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YOUR WORLD TODAY

Civilians Fleeing Bombardment of Tyre; More Hezbollah Rockets Land in Northern Israel; Canadian-Chartered Cruise Ship and Shell- Shocked Passengers; President Bush Meets with Romanian President; Israel Defense Minister Peretz Speaks

Aired July 27, 2006 - 12:00   ET

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


FIONNUALA SWEENEY, CNN INTERNATIONAL ANCHOR: Israel says it will not expand its ground war in Lebanon, but that doesn't mean that fighting will slow any time soon.
HALA GORANI, CNN INTERNATIONAL ANCHOR: The rubble of a 10-story apartment building provides little hope of more survivors in the heavily hit Lebanese city of Tyre.

SWEENEY: And his comeback win at the Tour de France was unbelievable. Now, new allegations say Floyd Landis' feat was also unnatural.

GORANI: Hello. These are just some of the stories we're following in our report broadcast in more than 200 countries around the globe.

I'm Hala Gorani in Beirut.

SWEENEY: And I'm Fionnuala Sweeney in Haifa, Israel.

From Beirut, to Jerusalem and Paris, this is YOUR WORLD TODAY.

Israel makes key decisions about its military strategy in Lebanon amid renewed violence on both sides of the border. Here's a check of the latest.

Israeli's security cabinet has called thousands more reserve troops to join operations under way but has decided against expanding its offensive into a full-scale invasion.

Warplanes are bombing more targets across Lebanon. As Israel's justice minister said, tremendous firepower should be used in the south to clear out Hezbollah. He tells Israeli army radio that residents there have been warned to leave and anyone who remains should be considered Hezbollah allies.

Red Cross officials who visited one village say some civilians are still huddling in schools and mosques.

Hezbollah militants have fired dozens more rockets into northern Israel. Several caused fires, but no injuries are reported.

The Palestinian Authority president, Mahmoud Abbas, says there may be an imminent solution for the release of an Israeli soldier captured by Hamas militants. He spoke alongside Italy's prime minister, who said Israel had misinterpreted a conference in Rome as sanctioning (ph) continued fighting.

And amid all this, Al Jazeera has aired a video statement from Ayman al-Zawahiri, Osama bin Laden's top deputy. Zawahiri warns that al Qaeda will not stand by silently as the Israeli offensive continues.

GORANI: Well, now the Lebanese southern city of Tyre has been one of Israel's main targets since the fighting began. Yesterday, Wednesday, a 10-story building was flattened, and next, one of the headquarters of the Amal Shiite political party was also hit.

Our Karl Penhaul is on the ground in Tyre and brings us up to date on what has happened today -- Karl.

KARL PENHAUL, CNN CORRESPONDENT: Hala, we've been finding out a little bit more about that Israeli airstrike on the 10-story apartment building about this time yesterday. And Red Cross officials have told us that 12 civilians were wounded in that strike. But amazingly, they say that nobody was killed.

Now, Israeli Defense Forces have alleged that they were trying to target the leader of Hezbollah's military wing in south Lebanon, but local residents say there was no Hezbollah presence in that building. We also understand that Hezbollah officials have also denied those claims. But we went back down to the bomb site this morning to see what more we could find out.

(BEGIN VIDEOTAPE)

PENHAUL (voice over): The ruins are still smoldering the morning after an Israeli airstrike. Firefighters scour the wreckage.

Hours earlier, it was chaos here. Now the only sound you can hear is an Israeli reconnaissance drone buzzing over head and water gushing from broken pipes.

Just yards from the bomb site, Jihad al-Husseini tries to clean up the office of his driving school.

JIHAD AL-HUSSEINI, DRIVING SCHOOL OWNER: The good army, when you -- when you make war with another army, not with people and children. Why?

PENHAUL: This was a 10-story apartment building, and residents say civilians lived here. The Israeli Defense Forces say the target was Hezbollah leadership.

This war has shattered homes, yet some reminders of more peaceful times survive. Mementos of happy families who have now fled the battlefield. Since the conflict exploded, there's been a steady exodus.

Now, as I drive around Tyre after Wednesday's attack in downtown, I see the streets are emptying faster than ever. MOHAMMED AL-HUSSEINI, CITY OFFICIAL: Everyone here doesn't -- isn't confident about anything, because he's expecting any time, anywhere, a bomb.

PENHAUL: Yesterday, more than 40 people were bunkered down in the basement of this apartment block in Tyre, but yesterday's attack convinced most of them they were no longer safe. Now only fisherman Ali Natiya (ph) and his family are left.

UNIDENTIFIED MALE: I am afraid because from the bomb yesterday.

PENHAUL: His son Hussein has seen the news on TV that diplomatic efforts to broker a cease-fire have failed.

