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THE SITUATION ROOM

24 Arrested in Terror Plot To Blow Up Trans-Atlantic Flights; Michael Chertoff Interview; Ed Royce Interview; Intense Firefights Raging Across Southern Lebanon as Israel Takes War Against Hezbollah Into New Areas

Aired August 10, 2006 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks very much, Susan.
And to our viewers, you are in THE SITUATION ROOM where new pictures and information are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you today's top stories.

Happening now the United States, Britain and the world on terror alert. British officials say they have nabbed the main players in an alleged plot to blow up flights in the United States, to the United States as well. It's 9:00 p.m. in London where investigators are looking into an al Qaeda connection to what could have been mass murder on an unimaginable scale. Right now airline security at a new level.

It's 4:00 p.m. at JFK airport in New York. We will have a live report on what you need to know and what you need to get rid of before you get on a plane.

And I will ask the Homeland Security Secretary Michael Chertoff if his department was ready for all of this.

And fierce new attacks here in the Middle East. It's 11:00 p.m. in Lebanon where Israeli forces are taking their fight against Hezbollah into new places. We're live on the front lines. I'm Wolf Blitzer in Jerusalem. You are in THE SITUATION ROOM.

Here in the Middle East, there's new intensity to the warfare between Israel and Hezbollah. We are going to bring you all the latest developments and we're going to go live to the combat zone in a few moments.

First though our top story and it is still unfolding. Twenty four people now are under arrest accused of being close to carrying out a plot to blow up flights from Britain to the United States. A U.S. government sources tells CNN they are all British citizens, some of Pakistani decent.

Scotland Yard says the suspects were nabbed in several locations across Britain overnight. And officials in Pakistan say authorities there made some arrests as well in connection, coordination that is with Britain. CNN has just confirmed a report that two alleged ringleaders of the terror blot recently traveled to Pakistan and were wired money to purchase tickets for alleged suicide bombers. A U.S. Homeland Security memo says the bombers hoped to simultaneously blow up as many as ten planes in flights, using liquid explosives, overlooked by X-ray machines. U.S. government officials say the planes would have been heading from London's Heathrow airport to New York, Washington, D.C. and to California. And they say British Airways, Continental, United and American Airlines would have been targets. U.S. officials say the foiled plot appears to have all the hallmarks of al Qaeda.

Meanwhile British authorities immediately put that country on its highest state of alert, more than 400 flights in and out of Heathrow Airport were simply canceled. Travelers there still are experiencing severe disruption, but the airport officials there on the ground say the situation is easing a little bit.

In the United States, the Homeland Security Department ratcheted up security for commercial flights coming from Britain to the highest terror threat level. That would be red here in the United States and the threat level was raised to high or orange for all commercial flights in the United States.

Security agents are imposing new and severe restrictions across the board. Air travelers in the U.S. are not being allowed to carry any liquids onto the planes, that includes beverages and a wide variety of items, such as hair gels, lotions, lip gloss, and even roll-on deodorant.

Our correspondents are covering this important story from every angle and on both sides of the Atlantic. Becky Anderson is in London's Heathrow Airport, Mary Snow is at JFK Airport in New York and our chief national correspondent John King is in Washington. So is our Homeland Security correspondent Jeanne Meserve.

Jeanne let's begin with you. Update our viewers on what we know.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf U.S. officials say the plot was as sophisticated as any they have seen since 9/11 and it was on the verge of going operational when British authorities moved in and broke it up.

(BEGIN VIDEO CLIP)

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: The terrorist planned to carry the components of the bombs, including liquid explosive ingredients and detonating devices disguised as beverages, electronic devices or other common objects. While this operation was centered in Great Britain, it was sophisticated. It had a lot of members, and it was international in scope. This operation is, in some respects, suggestive of an al Qaeda plot. But because the investigation is still underway, we cannot yet form a definitive conclusion.

(END VIDEO CLIP)

MESERVE: Officials call this the real deal. The threat level on flights from the United Kingdom into the U.S. was heightened just as high as it could possibly go. That's to red. That is an unprecedented step and other flights within the U.S. and flights into the U.S. were hiked up to threat level orange and liquids, as you mentioned, and gels were banned, even though U.S. officials say at this point they have no evidence of any plotting in the U.S. and no connections here in the U.S. Local officials sometimes went further than the government required.

Some of them did things like activating the national guard. They deployed additional police, some with heavy arms. They did additional roadblocks. Officials can't say how long this extra security is going to be in place. They say that all depends on this investigation and how it unfolds in the days and weeks ahead. Wolf, back to you.

BLITZER: I take it, Jeanne, the suspicion is, even though they have rounded up a couple dozen suspects in this alleged plot, there is fear that others remain at large? And as a result the higher security levels that have gone into effect, is that right?

