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American Morning

North Korea Missile Threat; Crisis in Gaza; Calls for Justice; New Jersey Rolls the Dice

Aired July 05, 2006 - 06:00   ET

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

MILES O'BRIEN, CNN ANCHOR: Good morning to you, Wednesday, July 5. I'm Miles O'Brien.
CAROL COSTELLO, CNN ANCHOR: And I'm Carol Costello in for Soledad.

We begin this morning with breaking news.

O'BRIEN: A defiant North Korea still at it. The U.S. military confirming another missile firing just a short time ago. That makes seven test firings since yesterday. We have extensive coverage from all around the globe just ahead.

Another court appearance today for those alleged terrorists in Miami. They're accused of plotting to blow up several buildings, including Chicago's Sears Tower. The judge to decide if they should be held without bond.

COSTELLO: In New York City today, the search resumes for human remains near ground zero in the 9/11 attacks. The search at the badly damaged Deutsche Bank building was put on hold in April because of asbestos worries.

It is day five of New Jersey's budget crisis and a government shutdown. And Atlantic City's casinos could be forced to close two hours from now. Casinos are not allowed to operate without state monitors.

The immigration debate hits the road today. Senators Arlen Specter and Ted Kennedy will hold a public hearing on the matter in Philadelphia. In the meantime, House Republicans will hold a hearing in San Diego.

O'BRIEN: And the crew of the space shuttle Discovery waking up to their first full day in space, and what a view they're enjoying. Job one for the astronauts, start checking the orbiter to ensure the heat shield was not damaged by falling foam during yesterday's launch.

Chad Myers, we had a beautiful day at the Cape.

CHAD MYERS, CNN METEOROLOGIST: We did. Yes.

O'BRIEN: Thank you very much, -- sir.

MYERS: Hey, Miles, how high is that thing now?

O'BRIEN: They're approaching the 250 nautical mile realm, but they're still kind of going up as they go.

MYERS: So they probably didn't see any fireworks from there?

O'BRIEN: No -- well I -- you know that's a good question. I bet they could.

MYERS: Tiny little puffs of white bulb (ph).

O'BRIEN: Yes, they probably could.

COSTELLO: Wouldn't that pale to what they're seeing in space?

MYERS: I guess. Hey, look at the fireworks. No, look, it's Saturn.

Hey, good morning.

(WEATHER REPORT)

O'BRIEN: Thank you very much, Chad.

Back now to North Korea and that barrage of missile firings. The U.S. confirming another test firing a short time ago. That makes seven since yesterday. And now the question is how is the world going to respond?

Here in New York in a few hours, an emergency meeting of the U.N. Security Council to consider some options. All seven missiles landed in the Sea of Japan. All but one were medium range, medium-range missiles.

The one that caused the most concern in advance of the tests, a long-range missile called the Taepodong-2. It failed, however, less than a minute into flight. Analysts say if it had worked, it could have been able to reach the continental United States. North Koreans do have a nuclear program, but American intelligence believes it is unlikely they have a nuclear device small enough to fit inside a missile warhead. The White House is sending its chief negotiator on North Korea to Asia today.

CNN's Suzanne Malveaux live now from the White House with more on how the administration is responding, -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, certainly they're keeping a very close eye on the developments this morning. The president getting constant updates on the activities of North Korea. It's important to note here the White House is characterizing this as provocative behavior, but they say this poses no immediate threat to the United States.

Now we have heard from the National Security Advisor Stephen Hadley. We have also heard from the press secretary. Tony Snow issuing a statement earlier saying that "The United States strongly condemns these missile launches and North Korea's unwillingness to heed calls for restraint from the international community. We are consulting with international partners on next steps. This provocative act violates a standing moratorium on missile tests to which the North had previously committed."

Now President Bush was notified by Hadley of these missile launches. He continues to be updated on what is taking place. The president also met with his secretary of defense yesterday, as well as Secretary Rice, Secretary of State. There will be more consultations and meetings.

