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CNN LARRY KING LIVE

Terror Plot Foiled

Aired August 10, 2006 - 21:00   ET

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


(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This was intended to be mass murder on an unimaginable scale.

(END VIDEO CLIP)

LARRY KING, CNN HOST: Tonight, a massive terror plot, what could have been the biggest attack since 9/11 foiled in Britain. Up to ten jetliners bound for the United States were to be blown up in midair using an explosive cocktail of liquid and paste that could be triggered by a cell phone or and iPod.

Thousands could have been killed. More than 20 have been arrested. Others may be at large. Chaos at the airports, liquids in carry-on luggage banned as the terror threat level rises for all commercial U.S. flights.

Who are the alleged plotters? How did they get caught? How safe is it to fly? We'll get answers from London, New York, and Washington.

And, Rudy Giuliani, America's mayor, will give us his thoughts all next on LARRY KING LIVE.

(END VIDEO CLIP)

KING: Thanks for joining us everyone. We start tonight with three of the hardest working journalists in the business; at Heathrow Airport in London, CNN Chief International Correspondent Christiane Amanpour; in Washington, Chief National Correspondent John King; and also at Heathrow, Anderson Cooper of Anderson Cooper 360.

We'll start with Christiane. To this moment what do we know, Christiane, like is this plot foiled?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well that's what they have said that it was thwarted just in time, they said, to prevent mass murder as it was described by one of the officials here on an unimaginable scale.

The latest as we've been reporting for the last several hours really hasn't changed in that they have 24 people in custody, 24 suspects. They're not telling us here, although word is coming from the United States, about the potential origin of some of these people, they're not telling us whether they're Muslims or not but there is a speculation that some or all of them are and from the Pakistani community perhaps some of them.

We're told that they are homegrown, although not necessarily all British citizens. And we also know the parameters of the alleged plot that they were going to blow up several airlines en route from the U.K. to the United States using liquid explosives detonated by ordinary electronic gear, such as mobile phones or iPods or whatever it is.

And, to wit, nothing, no hand luggage was allowed onboard any of the flights in the highly disrupted flight plans and flight paths that were at Heathrow and other British airports today -- Larry.

KING: John King is our CNN Chief National Correspondent in Washington. What part in foiling this, if any, did the United States play?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Late in the game, Larry the CIA and other intelligence agencies did play a role in this, although they are very clear that the British intelligence agencies and law enforcement deserve most of the credit.

But what you get, Larry, in talking to law enforcement and intelligence sources is this stunning picture, an elaborate plot but elaborate in part because it was so simple. That's what makes it so frightening to people.

Let me give you an example. What they're talking about is say one alleged terrorist getting on a plane with a sport drink in a bottle like this, another terrorist perhaps carrying toothpaste or hair paste in a jar just like this. It's not hair paste in the terrorist plot though. This is some sort of a peroxide-based paste that is highly explosive.

A third terrorist or perhaps one of those two carries a disposable camera like this or an iPod, something with an electric charge. This has a flash. You push the button, boom. That's the detonator.

U.S. intelligence officials are saying that is the picture that has been given to them about this plot, remarkably simple everyday looking devices to be carried onto a plane and used over the Atlantic in a bomb on as many as nine or ten aircraft killing hundreds, perhaps more than 1,000 people.

That is why, Larry, officials are so worried about this. They are happy that they stopped this alleged plot but you are going to hear a debate in this country and around the world now, five years after 9/11, do we need new scanners in airports? Do we need new restrictions on what you can carry on an airplane? Out of this terror plot will come a whole new debate about security.

KING: So, John, to pull that off you have what three suicide bombers needed?

J. KING: Two or three on a plane depending. One could carry two of these devices. I could get on a plane every day with these devices, Larry, until today. That's what makes this so complex. You can go on the Internet and learn. You have peroxide-based substances. You can learn how to make a bomb.

They say with a little bit of liquid, a little bit of paste, and the proper -- if you know the chemistry and a detonator to set it off you could have a decent enough explosion with a tiny device to impact the structural integrity of an airplane or to create such a fire these substances, the liquids can be so flammable such a fire that you have a catastrophic failure on the airplane. That is what makes it so stunning.

They stopped this plot but many say that, you know, they're quite lucky they stopped this plot and it is going to cause a reassessment again of all of the technology at all our airports, not only here in the United States but around the world.

KING: Anderson Cooper, the anchor of AC 360, which follows this program is at Heathrow. What's the situation there at that airport?

ANDERSON COOPER, CNN ANCHOR: Well trying to get things back to normal, Larry. It was, as Christiane said just an incredibly disruptive day. You know, on an average summer day at this time of year in Heathrow Airport there are about 180,000 people traveling through that airport.