UNIDENTIFIED MALE: We have no chance to being -- to stop the war.

PENHAUL: Amid the ruins of bombed-out buildings, hope is hard to find.

(END VIDEOTAPE)

PENHAUL: Now, the fighting has been continuing today. There have been artillery attacks on the southern and eastern edges of Tyre. And also, we did see that one missile slamming into a building not far from where we are, just in a part of downtown Tyre.

Not clear whether there were any injuries from there. It was very difficult to get to that scene, because increasingly, the local residents are getting very angry and on occasion they are turning that anger on journalists -- Hala.

GORANI: Now, in your report there, Karl, we saw pictures of everyday life of some of Tyre's residents, and it reminds us that ordinary citizens really get caught up in all of this.

Give us a sense of how many are fleeing, and those who chose to leave, where do they go and is it safe for them to leave at this stage?

PENHAUL: Well, before yesterday's airstrike on the downtown area, city officials estimated there were 30,000 citizens still left in this city. In normal times, it has a population of about 90,000. But since that airstrike, what the mayor has clearly told us is that, no, many more people have fled.

We've seen columns of cars leaving. We've been seeing people assembling here to try and get a ride somewhere else. And most of them are trying to head north, north towards the port of Sidon, and if they're lucky enough, north towards Beirut -- Hala.

GORANI: Karl Penhaul, live in Tyre.

Thank you, Karl -- Fionnuala.

SWEENEY: Well, Hala, a U.N. observer group says there's no letup in the exchange of fire across the Lebanese-Israeli border. Now, I should interrupt myself and say if you're hearing something in the background here, it's a rather noisy demonstration by some Israelis here in Haifa in support of the IDF.

But back to the story that we want to cover, Hezbollah firing more rockets into northern Israeli towns once again on Thursday. Several landing in Kiryat Shmona, causing several fires.

And CNN's John Roberts joins us from northern Israel now -- John.

JOHN ROBERTS, CNN SR. NATIONAL CORRESPONDENT: Good day, Fionnuala.

The Israeli army is calling up reinforcements, even though the Israeli cabinet has decided against a full-scale invasion. You're looking at some of those reinforcements behind me.

It's a combat engineering brigade that is waiting for its turn to go across the border. We can't give you the exact location, we can't tell you troop strength, and we cannot tell you when they may go across because of Israeli censorship rules.

But I did talk with a couple of the members of this combat engineering brigade about the fighting, particularly in light of what happened in Bint Jbeil yesterday, when eight soldiers, including three officers, were killed in a Hezbollah counterattack. One of the soldiers I talked to, a first sergeant, said, "It makes us all a little more anxious. It makes us all a little frightened," he said, "about going in."

He said, "But we have a job to do. We have to think about going in. We're trying to defend our homeland."

A second lieutenant who I talked to about it said, "Well, it's a shame what happened. This now just does not become anymore a mission to defend the Israeli territory, this becomes very personal." His overall, overarching goal is to make sure that his troops stay safe, but he said, "We are all a little more motivated because of what happened in Bint Jbeil. We're motivated to win."

Despite the fact that the Israeli army is claiming success against Hezbollah in terms of degrading their infrastructure, they say, reducing their command and control capabilities, and getting a lot more intelligence on what they may be up to, those Katyusha rockets continue to fly into northern Israel, one of them hitting a laundry detergent plant in Haifa.

Three we saw today in Kiryat Shmona along a road that we drive several times a day. It's the way that we get into the front.

One of them hit right beside that road, igniting a brushfire. Everywhere you go here in northern Israel it looks like it's fire season because the hills are scorched from these Katyusha rockets.

Another one hit about a quarter of a mile away from that location in a residential neighborhood. It took out a couple of cars that were parked on the side of the road, did some damage to the front of a block of apartment buildings. What happened was that, when the rockets hit the sidewalk, it exploded out sideways and it took with it all of those ball bearings that are packed around that war head.

The damage that we saw to the car was a good indication of what could happen to you if you were in the hill area of that rocket when it hit. That car looked like it had been raked by machine gunfire, as well as being burned to a cinder.

And a third rocket that we saw hit right near a shopping center, a small shopping center in Kiryat Shmona, sort of in between a child's playground and a shopping center. Of course, no one has been in that playground for the last couple of weeks, and no one was in the shopping center, to the best of our knowledge.

People in Kiryat Shmona are so used to the air raid sirens going off, so used to seeing those incoming rockets, that whenever that siren goes off, they head for the low ground, they head for the bunkers as quickly as possible -- Fionnuala.

SWEENEY: And John, let me ask you, if we can roll back there, two days ago the Israeli military had said it had captured Bint Jbeil. What changed?

