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American Morning

Crisis in the Middle East; High-Level Talks

Aired July 17, 2006 - 06:00   ET

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

SOLEDAD O'BRIEN, CNN ANCHOR: Good morning. Welcome, everybody. It is Monday, July 17, and I'm Soledad O'Brien.
MILES O'BRIEN, CNN ANCHOR: And I'm Miles O'Brien.

Here's a look at what's happening this morning.

Day six in the border battle pitting Israel against Hezbollah. Israeli warplanes still bombing targets in Lebanon. Hezbollah still launching rockets deeper into northern Israel.

Live pictures now in Russia, the G-8 summit closing with a news conference from Russian President Vladimir Putin. President Bush finished with his summit duties. He'll be wheels up for Washington in about a half hour.

S. O'BRIEN: A devastating attack to tell you about. In Iraq today, at least 48 people were killed when a group of attackers raided an outdoor market in Mahmoudiya just south of Baghdad. Most of the victims are believed to be Shiite. Another 60 people were wounded.

And the crew of the shuttle Discovery getting ready to come back to Earth today. There are two landing opportunities this morning at the Kennedy Space Center in Florida. The first at 9:14 a.m. Eastern Time.

M. O'BRIEN: A stem cell showdown in Washington, the Senate to debate and most likely pass a bill lifting restrictions on federal funding for embryonic stem cell research. But President Bush is opposed and would likely make this his first veto.

Today marks the 10th anniversary of the TWA Flight 800 explosion. A special memorial service planned near the Long Island, New York crash site. The Paris bound 747 blew up shortly after takeoff from JFK Airport killing all 230 aboard.

S. O'BRIEN: In southern California, firefighters are making some progress against those huge wildfires with 62,000-acre sawtooth fires now 70 percent contained. Firefighters had the small and the large fire 20 percent contained. Still some residents are out of their homes this morning.

Today is going to be a scorcher across the country. Temperatures are expected to soar into the upper 90s and higher. Heat warnings have been issued in several cities, including Chicago and St. Louis and in Philadelphia.

Let's get right to Chad Myers. He's at the CNN Center. He's got the forecast for us.

Hey, Chad, good morning.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Soledad.

Check this out, in Pierre, South Dakota on Saturday, it was 117 degrees. The old record was 107. The old record high for any day, the all-time record high for that city any year was 115. So they broke records way back into the Dust Bowl days back out there.

(WEATHER REPORT)

S. O'BRIEN: Hot, hot, hot.

MYERS: Yes.

S. O'BRIEN: All right, Chad, thank you.

Now for the latest developments on the crisis in the Middle East. Israel launched more attacks into Lebanon early this morning. Southern suburbs of Beirut were hit, as well as the city's main port. Hezbollah militants fired several rockets into northern Israel.

British Prime Minister Tony Blair and U.N. Secretary-General Kofi Annan at the G-8 summit are now calling for an international force to be sent to the Israel-Lebanon border.

Evacuations for some of the 25,000 Americans in Lebanon could start as early as today. This weekend, U.S. Marines escorted out 21 Americans by helicopter. They were all taken to nearby Cyprus.

And the violence in the Middle East again is sending oil prices to record levels. Overnight trading put the price up another 55 cents to nearly $78 a barrel.

CNN has got reporters throughout the region this morning. Paula Hancocks is in northern Israel for us. Alessio Vinci is live for us in Beirut.

Alessio, let's begin with you. Good morning.

ALESSIO VINCI, CNN CORRESPONDENT: Good morning to you, Soledad.

Well residents here in Beirut woke up again this morning to the sound of loud explosions, and not just in the eastern part of Beirut, of course, targets -- targeted several times by the Israel military, but also today, the main port. And unclear there what the target was. But two missiles, we understand, landed in a parking lot where trucks were parked and two drivers there were killed.

And then further up to the north, in a town of Abdeh, about 50 miles north from here, we understand three rockets have destroyed a military barracks, a Lebanese military barracks. It will be the first time that the Israeli military, the Israeli Air Force has targeted a Lebanese Army barracks, killing 6 soldiers and wounding 28. Now we know that the Israeli military has said all along that it did not want to engage directly the Lebanese Army but just the Hezbollah militia movement. But this is of course the first time that the Lebanese military is directly targeted.