All flights were cancelled today for time being. Some flights have now resumed. We've seen -- we've been watching tonight some planes taking off and landing. But, Larry, it is going to take days for things to return to normal.

Again, on a Thursday like today some 3,800 flights were supposed to take off and land at this airport. This has disrupted planes, not only all over England, shot haul flights as well as long haul flights, but planes all across Europe and planes, of course, going and coming into the United States.

We've seen major disruptions at a lot of American airports. And really for the next couple days there's going to be widespread confusion as people come to the airport trying to figure out what they can and cannot bring onboard.

As John King pointed out, you know, two days ago you could have brought a sport drink like this. This is actually the brand of sport drink that was allegedly going to be used. It's a Gatorade-like drink. Two days ago you could have brought this onboard any plane here in the U.K. You can no longer do that. In fact, you can't bring any liquids onboard.

And in the United States as well, no liquids, no suntan lotion, any kinds of lotions, any kinds of gels, even toothpaste will not be allowed in a carry on bag. The only thing you're going to be allowed to bring on for the foreseeable future is a wallet. But you can't have anything in your pockets. You can have eyeglasses but not an eyeglass case.

If you have a baby, you can bring baby milk. But then the question becomes will you have to actually drink the baby milk to prove that it's baby milk and some security experts say even that is troubling that that's really not a failsafe method of allowing any form of liquid onboard, so a lot of questions -- Larry.

KING: Thanks, Anderson. We'll be checking with you and, of course, you'll be covering it throughout the two hours of your program.

We invited the heads of all the allegedly targeted airlines, that's United, Continental, American, and British Airways, invited them to appear on tonight's show and they declined.

Rudy Giuliani is next. Don't go away.

(BEGIN VIDEO CLIP)

MICHNAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY: It's clear that the plan was multiple planes at about the same time. Now whether the exact number had been decided upon or whether that was going to depend upon some factors that had not yet been resolved we don't know. But it was under any circumstances an attack which had the potential to kill hundreds and thousands of people

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: We now welcome the former mayor of New York Rudy Giuliani to LARRY KING LIVE. What's your reaction to this story?

RUDOLPH GIULIANI, FORMER NEW YORK CITY MAYOR: Well, of course, you know, as shocked as anyone except heartened by the fact that they were able to find this.

I was in London a year ago, you know, on July 7 a half a block away from where the first bomb went off and when I look at what the U.K. intelligence has been able to do with this, you can see how they sort of factored in what they missed last time, which for, you know, U.K. citizens and people who maybe weren't in the profile.

And they did a very, very good job here in being able to detect this but it does remind you that, you know, we're living -- this is the world we're living in. We're living in -- and we've been living in this world for a long time.

This reminds me of the plot back in '95, I think it was '95 that the U.S. and Philippine intelligence was able to discover where it was a similar group of terrorists were attempting to -- they were going to hijack planes and bomb planes.

So, this has been going on for a very long -- we think of it as kind of starting with September 11th but this started in the 1970s, 1980s, got really heavy in the '90s. This has been going on for a long time.

KING: How do you deal with an enemy willing to kill itself? GIULIANI: Well, I mean this is not an enemy with as much chance to negotiate with them or to work things out. That's why it's so important that we use this as a reminder that we're at war.

This is not a law enforcement activity. This isn't -- we're at war. These people -- these people want to kill us and they can maintain their desire to kill us through years and years of planning a suicidal mission.

The thing about September 11th that I still have a hard time understanding is how those people were able to carry out that plot in which their own suicide was involved over that lengthy period of time, 18 months, 20 months. So, you've got some very, very unfortunately dedicated people, I mean maniacal but dedicated people that want to kill us.

KING: President Bush said today the United States is safer now than it was back on 9/11, do you agree?

GIULIANI: Sure. I mean today is an example of that, right? I mean September 11 this didn't happen. In other words, it wasn't picked up by United States intelligence or U.K. intelligence or just like July 7 wasn't picked up by the U.K. intelligence, even though I believe they have just about the best intelligence in the world. It does remind you that unfortunately intelligence is not going to ever be 100 percent and there are so many ways to attack us that we are very vulnerable.

KING: What concerns you the most?

GIULIANI: Well, I think what you were illustrating before, how simple this plot was and how they're always trying to get one step ahead of us. In other words, they're always trying to figure out where are they vulnerable? What haven't they anticipated? What haven't they thought of? And, it's hard to think of everything.

I mean this -- this will now result in a lot more work being done on airport security to avoid a plot like this but that's just going to drive them to start thinking about "Well, you know, what else can we -- what else can we devise?"

KING: Would you fly commercially tomorrow?

GIULIANI: Sure, absolutely. I mean right after September 11, I urged people that you should not allow these terrorists to stop us. I mean the risk for any one person, any one flight, is very, very small I mean but the risk is there.

