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LOU DOBBS TONIGHT

Terror Plot Busted, Security at U.S. Airports Stepped Up; Close-Quarter Battles Between Israeli Troops and Hezbollah Guerrillas; Outrage Grows Over Charging of Border Patrol Agents

Aired August 10, 2006 - 18:00   ET

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


LOU DOBBS, CNN ANCHOR: Tonight, British police and security services have broken up a terrorist plot to destroy as many as 10 transatlantic airliners in midair. Thousands of people could have been killed. Al Qaeda is the prime suspect.
We'll be live with reports from London, Washington and New York.

The Department of Homeland Security immediately raised its terrorist alert to the highest level for flights from Britain. Officials have ordered new security measures for all other flights.

A former Department of Homeland Security inspector general joins us with his assessment of this latest terrorist threat and the U.S. government's response.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Thursday, August 10th.

Live in New York, Lou Dobbs.

DOBBS: Good evening, everybody.

British police today said they've disrupted a terrorist plot to cause mass murder on an unimaginable scale, as they put it. Suspected al Qaeda terrorists planned to explode bombs simultaneously on as many as 10 transatlantic airliners flying to the United States.

British police arrested 24 people in raids in London, London's suburbs and Birmingham. Several other suspects remain at large tonight. U.S. officials say two of the alleged terrorists recently traveled to Pakistan and later received money from sources in Pakistan.

Christiane Amanpour reports from London tonight on what appears to be the largest al Qaeda plot since September 11th.

Jeanne Meserve reports from Washington on the federal government's rapid response to this terrorist plot.

And Mary Snow reports from Kennedy International Airport in New York on the effect of the government's new security measures on travelers all across this country.

We begin tonight with Christiane Amanpour -- Christiane. CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, Lou, we're at Heathrow tonight. As you can see the tower in the background behind me, and this is where the bulk of the airport disruption took place today, where hundreds of flights have been canceled and there is a huge backlog.

As you say, officials have now reported -- their latest bulletin to us was that 24 people have been arrested. They say that this was an investigation that had been gathering pace for several months, and that they acted on Wednesday night, late on Wednesday night, after they say there had been some arrests made in Pakistan and information gleaned from those arrests led them to believe that the plot was soon going to be put into action and that, in fact, it could have caused a lot of deaths on a lot of airlines going from the U.K. to the USA.

There have been many, many leaks, and officials and other people talking today, but the outlines of this indicate that this was a plot to blow up these airlines, a very sophisticated plot, they say, with an immense amount of detail and preparation. That it was to use liquid explosives, that they were going to be carried on board, disguised as anything such as any kinds of liquids, beverages and the like, plus detonators, and that they could have been detonated on board.

As a result, huge disruptions today at all the airports, including one that I flew from -- into. No hand baggage allowed on board at all, no mobile phones, no electronic gear, no computers, no cameras. Basically, no children allowed to take bottles of water or other such things. Only the very, very bare necessities, travel documents, money, keys, and prescription medicine, causing huge backlogs and security at the airport.

Many people, however, stoic, as they are on these occasions. Many people saying that they were just grateful that they were safe -- Lou.

DOBBS: Christiane, thank you very much.

Christiane Amanpour, reporting from London.

The Department of Homeland Security immediately raised the security alert for flights from Great Britain to the highest level. Officials also raised security for all other international and domestic flights.

Jeanne Meserve reports.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice over): Liquids and gels piled up at airport screening checkpoints today after the terror threat triggered a ban from aircraft cabins.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: One of the concerns we had was is the possibility of bringing on board a number of different components of a bomb that each one of which would be benign, but when mixed together, would create a bomb.

MESERVE: Experts say the government has long known of the potential explosive threat from liquids and gels, but hasn't closed the hole.

UNIDENTIFIED MALE: Screening for, you know, liquid explosives was something that would have not really raised any flags prior to today, and definitely would have been a gap.

MESERVE: Though the Department of Homeland Security has deployed a wide array of detection devices since 9/11, it says no machine capable of detecting explosive liquids or their precursors is ready for mass deployment. Vendors like Brijeau Systems (ph) are already lining up to try to persuade the government that their technologies are the answer.

WAYNE NORRIS, DEFENDERTECH INTERNATIONAL SOLUTIONS: It would have found any type of liquid. In fact, it would have found a water bottle.

MESERVE: Meanwhile, in an unprecedented step, commercial flights from the United Kingdom to the U.S. were put on the highest threat level, red. All carry-ons were forbidden. Passenger manifests were scoured, additional federal air marshals deployed.

With other commercial aviation on threat level orange or high, Customs and Border Protection was giving all incoming international flights a closer look, and some officials took steps above and beyond what the government required, activating the National Guard and more.

GOV. MITT ROMNEY (R), MASSACHUSETTS: You'll notice at the airport that our state police personnel are carrying automatic weapons. There will also be, as there have been in the past, but now at a heightened level, roadblocks and random searches.

MESERVE: Because the terror investigation is ongoing, homeland officials cannot say how long the additional security measures will be in place or whether they will be modified or strengthened.

(END VIDEOTAPE)

MESERVE: At least one security expert is suggesting the only way to absolutely protect against this kind of attack is to prohibit passengers from bringing liquids on aircraft permanently -- Lou.

DOBBS: Jeanne, thank you.

Jeanne Meserve, reporting from Washington.