ROBERTS: What has changed is that Hezbollah has decided that they are not going to allow the Israeli army to control the center of the city. General Udi Adam (ph) of the northern command said yesterday, "Look, we don't really control the city," contrary to what the commander of the Galilee division had told me the day before. He said, "We control the area around the city."

And what happened yesterday morning, when Israeli forces went in to conduct some clearing operations in the center of the city, Hezbollah counterattacked with improvised explosive devices, mortars, rocket-propelled grenades, anti-tank missiles, machine gunfire. There was very close-quarters fighting that was described as vicious, sometimes hand to hand.

Hezbollah has shown the impact of what is called asymmetrical warfare could have on a traditional fighting unit. So Israel really had a wakeup call yesterday. And now they say that they have to be much more determined in going against these Hezbollah positions. And that's why these reinforcements are here -- Fionnuala.

SWEENEY: And John, it really does reinforce the difficulties of a major ground offensive on the part of Israel. This just after hearing from the cabinet meeting a few hours ago deciding not to expand that ground offensive.

ROBERTS: They are not going to expand the ground offensive in terms of a massive invasion, but they are expanding the ground attack.

They took the town of Maroun al-Ras last week, Bint Jbeil they said they're trying to get under control. And yesterday we saw artillery attacks expanding westward into the town of Yaroun (ph). So there are three population centers -- or probably not too much population at this point, but three major towns and villages in the southern part of Lebanon, just north of the Avivim section of northern Israel that they're trying to get control of. As to where they go from there, that's most likely going to be a political division, and they are at odds, the generals and the politicians. The generals want a broader campaign, the politicians don't -- Fionnuala.

SWEENEY: All right. John Roberts reporting there from the Israeli-Lebanese border -- Hala.

GORANI: Now, here in Lebanon, most of the foreigners who wanted to make it out of the country have done so already. But there were a few hundred trapped in southern Lebanon.

Alessio Vinci brings us the story of a Canadian chartered cruise ship and its shell-shocked passengers.

(BEGIN VIDEOTAPE)

ALESSIO VINCI, CNN CORRESPONDENT (voice over): They escaped war, but in their eyes there is still fear, anxiety and disbelief at how tragically a summer trip back home came to an abrupt end.

ALI NASSER, STUDENT: There was, like, 30 people in the house in the corner. And they were shooting at us. Over 30 missiles hit the house. Everything burned down, everything was black. Everything.

The cars in the street, everything, it was a pile of dirt. Everything.

VINCI: More than 350 people, mostly American women and children, arrived in Cyprus after a harrowing escape from southern Lebanon.

MOHAMMED NASSER, STUDENT: There were bombs everywhere. People were killed (ph). It was really bad. Fifteen days, like, without food and water, under -- under attack.

VINCI: Many fled small villages bordering with Israel and saw some of the worst fighting.

ALI JUMA, STUDENT: It got pretty rough, you know, the last day.

VINCI: Ali Juma, from California, tells us how his uncle organized part of the evacuation, hiring several cars and text messaging friends, relatives and anyone else who wanted to flee.

JUMA: My uncle, yes, he called all the neighbors, and then he brought them -- he told them to meet up in a spot. And when we all left. We came back there with more cars. He took them back.

VINCI: As the fighting in southern Lebanon intensified, many did not manage to reach Beirut, the north, where the U.S. embassy was organizing evacuations. Their only escape turned out to be this vessel leaving from Tyre, chartered by Canadian officials who managed to strike a deal with the Israelis. UNIDENTIFIED MALE: We had assurances from the Israelis they had established a safety box around the area that we were using. And nothing ever came close to that box that was even remotely threatening.

VINCI (on camera): From here, the rest of their journey will be relatively easy. Most of them will spend just a few hours in Cyprus, after which chartered flights will take them to their respective homes.

Yet, many of them can't help but wondering what is happening to their loved ones they have to leave behind in Lebanon, a friend, or perhaps a relative. When and how will they be able to see them again as the fight rages on in Lebanon, is a question that has no answer.

Alessio Vinci, CNN, Larnaca, Cyprus.

(END VIDEOTAPE)

SWEENEY: Well, our coverage of the Middle East crisis continues in a moment.

Up next, Israel and Hezbollah have been battling it out for weeks. But are they waging a wider offensive?

Also ahead, this year's Tour de France winner comes under scrutiny. He may have won the race, but he fails in another arena.

We'll explain. Stay with us.

(COMMERCIAL BREAK)

SWEENEY: Welcome back to this special edition of YOUR WORLD TODAY.

I'm Fionnuala Sweeney in Haifa, Israel.

GORANI: I'm Hala Gorani in Beirut.

