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LOU DOBBS TONIGHT

Israel On Verge of War with Lebanon; President Bush Stops in Germany On His Way To G-8 Summit in Russia; Donald Rumsfeld in Iraq; Widening Gap Between State Action and Federal Inaction; Cyber War Attacks on Computers at U.S. State Department; Rick Santorum Discusses Showdown Over Illegal Immigration; Fouad Ajami Interview

Aired July 12, 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, Israel is on the verge of all- out war with Lebanon. Israeli tanks, artillery and troops are now in southern Lebanon.
We'll have a live report from the Israel-Lebanon border.

And the U.S. State Department today revealed its computers have been attacked. Have North Korea and communist China commenced a cyber war against the United States?

We'll have that special report here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Wednesday, July 12th.

Live in New York, Lou Dobbs.

DOBBS: Good evening, everybody.

The Middle East tonight appears to be on the verge of an all-out war. Israel says it will unleash its utmost power to recover two Israeli soldiers abducted by Hezbollah on the Israel-Lebanon border.

Israeli troops tonight are advancing into southern Lebanon and shelling suspected terrorist positions. And Israel is calling up its military reserves.

The White House today said Syria and Iran, which support Hezbollah, are responsible for the violence. This new crisis comes as President Bush faces a rising insurgency in Afghanistan and rising sectarian violence in Iraq, while both North Korea and Iran have issued new threats against the United States.

John Vause reports from the Israel-Lebanon border tonight on the Israeli offensive.

Ed Henry, traveling with President Bush, reports from Rostock, Germany, on White House reaction to the violence.

And Barbara Starr reports from the Pentagon on U.S. efforts to stop the spiraling number of sectarian killings in Iraq.

We turn first to John Vause -- John. JOHN VAUSE, CNN CORRESPONDENT: Lou, many airstrikes have struck deep inside southern Lebanon today, targeting mostly Hamas training camps and buildings. But roads and bridges have also been bombed.

The head of the Israeli northern command forces says all of Lebanon is now a target. This is an offensive by land, sea and air.

The Israeli military says so far today eight Israeli soldiers have been killed, three in the initial attack in which two Israeli soldiers were killed -- or kidnapped, rather. Another four were killed when their tank hit an explosive just inside Lebanese territory. And an eighth soldier was killed by gunfire as he tried to rescue them.

The Israeli cabinet tonight has approved what it says is a severe response, but says the military operation will be gradually escalated to put pressure on the Lebanese government.

The Israeli prime minister, Ehud Olmert, says the kidnappings and the attack go way beyond terrorism. He says it's now an act of war and is holding the Lebanese government responsible for the fate of the two kidnapped Israeli soldiers. But amid all of the celebrations in Lebanon, the government there is denying any responsibility and says it does not condone the actions of the Hezbollah militants who are now demanding the release of Lebanese prisoners being held by Israel in exchange for the two kidnapped Israelis -- Lou.

DOBBS: John Vause, thank you, from the Israeli-Lebanon border.

Israel today launched more attacks in Gaza as Israeli troops intensified their search for a captured Israeli soldier there. Israeli artillery and aircraft firing on and killing at least 18 Palestinians today. One of the worst for casualties since the Israeli military operation began at the end of last month.

The White House today blamed Syria and Iran for the abduction of the two Israeli soldiers by Hezbollah. The new international crisis comes as the president prepares to discuss global events with rural leaders at the G-8 summit meeting held in Russia this weekend.

Ed Henry is traveling with President Bush and reports from the German city of Rostock.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): President Bush is stopping in Germany on his way to the G-8 summit in Russia, where a mountain of foreign policy headaches await him.

Secretary of State Condoleezza Rice is on a separate diplomatic mission to Paris to deal with Iran, again refusing to answer the U.S. answer for talks in exchange for suspending its nuclear enrichment program. As Rice threatened tough U.N. sanctions against Iran, she had to deal with by phone with yet another Middle East flare-up.

Israeli troops stormed into Lebanon after Hezbollah abducted two Israeli soldiers and killed three more, which the Israeli prime minister dubbed an "act of war" and the White House called an unprovoked act of terrorism. Then there's the nuclear threat from North Korea, as well as Iran, which the White House seems to be reacting to from a defensive posture.

STEPHEN HADLEY, NATIONAL SECURITY ADVISER: We'll have to see. I think the diplomacy has set it up well. We'll have to see what these countries decide.

HENRY: This has inflamed some conservatives, with Bill Kristol charging the approach to North Korea is "Clintonian."

But yet another hotspot, the ongoing war in Iraq, has left the president with a weakened hand.

MIKE ALLEN, "TIME" MAGAZINE: The White House says the president has always said that approaches will change as circumstances change. But one of the circumstances that has changed, of course, is the president's standing at home and in the world.

HENRY: In need of allies, the president is making a special stop in Germany to further bond with new chancellor Angela Merkel.

CHARLES KUPCHAN, COUNCIL ON FOREIGN RELATIONS: Bush has focused on Germany now that Chancellor Merkel is in office as the key link to Europe. And that's important because Tony Blair is very weak. And that gives the United States a new foothold in Europe.

