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LOU DOBBS TONIGHT

Israel and Hezbollah Step Up Attacks in Widening Conflict; Showdown in Gaza; Provision in Senate Amnesty Bill Could Force Employers to Pay Guest Workers More than U.S. Citizens; U.S. Warning Tonight about Venezuela Fueling Illegal Immigration Crisis

Aired July 14, 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, the radical Islamist group Hezbollah declares "open war" on Israel.
As Israel and Hezbollah escalate their rocket and missile barrages, the Israeli ambassador to the United Nations, Dan Gillerman, joins us.

And the United States is preparing plans to evacuate tens of thousands of Americans from Lebanon. The USS Iwo Jima and other warships on standby.

We'll have that special report here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Friday, July 14th.

Live in New York, Lou Dobbs.

DOBBS: Good evening, everybody.

Israel and the radical Islamist terrorist group Hezbollah tonight are at war. The leader of Hezbollah today declared "open war" against Israel. The Israeli prime minister, Ehud Olmert, said that Israel will not stop bombarding Lebanon until Hezbollah is disarmed.

At least 12 Israelis have been killed in the past three days. More than 60 Lebanese have been killed.

The United States is preparing to tonight to evacuate up to 25,000 Americans from Lebanon. Seven U.S. warships are already in the region.

Alessio Vinci reports from Beirut on Israel's tightening blockade on Lebanon.

John Vause reports from northern Israel on the escalating Hezbollah rocket attacks on Israeli border towns.

And Jamie McIntyre reports from the Pentagon on the military's preparations for a possible evacuation of American citizens from Lebanon.

We turn first to Alessio Vinci -- Alessio.

ALESSIO VINCI, CNN CORRESPONDENT: Lou, extraordinary series of events here in the last few hours in Beirut.

First, the Israeli gunship enforcing a blockade off the coast of Beirut, hitting hard at the Hezbollah headquarters in the southern part of Beirut. And the -- yes -- destroying the home office of the militia group leader. No casualties there, but heavy damage.

And moments later, the Hezbollah leader, Sheik Hassan Nasrallah, made an audiotape appearance declaring all-out war against Israel, called on the people to resist Israeli attacks, and vowing to achieve victory.

And then very -- at the very end of that videotape, the sheik actually called on his people to look at the ship that had just attacked the Hezbollah headquarters and basically said it will burn and sink before your very eyes. And moments later, the IDF confirming that one of its ships had been hit by what appeared to be initially a rocket and slightly damaged that ship. Now we understand from the IDF that that ship has been heavily damaged and on its way to Jerusalem.

In the meantime -- to Israel. In the meantime, all this is happening while this morning, again, the Israeli forces pounded the international airport here in Beirut. First they allowed one of the runways that had been destroyed the day before to be patched up. Five Middle Eastern MEA aircraft carrier -- airliners belonging to the national airline here were allowed to leave. And after that, the Israeli forces pounded again that same runway that had been repaired, including the parking lot nearby.

So, Israel really on an all-out attempt here to completely isolate Lebanon from the air, the sea and the land -- Lou.

DOBBS: Alessio, thank you very much.

Alessio Vinci.

We appreciate it.

We'll be going back for further reports on this escalating and widening conflict.

Radical Islamist terrorists today fired more than 50 rockets at communities across northern Israel. Two more Israelis were killed in those attacks. More than 200,000 Israelis living near the border tonight are bracing for more attacks.

John Vause reports from one Israeli community just 10 miles from the Israel-Lebanon border -- John.

JOHN VAUSE, CNN CORRESPONDENT: Lou, it is eerily quiet here tonight, with many residents taking cover in bomb shelters and other safe rooms in their homes.

The Israeli military now says Hezbollah has fired more than 90 Katyusha rockets today, more than 300 in the past 48 hours. Today another two Israeli civilians died. A woman and her grandson were killed when their house took a direct hit from a Katyusha rocket. Here in Nahariya there have been two rounds of Katyusha attacks. Hezbollah seems to be sticking to a pattern, attacks in the early morning and then again in the early evening.

At least 30 people have been wounded here. At least a dozen more have been hurt in the town of Safed.

Along the Israel-Lebanon border, a warning for Israeli residents living within 14 miles of Lebanon to say inside bomb shelters and safe rooms, and also for residents 30 miles away, including those who live in the major port city of Haifa, a warning from the military to stay off the streets and to stay indoors.

There is also growing concern among Israeli military officials that Hezbollah may have long-range missiles. The two rockets which hit Haifa on Thursday evening are calling, the Israeli military, not typical Katyushas. They have a much longer range. And once again, quoting Israeli military officials, "Those two rockets were made in Iran" -- Lou.

DOBBS: John, thank you very much.

John Vause from the northern border with Lebanon.