And then to the east from here, in the Bekaa Valley, there also the military trying to strike at bridges and gas stations, trying to prevent Hezbollah from moving around. Well throughout the night several strikes there causing the death of seven more people. And we understand also 43 people have been wounded as a result of those latest attacks in the Bekaa Valley. We also understand from local reports here that one girl is missing.

That's the latest from here. Back to you, -- Soledad.

S. O'BRIEN: All right, Alessio Vinci. He's in Beirut for us this morning.

Let's get to Paula Hancocks now. She's live for us in northern Israel where civilians, of course, on alert this morning.

Paula, good morning.

PAULA HANCOCKS, CNN CORRESPONDENT: Hello, Soledad.

Yes, residents all the way from the Israeli-Lebanon border down to Tel Aviv, which is around about 130 kilometers, are all on high alert. Now many of these northern Israeli towns have already been hit by rockets.

Haifa, where I am, the third largest city in Israel, has been hit. A very deadly attack on Sunday. But Monday morning, we had a siren here. Now this siren gives us a one-minute warning to let us know that a rocket is incoming. And where we would actually see that rocket from is just where the camera is now. That is north. That is Lebanon. About 30 miles or 45 kilometers in that direction is the border and this is where these rockets have been coming from.

Now we know one hit this morning, but it did land in the sea. This is a seaside resort. And this time last week, it would have been absolutely heaving here with holiday makers. But now there's hardly anybody on the street. And anyone that is on the street is making sure that they are going quickly to wherever they have to be.

Now Israel has said what it wants, has given its conditions for a cease-fire. It's said that it wants Hezbollah to stop these rocket attacks. It's really put fear into many people in northern Israel, many of them heading south. And also the Israeli military is worried that the Hezbollah, through Iran, has longer-range missiles that could reach to the -- close to Tel Aviv, the most popular city -- Soledad.

S. O'BRIEN: Paula Hancocks for us this morning reporting for us from Haifa, thanks for that report -- Miles.

M. O'BRIEN: Of course the Middle East fighting continues on two fronts. To the south in Gaza, Israeli warplanes today hit the Palestinian Authority Foreign Ministry offices. It was the second time in less than a week that Israel targeted that building. This time destroying one wing. Israeli warplanes had already destroyed the top two floors of the building. Israel has targeted several Palestinian offices since an Israeli soldier was kidnapped by Hamas three weeks ago.

The U.S. Ambassador to the United Nations says he sees the hand prints of Syria and Iran in the fighting. John Bolton says Washington wants the militants in Lebanon disarmed and Syria influence removed. Here is what he told CNN's Larry King.

(BEGIN VIDEO CLIP)

JOHN BOLTON, U.S. AMBASSADOR TO U.N.: There are allegations about weaponry coming from Syria and Iran and allegations about their personnel being involved. I don't -- I'm not in a position to comment on that. But we do know that Iran is the central banker of terrorism. Responsible people estimate they may fund Hezbollah to the tune of $100 million a year. Syria also funds Hezbollah, as well as other Palestinian militant groups in Lebanon, and funding from us.

(END VIDEO CLIP)

M. O'BRIEN: Syria's Ambassador to the U.S., Imad Mustafa, told CNN's Wolf Blitzer that Syria has nothing to do whatsoever with this current crisis -- Soledad.

S. O'BRIEN: With missiles and bombs falling, many Americans in Lebanon are anxious to get out of this growing crisis. U.S. military helicopters are scheduled to take a few dozen Americans out of Beirut today. No word yet if that has happened. The first batch of 21 Americans was evacuated to Cyprus from Lebanon yesterday.

CNN's Chris Burns joins us by phone from Lamaka in Cyprus.

Chris, good morning.

CHRIS BURNS, CNN CORRESPONDENT: Good morning, Soledad.

Well the British are doing the same thing, sending helicopters over from Cyprus here over to Beirut to pick up very high-priority cases. The old, sick people, elderly, children without parents or unaccompanied by parents. That is the priority for those because they are using just helicopters.

But there are also ships involved. The French has sent a ship that can take in about 1,200, 1,300 people and that has been sent over to Beirut. As well as the Italians are right now loading up as many as 400 people on a Navy ship. That ship has arrived back over here this evening. So the process is under way. About 500 people were evacuated yesterday aboard various planes and planes by Italy and Greece and Spain, as well Morocco. So the countries are beginning to take these people out.

We heard a very harrowing story from a dual citizen, a Lebanese- American who is studying at Harvard who is trying to write a paper about the politics there, and the whole thing blew up in his face.