Now to the conflict in Beirut. And Israel says it is fighting Hezbollah, but the mounting collateral damage is pushing some more moderate political parties such as the Shiite party Amal into the militant group's corner. Amal now says that it stands side by side with Hezbollah.

When Condoleezza Rice, the U.S. secretary of state, was in Lebanon, it met with the group's leader, Nabih Berri. But now Nabih Berri says his group has joined the fight against Israel. Amal is a much smaller and less military effective group than Hezbollah, but does it not keep Israel from giving a rapid response to the group's new allegiance.

Now, Israeli warplanes destroyed the party's headquarters in Tyre. The building was empty at the time of the strike. Amal party officials say eight of its members have died in fighting against Israel. SWEENEY: Well, we will be continuing to follow that development over the next hour.

We're here in Haifa, where today there has been increasing numbers of air raid sirens, as there have been over the last 15 days. It has been quite extraordinary, because there are times when it really is quite dangerous to step out into the streets, followed by periods of relative calm and lull. But then suddenly the air raid sirens will go off again and people run for cover.

There's very little happening in Haifa here. The businesses are closed, the shops have their shutters down, and people are leaving to go further south. In fact, some people are going -- sending their children further south to places like Tel Aviv.

However, overall, today, more than 50 rockets were fired across the band of northern Israel. None hitting Haifa directly itself. The Katyusha rockets falling across -- bear with me.

I'm being told now we would like to go to the White House where U.S. President Bush has been just speaking within the last few minutes. Let's listen in to that.

I'm afraid we don't have that. This is one of those things with live television, so you'll have to bear with us as we try to cover every angle of the story.

We'll take a break. We'll get it together. We'll be right back after that.

Stay with us.

(COMMERCIAL BREAK)

SWEENEY: Well, hello, and welcome back to our extended coverage of the crisis in the Middle East.

I'm Fionnuala Sweeney, in Haifa, Israel.

My colleague, Hala Gorani, is standing by in Beirut.

Now, we're expecting remarks from President Bush very shortly about the crisis here in the Middle East. He'll be speaking from the White House, and we'll bring that to you very shortly.

But in the meantime, let's have a look at business news, because it's been one of the busiest days of the earnings season.

And Valerie Morris is in New York to sort it out for us.

Valerie, hi.

VALERIE MORRIS, CNN CORRESPONDENT: Hi there, Fionnuala.

(STOCK MARKET REPORT) SWEENEY: Valerie -- excuse me, Valerie. It's Fionnuala in Haifa. I'm afraid we're going to have to interrupt this business report, because we've been wanting to bring you comments from President George W. Bush in the White House on the Middle East crisis.

Let's listen in.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... the loss of life, and I am troubled by the destruction that has taken place in Lebanon. And, you know, we grieve when Lebanese families lose innocent life.

I have urged that there be caution when it comes to dealing with Hezbollah. On the other hand, I fully understand that whatever is done diplomatically must address the root cause, and the root cause is terrorist activities.

One of the things I said initially, when these incidents first started happening was that it is important for the Lebanese democracy to survive and to become strong. And so what you're watching is American policy, aiming to address the root cause and aiming to strengthen Lebanese democracy so that we can have peace.

I view this as a clash of forms of government. I see people who can't stand the thought of democracy taking hold in the Middle East.

And as democracy begins to advance, they use terrorist tactics to stop it. And so I appreciate my secretary of state's hard work. There's a lot of diplomacy being done. There's a lot of discussions about how to go forward.

Yesterday's meetings were successful in this way. It showed a diplomatic way forward. And so you're seeing a lot of diplomacy take place.

But our objective is to make sure those who use terrorist tactics are not rewarded, and at the same time, help those who have suffered as a result of the responses.

QUESTION: So, several more weeks of fighting is OK to achieve this goal?

BUSH: My goal is exactly what I said it was. And that is to, hopefully, end this as quickly as possible and, at the same time, making sure there's a lasting peace, not a fake peace, not a fake -- you know, circumstances that make us all feel better and then, sure enough, the problem arises again.

And that's the goal of the United States. And we're working toward that. And we're working hard, diplomatically. Look, the sooner we can get this resolved, the better, obviously.

But it must be real and it can't be fake. And so there's a serious diplomatic effort going forward, led ably by my secretary of state.

Do you want to ask somebody from the Romanian press?

QUESTION: (INAUDIBLE)

BUSH: Absolutely. I spend a lot of time listening to my friend's advice on the Black Sea region.

We talk -- we're going to spend time over lunch talking about specific issues related to the Balkans. And Romania's role in this area and in her neighborhood is a vital role, one that I listen very carefully to his advice on because, you know, this area of the world is one where there's emerging democracies. And it's an area of the world where there has been historical conflict. And it's an area of the world where we've got to pay attention to it.