But you know, Larry, life is full of risk anyway. I mean we're all living with that so basically what you have to do is kind of -- kind of move ahead with your life and not let them win the psychological battle.

They can attack us often. They can attack us catastrophically unfortunately as we found out and as they just foiled. But, I mean the risk in terms of, you know, rationally assessing it for any one person is not that great.

KING: Where do you think, Rudy, we are most vulnerable? What would...

GIULIANI: Do you know -- do you know, Larry, here's sort of the tragedy of it. We're most vulnerable probably in the thing I don't tell you meaning the things we're concentrating on they're going to try to look for some other way to attack us.

You know the U.K. had put a great deal of concentration in their profile on people that came from Muslim countries and people who weren't citizens. Then on July 7, they got attacked by what turned out to be U.K. citizens. So, now they've expanded and gotten themselves one step ahead and they're going to try to do that again. I mean the terrorists are going to try to do that again.

So, my hats are off to the intelligence people, the U.K. people, the people in the United States and they really have improved tremendously since September 11th but that is no guarantee of any kind.

KING: Are you surprised, and your firm and you have become kind of experts in this so maybe you're not but I'll ask it anyway, are you surprised at how seemingly simple it is...

GIULIANI: No.

KING: ...to blow up a plane?

GIULIANI: No, no, of course not. I mean a plane is a fragile instrument when you think about it, right? It's up there at 35,000, 40,000 feet. It's going at a massive rate of speed so...

KING: Yes, but a bottle of Gatorade and a radio?

GIULIANI: Well it would have to work just right, meaning it would have to create an explosion. It would have to puncture maybe the wall of the plane or harm one of the engines.

I mean it might not be a absolute guarantee that it's going to bring the plane down. But, if you're -- if you're out over the Atlantic Ocean -- I remember, gosh, I think it was about within six months or a year after September 11, I was traveling on the Concorde to London and about two hours out there was a bomb scare. Someone heard it -- thought they heard a ticking on the plane.

And, you know, it turned out that it probably was some kind of an alarm clock or something else but it created a little bit of a furor on the plane. And, when you're -- when you're hanging over the Atlantic Ocean and you got another hour to go there's no place to easily put the plane down, so unfortunately that's what they were counting on.

KING: And we only have about 30 seconds. You said the British are extraordinary at this, why? GIULIANI: Well, I mean first of all the scope of their problem is smaller, right. It's a small island compared to a large continent that we have to defend. And they've had more experience with terrorism than we have. Their experience goes into the '70s and the '80s with the IRA and all the work they've had to do. And I think they're, you know, they're very, very good.

I mean so are the Israelis and so are we but in each case you can -- even the U.K. wasn't able to stop July 7. No intelligence service, even the very best and I include our own in that can ever be 100 percent and that's what has everybody concerned.

KING: Rudy Giuliani, the former mayor of New York.

We turn to Arnold Schwarzenegger the Republican governor of the state of California. He's on the phone with us. What have we done today, governor, to make California airports safer?

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA (by telephone): Hi, Larry, how are you this day? And hi, Mayor Giuliani, how are you?

GIULIANI: How are you?

SCHWARZENEGGER: Terrific, thank you.

First of all let me tell you, Larry, you're talking to the man that is I think the idol of everyone for everyone when it comes to quick action and response because what Mayor Giuliani has done on 9/11, the quick action that he created and followed through was really staggering. And I think that it was a model for everyone.

And I think this is the key thing, as Rudy is saying that the quick response, what do you do? You have to show immediate leadership under those circumstances even though it was, you know, in this particular case here, you know, no one hit the United States but the fact is there was a threat.

And I got my information from homeland security in California and they got the information from Washington, so there was a great, great, you know, (INAUDIBLE) relationship there immediately. And I put certain things right away in motion this morning.

KING: Like?

SCHWARZENEGGER: Like highway patrol, the CHP, the National Guard, bomb-sniffing dogs and working together with homeland security and with the U.S. Department of Homeland Security and bringing everyone together, including the local law enforcement authorities and everyone working together to make sure that we cover ourselves.

And if there is a threat, because at that point they did not know to what extent it is, and we still don't know. They don't know yet if they have, you know, caught everyone. That's why we are still when it comes to aviation out of England we are still, you know, on a threat level red (INAUDIBLE) threat level orange but that would go away as soon as they find everyone or know for sure that they've caught everyone.

KING: Governor, can you say that California's airports are safer today than yesterday?

SCHWARZENEGGER: Oh, absolutely. I think that the reason is because everyone is really working together well. I've experienced how quickly we get the information out of Washington. Secretary Chertoff is terrific.