He said that as they were trying to drive to the evacuation point, that they were just a couple of a hundred yards away as the explosions were going off. There were collapsed bridges. He didn't know if he was going to make it. So a very, very terrifying and harrowing experience for this guy. And he's of course here now at a hotel and very relieved to be here -- Soledad.

S. O'BRIEN: Yes, I bet he is.

Chris Burns for us this morning.

Thanks, Chris.

We're going to talk more about the exit strategy for Americans who are stranded in Lebanon coming up in the next hour when we speak with the U.S. State Department official Maura Harty -- Miles.

M. O'BRIEN: The Middle East fighting stole the show and dominated the talk at the G-8 summit. Russian President Vladimir Putin saying today he hopes his country can use its influence with the Hamas leadership to free at least one of those kidnapped Israeli soldiers.

CNN's Ed Henry joining us live from St. Petersburg with more on that talk and what else happened at the G-8 summit -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well good morning, Miles.

We actually now have some dramatic video and sound showing a rather frank conversation today at lunch between President Bush and British Prime Minister Tony Blair. At a luncheon here behind closed doors, President Bush had some frank comments for U.N. Secretary- General Kofi Annan.

This conversation was about that violence, the escalating violence in the Mideast. President Bush expressing frustration, a feeling that he believes U.N. Secretary-General Kofi Annan needs to do more directly, get in touch with Syrian President Assad to get Hezbollah, the terrorist organization, to stop the violence.

What preceded this luncheon is the fact that Mr. Annan, as well as Prime Minister Blair, this morning announced that they now want to get an international stabilization force to go to Israel, stop the cross-border attacks between Hezbollah militants and the Israeli military. Also hanging over the entire summit is the question of whether or not the leaders should be calling for a cease-fire.

So far, this G-8 joint statement that came out yesterday about the Mideast left out a cease-fire, in part because President Bush is someone who does not believe a cease-fire will necessarily work. He doesn't believe that Hezbollah will actually follow that.

So what you will hear is President Bush and Prime Minister Blair talking. I want to be clear that the leaders knew that this was a photo opportunity. There was a microphone on the table. And at the end of the conversation, Prime Minister Blair turned that microphone off. But first, it captured this. You've got to listen closely, they were at lunch. Take a listen.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: What about Kofi Annan? That seems all right.

(CROSSTALK)

BUSH: His attitude is basically cease-fire on everything that's happened. But -- you know what I'm saying?

TONY BLAIR, BRITISH PRIME MINISTER: Yes. Now I think (INAUDIBLE) it's really difficult is you can't stop this unless you get international help and it's agreed.

BUSH: Yes.

BLAIR: Now I -- with what you guys are talking about.

(CROSSTALK)

BLAIR: But you need that done quickly.

BUSH: Yes.

(CROSSTALK)

BUSH: I think Condi is going to go up there pretty soon.

BLAIR: Right. Well that's all that matters. But...

BUSH: Well.

BLAIR: If you - see, it will take some time to get out of there.

BUSH: Yes.

BLAIR: But at least it gives people a shot.

BUSH: Some process. I agree.

BLAIR: At which...

BUSH: I told them your offer, too.

BLAIR: Well good. Well, it's only a good subject you know, if she's going -- or she needs the ground (INAUDIBLE). Because, obviously, if she goes out, she's got to succeed (INAUDIBLE).

BUSH: See, the irony is that what they need to do is get Syria to get Hezbollah to plain stop doing this (EXPLETIVE DELETED) and it's over.

BLAIR: Well that's fine. Good.

(CROSSTALK)

BUSH: (INAUDIBLE) why?

BLAIR: Well I think it's all part of the same thing.

BUSH: Yes.

BLAIR: Look, what does he think? He thinks that Lebanon turned down five (ph), you get a solution to this problem (ph).

(END VIDEO CLIP)

HENRY: OK. And what you heard there near the end was President Bush saying clearly -- what you heard President Bush saying there near the end is what they need to do, a reference to the United Nations, is to get Syria to stop Hezbollah doing -- quote -- "this (EXPLETIVE DELETED)." That was from President Bush directly.

He also says in there -- quote -- "I felt like telling Kofi to get on the phone with Assad -- of course Syrian President Assad -- make something happen." You can see President Bush's frustration. We're getting that in an unscripted moment behind closed doors where the president is showing that he feels the United Nations could be doing more here.