And so the Romanian role is a vital role. And so, as I say, we're going to spend time strategizing about the role over lunch.

QUESTION: (INAUDIBLE)

BUSH: My answer is: I'm not surprised people who use terrorist tactics would start speaking out. It doesn't surprise me. Zawahiri's attitude about life is that there shouldn't be free societies. And he believes that people ought to use terrorist tactics, the killing of innocent people to achieve his objective.

And so I'm not surprised he feels like he needs to lend his voice to terrorist activities that are trying to prevent democracies from moving forward.

Al Qaeda has made it clear about their vision for the future. And it's one that is exactly opposite to what the American people believe and this Romanian president believes, and that is people ought to be free -- free to worship, free to speak their minds, free to participate in the process.

And so, you know, here is a fellow who is in a remote region of the world, putting out statements, basically encouraging people to use terrorist tactics to kill innocent people to achieve political objectives.

And the United States of America stands strong against Mr. Zawahiri and his types.

QUESTION: Mr. President (INAUDIBLE) expect to travel to U.S. without a visa. And when taking this decision that Romanians are expecting, are you going to take under consideration, for instance, that Romanians will probably want to come and work in the United States in great numbers? Is that the problem for the United States?

BUSH: No. No. It's an interesting question you bring up, however.

I told the president we're dealing with an immigration debate here in the United States and that I'm hopeful that we will get a comprehensive immigration bill that will accommodate people who want to work here, but we want them to work here on a temporary basis and in a legal way.

No, the issue with the visa policy first started because of what was an overstay problem, based upon a history of people traveling to the United States during a different era. In other words, a lot of people during the previous era -- that era would be one defined by a non-free society versus a free society -- would come to the United States on a temporary visa and then would overstay their visa.

And we have laws on the books that say countries who had people come and overstay their visas, therefore must be viewed differently than others.

Now one of the first changes we have made is that we have said, OK, that's a bygone era. Now let's look toward the future.

Secondly, we've said to countries, we want to work together on a road map to make sure the visa policy will work. And that's where we are with Romania as well as other countries.

And so each country has to develop its own road map based upon its own particular circumstances. And that's what we're doing.

Mr. President, the answer is, as quickly as we can get these issues resolved, the better. But we've still got work to do.

TRAIAN BASESCU, PRESIDENT OF ROMANIA: If you'll allow me, Mr. President, mainly, for the American journalists, Romanians don't look at the United States like an immigration area. In fact, as a member of the European Union, Romanians have a lot of places to work around Romania.

The problem which you have now -- and for this reason, I raise the subject of visas in discussions with the president -- is in connection with our students, which are more and more present in American universities, with our intelligent people which are working in IBM or in Oracle, with our business people -- and if you look at the volume of the business in the last three years, it was three times increased.

And now, a business person from Romania, in order to obtain a visa, coming into the United States, discussing about developing the business, need a minimum of three months.

And, in fact, the Romanians don't look at the United States like a place to immigrate illegally or to find a working place. This problem was settled for Romanians in Europe.

We already have the people spread around Europe, like Romania has people from Europe, from other countries, which work in Romania.

SWEENEY: We leave it there in the White House. The Romanian president there, a photo op with U.S. President George W. Bush, who was speaking about the crisis in the Middle East and beyond, saying any cease-fire, quote, "It must be real, it cannot be fake." Saying that this was American policy at work in the region, that we were witnessing what he called a clash of governments and that terrorists didn't like spread of democracy in the Middle East. "Our objective," he said, "is to make sure there are -- those who use terrorist tactics are not awarded. My goal is hopefully to end this as quickly as possible and to make sure there is lasting peace."

Now we are awaiting a news conference by the Israeli defense minister, Amir Peretz. We will go it as soon as it happens. This on a day, of course, when the Israeli cabinet decided to meet and made a decision that it would not expand its military operations inside Lebanon. We will go to that just as soon as it happens, to hear what he has to say.

In the meantime, Hala in Beirut.

GORANI: All right, as we await that news conference there by Amir Peretz, let's bring our viewers up-to-date on the latest developments across the region and in the conflict in Southern Lebanon and Northern Israel.

Now, Israel's security cabinet has called up thousands more reserve troops to join operations under way in Lebanon, but it has decided against expanding the current offensive. War planes, meantime, bombing more targets across Lebanon. As Israel's justice minister said, tremendous fire power should be used in the South to clear out Hezbollah. He tells Israeli army radio that residents there have been warned repeatedly to leave. Red Cross officials who visited one village say some civilians are still huddling in schools and mosques there.

