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American Morning

Rumsfeld in Iraq; Mideast Fighting Spreads; Mumbai Blasts

Aired July 12, 2006 - 06:29   ET

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

MILES O'BRIEN, CNN ANCHOR: Happening this morning, Israeli troops moving into southern Lebanon. The move follows the kidnapping of two Israeli soldiers by Lebanon-based Hezbollah guerillas.
A day after his unannounced visit to Afghanistan, Defense Secretary Donald Rumsfeld making a surprise visit to Iraq. Rumsfeld meeting today with U.S. troops and the top U.S. commander in Iraq.

And the death toll is rising from Tuesday's train bombings in Mumbai. One hundred and ninety people are now dead. Authorities suspect Islamic militants behind the attacks.

Good morning to you. I'm Miles O'Brien.

BRIANNA KEILAR, CNN ANCHOR: And I'm Brianna Keilar, in today for Soledad.

O'BRIEN: Good to have you here.

KEILAR: Thank you. It's great to be here.

Going to the headlines now, security in Iraq foremost on Defense Secretary Donald Rumsfeld's mind as he makes another unannounced visit to Iraq. That trip includes another question-and-answer session with U.S. troops.

CNN Senior International Correspondent Nic Robertson live for us now in Baghdad.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Hello, Brianna.

Well, Secretary Rumsfeld arrives in the -- in Iraq at a time when the violence, the spilt-over sectarian violence from the weekend continues. A car bomb in the center of Baghdad killed two, wounded two others. A suicide bomber in the south of the city walked into a restaurant, detonated his explosives, killed seven, wounded 20 others.

Secretary Rumsfeld has flown initially into the very large U.S. military base at Balad, about 50 miles north of the capital. He's had a question-and-answer session with some 700 troops. He's been briefed by General Casey about the situation in Iraq.

He is also flying on to Baghdad to meet with Prime Minister Nouri al-Maliki. He'll be talking about the Baghdad security situation, the issue of the militias here. And that has been a hot topic for the prime minister today. In parliamentary session he faced harsh criticism from parliamentarians. He laid out to them the importance of intelligence gathering, the fact that the national reconciliation plan is essentially the last hope for the country, but said that the government here was in charge of security throughout the capital. He was challenged on that by parliamentarians, so no doubt Secretary Rumsfeld will be following up on that with Prime Minister Maliki here later today -- Brianna.

KEILAR: Nic Robertson, live for us from Baghdad.

Thank you, Nic.

O'BRIEN: A major battle under way in southern Lebanon this morning. Live pictures now from the Lebanese side of the border. Israeli forces pounding Hezbollah fighters; two Israeli soldiers captured and held. Israel says it is holding the Lebanese government responsible.

CNN's Paula Hancocks monitoring things for us from Jerusalem -- Paula.

PAULA HANCOCKS, CNN CORRESPONDENT: Hello, Miles.

Well, this is a serious escalation of violence in southern Lebanon after those two Israeli soldiers were taken just about four and a half hours ago, 9:05 in the morning here in Israel. We understand the ground troops are currently operating inside Lebanon. We know that the Israeli air force has been bombing roads and also bridges, trying to make sure that the Hezbollah militants who are believed to have taken these two Israeli soldiers cannot move deeper into Lebanon.

Now, Israeli Prime Minister Ehud Olmert has been speaking in the past half-hour or so, saying he holds the state of Lebanon, the sovereign state of Lebanon, responsible for this particular attack. Not the Hezbollah militants.

So, very strong words from Olmert, saying the Lebanese government has attacked Israel and they are responsible for the safekeeping and the safe return of these two Israeli soldiers. So, a severe escalation of violence in that area.

We know four Israeli soldiers were injured in that particular attack, as well. There are reports that reservists have been called up in Israel. We're trying to confirm those at this point, but we know that there are operations ongoing. And, of course, there are operations ongoing in Gaza, as well, after two and a half weeks ago, one Israeli soldier was kidnapped.