MESERVE: That's absolutely right. Officials have made it clear that they do not know if they have gotten everybody in yet. So the investigation is continuing. Another thing they've mentioned in connection with this heightened threat level is that they are wary of copycats, people who will read about this threat and try and replicate it. So that's another reason why they have heightened the level to the extent they have.

BLITZER: All right Jeanne, thank you very much. Jeanne Meserve reporting for us. Let's find out how all the stepped-up security is being felt at various international airports. Mary Snow is at John F. Kennedy Airport in New York. What's it like there, Mary.

MARY SNOW, CNN CORRESPONDENT: Well Wolf, it's being reported here, significant delays and people are being advised to get to the airport at least two hours before the flight. Passengers are being told absolutely no liquids in their bags and that includes everything from shampoos, to perfumes, to solutions for contact lenses, toothpaste, any kind of cream. This as security has been stepped up.

Now, what is happening here, too is we have been getting some flights coming in from London and security was intense there. Some of the passengers clearly shaken. Those passengers flying into New York were not even allowed to carry any handbags.

They walked off planes with their belongings, passports and wallets, in plastic bags. And some say that they took comfort knowing that security was very high and therefore they said they overcame the second thoughts about boarding planes into the United States. We spoke to one passenger who flew on American airlines.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We had some concerns about whether we should fly or not, and there were some people that decided not to fly. And, but we were made to feel more at rest because we had been through rigorous security checks, because we could see people weren't carrying things onto the plane and at the end of the day, it's probably safer to fly today than any other day.

(END VIDEO CLIP)

SNOW: Now passengers in the United States are also being told that they can carry baby formula onto flights but it will be inspected. Also prescription medication, but it must match the name of the passenger. People are being told to call ahead to their carriers, and here at JFK international flights are only going to be picking up as the evening goes on, so people are being warned that these delays could get more extensive. Wolf?

BLITZER: Are you getting the impression, Mary, talking to passengers there that some are just grinning and bearing it and others are simply canceling their plans to go and fly? Give us a little sense of how people are coping there.

SNOW: You know, wolf, we de get the sense that some people were canceling their flights. But in talking to these passengers, and we talked to one man who said that these kinds of threats have been in the back of his head since 9/11. He said he flies all the time. And many people we spoke with today said that they felt that this has just become a part of life here and they were gratified that security was being stepped up, but they said that they had no other choice but to fly.

Clearly, some people did cancel their flights and we heard from passengers getting off that American Airlines flights from London who described people watching the TV screens, crying and clearly being upset. But they said they credit the airline and the pilot for calming them down.

One woman even saying that they applauded when the plane landed here today and that the pilot had spoken to them on board the flight about the threat and saying that they were on the safest plane. So clearly, this has become a way of life for many of these people.

BLITZER: And I can only assume that a lot of people who did board some of those flights, especially international flights, must be a little bit nervous or at least perhaps even very nervous even sitting on those planes.

By the way, we have two correspondents who did board a flight from New York to London. They're on those planes right now. We're going to speak to them shortly, as soon as they land at Heathrow airport.

Mary Snow, thanks -- Mary Snow at JFK.

Let's go to Heathrow, though, in the meantime. CNN's Becky Anderson is there, has been there for some time. Set the scene, Becky, for us -- what is it like at Heathrow? Supposedly the source, the airport where these flights were supposed to leave Britain, heading for the United States.

BECKY ANDERSON, CNN CORRESPONDENT: That's right, Wolf. This is one of, if not the, busiest international airport in the world. There's 180,000 people who would have been at this airport today on a busy August day, it's a summer holiday, it's vacation time, and something like 1,800 flights should have been taking off. Most of those were either suspended or canceled for most of the day today. It's been absolute chaos at this airport.

You might have just heard a plane taking off behind me. They would normally be taking off every 90 seconds or so, Wolf. We are beginning to see the volume coming back and authorities here say that they are trying to get some of these flights off the ground here. They say it will be another 48 hours of disruption at least.

But let me give you some sense of exactly what's been going on. It was mostly domestic and short-haul European hop flights that were canceled today. The British Airports Authority, which runs this airport, had asked most European carriers to suspend their flights.

British Airways itself said it canceled some 400 flights of the 820 flights that would normally fly in and out of here and out of Gatwick airport, which is just to the south of here. So an awfully big number of flights canceled and an enormous amount of people still of course at the airport as it stands at present.

B.A. tell us that some 60 percent of their flights out of here should take off at some point tomorrow. We are seeing two-and-a-half- to three-hour delays, on the transatlantic flights as well. But it's interesting to think that it was probably B.A. that was targeted as one of these airlines and we were looking at the potential for blowing up as many as ten flights, airplanes in flight, over the Atlantic. But it isn't necessarily the transatlantic flights that have been hit as badly as the European and the domestic ones. That's how it stands here at present. Wolf?