The terrorists in Britain apparently planned to make bombs from a British version of Gatorade and a gel-like substance. And our sources say the trigger would have been an electronic device such as a cell phone or an iPod.

Brian Todd with the report -- Brian. BRIAN TODD, CNN CORRESPONDENT: Lou, former counterterrorism officials and experts point to a chilling pattern here. The plot uncovered today eerily similar to one that was broken up in the mid '90s.

It was code named Bojinka. It's aim, to blow up 12 U.S.-flagged carriers simultaneously over the Pacific.

Its masterminds, familiar names. Ramzi Ahmed Yousef, later convicted for engineering the first World Trade Center attack in 1993, and Khalid Sheik Mohammed, who would later go on to plan 9/11.

That plot failed when the terrorists accidentally set an apartment fire in Manila and were caught. But experts say their methods were very similar to those in the alleged plot just uncovered.

(BEGIN VIDEO CLIP)

PAUL CRUICKSHANK, NYU CENTER ON LAW & SECURITY: Twelve years ago, terrorists which -- who would eventually have strong connections with bin Laden tried to smuggle on and succeeded in smuggling on liquid explosives on to a plane. And now we're seeing exactly the same thing happening again.

Al Qaeda are determined to strike commercial aviation, they see that has having an enormous global impact, and they're determined to think through ways they can evade detection of explosives at airports internationally. They're absolutely determined.

(END VIDEO CLIP)

TODD: For that reason, experts say don't expect terrorist groups to be dissuaded by two failed plots. They say the terrorists will just try to perfect those plans and take another shot at it. The World Trade Center attacks are evidence of that -- Lou.

DOBBS: Brian, thank you.

Brian Todd, reporting from Washington.

The governors of three states with major international airports today activated their National Guard to raise security. Governor Arnold Schwarzenegger of California mobilizing 300 National Guard troops. They're being deployed in Los Angeles, San Francisco and Oakland.

Governor Mitt Romney of Massachusetts also ordered several hundred National Guardsmen to Logan International Airport in Boston.

And Governor George Pataki said he was increasing the National Guard presence at airports, though no details were given.

The new security measures immediately led to long lines at airports all across this country. The government has banned passengers from carrying any and all liquids and gels on to commercial aircraft. Mary Snow reports tonight from Kennedy International Airport in New York -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Lou, that screening process is adding up to some significant delays at some airports. Some of the airlines reporting limited cancellations at this time. As we've been reporting, no liquids are being allowed on board, even small items like lotions, deodorants, are now being banned from carry-on bags.

The rules were even stricter coming in from flights out of London. There, passengers were not even allowed to take on carry-on bags and had to put all their belongings, essential belongings, into plastic bags. Because of those security rules, passengers telling us as they arrived here from London that they felt that their fears were alleviated to some extent so that they could board their planes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All the bags had to be checked in, and basically they we're looking for liquid-type products, I understand. So that was it. Just very extensive, and a second search on the jet way to get on the airplane.

UNIDENTIFIED MALE: They had the TVs on, the BBC and CNN. So it was basically the news services that kept us up to date.

It was full restrictions. You had to check off every belonging to put on the plane, 100 percent bag inspection.

The flight was pretty smooth. It was a very short taxi because not many jets were taking off. And I think we were the first and maybe the only flight out. I'm not sure.

(END VIDEO CLIP)

SNOW: Now, passengers were relieved when they landed here. They also reported increased security as they landed. And Customs and Border Protection saying that they're increasing security at arrivals -- Lou.

DOBBS: Mary, thank you very much.

Mary Snow, reporting from Kennedy airport in New York.

A new CNN opinion poll shows two-thirds of all Americans do not believe the United States is winning the war on terrorism. The poll conducted by Opinion Research Corporation says only 31 percent of voters believe the United States is winning the war on terror. The survey, we should point out, was conducted before these latest developments, this latest terrorist plot to destroy transatlantic aircraft.

Still ahead, Israeli troops and Hezbollah terrorists fight house to house in southern Lebanon. We'll be live in northern Israel and Beirut. And three of the country's top Middle East experts join me here. And congressmen demanding answers in the case of two border patrol agents who are facing up to 20 years in jail while the Mexican drug smuggler they were pursuing was given immunity by federal prosecutors in order to prosecute our border patrol.

We'll have that special report.

And we'll have the latest on the breakup of a terrorist plot in Britain to kill thousands of people.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: In the war between Israel and Hezbollah, Hezbollah terrorists today fired more than 130 rockets into Israel despite 30 days of Israeli air and ground attacks. The rockets killed two Israeli civilians. Israeli troops today seized a strategic town in southern Lebanon, and Israeli aircraft continue to strike targets across Lebanon.

Tonight, two perspectives. John Roberts reports from northern Israel on the close-quarter battles between Israeli troops and Hezbollah terrorists in southern Lebanon.

Jim Clancy reports from Beirut on Israel's new air attacks against suspected terrorist targets and Lebanon's infrastructure.

We turn first to John Roberts -- John.

JOHN ROBERTS, CNN SR. NATIONAL CORRESPONDENT: Good evening to you, Lou.

It was another day of Israeli casualties in the fighting here in southern Lebanon just north of the tip of the Galilee peninsula. One soldier was killed in the fighting around Marjeyoun.

