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Lou Dobbs Tonight

North Korean Dictator Kim Jong-il Defying United States and the World by Firing Ballistic Missiles; U.S. Military Says Interceptor Missiles Are Ready; House and Senate Leaders Hold Hearings on Immigration Reform; Left Wing Candidate in Mexico's Contested Presidential Election Says He Is Victim of Voter Fraud; U.S. Policy Failures When Dealing With North Korea

Aired July 05, 2006 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Tonight, North Korean dictator Kim Jong- il has defied the United States and the world by firing seven ballistic missiles over the past 24 hours. The United States, which said any test would be "unacceptable," is now accusing North Korea of a "provocation."
We'll have complete coverage.

And the House and the Senate, they're on the road selling their competing proposals to tackle our illegal immigration and border security crisis. Congressmen and senators holding separate hearings on opposite sides of the country. The chairman of the House border security hearing, Congressman Ed Royce, is our guest.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Wednesday, July 5th.

Live in New York, Lou Dobbs.

DOBBS: Good evening, everybody.

President Bush today said North Korea's missile tests have further isolated Pyongyang from the rest of the world. The United States is now demanding international action against North Korea, but the world appears to be far from united on just how to respond to North Korea's missile tests. Both China and Russia seem unwilling to support any United Nations Security Council resolution that would threaten sanctions against North Korea.

Ed Henry tonight reports from the White House on the Bush administration's response to this latest political and military challenge from North Korea.

Richard Roth reports from the United Nations on the deep divisions within the security council over how to deal with North Korea.

And Jamie McIntyre reports from the Pentagon on what we know about North Korea's missile technology and the capabilities of U.S. missile defense.

We turn first to Ed Henry at the White House -- Ed. ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Lou, from the president on down, the White House is all about trying to calm this situation down. They're playing down the threat from North Korea, playing up the support they're getting from international allies. In short, just the opposite of how they handled the situation with that other key member of the axis of evil, Iraq.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I view this as an opportunity to remind the international community that we must work together to continue to work hard to convince the North Korean leader to give up any weapons program. It is much more effective to have more than one nation dealing with North Korea. It's more effective for them to hear from a group of nations rather than one nation.

HENRY (voice-over): A White House accused of rushing to war in Iraq moved quickly to reassure Americans the U.S. is not on the brink of another military conflict.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: There are attempts to try to describe this almost in breathless World War III terms. This is not such a situation.

HENRY: An administration previously accused of not going the extra mile diplomatically is now all about making sure this is not cast as Washington versus Pyongyang.

CONDOLEEZZA RICE, SECRETARY OF STATE: We've had expressions from countries all over the world of concern about this provocation that the North Koreans have engaged in.

HENRY: Once accused of thumbing its nose at the United Nations, the White House embraced the Security Council, which met in emergency session to consider a resolution rebuking North Korea.

JOHN BOLTON, U.S. AMBASSADOR TO U.N.: No member defended what the North Koreans have done. And I think that the tenor of that discussion shows how little support there is in the international community as a whole for these North Korean missile launches.

HENRY: The president is sending State Department official Christopher Hill to the region to urge North Korea to return to the six-party talks with the U.S., China, Japan, Russia, and South Korea.

CHRISTOPHER HILL, ASSISTANT SECRETARY OF STATE: We're prepared to go ahead with it, and meanwhile, North Korea seems to want to go in a different direction.

HENRY: But former Clinton official Wendy Sherman charges the White House has failed by not taking a more assertive role in the talks earlier.

WENDY SHERMAN, FMR. STATE DEPT. COUNSELOR: We have to come to that negotiating table ready with direct talks and ready with enough incentives, as well as disincentives, much in the way that we have begun to do with Iran.

(END VIDEOTAPE)

HENRY: Tony Snow insisted today the firing of these missiles has more to do with the irrationality of Kim Jong-il than with any failure in White House policy. Snow asserting that the White House has succeeded, at least for now, in building a diplomatic consensus that North Korea has to come back to the table for these six-party talks. But obviously so far those talks have yielded very little -- Lou.

DOBBS: Well, I mean, let's be straightforward here, Ed. They've been trying for three years with these so-called six-party talks.

The fact is, the president of the United States said it would be unacceptable, the secretary of state said it would be provocative, and the United Nations is doing absolutely nothing. So, I'm at a loss to understand how the White House or the Bush administration could claim that they've been successful on any quarter.

HENRY: Well, they do not want to sit down directly with North Korea for any talks. They feel this would just give Kim Jong-il the attention that he so desperately wants around the world. And when they look at the one long-range missile that was fired, it failed.

So, the White House feels that it's not as big a threat. It's clearly a threat, but not as big a threat as Kim Jong-il would like others to believe -- Lou.

DOBBS: Yes, but the White House, where you stand now, is the one who said it would be provocative and that such a test would be unacceptable.

HENRY: That's right, they did say that.

DOBBS: Ed Henry, thank you very much, from the White House.

Members of the United Nations Security Council tonight are holding urgent talks about those North Korean missile tests. The U.S. ambassador to the United Nations, John Bolton, says the Security Council must send a strong and unanimous message to North Korea. But China and Russia are unlikely to support any necessary message that is as strong as the United States would wish.