BLITZER: Quickly, Becky, I take it they canceled a whole lot of flights out of Britain, but have a lot of people there, based on some informal survey you've looked at, decided they simply don't want to risk it? They're not getting on any planes?

ANDERSON: Yes -- I mean, it's difficult to say at this point. There's an awfully big number of people who have just decided that it's not worth hanging around. It's going to be extremely difficult to get on any other flight out of here in the next 48 hours.

But the idea being that it's not worth hanging around at the airport. There are people with sort of six, seven, eight members of their family, with 14, 15, 16 pieces of luggage. They've had to unpack that, effectively, and they'd have to recheck it. And they have to put all their handbag gage into their luggage which will be stowed at this point. It's extremely difficult. New rules and regulations about what you can and can't take onto planes. And there are some people who've just decided not to fly at this point. Wolf?

BLITZER: Becky, thank you very much. Becky Anderson at Heathrow airport in London.

We are going to speak shortly with the secretary of Homeland Security, Michael Chertoff. We're going to go to him and get his assessment of what's going on. But Kelli Arena is watching all this as well, our justice correspondent. She's getting new information now on this alleged terror plot. Kelli?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, as you know, lots of questions about why British officials felt they needed to move in now. We have just confirmed that two martyrdom tapes were found as part of this investigation. Martyrdom tapes are tapes that terrorists make before they are going into a suicide mission. They are usually left as a communication for after the fact. So we have confirmed that two martyrdom tapes were found.

And Wolf, as you know, lots of connections leading to Pakistan as part of this investigation. First of all, an arrest in Pakistan, we have been told by several officials in the U.S. and in Pakistan, lead British authorities to find out some more specifics on this plot and also lead them to move in on these alleged plotters as quickly as they did.

We have also found out from several government officials that two of the suspects traveled to Pakistan recently and also had money wired to them from Pakistan. We don't know exactly what that money was to be used for, but, again, all of these signs indicating that this may have been a plot that was ready to go operational, Wolf.

BLITZER: Kelly, thank you very much. Kelli Arena, working her sources on this huge story.

President Bush, meanwhile, is calling the alleged terror plot a stark reminder that Americans are at war against what he calls "Islamic fascists." Our chief national correspondent, John King, has been working his own sources -- he's got excellent sources. He's joining us now live. What are you picking up, John?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, we're getting some fascinating information about the investigation and about what intelligence sources here in the United States, based on what they're hearing from Great Britain and based on their own investigations, think was about to happen, think what these terrorists wanted to do on this plot. But it is perhaps inevitable -- we're so close to the midterm elections -- that there's also a political debate already about the government's response and what President Bush has done in the almost five years now since 9/11.

You mentioned the president's comments -- he made those upon landing in Green Bay, Wisconsin, today. He was there to talk about the economy. We know from administration officials he talked at least twice to Prime Minister Tony Blair about this investigation -- once over the weekend, he was given an update from Prime Minister Blair that the investigation was continuing. And then yesterday, he spoke to the prime minister again. He was told then that the British authorities thought it was necessary for them to act with these dramatic arrests overnight.

In his remarks in Wisconsin, the president saying in his view the American people are safer now than they were just before 9/11, and the president also going out of his way to thank the British intelligence services for their work in this case.

(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: Some Arab-American groups already criticizing the president's use of the term Islamic fascists and Wolf, there has just been a flurry of press releases, back and forth, from political figures -- Republicans saying this is the reason to keep up vigilance in the war on terror, Democrats saying it's proof to them that this president has failed in the war on terrorism.

As all the political finger-pointing goes on, we're learning some fascinating information from intelligence sources about what they say is a plot to use everyday items -- perhaps to use a hair gel tube or a toothpaste tube, some sort of something in a makeup kit -- to carry on an explosive paste, perhaps to use a British version of Gatorade, a sports drink, to use that as part of what we're told would be an explosive cocktail that they wanted to detonate, Wolf, in nine or ten planes over the Atlantic, carrying Americans and others from the UK here to the United States.

BLITZER: And the theory was that all these planes, presumably, John, based on what you're hearing, would blow up -- let's say, ten planes, almost simultaneously in a spectacular demonstration of what they call these alleged terrorists, martyrdom?

KING: Exactly right. Intelligence officials are saying what these men were plotting was a spectacular event that would rival, if not surpass, 9/11. They say the planes were, according to the plot, if it were carried out, to go off in succession, much like you had the planes on 9/11.

Many are comparing this to a foiled al Qaeda plot back in the 1990s, when there was a plan to blow up perhaps as many as a dozen planes over the Pacific. That's one of the reasons people are saying they believe there is some al Qaeda link here, because they say it is so familiar, so reminiscent of the plan that was foiled back in the 1990s.

BLITZER: They say it has the hallmarks of al Qaeda, even if they are not yet 100 percent sure it is al Qaeda. Thanks very much. John King doing some excellent reporting for us today, all day here on CNN.