Now, we're hearing from the defense minister, Amir Peretz' office, that they've give the IDF, the Israeli Defense Forces, the green light to do whatever is necessary to secure the release of these two Israeli soldiers. So, very similar statements to what we heard two and a half weeks ago, when another Israeli soldier was kidnapped. Now, the Hezbollah militants have been trying to kidnap Israeli soldiers for years, as has Hamas, to try and see if they could secure a prisoner swap. There are many Hezbollah militants and Hamas militants being held in Israeli jails at this point.

So, as far as we know, at this point, this offense is ongoing in southern Lebanon. This is the first time that Israeli troops have gone into this area since they left Lebanon in May 2000 -- Miles.

O'BRIEN: Paula, you mentioned those prisoner swaps. Has Hezbollah issued a specific demand yet that would lead to the release of those two soldiers?

HANCOCKS: At this point we have not heard a specific demand from Hezbollah, but we are expecting to hear this. Now, we've heard from Israeli Prime Minister Ehud Olmert in relation to the Hamas militant group demand for prisoner swap that there would be no negotiation here.

Olmert said there is no negotiation with terrorists, there will be no prisoner swap. And we should imagine that he will say exactly the same in this particular occasion.

Now, this is what the Israeli officials are saying publicly. We know that there have been back channels open with Palestinians, and we would imagine there would be mediators that would get involved to talk between Hezbollah and Israel itself. But the fact that Olmert is holding the Lebanese government responsible, saying a sovereign state has attacked Israel, is very strong words and very significant.

This is a very significant escalation in the violence. We would imagine there would be mediators who would be discussing between the two and trying to mediate a release of these -- these soldiers, but physically, Israel is not talking to Lebanon.

O'BRIEN: Paula Hancocks in Jerusalem.

Thank you very much.

In India, a desperate hunt for terrorists who targeted commuter trains in stations in Mumbai during yesterday evening's commute. At least 190 dead, 500 injured. Investigators suspect Islamic militants, but so far no claims of responsibility.

CNN's Seth Doane on the phone now from Mumbai, formerly known as Bombay.

Seth, tell us what you know.

SETH DOANE, CNN CORRESPONDENT: Well, Miles, the numbers you mentioned are the ones that we've confirmed and have gone with for a long time. They still are fluctuating as different government agencies and different police, different ranks offer -- offer their scenario of what's going on.

We just had the director general of state police in this region in Mumbai. As a part of his region, he's higher than the city police. The numbers he's been going with for a long time, he is estimating the number of dead down a bit to 183, but the number injured up quite substantially to 700.

That was in a press conference just recently here in Mumbai by the director general of state police. There's still -- it's still less than 24 hours and the numbers continue to fluctuate here on the ground -- Miles.

O'BRIEN: Seth, are authorities talking at all about the timing of this attack? We were just marking the anniversary of the London bombings, this is in advance of the G8 summit. Are there any thoughts about that?

DOANE: There has been nothing official, but on the ground a lot of speculation. People look at 7/11, July 11th, they looked at 11 minutes in this synchronized, well-timed bombing.

There is a lot of speculation on the ground, a lot of theories, but nothing -- really, the Indian government has been quite tight- lipped. The latest we heard in this same press conference with the director general of state police for this region who overseas Mumbai, they were -- he was linking a Pakistani Islamic militant group to the attacks. But from the higher-up Indian government, there has been no -- no other speculation.

O'BRIEN: Seth Doane in Mumbai.

Thank you -- Brianna.

KEILAR: Happening "In America," security is extra tight on New York City subways this morning following the deadly bombings on a commuter rail system in India. Teams of New York City police officers will be patrolling the stations and checking commuters' bags. But the New York Police Department says the measures are precautionary and there is no specific threat to New York.

Meanwhile, subway trains on the blue line in Chicago are partly back up and running this morning following a derailment that sparked a fire. Dozens of commuters were forced to evacuate through a smoke- filled tunnel Tuesday night, and at least two people were critically injured. Investigators still trying to determine what happened, though terrorism is not suspected.