Richard Roth has the report from the United Nations.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: All of you, I invited you to come to the United Nations immediately now. I'll be there.

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT (voice-over): North Korea's United Nations ambassador was too late with his invitation. An angry Security Council was already there.

Japan demanded an urgent meeting to launch a U.N. resolution back at North Korea. KENZO OSHIMA, JAPANESE AMBASSADOR TO U.N.: We hope the response of the council will be swift, strong and resolute.

ROTH: Japan, the United States, Britain and France want a resolution condemning North Korea for the missile launches. Not stopping there, they also want sanctions imposed on Pyongyang, barring countries from sending technology and material for use in North Korea's missile program.

JOHN BOLTON, U.S. AMBASSADOR TO U.N.: No member defended what the North Koreans have done. And I think that the tenor of that discussion shows how little support there is in the international community as a whole for these North Korean missile launches.

ROTH: Yes, there was general agreement some response was required.

WANG GUANGYA, CHINESE AMBASSADOR TO U.N.: Actions taken should be constructive for maintaining peace in that part of the world. But certainly what happened yesterday was a regret.

ROTH: But responding with diplomatic force may be hard. China and Russia indicated they would oppose any resolution calling for sanctions.

VITALY CHURKIN, RUSSIAN AMBASSADOR TO U.N.: We are very mindful of all those grave aspects of the situation. However, we believe that we should also keep our goal in mind. And in that sense, I would caution you against whipping up the emotions too much.

UNIDENTIFIED MALE: I told you come to the United Nations. I'll see you there.

ROTH: The North Koreans may be confident now that China and Russia will offer protection in the Security Council. Analysts say China has to be worried that missile madness will spiral out of control in the Far East.

(END VIDEOTAPE)

ROTH: There was no vote today, Lou, and there's not going to be a vote tomorrow. We seem to be in the same situation in the run-up to Iran, which at the moment is also kind of stalled. It's a very familiar situation, the U.S., France and Britain on one side and Russia and China lined up on the other -- Lou.

DOBBS: As you say, a very familiar situation.

Richard Roth, thank you, from the United Nations.

The U.S. military says interceptor missiles were set and ready to shoot down the North Korean missiles, had it been necessary. But like the North Korean leader, Kim Jong-il, the North Korean missile test came up short.

Jamie McIntyre reports from the Pentagon. (BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice-over): When North Korea conducted its first and only other test of the long- range Taepodong back in 1998, it proudly released this video. But don't expect to see any pictures this time given the U.S. says the missile failed less than a minute after takeoff, before it even crested the horizon. Because the Taepodong-2 might have been able to reach the U.S., nine ground-based interceptor missiles were activated at Fort Greely, Alaska, and two at Vandenberg Air Force Base, California. But the U.S. Northern Command at Peterson Air Force Base in Colorado said in a statement, "Top officials from the command were able to determine quickly that the launch posed no threat to the United States or its territories."

Still, experts question whether the U.S. could have shot the missile down if it had to.

MAJ. GEN. DON SHEPPERD (RET.), CNN MILITARY ANALYST: You want to stay ahead of that military threat. You don't want to stay behind it. And right now we're certainly either behind or on a par with it. We have limited capability to do anything about a missile coming into this country.

MCINTYRE: North Korea did successfully test a half-dozen old technology missiles, three short-range Scuds and three medium-range variants called Nodongs, according to Pentagon sources. Those ballistic missiles were fired from a launch facility on the northeast coast and were aimed northward away from Japan, in the general direction of Russia. All six fell harmlessly into the Sea of Japan.

The U.S. says it had no trouble tracking the launches using both satellites in space and ships off the Korean coast, including the USNS Observation Island, a high-tech monitoring ship with sophisticated radars. Also nearby were two U.S. Navy Aegis destroyers, equipped with standard missiles that could have, in theory, at least, shot down the short-range missiles much the same way this warhead was shot down by an Aegis ship in a test over the Pacific last month.

Critics argue the U.S. is rushing to deploy missile defenses to counter a threat that barely exists.

JOSEPH CIRINCIONE, CENTER FOR AMERICAN PROGRESS: We had six Scuds and one dud fired. All of them landed in the Sea of Japan, all of them thousands of miles away from America's shores. It's a regional threat, but it doesn't represent any serious threat to the American heartland, and probably won't for a good decade or more.

(END VIDEOTAPE)

MCINTYRE: It's not clear what North Korea learned, if anything, from the very brief flight of its Taepodong-2 missile. But the United States is intensely interested in what went wrong.

Defense Secretary Donald Rumsfeld told reporters a short time ago here at the Pentagon that he knows a lot about what happened with the missile. He said he knows everything there is to know at the moment, and he said they're gaining more information all the time as they cross-check censors that were monitoring the launch -- Lou.

DOBBS: Jamie, thank you very much.

Jamie McIntyre, reporting from the Pentagon.

There are, of course, also rising tensions in the Middle East tonight. The Israeli army is pushing deeper into northern Gaza. That in an effort to stop Palestinians from firing rockets into southern Israel.

