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THE SITUATION ROOM

South Dakota Abortion Ban Is Possible Challenge Of Roe v. Wade; Dubai Ports World Delays Takeover Of U.S. Ports; In Iraq Today, A Damaging And Provocative New Attack On A Shiite Shrine; Port Deal Causes Election Year Insecurity; Rod Blagojevich Of Illinois Says He Didn't Realize "The Daily Show" Is A Spoof

Aired February 24, 2006 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks very much, Ali.
And to our viewers, you're now in the SITUATION ROOM, where new pictures and information from around the world are arriving all the time.

Happening now, a dramatic new step aimed at launching a direct challenge to Roe versus Wade. It's 3:00 p.m. in South Dakota, where the state legislature has just passed a sweeping abortion ban. Will this go all the way to the U.S. Supreme Court? We'll tell you what may happen next.

Also this hour, another Shiite shrine in Iraq attacked. Today's explosion comes amidst two days of spreading violence. It's midnight in Baghdad. Are fears of civil war subsiding, or are they being stoked?

And the port deal delay. It's 4:00 p.m. here in Washington where the Bush White House hopes the uproar is easing. But some Democrats still are pouncing on port insecurities.

I'm Wolf Blitzer, you're in THE SITUATION ROOM.

We begin this hour with a developing story in the culture wars. Just an hour or so ago, the South Dakota House of Representatives approved a ban on nearly all abortions. It now goes to the desk of Republican Governor Mike Rounds.

He says he's inclined to sign the bill which would make it a crime for doctors to perform abortions unless a woman's life is at risk. The State Senate passed the measure earlier this week without any exceptions for rape or incest. Supporters and opponents see it as a direct legal challenge to Roe versus Wade.

Many anti-abortion activists think the time is ripe for the U.S. Supreme Court to overturn that decision legalizing abortion, now that conservatives John Roberts and Samuel Alito are sitting on the highest court. Planned Parenthood, which operates the only abortion clinic in South Dakota, has vowed to challenge the state ban if and when the governor signs it into law.

Let's bring in senior analyst Jeff Toobin. He's joining us on the phone from New York. Give us some perspective on potentially how significant this legal challenge is going to be.

JEFFREY TOOBIN, CNN SR. ANALYST: Well this is potentially an earthquake, because there is no doubt that this law conflicts with Roe v. Wade. It bans abortions in the first trimester, it bans abortions in the case of rape or incest. It is completely contradictory to what the current law of abortion is.

But what the legislators in South Dakota are betting is that the law of abortion is going to change, that the new Supreme Court will uphold this law and overrule Roe v. Wade.

BLITZER: But that's a risk that some are suggesting is, from the anti-abortion stance, not necessarily ripe yet. There are two new conservative justices, John Roberts and Samuel Alito, but it's not necessarily a foregone deal that they would vote to overturn Roe versus Wade and allow this new law, if it becomes the law, of South Dakota to stay in effect.

TOOBIN: Far from it, in fact. There are still five justices on the court who have made clear that they support Roe v. Wade, either in the Casey Decision or subsequent abortion decisions. Anthony Kennedy, David Souter, John Paul Stevens, Ruth Bader Ginsburg, Stephen Breyer -- they are all on record as supporting Roe versus Wade.

So it does seem unlikely that any of them would switch at this point. So the risk for the anti-abortion forces is they take this case to the Supreme Court and get Roe reaffirmed yet again.

BLITZER: That would be a huge risk. And it's unclear whether Samuel Alito or John Roberts, given their stance, what they said during their respective confirmation hearings in terms of supporting precedents, it's unclear that they necessarily would go and support this new law if it, in fact, becomes the law in South Dakota.

TOOBIN: That's right. And even if, as many people expect, Samuel Alito and John Roberts oppose the constitutional protection of a woman's right to choose abortion, that's not enough. They still need five votes. And unless Anthony Kennedy has changed his mind, which is always possible, there does not seem to be five votes on the court to overturn Roe at this point.

So that's why many anti-abortion leaders, even though they are sympathetic to what's going on in South Dakota, feel that it's a premature step with five pro-Roe votes still on the court.

BLITZER: Jeff Toobin who watches the Supreme Court for us, thanks very much for that analysis.

Let's get some online reaction that's already coming forward to this pending anti-abortion law. Our Internet reporter Jacki Schechner is standing by -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: We want to give you a peek into how this local legislation is resonating nationally. There's not a lot of talk on the big, conservative political blogs, other than just linking to the news, but what little chatter we are seeing is about how this may be a sign of things to come.

It may be a sense that now that the Supreme Court is seeming to turn a little more conservative, this may be the start of lots of states challenging on this level.

We went to over to prolifeblogs -- this is one of the big blogs that was first and foremost in the fight for Terri Schiavo. And they say actually that the stipulation within this legislation that allows for an abortion in the case that the mother's life is at risk is actually a giant loophole. They'd like to see that go away.

