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PAULA ZAHN NOW
Eight Israeli Soldiers Killed in Renewed Fighting With Hezbollah; Investigation Into U.N. Deaths in Lebanon Continues; Interview With Assistant Secretary of State Kristen Silverberg; Andrea Yates Found Not Guilty by Reason of Insanity
Aired July 26, 2006 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: And thank you all for joining us.
Tonight, we go in depth on the day's "Top Story," starting with the latest war bulletins from the front lines.
Eight Israeli soldiers are dead in renewed fighting around a southern Lebanese town that, only yesterday, Israel's military announced was under its control.
And fighting around a nearby town claims the life of an Israeli officer. A major general says Israel's offensive against Hezbollah will probably last for several more weeks.
For the first time, Israel strikes downtown Tyre, creating panic and destroying a 10-story building. Israel says Hezbollah rockets are being launched from Tyre.
Well over 100 rockets hit Israel today, at least 20 -- 27, that is -- landing inside cities. A peace conference in Rome fails to stop the fighting. Despite international pressure for a quick truce, Secretary of State Condoleezza Rice insists, Hezbollah must be disarmed to set up a lasting peace.
Also tonight, more angry fallout over the deaths of four U.N. observers in southern Lebanon -- their post was hit, even though they had called the Israeli military 10 times during a six-hour period, complaining of shells landing nearby.
Tonight, we're bringing in live reports from all over this region in the conflict, as well as Rome.
Now, this time last night, we were hearing that Israeli forces had taken the town of Bint Jbail. Well, that is not exactly what Israel is saying tonight.
John Roberts joins us from the front lines along the Israeli- Lebanese border. He has the very latest for us now -- John.
JOHN ROBERTS, CNN SENIOR NATIONAL CORRESPONDENT: Good evening to you, Paula.
The chief of Israel's northern command is claiming substantial success against Hezbollah, particularly in the areas of seizing weapons, learning intelligence about Hezbollah, and destroying its infrastructure. But there is no question that the Israeli army had some serious difficulties with Hezbollah today.
ROBERTS (voice-over): The Israeli army unloads a powerful Marev (ph) tank, soon to be headed for the front lines. It joins other armor staging near the central border, a show of strength against an enemy that has proven far more capable than Israel thought.
Just 24 hours ago, the army claimed to be in control of Bint Jbail, a town that is a major Hezbollah stronghold in southern Lebanon. But a Hezbollah counterattack killed eight Israeli soldiers, three of them officers. Twenty-two others were wounded. The fighting was described as vicious, close-quarters. Control in this conflict, it seems, is fleeting.
CAPTAIN DORON SPIELMAN, ISRAELI DEFENSE FORCES: They have been stored in there for six years. They have been digging underground tunnels. They have massive munitions. At the end of the day, this is a terrorist army. This is not a band of terrorists. This is a well- organized, well-funded, well-trained (AUDIO GAP) people who have had six years to embed.
ROBERTS: The northern command's top general, Udi Adam, walked back those previous claims that his army owned Bint Jbail. Adam said: "It is not in Israeli control. We control the area on the village. We don't want to occupy this village."
(on camera): With Hezbollah proving far more difficult to rout from Bint Jbail than the Israeli army first anticipated, there is a constant need for reinforcements. I'm standing in Israel right now. That is Lebanon.
And the reinforcements are just going over the border.
(voice-over): Even as the Israeli army is tied up in Bint Jbail, the ground operation is expanding. Heavy artillery pounded targets farther west for hours. Thick clouds of smoke could be seen from miles away. It looked on Tuesday like the army was about to open up a new front, massing tanks and armor in the northeast.
Artillery and bombers unleashed a punishing barrage of explosives on the area, an attempt to soften it up for the army's advance. But, just as an invasion appeared imminent, Israel hit that United Nations observation post, similar to this one, just across the border. Any ground attack there seems to be off, for now.
And, no matter how much fire the military rains on Hezbollah, Katyusha rockets are still falling into Israel. More than 100 hit today, 27 of those landing inside towns and villages. The rockets caused damage, but no one was killed.
And, so far, Hezbollah leader Hassan Nasrallah has not made good on his threat to strike farther south into Tel Aviv.
ZAHN: So, is -- John, is the IDF looking to regain control of Bint Jbail or move on west?
ROBERTS: It -- it's -- it's difficult to tell, Paula.
If you listen to what the chief of the northern command, General Udi Adam, said today, they don't want to take control of that city. He seemed to suggest that it would take too many of his soldiers to -- to really get total control of it. It's -- it's quite a large place.
But, then, at the same time, if you don't take total control of it, you're always going to have Hezbollah fighters harassing you. And they have quite a substantial network in southern Lebanon. And it's -- it's pretty easy to -- to assume that they could hook up with fighters elsewhere and launch sort of, you know, two-pronged harassing attacks on the Israeli military.
So, if they do not get control of that city, it's difficult to see how they could really maintain security in the area.
ZAHN: John Roberts, thanks so much. Appreciate it.