Hezbollah militants are firing dozen more rockets into Northern Israel. Several caused fires but no injuries are reported this day.

Palestinian Authority President Mahmoud Abbas says many efforts are being made for the release of an Israel soldier captured by Hamas militants and taken to Gaza, but Hamas denies that any release is imminent. Mr. Abbas spoke alongside Italy's prime minister, who said Israel had misinterpreted a conference in Rome as sanctioning continued fighting.

Well, amid all this, Al-Jazeera airing a video statement from Ayman al-Zawahiri, Osama bin Laden's top deputy, of course. Zawahiri warns that al (AUDIO GAP) by silently, as Israel continues its offensive.

All right, now let's bring you up-to-date on an incident that occurred yesterday, when four U.N. peace observers were killed by Israeli fire power.

Brent Sadler has the latest on that.

(BEGIN VIDEOTAPE)

BRENT SADLER, CNN BEIRUT BUREAU CHIEF (voice-over): United Nations troops in South Lebanon 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.

CAPT. RONAN CORCORAN, U.N. OBSERVER: All players out here understand we are unmanned, we fly a 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 illicit 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, 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 it, 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.

(voice-over): Ten years ago, when Israel last attempted to destroy Hezbollah, Israel shell fire hit a U.N. compound in Kanar (ph), 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.

Brent Sadler, CNN, Beirut.

(END VIDEOTAPE)

GORANI: Now, more on a possible peacekeeping force in Southern Lebanon, several countries expressed an interest in participating. A top U.S. diplomat says France, Turkey, Norway and Italy are taking an active look at their capabilities to help.

Meanwhile, U.S. Secretary of State Condoleezza Rice plans to return to Middle East this weekend. Rice is currently attending a regional security conference in Malaysia -- Fionnuala.

SWEENEY: Well, Hala, the Palestinian president, as you know, Mahmoud Abbas, said efforts are under away to resolve the case of the captured Israeli soldier Gilad Shalit as soon as possible. The comments come as the Israeli offensive continues in Gaza. Twenty- seven Palestinians have been killed in the last two days. Funerals were held for a mother and her two children killed by Israeli shelling.

Well, joining me to discuss the turmoil in Gaza and Southern Lebanon is Alvaro de Soto. He's the U.N. special envoy to the Middle East. Thank you very much indeed for joining us from Jerusalem.

My first question to you is that Mahmoud Abbas says he believes the release of Gilad Shalit in Gaza is imminent, and yet Hamas is denying this. What do you know?

ALVARO DE SOTO, U.N. SPECIAL ENVOY TO MIDDLE EAST: Well, this is a hope that we continue to harbor. And I understand that discussions have not been interrupted, despite the events in Gaza between Fatah, Hamas and other participants, including the representatives of all of the factions. I can only hope that they will reach an agreement that will lead to the liberation of Corporal Shalit, that will lead also to the end of rocket attacks against Israeli targets, that will lead to the ongoing military action by Israel in Gaza, and that will open up the possibility of an end to the very serious pressure under which the Palestinians of Gaza find themselves.

SWEENEY: But it's not, then, I take it, your impression that Gilad Shalit's release is imminent?

DE SOTO: Well, I don't have any information of my own to either confirm or deny this. I am hopeful that what President Abbas has said, does indeed reveal that something is going on.

SWEENEY: Well, let me ask you, where does prospects of a cease- fire stand in Gaza. And are any negotiations being discussed separately as opposed to what is taking place further north in the Lebanese situation?

DE SOTO: Well, what I understand, what is going on now is an effort, amongst the Palestinians, following on the agreement that they reached a couple of weeks ago to -- on a national conciliation document that would lead to cease-fire that would be subject to Israel reciprocating. This is what I understand. At what stage it finds itself, and at what the prospects are and when it will come to fruition, that I do not know.

SWEENEY: Well, with everything that's taken place in Gaza, in the West Bank in the last six months, the election of Hamas, the kidnap of Gilad Shalit, the Israeli military action that's taken place there of late, the Kessam rockets being fired into Israel and so forth, is there a peace process?

DE SOTO: Is -- well, the peace process, obviously, now is somewhat suspended. But what is hoped is if the current crisis can be diffused, we can once address the long-postponed problems between the Israelis and the Palestinians. You will notice that in the meeting in Rome, which was primarily focused on Lebanon, there was once more a reminder of the need for regional solution to Middle East problems.

SWEENEY: And speaking of a regional solution, let me ask you about the situation in Lebanon. Is it your understanding that a cease-fire itself might be imminent, or is it a prospect that you believe will only happen in a matter of weeks?