And there's another major story we are following, namely the war right here in the Middle East between Israel and Hezbollah. Let's go to Zain Verjee in Washington. She's getting some new information -- Zain.

ZAIN VERJEE, CNN ANCHOR: Wolf, CNN has been able to confirm that the British prime minister, Tony Blair, believes that there could be a potential deal over at the U.N. in New York on a Security Council resolution, ending the fighting in Lebanon. It could happen within 24 hours, says a spokeswoman from the British prime minister, Tony Blair's office.

As you know, there have been intense diplomatic activities at the U.N. to amend a draft resolution that's currently on the table. Lebanon has been saying, look, we're really unhappy with it. And what they want is an explicit demand in the resolution that Israel withdraws from Lebanon. But that's all we're getting right now, Wolf, a confirmation that Tony Blair thinks there could be a potential deal at the U.N. Wolf?

BLITZER: And the keyword, Zain, being potential. Let's see if that happens. There have been hopes that have been raised over these past several weeks, hopes that have been dashed. We will see what happens over the next 24 hours. Much more on this story coming up here in THE SITUATION ROOM, the crisis, the war unfolding right here in the Middle East.

Jack Cafferty is off today. "The Cafferty File" will return here in THE SITUATION ROOM on Monday.

But this hour, much more on our top story, a major terrorist plot thwarted. Did the system work? Was America prepared? I will ask the Homeland security secretary, Michael Chertoff. He will join us in THE SITUATION ROOM.

Plus the political impact. Will this plot make an impact with voters at the polls in November?

And later, there's no let-up in the fighting here in the Middle East. We're going to go live to the frontlines. We're reporting live from Jerusalem, and you are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back. A terrifying scheme to blow up airplanes filled with passengers heading to the United States was in its final stages. That's what the Homeland Security secretary, Michael Chertoff, says about the alleged terror plot uncovered by British police.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, the secretary of Homeland Security, Michael Chertoff. Mr. Secretary, an incredibly difficult day for you, for a lot of people right now. What can you tell us about these reports that are coming into THE SITUATION ROOM even as we speak that two of these alleged ringleaders, masterminds of this alleged plot, had martyrdom tapes ready to release, that they were ready to die to explode these planes?

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: Well, Wolf, let me say it's clear that the plot that was disrupted by British authorities over the last 24 hours was a plot that involved suicide bombing. And the plan was to have multiple suicide bombings on aircraft, essentially at the same time. So we know that the people involved were, in fact, intending or expecting to lose their own lives.

Now, as far as the specific evidence is concerned, you know, the British courts are very careful and very strict about what we can say, so I don't want to spoil the prosecution in Britain, but I do want to emphasize this was a case that would have involved the loss of an enormous amount of innocent life had the plot been successful.

BLITZER: How many planes, specifically, were targeted?

CHERTOFF: You know, I don't know that I can give you a definitive answer to that. I think we're still investigating. We've uncovered a lot of material. The British have, and so it may take awhile before we get a precise picture. 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 has not yet resolved. We don't know. But it was, under any circumstances, an attack which had the potential to kill hundreds of thousands of people.

BLITZER: Was it -- and I know you are limited to what you can say, but was it designed that all of these planes would blow up over the Atlantic, or as they approached major American cities, whether New York, Washington, or Los Angeles, and explode into buildings or over populated centers?

CHERTOFF: Well, I have to say, I am not aware of any indication that the intent was to make the plane into a weapon. It seems to me that, from what we understand, the plot here involved destroying the planes themselves but, of course, doing it in a way that would not alert other planes to the eminent danger.

There is actually a precedent for this. A little over 10 years ago, Khalid Shaikh Mohammed, who eventually was the mastermind of the World Trade Center attacks on 9/11, came up with a similar plan to detonate, I believe, 11 explosions in 11 airplanes over the Pacific Ocean.

Now, that plot was foiled when it was uncovered by authorities, but that has always been out there as a kind of iconic terrorist plan, and in some ways, what we've seen here resembles that.

BLITZER: Which raises this question: If the U.S. and other countries have known about this potential of using some sort of liquid explosive to blow up a plane, why has it taken until now to implement the kind of security procedures to deal with this potential threat?

CHERTOFF: Well, of course, we are always looking at putting in security measures to deal with explosive devices. And a lot of the measures we've put into effect dealt with the kinds of devices that were around and being used by terrorists and being built by terrorists over the last 20 years.

We have also, however, been looking at what I call cutting-edge techniques that terrorists might develop in creating improvised explosive devices. And we've quite a bit of work on liquid explosive, which are challenging.

And in this instance, because of the fact that it looks like a sophisticated design and because we haven't had an adequate time to really study what the design was, we felt it was prudent to prevent any kind of liquid from coming on the plane.

Eventually, we will look at what they did, we will reverse- engineer it, and we'll make sure that we make adequate countermeasures in place so that we can prevent these kinds of bombs from coming on board.