The homeland security office in Washington is doing well and working together with the states and the states work very well with local authorities unlike before 9/11 that was not the case in that same level.

And so today, I mean there's a real willingness, like I saw that today again firsthand as governor of how willing everyone is to really go out of their way to make sure that the people are protected and that we do everything we can, no stone unturned.

KING: Thank you, governor. We'll be checking a lot more with you, Governor Arnold Schwarzenegger, before that Mayor Rudy Giuliani.

When we come back our panel will be joined with us as we discuss the incredible events of late last night and all day today. Don't go away.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I need back all liquids. They're going into checked baggage right?

UNIDENTIFIED FEMALE: Yes, yes, got it.

UNIDENTIFIED FEMALE: It's a very good time to fly. Everybody is aware of it and hopefully it will -- it will be all OK.

UNIDENTIFIED MALE: Soda pop, I'm not allowed.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The recent arrests that our fellow citizens are now learning about are a stark reminder that this nation is at war with Islamic fascists who will use any means to destroy those of us who love freedom, to hurt our nation.

(END VIDEO CLIP)

KING: Let's meet our panel. Remaining with us in London, Christiane Amanpour, in Washington, D.C. is John King, joining us in New York is Peter Bergen, CNN terrorism analyst and the best-selling author of "The Osama bin Laden I know: An Oral History of al Qaeda's Leader and Holy War, Inc.;" and in Hanover, New Hampshire, Ron Suskind, the Pulitzer-prize winning journalist, author of the New York Times best seller, a great book, "The One Percent Doctrine, Deep Inside America's Pursuit of its Enemies Since 9/11."

Peter Bergen, was this al Qaeda?

PETER BERGEN, CNN TERRORISM ANALYST: In my view, yes. CNN is reporting that two of the people involved met with an al Qaeda operative in Pakistan. Certainly this fits with al Qaeda's modus operandi.

We know from the July 7, 2005 attack in London that that was an al Qaeda operation. Two of the bombers recorded suicide videos with al Qaeda. They got bomb training in Pakistan and it seems to me that this next, this most recent London plot is a sort of much larger version of the plot we saw on July 7, 2005. Thankfully, of course, this was averted.

KING: Ron Suskind, does this surprise you?

RON SUSKIND, AUTHOR, "THE ONE PERCENT DOCTRINE": It is just the kind of plot that terrorism officials in the U.S. have been worried about for years, the so-called second wave to 9/11, noisy, visible, in some ways bigger to create an upward arc of terror and anticipation between this attack and whatever follows. Terror is the product of our enemies here. This is what they're about.

KING: Christiane Amanpour are things feeling safer in London now?

AMANPOUR: Well, things are very disrupted. I'm at Heathrow, which has born the brunt of the massive airline disruptions throughout the day, at other airports as well. They're saying here that they're trying to get back to normal by tomorrow. It's probably going to take some effort to do that. There's been a large backlog. Hundreds of flights have been disrupted.

When you ask people at the airports, you know, how they felt about the incredible intrusiveness now into what they're allowed to take onboard, the increasing restrictions, like no hand baggage of any type today except for passports and money and keys and things like that, medicine, but that's about it, you know some people are resigned.

You know that this nation is a stoic nation. It doesn't panic. It doesn't, you know, it doesn't -- it doesn't get all flustered and hot and bothered. People were mostly relieved that this plot had been thwarted and they were safe. But people do anticipate some frustrations. And, certainly we think and we're being told that future flying is going to be even more restrictive than it has been before today.

KING: John King, after listening to Rudy Giuliani, one would think that this is never going to go away is it? I mean our children are going to be raised with this.

J. KING: That certainly is the view of counterterrorism officials, Larry, in the government. It is the view of law enforcement officials in this government and certainly in the western nations around the world. It is also part of the political debate.

Let's be honest about this. This is a tragic event. Thank God it was stopped but even within minutes here in the United States because we're 80-something days away from election there was a political debate about this as well.

And, Larry, we were going to have to have this conversation anyway about a month from now when the five year anniversary of 9/11 hit and now we are going to have it in a much louder volume about are we really safer? Have we made progress in the global war on terrorism? Has al Qaeda been as damaged and decimated as the president and this administration say? What else needs to be done in this country?

Will this be with us for sometime? I think there's increasing evidence of it and I think Peter Bergen is a lot smarter than I am on this subject. One of the big debates is will we see more big, grand plots like this or will we see more of these smaller attempts on the subway systems, one incident or two or three terrorists involved as opposed to the big, grand plot?

Because this administration would tell you it thinks it's done a pretty good job of knocking out the corporate hierarchy of al Qaeda. The question is what is left out there around the world?

KING: Good point. Peter, what say you?