Now, our "Top Story" coverage continues with fresh violence in Tyre -- the Israelis say the southern Lebanese city is a launching pad for rockets aimed at Israel. Now the Israelis are striking back with devastating force.
Here's senior international correspondent Nic Robertson.
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Paula, in the last couple of hours, there has been an airstrike about 50 miles north of here, just north of the town of Byblos, up the coast from Beirut.
According to the Lebanese army, it targeted a television transmitter next to one of their barracks -- no information on casualties so far. One Lebanese television station says that they believe the transmitter was carrying a Lebanese government station, Tele Liban. It now appears to be off the air in that particular area.
But there have also been airstrikes in the south today, one particularly large bomb dropping in the center of the port city of Tyre just around sunset.
(voice-over): In the hour before sunset, a huge strike in the center of Tyre -- a 10-story building is hit and collapses -- only civilians here, claim the people gathering in the rubble. In recent days, Hezbollah has drawn much Israeli fire on the outskirts of Tyre by launching its own rockets from residential neighborhoods.
It's not clear what Israel was targeting when it hit this building. The blast ends a week of relative quiet in the town's center, where many were seeking refuge from bombing in surrounding villages. After two weeks of attacks across the country, almost 400 are dead, around 1,400 wounded, according to Lebanese officials. In an indication of hardening positions, Hezbollah ally parliamentary speaker Nabih Berri, who met with U.S. Secretary of State Condoleezza Rice earlier in the week, appears to be bowing to domestic political pressure to be seen as resisting Israel -- on his TV station, the aftermath of an Israeli airstrike against the offices of Berri's own Amal Party, a Shiite Muslim political party.
Amal, a far weaker and less significant cousin of Hezbollah, says it has joined the fight against Israel -- two of its members killed in recent fighting elsewhere, they say.
Hezbollah's leader again threatened to escalate the war, implying the guerrilla group may target Tel Aviv -- no sign of that yet.
At Beirut's international airport, the first planes to fly in since Israel bombed the runway two weeks ago, Jordanian military aircraft, bringing a 25-bed field hospital -- too dangerous, they say, to take it south, where it's needed most right now.
MOHAMED SAFADI, LEBANESE MINISTER OF TRANSPORTATION: To get the supplies to the real needed who under bombardments, it's next to impossible. But we're doing some, but very little. We would like to do more. We would like to have some safe pass.
ROBERTSON: This first access to the airport affording a good view of the damaged runways.
(on camera): So far, the terminal buildings at Beirut's prestigious international airport haven't been targeted, only the runways. But what concerns Lebanese officials now is that, if Hezbollah does ratchet up the violence and target Tel Aviv, then the airport here could be on the Israeli target list again.
(voice-over): In the wake of an Israeli airstrike on a U.N. observer post in southern Lebanon, even U.N. officials are cautious about moving much-needed supplies.
DAN TOOLE, OFFICE OF EMERGENCY PROGRAMS DIRECTOR, UNICEF: We don't have clearance to go down there, so that we are not certain that we will not be hit by -- by rockets, etcetera, when we go down.
ROBERTSON: As witnessed in Tyre at sunset, the further south, the more dangerous the war.
(on camera): As for military casualties, Israel says it's killed 130 Hezbollah. Not true, says Hezbollah's leader, Hassan Nasrallah. He says it's 28. He adds that they're not afraid to announce their martyrs.
He said, "If any of our ranks or soldiers die, we announce it and take pride in it" -- Paula.
ZAHN: Nic Robertson, thanks, our senior international correspondent. We're going to take a closer look now at Israel's offensive against Hezbollah.
Joining me now, military analyst Don Shepperd, a former Air Force major general.
Always good to see you, sir.
Now, we have heard a lot about Israel saying it had control of this very important town strategically, Bint Jbail. Now, tonight, as John Roberts just reported, it's not clear that it does, or if it will in any near-term future here. So, why is this town so hard to get under control?
MAJOR GENERAL DONALD SHEPPERD (RET.), CNN MILITARY ANALYST: Yes.
Paula, the story is changing in southern Israel in several ways. Let me zoom in here on -- on southern Lebanon -- sorry -- in many ways. Let me zoom in on the map here.
The town of Bint Jbail was referred to as the capital of Hezbollah in southern Lebanon, four miles north of the -- of the Israeli border. And let's zoom in on the town, and let me show you what the Israelis are actually facing here.
There are two ways to clear this town. One of them is to go in and bomb it and take it off the map. The Israelis are not likely to do that. World opinion won't allow it.
The other way is to go street by street, house by house, room by room, looking for terrorists and caches and that type of thing. That's what the Israelis did. Every intersection in this town, every building, every room is a potential ambush site -- shot -- site. It can also be -- they can also be booby-trapped.
And, once you clear it, think of the number of troops it takes to surround and keep this secured. The Israelis basically left it. The guerrillas, the insurgents, came back, and they attacked the Israelis. And there were civilian and Israeli casualties as well.
