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THE SITUATION ROOM

Enron Plea Deal; Spying Showdown; Civil War in Iraq?; Airport Screeners Pay More Attention to Passengers; Israel Can Help U.S. Fight Suicide Bombers; Iraq Must Stand On Its Own Economically; Don King To Boost Troop Morale

Aired December 28, 2005 - 17:00   ET

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


TOM FOREMAN, CNN ANCHOR: It's nearly 5:00 p.m. 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 right now, it's 4:00 p.m. in Houston, where Enron's former accounting chief pleads guilty, clearing the way for potentially damaging testimony against his former bosses at the fallen energy giant.

In Seattle, it's 2:00 p.m. There was a loud bang and the oxygen masks dropped down. Investigators learn more about the sudden and terrifying loss of cabin pressure on an Alaska Airlines jet.

And American airport screeners now add new techniques learned from the Israelis. Will they be looking more closely now at your face and your stress level and less at your shoes and your scissors? You'll find out.

I'm Tom Foreman. And you're in THE SITUATION ROOM.

A major shakeup in the prosecution of the Enron scandal. One of the key defendants has struck a plea deal with prosecutors and now the judge is postponing the trial of Enron founder Ken Lay and former CEO Jeffrey Skilling.

Former accounting chief Richard Causey pleaded guilty today in exchange for a seven-year sentence. His attorney confirms Causey will work with prosecutors in his case against the former bosses.

(BEGIN VIDEO CLIP)

REID WEINGARTEN, ATTORNEY FOR RICHARD CAUSEY: Mr. Causey signed a plea agreement, not a cooperation agreement. I'm sure many of you understand the significance of that. But what is true, to the extent he has any involvement in upcoming legal proceedings, he will do one thing, he will tell the truth. Because that's who he is, that's what he should do, and that's what he is going to do.

Thank you very much.

(END VIDEO CLIP)

FOREMAN: Lay's attorney also says the truth will come out at trial, and he says it's going to be very different from the public perception of Enron.

(BEGIN VIDEO CLIP)

MICHAEL RAMSEY, ATTORNEY FOR KEN LAY: All that's been said about Enron being a house of cards and being corrupt is going to be addressed during this trial. Come see the trial. We're looking forward to it.

(END VIDEO CLIP)

FOREMAN: For more on these late-breaking developments, let's bring in our own Ali Velshi. They're playing a very high-stakes game of poker right now.

ALI VELSHI, CNN ANCHOR: Well, it's interesting you say that. Let's take a look at what the -- what the deck looks like.

In the top corner here is Ken Lay. This is the person that we're looking for. This is who the government is trying to hold accountable for the collapse of Enron, $63 billion.

He was at the head of the company, and he said his biggest crime was not being on point, not knowing what was happening with his underlings. He said that he wasn't involved in the scandal that ended up bringing the company down. He does think, however, that he's got a good defense, and he is in that defense with the man under card number two, who's the company's former chief executive officer, Jeffrey Skilling.

So these two guys were meant to begin their trial on January the 17th. That, as you just reported, is not going to happen as a result of today's development.

Now, the government's case against these guys is that the shenanigans that took place at Enron -- and we've confirmed there are shenanigans -- were done with the knowledge of the top executives.

FOREMAN: These are the guys in charge of one of the biggest, most successful companies in all time, took it to the bottom.

VELSHI: Number seven on Fortune 500 list of companies.

FOREMAN: That's what prosecutors say.

VELSHI: Sixty-three billion dollars.

Now, here is the guy who did admit that he did something. It's under card number three. This is Andy Fastow. He was the chief financial officer. He pled guilty two years ago. And he's going to get around 10 years if he cooperates fully. But he said everything he did to bring Enron down and profit for himself was done with the knowledge and blessing of Ken Lay and Jeff Skilling.

FOREMAN: So now comes the hold card. This is the thing that matters to them. This deal today matters because this one can be played against the other two on top. VELSHI: Card number four is the former chief accountant at Enron. This was an accounting scandal, so having the chief accountant on your side -- he is the 16th person to agree to testify or cooperate with the government against the two -- the two men who are now on trial.

Why is it important? Because it hinges on whether or not Ken Lay and Jeff Skilling did know and agree to what was going on with the cooking of the books. If somebody can tell us if that's the case, it's going to be the chief accountant.

Richard Causey agreeing to forgo the chance of life in prison for five to seven years, depending on how he cooperates with the government. This is a turning point for this trial. The trial is delayed. It should start on January 31 now.

FOREMAN: One last question in all of this. A lot of people lost a lot of money in all of this. Even though this guy's now in the government's deck, they think they have a strong hand, they can win, is anybody going to get anything back?

VELSHI: Probably not. There will be civil suits. But in the end, we're talking about $63 billion of market capitalization, most of which disappeared. Four thousand people lost their jobs, many people their pensions, their life savings. For them this just might be about justice.

FOREMAN: Not to be forgotten in a case like this. Ali Velshi, thank you so much.

