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THE SITUATION ROOM

Debate Over Climate Change Heats Up; Interview With U.S. Ambassador to United Nations John Bolton; New Information on Massive Security Breach with Veterans Affairs; Newly-Released Documents on CIA and Nazi Whereabouts

Aired June 6, 2006 - 19:00   ET

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


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you tonight's top stories.
Happening now, it's 7:00 p.m. in Toronto, where prosecutors offer some shocking new revelations about an alleged terror plot. Did the suspects really plan to behead Canada's prime minister?

It's 2:30 a.m. in Tehran. Just how far would the U.S. go to get Iran to give up its nuclear ambitions? Would it offer to provide Iran with nuclear technology? I will ask the U.S. ambassador to the United Nations, John Bolton.

And Al Gore is raising a red flag about global warming. But a top weather researcher says it's a lot of hot air. Who is right?

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

Canadian prosecutors say the blueprint called for bombings and beheadings. They're offering some dramatic new details about the alleged terror plot, which led to the roundup of 17 Muslims. The new information concerns purported targets. And the charges couldn't be more chilling.

CNN Homeland Security correspondent Jeanne Meserve is in Brampton, Ontario. She's joining us with our "Security Watch."

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): It sounds like a movie script. Terrorists storm parliament and the headquarters of the Canadian Broadcasting Corporation in downtown Toronto, taking hostage.

When their demands to free Muslim prisoners and remove Canadian troops from Afghanistan are not met, they behead hostages, including Canadian Prime Minister Stephen Harper.

But this is not a script. These are the Canadian government's allegations against Steven Chand, one of the Canadian terror suspects, according to his attorney. The lawyer says, prove it. He has seen no evidence, only a synopsis of the charges. GARY BATASAR, DEFENSE ATTORNEY: This is a two-year investigation that was going on. One would think that the two-year investigation would have brought forth a lot more evidence than eight pages and a one-page synopsis of Mr. Chand.

MESERVE: Family members at the courthouse found themselves in a scrum. Media and public interest in this case is intense. This is, for Canada, something like 9/11, a jolt, a realization that terror can hit you where you live.

In court, defense attorneys complained that security is so tight, they have been unable to meet with their clients privately, a violation, they said, of the suspects' rights.

ARIFA ZARA, DEFENSE ATTORNEY: Regardless of the allegations and charges, everybody is entitled to be treated equally. And I think that unequal treatment just because of these allegations is improper.

BATASAR: This is not Guantanamo. This is Toronto, Canada.

(END VIDEOTAPE)

MESERVE: The suspects appeared in court in shackles. Some were somber, but a few smiled and waved at friends and family in the courthouse, apparently oblivious to the gravity of the charges against them -- Wolf.

BLITZER: Jeanne, you say 15 of the suspects appeared in court. Two did not. Why not?

MESERVE: Because they are in jail.

We saw some court documents today saying that these two men, last August, had crossed into Canada over the Peace Bridge from Buffalo, New York. They were stopped by Canadian customs. And when they were frisked, this document says, customs found guns concealed under their baggy pants.

The men said that these guns were for their personal protection. They pleaded guilty to charges and are now in jail -- Wolf.

BLITZER: All right, Jeanne, thank you very much.

And, to our viewers, stay tuned to CNN day and night for the most reliable news about your security.

There are new developments tonight in the nuclear standoff with Iran. A European Union diplomat has delivered a proposal to Tehran from the five permanent members of the U.N. Security Council and Germany. It offers a package of incentives for the country to stop enriching uranium.

President Bush spoke out on this new development just a few hours ago.

Our White House correspondent Elaine Quijano is traveling with the president -- Elaine.

ELAINE QUIJANO, CNN CORRESPONDENT: Wolf, President Bush says the latest signals from Iranian officials over talks about its nuclear program are positive. But he reiterated that the United States will only come to the negotiating table if Iran suspends its uranium enrichment.

The president made his comments during a stop Laredo, Texas, where he was talking up his immigration policy.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want to solve this issue with Iran diplomatically. And I think that I appreciate Javier Solana carrying the message to the Iranians that America, Russia, China, and Britain, France and Germany, the main -- the main group of negotiators, wants this problem to be solved.

And so we will see -- we will see if the Iranians take our offer seriously. The choice is theirs to make. I have said the United States will come and sit down at the table with them, so long as they are willing to suspend their enrichment in a verifiable way.

(END VIDEO CLIP)

QUIJANO: President Bush's comments come on the heels of a meeting between European Union and Iranian officials, a meeting described by the Europeans as constructive -- Wolf.

And we are going to have a lot more on the potential negotiations with Iran. The U.S. ambassador to the United Nations, John Bolton, will be my guest here in THE SITUATION ROOM this hour. I will ask him about an Associated Press report saying the U.S. is actually offering to give Iran some nuclear technology in exchange for an end to its uranium-enrichment program.