Israel tonight is also maintaing a tight blockade of Gaza. Israeli troops have destroyed key transportation facilities in Gaza in an effort to secure the release of a kidnapped Israeli soldier. Israel has also closed key crossing points into Gaza. Today, Palestinians blew a hole in a border fence with rocket-propelled grenades, and hundreds of Palestinian immediately crossed into Gaza into Egypt.

Ben Wedeman reports from Gaza on the showdown between Israel and the Palestinians' radical Islamist government.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN INTERNATIONAL CORRESPONDENT (voice over): The bullhorn is blaring in Gaza; Hamas is on the march. The radical Islamist group which has held one Israeli soldier for almost three weeks organized rallies all over Gaza in support of Hezbollah, which is holding two Israeli soldiers.

Hezbollah's yellow flag flies next to Hamas' green banner. "God willing, everything will come down on the heads of the Jews and we'll defeat them," says Hamas supporter Abu Majehed (ph). Little chance of that happening, but the fighting in Lebanon has ignited passion among the militants and their supporters for a regional war against Israel.

Gaza's misery, it appears, loves company.

Addressing the crowd, Hamas spokesman Mushir al-Masri (ph) called on Arab and Islamic leaders to get off the sidelines and join the fight against Israel or face the anger of their people. But while Gaza's streets are noisy, its front lines have gone quiet.

(on camera): And Israel seems to have suspended most of its military operations in Gaza, if only for now.

(voice over): Shortly after dawn, residents in central Gaza returned to areas evacuated by withdrawing Israeli forces. They left behind destroyed roads and damaged houses.

And early Friday, Hamas' military wing fired six Kassam rockets on Israel. No injuries or damage were reported.

Hamas' bark and bullhorns may be louder than its bite.

Ben Wedeman, CNN, Gaza.

(END VIDEOTAPE)

DOBBS: Plans to evacuate nearly 30,000 Americans from Lebanon. One option is to send an amphibious task force led by the USS Iwo Jima to the Lebanese coast.

Jamie McIntyre has the report from the Pentagon.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT (voice over): The open warfare between Israel and Hezbollah has essentially trapped an estimated 25,000 Americans in Lebanon. The State Department says all U.S. citizens, except essential embassy personnel, should consider leaving what has become a war zone. The American Embassy in Beirut has put an authorized departure policy in effect. but with no safe way out for now, most persons are on their own.

SEAN MCCORMACK, STATE DEPT. SPOKESMAN: Conditions permitting, we have urged American citizens to leave -- consider leaving Lebanon. But again, they have to take into account their own personal security. That's going to be a decision that they have -- that they have to make themselves

MCINTYRE: With Beirut's main airport cratered by Israeli bombs, the usual manner of evacuating Americans, chartering commercial aircraft, is not an option. Although, under a brief cease-fire, Israel allowed Lebanon to move five airliners to safety and also permitted the former Lebanese prime minister's private plane to take off before the runway was bombed again.

Pentagon sources say the U.S. military is considering a number of options if an emergency evacuation is ordered. The nearest U.S. ships with helicopters are part of a seven-ship task force headed by the Iwo Jima, which is in the Red Sea. It would take several days, though, for it to move back through the Suez Canal to the Mediterranean because it would first have to collect many of its 2,200 Marines who are ashore in Jordan on an exercise.

Another option would be to move helicopters to the nearby island of Cyprus, roughly 150 miles from Beirut, close enough for unrefueled helicopter runs back and forth.

(END VIDEOTAPE) MCINTYRE: And given the close relationship between the U.S. military and Israel, it's also possible the U.S. could work out another brief cease-fire to use -- to use the Beirut International Airport after some emergency repairs. But whatever the U.S. does it will not do in secret. The last thing the U.S. military wants to do is send in evacuation helicopters that then draw fire because they're confused with Israeli helicopter gunships -- Lou.

DOBBS: Jamie, thank you.

Jamie McIntyre from the Pentagon.

The continuing escalating violence in the Middle East today leading to another increase in world crude oil prices. Crude oil rose 33 cents, closing at a record high, $77.33 a barrel. The price of oil has risen 26 percent so far this year.

We'll have much more on the Middle East crisis ahead.

Hezbollah declares war on Israel. President Bush holds emergency talks in Russia. We'll have a report for you from St. Petersburg.

At the United Nations, calls for an immediate Israeli cease-fire rebuffed. Our nation's closest allies are split on how to respond to this war. We'll be going live to the United Nations.

And Israel says it won't stop its bombardment of Lebanon until Hezbollah is disarmed. The Israeli ambassador to the United Nations joins us here tonight.

(COMMERCIAL BREAK)

DOBBS: President Bush tonight is in St. Petersburg, Russia, for the G8 meeting. The G8 countries are deeply divided over how to respond to the war in the Middle East. President Bush today made a series of telephone calls to Middle Eastern leaders.

Suzanne Malveaux reports from St. Petersburg.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice over): President Bush arrived in St. Petersburg two days ahead of the G8 summit to have what aides call private and frank discussions with someone he calls an old friend, Russian President Vladimir Putin. But it's the crisis in the Middle East that has now taken center stage.