This is just one of the towns dotting the countryside around there. It shows the problems the Israelis are facing in clearing this area.
ZAHN: Let's talk about another problem they face. Originally, Israel said it would not occupy any part of Lebanon. Now they are saying they want to control a very small strip of land until an international peacekeeping force can be in place.
How big is this area, and how important is it?
SHEPPERD: Not big, a little bit important is the answer.
Again, the blue here shows the security zone, or buffer zone, that the Israelis are trying to establish, 1.2 miles along their northern border into Lebanon. All this will do, Paula, is, it will keep the short-range mortars from being lobbed from southern Lebanon into Israel itself. It is not a solution. And here's why. This is the range, in red, of the Katyusha rockets.
And you can see, with a 12-mile range, if they're north of the buffer zone, the insurgents, the Hezbollah, can basically lob rockets into northern Israel. They can't hit Haifa, which is 20 miles down here, but they can hit a lot of towns all across northern Israel. The -- the Israelis need more than this buffer zone to make it safe.
ZAHN: And more of our geography lesson now, and the importance of the Litani River?
The Litani River is further north. As you can see here, it's between 15 and 20 miles into Lebanon from the border of Israel. And what this does, once you push the Hezbollah north of Litani, or put in an international force to do that, it gets the Katyushas out of range of northern Israel, except for the very northeastern part up here.
So, it's a major step in security of northern Israel, is to make the Litani a line, and get the Hezbollah north of that line. This is tough, dangerous sledding. All of this means more Israeli casualties and more civilian casualties, and the world is watching, Paula -- tough stuff.
ZAHN: You made the challenges very clear to us tonight visually, and verbally, I might add.
General Shepperd, thank you.
SHEPPERD: My -- my pleasure.
ZAHN: Always appreciate your perspective.
There's much more ahead on tonight's "Top Story," including the latest development in the pursuit of Mideast peace.
ZAHN (voice-over): Diplomacy fails to stop the shooting. The U.S. says it wants an end to Hezbollah terror, but some of our allies think we're asking for too much.
The Hezbollah money machine -- how millions of dollars go from America's streets to one of the world's most fearsome terrorist organizations.
Our "Top Story" coverage of the crisis in the Middle East continues after this.
ZAHN: As part of our "Top Story" coverage tonight, we're following Hezbollah's money trail all the way to America. What are you buying that may be putting money in a terrorist's pocket? That's coming up.
And, tonight, we're hearing more about how four United Nations observers were killed in an Israeli airstrike on Lebanon. The U.N. says the observers called the Israeli military repeatedly to warn them that Israeli fire was steadily approaching their post -- many, many phone calls.
And Lebanese security sources say, Israeli aircraft dropped at least three precision-guided bombs on the U.N. bunker. Still, the Israelis deny that the strike on the U.N. outpost near Khiam was deliberate.
And, tonight, we have exclusive pictures of the aftermath.
The latest now from Beirut bureau chief Brent Sadler.
BRENT SADLER, CNN BEIRUT BUREAU CHIEF (voice-over): United Nations troops in south Lebanese recover the charred remains of fallen comrades, victims of an Israeli airstrike on this U.N. position.
As graphic pictures exclusive to CNN clearly show, the observation post was reduced to rubble. Four military observers, from Canada, Austria, Finland, and China, were huddling inside the bunker, when it took a direct, so far unexplained, Israeli hit.
CAPTAIN RONAN CORCORAN, UNITED NATIONS OBSERVER: All players out here understand, we are unmanned. We fly the blue flag. We are the secretary-general's eyes on the ground.
SADLER: This is what the remote outpost looked like during the attack, a position that stood since U.N. observers first came to Lebanon some 50 years ago to monitor the movement of elicit weapons close to Israel's border.
On the day that the post was hit, the peacekeepers logged about a dozen warnings to Israel's military that shell fire was coming too close. Despite all those warnings, U.N. officials say at least one shell and perhaps as many as two bombs destroyed the post, and killed the four observers inside it.
KOFI ANNAN, U.N. SECRETARY-GENERAL: People on the ground were in touch with the Israeli army, try -- warning them: Please, be careful. We have positions here. Don't harm our people.
SADLER: At first, the U.N. chief said it appeared the attack was deliberate, drawing immediate Israeli denials.
TZIPI LIVNI, ISRAELI FOREIGN MINISTER: It was not a deliberate attack, because Israel will never, and never targeted and will never target United Nations forces.
SADLER (on camera): Hezbollah rockets, claim security sources in Lebanon, were fired from positions close to the U.N. base on previous days, but not the day it was struck.
Ten years ago, when Israel last attempted to destroy Hezbollah, Israeli shell fire hit a U.N. compound in Qana, south Lebanon, killing more than 100 Lebanese refugees. An inconclusive Israeli investigation deepened concerns among some U.N. peacekeepers that Israel is too often careless when firing at targets in Lebanon.
SADLER: Paula, the United Nations Security Council was told that, over many hours, at least 21 strikes and 12 artillery shells fell in an area about several hundred yards around that United Nations post.