Other news: U.S. Marines are under investigation for the death of an Iraqi man last April in Hamandiyah and the alleged massacre of 24 civilians last year in Haditha. It may be some time before all the charges are filed. But defense attorneys are already preparing.

Let's turn to our senior Pentagon correspondent, Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, you know the old saying there's two sides to every story.

Well, we have been talking to some of the defense attorneys who may be defending some of the Marines accused in both of these incidents. And they are preparing that other side of the story.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): Even before a decision is made whether to charge anyone with killing unarmed men, women and children at Haditha, defense lawyers are busy constructing an alternative version of events, aimed at countering the perception the deaths were the result of a murderous rampage by Marines bent on revenge.

If the cases come to trial, look for attorneys to question the idea Marines knew that only unarmed civilians were in the houses in a village believed to be a hotbed of insurgent activity. They may call witnesses like Corporal Scott Jepsen, who told CNN he was in Haditha, but not at the scene.

CORPORAL SCOTT JEPSEN, U.S. MARINE CORPS: I believe that insurgents did dwell inside those houses there, and they -- and they did live with their family members. And I think that's part of the reason why the insurgency is so strong in that area, that they do -- they -- they do live in those houses there in Haditha.

MCINTYRE: Defense attorneys will paint a picture of a confusing day of nearby firefights and daylong battles, in which unmanned spy planes tried to track insurgent movement and may have been used to direct Marines to clear the houses of suspected insurgents.

One attorney tells CNN he's been told that the members of Kilo Company didn't know that their fellow Marine Lance Corporal Miguel Terrazas died in the IED attack on their convoy until they returned to the base at the end of the day, undercutting the contention the Marines were seeking vengeance.

One problem for defense lawyers, how to explain the allegedly false report by Marines that the bomb blast also killed some of the civilians, which the evidence, gunshot wounds, clearly disputes.

But Pentagon sources confirm what experts have been saying. The long delay in beginning the investigation, along with the refusal, so far, of the families to allow the bodies of the victims to be exhumed, is making it hard to get the kind of evidence that can make a murder charge stick in court.

(END VIDEOTAPE)

MCINTYRE: And, Wolf, because of that, sources now tell CNN that the investigation into the alleged massacre at Haditha could stretch well into the summer. That's because investigators have decided they need to re-interview some of the witnesses.

They also want to make another push to get access to the bodies, because they need the kind of forensic evidence that can link an individual Marine to an individual victim -- Wolf.

BLITZER: Thank you very much, Jamie McIntyre.

Let's go up to New York. Jack Cafferty is standing by -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, on May the 11th on THE SITUATION ROOM, in the wake of news the government was secretly collecting the telephone call records of millions of Americans, I went on the air and said this:

(BEGIN VIDEO CLIP, MAY 11) CAFFERTY: We better all hope nothing happens to Arlen Specter, the Republican head of the Senate Judiciary Committee, because he might be all that is standing between us and a full-blown dictatorship in this country.

He's vowed to question these phone company executives about volunteering to provide the government with my telephone records and yours and tens of millions of other Americans.

(END VIDEO CLIP)

CAFFERTY: What an idiot I am. I actually thought at the time Senator Specter was going to exercise his responsibility to provide some congressional oversight of the executive branch, you know, see if the White House is playing by the rules. Silly me.

In the end, Senator Specter has turned out to be yet another gutless Republican worm cowering in the face of pressure from the administration and fellow Republicans. There are not going to be any hearings. Americans won't find out if their privacy is being illegally invaded.

You know what the Senate Judiciary Committee settled for instead? Senator Orrin Hatch said he has won assurances from Vice President Dick Cheney that the White House will review proposed changes to the law that would restrict certain aspects of the NSA program.

Dick Cheney is going to decide if it's OK to spy on American citizens without a warrant. And this worthless bunch senators has agreed to let him do it. It's a disgrace.

Here's the question: Should the phone companies be forced to testify about cooperating in a secret NSA spying program?

E-mail your thoughts to CaffertyFile@CNN.com, or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Jack Cafferty, thank you very much.

Coming up: A collection -- a congressional election showdown in California under way right now, will it provide clues about the fall battle for control of the Congress? We are going to tell you about all the voting action that's happening today.

Plus: A former governor in one state calls it quits in another. What does it tell us about the state of party politics? Jeff Greenfield standing by with that.

And Al Gore is sounding alarm bells on the big screen about global warming. But there's another powerful voice out there who says it's all a hoax. The clash over climate change, that's coming up, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back. This is a busy and potentially critical day in the 2006 campaign. Voters are going to the polls right now in eight states. Only one contest in California will actually put someone in office. And it could be an early sign how the fall battle for Congress will turn out.