Before his arrival aboard Air Force One, Mr. Bush called key allies in the region, the leaders of Egypt and Jordan, to press them to use their influence with Hezbollah to get the Israeli soldiers released. He also called Lebanon's prime minister, Fouad Siniora, to reiterate his belief that Israel has a right to protect itself against Hezbollah but should try to spare the innocent and respect Siniora's authority.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Whatever Israel does, though, should not weaken the Siniora government in Lebanon.

MALVEAUX: White House officials denied that Mr. Bush was calling for Israel to stop its attacks, saying that was a matter for the Israeli military to decide . But Mr. Bush has not spoken to Israel's prime minister, Ehud Olmert. That task has been left to his secretary of state, Condoleezza Rice.

CONDOLEEZZA RICE, SECRETARY OF STATE: We just continue to ask that the Israelis exercise restraint, be concerned about civilian casualties, be concerned, of course, about civilian infrastructure. And that's been the nature of our conversations.

MALVEAUX (on camera): It's far from clear whether or not the G8 leaders at the summit will come up with a unified response to the Middle East crisis. Already, there is a split, with Russia and France saying they believe Israel has overreacted, while the United States and Germany disagree.

Suzanne Malveaux, CNN, St. Petersburg, Russia.

(END VIDEOTAPE)

DOBBS: The U.N. Security Council is also divided over this conflict. Countries that support Hezbollah are trying to stop Israel's bombardment of Lebanon. Israel and its supporters are strongly defending Israel's right to defend itself against radical Islamist terrorism.

Richard Roth reports from the United Nations.

(BEGIN VIDEOTAPE)

RICHARD ROTH, CNN SR. U.N. CORRESPONDENT (voice over): Instead of across their own borders, Mideast neighbors Israel and Lebanon lobbed accusations and denounceations over the Security Council table.

AMB. NOUHAD MAHMOUD, LEBANESE FOREIGN MINISTER (through translator): What Israel is undertaking is an act of aggression and devastation aimed at bringing Lebanon to its knees and subverting it by any means.

AMB. DAN GILLERMAN, ISRAELI AMBASSADOR TO U.N.: Having shown unparalleled restraint for six years while bearing the brunt of countless attacks, Israel had to respond to this absolutely unprovoked assault whose scale and depth was unprecedented in recent years.

ROTH: Lebanon appealed for help in stopping Israeli attacks.

MAHMOUD: The international community is called upon, as represented by the Security Council, to take an immediate, clear decision, calling for comprehensive immediate cease-fire, a lifting of the air and sea blockade imposed upon Lebanon. And calling for an end of Israeli aggression.

GILLERMAN: You know deep in your heart that if you could, you would be sitting here, right next to me right now, because you know that we are doing the right thing. And that if we succeed, Lebanon will be the beneficiary.

ROTH: The U.S. blasted Syria and Iran for having a hand in the missile attacks on Israel. The Syrian ambassador said he was denied permission to respond inside the Security Council.

(END VIDEOTAPE)

ROTH: And the council president, the ambassador from France, said it was too soon, Lou, to consider any cease-fire resolution -- Lou.

DOBBS: Richard, thank you.

Richard Roth from the United Nations.

Later here, I'll be talking with Israelis U.N. ambassador, Dan Gillerman.

Also ahead tonight, three of the nation's best political analysts join to us discuss this worsening, escalating conflict in the Middle East.

And the government of Hugo Chavez and Venezuela may be aiding and abetting illegal aliens and possibly radical Islamist terrorists trying to enter this country.

A special report on that.

And we'll have complete coverage of Hezbollah's declaration of war and what is an escalating crisis in the Mideast tonight.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Israel's ambassador to the United Nations, Dan Gillerman, today said the Hezbollah terrorist group is an instrument of Syria and Iran. The ambassador said Hezbollah, together with Hamas, Syria, and Iran, constitute a new axis of terror.

Israel today intensified its attacks on targets in Lebanon. One of those targets, the home of the leader of Hezbollah.

Meanwhile, Hezbollah fired more rockets at towns in northern Israel. At least two Israelis, a woman and a child, were killed.

Ambassador Dan Gillerman joins me here now.

Good to have you with us.

GILLERMAN: Good to be here, Lou.

DOBBS: Ambassador, first, there are reports that the missiles that were fired, the two Katyusha rockets, with longer range than anyone had expected, were manufactured in Iran.

Can you confirm that here tonight?

GILLERMAN: Yes, I can. We know for a fact that many of the long-range missiles which the Hezbollah has amassed over the last few years -- and Hezbollah has amassed over 10,000 rockets, it has fired 600 of them in the last 48 hours alone. Many of those were supplied by Iran, made in Iran. Iran funds the Hezbollah to the sum of $100 million a year.

DOBBS: This conflict is widening. Hezbollah has declared "open war" was the language, on Israel.