But it's important to note here, of course, Miles, that the White House is really playing a delicate act here, a delicate balancing act. On the one hand saying yes, this is important; but on the other hand certainly do not want to be pulled in some sort of confrontation with North Korea.

Rather, as you said, Christopher Hill at the State Department, chief negotiator for the United States, is going to be acting as the go-between here to say, look, this is something that deals with the region and North Korea six-party talks, not the United States versus that regime -- Miles.

O'BRIEN: But so far all that's being discussed is diplomacy, correct?

MALVEAUX: Well that's right. I mean that's all that's being discussed. They say that they want North Korea to come back to the six-party talks.

But you can bet that there's going to be a reexamination of the administration's policy here. I mean, clearly we have watched North Korea build up this nuclear arsenal. They have not returned to the negotiating table, but we have seen some strong statements and stands already from some of its neighbors. The United States certainly hoping to push its neighbors, specifically Japan and China, to take the lead on this.

O'BRIEN: Suzanne Malveaux at the White House, thank you very much.

Japan and South Korea, the two countries most threatened, were quick to react. China's response will be significant. It has the most influence over North Korea.

We have live reports now from all three places. Jaime FlorCruz is in Beijing, Sohn Jie-Ae in Seoul. We begin with Atika Shubert in Tokyo.

What's the reaction there, -- Atika?

ATIKA SHUBERT, CNN CORRESPONDENT: Well Japan has taken a very tough stand on this. They have issued a strong protest to the North Korean Embassy in Beijing and also taken the decision to impose sanctions, economic sanctions, on North Korea.

The first step for that was to actually suspend a ferry service between North Korea and Japan. That's the only direct link between the two countries. And also bar any North Korean officials from traveling to Japan. Now the government has said that there are probably more economic sanctions likely to come, but first they want to find out more about these continuing missile launches that are going. As you mentioned earlier, there was another one just about an hour and a half ago. And of course there's the U.N. Security Council meeting coming up that Japan has pushed for because it wants to make its case to the Security Council.

O'BRIEN: Atika Shubert in Tokyo, thank you very much.

In South Korea where many people, millions of people, frankly, are in the range of artillery fire from the North, there is a lot of tension of course.

Sohn Jie-Ae live now from Seoul with more from reaction there -- Sohn Jie-Ae.

SOHN JIE-AE, CNN CORRESPONDENT: Well, Miles, in South Korea, as you pointed out, South Korea, which has actually for a long time been in the range of North Korean missiles, and they don't even have to be the medium to long-range ones. The feeling here is more of frustration rather than danger.

The feeling from the South Korean government, as well as the people that we met on the street, is not so much fear of North Korea, but of frustration that North Korea is again playing its games of brinkmanship and taking the South Korean peninsula to the brink of what some said was war a few years ago, racking up tensions on the Korean peninsula.

And South Koreans at this point, who are enjoying a very vibrant economy, don't want anything to endanger their economy and their livelihood. So it is a feeling of frustration that you hear on the streets of Seoul and in the government offices here -- Miles.

O'BRIEN: Jie-Ae, thank you very much.

China has been trying to get North Korea back to the six nation nuclear disarmament talks. Jaime FlorCruz from Beijing with more on that -- Jaime.

JAIME FLORCRUZ, CNN BEIJING BUREAU CHIEF: Miles, still no official word from the Chinese officials, but the Chinese are a very key players in this crisis. China is a neighbor of North Korea. It's also a very close ally and a main provider of oil and food and other economic aid. So the U.S. and Japan are hoping that China will lean on North Korea to contain its behavior.

However, the North Koreans also expect China to help block any attempts to impose economic sanctions on them. And this will be specially the case when the United Nations Security Council hold a meeting very soon. China is a member of the -- permanent member of the council and wields the veto power.

China, however, hopes that the two sides, the United States and North Korea, can restore to diplomacy and that this will be resolved through the six-party talks -- Miles.

O'BRIEN: Jaime FlorCruz in Beijing, thank you very much -- Carol.

COSTELLO: Israel's security cabinet now getting the go-ahead for an increased offensive into residential areas in Gaza. That word just coming to us within the last hour. The decision comes after Palestinian militants fired a rocket that hit an Israeli high school.