Voters north of San Diego are choosing a replacement for Randy "Duke" Cunningham. He's the ex-Republican congressman now serving jail time for bribery. The race pits Democrat Francine Busby against Republican Brian Bilbray.

Across California, Democrats are choosing a nominee to run against Governor Arnold Schwarzenegger. State Treasurer Phil Angelides and State Comptroller Steve Westly are facing off in that primary.

Another closely watched race is in Montana, where Democrats are choosing a challenger to Republican Senator Conrad Burns. He's considered one of the most vulnerable members of Congress this fall because of his ties to CNN convicted lobbyist Jack Abramoff.

And, in Alabama, Republican Governor Bob Riley is facing something unusual for an incumbent, a primary challenger. Former Judge Roy Moore is known nationwide for his unsuccessful fight to put a Ten Commandments monument in his courthouse.

Let's take a closer look at all of these elections, specifically what is happening just north of San Diego.

Our John King is standing by with that -- John.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, for Democrats, this is ground zero, as they test their theme, culture of corruption, against Republicans in the midterm elections.

For Republicans, this is an early test of how President Bush's political slump might hurt Republican candidates in places they should win. And, for both parties, it's an early look at what voters think about the bitter debate over illegal immigration.

(BEGIN VIDEOTAPE)

BRIAN BILBRAY (R), CALIFORNIA CONGRESSIONAL CANDIDATE: This is Congressman Brian Bilbray calling.

KING (voice-over): At campaign headquarters, Republican Brian Bilbray works the phones one last time...

BILBRAY: No, I'm not a recording, ma'am.

KING: ... hoping to solve the biggest mystery in the special election for California's 50th Congressional District.

AMY WALTER, COOK POLITICAL REPORT: ... intensity question. Are Republicans truly less motivated to go to the polls than Democrats? And I think that's the lesson we'll take away from this.

KING: Francine Busby would be the Democrat who benefits and goes to Washington.

FRANCINE BUSBY (D), CALIFORNIA CONGRESSIONAL CANDIDATE: Thank you.

KING: This normally rock-solid Republican district sends the first big message in the 2006 battle for control of Congress.

BUSBY: I think the message will be, we are fed up and we want change. That's the message that will come out of this district if I win this race.

KING: The seat is open because a corruption conviction forced former Congressman Randy "Duke" Cunningham to resign, the district now a laboratory for the Democrats' culture-of-corruption theme, as Busby paints former Congressman-turned-lobbyist Bilbray as a Cunningham clone.

(BEGIN VIDEO CLIP, BUSBY CAMPAIGN AD)

BUSBY: I'm Francine Busby, and I approve this message, because if you send a lobbyist to Washington, he'll serve special interests. Send me, and I'll serve you.

(END VIDEO CLIP)

KING: Republicans have a double-digit margin in voter registration. The national party has outspent Democrats two-to-one, in hopes of preventing what would be an embarrassing loss.

The San Diego-area district is also a testing ground for competing arguments on illegal immigration, the issue on which Bilbray has sought to not only portray Busby as soft, but also to prove himself to conservatives who view him as too moderate.

(BEGIN VIDEO CLIP, BILBRAY CAMPAIGN AD)

ANNOUNCER: Brian Bilbray opposes amnesty for illegal immigrants. Francine Busby supports amnesty. Her plan allows 11 million illegal aliens to stay here, and adds up to $30 million in 10 years.

(END VIDEO CLIP)

WALTER: Even Democrats concede that this issue has cut against their candidate, and that's a much better issue right now for Brian Bilbray.

(END VIDEOTAPE)

KING: Still a few more hours to vote out here in California, Wolf.

We're outside a voting poll in Encinitas, in the northern part of the 50th Congressional District. Officials here and at other polling places we visited say relatively light turnout throughout the day. That's pretty normal for a special election, although there is that gubernatorial primary you mentioned. Officials say this race is close. That's good news for the Democrats, just that it's close. They also say, though Wolf, that they may not have a call in this race, may not have a winner, until some time in the early-morning hours back East -- Wolf.

BLITZER: Sure. We will be watching closely. The polls don't close there for a few more hours, as you say.

John, thank you very much -- John King reporting.

In this midterm election year, party lines are not always as clear-cut as you might think, especially this year. Ideology can make campaigns complicated.

Let's bring in our senior analyst, Jeff Greenfield -- Jeff.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SENIOR ANALYST: Wolf, two political items today from two very different parts of the country, put them together and you have a potential political shift of real importance.

(voice-over): The first one comes from Kansas, reported in "USA Today" this morning. Democratic Governor Kathleen Sebelius has chosen Mark Parkinson as her running mate. So what? Parkinson is a former Republican state chair, who worked very hard to defeat Sebelius four years ago.

WILLIAM WELD (R), FORMER MASSACHUSETTS GOVERNOR: I, William F. Weld...

GREENFIELD: The second story comes from New York state, where William Weld, former governor of Massachusetts, had hoped to be the GOP nominee for governor of New York this year.