Where does this end?

GILLERMAN: It ends when our soldiers are returned home. It ends when the rocketing of Israeli towns and villages stops. And hopefully it ends with Lebanon becoming a free country again after living under the stranglehold of terror both from tyrants in the north, like Syria, and terrorists from the south, like the Hezbollah.

The Lebanese people have been living under oppression for over 30 years. They deserve to be free as well.

DOBBS: The Lebanese prime minister, Fouad Siniora, basically implied that Hezbollah had made a mistake. Implied further that he could go no farther than the statements he made which were critical of Hezbollah and the tactics it was employing.

Is his constraint and his obvious discomfort a sign of just how intimidated the Lebanese are?

GILLERMAN: Well, wouldn't you be intimidated if a word against the Syrians would blow your car up and blow you up to smithereens, as they did to Rafik Hariri and many of their opponents? Of course they are intimidated.

Syria regards Lebanon as southern Syria. Syria is still threatening Lebanon. The Lebanese are in fear both of Syria and of the Hezbollah, but I must say that over the last few hours, we've heard some brave statements from very courageous Lebanese, including parliamentarians and ministers. And I actually pointed out to my Lebanese colleague at the Security Council today that if he could, he probably would join in those brave words which were crying out of the brink of the abyss in that war-torn country and would be sitting next to me making exactly the same statement because he knows what we are doing is the right thing and would actually benefit Lebanon in the long run.

DOBBS: Hezbollah, radical Islamist terrorism, a global war against radical Islamist terrorism. Is there any other end but conflict in this confrontation?

GILLERMAN: Well, I very much hope so. I think that the world needs to mobilize in this war.

This is no longer just a war against terror. This is, as you pointed out, Lou, a war against extreme fundamentalist Islamic terrorism.

You know, while it may be politically incorrect and maybe even untrue to say that all Muslims are terrorists, it happens to be very true that nearly all terrorists are Muslim. So this is not just Israel's war.

This is the world's war. We are fighting it. We are on the front line. But I can sense, and I could even sense it at the Security Council today, that the world understands that we're fighting this war.

DOBBS: There are some who may find it Congress, Ambassador, that the United States government called Hosni Mubarak of Egypt, talked to other leaders in the region, when the number of deaths in Iraq are greater, the insurgency is widespread and obviously well supported, both by Iran and Syria there as well.

Does this conflict have to be resolved with Syria and Iran as the principal targets?

GILLERMAN: There's no doubt that Syria and Iran are the principal targets. Hamas and the Hezbollah are just the fingers on the bloody arms, the blood-stained arms of Iran and Hezbollah and the twisted minds of Iran and Hezbollah -- and Syria.

I mean, there is the president of Iran denying the Holocaust while preparing the next one and trying to amass nuclear weapons. The first thing those weapons will do, those dirty bombs and weapons of mass destruction, is find their way back to Lebanon, back to the arms and the hands of the Hezbollah and the Hamas, and spread around the world as probably the world's worst pandemic ever.

DOBBS: Israel tonight will accept nothing less than disarmament of Hezbollah before it ends its attacks?

GILLERMAN: Israel tonight will accept nothing less than the safe return of its soldiers and the stopping of the shelling of its cities and towns. The disarming of Hezbollah is something the rest of the world has demanded for a long time.

Security Council resolutions 1559 and 1680 have demanded that. It's the Lebanese government that has to exert its sovereignty over the whole of Lebanon and deploy its forces also in the south.

We will do everything we can to allow it to do so.

DOBBS: Ambassador Gillerman, good to have you with us.

GILLERMAN: Very good to be here. Thank you, Lou.

DOBBS: Coming up next, much more of our coverage on this worsening conflict in the Middle East as the leader of Hezbollah declares open war on Israel. Three of the nation's sharpest political analysts join us here to assess the events.

And a Pennsylvania city fighting back, tackling the illegal alien crisis in this country. I'll be talking with the mayor of Hazleton, Pennsylvania, about what is quickly becoming a nationwide reaction to a federal government failure of leadership.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Hezbollah has declared war on Israel. The conflict tonight is widening.

Joining me now to assess the events, former Reagan White House political director Ed Rollins; Michael Goodwin of "The New York Daily News"; Democratic strategist Hank Sheinkopf.

Good to have you all here.

Hank, let me turn to you first. This is a reaction that some are saying, friends of Hezbollah, that it is an overreaction on the part of Israel. Your assessment?

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: The real enemy here is Iran. The real enemy is -- they are the people funding Hezbollah. What the Israelis do will impact directly on the security of the United States of America.

DOBBS: Is the United States being constrained in its options here, in your opinion, Michael, because of the war in Iraq and the political mood in this country toward the Middle East?

MICHAEL GOODWIN, "NEW YORK DAILY NEWS": No. Well, so far, I think the president has said the right thing, which is to basically say Israel has a right to defend itself. I mean, I think that is the clear statement of American principle here, and it's not one -- it would seem so simple, but it's not being one that's shared around the world, so it's important that America say that.