Earlier, a Palestinian rocket hit the Israeli town of Ashkelon. There were no casualties. It was the second Palestinian rocket to be fired on the town in as many days.

Israeli troops have still not found the missing Israeli soldier who was kidnapped by Palestinians more than a week ago and taken to Gaza.

Coming up next here, after North Korea defies the world by firing those ballistic missiles, the United States struggles to figure out how to respond. Three of the country's top analysts on North Korea join me.

And the House and the Senate on the road, selling their competing proposals to attack our illegal immigration and border security crises.

We'll have complete coverage for you.

And charges tonight of fraud in the Mexican presidential elections as the political crisis there intensifies. We begin with a live report from Mexico City and upcoming analysis.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: House and Senate leaders today held separate hearings at different ends of the country trying to discredit each other's visions of border security and immigration reform.

We have two reports. Casey Wian, in San Diego, where House leaders blasted the Senate's so-called comprehensive immigration reform as weak on border enforcement and national security. And Lisa Sylvester, in Philadelphia, where senators there argue their bill grants amnesty to millions of illegal aliens and is best for the country.

We begin with Casey Wian -- Casey.

CASEY WIAN, CNN CORRESPONDENT: Lou, the topic of today's hearing was border security and terrorism. But the real goal appeared to be political posturing.

(BEGIN VIDEOTAPE)

WIAN (voice-over): The chief of the Border Patrol San Diego sector told lawmakers he doesn't have the resources he needs to control his 60-mile stretch of border with Mexico. Most critical, he says, are remote video surveillance technology, tunnel detection equipment, and more Border Patrol agents.

DARRYL GRIFFEN, BORDER PATROL CHIEF, SAN DIEGO: If you give us additional resources that level of border security must raise.

WIAN: Despite those pleas, lawmakers seemed focused on scoring political gains. The ranking Republican and Democrat on the committee holding the hearing interrupted Chief Griffen's testimony to argue technical points of a vote taken weeks ago.

UNIDENTIFIED MALE: We could debate that, but...

UNIDENTIFIED MALE: Were you against it before you voted for it?

UNIDENTIFIED MALE: What I would say is it was not actually a bill. It's a motion to recommit and not take action on the floor that day.

UNIDENTIFIED MALE: Mr. Chairman, if I could just interject -- so only one side should speak to this issue, Mr. Issa (ph)?

UNIDENTIFIED MALE: Listen, I've got the gavel here and I'm yielding to you.

WIAN: Once they returned to business, newly elected congressman Brian Bilbray demanded border patrol attention to day labor centers in his district.

REP. BRIAN BILBRAY (R), CALIFORNIA: Is it is too much to ask agents to be able to go to places that are known to be frequented by suspected illegal immigrants? Because what I'm seeing in my neighborhoods is sanctuary zones being created not by rogue cities but by the federal government's policy.

Please explain that to me and my constituents.

UNIDENTIFIED MALE: As the chief of the sector -- so, you're talking to the commander -- if we can respond to just this situation, we will.

WIAN: The hearing produced little new information. Democrats claim it was a Republican effort to promote the House border security bill and doom the Senate's bill, which includes amnesty.

UNIDENTIFIED MALE: These hearings are not designed to legislate. They're designed to whip up public opinion.

WIAN: The hearings, which drew an overflow crowd and protesters from both sides of the issue, will continue Friday in Laredo, Texas.

(END VIDEOTAPE) WIAN: The only clear issue from the San Diego hearing is that Congress remains deeply divided over how to deal with border security and illegal immigration. In fact, one lawmaker, Xavier Becerra, of Los Angeles, predicted nothing will get done on the issue this year -- Lou.

DOBBS: Did I understand the Border Patrol sector chief correctly, Casey, that if they can fix that problem with those day laborer centers, they will?

WIAN: He says if they -- if they are able to, they will. But that leaves a lot of -- that leaves a lot of room for wiggling, if you will, because he can, you know, easily say that his agents are deployed elsewhere. And he did point out that the San Diego sector used to have 2,000 Border Patrol agents. Now they're down to about 1,500, because they've been deployed to other spots on the border -- Lou.

DOBBS: The elected officials not the only politicians in the room.

Casey, thank you very much.

WIAN: Absolutely.

DOBBS: Casey Wian.

I'll be talking with Congressman Ed Royce, who chaired that hearing on border security, later in this broadcast.

Senators supporting illegal alien amnesty tried to argue at their hearing today that the House border security bill would be damaging to this nation. Panelists told senators at the hearing that the United States economy -- one of them said this -- would collapse if it were not for illegal labor.

Lisa Sylvester reports.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Demonstrators came out in support of a plan to legalize 12 million-plus illegal aliens. Senator Arlen Specter chose the City of Brotherly Love to rally for the Senate immigration legislation and attack the House's enforcement-only approach.

SEN. ARLEN SPECTER (R-PA), CHAIRMAN, JUDICIARY COMMITTEE: The House made the decision to have the nationwide hearings. And the Senate was not going to sit idly by during July and August and be a potted plant.

UNIDENTIFIED MALE: This is a complex issue.