BERGEN: Well, I mean I think they put an awful lot of eggs in this particular basket with this London plan. You know, it was the same scale almost as the 9/11 plot in terms of the number of people that were involved, 24 arrests we're reporting.

I don't think they necessarily have a plan B. There wasn't really a plan B for 9/11. There were a couple of throwaways, people like Zacarias Moussaoui, Richard Reid, the so-called shoe bomber. They were very much division B.

So, if al Qaeda has a plan I think it's a much smaller one than the one that was disrupted now. So that's really the good news we can take away from today is that this was a large scale plan. You know these organizations don't have, you know, multiple, you know, huge plans like this in the pipeline.

I don't think al Qaeda does and so, you know, I think that this was their fifth anniversary spectacular for 9/11, something that was going to fall in that kind of time frame and it's been averted and this must be very, very bad news back at al Qaeda central on the Afghan-Pakistan border.

KING: We'll take a break, come back. We have an e-mail question for Ron Suskind and lots more. Don't go away.

(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: No one knew that this area of (INAUDIBLE) has been under surveillance for months. When armed police raided this house last night, eyewitnesses say it was dramatic.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: We're back with tonight's panel. Ron Suskind, the author of "The One Percent Doctrine" is in Hanover, New Hampshire. We have an e-mail for you from Linda in Atlanta, Georgia. Question, why are all of the major terrorist plots against the United States being identified by the U.K. does this mean the United States is being successful by keeping them out or are the U.S. intelligence operatives around the world not doing their job uncovering the plots against us.

SUSKIND: The UK has gotten better and better at infiltrating al Qaeda. Not only since the July 7th plot of last year, the attacks, but they have a large Islamic community, Muslim community in the United Kingdom. You know, they ran a strategy for years which is, let them be visibility. Let people speak out, often even with hate speech, so we can see them. We can see where they are. We can see what they're up to and create infiltration. We're not quite doing that so much here.

I mean, the key to this battle is human intelligence. We're going to go in to a frenzy of screening this and screening that. But ultimately, what will win is human intelligence. Infiltrators who manage for some reason to cooperate with us. I think that's what the lessons of this incident indicate. We need that to win.

KING: Christiane Amanpour at Heathrow, probably too early to tell, but, do we have a hero in this? Is there someone in the British intelligence who will be hailed tomorrow or the next day as the guy who thwarted the plot?

AMANPOUR: Well, I think, you know, the general thwarting of the plot will be hailed and already has been and I think that, you know, you asked me a while back do people feel safer. I think a lot of people are beginning to point out less the similarities between what's being thwarted today apparently and what was a successful attack last year. And more of the similarities between what was thwarted today and what was thwarted some 10, 12 years ago in 1994, when there was an al Qaeda plot to, again, blow up airliners over the Pacific and so some people are saying, well you know, they keep trying, they keep trying to do this and this is very worrying to a lot of people.

KING: John King, besides the fact that the plot was thwarted today, and that's good news, any other good news in this, do you think?

J. KING: Well, good news in the sense, Larry, one of the constant debates is the United States, any government around the world, changes its tactics and then the terrorists adjust. We have seen it since 9/11 here in this country. We are watching it every day as we are watching the insurgency in Iraq. We're watching it to a degree as we watch Israel fight Hezbollah now. Every group changes tactics.

You learn the lessons of the last war and you plan your next offensive or your next strategy. So if there's good news in this, it's that we know that they can carry bottles like this and little thing like this and get an electronic device and make a bomb. The bad news in that is, in the short term at least, you're going to have people grumpy in the lines going through. People saying why can't I bring this aboard an airplane, but if you talk to intelligence officials they say, OK, now they know that we know this and they'll try to learn another way.

KING: Peter Bergen, will we have a hero her, is there a hero, do you think?

BERGEN: CNN is reporting that there was an informant, a British informant, who basically revealed much of the plot. And, that person looks like hero to me.

KING: Yes. I guess he would be. Ron, would you, people have asked this, explain the one percent doctrine.

SUSKIND: It's a Dick Cheney creation. It says if there's a 1 percent chance of terrorists getting WMDs or doing something of massive destructiveness, we need to treat it as a certainty. Not in our analysis of the preponderance of evidence but in our response. This is the vice president's way early on, this defines almost everything that follows from 2001 forward of saying we may have to act on nothing more than suspicion.

The fact is we are trying to evidence, ardently, this is what this day is all about, but it's very difficult to get. And we often have to act on the thinnest evidence, even mere suspicion, using the awesome powers of the U.S. One of the key issues here, that I think other people have mentioned, is that when we act with this awesome force, sometimes when it's not targeted, we create more enemies than we know what to do with. Not just, we have a problem to solve, we create five problems that we then have to face.

