice.

Now, Woodward told Larry King about the moment he realized his own role in the unfolding drama in this exclusive interview.

(BEGIN VIDEO CLIP)

BOB WOODWARD, "WASHINGTON POST": The day of the indictment. I read the charges against Libby and looked at the press conference by the special counsel.

And he said the first disclosure on all of this was on June 23, 2003, by Scooter Libby, the vice president's chief of staff, to "New York Times" reporter Judy Miller. I went, whoa, because I knew I had learned about this in mid-June, a week, 10 days before.

So, then I say, something's up. There's a piece that the special counsel does not have in all of this. I then went in to aggressive -- incredibly aggressive reporting mode and called the source the beginning of the next week, and said: Do you realize when we talked about this and exactly what was said? And the source in this case, at this moment -- it's a very interesting moment in all of this -- said, I have to go to the prosecutor. I have to go to the prosecutor. I have to tell the truth.

And, so, I realized I was going to be dragged into this, that I -- I was the catalyst. And then I asked the source, if you go to the prosecutor, am I released to testify? And the source told me, yes.

(END VIDEO CLIP)

VERJEE: Woodward reveals plenty more in his exclusive interview with Larry. Now, you can watch it tonight on LARRY KING LIVE at 9:00 Eastern -- that's 6:00 Pacific -- only on CNN.

And, Wolf, I will see you at 7:00.

BLITZER: Thanks very much, Zain. Good reporting. We will be watching LARRY KING LIVE tonight.

And we will get your answers to our question of the hour: What's the best excuse for a politician not to talk to the news media? -- Jack Cafferty standing by with your email.

We will be right back.

(COMMERCIAL BREAK)

PAULA ZAHN, CNN ANCHOR (voice-over): Dominique Dawes tumbled into the spotlight during the 1996 Olympics as part of the Magnificent Seven gold-medal winning gymnastic teams."Awesome Dawson" became the first African-American to win an individual gymnastics medal, with the bronze in the floor exercise.

DOMINIQUE DAWES, GYMNAST: It just meant a lot to do it for the country, my team and myself.

ZAHN: After the games in Atlanta, Dawes turned heads on Broadway, dabbled in acting and modeling, and cartwheeled her way through a Prince music video.

(MUSIC)

ZAHN: She hung up her leotard in 1998 and went on the University of Maryland, but soon realized that gymnastics was not quite out of her system. Dawes participated in her third Olympic Games in 2000, in what she calls a once-in-a-lifetime experience.

Dawes, now 28, is completely retired from gymnastics and splits her time between coaching and motivational speaking.

DAWES: It's really going out there and teaching young girls what being fit is all about.

ZAHN: She's also president of the Women's Sports Foundation, and has recently launched a new project called, Go Girl, Go. DAWES: I feel like I do have to inspire and empower others, and that's why, you know, I've found these different platforms, these different venues that I feel like I've been able to touch lives in.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BLITZER: Let's immediately head up to Jack Cafferty in New York. Jack?

CAFFERTY: The prime minister of Thailand, Wolf, has come up with a new twist on an old political dodge. He says he's not going to talk to the media because the planets are not aligned in his favor. He says he's not going to answer reporters' questions any more, until next year, when Mercury is properly aligned with his star.

Critics say that's all about politics, not astrology. The question is, what's the best excuse for a politician not to talk to the media?

Todd in Collierville, Tennessee: "Sorry, folks. Barney, my Scottish terrier, ate my press notes."

Chak in Ottawa, Canada: "National security issue. The matter is currently before the courts."

Anne in Houston, Texas: "I finally realized I don't know my backside from a hole in the ground."

Preston in Burbank, California: "The best excuse for someone not to speak to the media is no excuse. Just leave the podium through a door that isn't locked."

Skip in Sebastopol, California: "Best excuse for politicians not to talk to the media is, it would give Jack more time to spend with his family" -- reference to a conversation we had earlier in THE SITUATION ROOM.

And Brian in Cordes Lakes, Arizona: "I have Asian bird flu, and I have to go into quarantine right now, but I will be out for the 2008 elections".

Wolf.

BLITZER: All right, Jack, I will see you in an hour, when we are back in THE SITUATION ROOM.

CAFFERTY: Good. BLITZER: We will be back here 7:00 p.m. Eastern, just one hour from now. Until then, thanks very much for joining us. I'm Wolf Blitzer in Washington.

Kitty Pilgrim is sitting in for Lou Dobbs tonight. She's standing by in New York. Hi, Kitty.

KITTY PILGRIM, CNN ANCHOR: Hi, Wolf. Thanks. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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