After that are, I think, the president does have limited influence in the region. Certainly, we're no longer considered a broker, honest or otherwise. So I think that we're clearly on Israel's side, as we should be, and the rest of the world is going to have to figure its own way out, how to deal with that.

DOBBS: Germany, Japan, and the United Kingdom siding, of course, with the Israel, along with the United States, but Russia, China, a host of major nations are calling for a cease-fire and, obviously, greater friends of Hezbollah, radical Islamist terrorists, than Israel.

ED ROLLINS, FMR. WHITE HOUSE POLITICAL DIR.: The important thing in this debate is the Congress and the president are all on the same side. Israel is our friend. It's a democracy that we've stood behind before.

As much of a tinderbox as this is, you're not going to have the partisan disputes that you're having on the other parts of the war, and so I think the president has to lead, has to do the right thing, and even though our options may be somewhat limited by our Iraq involvement, we cannot forget our friends.

DOBBS: Is anyone else struck by the fact that this administration is calling several leaders in the region to deal with this crisis, but that we have not insisted upon aggressive, vital support from Egypt, Saudi Arabia, Jordan in the war in Iraq? Can we continue this kind of lapsed, non-strategy in our dealings with the Middle East?

SHEINKOPF: Very different to do over time, but the need for oil and the fact that we do not have a long-term energy policy that would make us oil -- which makes us much more efficient and reduce our dependence on foreign oil, that coupled with the problems that we're now going to experience more so than even before in Venezuela, makes us much more unlikely to take any strong gestures.

DOBBS: We're watching world oil prices skyrocket and families in this country, working men and women are being hammered, because we do not have -- in part because we do not have a reasoned and innovative energy policy or strategy, in part because we are permitting the Middle East and OPEC to drive prices.

And we can talk about speculators in the world oil market. Let's say it very clearly what it is. Is it time for the United States to insist on the support of those 22 Arab nations that are at the center of this conflict, even though the absolute epicenter is Iraq?

GOODWIN: Lou, I think it's probably not the right time for that. I think that right now they are all intimidated by the Islamist fanatics in their own countries. I think what is clearly now in America's interests, what we must do, is find other sources of fuels. We have to be serious about it.

DOBBS: Without question.

GOODWIN: Right. And I think this is -- during a war, we're not likely to get Egypt to stand up bravely. I think that ...

DOBBS: Right.

GOODWIN: ...those countries are all threatened from within.

DOBBS: They are threatened from within, but the United States, western civilization, is clearly threatened by radical Islamist terrorists. And to see Fouad Siniora, the prime minister of Lebanon, bravely speaking, but still constrained by fear of Syria itself and Hezbollah and Iran, is -- should awaken every person in this world watching these events unfold.

ROLLINS: Well, there is no question. It's time that we get very aggressive in whatever the strategy may be. We can't be held hostage by people we've protected for a long period of time. And I'm not talking about the Israelis, I'm talking about the Saudis and everybody else.

And if terrorism is here, the rest of my life and my child's life, terrorism's going to be a part of our existence, unfortunately. And I think that we basically have to decide who our friends are.

We have to develop an independent energy policy. It may mean Americans making some very severe sacrifices beyond paying $3 for gasoline, but at the end of the day, if we don't take and be very strategic about this and put a 10-year plan together, we're going to basically be caught just as we were 20 years ago.

DOBBS: Let me posit this possibility, that it has been an enormous mistake of U.S. foreign policy to continue the long war and to permit the Middle Eastern conflict to exist for more than half a century between Israel and Palestinians, that the military strategy and our national security policy, to permit our military to engage in long wars, including, which they now admit, Iraq, is an entirely wrong approach for the world's only super power and that we have to some to new terms to deal with this enemy, radical Islam.

SHEINKOPF: The world has to believe that there's a problem. The Europeans are asleep. They don't believe it. They need to believe it, because the rockets that the Iranians may or may not have at their availability with nuclear weapons potentially, can be sent just as sure as to Tel Aviv as they can to the center of Europe. That's the problem.

GOODWIN: And I think what is going on right now with Hezbollah and the Iranians may actually work to convince more Americans of the danger of Islamic terrorism. I think that particularly the Democratic Party is kind of asleep on this, and doesn't know what to do about it and hasn't figured out its own course.

And so I think this kind of event where, in fact, Israel is the canary in the coal mine, Israel is doing the dirty work of taking these groups on, may convince more Americans that we must all stand up against this group.

DOBBS: And Republican leadership in both the Congress and this White House, sent troops, American troops, into Iraq knowing full well Iran and Syria were supporting terrorism globally, radical Islamist terrorism. Did we go after the wrong country in your opinion, Ed?

ROLLINS: I personally have always thought we went after the wrong country. I thought there was a far greater potential in Iran. There was a younger movement there. I thought they were a greater threat.