HENRY: But there may be cracks in the president's one-time alliance with Russian President Vladimir Putin on the eve of their own one-on-one talks before the G-8 summit. President Putin is reacting bitterly to a speech Vice President Cheney recently delivered in Lithuania, charging Russia may be backsliding on the way to full democracy.

PRES. VLADIMIR PUTIN, RUSSIA: I think your vice president's expression there is like his bad shot on his hunting trip.

(END VIDEOTAPE)

HENRY: The vice president's office declined to comment today on that blast from Mr. Putin, which will only increase pressure on President Bush to press his Russian counterpart harder not just on the issue of reform, but also in bringing Russia along to fight Iran and North Korea's thirst for nuclear weapons. So far, that support has been elusive -- Lou.

DOBBS: Ed, thank you very much.

Ed Henry reporting from Rostock, Germany.

Communist China and Russia today directly challenged U.S. policy toward North Korea after Pyongyang's missile test. China and Russia introduced today a draft United Nations resolution that makes no reference whatsoever to mandatory sanctions against North Korea. The United States, supported by Japan, says it still wants the Security Council to order sanctions against North Korea.

(BEGIN VIDEO CLIP)

JOHN BOLTON, U.S. AMB. TO U.N.: We're prepared to push ahead for a vote. We've deferred it on the basis of the high-level Chinese mission in Pyongyang. That's what the government of China asked us to do, and that's what we've been doing, reviewing it on a day-to-day basis. But if -- if the resolution comes to a vote and China votes no, then that -- that's -- that will be a decision they will have to make.

(END VIDEO CLIP)

DOBBS: Japan tonight said the Chinese-Russian draft resolution has what it calls very serious gaps on very important issues.

Communist China and Russia appear to be slightly more cooperative on the issue of Iran's nuclear weapons program and its defiance of international demands to end it. China, Russia, the United States and other countries have sent the issue back to the U.N. Security Council for consideration. The agreement follows Iran's refusal to decide by today whether to accept an offer to begin talks on its nuclear activities.

The U.S. military has successfully tested an intermediate range missile defense system. The system has the unlikely acronym THAAD. The interceptor is designed to shoot down short and intermediate-range missiles in their last minutes of flight. It is a different type of interceptor from the type deployed in Alaska and California and would be used against the North Korean ICBMs. Those interceptors, of course, are intended to shoot down intercontinental ballistic missiles.

Defense Secretary Donald Rumsfeld today made an unannounced visit to Iraq as sectarian violence there spiraled out of control. At least 30 Iraqis today were killed.

Rumsfeld said it is too early to talk about large-scale U.S. troop withdrawals from Iraq. And the commanding general in Iraq, in fact, announced today that our troops could be called back to patrol the streets of Baghdad.

Barbara Starr reports from the Pentagon.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Defense Secretary Donald Rumsfeld is in Iraq at a time when sectarian violence in Baghdad alone has claimed more than 100 Iraqi lives in the last few days.

His top commander, General George Casey, says it's a violent Shia backlash against the Sunni insurgency.

GEN. GEORGE CASEY, U.S. COMMANDER IN IRAQ: What we're seeing now as a counter to that is death squads, primarily from Shia extremist groups that are retaliating against civilians.

STARR: At a time when U.S. commanders hope to be talking about troop reductions, Casey is saying more troops might be needed to deal with the death squads.

CASEY: It's constant pressure on both sides of the equation while we increase the numbers of forces in and around the city to protect the population.

QUESTION: Does that include additional U.S. forces in Baghdad?

CASEY: It may, yes.

STARR: This comes after a highly-publicized effort to put thousands of Iraqi security forces on Baghdad streets.

Iraqi Prime Minister Nouri al-Maliki told members of parliament he now fears insurgents will try to take control of western Baghdad.

For his part, Rumsfeld kept to the "stay the course" message, but also acknowledged that police forces must do better.

The secretary continues to say that U.S. military force cannot fix Iraq's problems.

DONALD RUMSFELD, SECRETARY OF DEFENSE: The political process is critical to success on the security side. The prime minister's effort with respect to reconciliation will be critically important in achieving better success with respect to security.

(END VIDEOTAPE)

STARR: Lou, while the violence against Iraqi civilians continues really unabated at this point, U.S. troops are also facing a rising number of IED attacks. There is one piece of better, if not good, news, and that's that the troops, the Pentagon says, are finding more of the IEDs before they explode -- Lou.

DOBBS: Barbara, that is good news indeed. Thank you.

Barbara Starr from the Pentagon.

The U.S. Army has decided to end its exclusive contract with Halliburton for logistical services for our troops in Iraq, Afghanistan and other countries. The multibillion-dollar contract will now be opened for bidding from other companies. The cancellation of the deal follows repeated allegations of waste, fraud and mismanagement by Halliburton, allegations that Halliburton has denied.

Still ahead here, secret negotiations to try to force President Bush's pro-amnesty agenda for illegal aliens through the Congress. We'll be live in Washington with that report.

And states have had a bellyful of the federal government's failure to secure our borders and to enforce our immigration laws. Now many states are taking action on their own to enforce those laws. We'll have the report.

And troubling questions tonight about computer security and some of our government's most sensitive offices. Have communist China and North Korea launched a cyber war against the U.S. State Department?