SYLVESTER: Eight out of the nine witnesses at the Judiciary Committee hearing approved of the so-called comprehensive approach, including New York Mayor Michael Bloomberg. MAYOR MICHAEL BLOOMBERG (R), NEW YORK: Although they broke the law by illegally crossing our borders or overstaying their visas, and our businesses broke the law by employing it, our city's economy would be a shell of itself had they not, and it would collapse if they were deported.

SYLVESTER: Representatives of the hotel, agriculture and landscaping industries testified they would take a serious hit if illegal aliens were deported.

CAROL ROSSI, HARRISBURG HOTEL CORP.: I would estimate that 15 to 20 percent of our workforce are foreign workers. So it would have a deadly impact on us.

SYLVESTER: But a group representing legal immigrants blasted the hearing as one-sided.

CARMEN MORALES, "YOU DON'T SPEAK FOR ME": The effect on the American citizens of this country, of the housing, the schools, the taxes, none of that was brought out, which is what we wanted to hear. But we didn't hear that.

SYLVESTER: Only one witness talked about the negative consequences of illegal immigration, pointing out violent crimes committed by illegal aliens.

MAYOR LOUIS BARLETTA, HAZLETON, PENNSYLVANIA: We are small-town USA. People that live in Hazleton live there because they want their children to be able to play on the playgrounds. They don't want to be terrified by some of the high-profile crimes that we've seen in our city mainly by people who do not belong in the country.

SYLVESTER: The mayor of Hazleton, Pennsylvania, is considering a new law that would punish companies that hire illegal workers and hold landlords who knowingly rent to illegal aliens accountable.

(END VIDEOTAPE)

SYLVESTER: And in many ways, this was, in fact, less of a leering and more of a press conference. It was clearly meant to counterbalance the House hearing in San Diego, and both the House and the Senate are promising more hearings to come -- Lou.

DOBBS: And New York Mayor Bloomberg managed to move right forward to center stage by saying that the economy of New York would collapse if not for illegal labor.

What was the reaction to that -- that statement?

SYLVESTER: You know, one of the interesting things that he also brought out, Lou, was not only that, but he said that it permeates all sectors. That it's not just low-skilled workers in New York, which clearly points out that there's a problem if we've become so reliant on illegal immigrants.

DOBBS: Yes. And I think -- I think it is appropriate at this point to point out that most of the economists who have analyzed the impact of illegal immigration figure that just about -- they had just about one-half, no more than one half of one percent of our total GDP to this economy, through their efforts, and that does not take into account, of course, the costs for social and medical care, and other costs as well.

Remarkable spectacle to see the Senate with hearings after they've passed legislation. One would think that it would be perhaps more helpful to have hearings before they pass that 715 pages of legislation. But it's America.

Thanks a lot.

Lisa Sylvester.

That brings us to our poll question tonight.

Do you believe the Senate and House field hearings on illegal immigration and border security will produce any meaningful result for the U.S. Congress? Yes or no?

Please cast your vote at LouDobbs.com. Those results coming up later here in the broadcast.

We'll also have your thoughts on our broken borders.

And Mexico's presidential election too close to call. Now one candidate accusing his opponent of fraud. We'll have a live report for you from Mexico City and analysis of what's likely to happen next.

And are congressional hearings on border security just a political road show? No way. Congressman Ed Royce chairing hearings along our border with Mexico. He'll be our guest.

And tough words in reaction to North Korea's missile launches. How will the United States respond to North Korea's challenge? Three leading authorities on North Korea and the Pacific-Asia region, they'll be joining us here for their thoughts as well.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, the left wing candidate in Mexico's contested presidential election says he is the victim of voter fraud. A spokesman for presidential candidate Andres Manuel Lopez Obrador says election officials deliberately manipulated an initial vote tally to favor his rival.

Both candidates have declared victory. Now Obrador is demanding a ballot-by-ballot recount.

Harris Whitbeck has the report from Mexico City -- Harris.

HARRIS WHITBECK, CNN CORRESPONDENT: Hello, Lou. Election officials in Mexico are verifying the counts made at polling stations throughout the country by looking at the documents used at the polling stations to record the vote tallies in last Sunday's election. Election officials say that that procedure is in accordance with the electoral law and is necessary due to the fact that the election here is too close to call.

Leftist Andres Manuel Lopez Obrador, however, says he wants a vote-by-vote recount, something election officials say is not possible under the current circumstances. Ruling party candidate Felipe Calderon says he is confident of victory and even went so far today as to offer Lopez Obrador's party a seat in his cabinet.

Meanwhile, you might hear the sound of demonstrations in the background. Those are hundreds of sympathizers of Lopez Obrador who since yesterday have been in front of the Federal Electoral Institute here in Mexico City demanding that victory be declared for their candidate, Andres Manuel Lopez Obrador.

So we expect a result possibly as early as tomorrow, but that's -- we're not sure that that will do away with the social unrest -- Lou.

DOBBS: You say social unrest. There have been, as you know, a lot of reports, some of it rather sensational, talking about Lopez Obrador urging his supporters to move into the streets, threats of social unrest.

What is the reality there this evening?