I think one of the keys is not only tactical forcefulness, which I think is all about the discussion now, but how to not create more and more people who are angry at the United States and ready, prone to act violently. You know, if it's one out of a thousand people, that's so many. If it's ten out of a thousand, that's a lot. If it's a hundred out of a thousand, it's a violent Jihadist army beyond anything that we can match even with the resources and capabilities of the U.S. I think that's the broader issue. Tactics are one thing. We need a strategy. Where those tactics flow in to some longer purpose, they're measurable and we can say we're on the way to victory. We are not there yet.

KING: Thanks, Ron, Ron Suskind, the author of " The One Percent Doctrine." Thanks for joining us. We'll be calling on you again. Christiane, John King and Peter Bergen will be back towards the end of the program. We'll be back with more. Don't go away.

(BEGIN VIDEO CLIP) MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY: In light of the nature of the liquid explosive devices which were designed by the plotters, we are temporarily banning all liquids as carry-ons in aircraft cabins. That means no liquids or gels will be allowed in carry-on baggage.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We finally got through to departure, there were people there crying and getting upset because we were actually watching it on the screen and what was going on.

UNIDENTIFIED MALE: We were made to feel more at rest because we had been through rigorous security checks.

UNIDENTIFIED FEMALE: He had a tin of baby milk and it had to be handed in to a cup. He's only allowed to take a certain amount.

(END VIDEO CLIP)

KING: We welcome from Dulles Airport Jim May, the president and CEO of the Air Transport Association. That's the industries organization that represents, well, 90 percent of United States airlines. What do the new security measures generally entail, Jim?

JIM MAY, PRESIDENT/CEO, AIR TRANSIT ASSOCIATION: Larry, I think you have heard other guests talk about them this evening. It basically is a ban for carrying on liquids, gels, shampoos, a whole range of other products that fit the profile of the risk that we're facing right now.

KING: Why does it look so -- I'm sorry. Go ahead, Jim.

MAY: I'm sorry?

KING: I'm sorry. Go ahead.

MAY: And I think the other thing it entails is a second layer of security. So in addition to being screened at the checkpoint, they're also going to be doing random screening throughout the country at the gate itself.

KING: What was it like at Dulles today?

MAY: I wasn't here during the day, but we had a rough morning at Dulles, Boston, JFK and a number of other airports in the morning. It smoothed out significantly in the afternoon. And by the end of the day, we had a fairly normal experience.

We anticipate that will be the case. Our bookings are holding fine. And I think the message we want to send our customers and our crew is that we continue to have an extremely safe flying experience and one that people should be confident in, as Rudy Giuliani and others have said earlier tonight.

KING: Your association says these measures are temporary. Why temporary?

MAY: I don't think we have said temporary, but, Larry, but I think that we have always said that the measures that are taken by TSA, DHS ought to be consistent with the risk or the threat of the risk. We think that these are perfectly appropriate for the time that we are in. As we go down the road, there may be a change in the level of risk. And accordingly, there may be a change in the kind of screening that is done by TSA.

KING: Any advice you want to give to people who are going to fly tomorrow?

MAY: My big advice is pack light. Put everything in your checked baggage. Take as little as possible on the plane, and be prepared to be screened not only at the checkpoint but at the gate itself. And don't take any liquids, gels or any of the things that have been so frequently mentioned on the show tonight.

KING: And arrive how early?

MAY: I would -- I would arrive an hour and a half to two hours in advance, Larry, although experience later today showed that wasn't necessary. You have an opportunity to go in and have a cup of coffee and relax a little bit before boarding your flight.

KING: Thank you, Jim. Jim May, president and CEO of the Air Transport Association. We invited the heads of all the allegedly targeted airlines, by the way -- United, Continental, American and British -- to appear on tonight's program. All declined.

Let's go to New York City and Mary Schiavo, a formerly frequent guest on this show, former inspector general for the United States Department of Transportation. As an attorney, she specializes in aviation-related litigation. Her clients include family members of the 9/11 hijacking victims. What's your reaction to today?

MARY SCHIAVO, FORMER INSPECTOR GENERA, U.S. DEPARTMENT OF TRANSPORTATION: Well, we were extremely fortuitous, because if they had not foiled the plot -- the intelligence was very important -- it was pretty widely recognized that they would have not been able to pick up these materials at the airport. These are called modular bomb sets, meaning they come in pieces and they assemble them on the sterile side or the air side of the airport, and that has been a known weakness for well over 10 years since the Bojinka plot was foiled, that we have a real problem picking those up at security. So we were very lucky.

KING: Mary, we have an e-mail question from Tony in Orlando, Florida. He sounds worried. The question is -- "Why are there still no armed, uniformed sky marshals on every flight?"