There's also a dispute raging between Israeli and Lebanese officials over an army base just outside of the town of Marjeyoun. Lebanese officials are claiming that the Israelis have occupied that base which is home to about 350 Lebanese army servicemen. There's also apparently some refugees inside.

The Israelis say, no, we do not occupy that base, we have merely told those inside to stay inside because it is dangerous out where the fighting is. Lebanese say, no, that's not true, the Israelis are in there and they're searching for heavy weapons.

Meantime, Lou, the Israeli political leadership has decided that they are going to hold off, for the moment, at least, while the diplomatic takes track, any moves toward expanding this ground war.

(BEGIN VIDEOTAPE)

ROBERTS (voice over): At nightfall, thick, oily smoke clouds a Lebanese hillside as an Israel artillery shell finds its mark. The strike is in support of troops fighting in the town of Marjeyoun, within sight of Lebanon's Litani River. The operation began Tuesday night from the tip of the Galilee peninsula, the farthest drive north yet for the Israeli army.

The goal is to eliminate the threat from Hezbollah raining Katyusha rockets on northern Israel. More than 160 fell today, 28 inside populated areas. One struck this house in the village of Dir al-Assad (ph), killing an Arab mother and her 5-year-old child.

Hunting down those launch sites is proving more difficult than first thought, says Israeli army spokesman Michael Oren.

MICHAEL OREN, ISRAELI ARMY SPOKESMAN: Hezbollah was deeply dug in here. They had six years to do it. And extracting them from their underground tunnels, craters, arms caches is a laborious and dangerous process, and it's not done overnight.

ROBERTS (on camera): In the light of day you can see the aftermath of an intense battle that was raging for more than 36 hours. This mark (ph) of a main battle tank has taken some sort of round here in its front end, stripping off a lot of the armor.

Walking down toward the Lebanese side, you can see that the border fence has been blown wide open. Crossing over into Lebanon, these are the tank berms that were built for these (INAUDIBLE) to hide behind while they fired on Hezbollah positions.

Smoke still hangs through this valley, and we still hear the sound of gunfire in the Arab villages that dot these hillsides. The Israeli army is describing this, though, as only one of their pinpoint operations that they have been engaging in for nearly the last month. This is not part of an expanded ground campaign that still may lie ahead in the days to come.

(voice over): Tanks and troops continue to mass near the border, though political leaders are holding off on an expansion, hoping just the threat will pressure Lebanese officials into a deal to end the fighting. But if diplomacy fails, they have vowed a major invasion, a move that has broad support in Israel.

OREN: I mean, clearly, on the ground campaign you limit to a certain degree the number of civilian casualties you're inflicting on the other side, even at the risk of incurring greater casualties on your side among your soldiers.

ROBERTS: But some Israeli officials are wary of sending large numbers of new troops into Lebanon, even scaling back their expectations of what this war will achieve.

SHIMON PERES, ISRAELI DEPUTY PREMIER: Since we didn't initiate the war, we don't have to win it. We have to stop it.

(END VIDEOTAPE)

ROBERTS: Israeli political leaders say that they want to exhaust all of the diplomatic options before launching an expansion of the ground war. They won't say how long they are going to wait, but with some progress now apparent on the diplomatic track at the United Nations, and President Bush urging both sides not to escalate, the threat of a larger ground war may remain just a threat -- Lou.

DOBBS: John, thank you very much.

John Roberts reporting from northern Israel.

Israel today launched a new wave of airstrikes against targets in Lebanon, including radio towers and cell phone towers. More than 800 Lebanese have been killed since this war began 30 days ago.

Jim Clancy reports from Beirut.

(BEGIN VIDEOTAPE)

JIM CLANCY, CNN CORRESPONDENT (voice over): A smattering of residents in Beirut's' southern suburbs chose "better safe than sorry" and packed up their belongings. Leaflets dropped all across Beirut Thursday by Israel warned an expanded assault on the Lebanese capital would target Shiyah, Berjel Barajna (ph) and Haya Selam (ph), three neighborhoods in the southern suburbs that are home to more than 200,000 people.

One woman demonstrated her disdain for the marching orders dropped from the sky while even the cautious voice contempt.

UNIDENTIFIED MALE (through translator): We're not scared from evacuations. Even though we're leaving, we're steadfast in Lebanon. All of Lebanon is ours, and we are against the enemy, and we're coming back, and we will resist, and we are Hezbollah, and we're all Hezbollah.

CLANCY: As they picked up and read the leaflets, others echoed the defiance.

UNIDENTIFIED FEMALE (through translator): We are steadfast. We are not leaving. The country's ours. And this is our area. It's neither Israel's land or anyone else's.

CLANCY: But as Lebanon shutters with continued fighting between Hezbollah and Israel across the south, the urgency of a cease-fire is all too obvious. Still unknown whether the U.N. Security Council will approve plans for an Israeli withdrawal and the deployment of international peacekeepers and the Lebanese army.

Lebanese defense analysts say without it no cease-fire will work.

BRIG. GEN. SALIM ABOU ISMAIL (RET.), DEFENSE ANALYST: If the international community and the United Nations are really working for peace in this area, they have to accept that. The United States would agree, Israel should agree, and, of course, the Lebanese and the Hezbollah, they don't have any problem against that.

CLANCY: General Salim says it's not about the military capabilities of the Lebanese army, but the political context. Pressured by the cost of the conflict to Lebanon, Hezbollah has agreed to disengage if Israel withdraws and the Lebanese army goes in. If Israel stays, so does Hezbollah. But Israel has not agreed.