WHITBECK: Well, the reality is that there are hundreds of protesters in pockets in Mexico City here in front of the electoral institute. There was a group in front of the presidential official residence of Los Pinos, and Lopez Obrador asked his supporters to go to the different polling stations throughout the country to ensure, in his words, that the tally taking place today is done correctly.

Now, his party has threatened mass mobilizations. And the party certainly is capable of doing that. They've done it in the past. And they say that they're ready to do it again if necessary.

DOBBS: Harris Whitbeck, from Mexico City, thank you very much.

Coming up next here, Enron's founder, Ken Lay, dies of an apparent heart attack. Details on the man convicted of perpetrating the greatest fraud in corporate history, at least one of them, coming up.

And North Korea launches missiles and develops nuclear weapons. How will the United States respond to that challenge? Will it respond to that challenge? Three leading foreign policy analysts join us.

And the House convenes hearings on border security and illegal immigration. Democrats call the Republicans road show warriors. The Republicans say that the Democrats, all they're interested in is amnesty. Congressman Ed Royce chaired today's hearings in San Diego. He's our guest.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Three of the country's most respected authorities on North Korea join me in just a moment to discuss the escalating North Korean missile crisis, if you can call it a crisis.

But first, a look at some of the hour's top stories.

An autopsy on Enron founder Ken Lay shows he suffered from coronary artery disease and died of a heart attack. Ken Lay died at his vacation home in Aspen, Colorado. He'd been awaiting federal sentencing for conviction of fraud in the Enron scandal. He was 64.

Space shuttle Discovery astronauts today examined their spacecraft for signs of damage after yesterday's July 4th launch. Astronauts said the shuttle appears in good shape. They're also planning for tomorrow's hookup with the International Space Station.

All 12 of Atlantic City, New Jersey's casinos shut down today, victims of New Jersey's ongoing budget crisis which entered its fifth day today.

Oil prices today rallied to new record heights in today's trading to $75.19 a barrel. That's an all-time high for oil prices. Traders say the Iranian nuclear crisis and the North Korean missile tests triggering the run-up in oil prices.

North Korea's missile launches are the latest challenge to the United States by communist dictator Kim Jong-il. The launch is a part of North Korea's aggressive buildup of conventional and nuclear weapons. But the United States has outright failed to pursue a consistent foreign policy over a decade in response to North Korea's challenges.

Kitty pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): A foreign policy nightmare. The violence in Iraq continues. Iran remains defiant about its nuclear program. Afghanistan sees a renewal of Taliban strength. And now, North Korea's shot over the bow. But U.S. policy toward North Korea has zigzagged through at least two administrations with no success.

BRUCE KLINGNER, EURASIA GROUP: The U.S. has tried various foreign policies and to date, none have seemed to work in order to get North Korea to secure its nuclear weapons program. There doesn't seem to be any good options of policy toward North Korea. It tends to be those that are less bad. PILGRIM: Under the Clinton administration, the policy of engagement put the secretary of state in Pyongyang talking to North Korea. The Bush administration took a hard line approach, refusing to talk one on one with North Korea and declaring them part of the axis of evil. North Korea advances relentlessly in its ambitions, despite both approaches.

JIM WALSH, MASS. INSTITUTE OF TECHNOLOGY: The U.S. has to look at its own policy. North Korea back six years ago had one, maybe zero nuclear weapons, but it wasn't building any. For the last six years, it's been building nuclear weapons and now it has started testing long-range missiles. Clearly, we're moving in the wrong direction and we have to relook at our own policy and see if we shouldn't be doing something differently.

PILGRIM: Today, President Bush saying the current policy is to rely on allies in the region to increase pressure. The situation is increasingly dangerous.

CHRISTOPHER HILL, ASST. SECRETARY OF STATE: On the one hand, we know that they have nuclear weapons materials, plutonium. On the other hand, we know that they are apparently testing the means to deliver it. And so what we don't want to do is be standing around, waiting around until they get both of these parts together.

PILGRIM: North Korea has been very resilient in resisting foreign pressure, not only by the United States, but also by China.

(END VIDEOTAPE)

PILGRIM: China has refused to put any sanctions on North Korea, and the six-party talks after five rounds have come to nothing. Nevertheless, again today the Bush administration was calling for international cooperation to put pressure on North Korea with no other policy option to put forward, Lou.

DOBBS: Kitty, thank you very much. Kitty Pilgrim.

Russia has joined China to oppose sanctions against North Korea at the United Nations. South Korea is backing off of its initial strong reaction to those missile launches. It is calling for further talks with Pyongyang.

Joining me now to discuss this confrontation, Gordon Chang, author of "Nuclear Showdown: North Korea Takes on the World"; Frank Gaffney, president of the Center for Security Policy from Washington; and Graham Allison. He served as assistant defense secretary under President Clinton, joining us tonight from Boston. Gentleman, thanks for being here.

Gordon, let me turn to you. The president says it's unacceptable, the secretary of state says it's provocative. And, frankly, in my opinion, this administration looks like a bunch of whining babies trying to figure out how to get out of their name calling. GORDON CHANG, AUTHOR, "NUCLEAR SHOWDOWN": Well, you know, for the last three or four weeks, the United States has been saying to North Korea, if you launch, there are going to be serious consequences. Well, they launched.