DE SOTO: The agreement, at Rome consists of working toward a cease-fire urgently, but to try to make sure that the conditions in which that cease-fire is agreed will ensure a political framework within which the underlying problems can be addressed, so that you will not have a repetition of what happened on the 12th of July.

At the same time, however, the secretary-general, with strong support from many, has called for a cessation of hostilities, at least a lull in combat, that will allow for diplomatic space to address some of the underlying issues there, and that will also give some assurance that the delivery of humanitarian assistance will take place and will take place safely.

SWEENEY: Very briefly, if I may, Alvaro de Soto, we're almost out of time, but have you heard anything yet from the Israeli government that satisfies you, or gives any kind of explanation for what happened at the U.N. base the other night?

DE SOTO: No, the government of Israel has promised to carry out an investigation, and that it will share the conclusions with the United Nations. The secretary-general would have liked a joint investigation. We believe that we can have -- bring a lot to bear in order to make sure that key questions, which we believe must be addressed, are addressed. So that this kind of thing does not happen again.

SWEENEY: And what is your understanding about what actually did happen that night?

DE SOTO: Well, let's concentrate on addressing the questions that...

SWEENEY: We have to leave it there. Alvaro de Soto, I'm sorry to interrupt you. Please, forgive me, but we need to go to Tel Aviv, because Amir Peretz, the Israeli defense minister, is sitting down. He's about to hold a news conference.

Let's listen in.

AMIR PERETZ, ISRAELI DEFENSE MINISTER (THROUGH TRANSLATOR): Good evening.

The state of Israel is now on day 16 of the fighting on the northern border, and it's the 33rd day of the fighting in Gaza.

The citizens of Israel know full that we're in the midst of a war. This morning, the cabinet approved a call-up of the reserves. We are preparing ourselves for any and every possible event and development. And for this purpose, we intend to call up reserve forces in such a way that we will be able to ready ourself for every single development.

We will take advantage of the time available through the reserves in order to use all our resources in order to defend the state of Israel and achieve the goals of our operation. Yesterday, there was a fierce and complicated battle in the town of Bint Jbeil, and this exacted a very dear price of us. As I speak, the IDF soldiers are still waging their struggle in the air, on the ground and on the sea. The Israel Defense Forces are showing outstanding valor in order to deal with the terrorist forces which, over years, have developed their resources along our northern border.

We intend to bring about an area which is clean of them, so that they will not be able to return to the sites at the end of the operation. Our goal is to produce a special security zone. A special security zone will produce better security along our northern border.

We will not agree for Hezbollah flags again to fly in our faces on the northern border. We will not agree to this. This is our goal and we shall insist on this and achieve this.

On day 16 of the operation, yesterday, we took major losses. But this will not break our will. We can hurt, but we cannot be broken. We can suffer, but we cannot give in and cannot give up.

I wish to send my condolences to the families who have paid the ultimate price.

And what I wish to say to them is this: Your boys did the most courageous thing, and this will go down as one of the greatest chapters in one of the most important battles that will have brought about a new situation in the state of Israel. They fought in order to defend their country, and they did this in the most outstanding fashion.

From here, I wish to send my wishes for a full and speedy recovery to all those who have been injured.

The other side is ruptured over human values. It is operating from the midst of a civilian population. We, in contrast, are suffering and feeling the anguish of our losses. I want the world to know that our anguish is not weakness. Our anguish is the real courage of the state of Israel and the Israel Defense Forces.

The crisis began when the Hezbollah organization, in order to justify itself, following Syria and Iranian instructions, decided to capture, to kidnap two Israeli soldiers, and it caused the death of eight other soldiers.

It assumed that Israel would react in a limited fashion. But when the kidnapping was carried out, we reached the conclusion that that was it. No longer, no more. No more -- no longer would a terrorist organization threaten -- menace the state of Israel. No longer would a terrorist organization be able to easily fire rockets at the Israeli home front.

We decided that despite the threat to the Israeli home front, we would not sit and twiddle our thumbs of the face of the threat of terrorism. We decided that such a threat would no longer be accepted without a robust response. And that is why we opened our -- initiated our attack, our very fierce and robust no-holds-barred-attack on Hezbollah, in order to ensure that no one would do this again -- no one again would attack our citizens.

Our goals were and remain changing the reality on the northern border. What has been will no longer return. The goal is to bring about a situation where Hezbollah will not threaten the state of Israel, not now and not in the future.

The goal is to ensure and make sure that the Hezbollah organization will no longer sit along our border; will no longer plan and plot to harm the state of Israel.

The goal is to no longer allow terrorist organizations to, time and time again, undermine the stability of the area.

Hezbollah must not in the future be what it has been in the past. It may take time. This may take more force. We have both in plenty.