Many here say a missile strike from a pair of Israeli helicopters near the home of Saad Hariri is a warning shot across the bow of the man who leads Lebanon's parliamentary majority. The historic lighthouse, nothing more than a cell phone tower today, had no apparent military value. But Hariri is at the forefront of those pushing for immediate Israeli withdrawal and the subsequent deployment of Lebanese forces.

(END VIDEOTAPE)

CLANCY: Lou, tonight, with the Security Council getting ever closer, it would look like, to agreement, it would see the Israeli forces pulling back, maybe a little analysis is in order.

First of all, why would Hezbollah agree to a deal that could see it ultimately having to disarm? Well, the answer is this: its leader, Hassan Nasrallah, for the past six years, his claim to fame, Lou, has been, "I drove the Israelis out of Lebanon." But tonight, that legacy reads more like, "I'm the one that brought them back and caused more than $2 billion..."

DOBBS: We lost the transmission from Beirut with Jim Clancy reporting.

And Jim, as always, making a very important point on the -- on the political fate, as well, of Hassan Nasrallah, the head of the Hezbollah.

Much more on the conflict will be coming up here over the course of this hour. I'll be discussing the crisis with some of the country's most respected authorities on the Middle East.

Also tonight here, U.S. and British authorities looking for more suspects in the airline terrorist plot.

We'll have the latest for you.

And how many foreign nationals are in the United States looking for work? Just try getting an answer from your government.

We went out looking for those answers, we'll tell you what we found in a special report.

And in Texas tonight, two U.S. border patrol agents face sentencing after shooting a Mexican drug smuggler. The smuggler was granted immunity by the U.S. Justice Department so that they could prosecute administrative breaches by those agents. The agents now could spend 20 years in prison.

We're live in El Paso with the story that one border patrol official calls the most outrageous miscarriage of justice in his career. Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Homeland Security Department today said 24 terror suspects arrested in Britain were in the final stages of a plan to kill hundreds of people and destroy as many as 10 transatlantic airliners. British police say the terrorists planned to explode liquid bombs made from drinks and other common household products. And the British reports say the suspects had been under surveillance since last December.

Police arrested 24 people in raids in the London area and Birmingham. Sources saying two of the suspects had made a so-called martyrdom tape for release after the attacks.

Tonight, federal agents have arrested three more of the Egyptian students who were reported missing in this country. They arrived here two weeks ago on student visas but never arrived at their stated destination, Montana State University.

Two of the men were arrested in Maryland, one was arrested at Chicago's O'Hare Airport. The whereabouts of the five other Egyptian students remains unknown tonight. The FBI says it has no idea whether the men pose a terrorist threat.

The five Egyptian men that remain unaccounted for here in the United States highlight the failures of this nation's visa system. The inability to track these men is a glaring example of just how the visa programs for students or workers pose a national security threat because of inept and ineffective bureaucracy.

Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice over): Attorney John Miano had a simple request. He wanted to know how many H1B visas were issued in the years 2004, 2005. The government would not tell him.

So...

JOHN MIANO, CO-FOUNDER, PROGRAMMERS GUILD: I filed Freedom of Information Act request to get copies -- electronic copies of the records and applications for H1B guest worker visas.

TUCKER: H1B visas are temporary guest worker visas which allow foreign workers with specialized skills to work in the United States. Miano's reasons for wanting to know the information are basic.

MIANO: We do not know how many of H1B visas are being issued each year. The second big question we would know is, who is getting these visas?

TUCKER: So, what was the government's response to his request? "We have completed our search for records responsive to your request but did not locate any." In other words, they lost the records.

The response came from the person in charge of handling Freedom of Information Act requests. We asked the USCIS for a clarification, and a spokesman told us, "The response was a mistake and the letter was sent in error."

The mistake came to their attention after LOU DOBBS TONIGHT asked them about it. The agency tells us that the information Miano was looking for could be available, but he would have to buy it for a fee of roughly $4,500 to $5,000.

The former director of the Office of Internal Affairs at USCIS finds it outrageous that the information isn't immediately available and points out that Congress has been asking for this information for six months.

MICHAEL MAXWELL, FMR. DIR. OF INTERNAL AFFAIRS, USCIS: If they are at all honest with the American public, we will see that there is a real problem with fraud in the H1B system, and it is being gamed by both terrorists and foreign agents.

TUCKER: The national security implications are obvious.

(END VIDEOTAPE)

TUCKER: The USCIS is supposed to publish an annual report on the program, but no such report has been filed since (AUDIO GAP).

And the Senate's so-called immigration reform would nearly double the size of the H1B program, and, Lou, it would add additional guest worker programs for USCIS to manage.

DOBBS: It is stunning that the Citizenship and Immigration Service, the very agency that would be responsible if the Senate and the president have their way with this amnesty bill and so-called guest worker bill, they can't even administer a pathetically-run program like this. It's crazy.

Why do they not know how many people are in this country?

TUCKER: Well, it's been told to me by sources they do know. They just don't want to let anybody know because...

DOBBS: Well, we've got a couple of answers to go with here. Either they don't know, they won't give it to you, and if they do have it, which they now say they might have, it's going to cost you five grand to find out.

TUCKER: You got it.