And there will be serious consequences if we don't do anything because an international system that cannot defend its most vital interests against one of its weakness members cannot last. The Bush administration has got to realize that.

DOBBS: Frank Gaffney?

FRANK GAFFNEY, PRES., CENTER FOR SECURITY POLICY: Well, I agree with that. I think there will be serious consequences if we not only do nothing, but we persist in what I think is becoming increasingly the recommended course, namely reward North Korea once again for this kind of provocative behavior.

Lou, the problem fundamentally is the regime. And you're going to see this kind of behavior not only persisting but becoming more serious as long as this regime is able to operate as it is.

DOBBS: Graham Allison, your thoughts?

GRAHAM ALLISON, FMR. ASST. DEFENSE SECTY.: A flat failure. I think if you were grading the Bush administration's performance, it deserves an F. And I think the bottom line here is that a state that had two nuclear weapons when President Bush took office back in 2001 today has 10 nuclear bombs and a production line running for additional two bombs a year. So in my grade sheet, that's an F.

DOBBS: That's an F, but just to put it in some context, those two that they had they got through very effective manipulation of the Clinton administration. This country has been absolute lousy, whether it's the Clinton administration or the Bush administration, in dealing with North Korea, Graham. Why?

ALLISON: I think that's only half correct. I would say that actually in terms of CIA's best estimate, the two bombs worth of plutonium that were diverted by North Korea happened in 1991 and 1992 under Bush 41.

DOBBS: Oh, for crying out loud.

ALLISON: No, it just is a fact.

DOBBS: Graham, I appreciate the partisanship.

ALLISON: No, during the Clinton -- no, not partisan.

DOBBS: But I got to tell you, as an American citizen watching two administrations, the Clinton administration and the Bush administration, absolutely look like blundering foul-ups in their dealings with North Korea, with all sorts of bravado and entreaties and incentives and the net result is this? I'm telling you, I don't see any room for partisanship here, Graham. ALLISON: No, I'm not trying to be partisan, I was just trying to get the facts established. There's a statement that people like to say that the Clinton administration failed with respect to North Korea. I would say it failed in half. The 8,000 fuel rods that represented six nuclear bombs were frozen for a year.

DOBBS: All right, I will accede to whatever percentage you want to put on the failure, but as far as I'm concerned, it's an outright failure. You can take 50 percent failure, that's fine. But the fact is, we're looking at a very serious situation because this administration, Frank Gaffney, continues to use bravado and bluster and to what end?

GAFFNEY: Well, I think one of the things that the administration did right awhile back was say, we're actually going to defend this country against the sorts of ballistic missiles that the North Koreans are pursuing. They've not done as much as I think they should to deploy those defenses to date and particularly at sea where I think they could make a real contribution to defending us.

But I completely agree with you, Lou, that under successive administrations, we've pursued a strategy such as it is of basically trying to appease the North Koreans. It will not succeed. It will make matters worse particularly if we now turn it over to the U.N., for heaven sakes to try to pull our chestnuts out of the fire.

DOBBS: Well, those chestnuts were pushed there in part by an administration uttering rather -- it looks now rather ridiculous statements -- provocative, serious consequences. I mean, just tell me this.

Are we so impotent in this country that we have neither the diplomats or the strategists to understand that you shouldn't make threats you can't back up and that we have an inadequate missile defense system to deploy against such a threat?

CHANG: And the other thing that we're not doing is we're not really looking at the source of those problems. You know, we're not looking at North Korea's friends in the region. You know, we're trying to bring China along and trying to engage them into the international community, but China, you know, either could not stop North Korea from launching or it did not want to.

And we've got to realize that, because the Bush administration policy is overly reliant on China to solve a problem that we should be trying to solve ourselves. That's really in my mind, the critical issue.

DOBBS: Graham, do you agree?

GAFFNEY: I couldn't agree more.

ALLISON: Yes, I would say that the state that has the greatest leverage on this problem is China. But the dirty little secret here is American objective, the Bush administration's objective which is change the regime, is China's nightmare. So China is as afraid of the United States in this situation as it of nukes in North Korea.

DOBBS: Do you really think we -- you know, what I can't understand is this administration, the previous administration, and the one before that, took trade out of our foreign policy, they've taken immigration out of our foreign policy.

All that we have left in foreign policy and what is a superpower that is showing if not signs of decline, certainly fraying at the edges, we have only a military option, and that is not an adequate or acceptable option here, Graham. What do you think?

ALLISON: I agree. I agree with you 100 percent on that. I think in terms of the relations with China, the notion that Hu came to town, Bush spent a day with him, and this was not at the top of the agenda and that it is not a demand by American policy that China become involved with the leverage they have.

And the one instance in which they interrupted the flow of oil to North Korea for, quote, they said, "technical reasons," North Korea turned on a dime in about 24 hours. So they've got the leverage.

GAFFNEY: We have leverage, too, Lou, and I don't think it has to be military.

DOBBS: Where is it? Where is it, Frank? Tell us.

GAFFNEY: Well, look, I think part of this is, as a colleague of mine has put it, you know, we're dealing with a government that really is a Mafia operation. It's a criminal enterprise through and through. Going after its criminal ignorance ...