CNN's Paula Hancocks live in Gaza City to tell us more.

Hello, -- Paula.

PAULA HANCOCKS, CNN CORRESPONDENT: Hello, Carol.

Well it looks like this Israeli operation in Gaza is going to be stepped up a notch. As you say, the Security Council has given the green light for a further incursion into Gaza itself.

Now from the initial information we're getting, it appears though also these troops will be permitted to go into residential areas. Now this is something they haven't done for the past seven days. They've had tanks and troops surrounding towns but not have -- but not once have they actually gone in. Now this could escalate the situation a lot more as this is a very densely populated territory, 1.4 million people, and the territory itself is only about 45 kilometers long.

Now this is in direct response to that missile from a Palestinian militant, a Hamas militant, that went into a schoolyard in an Israeli city on Tuesday evening. Now this is further than any of the militant's rockets have reached before. And the fact it reached into the heart of a city, which has a population of 110,000 people, this is why Prime Minister Israeli -- Israeli Prime Minister Ehud Olmert said that it's unprecedented and severe escalation of the terrorist war. That's why he's given this go-ahead for the increase in operations here.

Now we saw some airstrikes for the eighth day and eighth night running as well on -- early out of Tuesday/Wednesday morning. The interior minister was hit for a second day in just a week. Now that -- the second floor of that building collapsed. We know five people have been injured, at least one child amongst them -- Carol.

COSTELLO: Paula Hancocks live in Gaza City this morning.

Some Iraqi lawmakers blasting the United States over an alleged rape and murder of an Iraqi girl and the killing of her family. A former U.S. soldier has been charged. But now there are calls for the Iraqi government to open its own probe.

Arwa Damon live in Baghdad to tell us more.

Hello, -- Arwa.

ARWA DAMON, CNN CORRESPONDENT: Hello, Carol. And that's right, outrage expressed here in Iraq from Iraqis on the street all the way up to Iraq's prime minister. The Iraqi Islamic Party putting out a scathing press statement calling this a heinous act, an immoral act carried out by a group of U.S. soldiers, calling for Iraq's government to take a clear stance on this.

And it appears that they are going to do just that. Iraq's Prime Minister Nuri al-Maliki in a press conference from Kuwait where he is on a visit saying that the immunity granted to U.S. soldiers has emboldened them, calling for this law of immunity, this immunity that is granted to international forces here, to be reviewed.

Also from his office here in Baghdad, the additional statement that the Iraqi government will be calling for an independent U.S.- Iraqi investigation into these allegations. Some parliamentarians, we are told, are also calling for an international investigation -- Carol.

COSTELLO: Arwa Damon live in Baghdad this morning, thanks.

O'BRIEN: Still to come on the program, our continuing coverage of the North Korea missile test. New reports this morning the country has fired a seventh missile. But how will the world react?

COSTELLO: And then, a crisis playing out at New Jersey's casinos. Why gamblers may be placing their last bets this morning.

O'BRIEN: And then an explosion marring a July 4th fireworks celebration in one northeast town. We'll tell you about that.

COSTELLO: Carrie Lee is back. She has business headlines this morning.

CARRIE LEE, CNN CORRESPONDENT: Thank you very much.

We'll take a look at North Korea's missile launch, its effect on the financial markets around the world and another case of identity theft. This time, workers are suing. Those stories coming up on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Happening this morning.

North Korea test firing another missile in the last several hours. That makes seven now since yesterday, including a long-range rocket. It was a dud, though.

Israel is stepping up its offensive in Gaza today. Israeli warplanes hit the Palestinian Interior Ministry. Israel is trying to free an Israeli soldier kidnapped by Palestinian militants last month.

And still no deal to fix the gaping hole in New Jersey's state budget. Much of the government already shut down and the showdown between the governor and state lawmakers now threatening their ultimate cash cow. What would that be you ask? Casinos of course. Atlantic City's casinos could fold in less than two hours. It seems they have to have state monitors in order to stay in business.