BLITZER: Right now the X-ray machines at airports around the United States and around the world, I take it, cannot detect some sort of liquid explosives along the lines in this alleged plot?

CHERTOFF: I would not make that assumption. What I will tell you though is since we, obviously, did not have an opportunity to study the bombs before we took down the arrests, and because it may take some time to really analyze and understand what they have done, the prudent course was to prevent any kind of liquid that might be harboring an explosive device from coming in.

Once we've had an opportunity to study the devices that were being planned and designed here, we will have a better idea what adjustments, if any, need to be made in our screening tools.

You know, we're in a race, in a sense, against terrorist ingenuity, and just as we see in the war in Iraq, the terrorists continue to try to retool their devices to defeat our defenses, and we constantly revise our defenses to defeat their devices.

BLITZER: There is a report now that the Associated Press is noting, that these terrorists -- these alleged terrorists -- were getting ready for a dry run of this plot within two days. Is that true?

CHERTOFF: Again, Wolf, I want to be careful to respect the British process and not get specific about evidence. But I can say is it's not uncommon. And historically, in fact, we have seen that these kinds of plots almost always have a dry run or a casing element before the actual plot is carried out.

And going back to that 1994 plot I told you about, involving the airliners over the Pacific, they, in fact, did a couple of dry runs before that plot as well.

BLITZER: How long will this heightened procedure, this heightened security alert at U.S. airports remain in effect? In other words, what will trigger going back down to that reduced level?

CHERTOFF: Well, as we get a better picture of the plot, as we get a better understanding to what extent we have actually scooped up everybody involved, we will be in a position to judge whether the threat is still as alive as we have to consider it to be today. But, you know, the motto here has to be, better safe than sorry. We know it's inconvenient. It certainly makes traveling more of a hassle than it was a few days ago.

On the other hand, we don't want to lose even a single life because we were careless or because we were too quick to let up. So, we are going to be careful. There's a lot more material to analyze. This is a complex investigation, as the British authorities have repeatedly emphasized.

And, so, we are going to be as deliberate and as -- as expeditious as we can be, in trying to get our arms around the entirety of what we're looking at, so we can make some good judgments about how to keep the American people safe.

BLITZER: Is this the work of al Qaeda?

CHERTOFF: Well, as I think I said, and Attorney General Gonzales said today, it certainly has some of the hallmarks of an al Qaeda plot. And it's suggestive of an organization such as al Qaeda.

On the other hand, I don't want to rush to judgment. There is a lot of evidence that has to be sifted. And we want to go through that process with the British before we draw a conclusion.

At the very least, I can say this, though. We are dealing with a plan that is every bit as sophisticated as the kind of plans we have seen al Qaeda carry out. So, whether or not, at this moment, we can conclude it is al Qaeda, we can certainly suggest, the plan presented the kind of threat that we would consider to be similar to an al Qaeda type of threat.

BLITZER: Susan Collins, senator from Maine, says this plot was the biggest terrorist threat since the attacks of September 11, 2001. Do you concur?

CHERTOFF: I think that's a fair observation, based on my knowledge of what has gone on in the last five years.

BLITZER: Secretary Chertoff, thanks very much for joining us. We will continue this conversation.

CHERTOFF: Wolf, I look forward to it.

(END VIDEOTAPE)

BLITZER: And, up next: Once they found out about the plot, did White House officials brief top members of Congress? I will add -- I will ask Congressman Ed Royce. He's a leading House Republican. He's here in Jerusalem with me.

And, later: no letup in the fighting in Israel and Lebanon -- we will get fresh reports from the front lines.

I'm live in Jerusalem, and you are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer, reporting live tonight from Jerusalem.

The discovery of the alleged plot to blow up packed U.S.-bound airliners is a stark reminder that the war against terrorism isn't over, by any means -- those words today from President Bush.

Joining us now in Jerusalem is Congressman Ed Royce. He's the chairman of the House Subcommittee on International Terrorism and Nonproliferation.

You have been briefed, I take, on this plot. Have you?

REP. ED ROYCE (R-CA), HOUSE SUBCOMMITTEE ON INTERNATIONAL TERRORISM AND NONPROLIFERATION CHAIRMAN: I have been here in Israel the last four days.

I have not been briefed. And, arguably, this is more a law enforcement issue than a policy issue. So, it's possible that the administration would argue that they wouldn't need to brief Congress until after this has been...

(CROSSTALK)

BLITZER: Well, what's your take? You study counterterrorism. You look at this all the time. What -- is this a big deal, a little deal, based on what you have been told?

ROYCE: Well, this is clearly an al Qaeda-style operation, probably orchestrated by al Qaeda, and attempt for a really spectacular terrorist attack.