Even the French general commanding the mission made repeated calls. And no action was taken. Right now, both sides, Israel and the United Nations, have agreed to a joint investigation -- Paula.
ZAHN: Brent Sadler, thanks so much.
Now, is the U.S. doing enough to stop the fighting there? Next in our "Top Story" coverage: Was today's peace coverage in Rome really a case of Condoleezza Rice against the world?
ZAHN: More now of our "Top Story" coverage tonight -- the U.S. may be all that's in the way of an international agreement for a cease-fire in Lebanon. Peace talks in Rome got nowhere today. Most countries want an immediate cease-fire. But the U.S. won't go along with that, insisting that Hezbollah must be disarmed first.
Secretary of State Condoleezza Rice is under a lot of pressure.
And John King now has the very latest from Rome tonight.
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): The mood was described as tense, frustrating -- Secretary of State Rice said to be under constant siege, viewed by many at the Rome emergency summit as the obstacle to a cease-fire plan.
But she stood firm, insisting, any cease-fire that did not demand Hezbollah disarm would be meaningless, and would not be accepted by Israel, anyway.
CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: Because, unfortunately, this is a region that has had too many broken cease- fires, too many spasms of violence, followed, then, by other spasms of violence.
KING: And, so, a summit designed to provide hope the hostilities might soon end instead ended with Lebanon's prime minister devastated.
FUAD SINIORA, PRIME MINISTER OF LEBANON: The more we delay the cease-fire, the more we are going to witness more are being killed, more destruction, and more aggression against the civilians in Lebanon.
KING: As tensions mounted, diplomatic sources tell CNN, only an impassioned plea from Prime Minister Siniora kept the summit from collapsing. So, the participants huddled for an extra 90 minutes, but, in the end, no communique or agreement on a plan, just a statement voicing "determination to work immediately to reach, with the utmost urgency, a cease-fire that puts an end to the current hostilities."
Privately, some meeting participants complained, the United States was not budging because it wanted to buy Israel more time for military operations -- publicly, though, a concerted effort to keep diplomacy alive.
BENITA FERRERO-WALDNER, EUROPEAN EXTERNAL AFFAIRS COMMISSION: This conference is not a failure. This conference is a very important beginning.
KING: To back up such talk, diplomats pointed to major commitments from Saudi Arabia and others for humanitarian and reconstruction aid to Lebanon, and to some progress on another contentious issue, creating an international peacekeeping force that would step in, if and when there is a cease-fire.
Italy and France volunteered troops, and the European Union agreed to take the lead in organizing the force and presenting a plan to the U.N. Security Council.
FERRERO-WALDNER: We want to give a chance to the Lebanese government to expand its authority, with the help of such a stabilization force.
ZAHN: So, we could tell from your, John -- your reporting, John, that there's this concerted effort to make it look like diplomacy lives on. But, tonight, is it really Condoleezza Rice against the world?
KING: Well, not exactly, Paula, but fairly close, if you ask those involved in the meeting tonight.
Great Britain says it agrees with the United States, that a cease-fire deal should include some commitment to disarm, or at least push back Hezbollah. France says it agrees -- or at least understands -- the United States' position.
But it is also very clear that, if Condoleezza Rice was willing to go along with Kofi Annan, with the Arab nations, who wanted to say, cease-fire first, then negotiate about Hezbollah and all the other difficult political issues, if Secretary Rice was willing to go along, Britain, France would have gone along as well.
She was the one who made clear, the United States would not accept a deal, would not pressure Israel to accept such a deal, even saying we are -- our understanding is, she has conveyed, at least privately, to other diplomats: Look, even if the United States embraced that deal, leaving Hezbollah with its rockets, Israel might simply say no -- Paula.
ZAHN: John King, thanks so much.
So, just what did the U.S. accomplish in Rome, beyond what John was just talking about now, and what is next for the diplomatic process?
Joining me now is Assistant Secretary of State Kristen Silverberg.
Thanks so much for being with us.
Now, most of the countries in the Rome talks called for an immediate cease-fire. That is not what Secretary of State Condoleezza Rice called for. Are you saying that those other countries are wrong here?
KRISTEN SILVERBERG, ASSISTANT SECRETARY OF STATE FOR INTERNATIONAL ORGANIZATIONS FOR THE UNITED STATES: Well, what we're saying is that we want a long-term, sustainable solution to this crisis.
You know, no one thought that this diplomatic effort was going to be easy. We're trying to address some persistent and deep-seated problems in a complicated part of the world. But what we have agreed to now, coming out of Rome, is that everyone agrees we can't return to the status quo ante. We need a long-term solution.
Everyone agrees that will require an international force. And everyone...
ZAHN: All right.
SILVERBERG: ... everyone has made a commitment that part of the international force's obligation should be to help the Lebanese government control all of its territory, including the part occupied by Hezbollah.
ZAHN: So, when you talk about the goal of this sustainable effort, are -- are you saying that countries who want an immediate cease-fire aren't serious about disarming Hezbollah?