President Bush authorized secret wiretaps without court orders. But that domestic spying program may soon face court challenges of its own.

Let's go now live to our Homeland Security correspondent, Jeanne Meserve, who has more on that. Jeanne?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Tom, the first of those challenges could come within the next few weeks, when a lawyer for one man charged along with Jose Padilla is expected to file a motion in Florida. Padilla is the enemy combatant charged with terrorism last month. But that motion is likely to be just the beginning.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Muslim scholar Ali al-Timimi is serving a life sentence after being convicted for inciting his followers to wage war against the United States overseas. His lawyer is going to federal court so he can try to determine if some of the evidence used against al-Timimi was developed from National Security Agency wiretaps conducted without a warrant, and if any evidence favorable to his client was withheld.

JONATHAN TURLEY, ATTORNEY FOR ALI AL-TIMIMI: The government's not allowed to do a type of legal three card monte where you have to guess where the evidence is, under this card or that card. It has to turn over all the cards.

MESERVE: Truck driver Iyman Faris is serving 20 years in a maximum security prison after pleading guilty to plotting to bring down the Brooklyn Bridge as an al Qaeda agent. His attorney says he also will be asking a federal court to force the Justice Department to tell him how the NSA program was used in his case.

Government officials familiar with the program have confirmed that NSA eavesdropping helped authorities move against Faris. A civil suit against President Bush for illegal wiretapping could be in the works.

DAVID SMITH, LAWYER FOR IYMAN FARIS: I think there's a good likelihood -- I mean, I believe that he would -- he would be happy to bring such a lawsuit.

MESERVE: But legal experts who agree with the White House that the NSA program was constitutional and legal do not believe it will undercut the government's terrorism prosecutions.

DAVID RIVKIN, FMR. JUSTICE DEPT. OFFICIAL: I really do not see how any of the criminal convictions that have taken place so far -- and there's other indictments -- would be undermined by that. So I -- I mean, I would call it fishing, I would call it grandstanding.

(END VIDEOTAPE)

MESERVE: The Justice Department declined comment on the legal maneuvering. A White House spokesman says no one should be surprised that defense attorneys are looking at ways to represent their clients.

Tom.

FOREMAN: Thanks so much, Jeanne.

In cities across Iraq, thousands have been protesting the early results of the recent election which puts power in the hands of religious Shiites. But a U.N. elections official says the voting met international standards, adding that there's no need for a revote.

And in an exclusive interview with CNN, a key critic of the process, former interim Prime Minister Ayad Allawi, says a new vote would not be practical. He echoes calls for a national unity government. Let's listen.

(BEGIN VIDEO CLIP)

AYAD ALLAWI, FORMER INTERIM PRIME MINISTER OF IRAQ: We believe very strongly that the future is ours. Not ours for me or for the people who are with me on the slate, but for this kind of (INAUDIBLE) in Iraq rather than sectarianism. The path of sectarianism is going to break the country. It's going to destroy (ph) the country, and it will break the back of the region, and it will spill over beyond -- beyond the region.

The only way to preserve Iraq is to have a secular, national program, where all Iraqis (INAUDIBLE) will unite together in one Iraq.

(END VIDEO CLIP)

FOREMAN: While there is this push for unity, the violence rages on in Iraq.

Let's turn to our senior Pentagon correspondent, Jamie McIntyre. Jamie, we've heard Ayad Allawi talk about inclusiveness. But does the Pentagon have a plan should civil war break out?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, the short answer to that is no. They're working very hard to ensure that civil war doesn't break out, and they insist that they don't see that as a serious possibility, despite the fact that there's all this bickering between the factions.

They're putting pretty much all their eggs in the basket of this new parliament working out an agreement to have that unity government, to share power, even though the different groups have very different interests and even though some of the groups such as the Kurds in the north have a desire to be independent. They believe the future in Iraq is best served by a country that stays together, and essentially they're putting all their eggs in that basket.

If it doesn't work out, I think they'll have to regroup.

FOREMAN: Is there any sense of uncertainty about this at all since one of the prime complaints from the beginning has been not enough contingency planning for things that aren't expected?

MCINTYRE: Well, there is -- I mean, there is a degree of uncertainty to it. And it's not that nobody has thought about it at all, but that result is so unacceptable at this point that the -- the U.S. military, the Pentagon is putting its full force into trying to ensure that this new government works out and that the U.S. troops aren't pulled out before that happens.

FOREMAN: Thanks so much. Jamie McIntyre over at the Pentagon.

To Afghanistan now, where CNN's Becky Diamond has been out on a mission with U.S. forces. Becky's in Gardez with a report you can see only on CNN.

(BEGIN VIDEOTAPE)

BECKY DIAMOND, CNN CORRESPONDENT: Good evening, Tom. Well, I spent the day with a special group of U.S. soldiers here in Gardez. I went out on a very different type of combat patrol.