Sharp contrast to what we saw yesterday, a very happy statement. The G-8 leaders saying they were all on the same page in dealing with the Mideast, but there are clear differences here.

We've also heard President Chirac from France. He had wanted there to be a statement about Israel overreacting here, that their reaction being disproportionate, something President Bush did not want.

And finally, you heard in there President Bush talking about how he is sending Secretary of State Condoleezza Rice to the Mideast region soon. He didn't give a specific day -- Miles.

M. O'BRIEN: OK, lots to consider in all of this, Ed, and I sort of feel like we were just a fly on the wall there at that gathering there which was fascinating on its own level. How much did that reflect a lot of tension and disagreement among these leaders about how to go forward here and try to handle what's going on in the Middle East?

HENRY: It is a reflection of just how tense some of these negotiations must have been, the hours and hours they were spending trying to hammer out this statement that came out yesterday. And of course in the official statement, they were very positive, very happy. In the public comments we heard from all of the various administrations was that everyone was basically on the same page.

But as I noted, President Chirac of France clearly wanted the statement to be tougher against Israel, but also wanted there to be the phrase cease-fire in there. President Bush did not want that.

Also, President Bush wanted this statement, joint statement from the G-8 yesterday to be much bolder in going after both Iran and Syria and saying that they are financing and harboring the terrorists of the Hezbollah. That was left out of the statement as well. So clearly there are some areas of agreement, but this shows there still are some vast areas of disagreement on the way forward in the Mideast -- Miles.

M. O'BRIEN: Ed Henry, thank you very much, live from St. Petersburg.

Still to come on the program, an American living in Lebanon, living a long-held dream and now it's a nightmare as his wish to see his Lebanese family cuts him off from his American family.

S. O'BRIEN: And evacuations and an intense battle in California too, now two wildfires merge. Today, firefighters face much more tough conditions and it could make things worse. We'll tell you about that.

M. O'BRIEN: More trouble for Boston's Big Dig. City commuters get some bad news on how long it will take to make the tunnels safe again.

S. O'BRIEN: And Carrie Lee joins us with some business headlines.

Good morning.

CARRIE LEE, CNN CORRESPONDENT: Good morning. Thank you.

Escalating tension continuing in the Middle East and pushing oil prices once again close to $78 a barrel. We'll have that story and an early market check coming up on AMERICAN MORNING.

(COMMERCIAL BREAK)

S. O'BRIEN: Welcome back, everybody.

Happening this morning.

The crisis in the Middle East is escalating. Israel today bombed Beirut's southern suburbs, the city's port and an Army barracks. The bombing follows Hezbollah rocket attacks on northern Israel.

Firefighters in southern California making some progress against those huge wildfires. The 62,000-acre sawtooth fire now about 70 percent contained. The small and the large fire is 20 percent contained.

And a heat wave is gripping much of the country. Temperatures are expected to get into the upper 90s and above today. Heat warnings have been issued in several cities, including Chicago and Philadelphia.

Brings us right to the forecast. Let's get right to Chad Myers. He's at the CNN Center.

Hey, Chad, good morning.

MYERS: Good morning, Soledad.

(WEATHER REPORT)

Back to you, -- Miles.

M. O'BRIEN: Chad Myers, do you have the radar pictures for Florida right there handy by any chance?

MYERS: No.

M. O'BRIEN: You don't.

MYERS: I just took it out because nothing is going on. The rain showers...

M. O'BRIEN: That's the point.

MYERS: There was a big storm over Savannah. It rolled on down to about Amelia Island. And now it's just about dissipated, and that's the good news, because I know why you're asking.

M. O'BRIEN: OK, so you are go for landing?

MYERS: So far so good.

M. O'BRIEN: Chad Myers. Myers is go for landing. Well we'll report that to Houston immediately.

MYERS: Fair enough.

M. O'BRIEN: The space shuttle crew is getting ready right now. They are suited up. They are drinking a lot of fluids, which is one thing they do before they land after a long mission like this. They've been in space for nearly two weeks.

This is the wake-up call for their last morning in space. Happened about 1:00 a.m. Eastern. What is it? Anybody name that tune? Nobody can do it. It's called "Astronaut" by the group something Corporate. OK. There you go. Thank you very much. Obscure songs, but you know you run out of astronaut theme songs after awhile.

Let me show you what's going to happen in about a little after 8:00 Eastern Time, hour and 40 minutes or so from now, if the weather holds, as Chad would suggest, the -- they will get their - they'll fire the braking rockets on the space shuttle and that will start their precipitance fall toward Earth.