SILVERBERG: What we're saying is that this part of the world, this region, has been through too much. The Lebanese people have been through a painful civil war. They have been through conflict. And they deserve an opportunity to have a long-term, sustainable solution.
So, what we say is, we don't wand a band-aid. We don't want a temporary solution. We want the kind of solution that is going to put Lebanon on the path to stability and democracy over the long term.
ZAHN: Am I to read into that, then, that these countries who support an immediate cease-fire aren't serious about fighting terrorism?
SILVERBERG: I think that all of our partners on the issue, all of the people who are in Rome, are very serious.
We were grateful for all of their input. We're grateful for the agreements we reached on the international force, on the need for a long-term solution. We're working very closely with all of our allies and are grateful for their support.
ZAHN: You say you're working closely with your allies, but John King says that there's a distinct impression from many of the participants in the forum that Secretary of State Rice is perceived as an obstacle to that process.
SILVERBERG: Again, I don't think anyone thought this was going to be easy. Everyone wants an urgent end to the crisis. And Secretary of State Rice made that very clear. The communique made that very clear.
But what we want is to address these underlying, deep-seated problems, the conditions that create the kind of conflict we're dealing with now. And that's going to require a lot of work.
ZAHN: Kristen Silverberg, we got to leave it there tonight. Thank you so much for being with us.
SILVERBERG: Thank you.
ZAHN: Appreciate your time.
Does the U.S. have the right plan for the Middle East? Does anyone have a better approach? And are some countries simply out of touch with reality? Coming up next: a "Top Story" panel with very different points of view.
And, later, is some of your money helping Hezbollah? Stay with us. You may be very surprised at what they're selling and what you may be buying.
ZAHN: Our top story coverage of the conflict in Lebanon continues now. We're talking about the failure today of peace talks in Rome, where Secretary of State Rice was said to be under siege because the U.S. refuses to support an immediate cease-fire unless Hezbollah is disarmed first. Joining me now Fawaz Gerges, a Middle East scholar at Sara Lawrence College. He happened to be in Lebanon when the conflict began. He had to be evacuated. He filed some pretty dramatic reports from there. Glad to have you home.
John Fund of the "Wall Street Journal" is also a guest tonight and Robert Malley of the International Crisis Group, an organization devoted to resolving conflict around the world. Welcome all. So Robert, why is the United States virtually alone in calling for an immediate cease-fire?
ROBERT MALLEY, MIDDLE EAST EXPERT: In not calling for an immediate cease-fire.
ZAHN: That's what I meant.
MALLEY: The U.S. logic is twofold. Number one, as you've heard said by U.S. officials, they believe that if you have a cease-fire now, without addressing some of the underlying issues, you'll have violence resume very quickly and the second reason I believe is they think as time goes by Israel could weaken Hezbollah enough so that when you get a diplomatic package they'll be a weaker counterpart to negotiate. I think they're wrong on both counts, but that is the U.S. strategy at this point.
ZAHN: What about that, John? A quick truce is a bad truce because it ultimately allows Hezbollah to very quickly re-arm itself.
JOHN FUND, "WALL STREET JOURNAL": Well, if Hezbollah isn't disarmed we could see again a 1983 incident in which we lost 283 marines, an international peace keeping force might be in that position. Now Hezbollah is obviously a puppet of Iran. Notice that Iran's nuclear acquisition program has gone off the front pages, so, too, has the vote been delayed in Palestine for a vote on the Palestine people on whether or not Israel has the right to exist, so this is very convenient.
The only way this is going to stop is if the U.N. resolution which passed six years ago, resolution 1559, which called for Hezbollah to disarm, is actually enforced. If the U.N. won't enforce it and it hasn't done so for six years, then somebody has to, and it might as well be the Israelis.
ZAHN: Fawaz, I know you don't agree with John Fund on this note. You think you could successfully have a cease-fire and tremendously weaken Hezbollah. Why are you so convinced of that?
FAWAZ GERGES, MIDDLE EAST SCHOLAR: I think there are three fallacies with the American thinking, the thinking that somehow Israel needs time to militarily cripple Hezbollah. How much time are we talking about? A week, two weeks, a month, two months, three months? Three fallacies.
ZAHN: Why is it a fallacy? They've lobbed over a hundred rockets in yesterday.
GERGES: Let me say why the thinking about this idea that Israel needs more time to militarily cripple Hezbollah. Hezbollah, Paula, cannot be crippled in a month, in two or in a year. Hezbollah is not just a militia. Hezbollah is a social and political movement with hundreds of thousands of fighters. Let me go further. I talk to Hezbollah people. I'm surprised how confident they are.
Even if Israel were to wipe out the entire Hezbollah fighters today, a new generation will emerge and replace the current generation and will be more radical, more militarize. The second fallacy, Paula, just give me a second. The longer the conflict continues, in fact, the one that will be crippled is the Lebanese government, the Democratic elected Lebanese government that's supposed to be replace Hezbollah, deploy the army into the Israeli/Lebanese borders and disarm Hezbollah.