These soldiers are embedded with an Afghan army unit, and they went to a very remote area by Gardez in this province basically to present a national presence in an area that has no government representation. Also, the hope and the goal of today's mission was to gather information, information that locals might be able to give the Afghan soldiers who speak the language, who know the customs, about possible terrorist or criminal activity going on in this area. So while these encounters have no bullets, they're certainly a very, very critical front in the war on terror here in Afghanistan.

Back to you, Tom.

(END VIDEOTAPE)

FOREMAN: Thanks so much for that report.

Up ahead, thousands of dollars allegedly stolen. Now dozens of people indicted, accused of taking money intended for Hurricane Katrina victims.

Also, can subtle signs tip airport screeners to possible terrorists? We'll show you the new training that some say could save lives.

Plus, the always entertaining boxing promoter Don King, what he's planning to do to boost morale among U.S. troops in Iraq.

(COMMERCIAL BREAK)

FOREMAN: Federal authorities say they've indicted 49 people in connection with a scheme that stole thousands of dollars from a fund intended for aid for the victims of Hurricane Katrina. Six have pled guilty. The accused included workers for a company hired by the Red Cross to take calls from hurricane victims and get them emergency financial aid.

Joining us now in THE SITUATION ROOM is Steve Cooper, senior vice president of the American Red Cross. This is obviously bad news, because a lot of what you do is built on trust.

STEVE COOPER, SENIOR VICE PRESIDENT, AMERICAN RED CROSS: That is correct. That is correct.

We take very seriously our responsibility with the money that has been entrusted to the American Red Cross through the generosity of the American public. And in this case, while we had checks and balances in place, and as soon as we saw suspicious activity in our Bakersfield call center and we notified the FBI, that then has led to the investigation to which you refer. We recognize and will continue to work with law enforcement officials so that we can fully gain and regain the confidence of the American public.

FOREMAN: What was the suspicious activity?

COOPER: Well, the easiest was simply that Bakersfield, California, is quite a ways from the five states affected by the Hurricane Katrina. And when we began to see a lot of claims being processed in the Western Union outlets in Bakersfield, we began to kind of wonder how come so many claims disproportionate to where we figured people would be occurring in Bakersfield, California, we reached out to law enforcement.

FOREMAN: Now, that said, the Red Cross has run into a number of things over the past few years. Each time we've been assured as the giving public that it's going to be taken care of.

There's an editorial in the "Contra Costa Times" that said that "After troubling failures in the organization's response to Katrina, coupled with an earlier controversy over the misuse of donations raised for 9/11 victims, it is high time for an extensive review of the Red Cross role in U.S. disasters."

You did have problems after 9/11, you had some problems this time. I know you're dealing with an awful lot of money, but why not do just that, why not launch a major investigation of your own organization, clean house if people aren't doing their job as well as they can?

COOPER: Well, in fact, we have begun, through the guidance of our board of governors, and with the executive team, and with some external partners as appropriate, we have begun exactly that to take a look at Katrina and our performance in Katrina. We feel very, very good about we, the American Red Cross, responded to Hurricane Katrina. But we also recognize that we can continuously strive to do better.

FOREMAN: Will people lose their jobs over this?

COOPER: I think it would be premature of me to speculate on what the outcome might be with regard to any individuals and their specific jobs.

FOREMAN: Well, I asked that because you know in the private sector something as big as this, hundreds of thousands of dollars lost because somebody didn't check something out properly or the situation wasn't set up properly, people lose their jobs over that.

COOPER: Yes. And I think I'll respond this way: in this case, the people who have been indicted, and as the investigation continues with more indictments abroad, were not Red Cross employees. No Red Cross staff or volunteers were involved in any of the fraud investigations.

FOREMAN: I understand. But they were soliciting in the name of Red Cross. So the people...

(CROSSTALK)

COOPER: Well, no, they weren't -- they weren't soliciting in the name of the Red Cross.

FOREMAN: Well, they were acting in the name of the Red Cross.

COOPER: They were receiving phone calls, and we had trained them through a third-party contractor. One of the things we clearly will do as we move forward is to re-look at the process by which we utilize subcontractors in a situation like this in the future.

FOREMAN: I hope we'll see a big report on that, because I know a lot of the donors out there who gave this enormous amount of money, the most you've ever received for anything like this, will want to know it's well accounted for. COOPER: Absolutely. And I think I would simply close with saying that we take very, very seriously every dollar that's donated to the American Red Cross. And the amount of money that's represented here, which is currently about $200,000, is a serious amount of money, we take it very seriously, but it also represents a very, very small percentage of the $1.4 billion that we distributed in aid properly.

FOREMAN: Steve Cooper from the American Red Cross. We'll check back in with you in a few months and see how it's going.

COOPER: Thank you very much.

FOREMAN: It turns out that Internet criminals have also seen the Katrina tragedy as an opportunity to defraud hundreds of thousands of online users. Our Internet reporter Jacki Schechner, has that story.

JACKI SCHECHNER, CNN INTERNET REPORTER: It's been going on for some time. It's called phishing, with a "ph". And you get something like this, an email that looks very official, asking you to give money to the American Red Cross, coming from somebody that is not the American Red Cross.