That special report coming up here next.

(COMMERCIAL BREAK)

DOBBS: States, many of them, are taking action to directly attack the illegal immigration crisis while Washington remains divided.

We have two reports tonight on the widening gap between state action and federal inaction.

Lisa Sylvester reports on the continuing congressional deadlock over so-called comprehensive immigration reform. And Kitty Pilgrim reports on state efforts to address the illegal immigration crisis.

We begin with Lisa Sylvester in Washington -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Lou, the Bush administration and congressional leaders have been negotiating behind the scenes to get an immigration reform bill through Congress, even as both the House and the Senate continue with a series of public hearings.

(BEGIN VIDEOTAPE)

BUSH: In a moment we'll hear...

SYLVESTER (voice-over): Proponents of amnesty are pinning their hopes on President Bush to see if he can break a congressional logjam.

Monday, Senator Ted Kennedy pressed the case for amnesty at a White House Special Olympics event.

Tuesday, Senator Arlen Specter had a separate immigration meeting with the president.

Today, Senator Patrick Leahy tried to pin down the administration's immigration representative, Commerce Secretary Carlos Gutierrez, at a Judiciary Committee hearing.

SEN. PATRICK LEAHY (D), VERMONT: Is the president prepared to get personally involved in this, to increase his involvement in this issue?

CARLOS GUTIERREZ, COMMERCE SECRETARY: Senator, everything I've seen from the president is that he is deeply involved, deeply engaged.

SYLVESTER: Gutierrez says the White House still backs the comprehensive approach that combines border security with a guest worker program and legalization of illegal aliens while keeping the door open to compromise. GUTIERREZ: One of the big challenges is how you execute that. How do we execute comprehensive reform? That execution can take on a lot of different avenues, but it needs to be comprehensive reform.

SYLVESTER: The Senate is trying to wrestle control of the issue from the House leadership, which announced a new round of summer hearings.

House Majority Leader John Boehner says he not only has the public support for a plan that secures the borders first, but is also winning over senators.

SEN. JOHN BOEHNER (R), MAJORITY LEADER: The number of conversations that I've found myself in with Democrats and Republicans on the Senate side have made it clear to me that there's some movement toward the House -- the House bill, and I'm encouraged by that.

SYLVESTER: Still, there's been no major breakthroughs. The House saying no to amnesty, the Senate still trying to get its legislation passed by Congress before the November elections.

(END VIDEOTAPE)

SYLVESTER: And it's looking less likely that there will be something passed before the November elections. The House favors a two-part system, first border security, then later addressing guest worker concerns. Senate leaders and the president, at least at this point, still pushing for the so-called comprehensive approach -- Lou.

DOBBS: Lisa, thank you.

Lisa Sylvester from Washington.

Well, many states -- in fact, more than half of the states are fed up waiting for the federal government. And they are acting on their own to address our illegal immigration crisis. Colorado became the latest state to restrict social benefits and to require employers to verify the legal status of their workers. More than two dozen other states have recently passed legislation.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Congress can endlessly discuss illegal immigration, but states are charging ahead in proposing and enacting illegal immigration laws.

SHERI STEISEL, NATIONAL CONF. OF STATE LEGISLATURES: States are taking this issue on their own into their own hands. They're not waiting for a gridlocked Congress to act.

PILGRIM: In 2006 alone, 500 pieces of legislation have been introduced with at least 59 bills enacted in 27 states. The issue of illegal hiring is high priority. State after state are getting tough on employers who hire illegal aliens. Laws on education, benefits, voting and driver's licenses are also high priorities in many states.

DAN STEIN, FED. FOR AMER. IMMIG. REFORM: The state cannot have its own immigration policy. It can't, for example, control its own borders or control our own national borders. But there is a huge range of area where states can really be helpful in ensuring that they are not magnets that attract people illegally here.

PILGRIM: Four states have enacted the toughest legislation related to illegal immigration: Colorado, Arizona, Georgia and Virginia.

Colorado is now restricting benefits like food stamps and Medicaid to illegal aliens, but also requires business owners to prove that their workers are legal. It also requires a contractor who discovers an illegal alien at a work site to alert the state agency within three days.

Georgia state agencies check a person's legal status before providing benefits. Arizona requires U.S. citizenship to receive healthcare benefits, giving only emergency care to illegal aliens. Virginia denies illegal immigrants permission to obtain a handgun permit and requires the Department of Motor Vehicles to provide the state board of elections with a list of non-citizens' drivers' applications each month.

(END VIDEOTAPE)

PILGRIM: Now, the message being sent by Colorado, Arizona, Georgia, Virginia and more than half the states this year is very clear. They want strong enforcement of immigration laws. And if Congress won't act, states are going to step in and do what they can -- Lou.

DOBBS: Kitty, thank you.

Kitty Pilgrim.

Voters in Georgia won't have to show their photo I.D. when they go to the polls for next week's primary elections. The Georgia Supreme Court today refused to block a challenge to the state's voter identification law. That law requires voters to show a state-approved photo identification card. It's designed to prevent photo fraud, but critics say it infringes on the rights of minorities and poor people.

Coming up next, a security breach exposes our most sensitive government information. North Korea and communist China could be declaring cyber war on this country.