There's also some reaction on the left that the stipulation that would punish doctors for with five years of imprisonment may be too much for moderate Republicans. And now there's also a call on the left to go after Joe Lieberman, saying that he helped to confirm Alito, this is all his fault. They want to support his Ed Lamont in the Senate race against Lieberman. So it's resonating. It's bubbling up, and then resonating out, Wolf.

BLITZER: All right. We're going to continue to watch this story and see what happens, see what the governor of South Dakota does. We are going to continue to watch this story.

Let's move on now to other important news we are following. The port security flap that's been weighing heavily on the Bush administration all week, it continues. Today the White House is welcoming an Arab firm's decision to delay its takeover of six major U.S. ports. But some key critics of the deal still aren't satisfied.

Our senior national correspondent John Roberts is standing by. Let's go to the White House first, Dana Bash standing by with the latest from there -- Dana.

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the Dubai Port World's decision not to take over immediately six U.S. ports is certainly the exit strategy that the White House wanted. And CNN is told it is the result of urgent but quiet, behind-the-scenes efforts by this administration to put the brakes on what was escalating as a political nightmare.

(BEGIN VIDEOTAPE)

BASH (voice-over): The delay to buy more time, informed sources tell CNN, came after private White House appeals to allies like former Congressman Vin Weber, a lobbyist who represents the United Arab Emirates.

It delays a remarkable political confrontation with ramifications well beyond the ports controversy -- a Republican president threatening a veto if the Republican leadership in Congress tried to block the port deal.

But a senior administration official admits they are not out of the woods yet. Sources involved in talks with the White House and the companies tells CNN Mr. Bush may have no choice but to accept a longer government review of whether the deal poses security risks. So far the administration is digging in, saying it will try to convince Congress, the 14 agency panel that approved the deal, did extensive vetting.

FRANCES TOWNSEND, W.H. HOMELAND SECURITY ADVISER: There was no need for an additional 45 days or an investigation.

BASH: But that won't fly with key members of Congress and others who say the White House did not follow the law. An attorney who helped write it, agrees.

PATRICK MALLOY, INTL. TRADE LAW EXPERT: If it's a government- owned corporation which is doing the acquisition of the American company, the law says that there's a mandatory investigation.

BASH: Bush officials recognize they're up against something else: raw emotion, especially from their own.

SCOTT REED, REPUBLICAN STRATEGIST: This is going to have some ramifications, not only nationally but also on the local level now in each one of these port towns. The politics has gotten almost out of control.

BASH: The president is suddenly the bad guy of talk radio.

UNIDENTIFIED MALE: Why should we have a Middle Eastern dictatorship, or company associated with a dictatorship, controlling our ports. It is going to quite possibly -- and maybe even probably -- cost the Republicans the next election.

BASH: The question for an already-weakened president is can he make that anger pass? Or will the animosity and mistrust carry over to other issues?

(END VIDEOTAPE)

BASH: And the jury is still very much out on that, but Wolf, in talking to Republicans in Congress over the past several days and Republicans around town, they say this is about a lot more than this port issue.

Many say that this is about, in the words of one, "years of arrogance and neglect from the Bush White House." And especially now, especially when you are talking about a Republican Congress who is very worried about their hold on power, they say they are not going to stand for it anymore.

BLITZER: Dana Bash, good reporting. Yesterday here in THE SITUATION ROOM, you were ahead of the curve in reporting on this delay strategy that was clearly emerging late in the afternoon yesterday. Dana Bash at the White House.

Let's get some reaction now up on Capitol Hill. Our senior national correspondent John Roberts is standing by with more on this part of the story -- John. JOHN ROBERTS, CNN SENIOR NATIONAL CORRESPONDENT: Well, Wolf, the White House had certainly hoped that this delay to slow down in the ports' acquisition was going to calm the waters and prevent the whole deal from hitting a shoal in Congress.

But late this afternoon, it appears that many lawmakers are more determined than ever to make sure that a thorough security review of Dubai Ports World is conducted during this delay, however long it may last. Leading that charge are Senator Charles Schumer and Representative Peter King from New York. Here's what they had to say about it today.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: The bottom line is simple. From one end to this country to the other, average citizens are scratching their heads and wondering, how could such a deal be put forward secretly, in the dark of night, without a full investigation, after 9/11?

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

REP. PETER KING (R), NEW YORK: If there's nothing to hide, why not investigate?

Again, if you were applying for a job in the federal government you would get a full investigation and a full vetting. To me, the same principal should apply to a company coming out of a country, which has had very strong al Qaeda connections in the past.

We have to be sure there is no current al Qaeda connection in the government, which can influence the company or within the company itself.

(END VIDEO CLIP)

ROBERTS: What can happen from here on in is that Congressman King and Senator Schumer are going to try to introduce their legislation on Tuesday to put the arm on the White House to get it to conduct this thorough security review whether it be the 45 days, which is required in the official law governing the acquisition of U.S. assets by foreign companies, or whether it be some other period of time.