UNIDENTIFIED MALE: Thank you very much.

(APPLAUSE)

GREENFIELD: The Republican state convention overwhelmingly gave its endorsement to conservative John Faso. This morning, Weld dropped out.

WELD: I have come to the conclusion that this is not the time for a contested primary in this party.

GREENFIELD: So, what links these two stories? Step back for a moment and look at the recent past. More than 40 years ago, when the national Democrats embraced the civil rights movement, many Southern Democrats began to bolt the party. They were led by South Carolina Senator Strom Thurmond in 1964.

In the years that followed, many one-time Democrats switched. Phil Gramm of Texas, who later became a senator, Alabama Senator Richard Shelby and Colorado Senator Ben Nighthorse Campbell, who switched after they were elected. Indeed, one of the keys to Republican dominance of the Congress is that politicians who once would have been conservative Democrats now vote and even run and win as Republicans.

By contrast, only a relative handful of one-time Republicans now hold office as Democrats, in the House, Loretta Sanchez of California, Carolyn McCarthy of New York, Mike Doyle of Pennsylvania.

UNIDENTIFIED MALE: Government has a responsibility to be fair.

GREENFIELD: And, this year, James Webb, who served as Ronald Reagan's secretary of the Navy, is running as a Democrat for the Senate seat in Virginia now held by George Allen.

(on camera): So, what does all this have to do with William Weld? Well, say the moderate liberal Republicans find themselves increasingly on the outs with their party's conservative base. Say Rudy Giuliani is effectively ruled out of the presidential race because of his relatively liberal social views.

And let's say that, in November, incumbent moderate liberal House Republicans in the Northeast lose a significant number of seats. Some of these Republicans may discover the same thing that conservative Democrats discovered a generation ago, that they would be happier and politically healthier in the other party -- Wolf.

(END VIDEOTAPE)

BLITZER: Jeff Greenfield, thank you.

Jeff Greenfield and John King are part of the best political team on television -- CNN, America's campaign headquarters.

Still to come tonight here in THE SITUATION ROOM: Is the United States ambassador to the United Nations on the same page with President Bush? I will ask him about Iran's initial response to a deal aimed at ending the nuclear standoff with the West.

And Hitler, the Holocaust, and the CIA -- did the spy agency hide critical information about the whereabouts of Nazi war criminal Adolf Eichmann? Startling new information released by the U.S. government today -- it's all coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Zain Verjee is joining us now with some other news making headline right now.

Hi, Zain.

ZAIN VERJEE, CNN CORRESPONDENT: Hi, Wolf.

They may claim to have captured Somalia's capital, but residents are now fighting back. An analyst says the Islamic militia now claiming control of Mogadishu faces mounting opposition and that there's little chance the group will actually be able to form a new government. The Islamic militia is suspected of having ties to al Qaeda. Yesterday, they said they took control of the war-torn Somalian capital from a U.S.-backed coalition of warlords.

Today, President Bush says he's staying abreast of the situation.

(BEGIN VIDEO CLIP)

BUSH: Obviously, when there's instability anywhere in the world, we're concerned. There is instability in Somalia. The first concern, of course, would be to make sure that Somalia does not become an al Qaeda safe haven. It doesn't become a place from which terrorists can plot and plan. And, so, we're watching very carefully the developments there.

(END VIDEO CLIP)

VERJEE: It's said to be yet another unfortunate result of Hurricane Katrina: illegal immigrants working in unsafe conditions to rebuild the Gulf Coast. That's from a new study from Tulane University and the University of California at Berkeley.

In addition to working unguarded in dangerous conditions and around harmful substances, the study says illegal workers are earning less than legal workers in the post-Katrina rebuilding effort.

In Indonesia, some villagers aren't sure if this volcano is ready to blow, but they're running for their lives anyway. Ten thousand people near Mount Merapi have evacuated, as the volcano spews hot lava and gas. Many fear the volcano's dome of lava could just collapse, sending dangerous gas down on to the villagers -- Wolf.

BLITZER: Zain, thank you very much.

Just ahead: Iran is said to be eying the -- eying an offer to give up nuclear activities. But there's reportedly one part of the deal raising eyebrows. I will ask the U.S. ambassador to the United Nations, John Bolton, about it.

And how real is global warming? Al Gore says it's very real. A prominent weather forecaster, on the other hand, says that's just a bunch of hot air.

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

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington.

Let's get back now to one of our top stories. The U.S. and other world powers have offered Iran a package of incentives to halt its uranium-enrichment program. Iran is calling the offer a positive move. And President Bush is also using the word "positive" to describe Iran's response.

But how far would the United States go to get Iran to give up its nuclear ambitions? How about supplying Tehran with nuclear technology? (BEGIN VIDEOTAPE)

BLITZER: And joining us now is the United States ambassador to the United Nations, John Bolton.