Police in Phoenix say 13 random shootings are probably connected to a set of earlier assaults. The recent shootings began in May, but investigators believe they're linked to another series of shootings that began in May of 2005 that killed four people. They're now searching for the same suspect or suspects.

And a federal grand jury in Atlanta indicted three people on a conspiracy charge Tuesday for allegedly trying to sell Coca-Cola's trade secrets. They're accused of creating a plan to sell the confidential information to rival Pepsi for $1.5 million. All three, including a former Coke employee, pleaded not guilty. And rescue crews are clearing people out of their homes overnight in southern California. They're trying to escape the fast-moving wildfires which were sparked up by high winds.

We go now to CNN's Kyung Lah. She is live from Yucca Valley, California.

Good morning, Kyung.

KYUNG LAH, CNN CORRESPONDENT: Good morning, Brianna.

The area that I'm standing in is the staging area for some of the firefighters who are dealing with a very tough battle this morning. I'm going to give you a closer look at this fire that is burning right over my shoulder.

This is the southern edge of this fire, and that plume that you're seeing rising out of that fire line has been problematic for firefighters this morning. Normally fire lays down overnight, but this has been an active, stubborn fire overnight. And when the sun rises, the flames are expected to pick up.

Here are some of the stats from the firefighters -- 30,000 acres so far. Firefighters at this point saying that this is an out-of- control fire, zero percent containment. And the potential, according to the California Department of Forestry, is that this fire can grow to 100,000 acres. That is a worse-case scenario for the firefighters here.

Now, there are 800 to 1,000 people in the line of this fire. They have been told to flee their homes. About 200 of them have complied so far.

At this point, firefighters say they've lost about 30-plus homes or structures. They do expect that that number will rise as the sun comes up.

Now, this fire did start Sunday afternoon. Some lightning strikes in this area sparked the fire. But some wind, some heavy winds overnight and some dry conditions really caused this fire to pick up.

This is not a densely-populated area, but firefighters say that what has been problematic is all this brush that is lying around here -- and they're very concerned that this is going to continue to be a problem as they try to battle this fire -- there's a lot of activity happening here this morning, and they do expect that this will be quite a battle as the sun does come up.

One other thing we want to note is that Pioneer Town is an area that has some historical significance. There are some historical structures here because this was home to some Hollywood cowboys -- Brianna.

KEILAR: Kyung Lah, thank you so much for keeping us informed.

And we're going to see if perhaps they're going to get some respite from these weather conditions.

We go to Chad Myers. He's at the CNN Center.

What are you seeing, Chad?

CHAD MYERS, CNN METEOROLOGIST: You know, the winds could lay down a little bit today, but they had wind gusts of 40 miles per hour there yesterday. And that's enough of a wind to take a spark and jump it to a different location.

(WEATHER REPORT)

O'BRIEN: Back to the tropical storms for a moment...

MYERS: Yes?

O'BRIEN: ... you say that's not necessarily good news that we haven't had that many, right?

MYERS: Not necessarily, because you can -- if -- if you could get 50 little storms that just kept the water mixed up and never let it get really, really hot, then you would have, like, taken the lid off the pressure cooker every two seconds, you would never get heat in there. So, we don't have that, so we're kind of keeping that top on.

But you know what? There have been years, Miles, where only four or five storms popped up. And boy, wouldn't I like to see that?

O'BRIEN: Wouldn't we like to see the predictions wrong?

MYERS: Yes.

O'BRIEN: All right. Thank you very much, Chad Myers.

KEILAR: Thank you, Chad.

O'BRIEN: Still to come on the program, news from around the world. The president on a whirlwind trip in Europe. He stops in Germany and gets a warmer welcome than he would have a few years ago.

KEILAR: And the latest turn in the CIA leak case. The man who started the whole thing, columnist Robert Novak, is naming names.