Everything we've read since we've started the war, Saddam wasn't the threat. Saddam was more worried about internal stuff. And I think we're now at a position where we have a very serious enemy there who doesn't feel threatened by us.

DOBBS: You get the last word, Hank.

SHEINKOPF: Gillerman just when he was just here a moment ago that Iran is spending $100 million a year to subsidize Hezbollah. You want to cut off the head of the beast, you cut off the oil weapon and the $100 million won't be there. DOBBS: And to put that into some context, the United States spending about $100 billion to carry out a war against an insurgency in a nation of 25 -- people -- in Iraq. Thank you very much, Ed Rollins, Michael Goodwin, Hank Sheinkopf.

ROLLINS: Thank you.

DOBBS: Up next, radical Islamist terrorists trying to enter the United States could be receiving help from the government of Hugo Chavez in Venezuela. We'll have that special report.

And Hazleton, Pennsylvania Mayor Lou Barletta joins us. His town's crackdown on employers and landlords hiring and housing illegal aliens, setting the standard nationwide. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The United States is warning tonight that Venezuela is now actively fueling this nation's illegal immigration crisis. With the help of Fidel Castro's Cuba, Venezuela's counterfeit document industry could also be helping potential radical Islamist terrorists gain entry into this country. Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): Terrorist groups like al Qaeda, Hamas and Hezbollah may be no further away than 1,400 miles from Florida, with the front door to America open in Venezuela. In no uncertain terms, the State Department made it clear to Congress, it considers the increasing discovery and growing use of fraudulent documents bearing the state seal of Venezuela to be a serious threat to the United States.

AMB. CHARLES SHAPIRO, DEP. ASST. SECRETARY OF STATE: I would be willing to bet that just about anybody in this room, except for me, could probably obtain a Venezuelan passport, a legitimate Venezuelan passport, within a short period of time, in Venezuela.

TUCKER: The implications were obvious to the committee's chairman.

REP. EDWARD ROYCE, CHAIRMAN, INTL. TERRORISM SUBCOMM: Let me just make the observation that news reports reflect that thousands, thousands, of Venezuelan identity documents are being distributed to foreigners from Middle Eastern nations, including Syria, Pakistan, Egypt, and Lebanon. This is certainly not in the best interests of the United States.

TUCKER: In the opinion of those concerned about security, this is a problem that will not go away until passports are made more secure.

JANICE KEPHART, FORMER COUNSEL, 9/11 COMMISSION: We have these threats all over the world, in different ways, with passports, with travel documents. We have not had a worldwide effort as of yet to go after the issue head on. And until we do, we will continue to have serious vulnerability.

TUCKER: Neither the State Department nor the Department of Homeland Security will comment on the numbers of fraudulent documents they have discovered.

(END VIDEOTAPE)

TUCKER: Officials so far are also unwilling to say that the document fraud has the official blessing of Venezuelan President Hugo Chavez. But they do note, with admitted concern, that Venezuela has signed a contract turning over the office that issues those documents, the identity cards and the passports, Lou, to Cuba.

DOBBS: Communist Cuba.

TUCKER: Communist Cuba.

DOBBS: Thank you very much. Bill Tucker, appreciate it.

Coming up here, a look at your thoughts about my interviews last night with La Raz's CEO Janet Murguia. Communities all across the nation so fed up with the federal government's failure to stop illegal immigration, they are legislating on their own. The city of Hazleton, Pennsylvania, leading the way. The mayor of Hazleton, Lou Barletta, is our next guest, next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Tonight, illegal aliens are intensifying their attacks on new local ordinances that punish employers and landlords for hiring and housing illegal aliens. And the Senate's so-called comprehensive immigration reform bill once again being exposed as an all-out assault on this nation's middle-class and a sham.

Lisa Sylvester tonight reports on a provision in the Senate amnesty bill that could force employers to pay guest workers a higher wage than U.S. citizens. Kitty Pilgrim reports tonight as illegal aliens and their supporters protest the tough new illegal alien crackdown in Hazleton, Pennsylvania.

We begin with Lisa Sylvester in Washington. Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Lou, the Senate immigration bill was so massive that senators are only now beginning to get a full understanding of the legislation. There are provisions that were included that some Republicans find downright appalling.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): U.S. construction employees working under a federal contract are guaranteed wages significantly higher than the minimum wage. The so-called prevailing wage rates are ensured by what's known as the Davis-Bacon Act.

The Senate's immigration bill extends those protections to foreign laborers under a guest-worker program. But it went a step further. It also guaranteed the prevailing wage to foreign workers even on private construction projects and in other professions, a benefit American workers do not have.

The result? A system where foreign temporary workers could be paid a lot more than American workers.

SEN. JOHNNY ISAKSON (R), GEORGIA: If a foreign worker on an immigrant firm were working in that job, they would have to be paid $30.27, yet an American citizen working for the same company would not. They might be paid $10 or $15 or minimum wage for that matter.