A special report ahead.

And investigators in Mumbai are searching for clues in the bombings that killed nearly 200 Indian commuters.

A live report from India ahead.

And Israel attacks Lebanon. A new front in the widening Arab- Israeli war. Fouad Ajami, one of the world's leading authorities on the Middle East, joins me.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Cyber war attacks on computers at the U.S. State Department. And those attacks succeeded in crippling some State Department communications as North Korea was preparing its missile tests. And the attackers may have permanently damaged the State Department's computer network.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): This is the new front line of war. The latest attack, computers in the State Department's offices dealing with China and North Korea. The State Department downplayed the latest incident.

SEAN MCCORMACK, STATE DEPT. SPOKESMAN: These are unclassified systems that don't deal with classified material in any way, shape or form.

TUCKER: The dismissive attitude belies warnings from the Defense Department about the growing use of information technology as a strategic military tool by foreign governments. Particularly China.

Just last fall, the Pentagon warned Congress the Chinese understand what technology can do, noting, "The PLA's emphasis on information technology as a force multiplier..."

Security experts echoed that warning, saying foreign governments understand the power and the vulnerability of technology.

JOSEPH KRULL, FMR. DEFENSE INTEL OFFICER: I actually had a chance to observe a school where this particular government was giving subsidies and some spending money to actually learn how to hack and then was picking from those and then developing them into professional hackers.

TUCKER: And while the State Department's initial investigation shows that no sensitive data was compromised in the hacker attack, the damage may not be in what was not taken but in what could have been left behind in the way of back doors allowing them re-entry or in the form of worms or a Trojan horse.

JAMES LEWIS, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: That's the bad news, is that we don't know the full scope of these attacks. They've been going on for years. They've gotten a lot of information. And they could have put things on people's computer systems that could do damage to us later.

TUCKER: No one is saying who is behind this latest hacker attack.

(END VIDEOTAPE)

TUCKER: The State Department will only say that the attacks came from the region of East Asia. There is no denying that the timing of these attacks are very interesting, Lou. They occurred in the weeks preceding North Korea's missile test.

DOBBS: And in point of fact, they succeeded in entering sensitive areas of the U.S. State Department's computers.

TUCKER: Exactly. They gained access.

DOBBS: And yet the State Department says that they did not take any sensitive information even though they had access to it?

TUCKER: Correct.

DOBBS: And at the same time, leading up to those missile tests, the State Department acknowledges that those cyber war attacks, in fact, ended some of the communications for the U.S. State Department computers.

TUCKER: Yes. If they're concerned, Lou, there was no evidence in the State Department briefing at all today that they are concerned.

DOBBS: Well, thank you very much, Bill. A fascinating report and an alarming one.

Bill Tucker.

Taking a look now at your thoughts.

Ron in Kansas asking, "What happened to one man, one vote? A 10 percent error factor is simply not acceptable" -- referring to e- voting machines and the standards in this country.

John in New Jersey said, "Hey, Lou, I can only wish our elected officials failed only one tenth of the time."

Bill in Texas, "Lou, in the 1960s we had the technology to put a man on the moon. Yet in 2006, we're not able to count all of our citizens' votes in elections."

Vincent in California, "Mr. Dobbs, the more I write to CNN wanting to have you on more than an hour, the less we get. Sir, could you tell me why?"

Well, it's an interesting question and we will relentlessly, rigorously seek out the answers.

And Gerald in Nevada, "Cambridge, like the rest of Massachusetts, is guilty of treason. All federal funds should be immediately stopped and the town council arrested for violation of the RICO Act" -- referring to Cambridge, Massachusetts, sanctuary laws and its interest in providing support and succor for illegal aliens.

Adrienne in New York, "There is one thing both the House and Senate are always in agreement on, their raises. And they continually give to themselves those raises at a time when the average American's wages haven't even kept up with the cost of living."

Thomas in Arizona, "Lou, I will keep this short and simple. No to Mike Pence and yes to a border fence."

Send us your thoughts to LouDobbs.com. More of your thoughts coming up here later in the broadcast.

Now our poll.

Has your confidence in your elected officials ever been lower? Yes, in the '90s; yes, in the '80s; yes, in the '70s; no; or, why do you ask, everything's boffo?

Cast your vote at LouDobbs.com. We'll have the results coming up here later.

Next, wildfires scorching thousands of acres in southern California. We'll have the latest for you on what is now a state of emergency on the West Coast.

And investigators have new clues tonight in the terrorist bombings in India. We'll have a live report on the commuter train massacre from Mumbai.

And Israel on the attack. Violence rising in Iraq and Afghanistan. Fouad Ajami, one of the world's leading authorities on the politics and culture of the Middle East, joins us here tonight.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: In a moment, Senator Rick Santorum, who is fighting for his political life, will be joining us.

But first, these headlines.

In Mumbai, investigators are trying to determine who is responsible for the bombings that killed nearly 200 people.

We go now to Aneesh Raman in Mumbai for the latest developments -- Aneesh.

ANEESH RAMAN, CNN CORRESPONDENT: Lou, good evening.