ZAHN: So Robert Malley, we're talking about fallacies here that Fawaz thinks exist. But, he's basically saying you can't cripple them in months, you can't cripple them in a year or two, so I think you're making it sound like a cease-fire would all be irrelevant whether it's immediate or if it comes down the road. Bob, weigh in.
MALLEY: Listen, you need a cease-fire and then you need to move on all these other issues. I make this point. Just as there was no reason to wait for the violence to erupt to take these diplomatic and political issues seriously, there's no reason now to wait to address and to finish up these issues before you solve the problem.
GERGES: May I add Paula?
ZAHN: Very quickly.
GERGES: This is what I'm trying to talk about, Robert, is that in fact, you need a cease-fire, with the understanding that the Lebanese government initiates a serious dialogue to disarm Hezbollah, deploy the Lebanese army into the south and gain internal public support to do so, Paula.
ZAHN: But John Fund made the argument that the Lebanese government has had a couple of years since the U.N. resolution was passed to do just that. You get the last word, John.
FUND: Well look, obviously there are many people of goodwill in the Middle East, but every time we get closer to peace, every time, for example, Palestinian President Abbas says maybe we should move closer towards a resolution, Hezbollah becomes the monkey wrench. It becomes the extremist element which destroys all possible talk of peace. They are off the table now in terms of being a partner in peace. They clearly have to be disarmed, the U.N. said they had to be disarmed, that was six years ago, six years is long enough.
ZAHN: Fawaz Gerges, John Fund, Robert Malley, thank you for all of your points of view tonight. Now, where does Hezbollah get the money for its rockets and weapons? Could it actually be coming from you or your family and friends? Coming up next in our top story coverage a shocking look at Hezbollah's money trail right here in the U.S.
And then a little bit later on we will turn our attention to the controversial new verdict in the Andrea Yates murder trial. She drowned her kids, but tonight she is not guilty by reason of insanity. Is the jury right and what does that mean for other folks facing trial tonight?
ZAHN: Our top story coverage of the conflict between Israel and Hezbollah continues now with a story that may shock you. Hezbollah, which the U.S. calls one of the most dangerous terrorist organizations in the world, has raised tens of millions of dollars right here in this country. Ed Lavandera has that part of the story for us now. (BEGIN VIDEOTAPE)
ED LAVANDERA, CNN CORRESPONDENT (voice-over): In the mid 1990s, a North Carolina deputy noticed several men buying cigarettes with grocery bags of cash at this outlet store.
BOB FROMME, SHERIFF: They'd have 20, 30, $40,000 in cash in bundles in these bags, and I'd think, "What's wrong with this picture?"
LAVANDERA: What had first appeared to be a simple cigarette smuggling case turned out to be the first clue into what federal prosecutors say was an international multimillion dollar scheme funneling money made in U.S. business deals to Hezbollah.
Eighteen people are accused in being involved in this operation. The alleged mastermind is Ahmad Hammoud, a fugitive now living in Lebanon. Prosecutors say with the help of his brothers living in Dearborn, Michigan and others, they were able to launder money for terrorist activities.
STEPHEN MURPHY, U.S. ATTORNEY, MICHIGAN: The capability of criminal defendants to take money and to launder it either domestically or overseas is limited really only by their imagination, I think.
LAVANDERA: This is how prosecutors say the money laundering scheme worked. The suspects would purchase untaxed cigarettes around the country and then resell them at retail prices on the black market. Prosecutors say the men often charged a resistance tax to help support the families of suicide bombers back in Lebanon. They're also accused of selling fake Viagra pills from drugstores and other outlets.
The indictment details hefty profits and numerous transactions made over an eight-year period, money that was allegedly delivered to Ahmad Hammoud in Lebanon and then passed on to Hezbollah.
An attorney for one of the Hammoud brothers says the men are hard-working, decent people who sent money home to help their families.
JAMES BURDICK, DEFENSE ATTORNEY: None of the family members of my client would do anything knowingly to involve themselves in any terrorist activities.
LAVANDERA: The suspects in the Michigan case are charged with racketeering to support a terrorist organization. Two have pleaded guilty and the rest are expected to go to trial early next year.
(on camera): This case highlights what terrorism experts say is a troubling problem, home-grown fundraising for Hezbollah, a group the U.S. government considers to be one of the world's most dangerous terrorist organizations.
U.S. officials say across the country there are dozens of investigations going on right now into people suspected of supporting Hezbollah financially.
(voice-over): In Dearborn, young Lebanese Americans are selling t-shirts on the streets, raising money for family and friends back home. Here there is sympathy of the men suspected of helping Hezbollah.
ALI NASSEREDDINE, HEZBOLLAH SUPPORTER: That's good that they're going to Hezbollah, that's good. Because you know, maybe you guys, maybe America think Hezbollah are terrorists, but I don't think they're terrorists. They're resistance, they're the brave people, they're the heroes.