DOBBS: OK, I'll accept that the North Koreans are bad guys and Kim Jong-il is an idiot, but he is making us look like fools.

GAFFNEY: I'm not suggesting that he is an idiot. I'm suggesting that he is playing us for fools. And we've got to be taking an approach that hurts him and that puts pressure on the Chinese, who are enabling him to get away with this. We're not doing that. I agree with Gordon on that. We've got to be making it clear to the Chinese, they can't play this double game indefinitely and have their way with us at will.

DOBBS: But Gordon, as Frank Gaffney is saying, we can't even impose ourselves and our objectives on North Korea which is, after all a podunk little country that is a thumbnail on a very bad map.

And he's talking about we're going to impose our will on China, upon whom we're now dependent for most of our clothing, most of our computers, most of our consumer electronics.

ALLISON: And who has got a trillion dollars of our money.

DOBBS: Exactly.

CHANG: I think that there really is a failure to view American foreign policy seriously in Washington. And we really need to just sort of change the way we approach these issues because they're getting more serious over time.

DOBBS: Good grief, we're talking about a nation of -- we're supposed to be a superpower. We're behaving like a banana republic, our diplomats, our analysts, look like complete fools.

CHANG: You know, I live in a town which has a gross national product bigger than North Korea's and the United States over 55 years has been helpless.

DOBBS: This is pitiful.

GAFFNEY: It need not be that way, Lou.

DOBBS: Well, I certainly agree with you. I think nearly all Americans would. It would be nice to see rapid and quick changes in direction and tone here and perhaps strategy and objectives. Gordon Chang, Graham Allison, Frank Gaffney, thank you very much.

CHANG: Thank you, Lou.

DOBBS: Coming up next, law enforcement experts say the threat of terrorists crossing our border with Mexico is rising. I'll be talking with Congressman Ed Royce. He chaired new hearings on our nation's border crisis and what do Mexico's presidential candidates now charging, presidential electoral fraud? Could political instability make our illegal immigration crisis worse? We'll have a leading analyst on Mexico's political economy here next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Law enforcement officials testifying at a congressional hearing in California today on this nation's worsening border security crisis. Congressman Ed Royce of California co-chaired -- chaired, rather, today's hearings and joins us tonight from San Diego. Good to have you with us, Congressman.

REP. ED ROYCE (R), CALIFORNIA: Nice to be with you, Lou.

DOBBS: Tell us what you think was accomplished today, if you could.

ROYCE: Well I think the testimony by Sheriff Flores, who talked about the breakdown of law and order, how criminal gangs have moved into Laredo, Texas, and we heard about the same thing here in California, MS-13 and about the concerns of law enforcement that al Qaeda or other terrorist organizations could use that network to carry out their attacks against the United States.

DOBBS: And the idea that the border patrol -- I frankly was amused to hear the San Diego sector chief say that he would be glad to deal with, as Congressman Bilbray put it, the issue of suspected illegal aliens in communities around southern California, if they're able to do so. What in the world did that mean?

ROYCE: I'm not sure what he meant by that, but in the House bill, one of the things that we did was to put in a provision which would allow the local sheriffs to cooperate with immigration authorities and be reimbursed and not only would this be a force multiplier for us, we would also build the border fence.

As you know, part of this hearing focused on the testimony that what the Senate Democrats did under Senator Kennedy's provisions was actually prevent a border fence without the agreement by Mexico that we could build that fence.

DOBBS: Now you don't want to do that, Congressman? You don't want to maintain U.S. sovereignty and responsibility for our own security, do you?

ROYCE: It's unbelievable. The other provision we looked at was the Senate provision which would strip our local law enforcement of their ability to work with immigration authorities. So what basically the Senate has said is that they cannot be part of the solution. We cannot use the 700,000 local law enforcement officers to help us get control for border security purposes.

DOBBS: Well let me ask you this. You all in the House and you're having hearings before you move to coming up with a resolution here. The Senate has decided to have hearings. What is really remarkable about all this is this is taking place after both houses have passed legislation.

We've been at war with al Qaeda for five years almost. We still don't have border security. We still don't have our ports secure. What in the -- what is it going to take for this government, this Congress, this president to take seriously our national security?

ROYCE: One of the things I hoped would come out of this hearing was in hearing from our border patrol agents on the line and our sheriffs that are dealing with this breakdown of law and order and the investigator who smuggled in radiological material to put together a dirty bomb.

I hoped that that would help drive the debate. And you'll notice that the 750 pages in that Senate bill that rolled back our ability of local law enforcement now all of a sudden, that's being discuss and the Senate is starting to move towards the House direction of enforcement first. That's what I hope comes out of the hearings.

DOBBS: And so is the president and they're just as warm as they can be in their words about comprehensive immigration reform. Going into these elections, you think the American people will accept anything other than a serious, serious legislation that focuses first and absolutely first and effectively on border security?

ROYCE: And Lou, let me ask you a question.

DOBBS: Answer mine first and I'll answer yours.