Investigators are yet to name exactly who they think was behind the attack. They do have some clues, the type of explosives involved, also timers that they think were as small as those of a pencil that were inside the train. This was a highly sophisticated, coordinated attack. In the course of 11 minutes, eight bombs detonating yesterday, killing close to 200 people.

All of this is leading investigators towards the country's biggest Islamic militant group that does have ties to Pakistan and is leading us to wonder whether the Indian government could stall the peace process that is being built on Kashmir, the disputed region in the north, and push the Pakistani president to do more.

Meantime, the family of those killed, they cremated their dead today, as is Hindu custom. I visited with some of them. They expressed outrage at the government for the number of hours it took for communications to come back up, for the number of people that were sent to government hospitals that were inadequate in terms of preparation for that number of casualties.

And the bigger question in Mumbai tonight: as the train system remains one of India's biggest vulnerabilities. Some 10 million people a day on average use this train system as a livelihood to get from where they are to where they have to go. There's virtually no security.

It is being described as implausible given the number of people. But if the Indian government doesn't figure out a way, this train system remains an eerie similarity to London and Madrid and could get attacked again, Lou.

DOBBS: And to be clear, Aneesh, at this point, no definitive understanding as to who is responsible for this massacre?

RAMAN: None as of yet. The Indians here in Mumbai are waiting for the government to say who they think exactly is behind this attack.

DOBBS: Aneesh Raman, from Mumbai, India -- thank you, Aneesh.

A state of emergency tonight in San Bernardino, California. Firefighters are battling a wildfire there that scorched more than 26,000 acres. The fire has destroyed more than 30 homes and buildings. More than 1,000 people have been evacuated.

And Washington, D.C.'s police chief has declared a crime emergency in this nation's capital city. Fourteen people have been murdered this month in Washington, D.C., and armed attacks have jumped nearly 20 percent. Two groups of tourists were robbed at gunpoint near the Washington Monument just last night.

Turning now to the showdown over illegal immigration in Washington, D.C., Senator Rick Santorum is now in the political battle of his life back home. Polls show him to be one of the most vulnerable incumbents in this year's upcoming midterm elections. Now Senator Santorum is attacking the president's so-called comprehensive reform legislation, proposing a different plan to secure the border and to prevent employers from hiring illegal aliens.

Senator Santorum joins us tonight from Capitol Hill. Senator, thanks for being here.

SEN. RICK SANTORUM (R), PENNSYLVANIA: Thank you, Lou.

DOBBS: Why are you weighing in at this particular moment with the introduction of your legislation as the Senate is seeking conference with the House?

SANTORUM: Well, and we've been working on this issue now for almost 18 months in the United States Senate. We've been going through countless iterations trying to get compromised bills up before the Senate. They finally did bring a bill up, which I could not support. And what I've done from that point is to try to figure out what can we pass, what can pass the Senate and what can pass the House?

And I thought of the compromise being since the House wants a border security first bill, let's take the provisions that just passed the United States Senate in the Senate bill that deal just with the border security issue.

And let's take the Senate passed bill, send to it the House, have the House pass that bill, and then send it back to us. And you know, there we have a situation where we can take the first step. Now, there may be -- additional steps are going to have to be taken. We're going to have to look at what we're going to do with employer verification in improving that and probably some sort of temporary worker program, but we can agree that the Senate...

DOBBS: Wait a minute, senator.

SANTORUM: ... border security provisions should go first.

DOBBS: Some sort of temporary worker program? You know, as we look at Senator Frist and his eagerness for border security that resulted in what is basically an amnesty, a sellout in its entirety in the Senate legislation.

SANTORUM: Right.

DOBBS: Which he and Senator Kennedy and Senator McCain and others hailed as some sort of profound historical achievement by the Senate, we're looking at Dennis Hastert, the speaker of the House, James Sensenbrenner leading the judiciary committee standing up and saying, "We're going to secure the borders and that's the law they passed."

SANTORUM: That's right.

DOBBS: Every poll shows Americans want our border secured and they frankly don't trust you guys to get much done because this president has played games, obfuscating the difference between immigration and illegal immigration, talking border security and can't even get 6,000 national guardsmen to the border with Mexico as he promised.

I mean, why should we take anything that happens in Senate, including your advances seriously?

SANTORUM: Well, because it is an attempt to try to bridge that gap between what you describe, which was the Senate bill that I did not support and could not support, even though I would argue my opponent who I'm running against in the political run of my life, does support the Senate bill, I don't.

But I do -- I have problems with some of what the House has done. But the House is right, that we need to do border security first. And so my suggestion is let's take the provisions that were in the Senate bill dealing with border security and pass that.

DOBBS: Senator Santorum, let me just ask you straight up, what is it in the U.S. Senate that is not understood? What is in the White House that's not understood? How complicated it is to simply say that almost five years since September 11th, this nation, a superpower, has the wherewithal, the political will and understands -- its senators understand the need to secure our borders and our ports?

SANTORUM: Well I think you see it candidly just played out in the coalition that has supported this, quote, comprehensive reform. And that's a coalition of the "Wall Street Journal" and some of the open markets conservatives, the business community, who wants a flow of labor into this country.

DOBBS: Did you see cheap labor to exploit?

SANTORUM: There's no question that the vast majority of the labor that's coming in, illegal immigration, overwhelming majority is cheap labor, are low-wage workers.