We found this one in particular off a blog. Somebody saved it from September. And there was a little spike in fraudulent emails, according to Fraud Watch International, in the final months of hurricane season -- people asking you to give help after Katrina, Rita and Wilma.

But according to the American Red Cross Web site, the money that they do get that is legitimately given to them, they will tell you how it's being spent. And this is very interesting. They put up this pie chart to show you the bulk of the money and where it's going. That large purple section right there is emergency financial assistance. The red part right here, which is the next largest, is food and shelter. And they also have a chart which will just show you exactly how much needs to be spent and how much is being proportioned so far.

Tom.

FOREMAN: Thanks so much, Jacki.

In New Orleans today, the superintendent of police says he believes officers were justified in the deadly shooting of a man wielding a knife. The confrontation with 18 officers on Monday was captured on videotape, you've seen it here.

Superintendent Warren Riley says the victim, 38-year-old Anthony Hayes, had a long arrest record and posed a threat.

(BEGIN VIDEO CLIP)

SUPERINTENDENT WARREN RILEY, NEW ORLEANS POLICE DEPT.: It's hard to stand here and judge police officers when their life is on the line. I wasn't on that scene, but I know that many people have been killed with knives. This was not only a three-inch knife, it was a hunting knife. Mr. Hayes is a very, very large man. So he had the ability to inflict great bodily harm.

(END VIDEO CLIP)

FOREMAN: Riley says New Orleans police are trained to treat knife attacks as deadly force and not to disarm those assailants through hand-to-hand combat.

Coming up, first there was a very loud noise, then the oxygen masks were released. Now investigators learn why there was a sudden loss of pressure aboard an airliner.

Tender, dry conditions are feeding wildfires in Texas and Oklahoma. Dozens of buildings have burned, and there have been several deaths. We'll tell you if there's any relief in sight.

Stick with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

FOREMAN: They got too much water in the West. They don't have enough out on the Great Plains. As one region gets soaked, the other is facing dangerous wildfires.

Our severe weather expert, CNN Meteorologist Chad Myers, is standing by live in the CNN Weather Center for more details on this. Chad?

(WEATHER REPORT)

FOREMAN: A scare in the air as a passenger jet loses cabin pressure. We'll show you what caused it, plus pictures of the panic inside.

And tonight, in our 7:00 p.m. Eastern hour, it has been months since he was last heard from. Where will he spend New Year's? We'll update you on the hunt for Osama bin Laden.

Stay with us.

(COMMERCIAL BREAK)

FOREMAN: Well, passengers tell us it was the scene of absolute panic when an Alaska Airlines jet decompressed shortly after takeoff. You can just imagine.

CNN's Kimberly Osias is here with the story and some gripping pictures of this scare in the air as it unfolded.

KIMBERLY OSIAS, CNN ANCHOR: Tom, this is absolutely amazing. The MD-80 was about 20 minutes into its flight from Seattle to Burbank, California, yesterday when the plane lost cabin pressure. One passenger captured the images of the incident and later described what he calls a terrifying scene.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: You know, a loud bang, and then a rapid decompression. It was extremely loud.

OSIAS (voice-over): As the pressure inside the Alaska Airlines jet plunged, oxygen masks fell. And passenger Jeremy Hermanns started snapping pictures with the camera on his cell phone. He says no one knew what was happening, and he says the scene inside was horrifying.

JEREMY HERMANNS, ALASKA AIRLINES PASSENGER: A lot of panic. I mean, there was just fear in everybody's eyes because we didn't know what was going on.

OSIAS: Neither did the plane's crew, who Hermanns says performed admirably, nevertheless.

HERMANNS: They -- you know, they were walking up and down, you know, trying to help people put the masks on babies and elderly people who had twisted them.

OSIAS: The plane managed to return safely to Seattle's Sea-Tac Airport, where the problem was soon discovered, a 12-by-6-inch hole in the plane's side, between the front and middle cargo holds, about four feet below the passenger windows.

A ramp worker later came forward, saying his vehicle had bumped the plane earlier, an incident he failed to report immediately. Federal investigators say that bump dented the plane. In turn, that dent opened into a gash, as the jet gained altitude.

Both NTSB and the FAA are investigating the incident.

(END VIDEOTAPE)

OSIAS: Alaska Airlines is also investigating. It reported the accident to Seattle police as a possible hit and run, if you can believe that. The airline says it's reviewing safety procedures and protocol with ground crew, emphasizing the importance of immediately reporting any incident involving the planes.

Tom.

FOREMAN: Thank you so much, Kimberly. In our "Security Watch," airport screeners will be paying more attention to you, rather than your carry-on bags. The techniques they're learning now have long been met with great success in Israel.

CNN's Brian Todd is live out at Reagan National Airport to tell us more. Brian?

BRIAN TODD, CNN CORRESPONDENT: Tom, we are going to show you a typical checkpoint that passengers see these days right behind me. Take a look at that. That's standard right now. It's the kind of checkpoint everyone goes through, where passengers are only screened for their belongings. But, pretty soon, they are also going to be checked for their behavior. This is part of a new program to add another layer of potential obstacles to terrorists.