The White House is saying there will be no security review. That the deal is done. It's fully closed. All they are going to do is spend the next however long trying to convince members of Congress that it is a good deal.

Dennis Hastert, the House leader, was saying that he's going to discuss this with the leadership on Tuesday. Senator Frist is said to be a little bit more comfortable with it than he was previously. However, he says -- he is said to say that the rest of the membership is not there. So what happens beyond this, Wolf, still very much in flux.

BLITZER: The jockeying continues.

John Roberts thanks very much.

The Homeland Security Secretary Michael Chertoff is defending the port deal. He says he's completely on board with the plan even though he was not involved in approving it and only learned about it in the last few weeks.

Chertoff is denying that a donation by the United Arab Emirates to the Katrina Relief Fund had any bearing on the port deal. The UAE contributed $100 million to help Katrina victims. Chertoff says it's a denial of facts to draw a connection between the money and the deal.

Former Senate Republican Leader Bob Dole is clarifying his role as a lobbyist for the UAE firm behind the port deal. Dole says he has not and will not lobby members of Congress on this issue including at home. That's a reference to his wife, Senator Elizabeth Dole of North Carolina.

Bob Dole says his job is to help the American people understand the facts about the port deal. He may have a tough time convincing the Teamsters Union though. It's holding rallies in 20 U.S. cities today protesting the outsourcing of port management to an Arab firm.

Thousands of Teamsters' members are port workers who say they are concerned about security if the Dubai ports deal goes through. Stay tuned to CNN, by the way, day and night for the most reliable news about your security.

Let's check in with Jack Cafferty now. He's standing by with "The Cafferty File."

Hi Jack.

JACK CAFFERTY, CNN ANCHOR: How you doing?

Is it still Bush's government? Remember in the cabinet meeting he said don't worry about security. My government has taken a look at this and everything's all right.

BLITZER: It's still his government.

CAFFERTY: That's unbelievable.

So they say there's a timeout and the White House is calling it a slight delay. And the Press Secretary Scott McClellan says it's not up to us. It's up to the company to decide how long the delay lasts.

And that means of course the United Arab Emirates own company, Dubai Ports World, will decide how long to wait before they start controlling major U.S. ports.

What is wrong with this picture? Critics on Capitol Hill are still talking tough although I sense that some of them are beginning to move away from the strong positions they took the day this came out. They say that a delay isn't good enough. They are vowing to block the deal.

The administration is still standing by its veto threat. Let's have a vote. Let's put some legislation on the table to block the deal and send it to the White House and have it vetoed. And then let's vote again. And then let's see whose government it is.

The question we are asking this hour is this, does a delay change your mind about the port deal? E-mail us at caffertyfile@CNN.com or go to CNN.com/caffertyfile. My government. Unbelievable -- Wolf.

BLITZER: It's our government.

CAFFERTY: Well, not according to President Bush, it isn't. It's my government, he said.

BLITZER: All right, thanks, Jack.

CAFFERTY: Yes.

BLITZER: Coming up, a quieter day in Iraq. But the threat of a civil war still looms large. We'll have a report from Baghdad just ahead.

And later we'll go in depth on the White House strategy in Iraq.

An attack near a major oil refinery in Saudi Arabia. Our Zain Verjee standing by. She'll join us with details on the damage and the impact on the price of oil.

Plus, Lewis Scooter Libby's defense in the CIA leak case. We'll tell you what's happening in court today and online. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In Iraq today, a damaging and provocative new attack on a Shiite shrine that comes just as Iraqi officials hoped they were on their way to restoring just a little bit of stability. Violence has been raging since Wednesday's bombing of another Shiite shrine, the golden mosque.

Let's check in with CNN's Aneesh Raman in Baghdad -- Aneesh.

ANEESH RAMAN, CNN CORRESPONDENT: Wolf, Iraq's government, which had already taken an extraordinary measure in announcing a day-time curfew for Friday, is doing the same on Saturday for Baghdad and three neighboring provinces.

A relative pause in the Sectarian strike that has engulfed this country since Wednesday morning's attack on that Shia mosque. At least 130 people have been killed. Today no major incidents to report.

That said, 26 bodies were found. Unclear when they were killed. Part of the string of attacks we've seen since Wednesday.

Meantime the curfew broken in Sadr city at least by the followers of radical Shia cleric. The militia is out on the streets with arms. They've set up patrols as well as checkpoints. The militias are a big issue here for Iraq's government.

The Shia leaders have said that if Iraqi security forces cannot protect the Shia sites, cannot protect the Shia people they will do it themselves. So Iraq's government in the background is battling to figure out the best way to deal with the situation and reign in the violence.

The curfew is extended to tomorrow but these day time curfews can not go on forever -- Wolf.

BLITZER: Aneesh, thank you very much.