And you combine that with the open borders crowd to the left, the Ted Kennedy's folks who see this as a political opportunity to build a future political base of support for the Democratic Party. That combination has resulted in the bill that we have in the United States Senate today.

And what I'm suggesting is let's stop that and let's put something forward that deals with national security and the economic security of our country.

DOBBS: Let me ask it just straight up this way. Would you be willing to support what the House has already passed without any other addendums?

SANTORUM: Well, I have a couple of problems with the House passed bill. Actually, one of them is very interesting. This whole provision saying that crossing the border would be a felony. I have a problem with that, not because I think...

DOBBS: ... But James Sensenbrenner, the chairman of the House judiciary committee, has already said that's out.

SANTORUM: That's out. So I guess my point is, with some of the changes that people have talked about, I could support it. But not as originally passed because I think there's some problems in original passed House bill.

DOBBS: Senator Rick Santorum, we thank you for being here.

SANTORUM: Thank you. DOBBS: Up next here, three of the nation's most provocative and intelligent political analysts and commentators join me. And the Middle East tonight on the verge of all-out war. Sectarian violence in Iraq and Israel on the move in southern Lebanon. One of the country's top Middle East analysts, Fouad Ajami, joins us.

After a productive day in space for the astronauts at the International Space Station, NASA may be getting back on course. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Israel tonight is giving every appearance of preparations for all-out war. Israeli troops, tanks, aircraft and ships are on the move. Israel has been bombarding southern Lebanon throughout this day. Israeli troops are advancing into southern Lebanon and reserves have been called up. There is also rising sectarian violence in Iraq. The commanding general in Iraq today said U.S. troops could be called back to patrol the streets of Baghdad.

Joining me now is Fouad Ajami. He is one of the world's leading authorities on the Middle East and Islam. He's professor of Middle East studies at John Hopkins University. And he's the author of the new and very important and beautifully written book "The Foreigner's Gift, the Americans, the Arabs and the Iraqis in Iraq." Farad, it is a great pleasure to have you here.

FOUAD AJAMI, PROF. OF MIDDLE EAST STUDIES, JOHNS HOPKINS UNIVERSITY: Thank you, Lou.

DOBBS: Let me start by complimenting you on a book that is very important to all our understanding.

AJAMI: My publisher will love you.

DOBBS: Well, I have to say that this book is important. It puts so much in context. But as we are listening to General Casey today say that U.S. troops might be not withdrawing but rather moving back to patrol the streets of Baghdad, a law enforcement role, as we're watching Israel on the advance in Lebanon.

AJAMI: Right.

DOBBS: Let's start with Iraq. And let's use one of, if I can paraphrase one of your titles, center point. Where does all this end in Iraq?

AJAMI: Well, I think we are deeply committed and deeply engaged in Iraq and you're right. General Casey, one of out top commanders, an amazingly honest and candid did man, he understands the situation. The battle has been joined Lou, in Iraq. In fact the Sunni Arabs had a free go at it for a long time. They went at the Shia and they went at them with abandon.

They killed them wherever they could find them. They targeted them everywhere. And now all of a sudden, now the Shia militias have found a way into the battle. Now, you have these boys of Muqtada al- Sadr, this radical brigand, this radical cleric and they have come out of Sadr City to engage in this fight. So we have not quite civil war, but we have something approaching civil war.

DOBBS: It's approaching civil war and is there any doubt in your mind that we will see it explode into civil war?

AJAMI: Well, I think that is something that, you know, the positive news if you will, out of Iraq, there is now a government in the country, which is really committed to national unity. This new prime minister, Nouri Maliki, is a very decent man. He's eager.

He's engaged in a program of national reconciliation. He's invited the Sunni Arabs to have a peace of the politics of the country. He's even gone out into Iraq. And if you noticed, a few days ago he was in Saudi Arabia and Kuwait and United Arab Emirates, courting the Sunni Arabs around Iraq in order to cap the volcano in his own country.

DOBBS: The volcano in his own country, that volcano is, it seems, becoming far more active and certainly moving nowhere near dormancy. What can the United States do here or are we so, as you say, committed and so engaged that extrication is unthinkable at this point? Or is that unthinkable?

AJAMI: Well, there are two things that are happening in Iraq. There's one, the training of the Iraqi army is really going at pace. And it is quite, quite advanced. It is actually doing very well. The training of the police is a very different world.

The police is really the sectarian militias by another name. Because when the Sunni Arabs boycotted the government, what happened was the young Shia boys went into the police. And the Interior Ministry and the police forces have become an extension of the Shia militias. This is really where the Shia are striking back at the Sunnis, who have goaded them into this battle.

DOBBS: The idea that the 22 Arab states are doing nothing to support the United States, in point of fact, they're supporting in most cases, as you document, they're supporting the insurgency. And the Sunnis, who are a minority, have held sway over the Shia, the majority, and the Kurds, of course, for decades. Why can the United States not come up with a foreign policy that says to Saudi Arabia, to Syria, to Egypt, you will either be our friend and you will support Iraq, or you will be our enemy?

AJAMI: You've asked a very noble American question as is your habit on this show. I think this is the fundamental issue here. The Arab states around Iraq are eager to see us bleed.