Mr. Ambassador, welcome to THE SITUATION ROOM. Thanks very much for joining us.

JOHN BOLTON, UNITED STATES AMBASSADOR TO UNITED NATIONS: Glad to be here.

BLITZER: Is the United States prepared, as part of this incentive package with Iran, to actually allow U.S. nuclear equipment to be provided to Iran for peaceful purposes as part of this package deal?

BOLTON: Well, you know, we're not really in a position now where we want to talk about things that may or may not be part of the package that Secretary Rice discussed in Vienna last week. And I know there are all kinds of pieces of speculation in the media.

Our view is that we wanted to present this to the Iranians. And Ambassador Solana has now done that. The Iranian government will now consider it. And we would just as soon try and keep this in diplomatic channels. I know people are interested in it, and I'm sure it will come out in due course.

But I don't think it's appropriate at this point to speculate on one piece or another that may or may not be part of the package.

BLITZER: Because if it were true, and the "Associated Press" is reporting it, quoting anonymous diplomats in Vienna, where the agreement was announced last week, if it were true, this would end, in effect, the 27-year-old economic embargo of Iran imposed after the Iranian regime held Americans hostage for, what, 444 days.

BOLTON: Well, as your question started off with an "if", that's exactly what I want to try and avoid, and I make no bones about it. I just don't think that it's appropriate at this point to talk about what may or may not be in there. The Iranian government has said they may make the whole package public. I suppose if they want to do that, that's up to them.

But I think for now, while they're still considering it, it's much better not to do this in piecemeal fashion and say, well, what about this or what about this? The presentation was made as a package. I think it should be considered as a package, and somebody with a higher pay grade than mine in Washington will decide when the package becomes troubling.

BLITZER: Here's what you said on "Nightline" last March 15, referring to Iran. "Just like September 11, only with nuclear weapons this time, I think that is the threat." The question is this. If this is such a threat, almost like al Qaeda, if not worse, since it potentially could have nuclear weapons, why even talk to them? Why negotiate with terrorists? BOLTON: I think what the president and Secretary Rice have done with this offer to negotiate along with our European partners, if -- if Iran fully and verifiably suspends all enrichment and reprocessing activity, is to take away another excuse that the Iranians have had about resolving their nuclear weapons program.

This is a process point that's now being taken off the table. If the Iranians are truly serious about giving up the pursuit of nuclear weapons, this puts the ball back in Iran's court, which is where it really belongs, focusing on their pursuit of nuclear weapons.

It is precisely the fact that Iran has been the leading state supporter of terrorism for decades that underlines our concern about stopping them from getting nuclear weapons. So what the president's leadership has done here is to say if Iran is really serious about giving up its effort to acquire nuclear weapons, there's a way to do it. But the spotlight is now on them.

BLITZER: Why not also demand that they give up their support for terrorists, whether Hezbollah or other terror groups? Why not also make that as a demand for a resumption of a direct dialogue between the U.S. and Iran?

BOLTON: Because the only purpose of this dialogue is to resolve the nuclear weapons question. Just as we've had discreet dialogues with Iran in the case of Afghanistan, as we've offered to do in the case of the trouble that they're causing inside Iraq, this is a discreet subject, a subject of enormous importance to be sure, but it's not intended, as Secretary Rice has said, to open the way for discussion of all aspects of our relation.

We are extremely worried about Iran's support of the Hezbollah, Hamas, other terrorist groups. There's no question about that. And our efforts to prevent that kind of activity are not going to slow down.

BLITZER: Here's what the ayatollah said on Sunday. He said, "You," referring to the United States, "should know that the slightest misbehavior on your part would endanger the region's energy security. You are not capable of guaranteeing energy security in this region."

How worried are you that the Iranians could stop selling oil on the international market and disrupt the oil flow, presumably raise the price per barrel?

BOLTON: Well, I think Secretary Rice addressed that a couple of days ago. This is not something that -- that we see them doing, because of the harm that it would cause themselves.

And I must say, I mean, to be completely honest, it is tempting to respond to that kind of rhetoric, but I think to be serious and responsible now, we have put an important proposition to the government of Iran. It's important that we get a definitive response back from that government. And despite the temptation to respond to what this or that Iranian official is saying, I think it's important that we just stay put here for awhile and see what they come back and say.

BLITZER: You feel comfortable talking to a government that openly calls for the destruction of Israel?

BOLTON: Of course not, but the issue is what we're going to do in order to prevent them from acquiring nuclear weapons. And I think this dramatic step that the president and the secretary have taken eliminates any excuse that Iran or any of its apologists or supporters can have to say we didn't go the extra mile to achieve a diplomatic and peaceful solution. Let's focus on what the real conduct to be worried about here is, and that's Iran's pursuit of nuclear weapons.