SYLVESTER: The provision was added as an amendment, ironically aimed at protecting job security of Americans.

STEVEN CAMAROTA, CENTER FOR IMMIGRATION STUDIES: Immigrants, guest workers, illegals, what have you, could come in and work for less and undercut natives. This was a way of trying to deal with it, so you can sort of kind of see the thinking behind it. The problem, is of course, then you get an outcome that doesn't seem to make any sense.

SYLVESTER: Critics also point to the process. The Senate bill and its attachments are nearly 800 pages. Yet, the full Senate devoted only 10 days for debate.

ISAKSON: A lot of things flew under the radar, but the brilliance of our system of government is, it takes a long time to get this done, and as people can read and pull back the layers of the onion, if you will, they'll find some of these things.

SYLVESTER: The Republican Policy Committee has highlighted this provision as one more reason why the Senate immigration bill should be defeated.

(END VIDEOTAPE)

SYLVESTER: Or at the very least, critics say, the Senate bill should be rewritten with an emphasis on border security first. Senator Isakson today called on the White House to send an emergency supplemental to Congress to get additional money for security. He added everyone knows it is an emergency and needs to be done. Lou?

DOBBS: It's just unbelievable. Who came up with the bright idea to do that?

SYLVESTER: This was originally an amendment by Senator Barack Obama, and as I said, he originally wanted this to be a job-security amendment for Americans, but you know, the road to hell is often paved with best intentions so...

DOBBS: ... And the Senate would send everyone in this country, every citizen, straight to hell, if they had their way. They didn't read the legislation that they wrote, and this -- it just keeps coming up, creating the requirement to consult with the government of Mexico, before building a fence. I mean, it's just one thing after another. If the Heritage Foundation doesn't get involved in this, the Senate would have approved 100 million immigrants into this country, in addition to what we have over the next 20 years. I mean, they don't even know what they're doing.

SYLVESTER: Lou, I'm sure there will be more surprises, too, as the weeks go on.

DOBBS: I'm sure you're going to share them with us here. Lisa, thank you very much -- Lisa Sylvester.

Tonight, the U.S. Senate is proving once again it isn't too serious about our border security. Just three months ago, the Senate agreed to build 370 new miles of fence against our border with Mexico. Yesterday it voted against releasing $1.8 billion to begin construction.

This is the way your Senate works. The amendment to fund the new fencing introduced by Senator Jeff Sessions. It was defeated by a vote of 83-16. Thirty-four senators who voted in favor of new border fences in May, voted against funding them in yesterday's vote.

Senator Sessions introduced a second amendment that would have made $85 million available to hire 800 new immigration investigators. The Senate killed that amendment as well. Now, we have an idea of what the Senate means and this White House means when it says comprehensive. We all get that, Mr. President. Senator Frist, thank you very much.

Illegal aliens and their supports vowing to fight Hazleton, Pennsylvania's tough new illegal immigration ordinance, signed into law today. Tensions in Hazleton were so high during last night's city council vote police were out in force and Mayor Lou Barletta wore a bulletproof vest. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): A divided and heated crowd outside the city hall in Hazleton. The city council passed an ordinance with harsh penalties for hiring or renting property to illegal aliens -- flag-waving, chanting, and singing.

Illegal alien rights groups also gathered. The city council passed the measure 4-1. The ordinance imposes strict fines of $1,000 per person per day to landlords not holding occupancy permits which prove a legal status of the renter, a five-year ban on doing business with the city if you're found to employ an illegal alien, and a 10- year ban on those committing a second offense. The measure also declared English as the official language of the city.

Mayor Lou Barletta received prolonged applause as he walked into the council meeting. He says he received 8,000 e-mails from across the country in support of his approach. He defended his intentions, saying illegal aliens drain the city budget and have committed violent crimes. MAYOR LOU BARLETTA, HAZLETON, PA: Over the past month or so, I have been accused of being racist, intolerant, and unfair. But let me repeat what I have been saying all along. Illegal is illegal. We do not care where they come from. We do not care what language they speak. But an illegal alien is not welcome in Hazleton.

PILGRIM: Some immigrant rights groups are lived.

DR. AGAPITO LOPEZ, HAZLETON LATINO ASSOC.: We will never convert ourselves into Anglos. We will aculturize. We will learn the language. We will learn the laws. We will follow the laws. But we will never assimilate.

PILGRIM: Protesters outside threatened legal action.

UNIDENTIFIED FEMALE: The sad thing about it is that this city cannot afford the lawsuit that's going to come against them.

PILGRIM: Ed Rodriguez's father came to the country legally in 1909. He supports the mayor.

ED RODRIGUEZ, HAZLETON RESIDENT: I'm not against people coming into this country, but to come into this country legally, not illegally.

PILGRIM: This former National Guardsman wants a safer town.

ANTONIO RODRIGUEZ, HAZLETON RESIDENT: A lot of vandalism in the city and gangs. Yes, something had to be done.