DOBBS: Bleed we are.

AJAMI: Absolutely. And they don't want to see us fail big time. Because our shadow falls over that region. And we underpin their security. So they don't want to see us fail. But they also don't want to see Iraq emerge as a nascent and good democracy. I thing our predicament today is actually good in many ways. The Arab regimes, because in this book I say that there is a battle between the American power and the loss of gravity in the region.

And they're content to watch us bleed in Iraq. They believe the laws of gravity will prevail, that we'll lose this war. We won't because the Iraqis believe we'll come to the rescue. This Iraqi army will be reliable. In the end there is a political process unfolding in Iraq. And the Iraqis are eager to reclaim their country and to stop this drift toward destruction.

DOBBS: Destruction, Israel on the march in southern Lebanon. Where does that end?

AJAMI: Well, southern Lebanon by chance is my birthplace. So it's very close. I think what happened is no government, no sovereign government in the world could countenance the kidnapping of a soldier and stand idly by. Hezbollah, the party of God in Lebanon, sought this crisis as a way of controlling the politics of the country and has, in fact, goaded Israel into this battle.

DOBBS: Will it be an all-out war, in your judgment?

AJAMI: I don't think there will be a wider war, but I think, fundamentally, the question of Hezbollah, the question of an armed militia in a sovereign country is a problem and there are all kinds of U.N. resolutions against that. We need to disarm Hezbollah and we need to bring the Lebanese army to the Israeli/Lebanese border.

DOBBS: And Syria and Iran to be held accountable for their support.

AJAMI: Syria and Iran are accountable. In fact, the paycheck for Hezbollah comes from Iran and the political and military support comes from Syria and that's what they've done.

DOBBS: Fouad Ajami, we thank you for being her. We want to thank CBS news for permitting you to be here, Fouad an analyst on the Middle East for CBS news. The book is "The Foreigner's Gift," a very important book, a very good read. We thank you very much.

AJAMI: Thank you very much.

DOBBS: Coming up at the top of the hour here on CNN, THE SITUATION ROOM with Wolf Blitzer. Wolf tell us all about it.

WOLF BLITZER, CNN ANCHOR: He's also, Lou, a great teacher. He was my teacher at the Johns Hopkins School of Advanced International Studies. Fouad Ajami, a good man.

Coming up at the top of the hour, Israel on the offensive, we'll have more on what's going on involving the Palestinian militants and Hezbollah after the seizure and killing of some Israeli soldiers. We have reporters standing by live in Gaza and Jerusalem and along the border with Lebanon.

The Middle East is only one hot spot on President Bush's radar right now as he gets ready to meet with fellow world leaders. Can they come up with a plan for North Korea? I'll put that question to the point man for North Korea, the assistant U.S. Secretary of State Christopher Hill. He'll join us live from Beijing.

And it was the head butt heard around the world. Now the guy who did it tells his side of the story. And it's a story made for Jeanne Moos. All that Lou, coming up right here in THE SITUATION ROOM.

DOBBS: Looking forward to it Wolf. Thank you. A reminder to vote in our poll tonight. Has your confidence in your elected officials ever been lower? Yes in the 90s, yes in the 80s, yes in the 70s, no, why do you ask, everything is boffo. Cast your vote at LouDobbs.com. We'll have the results coming up here in just a few moments.

Astronauts from the Shuttle Discovery today completed their third space walk. They tested materials that could be used to repair a damaged Space Shuttle. The astronauts supplied sealing putty that would fill cracks in a damaged heat shield. This is the final space walk planned for Discovery's mission while it's docked at the International Space Station.

Up next here, another look at your thoughts on the war on our middle class. I'll be talking to three of the country's top political analysts in this country about illegal immigration reform, North Korea, Iran, Israel and a great deal more. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Joining me now from Washington, Diane West, columnist, "Washington Times"; Here in New York, Democratic strategist Robert Zimmerman; and John Fund, columnist "Wall Street Journal." Good to have you all here.

Diana, let me ask you this. We have right now Israel advancing into southern Lebanon, an insurgency that is on the rise in Afghanistan ...

DIANA WEST, "THE WASHINGTON TIMES": Yes.

DOBBS: ...rising sectarian violence in Iraq, a host of issues, North Korea, Iran, Syria. This administration is surrounded by challenges to what is generally regarded as superpower. How is this administration responding? How effectively?

WEST: Well, Lou, the administration is responding but not effectively. And I think that the whole world -- and what I mean by the world is the free world -- is not responding effectively. We have to start connecting some dots between this violence in Israel, this violence in Mumbai, or as we used to say Bombay, this violence across the continents. We have a problem with Islamic jihad, and the administration needs to start seeing these things not as isolated incidents, but as part of a pattern.

DOBBS: John Fund, as Diana says, this administration has been resistant to say that this is a global war on radical Islamists and instead prefers the rather innocuous, tepid war on terror.

WEST: Yes.

DOBBS: Why not declare and name the enemy?

JOHN FUND, COLUMNIST, "WALL STREET JOURNAL": Well, it's more important to be resolved rather than talk about the semantics. I think it is very important that we prosecute the war, we go after everyone. If the -- if there are any connections to the Middle Eastern terrorists in India, we have to go after that as well. The bottom line, though, is resolve more than rhetoric and semantics.