Anger about the golden mosque bombing is spilling across the Iraqi border into Iran. A few thousand people crammed the streets of Tehran today to protest the bombing. They chanted slogans such as we protect the holy shrines with our blood.

President Bush is again condemning what he calls senseless attacks on holy sites in Iraq. In a speech today here in Washington he expressed confidence the Iraqi people are committed to preventing civil war.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This is a moment of choosing for the Iraqi people. We can expect the days, coming days, will be intense. Iraq remains a serious situation. But I'm optimistic because the Iraqi people have spoken, and the Iraqi people made their intentions clear.

(END VIDEO CLIP)

BLITZER: We'll have more on the president and his Iraq strategy. That's coming up.

And we will also hear more of Mr. Bush's speech and his warning about Iran. That's coming up here in THE SITUATION ROOM in the next hour.

Let's check in with CNN's Zain Verjee. She is joining us from the CNN global headquarters with a closer look at other stories making news.

Hi Zain.

ZAIN VERJEE, CNN ANCHOR: Hi Wolf.

A pair of car bombs exploded just outside a major oil processing facility in eastern Saudi Arabia. The cars breached the outer security perimeter before being fired on by guards. Now it's not clear how many bombers were involved. But authorities are saying that they were all killed in the blast. At least two guards were wounded. The Persian Gulf facility processes about two-thirds of crude oil from Saudi Arabia. That's roughly one of every five barrels of global oil exports.

U.S. crude oil prices jumped sharply on the news closing up about 3 percent at nearly $63 a barrel.

Elsewhere today, Wolf. Philippines riot police clashed with protesters in Manila today. The security forces say that they thwarted a plot to overthrow the government. A state of emergency is now in effect.

And President Gloria Macapagal-Arroyo says that she is firmly in control of the government. According to a top general the alleged coup attempt was to coincide with large anti-Arroyo demonstrations that are scheduled for today -- Wolf.

BLITZER: Zain, thanks very much.

Up next here in THE SITUATION ROOM, more on the bloodshed in Iraq and the fall-out back here in Washington. What can the White House do to try to prevent a civil war? Paul Begala, Terry Jeffrey, they'll weigh in today's strategy session.

Plus, the storm over the ports. Are there any winners in this fierce political battle? Someone wins Bill Schneider's "Play of the Week" though. Stick around to find out who.

(COMMERCIAL BREAK)

BLITZER: In our strategy session today, gunmen fire two rockets at a sacred Shiite tomb just south of Baghdad. After a week of violence, will the country be able to come together to avoid civil war?

Plus, will there be the lasting political fall-out from the controversial port deal which is now on hold?

Joining us now CNN political analyst and Democratic strategist Paul Begala and Terry Jeffrey, the editor of "Human Events.

Terry, is Iraq falling apart right now?

TERRY JEFFREY, EDITOR, HUMAN EVENTS: Well, I certainly hope not, Wolf. But I think actually these attacks on these Shia shrines can be attributed to the potential success at the Bush strategy.

The Bush strategy -- right now the ambassador there is pushing hard as he can to get Shias to bring Sunnis into the government that's forming. Try and get enough power handed over to the Sunnis, so they feel comfortable with the political process.

Zarqawi, who is the head of al Qaeda in Iraq, has quite literally declared sectarian war against the Shias. He's trying to keep the Sunnis in the insurgency mode. I think this is his biggest gambit yet to do it. If we can get past this crisis maybe we can form a government that does bring stability to Iraq.

BLITZER: A U.S. general says -- Brigadier General Mark Kimmitt, senior policy and planning officer for the U.S. Central Command, says "This isn't a bump in the road, it's a pothole. And we'll find out if the shock absorbers in the Iraqi society will hold or whether this will crack the frame."

PAUL BEGALA, DEMOCRATIC STRATEGIST: CNN Well so far the frame is cracking. I deeply disagree with terry's interpretation that somehow it's good news that we have rampant sectarian violence and that a 1200-year-old mosque was burnt to the ground.

This is not what we were promised as a political matter. Here's the president's problem. It's credibility. The sound byte you played in our last segment. The president saying I am optimistic about Iraq. I think he has got the calibration wrong. You don't want to be pessimistic. But he needs to be realistic. And when he says stuff like that, he sounds foolish on the worst week perhaps.

BLITZER: So what should be the strategy for Democrats? The Joe Lieberman strategy, which is hold tight and finish the job as best you can, or the John Murtha strategy, which is basically a phased withdrawal?

BEGALA: Those are policy distinctions that serious policy people are going to draw. I don't have the solution to Iraq. I had the solution which was don't invade. OK, they should have listened to me.

Now they are in the soup. There's no good solution. But what I am saying is politically the president's credibility is crumbling. There are other pro-war Republicans. John McCain and Newt Gingrich who are still very popular. The president is not. The majority of the country thinks the president is no longer honest.

Why? Because he says moronic things like I'm optimistic when 100 people are slaughtered in the streets.