CNN's Mary Snow live now from Atlantic City where I'm sure people will be rather upset if they dim the lights in just a little while -- Mary.

MARY SNOW, CNN CORRESPONDENT: They certainly are.

Miles, good morning.

And you know this is a first since gambling came to New Jersey in the late 1970s. Casinos are preparing to shut their doors by an 8:00 a.m. deadline. And this is because budget talks in the state went nowhere.

(BEGIN VIDEOTAPE)

SNOW (voice-over): In a rare July 4th special session, New Jersey Governor Jon Corzine told lawmakers to act on what he called an immediate constitutional crisis, a crisis that could play out on New Jersey's poker tables Wednesday morning. Atlantic City's 12 casinos could be forced to shut for the first time if a state budget agreement isn't reached. Gamblers said they feel like bargaining chips.

MITCHELL KRAMER, GAMBLER: Put all these people out of work. And the income that the state derives from the casinos, it's asinine to shut these casinos down.

SNOW: Casinos would be affected because they can only operate with state monitors. Those monitors are part of the next phase of a government shutdown that began Saturday. Union leaders say it would affect far more than state employees.

BOB MCDEVITT, UNION LEADER: Right now there's 60,000 workers in the Atlantic City industry that are holding their breath for tomorrow morning at 8:00 a.m. and it's just not fair.

SNOW: This showdown reaches everything from state offices to racetracks. Even state beaches could be forced to close down. It centers around a 1 percentage point sales tax increase the state's democratic governor says is needed to narrow a $4.5 billion deficit.

GOV. JON CORZINE (D), NEW JERSEY: Any spending cut, any tax increase is politically risky and difficult. But I also understand that taking a problem head-on is better than hiding from it, even when it hurts.

SNOW: Corzine is facing resistance from fellow Democrats, mostly the New Jersey state assembly speaker who says Corzine's plan is not the only remedy.

JOSEPH ROBERTS JR. (D), N.J. ASSEMBLY SPEAKER: It is almost as if his position is if there is no sales tax, there is no state of New Jersey. SNOW: Corzine says his plan would cost an average family $260 a year. State officials say if casinos are closed, $1.2 million would be lost per day in tax revenue. The political cost is still being tallied.

(END VIDEOTAPE)

SNOW: Now we do plan to hear from Governor Corzine at around 9:00 a.m. this morning. But, Miles, you see behind me, these slot machines here at the Borgata, a lot of them have already closed down. There are plenty of other rooms, though, behind us where people are still gambling. This casino plans to start closing some of those tables around 7:00. They'll make an announcement and people will have to leave -- Miles.

O'BRIEN: All right, Mary, get your bucket of quarters and get to it quickly, OK. Thank you very much -- Carol.

COSTELLO: She looks so elegant for so early in the morning, doesn't she?

O'BRIEN: Sure does, yes.

COSTELLO: Happening in America.

An Amber Alert in Texas is over after a toddler who was taken during an alleged carjacking was found. Police say 1-year-old Kaerich Forbes was briefly left unsupervised in a running SUV in Houston on Tuesday night. Police are not providing any details, but they say the child was found unharmed.

A shooting outside of an Atlanta area amusement park sends three people to the hospital. Police say two men had an argument at Six Flags Over Georgia on Tuesday. One man apparently left and went to a nearby bus stop when the other pulled up in a car and randomly fired shots into the crowd.

Police in Independence, Kansas still don't know what sparked a fireworks explosion that seriously injured one person. Authorities say a truck full of fireworks blew up on Tuesday afternoon, hours before the town's big 4th of July display. Some shell casings from the detonated fireworks flew more than 50 yards.

Another fireworks explosion, this one in suburban Philadelphia, injured at least 16 people. The blast happened as the July 4th display was finishing up at the King of Prussia Fairgrounds. Police still aren't sure if the explosion was caused by something in the show itself or by someone in the crowd.

And a spectacular display of patriotic pride lit up the skies over New York City. Thousands gathered along the East River last night to watch the 30th annual July 4th Macy's fireworks. It sounds nice, too, doesn't it? The dazzling 25-minute show is considered to be the largest fireworks display in the country.