DOBBS: I've got to say, this -- this government is absolutely dysfunctional. And why this Congress, this president -- well, to the degree in which they're not aiding and abetting in the effort, are tolerating this kind of incompetence is beyond me, and a whole lot of other folks, obviously, including you, Bill Tucker. Thank you for that fine report. Taking a look now at some of your thoughts, Bob in Kansas wrote in to say, "Thank goodness for British Home Security. At least someone is protecting our borders."

Tom in Tennessee: "Lou, illegal aliens, drug smugglers, suspected terrorists, child molesters all go free, but two men doing their job securing our borders go to jail. I believe something has gone terribly wrong with our country."

Kate in North Carolina: "Lou, what I want to know is why aren't the LaRaza-ists screaming 'racism' over the unjust conviction of our two Border Patrol agents?

And James in Connecticut: "Lou, the two Border Patrol agents should be given a presidential pardon and their jobs back. Oh, I forgot. Bush has to ask and receive Vicente Fox's permission."

And remember please to send us your thoughts to LouDobbs.com. More of them coming up here later.

This program is taking special interest in that case of the two Texas Border Patrol agents convicted down in El Paso, Texas. Those two men face up to 20 years in prison because the U.S. attorney there brought charges and didn't like the fact they'd shot a Mexican drug smuggler and the way in which they had pursued him. Then they gave the smuggler immunity. Not only did the smuggler receive immunity for his testimony against those agents, he subsequently was smuggling more drugs.

T.J. Bonner, the president of the National Border Patrol Council said this: quote, "This is really the most outrageous miscarriage of justice that I'm aware of in my entire 28-year career as a Border Patrol agent.

Casey Wian reports from El Paso, Texas.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): As Border Patrol agents Ignacio Ramos and Jose Compean await sentencing for the way they tried to apprehended a Mexican drug smuggler, it's becoming clear Border Patrol agents are being prevented from doing their jobs by questionable policies that could subject agents to criminal prosecution and allow illegal alien and drug smugglers to go free.

DEBRA KANOF, ASSISTANT U.S. ATTORNEY: It's very important that we police our own, if we have to scrutinize the actions of federal law enforcement officers in the same way we would and maybe even closer than we would an average citizen.

WIAN: Assistant U.S. attorney Debra Kanof made those comments the day agents Ramos and Compean were convicted for pursuing and shooting an illegal alien drug smuggler. They face 20 years to life to prison.

During the trial, she accused the agents of violating a little- known Border Patrol policy prohibiting high speed pursuits of illegal aliens and smugglers. Kanof declined our interview requests, but did speak to newspaper reporter Sara Carter.

SARA CARTER, INLAND VALLEY DAILY BULLETIN: She said they had violated administrative procedure, that they were not supposed to pursue anybody unless they got permission from a supervisor which has never been granted in El Paso, she said. I said yes, but that's an administrative failure, that is not necessarily a federal offense. It's a five-day suspension the Border Patrol.

But she said no, they tried to cover up the scene of the crime because they didn't report it, they didn't file a report. I continued to say that those were administrative failures, but she continued to tell me that it was her duty to fight for the Devilla's (ph) rights, his civil rights, and that his civil rights had been violated and that's why they pursued this so vigorously.

WIAN: Devilla is the drug smuggler who was shot in the buttocks after a scuffle with the agents. He was granted immunity from prosecution and is now suing the Border Patrol for $5 million. Agent Ramos says there is a policy against high-speed vehicle pursuits but it's routinely ignored for practical reasons.

IGNACIO RAMOS, BORDER PATROL AGENT: We don't really know what we have unless the car or whatever vehicle it is stops, and if the vehicle fails to yield, we'll never know what it is. It's not the first time it's been done by me or any agent out here.

WIAN: In fact, Ramos, a former nominee for Border Patrol Agent of the Year, says part of his job was to instruct Border Patrol agents in pursuit techniques.

T.J. BONNER, NATIONAL BORDER PATROL COUNCIL: The chase policy says that if a Border Patrol agent is following a vehicle, pursuing, if you will, and the vehicle breaks a traffic law, speeds, blows through a stop sign, et cetera, that they need supervisor approval to continue the chase. Now, perhaps there was a violation of that policy, but does that rise to the level of criminal misconduct? Absolutely not.

WIAN: The attorney for the man smuggling this load of marijuana denies claims by two sources he's since been arrested again for drug smuggling. He now lives in Juarez, Mexico.

Meanwhile, Agent Ramos says the only thing he would have done differently is to file a report that shots were fired during the pursuit. He still can't believe he's the one facing decades in prison largely for not filing paperwork.

(END VIDEOTAPE)

WIAN: The case is now drawing the attention of members of Congress. We personally have heard from two different staff members, two different members of Congress from border states. They say they're looking into legislation to close some of these gaping loopholes in border security that have been exposed by this case, Lou. DOBBS: Well, they're gaping holes, all right. The first question is why in the world this U.S. attorney -- and the U.S. attorney there for the western district of Texas is Johnny Sutton -- why in the world he permitted assistant U.S. Attorney Debra Kanof, who is very obviously very zealous about the rights of illegal drug smugglers, to proceed with such a case over administrative breaches. It's mind-boggling.

WIAN: It is mind-boggling, and it certainly appears, Lou, that they're take the so-called civil rights of this admitted criminal, this admitted drug smuggler who was in the act of committing a crime, over the rights of these two Border Patrol agents who were trying to stop that crime from happening.