So this is -- this is not a step that we took lightly. And it's a step that the Iranians need to consider very carefully. They face a choice now. They can go down one road and have one kind of relationship with the United States and its allies, or they can take another road if they reject this offer and face the path of international isolation.

BLITZER: Here's a paragraph that jumped out at me when I read it in Sunday's "Washington Post" about the build up to this major change in U.S. policy, expressing readiness for direct talks with Iran under certain conditions. Let me read this paragraph, because it refers to you.

"On Tuesday, the day before the announcement, Rice let U.N. Ambassador John R. Bolton, long a skeptic about dealing with Iran, in on the secret. Bolton then joined Rice, Hadley and Joseph over dinner and was asked to call conservative commentators the next day to explain the decision."

Is that true?

BOLTON: I read -- I read that paragraph with great interest, too. It's always fun to read things like that. It's somewhat inaccurate, because Nick Burns was at that dinner, as well.

But, you know, this was -- this was something the administration felt importantly, that the policy be explained. And I called many editors for whom I had written articles in my civilian days and talked to them about the policy. That's part of my responsibility in the job, and I take it very seriously.

BLITZER: But it sounds sort of humiliating, that they didn't include you in the decision making process. They only brought you in to go ahead and try to sell it to conservative commentators.

BOLTON: Well, take it the way it is. That's the job in the government.

BLITZER: But you accept that, obviously?

BOLTON: That's why I'm here, I suppose.

BLITZER: Final question, on Iraq, while I have you. Some startling -- I thought startling -- comments from the new Iraqi prime minister, Nuri al-Malaki, referring to these allegations of U.S. military misconduct at Haditha and elsewhere in Iraq. Listen to what he said last Thursday.

"This is a phenomenon that has become common among many of the multinational forces. No respect for citizens, smashing civilian cars and killing on a suspicion or a hunch. It's unacceptable."

I was pretty surprised, this coming from a man who is prime minister largely because of the United States and the U.S. loss in lives, the invasion, the overthrow of Saddam Hussein and the hundreds of billions of dollars we've spent to try to establish a democracy there. And here, he's lecturing the United States about U.S. military misconduct. How did you feel when you heard that?

BOLTON: Well, I don't think that statement was terribly well advised. But I'll leave it to others to respond to it more directly.

BLITZER: You're becoming a diplomat, obviously. Ambassador Bolton, I remember you from the academic environment. You would have had a different response, I suspect, in those days.

BOLTON: I don't work for myself any more.

BLITZER: Totally understandable. Ambassador John Bolton, the U.S. ambassador to the United Nations, thanks for joining us.

BOLTON: Glad to be here.

(END VIDEOTAPE)

BLITZER: And this is just coming into CNN right now. We're learning new information about that massive data security breach involving the Department of the Veterans Affairs. Of the more than 26 million records stolen, only a small percentage believed to be associated with active duty military personnel. But now we're getting new information that the number is significantly higher. Let's bring in our Internet reporter Abbi Tatton -- Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, the V.A. had estimated it was about 50,00 active duty military amongst that data. Now it turns out that estimate way off. This is what we're talking about, 1.1 million military members currently on active duty, plus 645,000 members of the reserves. On top of that, 430,000 members of the National Guard.

This is the latest from Veterans Affairs. They say these are the people whose data may have been amongst that 26 million figure that we had already heard. They're urging people to go to the phone line, 1- 800-FED-INFO. It's that line they set up.

There's also a Web page, firstgov.gov. We just checked that. The very latest isn't there yet. We've also posted it at CNN.com/SITUATIONREPORT. All the information is there, Now veterans affairs has said again today and repeatedly as this has been going along that there's no evidence that any of this data has been used illegally. However this laptop that's missing is still out there. Montgomery County, Maryland, police today, this is where the burglary took place, they were urging the public to look out for this laptop, a laptop that we're now finding out, may have included data over two million active duty military -- Wolf?

BLITZER: It's shocking, it's certainly an outrage, Abbi. Thank you very much for that. We'll continue to watch this story. Also coming up tonight, one weather expert likens global warming to a bunch of hot air. We're going to tell you who, why, and how his thoughts are at odds with Al Gore's. And letting Nazis go free? An architect of the Holocaust responsible for sending millions of Jews to their death. Was he allowed to roam free? Adolf Eichmann we're talking about. And there are startling new details that were released by the U.S. government today. Stay with us.

(COMMERCIAL BREAK)

BLITZER: One of the country's leading experts on weather is speaking out on global warming and he is finding himself at odds with many of his peers and also with the former vice president, Al Gore. Mary Snow is watching this story, Mary.

MARY SNOW, CNN CORRESPONDENT: Wolf, when William Gray talks about hurricanes, people listen. For the former vice president, Al Gore, his area of expertise is global warming. Now these two prominent voices on climate changes are in stark contrast.