JEFFREY: There's another hopeful sign in Iraq that people should know about. Abdul Aziz Al-Hakim, who is the head of the Supreme Council for the Islamic Revolution in Iraq....

BLITZER: He is one of the Shiite leaders.

JEFFREY: Right. They are actually one of the two parties that won the election. And he's one of the most influential Shia in the country. And Ayatollah Sistani, who in fact is the most influential in the country, they are both saying this violence is not justified. They are telling the Shia to cool it.

They are staying on board a peaceful political process. We can't afford to lose them obviously. But it's hopeful that even in this time of crisis, they are pushing for peaceful politics not war.

BLITZER: Here another excerpt from the president's speech today. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: By building free institutions and an inclusive society that provides minority rights, Iraqi leaders will bring the nation together. And this will help to defeat the terrorists and the Saddamists who are fighting Iraq's Democratic progress.

(END VIDEO CLIP)

BLITZER: It's a complicated though political issue now almost three years into the war, next month three years since the U.S.-led invasion, for Democrats to come up with a unified strategy at this clearly delicate moment.

BEGALA: They don't need one. They are heading into congressional elections. They can do enough by saying we'll ask tough questions. We won't be a rubber stamp.

BLITZER: But you know the Democrats are going to be asked well what do you think the president should do?

BEGALA: Well, 100 different things because they have 100 different positions because they are actually thinking this through. I don't think that's the problem.

I think the problem is that the president from the beginning said we will be greeted as liberators. He said -- just recently the vice president a few months ago said this is the last throes of the insurgency.

Today he says this nonsense about how great everything is. The president is no longer credible about Iraq. He is not a credible leader on national security and it is going to croak his party politically.

BLITZER: Is it going to croak the Republican Party?

JEFFREY: No, I do not think it is. Look, this is a problem for the United States of America. We need to solve it. We need bi- partisan support for a policy that will work. I think the president has put in place the policy that can work.

I think our enemies over there see that it can work. And right now they are trying to precipitate that civil war. We all have a interest in making sure it doesn't happen. I think what we are actually doing on the ground today is the best possible strategy.

If the Democrats have a good alternative, they should put it on the table. They need to be for this country now, not for their partisan interests.

BEGALA: Well of course we are for the country. The president needs -- you know what he needs to do? He needs to read. I know he doesn't like to. He should read Winston Churchill. Churchill led his country through a very difficult war, much of which they were losing, and he didn't give us this Howdy Doody happy horse manure.

You know, he needs to be Winston Churchill not Bobby McFerrin. Remember that song in the 80s, "Don't Worry, Be Happy?" That's all we get from him. And it is not leadership, and it is not working for Mr. Bush.

BLITZER: Let's talk about this delay in the port deal. The company, Dubai Ports World, has now agreed to delay it as they try to build support in the Congress. Only a little while ago, Stephen Hadley, the president's national security adviser, defended the deal once again. Listen to what he told reporters.

(BEGIN VIDEO CLIP)

STEPHEN HADLEY, NATIONAL SECURITY ADVISER: We have said privately, publicly, in a variety of different ways, that we think that's a good thing that the CFIUS process that we're all nor familiar with looked at the deal, felt there were no national security problems that in the end of the day remained unaddressed, and that therefore, the deal as contemplated did not jeopardize national security interests.

The president supports that deal and believes that it should go forward. But obviously, questions have been raised in the public and in the Congress. And the president believes that additional time, which would allow the company and the administration to explain this and provide more information to Congress, is a good thing. And that in the end of the...

(END VIDEO CLIP)

BLITZER: He says that it's a good thing that there's a little delay right now. CFIUS is the Committee on Foreign Investments here in the United States, which approved all the interagency discussions, approved this deal. Politically, who wins in this delay?

BEGALA: It's the lay down. The Democrats win the longer this is in the newspaper, the longer this is on the air here. Now, what we've learned -- I saw the interview with the guy who wrote this law that this CFIUS committee operates under. They didn't even follow the law.

This is not unusual for the Bush administration. There is a requirement for an additional 45-day review if the purchasing corporation is, in fact, owned by a government. That is the case here with Dubai Ports world. They didn't observe the law. They didn't follow the law.

They also didn't follow common sense. The notion that Mr. Hadley and Mr. Bush think it's a good thing for a country which recognized the Taliban but not Israel, which produced two of the hijackers, which served as a transshipment point for AQ Khan and his nuclear proliferation scheme, that has had ties to terrorism. The notion that that's a good company or country to be controlling our ports, it's nuts. It defies common sense.

JEFFREY: Well, you know, this is one place where I actually agree with Hillary Clinton. She suggests there should be a law that no foreign government period can own a port in the United States of America. I think this country needs to step back and look at our trade policy.

It is not free trade when you have a government competing against other enterprises. On of the question of the UAE and threat, people read pages number 137 and 139 in the 9/11 Commission reports, and the footnotes. It tells the story about how we had a chance to kill Osama bin Laden on February 11, 1999. We called it off because he was meeting with UAE officials in the desert of Afghanistan.