ROYCE: I will answer yours. I don't think they do. And my question is why do we call it comprehensive on the Senate side? This is what I was going to ask you, when it actually takes away the ability of law enforcement to work with immigration authorities? DOBBS: Well I think you've answered as well as asked the question. And I will -- how would you say, can I join in your opinion? No, that's a different branch of government. I will accede to your judgment. Congressman Ed Royce, thanks for being here, appreciate it.

ROYCE: Thank you, Lou.

DOBBS: A reminder now to vote in our poll. Do you believe the Senate and House field hearings on illegal immigration and border security will produce any meaningful result for the U.S. Congress? Please cast your vote at LouDobbs.com. We'll have those results coming up here shortly.

Plus your thoughts on Congress, border security, illegal immigration. New charges of fraud in Mexico tonight, four days after a contested Mexican presidential vote. One of the country's very best experts on Mexico joins me from Mexico City. Stay with us.

(COMMERCIAL BREAK)

DOBBS: We're going to Mexico City right now. The leftist candidate, as we reported, in Mexico's election, Lopez Obrador is accusing election authorities of basically fraud. Both candidates declaring victory. We'll go to Mexico City.

George Grayson wrote a biography of Lopez Obrador. A professor at the College of Williams and Mary and is tonight in Mexico City, where he's been leading up to these elections. Good to see, you George. And secondly, what appears to you to be the situation right now? Is this going to about be an orderly process with a clear-cut winner or what?

GEORGE GRAYSON, PROF. WILLIAM AND MARY COLLEGE: No, it's not going to be orderly, Lou. In fact, you may be able to hear in the background a very militant fist of demonstrators. They've got signs like this that say, Lopez Obrador won, no to fraud.

And what happened was the local electoral commission here didn't mention to the public that some 2.5 million votes had not appeared in the original count. Now, those votes weren't lost. There was no fraud, but in fact, the public was misled.

So Felipe Calderon's lead was cut from 1.04 percent to 0.6 percent. Now there is a precinct by precinct recount going on. And Lopez Obrador is ahead with about two-thirds of the precinct precincts counted. However, the precincts that haven't been counted yet are in the western part of the state, which is a strong area. So I think we'll find in the next hour or two, because these precincts report later, that Calderon will capture the lead then there will be all hell to pay tonight in Mexico City.

DOBBS: Now, PON is the party that displaced the PRI, the party of Vicente Fox and also Felipe Calderon. When you say hell to pay tonight in Mexico City, what do you mean? GRAYSON: Well, the demonstrators are mad. They feel that the electoral council here misled them by underestimating the percentage of the vote that Lopez Obrador received in the preliminary count, which was a random sample. They also know that Vicente Fox, the incumbent president, was strongly backing and overtly backing Calderon. They believe the system is rotten to the core, and when, if I'm correct, Calderon is announced as the winner, they'll be in the streets and they're going to be in an extremely ugly mood.

DOBBS: And the situation tonight, there's been a history when Lopez Obrador was mayor of Mexico City. He was accused, and some thought with great justification, of actually inciting city demonstrations, unrest in the streets. Is it your sense that that's what he would do here?

GRAYSON: Well, he ran twice for governor of his home state, Tabasco. Both times he was the victim of fraud. And as mayor of Mexico City, he showed himself to be dogmatic, secretive, authoritarian and he believes that the law is not something that's enacted by elected officials, but is the will of the people as he interprets it. He thinks the regime is rotten to the core and so his supporters will be in the streets.

DOBBS: All right. Professor George Grayson, we thank you very much. We appreciate it. From Mexico City.

GRAYSON: Thank you.

DOBBS: Still ahead, we'll have more of your thoughts on the illegal immigration crisis, our upcoming midterm elections and we'll have the results of our poll. Please stay with us.

(COMMERCIAL BREAK)

DOBBS: Results of our poll now, 94 percent of you responding that you believe the Senate and House field hearings on illegal immigration and border security will not produce any meaningful result for the U.S. Congress.

Now for more of your thoughts, George in Pennsylvania said, "Lou why do we have to reform our immigration law? Our loss have been good for over 200 years. Changing them is a slap in the face to all people who have done things the right way."

Richard in Kansas wrote, "not only do I believe that companies should hire veterans, I think companies should be prosecute for hiring illegal immigrants. This shouldn't even be a debate."

Pete in Indiana. "We're supposed to fight for this country, then it's to hell with you. We can get someone cheaper. What an insult."

And Thomas in Ohio, "I saw you discussing on your show how the results of Mexico's election will effect illegal immigration in this country. As long as the Republicans want unlimited cheap labor and the Democrats want potential new voters, nothing will change and the middle class loses again." David in Maine, "what if they have Diebold voting machines in Mexico? Then they wouldn't have a paper trail to fall back on."

Marcia in Illinois, "Lou it is hard to assimilate when you speak a foreign language, fly a foreign flag and vote for a foreign president while demanding rights of American citizenship."

Send us your thoughts at LouDobbs@CNN.com. Each of you whose email is read here receives a copy of my book, "Exporting America." Thanks for being with us tonight. Please join us here tomorrow. For all of us, thanks for watching. Good night from New York. "THE SITUATION ROOM" begins now with John King, John.

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