SCHIAVO: Money. The reason is money. We have substantially more now than we had on 9/11. On 9/11, I think it's no secret now, on 9/11 we had three dozen. But the reason they don't put them on every flight is because of the expense of putting them on the flights. And they do try to target the more risky flights, international plights, larger planes, et cetera and flights out of places like Washington, New York, as been widely reported. But the real reason beyond that is money. It's expensive.

KING: Why, Mary, is security -- I guess that's life -- more reactive than proactive?

SCHIAVO: Well, in part it is reactive because that's the way our laws and that's the way our regulations are set up. We actually have a federal regulation called the cost-benefit analysis, and we actually have to show before we can require additional regulations in aviation and other federal regulations, there will be loss of life without it. And the problem is, is anything that's expensive, airlines and others, including our own FAA in the past, have fought the regulations, saying they're not worth the expense. So in many ways, we make ourselves be reactive, and we're probably doing it again.

I'm dismayed about the comment about the liquids being temporary, because people will remember just a couple of months ago the TSA announced they were going to allow sharp objects, some sharp objects on the plane again so they could concentrate on explosives. That's good, but if you push in one area and relax in another, that's what they are going to do.

Bojinka was in '95. This is a reworked Bojinka plot, probably with some advice from some Korean operatives. There was a bombing similar to this on a Korean plane as well. And they look for the vulnerabilities in the plane. So they are reworking old plots.

KING: Thank you, Mary. We'll have you back soon. Mary Schiavo, the former inspector general for the United States Department of Transportation.

Here are the new security measures from the Transportation Security Administration. No liquids or gels of any kind will be permitted in carry-on baggage. Such items must be in checked baggage. Here's what's prohibited: All beverages, all beverages, shampoo, sun tan lotion, creams, toothpaste, hair gel, and other items of similar consistency. What is allowed is prescription drugs, but the name must match the ticket name. Essential nonprescription medicines, like insulin, of course, will have to be added. If you're traveling with a baby or a small child, formula is allowed, so is breast milk and juice.

Anderson Cooper will join us at the top of the hour. He is in London with the "AC 360." What's up tonight?

COOPER: Larry, we are going in-depth on this alleged terror plot. In particular, we're going to look at what we know about the alleged plotters. Young men, many of them from Great Britain. Two of them, government sources say, made a trip to Pakistan, met with an al Qaeda representative. We're trying to find out late-breaking details on exactly what they did in Pakistan and who they might have met with. Also, take a look at the chemicals said to be involved in this alleged attack. Common items, liquid chemicals, easily brought aboard a plane. We'll look at exactly how these chemicals could be used to bring down an airliner. A lot to discuss, Larry. That's at the top of the hour.

KING: That's "AC 360" at 10:00 Eastern, 7:00 Pacific. We'll be back with two members of Congress. Don't go away.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We want all liquids in here.

UNIDENTIFIED FEMALE: Lotion. Mouth wash.

UNIDENTIFIED MALE: Perfume.

UNIDENTIFIED FEMALE: $80 worth of makeup. Oh. That hurt.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Joining us now from Stanford, Connecticut, Congressman Chris Shays, chairman of the subcommittee on National Security. And in San Francisco, Congresswoman Ellen Tauscher, a member of the armed services committee. Congressman Shays, are you surprised?

REP. CHRIS SHAYS (R), CONN.: Not surprised. This is the world that Ellen and I live with every day but the outside world is discovering it. So this is a good day because we caught 'em. And I make this point to you. The Cold War strategy of contain and react and mutually assured destruction went out the window and it's got to be detect and prevent. It has to be preemptive and sometimes it might even have to be unilateral.

KING: And Congresswoman Tauscher, your thoughts?

REP. ELLEN TEUSCHER (D), CALIFORNIA: Well Larry, I think we are all shocked this morning to hear about what was plotted in the UK and perhaps Pakistan. I think it's, we have to be enormously grateful that we have good allies like the UK, specifically, with great intelligence. I think we have to really amp up our own efforts, leverage what we find out in the next few days about the alleged plotters and then we have to kind of get ahead of where we are right now, which is a defensive mode. We have to get into better detecting and better defensive, so that we are not finding ourselves always adjusting as they adapt to find a new way to get at us as quickly as they can.

KING: Congressman Shays, I know you pushed for the screening of all cargo before its transported on passenger planes. Why isn't it being done?

SHAYS: Well it's not being done in part because of expense but it's really foolish. We check carry-on baggage. We check the baggage in the belly of an airport, but 21 percent of what's in a passenger aircraft is actually cargo and they say, well, we check it but we check it by just saying it's a known carrier. We don't care who the carrier is. We want to know what is in that cargo.

KING: Congresswoman Tauscher, Senate Minority Leader Harry Reid said the Iraqi war diverted our focus and more than 300 billion dollars in resources that could have been used to prevent items like this. What do you think?