What I want to say to my fellow Israelis, is this: The entire world is finding it difficult to grasp the values which guide us. One of the values is to bring our boys home. We intend to carry on investing all of the requisite efforts in order to bring our soldiers home: Gilad Shalit, corporal, Master Sergeant Ehud Goldwasser, and First Sergeant Eldad Regev.

We will do everything in order to make sure they come back to the bosom of their families.

These are difficult days for the citizens of the whole of the state of Israel. The residents of the north every single day are under fierce attack on their homes. These attacks have lead to the deaths of many of our civilians and injured many more, and led to a great deal of damage to property.

Despite all of the suffering, the citizens of this country, from the shelters and their security rooms, say to us: Go on. Continue. Don't give in. Don't give up until the situation has been changed.

The prime minister, the finance minister, together with me and the entire Israeli government have undertaken to provide compensation to our residents for the damage they have incurred.

The state of Israel has, on numerous occasions, faced serious trials and tribulations, even more serious than those facing us now, and has overcome and prevailed.

Now, too, we have to call up all of our strengths and our resources and our values in order to deal with this situation.

In this situation, we are in a period leading up to the destruction of the temple 2,000 years ago. This is a very significant period for us, and we do not intend for history to reoccur.

It has been shown that we have a strong, proud, courageous, valiant generation here. It is able to stand up resolutely and cool- headedly and with fortitude to what it is going through.

I want to call upon the Lebanese government and Lebanese people, the Palestinian Authority and Palestinian population: There are outside forces who are using you in order to serve the values, the interests of Iran and others. And they are exploiting you in a totally irresponsible fashion. They're bringing about havoc and devastation of the Lebanese and the Palestinian economies alike. They are destroying and smashing any real chance of peace in this area, that will bring about a flourishing prosperity for all of the populations for this area, and not destruction.

You must call upon and demand that your government shoulder their responsibility. There must not be a situation where sovereignty has not exercised responsibility. Sovereignty and responsibility must lay with the governments. The situation in which responsibility and sovereignty have been replaced by hooliganism must not be reinstated.

Today, too, I want to say to you, I am a man of peace. I believe that through negotiation and dialogue it is possible to achieve peace for the entire region. But, you must know, the state of Israel will not allow terrorist organizations to continue harming the entire area. We will not flinch from using all of the resources available to us, anywhere, any time that is needed.

The Lebanese government is paying the price for the fact that for many years it and its predecessors ignored this cancerous growth.

Imagine how wonderfully Lebanon could have flourished had it put into practice Security Council Resolution 1559 and disarmed the Hezbollah. I am full of belief, and I look you in the eye and say that we have set out on a war about which there was no choice. We looked at all the other alternatives, but we had no choice. This is a war that we must win. This is a no- choice war and it must bring about a change in the situation.

To Syria and its leaders, I now say from here, again, Israel has not the slightest intention of opening a war against Syria. We are fighting against Hezbollah terrorism on Lebanese territory, but we do not intend to harm the Lebanese people. We have left open the possibility of a humanitarian corridor, airlift, sea and ground.

We are not fighting the Palestinian people, but Palestinian violence and terrorism, and we will continue to wage our war in the north, and at the same time, fight terrorism in the south, and Gaza, in order there to bring about a profound change there as well.

And I want now to talk to the Israel Defense Forces, to the chief of staff, to the various commanders at the various levels. And I want to stay to them, the state of Israel, the Israeli people have an army of which we must all be proud. We have an army which, today, we must all stand behind as one man. And we say to you, be strong. You are protecting our home. You are all our children. We all know that you will bring about the change for the state of Israel.

SWEENEY: Amir Peretz there. The Israeli defense minister is finishing a speech in which he describes Hezbollah as "a cancerous growth," saying, "Hezbollah in the future must not be what it was in the past." "We are in the midst of a war," he said. "We are preparing ourselves for any possible development," and that's why reserves are being called up, this following a decision that was taken at the cabinet earlier today in Tel Aviv that they would not expand their grand offensive in Southern Lebanon for the moment, but were still calling up reservist soldiers.

Yesterday, he said, Israel took major losses. This was in the village of Bint Jbeil in which nine Israeli soldiers were killed and dozens wounded. But he said "while Israel can be hurt, it cannot be broken. We cannot give in."

He also spoke to Syria and Iran, saying that their war was with Hezbollah and not with Syria, that there was no intention to open a front with Syria. And he said that the entire world was finding it difficult to grasp Israel's values. Quote, "We will do everything to bring our soldiers home."

Now, on behalf of my colleague Hala Gorani in Beirut, I'd like to say thank you very much for watching YOUR WORLD TODAY. I'm Fionnuala Sweeney in Haifa, Israel. Thanks again.

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