BLITZER: Do you sense, because some are already saying -- and we are approaching on 9/11, the fifth anniversary of the September 11 attacks -- that this could have been timed to coordinate, to coincide, with the fifth anniversary? Because we know al Qaeda is always looking for some new terrorist action. And they're patient, something even more spectacular than the past.

ROYCE: Well, I think they definitely thought that the timing would really be a shock to the world economy.

Now, whether or not they were going to try to coincide that precisely with a date, I don't know. But I do think they came up and rehearsed and prepared something here that they thought would really send the economy into a tailspin for the West.

BLITZER: Let me read to you briefly what Senator Harry Reid, the Democratic leader in the Senate, said.

He said: "As a result of mismanagement and the wrong funding priorities, we are not as safe as we should be. The Iraq war has diverted our focus and more than $300 billion in resources from the war on terrorism, and has created a rallying cry for international terrorists." Do you want to respond...

ROYCE: Well...

BLITZER: ... to the Democratic leader?

ROYCE: The reality is that al Qaeda has been trying to attack the United States since long before Iraq.

And, as a matter of fact, this was a successful prevention -- prevention -- of an al Qaeda attack. Al Qaeda is on the run, partly because the United States is in Afghanistan, pushing on al Qaeda, and working internationally to cut off the flow of funds to al Qaeda. They are having a difficult time. They failed in this endeavor.

BLITZER: Now, you are here in Jerusalem. You are in Israel. You are studying what's going on. There's a war going on in the north.

You were up in Haifa earlier today. And you got some firsthand evidence of what that war, in part, is all about.

ROYCE: I did.

I was at the hospital, the trauma center there in Haifa. It was during a period where it was attacked. There were two rockets that came in. And there were casualties, civilian casualties, brought in.

BLITZER: So, the sirens were going off when you were there?

ROYCE: Indeed. The sirens were going off.

And, in addition, earlier in the day, there were rockets on a residential neighborhood. They brought in one of those rockets, Syrian-made -- actually, Iranian, and then they transferred to the Syrians. And then Hezbollah got their hands on the rocket.

But one of the things that I picked up on were the ball bearings that they put in these rockets. Now, they tell me, there's 50,000 to 80,000 of these ball bearings that go into every one of these Katyusha rockets. They're -- in addition to the charges...

(CROSSTALK)

BLITZER: And they go off. And they are designed to kill and maim.

ROYCE: They are designed to take out civilians.

This is a weapon expressly designed to attack civilians. And to see the kind of damage -- there have been 650 citizens of Israel, both Arab citizens and Jewish, that have gone through that hospital. And I saw some of the effects of this weapon today.

BLITZER: Now, you -- we are almost out of time -- but we are hearing from Tony Blair, the British prime minister, that, potentially, there could be a new U.N. Security Council resolution within 24 hours that might stop the fighting.

ROYCE: Right.

BLITZER: You have been speaking with Israeli officials.

(CROSSTALK)

BLITZER: What's your sense?

ROYCE: I talked to Prime Minister Olmert today. That is his desire.

He says, if we can get a political solution to disarm Hezbollah -- but, as he points out, we have to disarm Hezbollah. There have all been -- already been 2,000 civilian casualties here in Israel. There have been scores killed by these rocket attacks.

They have to make sure that this agreement actually does the work of closing down those rocket launchers. So, we have got to get some NATO-type force and the Lebanese army down there on the border that actually are going to disarm Hezbollah. Otherwise, he is going to do it militarily.

BLITZER: Ed Royce, from -- Republican from California, thanks very much for coming in.

ROYCE: Thank you, Wolf.

BLITZER: It was pretty scary up there in Haifa when those sirens went off, right?

ROYCE: That's -- and terrible to see the human trauma, to see the people with their -- and their children, that have been injured in these attacks.

BLITZER: Congressman, thanks. Have a safe trip back to Washington.

ROYCE: Thank you.

BLITZER: And coming up: Are Americans now feeling more anxious about their security, after learning of this foiled terror plot? We are going to get a new snapshot of public opinion, and find out how this new scare is playing politically back home.

Plus, we are following all the latest developments here in the crisis in the Middle East. We're going to have live reports from the combat zone, and an update on the desperate diplomacy.

We're live in Jerusalem, and you are in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're following all the latest details that are emerging now about an alleged terror plot to blow up planes from Britain to the United States, and how authorities say it was foiled. We are going to have live reports. That's coming up. We will get a fresh look at how Americans are viewing the war on terror right now.

But, first, we want to bring you up to date on the crisis unfolding right here in the Middle East. Intense firefights have been raging across southern Lebanon, as Israel takes its war against Hezbollah into new areas right now. Israeli troops today seized a Christian-dominated town near the border. And Israeli warplanes bombed the heart of Beirut, searching out Hezbollah targets.

But Israel says it's holding off on new plans to dramatically even expand the ground war, to give diplomacy yet another chance. Hezbollah keeps firing back. It's launching more rockets on residents in northern Israel. Israel now reports 123 of its people killed in a month of fighting, 40 of them civilians. Lebanon puts its death toll at 834, most of them civilians.