DOBBS: In other words, protecting the nation from drugs and by the way, that border at which you stand and from which you're reporting tonight, is the source of the largest quantities of meth, of heroin, of marijuana and cocaine.

And we're losing that war, and perhaps one of the reasons we're losing that war, Casey Wian, is because the Border Patrol is to stupid as to say to its agents who are working there and putting their lives on the line every day, you have to break off a pursuit because the suspects ran a stoplight?

WIAN: Yes, the Border Patrol agents you talk to in the field say this is a catch-22 that they deal with on almost a daily basis. This dates back to a situation in California a few years back where drug smugglers -- or alien smugglers, I should say, ran into a group of school children while they were being pursued by Border Patrol agents.

So now they've taken this policy to a whole new level where an agent, as soon as he sees someone break a traffic law, he has got to get prior approval from a supervisor to continue the pursuit.

Obviously, that's not practical in a lot of cases, obviously it's ignored by the Border Patrol agents on a daily basis, and Border Patrol agents they tell you that many of their supervisors will help them -- I hate to use the words "cover up," but to sanitize their reports to reflect -- to not reflect that they violated that policy, Lou.

DOBBS: Well, someone needs to sanitize the Congress and this executive branch, this Justice Department, and the Border Patrol who would put those kinds of constraints on trained agents who are -- those men and women protecting our borders, being asked to carry out these ignorant administrative decrees from idiots in Washington who obviously don't have the concern of either the best interests of their agents or the interests of this country at heart. Somebody has got to get this thing straightened out. And I guess -- go ahead, Casey.

WIAN: I was going to say, Lou, it is certainly one of the reasons, it's well-documented, that the Border Patrol is having trouble recruiting enough agents to fill the numbers of positions that they've been budgeted for. It's clear that that's one of the reasons why. It's a tough job. DOBBS: Well, this -- I mean this is just -- as T.J. Bonner, the head of the Border Patrol Council said, this -- based on what you've been able to report and what we know about this case right now, this is one of the most outrageous prosecutions I've ever seen, and it's just hard to imagine this is happening in the United States of America.

And what you're reporting here, as you fill out this story, Casey, I mean, the idea that we're subjecting and restricting our Border Patrol agents in this -- in these ludicrous, ridiculous ways is just incomprehensible.

The federal case -- the federal prosecutor in this case, as I just mentioned, is Assistant U.S. Attorney Debra Kanof. Now we would love to have her and we've invited her to join us on this program, and today we again tried to contact her. We're still waiting for a response from her.

And Prosecutor Kanof, we'd love to have you talk. We know you're constrained in certain ways by your office but, you know, there's going to have to be a lot of explaining done here to the American people, and we've just begun the process of putting some light on this.

Casey Wian, an excellent job of reporting. We know you're going to be there for days and days to come because it's going to take awhile to get to the truth of this one. Casey, thank you very much.

That brings us to the subject of our poll tonight. Do you believe the Justice Department should be giving immunity to illegal alien drug smugglers in order to prosecute U.S. Border Patrol agents for breaking administrative regulations? What do you think about that? Yes or no. We'll have the results here later in the broadcast.

Still ahead, more on what appears to be the biggest terrorist plot since September 11. A former inspector general with the Department of Homeland Security joins me.

Also tonight, as the war between Israel and Hezbollah escalating, and diplomats are trying to reach a peace deal even as we speak. Three leading Middle East experts join me here.

And in Iraq new terrorist violence today. Our troops are trying to stop the sectarian violence that seems to worsen each day. General David Grange joins us. Stay with us for that and a great deal more still ahead right here.

(COMMERCIAL BREAK)

DOBBS: British police say they've broken up a terrorist plot to cause mass murder, the destruction of as many as ten trans-Atlantic airliners. Joining me now from Washington to asses this terrorist plot exposed by British authorities Clark Kent Ervin, CNN security analyst, author of the book "Open Target: Where America is Vulnerable to Attack." Clark, this looks like a rather large and certainly, as the authorities are now saying, apparently well coordinated plan of attack.

CLARK KENT ERVIN, CNN SECURITY ANALYST: Absolutely, Lou. As you said earlier, this appears to be a plot that was closer to 9/11 than any other plot that we've learned about since 9/11 itself. And the timing, it seems to me, is important as well. We're so close to 9/11 itself it wouldn't surprise me if we subsequently learned that it was timed to coincide with the fifth anniversary of 9/11.

DOBBS: You know, I couldn't help but think Monday a flight headed to Boston, as you recall, from Heathrow was turned back over the Atlantic because they discovered one of the passengers was on the no fly list. Often it seems that no fly list is a go ahead and fly, but we'll turn you back list. Are we going to see some changes in that given what has been uncovered at Heathrow?

ERVIN: I sure hope so, Lou. We haven't talked a lot about that today, but I think that's an important point. Most people don't realize that airlines have up to 15 minutes after a flight departs for the United States to transmit to United States government, the Department of Homeland Security, the flight manifest and if all the terrorists want to do is just to blow up a plane, which is apparently what they wanted to do with regard to this present plot, that's more than enough time to do that. We need to get that information long before the flight departs from the United States because it might be too late otherwise.

DOBBS: Nearly five years after those attacks, U.S., the United States, has virtually no inspection of cargo and commercial aircraft. You're shocked by that, I know. What are we going to do about some of these holes that we're seeing in our security?