(BEGIN VIDEOTAPE)

TODD (voice-over): Seemingly calm, two of the 9/11 hijackers moving through a security checkpoint at Dulles International Airport. Could anything about their behavior have flagged a security threat?

RAFI RON, CEO, NEW AGE SECURITY SOLUTIONS: Remember that, at this point in time, he was very confident that there was nothing going to be discovered.

TODD: Rafi Ron, former head of security at Israel's Ben Gurion International Airport, consulted with the Transportation Security Administration on a recent protocol that is now being updated.

Known formally as the behavior observation and assessment program, the idea is to check passengers for signs of stress, fear, evasiveness, any kind of behavior that might signal trouble, behavior that Rafi Ron did detect in one of the hijackers.

RON: We have not seen necessarily on the first guy a lot of unusual behavior. But we did see some of it with the second guy.

TODD (on camera): OK.

RON: So, with the connection between the two of them, we could have addressed both of them in a casual conversation, that they would have found much more difficult to handle.

TODD (voice-over): That's what some TSA screeners are now being trained for, to watch for subtle signs of unusual behavior.

JAY STANLEY, AMERICAN CIVIL LIBERTIES UNION: I think that, when you have a system that is based on such subjective criteria, and it remains subjective no matter what the training is about, that you will inevitably have abuse and racial profiling.

TODD: But TSA officials tell CNN, they're going beyond appearance, focusing mainly on behavior.

KIP HAWLEY, TRANSPORTATION SECURITY ADMINISTRATION DIRECTOR: From a security point of view, it makes no sense to limit. To look for a terrorist of any particular ethnic, age, any of those things, makes no security sense.

TODD: How will screeners distinguish terrorists from innocent passengers stressed out over flying?

RON: Well, we distinguish between the two through a casual conversation. At the beginning, those indicators of stress or nervousness might be similar, but, yet, it shrinks the number of people that we have to show interest in.

(END VIDEOTAPE)

TODD: Now, we asked Rafi Ron and TSA officials what a casual conversation with a flagged passenger might entail. None of them revealed details, saying they didn't want to tip off terrorists.

Tom.

FOREMAN: Thank you, Brian. It will be interesting to see if this works.

What can Americans learn from Israelis when it comes to stopping suicide bombers?

Our Justice correspondent, Kelli Arena, recently traveled to Israel with a group of U.S. law enforcement officers as part of a trip sponsored by the Jewish Institute for National Security Affairs. Kelli looks at some of the intense security measures seen by this group.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): This mall in Jerusalem may look like many in the United States, but just try getting inside.

GIDEON AVRAMI, JERUSALEM MALL SECURITY DIRECTOR: The major check is done here. And in the case something goes wrong, it will be out of the mall and not inside.

ARENA: The security is intense. Gideon Avrami, who is in charge of keeping shoppers safe, says there are armed guards patrolling the perimeter.

AVRAMI: One of the guys puts a binocular, watches the mountains around, the buildings around, mostly to be seen.

ARENA: Cars coming into the parking lot are searched, and shoppers go through metal detectors. It's all aimed at stopping suicide bombers.

Gil Kerlikowske, Seattle's police chief and a group of U.S. law enforcement officials that he traveled to Israel with got an up-close look at the security measures. Here, the private sector works hand in hand with Israeli police, a relationship Kerlikowske says should be emulated with businesses in his area.

CHIEF GIL KERLIKOWSKE, SEATTLE POLICE: I think I need to do a much better job of embracing them and going out to them, not waiting for them to knock on my door.

ARENA: Every attempt by a suicide bomber to get inside a mall in Israel has failed, although some have blown themselves up outside. Heavy security is just part of the offensive. Intelligence gathering is equally important.

AVRAMI: Once there is a knowledge or intelligence about a suicide bombing, it goes from the Israeli security services immediately to the police. From the police, it goes immediately to the private sector. When I say immediately, I'm saying minutes.

ARENA: The need to share intelligence was emphasized by Yoram Hessel, who met with the group for a closed session. He's formerly with Israel's intelligence service, the Mossad.

YORAM HESSEL, FORMER ISRAELI INTELLIGENCE OFFICER: Good, reliable, timely intelligence can multiply your resources.

ARENA: Hessel says Israel has spent a lot of time developing informants, but also relies heavily on technology. Cameras are part of that anti-terror arsenal, like these in Jerusalem's Old City.

(on camera): Right now, I'm on camera. There are more than 300 law enforcement cameras surveilling Jerusalem's Old City, home to holy sites for Christians, Muslims and Jews. Israeli police are worried that religious extremists could ignite a potentially explosive situation here.

(voice-over): The public also plays a vital role. Israeli officials say they get hundreds of terror-related tips a week.

KERLIKOWSKE: It isn't just the security force that is being held responsible and accountable for security.