Later, Richard Clarke called the chief of staff of the UAE army and remonstrated him about the fact that UAE officials were in Afghanistan. And a few days after, according to the 9/11 Commission report, this camp where we thought we had a chance to kill bin Laden was dismantled.

The question is, did people in the government of the UAE tip people off in Afghanistan, maybe even Al Qaeda, and protect Osama bin Laden from a strike that could have killed him in 1999? Congress needs to find out the truth of that because this is the same government that wants to own the operation of U.S. ports.

BLITZER: We have to leave it there. There is a fascinating article, though, today in "The New York Times" business section. Eighty percent of port operations in all of the United States are operated by foreign companies right now.

BEGALA: But not governments, as Terry points out.

BLITZER: And if Hillary Clinton had her way, there would have to be a massive overhaul of the way we operate our ports.

JEFFREY: And that article, Wolf, said this company paid 20 percent over the estimated market value for this company to do it. A capitalist enterprise would not do that. A government making a strategic move would.

BLITZER: All right. We'll leave it right there.

BEGALA: Those companies are not government-owned, in the main.

BLITZER: But they're foreign companies. They're not U.S. companies.

JEFFREY: We need to look at U.S. industry and revitalizing it in these places.

BEGALA: I'm with you.

BLITZER: Paul and Terry, thank you very much.

The flap over port security has a lot to do with political insecurity in this midterm election year. That brings us to our senior political analyst Bill Schneider -- Bill. BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Oh, sure. There have been complaints about President Bush's policies from Republicans from time to time, but this is different. This is serious. This is the political play of the week.

(BEGIN VIDEOTAPE)

SCHNEIDER: Republicans in Congress have had their differences with President Bush before. Remember the controversy over Bush's nomination of Harriet Miers to the Supreme Court? But the split over U.S. port operations is different. It's about the most serious issue of all, national security.

SEN. SUSAN COLLINS (R), MAINE: I'm troubled by the national security implications. I am very worried about this proposed sale because of the security implications.

SCHNEIDER: Some felt the president's reassurances sounded a bit, well, patronizing.

BUSH: People don't need to worry about security. This deal wouldn't go forward if we were concerned about the security for the United States of America.

SCHNEIDER: In other words, "Trust me." One or two Republicans said they do.

SEN. JOHN MCCAIN (R), ARIZONA: I think we ought to trust the president.

SCHNEIDER: Astonishingly, many Republicans don't. At least not on this issue.

REP. DENNIS HASTERT (R-IL), SPEAKER OF THE HOUSE: I've asked the president to put a moratorium on this decision.

SCHNEIDER: Et tu, DeLay?

REP. TOM DELAY (R-TX), FORMER HOUSE MAJORITY LEADER: Surrendering any control of any of our ports to any foreign nation strikes me as more than just a bad idea. It's a national security risk.

SCHNEIDER: They're members of Congress, and they're upset by the president's apparent disdain for Congress.

REP. CURT WELDON (R), PENNSYLVANIA: It almost smacks of an arrogance, like it doesn't matter what the Congress says.

SCHNEIDER: Voter outrage is also a factor. The administration's decision to allow an Arab-owned company to operate U.S. ports seems to defy common sense.

REP. PETER KING (R), NEW YORK: I've never had a situation like this where so many calls come in and everyone just cannot understand what's happening. SCHNEIDER: This week, congressional Republicans issued a declaration of independence and won the play of the week.

(END VIDEOTAPE)

SCHNEIDER: The first Declaration of Independence was followed by a war. That's exactly what could happen now if Congress passes legislation to stop the deal and the president carries out his threat to veto it -- Wolf.

BLITZER: Bill Schneider for us. Thank you very much. We're going to have much more on this port controversy ahead in our 7:00 p.m. Eastern hour here in THE SITUATION ROOM. Our own Lou Dobbs will face off against Republican Congressman Darrell Issa of California.

Also, the CIA leak case is now back in court. The defendant, Lewis "Scooter" Libby is demanding documents and demanding that his indictment be thrown out. We'll bring you the latest on the case against the former Cheney chief of staff and the charges he's making against the special prosecutor. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Former Cheney's chief of staff Lewis "Scooter" Libby is back in court today. He's fighting for classified information that could be crucial to his defense in the CIA leak case, at least that's what his lawyers insist, that he's fighting to get the charges against him dropped all together.

The hearing is continuing at this hour. Our Brian Todd is inside the courtroom. As soon as the hearing ends, Brian's going to emerge. He'll bring us the latest live. Stay with us for that.

Meanwhile, Scooter Libby is leaving nothing to chance. The vice president's former chief of staff is taking his legal case online and pulling out all the stops. Our Internet reporter Jacki Schechner is here to explain -- Jacki.