And this is the track they will take if they come in, right across the South Pacific, across Mexico and then straight across the Florida peninsula and into the Kennedy Space Center. And we will be watching the weather very closely and that decision when that decision is made. And of course that mission will end, we hope, safely.

We will hear from Commander Eileen Collins, former commander, who flew the last mission a year ago. She'll kind of walk us down and guide us down, give us a sense of what's going on on board and what the dangers are.

The landing is slated now for 9:14 Eastern Time, weather permitting. We'll let you know if they do that de-orbit burn and we'll keep you posted.

Back with more in a moment.

(COMMERCIAL BREAK)

M. O'BRIEN: The trouble in the Middle East meeting trouble at the pump.

Carrie Lee is here with that.

Good morning, -- Carrie.

LEE: Good morning, Miles and Soledad.

Well, we're seeing oil prices early this morning come back up to the $78-a-barrel range. This because of increased fighting in the Middle East.

Now, the thing is that the Middle East produces about 30 percent of the world's oil supply. And even though the two countries involved here, Israel and also Lebanon, don't directly produce oil; still, anything in this area is causing tension. So oil prices on the rise again and that is pushing stock prices in part downward.

We are coming off of the worst week on Wall Street so far this year. Take a look, the Dow, Nasdaq, S&P all down substantially. In fact, the Dow is down nearly 400 points three consecutive days, Wednesday through Friday.

So what is on the radar screen for this morning? Well we are getting more second quarter profits. We've already heard from Citigroup. The big bank saw net profits up 4 percent year over year. Here are some other names coming out as the week continues. And we're also going to get some key inflation data later on. Tuesday and Wednesday, a look at consumer and wholesale prices. So that will be an important one to watch.

But so far, Miles and Soledad, it is looking like a bit of a weak start for stocks this Monday morning. And that's been the name of the game over the past couple of weeks, as you both know.

S. O'BRIEN: It's a little bit like a broken record of course...

LEE: Yes, I know.

S. O'BRIEN: ... and certainly in the last several days.

M. O'BRIEN: Thank you, Carrie.

S. O'BRIEN: Thank you, -- Carrie.

LEE: OK.

M. O'BRIEN: See you in a little bit.

LEE: Sure.

S. O'BRIEN: The morning's top stories straight ahead, including the latest on a cease-fire plan in the Middle East and the U.S. plan to evacuate Americans. We'll take you live to Jerusalem just ahead this morning.

And President Bush could soon use the first veto of his presidency on stem cell research. That might just be what Congress wants him to do. We'll explain as we continue right here on AMERICAN MORNING.

(COMMERCIAL BREAK)

M. O'BRIEN: Most people don't like to watch commercials. And if they have a way, they'll breeze right through them. In the future, advertisers will have to come up with new ways to reach viewers.

(BEGIN VIDEOTAPE)

MINDY: When the commercial comes on, I usually get up and go. I'm out of the room. Commercials, to me, are a nuisance. If I have 20 minutes to watch something, kind of want to watch 10 minutes of commercials.

The advertisers need to think way outside of the box. Get to the point. Tell me what is going to benefit me. Make it interesting, make it exciting. The advertisers that give you something new, something you haven't seen before, those are the commercials that I want to watch.

M. O'BRIEN (on camera): But it's going to take some big changes to keep us tuned in. More and more of us are using digital video recorders, time shifting our programs and then fast forwarding through the commercials. There will be 30 million DVRs in use in another year in the U.S. So what's an advertiser to do to slow us down?

(voice-over): Peter Kim of Forrester Research says instead of fighting new technology, advertisers are working in tandem with it, like inserting promotional codes good for discounts or deals that flash on the screen, giving viewers incentive to watch very carefully. But many marketers believe product placement or branded entertainment just may be the wave of the future.

PETER KIM, FORRESTER RESEARCH: Putting products in the context of a show and integrating it within the fabric of the content rather than being separate in commercial breaks.

M. O'BRIEN: Soon advertisers may also be able to tailor commercials to consumers, specifically targeting a geographic location.

KIM: We see technologies being developed to that target, consumers, based on their zip code and eventually their home. Advertisers will be able to deliver offers that they feel are most relevant to that demographic. And the future of advertising is really building deeper relationships rather than taking a mass media approach.

(END VIDEOTAPE)

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