TAUSCHER: Well, Larry, it is true. We still have a number of items that the 9/11 commission recommended that we haven't implemented. Chris is right. We still don't do cargo on passenger planes. We need to do much more explosive detection. We have to really spend and really understand the intel piece of this. We have to have better allies out there that are going to give us better intel, more quickly. You know, here in California, both of our airports, Oakland and San Francisco, people really kind of adjusted to the new normal today. They were very cooperative.

The American people, I think, generally today, understood the they were going to be inconvenienced but really wanted the peace of mind of knowing that we were a little bit ahead of what was going on. But this is a very new paradigm. You know, your cell phone now is called a detonator and simple things like Gatorade apparently can be used as a component of a bomb that could take your plane down, so I think people are very weary and they want to know that we're doing things.

KING: Chris, would you safely fly commercially tomorrow?

SHAYS: I would fly commercially, but I realize just like if I'm on the road, a drunk driver could hit me and kill me. I mean I understand that. But what I'd like to point out is in the late '80s, early '90s, we had explosive devices in Gin bottles. We had Checkeslovakian explosive mats on the body, in the bottom of shoe bags. This is nothing new and the real important thing, Larry, I want to emphasize is we have to be able to have good intelligence that's able to detect and prevent. That's why you need a Patriotic Act. Think of all the people complaining about not getting good information that didn't support the Patriot Act.

KING: I'm sorry. We're so limited on time. We'll have you both back. Congressman Chris Shays, Congresswoman Ellen Tauscher. We'll take a break and return with our panel on this edition of LARRY KING LIVE. Don't go away.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's, you know, quite disturbing, really, about what's going on, but I mean, at least, it's something positive. They foiled this.

UNIDENTIFIED FEMALE: Well it's security, isn't it? It's a bit annoying, but safety first.

UNIDENTIFIED MALE: Thank God for the London police and this whole terrorism thing is just so frightening and despicable.

(END VIDEO CLIP) (COMMERCIAL BREAK)

KING: We have limited time with our panel. I want to ask John King what he makes of the U.N. resolution, is it going to happen?

J. KING: Larry, they do have a tentative agreement. The United States and France have agreed on language. They were shopping it around tonight to the other permanent five members and the other members of the Security Council, showing it as well to the government of Lebanon and the government of Israel. They have come up with a sequencing. We have been talking about this all week. The Lebanese army and a newly expanded United Nations force in Lebanon as that army and the U.N. force came south, Israel would withdraw and Hezbollah would be required to get out of the south of Lebanon and move to the north. They think they have a deal. They're going to try to unveil this tomorrow. Looking for a vote in the Security Council early afternoon Friday time in New York City.

KING: Peter Bergen, our terrorism analyst, what concerns you the most about this plot that was foiled today?

BERGEN: Well, I mean, I think it is mostly a good news story. This was their big attempt. It was averted. There are five supposedly suspects who are out there that have not been found. Obviously these guys are potentially quite dangerous. So I think that's the main concern is finding the other people that they haven't yet arrested.

KING: Christiane Amanpour, has a calm developed at Heathrow?

AMANPOUR: Well, it is not that calm. I mean it is now because it's not crowded. It is in the middle of the night or early morning here but the level is still critical here. And critical means that they fear an imminent threat so the threat has not gone, although the main plot, we're told by authorities, has been thwarted. Also, I think people are taking some comfort in the fact that Pakistan is often the problem but often the, part of the solution, as well. It was the arrest of several people in Pakistan that then led the British to realize that this was something that was about to happen imminently and they found out and went to all these places, made all these arrests, so there's quite some comfort in the fact that there is, at least in this instance, some good working together between intelligence agencies.

KING: Peter, we only have 30 seconds. Why is global aviation such an appealing target for al Qaeda?

BERGEN: I think it is, you know, particularly with an American airline, it's American citizens being killed, it's an American brand name that's being targeted. Tourism, aviation are critical to the global economy. They want to attack United States and its economy. This is a very good way to it.

KING: And John King, the mood in Washington is what?

J. KING: Well, Larry, the mood is one of gratefulness that nobody died and this plot averted, but there's also, because we are in the political atmosphere and election year, you have an immediate debate about this that will continue. The volume turned up, if you will, a debate that would have started right around the September 11th anniversary, starting about a month early because of this terror plot. Good news that it was averted, but a whole host of questions about what we should do about airline security, whether the president has the right strategy. Welcome to an election year.

KING: Thanks, John. As per usual, terrific coverage by our correspondents everywhere. One of them is Anderson Cooper. He is standing by at Heathrow in London and he will anchor "ANDERSON COOPER 360" for the next couple of hours. Anderson, it's yours.

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