ARENA: The fight against terrorism encompasses nearly every facet of Israeli life, something experts here do not believe the U.S. is ready for.

Kelli Arena, CNN, Jerusalem.

(END VIDEOTAPE)

FOREMAN: Remember, stay tuned to CNN day and night for the most reliable news about your security.

And we will have more coming up in the 7:00 p.m. Eastern hour of THE SITUATION ROOM. Kelli will continue her look at Israeli security measures with the basic question: Is America as prepared as Israel? You will want to know. That's at 7:00 p.m. Eastern. Make sure you stick with us for that.

Well, still to come, Don King making plans in Iraq -- we will show you what the boxing promoter plans to do to help boost the morale of U.S. troops. I can't wait.

And coming up in our 7:00 p.m. Eastern hour, he was the face of Dunkin' Donuts -- a look at the man known to millions as Fred the Baker.

(COMMERCIAL BREAK)

FOREMAN: This just in: We have more on those tornado warnings for parts of Georgia and South Carolina.

Let's go to Jacki Schechner in a moment.

But first of all, we are going to go to Chad Myers in our Weather Center to tell us what is happening. Chad?

CHAD MYERS, CNN METEOROLOGIST: Have a tornado on the ground by law enforcement officials to the west of Moultrie, about 10 miles west so far. The storm has been on the ground for quite some time. Here is the storm. And so many of these storms today, Tom, were just in the middle of fields, but this one here is actually headed to a fairly large town, population 20,000 or so, and confirmed on the ground by law enforcement officials to the west of this city.

So, you need to be taking cover if you're in Moultrie, or, for that matter, anywhere around Colquitt County. And that's the storm right there, a big storm headed to a pretty large city.

(CROSSTALK)

FOREMAN: Good and important warning there from Chad Myers. Thank you so much.

Let's check in with Jacki Schechner, who will tell us a bit more. Jacki?

SCHECHNER: Just wanted to show you the latest from the NOAA Storm Prediction Center online. You can see the moving map behind me. It's these areas right here in red -- I don't know if the -- there you go. You can see right there. If we click on that, it will take you to your current storm warnings. And if you take one step farther there, we can see the two that we're talking about. Now, you can click on. It will get you closer to that area.

The first one is central and eastern Alabama and Georgia. That is a tornado watch in effect until 8:00 p.m. Eastern Standard Time. Now, if I can bring you back to the other one we saw on that map, that's 899, is how it's labeled. And you can move in a little bit closer. That one is for east central and southeast Georgia and southern South Carolina, in effect until 10:00 p.m. Eastern Standard Time.

You can check this out closer online for yourself.

Tom.

FOREMAN: Thank you very much, Jacki.

And to make it clear again, the storm has touched town west of Moultrie, Georgia.

Up next, who is paying for all of the reconstruction in Iraq? We will get an update from Baghdad.

And, in our 7:00 hour, the hunt for Osama bin Laden -- did U.S. forces just miss catching him? We will tell you.

Stay in THE SITUATION ROOM.

(COMMERCIAL BREAK)

FOREMAN: We talk so much about stabilizing Iraq and bringing American troops home. The simple truth is this: If a new Iraq is going to take shape, it will have to be able to stand on its own economically. That's a fact. Given its oil resources, that shouldn't be a problem. That's also a fact. But what's the reality?

Well, with that in mind, earlier today, I spoke with the senior U.S. embassy official dealing with just that situation.

(BEGIN VIDEOTAPE)

FOREMAN: Joining us now is Thomas Delare in Baghdad. He's the U.S. minister counselor for economic affairs in Iraq. Thanks so much for being here. And, first of all, as a general sense, how is the economy in Iraq these days?

THOMAS DELARE, U.S. MINISTER COUNSELOR FOR ECONOMIC AFFAIRS IN IRAQ: I think it's probably a surprise to a lot of American viewers that it's doing probably better than they could possibly imagine. We have positive economic growth this year, expectations of more for next year.

FOREMAN: One of the things that was said a couple of years ago by Paul Wolfowitz, the deputy Defense secretary, was, the oil revenues of that country could bring between $50 billion and $100 billion over the course of the next two or three years. We're dealing with a country that can really finance its own reconstruction, and relatively soon.

Yes or no, have we reached that point yet?

DELARE: No, we haven't, not quite yet. I would say that Mr. Wolfowitz, at the time, was operating on the basis of a reasonable set of assumptions about -- with expectations that were not out of line with what we might have expected. But, almost like Eastern Europe or the Soviet Union, after it collapsed, I think we were all surprised just how decrepit the infrastructure had become under Saddam and just how expensive it was going to be to have to restore that infrastructure. FOREMAN: And, yet, you feel that you have been making relatively good progress relatively fast?

DELARE: I think that's true. We -- according to IMF numbers, we have positive economic growth this year, almost 3 percent. They predict about 10 percent next year. We're restoring a lot of the infrastructure as quickly as we can. Most of our projects will be finished next year, all of which should give a great boost to economic growth in this company.