On the diplomatic front, the U.N. secretary-general, Kofi Annan, is pushing the Security Council to come up with a plan by the end of the week to end what he calls the nightmare for civilians in Israel and Lebanon.

And the British Prime Minister Tony Blair's office now says there's potential for a deal to be reached, perhaps even within this 24 hours.

Let's go live to northern Israel right now for the latest on the fighting on both sides of the border.

We will bring in our senior international correspondent, Matthew Chance -- Matthew.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Wolf, thanks very much.

Well, as you say, there has been fighting, sporadic fighting, to say the least, in south Lebanon, over the course of the past 24 hours, with clashes between Israeli troops that have been deployed on the ground now for several weeks and Hezbollah fighters. At least another two Israelis have been killed over the course of this day.

But I have to say, we have seen a certain lull in the fighting, compared to what we have been witnessing from this location on the Israeli-Lebanese border for the past several weeks.

You -- we have been speaking to you over the course of the past several nights, and you have been hearing the ferocious artillery barrage that has been pounding those Hezbollah positions over the course of the past few nights particularly. That has now all but stopped.

We are hearing occasionally artillery shells being fired into southern Lebanon, but nothing like the kind of really intense pounding that we were witnessing over the past several nights. And, so, that is a distinct lull in the fighting, even though Israeli defense officials insist that sporadic clashes are still under way on the ground in southern Lebanon. But, at the same time, there has been this political decision, Wolf, to hold back from the brink in going ahead with that approved offensive to push deep into southern Lebanon, to hold back, to give chances to the political process, the diplomatic process, to try and find a solution to this, to try and get some kind of potent, robust force deployed, possibly a multinational force, on the ground in southern Lebanon, to prevent Hezbollah from striking at Israel once again.

In the meantime, coming in the other direction, Wolf, there have been, still, dozens of rockets, as many as 166 rockets, according to the latest count from the Israeli military, coming from Hezbollah positions from in south Lebanon, hitting towns and cities across northern Israel.

And, so, in the other direction, the offensive is still continuing -- Wolf.

BLITZER: Matthew Chance, thanks. We are going to be checking back with you soon up on the border between Israel and Lebanon.

Today marks the first time Israeli warplanes targeted an upscale neighborhood right in the heart of Beirut.

We get more now on the situation in Lebanon from our Beirut bureau chief, Brent Sadler -- Brent.

(BEGIN VIDEOTAPE)

BRENT SADLER, CNN BEIRUT BUREAU CHIEF: Wolf, fierce Israeli- Hezbollah battles raged in the south, while Israeli warplanes and helicopters attacked targets right across the country.

In the Lebanese capital itself, two missiles were fired into a high-end residential district of the city, overlooking the famed Corniche and the Mediterranean Sea. They destroyed an old lighthouse equipped with new mobile telephone equipment.

But the attack close to the home of parliamentary majority leader Saad Hariri is seen by many observes here as an attempt to curb Hariri's globe-trotting efforts to win international support for changes to a U.N. security draft resolution to stop the fighting, changes that call for an immediate withdrawal of Israeli troops from Lebanon as the foundation of any deal.

Israel, meanwhile, sent more messages to Lebanon, dropping from the sky over the north of the country and Beirut. In the city itself, residents of more districts on the outskirts were told to evacuate their homes, where Israel says civilians are used by Hezbollah to shield their terror operations.

Other messages dropped in the north, they contained more Israeli threats, this time to target any trucks using the coast road, widening, it seems, Israel's attempts to shut down the movement of Hezbollah weapons throughout Lebanon's entire road network -- Wolf.

(END VIDEOTAPE)

BLITZER: Brent Sadler, in Beirut, thank you.

And coming up: Just hours after the arrest of alleged airline terror plotters, politicians in the United States are already staking out their positions. Will the foiled plot influence the upcoming congressional elections?

We will be right back.

(COMMERCIAL BREAK)

BLITZER: Some members of Congress have been quick today to offer their takes on the alleged airline terror plot that British authorities say they disrupted.

Some examples: Republican Senator John Cornyn issued a statement saying, "The Islamic extremists attacking our troops, troops who are there bringing democracy to Iraq, are the same Islamic extremists who are seeking to attack and bring down the airplanes over our homeland."

Democratic Senator John Kerry offered this statement: "It's clear that saying the current course -- that staying the current course in Iraq is not making the American people any safer at home or abroad, and has hurt our fight in the war on terror. We need to put the focus back where it belongs, and make America as safe as it can and must be."

Our senior political analyst, Bill Schneider, is joining us now.

Bill, first of all, how might this kind of terror threat affect the political land -- landscape going into the midterm elections?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, typically, when people become fearful, public support for the president tends to go up.