(COMMERCIAL BREAK)

O'BRIEN: Robert Novak done with the CIA leak investigation. The syndicated columnist and former CNN analyst is out this morning with a secret that he held very close to his vest as that whole case unfolded. And now we know his source. The question is, who else talked to him?

AMERICAN MORNING'S Bob Franken live from Washington with more.

Hello, Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Hello. I hate to say this, Miles, but I think this is a bit of an anticlimax. We should take a little trip down memory lane, all the way back three years, July 14, 2003, when the column came out naming Valerie Plame as the wife of administration critic Joe Wilson. She was a secret, at that time, CIA operative. That triggered the whole investigation.

Since then, Novak has been very quiet about his sources. But the anticlimax is, over the three-year period, we have learned that Karl Rove, the president's top political adviser, had talked as a confirming source to Novak. We did know that the CIA spokesman at the time, Bill Harlow, to some degree or another, gave confirmation of it.

But what we don't know, and the special prosecutor and the grand jury do -- do know, because Novak testified to them, what we don't know, his primary source. And that's going to mean that the story still isn't going to end.

Novak says he's not going to identify this person publicly, because unlike the others, he has not given -- he or she has not given a waiver. So he is not able to identify the person.

Nevertheless, the Novak column that we've waited so long to read doesn't really tell us anything we know. The one thing that was interesting is that Novak went through a whole lot of trouble. And in the column he says, "If I had to do it over again, would I have done it? It's a hard question to answer."

So, what we have here, Miles -- and I know you like cliches. Here's one. It ends with a whimper, it started with such a bang.

O'BRIEN: All right. Hey, he did try to clear up a lot of things that were said about him in the media that he says are not true.

FRANKEN: Right, that he had not taken the fifth, that type of thing. But what we were so waiting for was some information that would shed new light on this. There seems to be no new light here.

O'BRIEN: All right. But thanks for shedding light on it, nonetheless, if you know what I mean.

FRANKEN: I don't, no.

O'BRIEN: All right. Bob Franken in Washington.

Play along, will you -- Brianna.

KEILAR: Still to come here on AMERICAN MORNING, they're calling it the CEO bloodbath of 2006. The number of CEO turnovers so far this year staggering. We'll tell you who is the latest chief to hit the road.

And later, the fear that's gripping Phoenix, Arizona. Police battling what they believe are two serial criminals. The latest on that.

Stay with us on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Here's a look now at stories CNN correspondents around the world are covering today.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN CORRESPONDENT: I'm Dan Rivers in Beijing.

And the talking is now over between the U.S. envoy in charge of resolving the North Korea missile crisis, Christopher Hill, and Beijing foreign ministry officials. Christopher Hill is due now to travel back to Washington to report on the progress, or lack of it, as the clock starts ticking down to that crucial vote in the U.N. on whether to impose sanctions against Kim Jong-il's regime.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

ROBIN OAKLEY, CNN CORRESPONDENT: I'm Robin Oakley, reporting from Europe, where today Condoleezza Rice will join foreign ministers from the EU, China and Russia to discuss Iran's nuclear program. Javier Solana, the EU's foreign policy chief, described his talks Tuesday with Ali Larijani, Iran's negotiator, as disappointing.

The six paths (ph) who've offered Iran an incentive package to suspend uranium enrichment want an announcement before the weekend's G8 meeting. They fear Iran's request for ambiguities to be cleared up is a sign they're playing for time. But pushing the Iranians into a speedier response may prove tricky.

(END VIDEOTAPE)

O'BRIEN: If you'd like to find out more about these stories and more, we always invite you to check out our Web site, CNN.com. It's there for you 24/7, 365, and on leap years 366.

Andy Serwer is here with a preview of business.

Hello, Andy.

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE": Hello, Miles.

Are bad CEOs finally getting what they deserve?

And a smoking gun in the stock option scandals. Yes, there's a memo. We'll tell you all about it coming up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: What do CEOs and baseball managers have in common?