ERVIN: Well, that's another vulnerability, Lou, again that hasn't been talked enough about today. You're quite right. Most Americans don't realize that about 20 percent of the cargo that goes on airplanes in the United States goes on passenger planes and virtually none of that cargo is inspected beforehand, unlike luggage. I'm hopeful that as a result of what we learned today, we'll go to 100 percent inspection of air cargo which is exactly what happens in Britain, Israel and the Netherlands.

DOBBS: Clark Kent Ervin, thank you very much for being with us. We appreciate it.

ERVIN: My pleasure, Lou.

DOBBS: Vicious battles today between Israel and Hezbollah, the death toll rising after 30 days of warfare. I'll be joined by three of the world's leading authorities on the Middle East in just moments.

And a deadly day in Iraq, rising sectarian violence goes on. Our troops trying to prevent an all out civil war. General David Grange joins us. Stay with us for all of that and more coming up.

(COMMERCIAL BREAK)

DOBBS: More on the Middle East here in just a moment. Coming up "THE SITUATION ROOM" with Wolf Blitzer reporting tonight from Jerusalem. Wolf.

WOLF BLITZER, CNN ANCHOR: Thanks very much, Lou. Liquid terror, an alleged plot to blow up American and British airliners. We're covering all angles of the story, including a look at how the plot it unfolded. Plus the al Qaeda connection. We're working hard on the investigation to try to find out if the suspects have anything to do with that terror network.

Also new rules for travelers. Before you will go to the airport find out what's in, what's out, and what you should leave at home. And the unprecedented terror threat. How long will flights from England to the United States be under red alert. We'll speak to the head of the Homeland Security Department, the secretary, Michael Chertoff. All of that, Lou, coming up at the top of the hour.

DOBBS: Wolf, thank you very much.

I'm joined now by three of the country's leading authorities on the Middle East. Here with me in our New York studios Daniel Pipes, director of the Middle East Forum, an authority on radical Islamist terrorists and the Middle East. And Alon Ben-Meir, an esteemed professor at NYU's Center for Global Affairs, good to have you with us. And joining us from Washington, Karim Sadjadpour, a highly regarded Middle East analyst with the International Crisis Group. Good to have you with us.

Let me begin Karim, first of all, you believe, although the president and others have said they're going to turn to Damascus for help with Hezbollah, you believe that we should be turning in a different direction?

KARIM SADJADPOUR, INTL. CRISIS GROUP: Well, Lou, I think essentially we have an alliance between three entities. We have the Islamic Republic of Iran, we have Syria and we have Hezbollah. And I think the Israeli strategy, you know, Israel refers to Hezbollah as a cancer, but what they've been doing is using a chemotherapy to fight that cancer which is essentially been destroying the body of Lebanon.

We have one million displaced people. We have about a thousand civilian casualties, and what I would argue is instead of chemotherapy, let's try cancer prevention. Let's talk to Syria. Let's talk to Iran and try to prevent these weapons from even going to Hezbollah in the first place.

DOBBS: Alon, do you agree?

ALON BEN-MEIR, PROF. CTR. FOR GLOBAL AFFAIRS, NYU: Well, I think, in principle, Syria ought to be engaged in this process. Syria has very unique interests and like Iran, who is interested in disturbing, disrupting the Israeli/Arab peace process, but Syria has the claim over the Golan Heights and as long as the Syrians don't see a way of getting that, they will continue to cause trouble as best as they can.

DOBBS: Daniel? DANIEL PIPES, DIR., MIDDLE EAST FORUM: Well I agree that Syria should be addressed, but I'd put it a little differently. I think rather than going to them and pleading with them to be nice and not to allow weapons, arms and personnel and funding to Hezbollah, we should be telling them you better not or you, as opposed to Lebanon, will be the target.

DOBBS: It strikes me tonight that Israel looks very weak here. Israel has not been able to subdue Hezbollah. The United States, engaged as it is in Iraq, seems to be offering platitudes and some rhetoric talking about there will be no cease-fire unless it's sustainable and addresses the root causes of the conflict, that we know right now in the United Nations diplomatic efforts are under way to get a cease-fire -- almost -- there's almost a desperate drive to a cease-fire.

Karim, let me ask you, would you agree with that assessment, and what are its implications if that's the case?

SADJADPOUR: Well, I'm actually more hopeful about the prospects of a cease-fire in the next week or so. I think the Israelis don't want to be in a situation where they're again occupying Lebanon. They've made it very clear, they tried that for two decades, it wasn't successful.

At the same time, the Lebanese public is really desperate, very much fed up, and I think Hezbollah does not want to continue this either. I think the holdup right now is between the argument that this should be a robust international peacekeeping force, which comes into play, or the Lebanese argument, which says that -- the Lebanese army itself should play the peacekeeping role.

I think this should not be held up for too long. Hopefully, we can find a medium solution in between those two.

BEN-MEIR: I absolutely think that Israel, you know, from the very beginning, suggested it has to have a clear-cut victory, and now they're talking about clear-cut sort of decisive result. What does that really mean? I think Israelis absolutely believe that Hezbollah has to be broken, has to be disarmed one way or the other, and anything short of this type of outcome is going to seriously backfire against the current government once this crisis is over.