WEST: I wouldn't agree with that, only because you have to define your enemy, otherwise people don't know what their resolve is about.

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: I think we pretty clearly know -- I think we very much know who our enemy is, and I think the reality is, what we're seeing is an administration that put all of their eggs in one basket. They put us into a quagmire in Iraq and, in fact, that has weighed us down from dealing effectively with combating terrorism around the world, and that's the real issue here.

DOBBS: And at home, we are witnessing the spectacle of the Senate conducting hearings on legislation that effectively was passed more than a month ago.

Yesterday, John Fund, we had General Peter Pace, the chairman of the Joint Chiefs -- Monday rather -- crying at a hearing in which there was no distinction made on the part of anyone at that hearing, no difference, between legal immigration and illegal. Is this purposeful obfuscation or was that simply an accident of semantics?

FUND: This debate has become completely muddled because people are scared. They're scared that the country has lost control of its border. I think we have to look back to the last great immigration crisis we had, which was in the early 1950s, which is the first year, 1954, when we hit over one million illegal alien arrests.

We solved that crisis, and you know how we did it, Lou? A comprehensive approach, more enforcement and the bracero guest worker program. It worked 50 years ago exactly.

ZIMMERMAN: I think we're facing a very different set of problems here. We're dealing with a Congress and a president that have refused to show any leadership in addressing this matter. These hearings are a sham. And there's no confusion about semantics. There's every effort to obfuscate the issue and delay it till after the midterm elections.

DOBBS: Diana West?

WEST: I think that this is being addressed at the state level. We're seeing states taking control of their own benefits, their own welfare and their own laws pertaining to employers and illegal aliens being hired. People really want something done and they do want the border secured first.

ZIMMERMAN: But the proper way to go about it is it's a federal issue and the federal government that has a responsibility to address it.

WEST: I would agree with you.

ZIMMERMAN: And the reality is you have a situation of the Republican Party, and they control both the presidency and the Congress, where you've got business that wants the cheap labor, and the conservative wing that just wants detention or deportation.

FUND: Governor Bill Owens ...

DOBBS: And in the Senate, you have the president of the United States for the purpose of pushing through this amnesty program, making the Democrats, the majority party, under Senator Bill Frist.

ZIMMERMAN: Making this a much more ...

(CROSSTALK)

FUND: State leaders are closer to the problem. Governor Bill Owens of Colorado this week forced the legislature to restrict benefits to illegal aliens, but he also knows that it must come hand in hand with a guest worker program. You should have him on.

DOBBS: I have had him on. We've discussed it quite a number of times, but thank you for the suggestion. Let me ask you another question. Aren't you offended by the fact that the president of the United States and his administration would trot out the chairman of the Joint Chiefs of Staff and put him on display like a trained monkey in a Senate hearing on immigration? I mean, aren't you offended by that?

FUND: I think the joint ...

DOBBS: No, I'm asking you a question.

FUND: I'm going to answer to you. The Joint Chiefs of Staff have been abused, misused and used as props on every issue. Now, I think the job of Joint Chiefs of Staff is, frankly, outmoded. We probably should go to something else.

DOBBS: It may be outmoded, but those four stars on his shoulder deserve a hell of a lot more respect than what this administration and this Senate demonstrated.

ZIMMERMAN: And just as bad, this administration has attacked our military leaders when they had the character to go after this administration for their failed policies.

DOBBS: Diana, quickly, you have 15 seconds to get the last word.

WEST: Well, I think that anyone who think that just because their father or grandfather was an immigrant has more to say about immigration also is off the subject. This is an American issue, no matter when your people came here.

DOBBS: Diana West, thank you very much. Robert Zimmerman, thank you very much. John Fund, thank you very much.

WEST: Thank you.

DOBBS: Still ahead, the results of our poll, another look at your thoughts. Stay with us.

(COMMERCIAL BREAKING)

DOBBS: Now the results of tonight's survey, 87 percent of you responding that your confidence in your elected officials has never been lower.

Taking a look at more of your thoughts, Ida in Indiana: "I'm part of the middle class and would love to get a job that Americans won't do. Why are we standing around like cattle instead of trying to save our jobs and our world? Come on, America, wake up before it's too late for all of us."

Scott in New York: "I agree, productivity is up. Anyone who has taken Economics 101 understands that when people work longer and harder for less money, that is seen as an increase in productivity."

Sandy in Kentucky: "What is this about illegal immigrants getting American drivers' licenses? We're not just a melting pot, we're just melting."

Richard in Alabama: "Why don't the Democrats seize the opportunity and call the issue the illegal employer problem instead of illegal immigrant problem?"

Send us your thoughts at LouDobbs.com. Each of you whose e-mail is read here receives a copy of my book, "Exporting America."

Thanks for being with us tonight, and please join us here tomorrow when three of the country's leading climate scientists join me to examine the threat of global warming. What's real? What isn't?

We hope you'll be with us for that and more. For all of us here, thanks for watching. Good night from New York. "THE SITUATION ROOM" begins now with Wolf Blitzer -- Wolf.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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