Andy Serwer, here's the deal, when times are rough, you fire them, right? SERWER: Yes. Only the difference is, sometimes CEOs get rehired, sometimes they don't.

Baseball managers always seem to get rehired.

(CROSSTALK)

SERWER: That's right.

They're calling it the great CEO bloodbath of 2006. Apparently, we are on a record pace when it comes to replacing CEOs in this country. That according to Challenger, Gray & Christmas.

Seven hundred and twenty-eight CEOs have lost their jobs in the first half of this year. That's six per business day, on pace to smash last year's record of 1,322. Companies like Williams Sonoma, Kraft, Gateway, Wendy's, RadioShack.

Why? Well, it could be that, number one, companies aren't doing so well. Number two, the regulatory environment is getting tougher. And then there's that stock option scandal that seems to be sweeping the country.

And here we go with another one. Sycamore Networks, this is a story in "The Wall Street Journal." And here we have a memo which is really a smoking gun.

A former human resources executive at the company has filed a lawsuit against his former employer, saying that this memo shows some very, very scandalous behavior, whereby employees were promised to receive stock options at the lowest point in the quarter. Their starting dates, when they were hired at the company, was changed, altered.

O'BRIEN: Ooh. And this is all in print?

SERWER: Yes. Yes, according to this lawsuit.

O'BRIEN: That wasn't a very smart thing to do.

SERWER: No, it wasn't. It never is good. And don't even think about putting it in an e-mail.

O'BRIEN: Yes.

SERWER: And then there was a part of the memo which also says, how dangerous would this be? How risky would this be? It says, "Low risk. No audit risk here at all."

Well, that's going to really come back, I think.

O'BRIEN: Stupid on many fronts.

SERWER: Yes, I think so.

O'BRIEN: Yes. SERWER: And then there's monster.com. We talked to you about them previously saying they had some problems.

Now they're saying that they may have to restate all their earnings going back from last year. And basically, this is a full (ph) employment act for auditors, lawyers, litigators and litigants of all sorts.

Don't you think?

O'BRIEN: I would think.

SERWER: You would.

O'BRIEN: Job security, that's what it's all about.

SERWER: Yes.

O'BRIEN: What's next?

SERWER: Coming up, we're going to be talking about Rick Wagoner, the CEO of General Motors, saying now that an alliance with Renault and Nissan might not be a bad thing. We'll talk about that.

O'BRIEN: Really? This may be coalescing. Very interesting.

All right. Thank you, Andy.

SERWER: You're welcome.

KEILAR: Thanks, Andy. See you in a bit.

Time for a quick check of the weather now. Chad Myers is at the CNN weather center.

Chad, what's going on?

MYERS: Hi, Brianna.

(WEATHER REPORT)

MYERS: The next hour of AMERICAN MORNING starts right now.

O'BRIEN: Thank you, Chad.

Israel calling it an act of war. Another kidnapping, another front. And now Israeli tanks are rolling again. The violence spreading in the Middle East.

KEILAR: It's the morning after the devastating bombings on India's rail system. Those attacks being felt across the globe today, causing America's transit system to go on alert.

O'BRIEN: In Chicago, they're trying to get back on track this morning. But what caused that train to derail yesterday?

KEILAR: And a turnpike tunnel in Boston still shut down. Yet another black eye on that city's troubled Big Dig.

O'BRIEN: And out West, a state of emergency. Wind whipping up more wildfires in southern California. We'll get you up to date on that ahead on this AMERICAN MORNING.

Good morning to you. I'm Miles O'Brien.

KEILAR: And I'm Brianna Keilar, in for Soledad this morning.

O'BRIEN: It's good to have you here.

Breaking news out of the Middle East we'll get right to. A dramatic escalation of violence on a new front. It is happening on Israel's northern border with Lebanon.

Israeli forces crossing the border, pounding Hezbollah fighters. The invasion comes after Hezbollah captured two Israeli soldiers, perhaps an attempt to prompt a prisoner exchange.

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