PIPES: Israel's glorious days of victory are long gone. Since 1973 -- since 1973, which is now over 30 years ago, the Israelis have not had a decisive victory. Indeed, the most parallel case to the present is 1982, when the Israelis took 88 days to defeat the PLO. So this is actually in keeping with modern -- with current Israeli history.

DOBBS: With the United States engaged in what is by I think a reasonable definition an outright civil war right now in Iraq, with our troops consumed there, with our policy, where not vague it seems to be ineffective, foreign policy. What are the implications for U.S. policy and for Israeli policy in the Middle East, given what seems to be agreement here on the constraints on both Israel and the United States?

PIPES: Some have compared this, and I think reasonably, to the Spanish civil war as a precursor to World War II. It was the same actors, but it was a side show. In some sense, having Israel and Hezbollah in Lebanon are a precursor or a side show to the United States and Iran.

BEN-MEIR: But there's a larger thing. I think initially, when you saw the Arab states, specifically Saudi Arabia, Egypt, Jordan, pretty much they were mute about what Israel has been doing. So I think there's also the larger picture we have to look at, and that is the fight, the conflict between the Sunni and the Shia.

For many Arabs, they see what's happening in Lebanon, and to some extent it served their interest, they wanted to see Hezbollah broken. But because of what's happened, because of the Israeli bombardment of some of the Lebanese -- you know, in Beirut, the public opinion has shifted somewhat.

But I think we have to also look at the larger picture. There is a definite interest in seeing Hezbollah broken and disarmed by not just Israel -- by the United States, certainly, but also by moderate Sunni Arab states. To them, this is a critical point.

DOBBS: Karim, you have the last word. About 15 seconds worth, if you will.

SADJADPOUR: What I'm concerned about, Lou, is that when you're reading the Iranian press, they describe this as a battle for the future of the Middle East, for the future of Muslim and Arab hearts and minds, and they feel they're very well placed, that Iran's type of politics in the region is on the ascent, Hezbollah in Lebanon, Hamas in (INAUDIBLE) coming to power, and the secular democrats, the reflection of the United States, are in decline.

So I think we need to be very much concerned about the future of the Middle East.

DOBBS: I think we should be concerned indeed. I think just about everybody would agree with you, Karim. We thank you very much, Alon, Daniel, thank you all for being here. Appreciate it.

A reminder now to vote in our poll. Do you believe the Justice Department should be giving immunity to illegal alien drug smugglers in order to prosecute U.S. Border Patrol agents for breach of administrative regulations? Yes or no. Cast your vote at LouDobbs.com. We'll have the results coming up here momentarily.

Next, carnage in Iraq. Today, a day of brutal, deadly sectarian violence. General David Grange joins me to assess and to discuss U.S. military policy in Iraq. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A suicide bomber in Iraq today killed at least 34 people at a police checkpoint in the southern city of Najaf. More than 100 people were wounded in that attack as well. The bomber detonated his explosives as he was being searched by police.

In other violence in Iraq today, terrorists and insurgents killing at least 18 people, most of them in the city of Baghdad.

American troops who were about to return home from Iraq are now in Baghdad, fighting Shia terrorists. The terrorists and insurgents are killing more people in Baghdad than Sunni insurgents and al Qaeda. And Iraqi police and troops are incapable of stopping the violence without American help.

General David Grange joins me now. General, I just want to turn first to the fact that the 101st Airborne turning over security to the Iraqi brigade, is this a reasonable disposition, or is this an expedient one?

GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: I think it was the plan all along, Lou, is to turn over certain areas in Iraq to the Iraqi security forces when they were trained to a certain level of standard and they were established in those communities to do so. And this is an example of part of that.

DOBBS: It's part of it. The United States now is putting its troops into the position that none of us wanted to see them, back into a police role, an enforcement role, a security role within Baghdad itself. This raises the stakes considerably for our men and women in uniform there.

GRANGE: Yes, the thing about a stabilization operation, the task that they have in keeping the peace, as well as going after insurgents and others that are armed groups that break the Iraqi law and those things established by the coalition forces, is police type work. And police type work in cities is very tough, and that's what American soldiers are involved with, along with the Iraqi military. The Iraqi military really isn't the weak link. The weak link is the Iraqi police. That's the big problem.

DOBBS: And, of course, an insurgency that has been referred to most recently as death squads by the Pentagon. Do you see any significant shift in U.S. military strategy in Iraq and anything that you as a warrior, general of considerable experience, (INAUDIBLE) lead us to victory?

GRANGE: Well, the strategy is going to have to be adjusted continuously. It's not one plan years and years ago that carries you through to the end. The ground changes, conditions change, and I think that has to be done for several reasons. One, the sectarian violence that we see right now, fueled by Iran. Iran wants the split to occur, they fuel it, and that's somehow that's got to be curbed.

DOBBS: I think that was a yes or a no, General.

GRANGE: Well, the answer is yes.

DOBBS: Yes, sir. Good to have you with us.

GRANGE: Thank you. DOBBS: General David Grange.

Results of our poll tonight: Only 97 percent of you say the Justice Department should not be giving immunity to illegal alien drug smugglers to prosecute U.S. Border Patrol agents for a breach of administrative regulations. Perhaps the Justice Department is listening.

Thanks for being with us tonight. For all of us here, good night from New York. "THE SITUATION ROOM" begins right now with Wolf Blitzer in Jerusalem -- Wolf.

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