PILGRIM: Today, the mayor signed the measure into law.

(END VIDEOTAPE)

PILGRIM: Now, the law will take effect in 60 days. On a local level, the action is fast. The measure was first proposed only one month ago by the mayor -- Lou.

DOBBS: Mayor Lou Barletta moves quickly. Thank you very much, Kitty Pilgrim.

That brings us to the subject of our poll tonight. Do you believe your community should follow the example of Hazleton, Pennsylvania, in cracking down on those that hire and house illegal aliens? Yes or no? Please cast your vote at LouDobbs.com. The results here later in the broadcast.

Hazleton Mayor Lou Barletta joins me now. Good to have you with us, Mr. Mayor.

MAYOR LOU BARLETTA, HAZLETON, PA: Thanks, Lou. Glad to be here today.

DOBBS: I thought it was interesting in your opening speech, you said that you have been accused of racism, but what you are doing is protecting a community that has been overwhelmed. What do most of the residents in Hazleton feel about this new ordinance?

BARLETTA: Well, obviously, they are very supportive, Lou. And that's what I was elected to do is defend the people, all the people, here in the city of Hazleton, and that's the legal residents that have a right to the quality of life that they have enjoyed here for so many years.

DOBBS: I want to, if I may, share a soundbite. Anna Arias, the president of the Hazleton Area Latino Association, strongly opposed, of course, to the ordinance. She said this, if we could hear that, please.

(BEGIN VIDEO CLIP)

ANNA ARIAS, PRES., HAZLETON LATINO ASSN.: To me, this is very discriminatory. This is very bigot and racist. Crime is not committed by undocumented people in Hazleton. It's committed by criminals. The mere fact that someone is an undocumented does not turn anyone into a criminal.

(END VIDEO CLIP)

DOBBS: Mr. Mayor, what's your response?

BARLETTA: I'm very disappointed in Anna and Dr. Lopez, who said that they will never become Anglo. And I'm not asking them to become Anglo. I'm asking them to become Americans. You know, we had a 29- year-old, as reported, who was shot in the head by four illegal aliens. A 14-year-old shooting a gun at the Pine Street playground, illegal alien.

And today, Lou, right before I came on, we arrested four more for selling drugs on that very same playground and our detectives are now spending hours and trying to find out if one of these individuals are also illegals. I've had enough. The tax dollars that the people here in Hazleton pay to us should be used on them, and there will be law and order back in the city of Hazleton.

DOBBS: Thank you very much. We appreciate it, Mr. Mayor.

BARLETTA: Thank you.

DOBBS: And we wish you all the best.

And coming up at the top of the hour on CNN, THE SITUATION ROOM with Wolf Blitzer -- Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks very much, Lou.

We're following breaking news out of the Middle East, a new Israeli missile strike in Gaza.

Plus, Hezbollah's vow of all-out war against Israel. As Hezbollah promises to take the fight to Haifa and beyond, Israel continues its strikes in Lebanon. Meanwhile, Israel is fighting on another front against Palestinian militants in Gaza. Our reporters are tracking all the angles throughout the Middle East, and I'll speak one-on-one with the former Israel prime minister, Benjamin Netanyahu and with James Zogby of the Arab-American Institute. Lots of new developments coming up this hour, Lou.

DOBBS: Wolf, thank you very much, look forward to it.

Still ahead, the results of our poll, a look at some of your thoughts, in particular on the National Council of La Raza. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Mayor Barletta was talking about a number of the people in Hazleton, Pennsylvania, calling him a racist for actually putting together the ordinance that was passed last night, cracking down on illegal immigration.

These are protesters outside Time Warner, "Down with Lou Dobbs, immigrant barber." In point of fact, I'm pro-immigrant, calling for more legal immigration. I am very much opposed to illegal immigration.

These folks waving signs and protests, about 30 of them, outside -- the May 1st Coalition, they are calling themselves, and we just wanted to be sure that freedom of speech and assembly was respected on this broadcast, as we try always.

The results of our poll tonight. Ninety-six percent of you say your community should follow the example of Hazleton, Pennsylvania, in cracking down on those that hire and house illegal aliens, 96 percent.

A look now at some more of your thoughts. Hank in South Carolina: "Hey Lou, my daughter just got married and went to the Social Security office to have her card changed to her married name. She couldn't do it because she didn't have her parents' Social Security numbers. However, an employer came in with eight Mexican workers and they were issued a card without a problem. What's up with that?"

And Daisy in California: "Can you please stop inviting the La Raza representatives to appear on the show? If I wanted to hear a whole lot of nonsense, I would listen to the president."

Marcelo in Illinois: "Please advise Ms. Murguia that 'comprehensive' is code for 'amnesty and citizenship only slightly delayed.'"

Send us your thoughts at LouDobbs.com. We thank you for doing so. And we thank you for being here with us tonight.

For all of us, have a great weekend. 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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