SCHECHNER: The special counsel has a Web site, and now so does Scooter Libby. The Legal Defense Trust has been up and running since November. They just put their Web site up this week. They've raised $2 million so far. They anticipate his defense is going to cost, quote from them, "in the millions."

They've got all the legal filings online, including today's motion to dismiss. You can see all of the evidence, why Scooter Libby's defense team thinks the case should be thrown out.

It's a very impressive list of backers on this list, including some names you might recognize. Steve Forbes being one of them, Mary Matalin another one, former Senator Fred Thompson, actor you might recognize.

Now, there's also what they say things you aren't hearing about Scooter Libby. There are quotes from President Bush, Vice President Dick Cheney, and they say that their largest contribution, Wolf, is quote, "in the thousands. " They couldn't be specific about that.

BLITZER: Legal fees are not cheap as we all know, Jacki. Thank you very much.

On our "Political Radar" this Friday, Governor Arnold Schwarzenegger is hoping to improve the standing with members of his own party tonight. The California Republican will give the keynote speech to the state GOP convention in San Jose.

He's expected to highlight the state's rebounding economy among other things after a year of political setbacks and plunging poll numbers. A new poll out in California shows Schwarzenegger's approval rating now at 42 percent. Troublesome level as he seeks reelection this fall.

Things may not be all that peachy between two southern states. Peachy. The Alabama House has voted to make the peach the state's official tree fruit. If the state Senate goes along, Alabama will be encroaching a neighboring Georgia's turf. And Georgians aren't necessarily all that pleased. Georgia is, after all, the Peach State. And peach growers there say Alabama's produce just can't compare.

Coming up, London's mayor gets suspended for something he said. So just what did he say? Our Zain Verjee has the answer. That's coming up.

Plus, it's been a sober six months along the Gulf Coast. But now it's time to party. Mardi Gras under way. We'll have live pictures from New Orleans. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the hot shots coming in from the Associated Press, pictures likely to be in your newspapers tomorrow. In the Philippines, an American marine uses a shovel to pull another marine out of the mud at the landslide. They're part of a unit helping out with search and rescue operations.

To the suburbs of Torino, Italy. Now, Olympic security. Soldiers from an Italian army man an anti-aircraft guided missile. More than 2,500 soldiers are guarding the winter games.

In Pakistan, protesters defy a ban on rallies to march against cartoons showing the Prophet Mohammed.

In Romania, stray dog on trial. This pup's accused of biting a Japanese man who later bled to death. One of the country's top lawyers is fighting to stop the government from killing the dog. He wants the little dog adopted instead. Some of today's hot shots, pictures often worth a thousand words.

Zain, what's going on in the CNN center?

VERJEE: Wolf, we're going to look at a story coming out of Thailand today where Prime Minister Thaksin Shinawatra has asked the king to dissolve parliament. Now, it's a move that requires new elections to be held in April.

Thaksin Shinawatra, telecommunications billionaire, has been accused of a variety of business and political conflicts of interest. In recent weeks, he's faced a series of massive demonstrations against his government.

London's mayor says that he may appeal a ruling today that basically suspended him from his job for four weeks because of a run in with a reporter. Last year, Mayor Ken Livingston compared the reporter, who works for London's "Evening Standard," to a German war criminal and a concentration camp guard, and said the newspapers supported fascism. Now, a disciplinary panel says that those comments brought disrepute to the mayor's office. The mayor called that ruling undemocratic.

And they're throwing Mardi Gras beads again, Wolf, on Bourbon Street. The Gulf Coast is taking a break from the sobering work of Hurricane Katrina recovery for the annual pre-Lenten festival. Many Mardi Gras activities have been slimmed down, though, and crowds appear to be smaller than a typical year.

But merchants are still hoping that the celebrations will boost the economy there. Many other locals are just looking for some much deserved rest and relaxation. And, Wolf, we're going to have a lot more on this story in the next hour. And these are live pictures right now coming to you from New Orleans -- Wolf.

BLITZER: All right, Zain. Looks like they're going to have a little bit of a party. Not as big as usual, but one that they deserve. Thanks very much.

Up next, the White House is praising the delay on the ports takeover by a company from the United Arab Emirates. But does a delay change your mind about the port deal? Jack Cafferty has your answers. He's going through your email. He'll share some of them with us when we return.

Plus, just how bad is the violence right now in Iraq? Is the country on the brink of a civil war? We'll ask someone who's worried. We'll get an assessment. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're back in THE SITUATION ROOM. So is Jack Cafferty. He's got "The Cafferty File" -- Jack?

CAFFERTY: Thanks, Wolf. They've announced a little bit of a timeout on this port deal. Everybody's going to try and firm up their position. I think they ought to put it to a vote in the Congress. Introduce a bill to block this thing and vote on it.

Because I want to know who wants to vote in favor of this thing. And then send it over to the president, let him veto it, and then send it back to the Congress and override the veto. Let's get everybody on the record where they stand on this thing.

Anyway, the question is, does a delay in the sale change your mind about the port deal?