LAVANDERA: Arab American community leaders say this example of Hezbollah's support in the United States should not be misunderstood as a full embrace.
IMAD HAMAD, AMERICA-ARAB ANTI-DEFAMATION COMMITTEE: The vast majority of the Arab-American community across the nation, they do not see Hezbollah as a terrorist organization. At the same time, they don't see that as a statement of support to Hezbollah and its political agenda.
LAVANDERA: For federal prosecutors, that makes pursuing these kinds of cases a delicate diplomatic challenge. They must convince Arab-Americans that the money trail from Michigan to Lebanon isn't always paved with good intentions. Ed Lavandera, CNN, Dearborn, Michigan.
ZAHN: Joining me now is someone who has lived in Lebanon, and has reported on Hezbollah for decades, the coauthor of "Lightning Out of Lebanon: Hezbollah Terrorists on American Soil," journalist Barbara Newman. Thanks for joining us, Barbara. So in terms of the money we're talking about here, how much of Hezbollah's money comes from the United States?
BARBARA NEWMAN, AUTHOR: Well, we know it's been published that they get about $150 million from Iran. I would say that they make almost that from the United States and from Latin America, where they have a huge presence there.
There isn't a crime that's been invented that they don't participate in from cigarette smuggling to the counterfeiting of Levi jeans, which is a hot-ticket item in the Middle East to baby formula, counter fitting that, to busting out credit cards.
And what they do is in the case of this North Carolina cell that you just discussed, money was sent from North Carolina to the chief of procurement of Hezbollah in Canada, who purchased war material and sent it back to Beirut. It's a serious situation. They're serious terrorists.
ZAHN: And that's not the only serious part of this story because your research also reveals that you got members or we've got members of Hezbollah living right here on American soil. Where are they hiding?
NEWMAN: Without a doubt. They're all over the country. Since the 1980s, the FBI has deported hundreds of Hezbollah members, but it's been under the -- under the radar, nobody's really -- Americans don't realize that before 9/11 Hezbollah killed more Americans than any other terrorist organization.
They are rituals and their rites say they want to kill Jews, Israelis and Americans. They say it. Now Hitler said he wanted to kill all Jews, et cetera. No one took him seriously in 1933. When are we going to start to learn that when people say this stuff, they mean it?
ZAHN: All right. We've heard what their threat is. How concerned are you that this conflict now that we're seeing in the Middle East will turn some of these members from simple fund raisers into terrorists prepared to launch attacks here on American soil against all those people you just mentioned that are targets?
NEWMAN: The intelligence community feels that Hezbollah is a very disciplined army as Israel is finding out both in intelligence and procurement and in weapons.
So you won't see a lone gunman like you saw in the British tubes, a group of five or six guys blowing up something. It would be something that would be a grand design decided in Beirut. Now, what would -- I just asked a high- ranking person in the FBI about this on Friday. He said two things. If they had nothing to lose. I said what constitutes nothing to lose? If the war goes very badly, if Iran feels very threatened or we cut off their fundraising in the United States.
ZAHN: Pretty frightening prospect to think about the repercussions of what you're talking about. Barbara Newman, thank you so much for all your information tonight.
"LARRY KING LIVE" is coming up in a few minutes. Larry, I know what story you'll be covering, but who are you going to be talking with tonight?
LARRY KING, CNN HOST: You got it, Paula. And among others, Senator John McCain will be with us, Senator John Warner, Governor Bill Richardson, victims, relatives of victims, journalists, generals, a whole host of people to try to bring everybody up to date in the next hour. That's all at the top of the hour, Paula, following PAULA ZAHN NOW.
ZAHN: We will see you at 9:00, Larry, thank you, have a good show.
Another top story tonight, a dramatic verdict in the Andrea Yates murder trial. Has she gotten away with murder? Was the jury right to declare her not guilty by reason of insanity? I'll ask a top story panel next.
(COMMERCIAL BREAK) ZAHN: Despite the crush of news from the Middle East there's a top story in this country that we simply can't ignore. It's a legal one just hours ago, a dramatic new verdict in the Andrea Yates murder case.
UNIDENTIFIED FEMALE: We, the jury, find the defendant Andrea P. A. Yates not guilty by reason of insanity.
ZAHN (voice-over): Andrea Yates drowned her five small children in a bathtub back in June of 2001. No one has ever disputed that. Yates, who had a history of postpartum depression, told police she had killed her children because she was possessed by Satan. In her first trial she pleaded innocent by reason of insanity. The jury found her guilty of murder and sentenced her to life in prison. Yates was granted a new trial because testimony from a prosecution witness, in part, turned out to be false.
This time around a new jury believed her insanity defense. Her former husband approved.
RUSSELL YATES, ANDREA YATES EX-HUSBAND: The jury was able to see past, you know, what happened, look at why it happened, understand that Andrea was ordinarily just a loving mother who fell through this disease and did an unthinkable act.
ZAHN: Andrea Yates will likely spend the rest of her life in a mental hospital and the debate over the insanity defense goes on.