FOREMAN: I wanted to look at some of the numbers you guys push around over there as evidence of this: increased telephone subscriptions, increased Internet usage, more than double the number of registered cars. You see these as genuine signs of economic improvement.

DELARE: That's right.

FOREMAN: What about these other numbers, though? Oil production still below pre-war levels, electricity generated below pre-war levels, unemployment estimated between 25 and 40 percent. If we had 25 or 40 percent unemployment in the United States, we would have riots in the streets.

DELARE: Well, both sets of numbers tell a true picture. There's a great deal yet to do, and, yet, there's been a -- some remarkable accomplishments. The reason we use things like cell phone usage and Internet connections, because we don't have good statistics for a lot of things, which includes the unemployment numbers, by the way.

But, when you look at people and how they're spending their disposable income, what they're doing to seek out new services, why are they going to buy television dishes for their homes? Why are they buying air conditioners? Obviously, they -- feel they can afford it. They have more income. And the market is providing goods they could never buy before. Now, that's part of the picture.

FOREMAN: How...

DELARE: But there's a lot more to do yet.

FOREMAN: How...

DELARE: And we won't dispute that.

(CROSSTALK)

FOREMAN: How much can you really get done, in all fairness, at this point, until the security issue is settled? When people don't think they can go to work without possibly being shot or blown up or count on electricity when they get there, how much can you do?

DELARE: Let me answer that in two stages.

First, I think it's very useful to look at some other recent experiences with reconstruction. Look at the Soviet Union or Eastern Europe. That's where I have had years of experience.

And it -- after 10 or 15 years, some of those countries are still climbing out of the abyss, where they have found themselves at the end of communism. Two and-a-half years after the fall of Saddam, we haven't done too badly. That's one way to look at it.

FOREMAN: Thomas Delare, the U.S. minister counselor for economic affairs in Iraq, thank you very much. I know you have a lot of work ahead of you. Thanks for staying up late to talk with us.

DELARE: Well, thank you.

(END VIDEOTAPE)

FOREMAN: Kimberly Osias joins us now with other news. Kimberly?

OSIAS: Yes. And, Tom, we just have a new story. It just is making news. The Associated Press is reporting that a retired auto worker accused of being a Nazi concentration camp guard, that he'll be deported from the U.S. An immigration judge on Wednesday ordered John Demjanjuk -- you may recall, he is a retired auto worker accused of being a Nazi concentration camp guard -- deported back to his native Ukraine. The judge ruled that there's no evidence to substantiate Demjanjuk's claim that he would be mistreated if deported back to his homeland.

We will, of course, bring you more details as we get them.

Authorities in areas hard hit by Hurricane Katrina have a new concern, New Year's Eve fireworks. It seems that those blue tarps -- you have seen them on many homes that cover the holes in the rooftops -- are flammable. One official says, any fireworks that scatter debris in the air could set those tarps on fire.

There has been another case of sensitive personal information going missing. This time, it involves Marriott's Vacation Club International. Computer tapes with information about more than 200,000 people are missing. The tapes include credit card and Social Security numbers. Some of those affected are Marriott employees. Others have timeshare agreements.

And up next -- Tom, you will tell us what we have got coming up next, Tom.

(LAUGHTER)

FOREMAN: Yes, I will. Thank you, Kimberly.

Don King is best known for setting up boxing matches. But now he says he wants to help U.S. troops in Iraq.

You're in THE SITUATION ROOM. Stay put.

(COMMERCIAL BREAK)

FOREMAN: Boxing promoter Don King wants to help the troops over in Iraq. And he has some plans as big as his hair. He first announced them right here in THE SITUATION ROOM in an interview with Wolf Blitzer just a few weeks ago.

Take a look.

(BEGIN VIDEOTAPE, DECEMBER 14, 2005)

DON KING, BOXING PROMOTER: I'm going to Iraq to put on a boxing show to lift the morale of the troops, the 101st Airborne, Air Assault, Air Assault, Strike Fear, the mightiest division on the planet is there. And I'm going over there with General David S. Petraeus, who is now handling the reconstruction there.

But all of the 101st Airborne, who's been in every war from World War I to Vietnam, to Desert Storm to Iraqi Freedom now, I want to be there to support them and bring some of my champions there to do a good show for them and lifting their morale.

WOLF BLITZER, CNN ANCHOR: So, what are you going to do when you get there to Iraq? Are you going to have a boxing match?

KING: Yes. I have a whole boxing show there, something that I will get some of the networks to work with and transmit it back to America. I did one show in December where I transmitted the show to Mosul. And General Petraeus was back and forth the same day that they captured Saddam Hussein, December 13. And so it's a December to remember. And so now, we want to go there live and do the show live emanating from Iraq.

BLITZER: This is news that you're making here in THE SITUATION ROOM. You're announcing it, in effect, right here.

KING: Yes. All we've got to do is get the permission. I'm certain we're going to get that with the White House and Karl Rove, and all those, the USO that's there, they want to see these guys be supported because the man who fights for this country, he can claim that country for his own and have that claim respected.