(BEGIN VIDEOTAPE)

SNOW (voice-over): In one corner, former vice president Al Gore making the movie, "An Inconvenient Truth" to focus attention on a global crisis.

AL GORE, FORMER VICE PRESIDENT: the Arctic is experiencing faster melting. If this were to go, sea level world wide would go up 20 feet. .

SNOW: In the other corner, renowned forecaster Dr. William Gray, who accurately predicted last year's hurricane season better than the National Hurricane Center. Two men with a focus on the environment with a divide over the science of global warming, with Gray skeptical that humans are having a major impact on the warming of the planet.

WILLIAM GRAY, COLORADO STATE UNIVERSITY: I think this threat of human-induced global warming is largely manufactured. I don't think it's real.

SNOW: That puts Dr. Gray at odd odds not only with former vice president Al Gore, but with over 2,000 of the world's leading climate scientists. They say, yes, because humans are burning things like oil and coal, it is contributing to global warming. So why aren't there more skeptics?

Dr. Gray claims that scientists, especially younger ones, are afraid to voice skepticism.

GRAY: There has been, I might say, a mild McArthyism running against skeptics like me. I believe I lost some government money and funds over the years because I have been a skeptic on this topic.

SNOW: Not so says one of those younger scientists who said she is surprised by Gray's global warming claims.

BRENDA EKWURZEL, UNION OF CONCERNED SCIENTISTS: If we wait till every last person understands the data as most of the scientists do, then it may be too late.

SNOW: Just last month a scientific panel set up by the Bush administration concluded there is no more debate, the Earth's climate is burning up and there's only one explanation, human burning of oil and coal.

(END VIDEOTAPE)

Gray insists in ten years, people will conclude that the threat of global warming was overblown. Scientists who disagree with him say that they can't be further from the truth and that time can't be wasted to address the problems of global warming.

BLITZER: This debate will continue. Only last week we did report extensively on Dr. Gray's forecast for the current hurricane season. Mary, thank you very much.

Is the United States prepared for a deadly tsunami? Not according to a new report. After years of false alarms, Pacific Coast states may posses a false sense of security. Our Internet reporter Abbi Tatton, once again, with more details.

TATTON: Wolf, tsunami warning systems for high hazard areas in Pacific Coast states should be improved. That according to this new study by the Government Accountability Office. They're also saying that Pacific Coast states should do more to map potential flooding in these high risk areas.

In Alaska only five of these high risk coastal communities have been mapped out of about 60 of them. Also this report is urging more of these high-risk communities to become part of the tsunami-ready community that NOAA already operates. NOAA has responded to the report, saying they agree with many of the recommendations but they stress the need for better cooperation from state emergency management agencies. Wolf.

BLITZER: Up ahead, disturbing new documents on what the CIA new about a notorious Nazi war criminal, Adolf Eichmann. We're going to show you why the agency kept his whereabouts hidden from Nazi hunters around the world.

Plus, should phone companies be forced to testimony about cooperating in the secret NSA spying program? It's our question of the hour. Jack Cafferty with your email when we come back, right here in "THE SITUATION ROOM." (COMMERCIAL BREAK)

BLITZER: The bottom line of the market. Today a third straight losing session for the Dow, Nasdaq and S&P, as concern about inflation and interest rates shook investor confidence.

Turning now to a newly-revealed batch of secrets from spy agency files. After decades, new details today emerging about how American intelligence let some Nazi war criminals go free and actually gave others jobs. CNN's Brian Todd with the story. Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the CIA has been reluctant to put out these documents until recently. And today, surprising information on how the agency handled one of the most notorious Nazi war criminals of all time.

(BEGIN VIDEOTAPE)

TODD (voice-over): This face coming back to haunt the CIA. Why did the agency stay silent for at least two years while this Nazi war criminal was in hiding? Adolf Eichmann, an architect of the Holocaust, responsible for transporting millions of Jews to their deaths.

Newly released CIA documents show the agency knew that Eichmann was hiding in Argentina well before his 1960 capture by Israeli agents.

TIMOTHY NAFTALI, UNIVERSITY OF VIRGINIA: It was not U.S. policy to track Nazi war criminals once the Cold War began.

TODD: Among tens of thousands of pages, this 1958 passage on Eichmann: "He is reported to have lived in Argentina under the alias Clemens since 1952."

Historians say the CIA was given that information by the government of then West German chancellor Conrad Adenauer, but they say neither the CIA nor the West Germans attempted to capture Eichmann and didn't tell the Israelis where he was.

NAFTALI: The Bonn government feared what Eichmann might say about Adenauer's national security adviser, Hans Glocker (ph).

TODD: Hans Glocker (ph), who historians say was a key Cold War player on the side of the allies but had previously served in the Jewish Affairs Department of the Nazi government.