I must say, though, Chad, the most beautiful fireworks I have ever seen, Washington, D.C.

MYERS: Yes.

COSTELLO: As they explode over the Washington Monument and the Lincoln Memorial.

MYERS: Yes.

COSTELLO: That's just so beautiful.

MYERS: I saw one in D.C. And I also saw when they unveiled the new redone Lady Liberty down there, when Iacocca did all of that. That was an amazing fireworks show, too. I was at the Battery Park with 2.7 million of my best friends.

Good morning, Carol.

(WEATHER REPORT)

O'BRIEN: All right, Chad Myers in the Weather Center, thank you very much.

Still to come, Carrie Lee with some business headlines and a look at how the North Korean missile situation is affecting the markets.

Also, the latest on the make-or-break mission of the shuttle Discovery. Did the falling foam, you see there, break the heat shield? That's a big question.

Stay with us for more AMERICAN MORNING.

(COMMERCIAL BREAK)

COSTELLO: Some of the most popular stories on CNN.com right now.

If North Korea was trying to get worldwide attention, it succeeded. North Korea test fired a seventh missile, a seventh missile, less than two hours ago.

NASA says falling foam pose no threat to the space shuttle. At least five small pieces fell off during Discovery's launch. NASA has many more images of the launch to look over today.

And Italy. Italy beat Germany two-nil in the World Cup finals. Both Italian goals came in overtime. Italy will play the winner of today's France-Portugal game for the title.

O'BRIEN: Well those North Korean missile tests are having an -- well having all kinds of implications on the world, and of course financial as well.

Carrie Lee is here with that.

LEE: Of course.

Thank you, Miles, that's right. Well in South Korea, let's start there, first of all, stocks finished lower by half a percent Wednesday. This, after falling intraday by about 2 percent. So rebounding a little bit.

But also you can see throughout Asia, take a look at Japan down .7, Hong Kong down .6 of 1 percent. Of course we have about three hours to go before the market starts here in the U.S. and it is looking like more of the same. So we are expecting a weak one. This, after a closed session yesterday for the 4th of July holiday.

Monday not so bad, first trading day of the third quarter. You can see the Dow adding about 77 points. All the major market indices gaining a bit of ground.

And moving away from stocks, employees at railroad Union Pacific are suing the company. They are alleging that the company failed to protect their personal data. This is the latest case of identity theft. A computer with the names and Social Security numbers of 30,000 workers was stolen. Now so far just nine employees are suing. Basically they say the company should use something other than Social Security numbers to identify employees.

And since, Miles and Carol, we've heard so many of these stories, it's probably not a bad idea.

O'BRIEN: Yes, a lot of companies have done that, including the company we work for, switched it over. It's probably a great idea.

LEE: Yes.

COSTELLO: What are they suing for, monetary damages, and are they going to keep their jobs after the suit is filed?

LEE: Yes, exactly, punitive damages. Only nine workers onboard so far, others could join in. But if it sets a precedent for other companies going forward, hey, not a bad thing, right?

COSTELLO: Maybe.

O'BRIEN: All right.

COSTELLO: Thank you, Carrie.

O'BRIEN: Thank you, -- Carrie.

LEE: OK.

COSTELLO: Morning's top stories straight ahead, including breaking news out of North Korea. A seventh test missile fired just this morning. We are live for you with the latest.

And it may be lights out in Atlantic City. The casinos soon to be the latest victims of a budget crisis. We'll have the full story. That's just ahead on this AMERICAN MORNING.

(COMMERCIAL BREAK) O'BRIEN: Happening this morning.

North Korea test firing yet another missile in the last few hours. That makes seven missile tests since yesterday, including a long-range rocket that failed 40 seconds after launch.

U.N. Security Council will meet this morning to discuss those tests. Governments around the world condemning North Korea's actions.

The White House sending a top diplomat to huddle with U.S. allies in Asia. Under Secretary of State Christopher Hill is the top U.S. negotiator in those six-party nuclear talks that include North Korea.

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