JOE OWMBY, PROSECUTOR: It's not a slippery slope. We're at the bottom of it in this case.
GEORGE PARNHAM, ANDREA YATES' ATTORNEY: That just underscores how further we have to go to be able to educate not only the public but the states prosecutors, about the reality of mental illness.
ZAHN: So will this verdict affect future trials involving the insanity defense? Of course it will. Let's see what our top story legal panel thinks though. Joining me now our senior legal analyst Jeffrey Toobin, Court TV anchor Lisa Bloom and in Houston, Beth Cares, who covered the Yates trial for Court TV, was in the courtroom when that verdict came down. Welcome all. So what is the deal here? Here you have a woman who killed five of her children and she's not sitting in jail tonight.
JEFFREY TOOBIN, CNN LEGAL ANALYST: But she's not going anywhere either.
ZAHN: Well she's going to spend the rest of her life in a mental institution.
TOOBIN: Which seems to me entirely appropriate. Look, if you were going to have an insanity defense in this country, who else is insane, more insane than Andrea Yates? I mean this woman is obviously insane and society needs to be protected from her, which it will be, and she deserves treatment. I think it's a good verdict.
ZAHN: You say she's insane, and yet she seemed to be aware enough that she waited to kill these children until her husband went to work, methodically carried out the murders and then picked up the phone and called 9/11.
LISA BLOOM, COURT TV ANCHOR: Well she was methodical and she intended to do what she did, but the question under Texas law is did she have a mental disease or defect. Everybody on both sides agreed that she had that. And did she know the difference between right and wrong? That was really the only issue in the case. I think it was an excruciatingly hard issue. The jury ultimately decided she didn't know right from wrong. She thought she was doing the right thing. She thought she was keeping the kids from being serial killers, that Satan told her to do this, all kinds of crazy stuff. The jury believed that's why she did it.
ZAHN: Describe, Beth, what happened in the courtroom when the verdict came down.
BETH KARAS, COURT TV CORRESPONDENT: As the verdict was being read, Andrea Yates acted very impassively, showing no emotion. When the first not guilty was read aloud she said oh my god very softly and then she was pretty stoic. Her ex-husband, Rusty Yates, said "Oh, wow" and then started nodding affirmatively and started to cry. He was next to his mother, who was crying. Andrea's mother was also crying. There was a lot of disbelief because people there, her supporters wanted this verdict and really did not think that they were going to get it.
ZAHN: How did the rest of the people in the court room react, other than the ones you just talked about? There certainly had to be some folks sitting in their today that weren't too happy about this?
KARAS: Well, the judge did caution that there was to be no outbursts, no emotion shown, there were audible sounds from the family, from Rusty and from Andrea, but other people very stoic. One female juror, there were six women, six men on the jury, a young woman actually smiled at one point during the reading of the verdict, and it was not unanimous for a while in that jury. They were eight to four in favor of insanity, but some of them were switching during the 13 1/2 hours that they deliberated and ultimately came to their unanimous decision.
TOOBIN: And I think the jury, you know, the jury asked to see photographs of the children, I mean this jury emotionally was just distraught about having to deal with this, and I think you just have to pay tribute to them for following the judge's instructions, not doing the popular thing, and trying to give a verdict that both protects society and addresses some of this woman's problem.
ZAHN: And Andrea Yates, you talk about being drawn in by the emotion, she herself showed much more emotion this time around. BLOOM: She is stabilized now. She's not psychotic now, so she's filled with remorse, by all accounts, for what she's done, and I thought the defense team today was very classy when the verdict was read. We watched it on Court TV. You know, they weren't high fiving, they weren't celebrating, they weren't saying Yahoo, we won the case. They were very classy about the way they handled it because there's no winners here. These children are gone, they can't be brought back, but there is a life and maybe we can do something about the life that Andrea Yates has by putting her in a mental hospital. It's more compassionate than imprisoning her for life.
ZAHN: Beth, final thought about the impact of this, what this means to other cases around the country? I don't mean specifically related to these facts, but murder cases on the docket.
KARAS: Well, it might spur other legislators around the country to take a look at the insanity law here in Texas. Jurors, and these are conservative jurors, have been finding mothers who killed children not guilty by reason of insanity and it seems to be in contravention of what the law is. Because it is a very pro-prosecution insanity defense here. It may cause some changes. It's been 25 years since Hinckley tried to kill President Reagan and states tried to change their insanity laws to be more pro-prosecution, harder for the defense to prove. That may change a little bit now.
TOOBIN: Fortunately jurors will impose rough justice. That's the beauty of the jury system and I think that's what they did today.
ZAHN: Trio, thanks, Beth, Lisa, Jeffrey. Always good to have you on. We're going to take a short break. We'll be right back.
ZAHN: And that wraps it up for all of us here. Thanks so much for being with us. We will be back same time, same place, tomorrow night. We hope you join us then. Our coverage of the crisis in the Middle East continues right now with Larry King.
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