Compromises like this found in case after case, like those of former Nazi officials tapped by the CIA as analysts or as so-called stay behind agents to be in place if the Soviets ever invaded West Germany. Compromises that experts say the agency is still dealing with in the war with al Qaeda.

ROBERT WOLFE, FORMER NATIONAL ARCHIVES OFFICIAL: Inevitably, this must require recruiting unsavory characters among the innermost circles of the enemy where few pure souls are to be found. (END VIDEOTAPE)

TODD: But among those less than pure souls, historians say there wasn't much decent intelligence. One expert says many of those Nazi war criminals peddled mostly hearsay and gossip designed to tell their American handlers what they wanted to hear -- Wolf.

BLITZER: Brian, what a story, thank you very much. Let's bring in our Internet reporter Jacki Schechner. She has more on these newly-released CIA documents.

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, we want to take a closer look online at these documents. Here you can see the memo. If you zoom in a little bit closer, you can see where they talk about Eichmann and the alias Clemens. Keep in mind, a document from 1958, a little tough to read.

Another one that you can see here, talking about a secret CIA program known as Kibbitz. The other one Brian mentioned, Stay Behind. They used former Nazis in post-war Germany to use as intelligence against Russia.

Now what we've done is put these documents online for you at CNN.com/SITUATIONREPORT. So you can take a clearer, closer look for yourself. They have been released from the National Archives. IWG, or Interagency Working Group, they I.D. and declassify World War II documents. Wolf?

BLITZER: All right Jacki, thanks very much. Let's go up to New York. Paula Zahn is standing by with a preview of what's coming up right at the top of the hour. Paula?

PAULA ZAHN, CNN ANCHOR: Hi, Wolf, thanks so much. We'll have the latest on some of the latest details now emerging from that Canadian terrorism plot. And we will also be bringing you one woman's very personal unique story. She has accused a man of shattering her life twice. The first time is when she claims he raped her when she was in college. The second time was more than 20 years later when she says he wrote to her in a letter to apologize. So where did she draw the line between granting forgiveness and seeking justice? Well, we're going to devote a significant part of our program tonight to hear her amazing story. We hope you'll join us then, Wolf.

BLITZER: We will, thank you very much, Paula for that. Still ahead, should the phone companies be forced to testify about cooperating in the secret NSA spying program? Jack Cafferty will be right back with that, stay with us.

(COMMERCIAL BREAK)

BLITZER: Go back to Jack in New York with "The Cafferty File." Jack?

CAFFERTY: Well, Senator Arlen Specter caved today. He's not going to call the phone company executives to testify before the judiciary committee about cooperating with the government when it comes to the NSA's secret program to collect telephone call records of tens of millions of us Americans.

The question is, should the phone company executives be forced to testify?

John in Houston: Hey, Jack, please remind the people who don't have a problem with the NSA program that J. Edgar Hoover's secret files began as being in the interest of national security and ended up being used for blackmail.

Cynthia, Wellesley, Massachusetts: Yes, obviously the spine donors didn't arrive yet for Senators Specter, Hatch, et cetera.

Janet in Accident, Maryland: I think the U.S. should do anything that is necessary to keep this country safe from terror and that includes dumping you and your stupid ideas from CNN.

Susan in Wellsville, New York: Jack, don't feel bad about being a dupe. We are all sheople, most pointedly Arlen Specter. We follow blindly, hope springing eternal. Things will be better in November, I hope, I hope.

Jonathan in Indiana, Pennsylvania: The phone companies, as well as administration officials need to be forced to explain their actions. Instead of rewriting our Constitution to protect us from the dread of gay marriage, maybe Congress should do something to protect the Constitution from the administration.

And C., Maineville, Ohio: Gutless Republican worms, did I really hear that on television? Cafferty, I almost lost my dinner I was laughing so hard. How good it feels to hear a journalist say exactly what is on my mind. Yes, those idiot telecom CEOs need to be interrogated under oath.

Wolf?

BLITZER: Jack, see you tomorrow, thanks very much. Let's end this hour with a closer look at some of the hot shots coming in from our friends at the "Associated Press." Pictures likely to be in your hometown newspapers tomorrow.

Gaza City: Palestinian journalists protest after a Hamas gunman stormed a Palestinian T.V. broadcasting facility yesterday.

Jakarta: Defense Secretary Donald Rumsfeld flashes a smile after meeting with Indonesia's president.

Tijuana, Mexico: A man who refused to identify himself keeps a lookout for the U.S. border patrol.

Southwestern Thailand: An elephant convoy lines the streets. The pacaderm transfer was delayed when animals rights activists blocked the convoy on the way to the airport.

Those are some of today's hot shots, pictures often worth a thousand words. That's all the time we have today, thanks very much for joining us. See you tomorrow back here in THE SITUATION ROOM. I'm Wolf Blitzer in Washington. Let's go to New York. "PAULA ZAHN NOW" starts right now. Paula?

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