And these soldiers are putting their lives on the line, putting themselves in harm's way to fight for us while we sit back and debate and discuss whether they should or should not be there. I think we have to stay the course and go out there and do what it's about, because law, order, and freedom comes from those who are the vanguard of our nation out there fighting for us.

BLITZER: So, now you want to go encourage the morale. You want to get a boxing match in Iraq. Do you have a date, any time frame, when you want to do this? KING: I'm going to discuss the time frame while I'm here in Washington. I want to do it as soon as possible.

BLITZER: Under the auspices of the USO?

KING: Yes.

BLITZER: So, this would be -- troops would be watching? And they would watch. Who would be fighting?

KING: We would fight -- we have several fighters that wants to go, including Zab Judah, Mormeck, including Lamon Brewster, you know, guys that want to be able to go out there and demonstrate their patriotism and to do what we can do.

We're like sort of like a black Bob Hope, going back to the troops and going out there and giving them the -- the support that they really justly and richly deserve, because they are the vanguard of our nation.

I visited Landstuhl in Germany when I was there, and I'm going to Germany again tomorrow to have a fight in Berlin with John Ruiz and the Beast from the East, the 7'2'' Russian that's going to be fighting him on December the 17th, that Saturday night.

BLITZER: So, you want to basically increase the morale and help these troops better endure what they're going through?

KING: Yes.

BLITZER: And you're a good Republican. We met at the Republican convention last year outside of Madison Square Garden. You were there with the flags, just as you are now. You're a very patriotic guy.

KING: Well, no. I'm a Republicrat. I am for whoever is going to do for my people, the American people...

BLITZER: You love George Bush?

KING: I love George Walker Bush, because I think he's a revolutionary. He's a president that comes in with conclusiveness.

What they're doing in tomorrow in Iraq is a demonstration of that for the vote for democracy. The fundamental process of democracy is freedom of speech, law and order, you know, and being able to have freedom, working with people and working and governing yourself. George Bush is that. He included in...

(CROSSTALK)

BLITZER: Do you have any regrets? Do you have any regrets supporting him -- as we take a look at that picture, when you and I were there at the diner last year. Do you have any regrets supporting him as enthusiastically as you did?

KING: No, I don't. In fact, I want to do him -- support him more now, because it seems like everybody is punching him. You know what I mean? But he's fighting back, and he's throwing great combinations. And, so, I think he's the guy that is really a revolutionary president.

I think he's a president that cares about the people he represents, but he doesn't compromise himself, to the extent that he acquiesce and accommodate. He goes out there and says like it is, and tries to make things better, inclusiveness, last -- you know, education, of -- is fighting for that.

These are the things that many guys that don't fight for -- George Walker Bush is a tremendous advocate to America, a great president for the great American people. And he's decisive. He's -- don't -- he's not...

(CROSSTALK)

BLITZER: All right.

KING: You know, he doesn't equivocate.

BLITZER: In addition to Iraq, in addition to helping George W. Bush, you're also trying to help the victims of Katrina. Briefly, because we're almost out of time, what are you doing in New Orleans and in the Gulf Coast?

KING: Well, we raised $200,000 for the victims of Katrina with the Salvation Army. I told the Salvation Army -- you can -- 1-800-SAL- ARMY. And from the Cleveland area, that if they give $100,000, raise $100,000, I would match it with $100,000. So, they have gotten $100,000, and now I've got the process of matching it. From each one of my events, I'm adding money to make my $100,000 come in, all right? Then we're giving away turkeys down there to the people just going down again, raising their hopes and aspirations, because this really was a tragic thing, a God -- what do you call it, a natural crisis, you know what I mean, that exposed a manmade crisis...

BLITZER: All right.

KING: ... with where we live in Louisiana and whatever it is, the racism that the president spoke about when he was down there.

BLITZER: Don King...

KING: And, so, it's this thing there.

Wolf Blitzer, you are doing the greatest...

(CROSSTALK)

(LAUGHTER) KING: And I love it.

BLITZER: Hey, I want you...

(CROSSTALK)

KING: This is the greatest country in the world. God bless America.

BLITZER: I want you to be careful when you're in Iraq.

KING: Yes, I will be. God bless America. God bless our president, George Walker Bush, and God bless the American people.

And, Wolf Blitzer, you're on the move, and there ain't no stopping you now.

(LAUGHTER)

BLITZER: Don King, thanks very much.

(LAUGHTER)

(END VIDEOTAPE)

FOREMAN: A black Bob Hope right there.

We are here every weekday afternoon during our rounds, from 4:00 to 6:00 p.m. Eastern. And we are back on the air at 7:00 p.m. Eastern. That's just one hour from now.

Until then, I'm Tom Foreman in THE SITUATION ROOM. Hope you will join us again.

Christine Romans is filling in for Lou Dobbs tonight way up in New York. And she's standing by with the latest news up there.

Christine, take it away, if you would, please. CHRISTINE ROMANS, CNN ANCHOR: I will. Thank you, Tom.

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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