President Bush and his party used the security issue to their advantage in the last two elections, but will it work this year?

Well, here, we see that, in a CNN poll taken by the Opinion Research Corporation last week, before the arrest of terror suspects in Britain, terrorism topped the list of issues that voters said they would be -- would be extremely important to their vote.

Among voters concerned about terrorism, slightly more said that they would vote for a Democrat, rather than a Republican, for Congress this year. Republicans still do better on terrorism than on any other issue, except same-sex marriage, which is far less important to voters.

But the Republican advantage on terrorism had vanished, at least before today's news.

BLITZER: And what's the reason of that -- for that, Bill? SCHNEIDER: Well, here's a clue, Wolf. As of last week, only 31 percent of Americans believed the U.S. and its allies were winning the war on terrorism.

That 31 percent is the lowest figure recorded since 9/11. The prevailing view is that neither side is winning the war on terror. Now, one reason is disillusionment with the war in Iraq. A majority of Americans believe terrorism has increased around the world because of the situation in Iraq. Only 5 percent believe the war has decreased the threat of terrorism.

BLITZER: Is there any other impact that you are seeing from this alleged terror plot that's likely to unfold in the coming weeks and months?

SCHNEIDER: Well, Wolf, this week's primary results suggested a growing anti-incumbent mood in the country.

Three incumbent members of Congress were defeated for renomination in their own parties -- and that's a rare phenomenon -- Republican Joe Schwarz and Democrats Joe Lieberman and Cynthia McKinney.

Concern about terrorist threats could blunt that anti-incumbent mood and lead voters to place more value on experience. It might have helped Joe Lieberman -- still might, since he says he intends to stay in the race.

Now, his Democratic opponent, Ned Lamont, issued a statement saying the terror arrests in Britain show the need to -- quote -- "fight for our security in a rational, serious way, rather than being bogged down in a war that is harmful to our security" -- unquote -- Wolf.

BLITZER: Bill Schneider reporting for us -- thank you, Bill.

And, coming up: all the new details we are learning about that alleged airline terror plot, and how British authorities say they actually broke it up.

But, up next: It's being called a barbaric massacre. Our Zain Verjee will be back with an update on the ongoing bloodshed in Iraq. We are not going to forget what is happening in Iraq.

We're live in Jerusalem, and you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: I'm Wolf Blitzer, reporting live from Jerusalem. And we are following all the latest developments in the alleged terror plot in Britain, as well as the crisis here in the Middle East.

But there's also another round of deadly violence unfolding right now in Iraq.

Let's bring back Zain Verjee. She's in Washington. She's following this part of the story -- Zain.

VERJEE: Wolf, Iraq's prime minister is calling today's suicide bombing in Najaf, Iraq, a barbaric massacre.

At least 35 people were killed when the bomber blew himself up at a police checkpoint near a revered Shia shrine. A Sunni insurgent group has claimed responsibility on a militant Web site.

Just hours after the Najaf bombing, at least two people died when a bomb exploded in a restaurant in south Baghdad. And a mortar shell killed five people at another cafe in a Shia Muslim area of the capital -- Wolf.

BLITZER: Zain, thank you very much.

Still to come: It has been a travel nightmare for many airline passengers. We are going to show you the best sites online to find out about your flight and whether there's anything in your carry-on bag that shouldn't be there, at least not now.

Stay with us. We will be right back.

(COMMERCIAL BREAK)

BLITZER: We will be right back..

We're following all the latest developments in the Middle East.

Let's go to Abbi Tatton right now. She's got more on the travel delays that are unfolding as a result of this alleged terror plot that we're learning about today.

Abbi, what can our viewers -- what do our viewers need to know? Where should they go online?

ABBI TATTON, CNN INTERNET REPORTER: Well, a good place to start, Wolf, is the FAA Web site. They have live, real-time information about general delays at the airports.

Looking around right now -- and this is a site that is pretty difficult to get on today, so many people looking at it -- and it looks pretty clear. Green means that there are hardly any delays. Where you do see, around the Chicago area here, orange, the short delays, it's generally to do with weather.

But this hasn't been really one of the main problems today. It has been more the security lines. Take a look here at Seattle-Tacoma Airport, just 15 minutes, or less, delays.

But we have just had photos uploaded on to the Internet from a traveler who is there. These are at flickr.com. This is Seattle- Tacoma, a very different story inside, at the security lines, here. This is Jeff Swift (ph), who has been waiting over five hours to get through these lines. He missed one flight, because he spent so much time in them. The problem is this, the lotions, is people getting used to these new restrictions here. So, you're going to want to go online on to the Transportation Security Administration site. They have the complete list of what you can or cannot take on, no liquids or gels. They're also saying there are special restrictions for people traveling to and from Heathrow and other airports in the United Kingdom.

These are the scenes that we have seen uploaded online today -- Wolf.

BLITZER: Thank you very much, Abbi, for that.

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