Patricia in Paumdale, California: "No, Jack. It doesn't. The company, Dubai Ports World, that's buying these assets from the British company is still owned by a foreign government. This is the one mark that should make all Americans wake up and really take a look at who President Bush is.

Mark in Boxborrow, Massachusetts: "This is a joke. This deal is still going to close next week, they just said they won't take over the operations until later. Kind of like a robber saying, 'Give me all your money and I promise I won't spend it right away.'"

John in Jacksonville, Florida: "No, it doesn't change my mind at all. A delay is merely a Karl Rove-sponsored political tactic to get this mess off CNN's radar screen for a week. It was wrong on Monday, and it'll be wrong next month."

Suzanne writes, "I don't think it'll make any difference. The outrage is mounting. Congressional members, particularly Republicans, must feel like kamikaze copilots."

Joan writes, "What a stupid question. Shouldn't we listen to the discussion before deciding? Your bias is unbelievable."

And Megan in Ferndale, Michigan: "Yes, let's put it to a vote. I agree. Force Bush to make a stand on this and look like the arrogant, incompetent sell-out to the corporate interests in the Arab world and elsewhere that he really is. Also, force Congress to make a stand as they, especially my party, the Democrats," she writes, "have been so darn wishy-washy about everything."

A selfless bit of promotion now for this other job that I have around here. This weekend on "In the Money," I'll talk to "New York Times" op-ed columnist Tom Friedman about today's attempted suicide attack against the biggest oil terminal in the world in Saudi Arabia.

(BEGIN VIDEO CLIP)

THOMAS FRIEDMAN, COLUMNIST, "NEW YORK TIMES": Obviously, what the terrorists are trying to do now by attacking an oil facility is take this to a new level. They haven't been able to succeed at the previous level, or even when they did succeed, they didn't get the global attention they wanted.

So now what they're doing, going right after an oil facility, trying to make the regime in Saudi Arabia look really vulnerable and really make a global story out of this.

(END VIDEO CLIP)

CAFFERTY: The attack didn't succeed. The guards killed all the attempted attackers earlier today. You can see the rest of the interview with Mr. Friedman -- who's a very bright guy. He's won the Pulitzer Prize and stuff --along with a lot of other very good things on "In the Money." It airs tomorrow at 1:00 and Sunday at 3:00. And I ask that you watch because in case I blow this thing here in THE SITUATION ROOM, I'd like to have an audience over there on the weekend so I can still pay my kid's tuition.

BLITZER: You do have a good audience. Saturdays 1:00 p.m., replayed Sundays 3:00 p.m. Did you ask Tom what he thinks about this Dubai deal?

CAFFERTY: We did. And he says politically, it doesn't make a whole lot of sense. Much the same as almost everybody in this country. I mean, this was just unbelievable to everybody, regardless of what their political persuasion is. I mean, you heard the Republican leadership in the Congress saying, "Mr. President, what's going on here?"

BLITZER: Jack, I'll see you in a few minutes in THE SITUATION ROOM. Thanks very much.

Still to come, the joke's on the governor of Illinois during a national TV appearance. Is he laughing at himself? We'll show you how "The Daily Show" got the best of the governor.

And at the top of the hour, we'll be back to one of our top stories. Is a civil war looming right now in Iraq? Aneesh Raman standing by in Baghdad. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Being governor keeps you busy. Maybe that's why Rod Blagojevich of Illinois now says he didn't realize that "The Daily Show" is a spoof of the news, not necessarily the real thing. Blagojevich says he thought he was sitting down for a legitimate interview about contraceptives. Take a look and see what happened.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH (D), ILLINOIS: I think it's important for your listeners to know that we're not talking about medicine that terminates pregnancies.

UNIDENTIFIED MALE: I'll be in charge of what my listeners get to here.

BLAGOJEVICH: Is he teasing me, or is that legit?

UNIDENTIFIED MALE: Let's role play for a second.

BLAGOJEVICH: OK.

UNIDENTIFIED MALE: You're a hot 17-year-old. You get knocked up on prom night. The morning after, you go to your doctor, get a prescription for the morning-after pill. You come into the pharmacy. You meet me, the handsome, morally sound pharmacist. Go.

BLAGOJEVICH: You got the wrong governor. You've got to talk to Schwarzenegger. He knows how to do that. I saw the first movie he ever made, "Pumping Iron." You know, I was fascinated by that.

UNIDENTIFIED MALE: You're not the gay governor, are you?

BLAGOJEVICH: Happily married with two kids.

UNIDENTIFIED MALE: You sure?

BLAGOJEVICH: No, I'm positive.

UNIDENTIFIED MALE: All right. My mistake.

(END VIDEO CLIP)

BLITZER: Very funny. And for those of you who like "The Daily Show," an important note. The host, Jon Stewart, will be a guest on CNN's "Larry King Live" this Monday, 9:00 p.m. Eastern. Jon Stewart and Larry King here on CNN.

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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