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THE SITUATION ROOM

Israeli Public Cynical Following Violence; Changes Following Cease-Fire in Israel, Lebanon; Interview with Israeli Foreign Minister; Technology to Detect Liquids in Airplanes

Aired August 14, 2006 - 16:07   ET

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


WOLF BLITZER, CNN ANCHOR: The president of the United States speaking at the State Department in Washington, flanked by his top national security advisers, including the vice president, insisting Hezbollah was defeated during this 34-day war with Israel.
He blames Hezbollah completely for the war. He also blame it's state sponsors. He says Syria and Iran, and he warns this, he says that imagine how worse the situation would have been if Iran already had nuclear weapons. Much more on this story coming up.

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, 15 hours into the cease-fire, signs of normal life and dueling claims of victory. It's 11:00 p.m. in southern Lebanon where Israeli troops are leaving and civilians are rushing home. Will the truce hold? We will bring you live reports from the Middle East.

And new comments by President Bush as you just say live here on CNN.

Also this hour, target USA. Is there a secret weapon for screening out terrorists before they strike? We are following up on the foiled airline bomb plot.

And we've been testing some brand new technology as part of the day-long coverage of the terror threat.

And terror on election day. The renewed focus on security is playing into Karl Rove's campaign advice to Republicans. Will voters prove him right or wrong? I am Wolf Blitzer in Jerusalem. You are in THE SITUATION ROOM.

Here in the Middle East tonight, celebrations in Beirut with a cease-fire still apparently holding and a new claim of victory by Hezbollah's leader. Hassan Nasrallah says his fighters scored a strategic and historic win against Israel and in a televised speech he didn't sound in any rush to discuss disarming his militia. Israel also is claiming victory as its forces pulled back from southern Lebanon and a month of bloody warfare. Hours after the cease-fire began this morning, Israel's prime minister defended the war against critics who say it was mismanaged. Tens of thousands of Lebanese, who had fled the southern combat zone, are now jamming roads, trying to get back to their homes. They are ignoring Israeli warnings that Hezbollah militants still are in the area and that attacks are still possible, despite the U.N.- brokered cease-fire. At least four clashes in violation of the truce have been reported.

In northern Israel residents also are trying to get back to a normal life. They are returning to the streets and to the outdoor cafes they had shunned during the fighting. But there is still sadness tonight here in Israel. Hospital officials say the former Prime Minister Ariel Sharon's condition is getting worse. The 78- year-old Sharon has been in a coma since suffering a massive stroke back in January.

As you just heard and saw live here on CNN only moments ago, President Bush talked about the truce and the broader situation in the region and he pointed a stern finger directly at Hezbollah. Our White House correspondent Suzanne Malveaux is over at the State Department where Mr. Bush spoke. She will join us in a few minutes.

Also standing by, our other reporters here in the region covering both sides of this Israeli-Lebanese border: Jim Clancy is in Beirut, Chris Lawrence is in northern Israel.

First though, Paula Hancocks. She's here with me in Jerusalem. What a day, Paula, here in Jerusalem today and Israel. This country still reeling, in large measure, from this war.

PAULA HANCOCKS, CNN CORRESPONDENT: That's right, Wolf, they are. And certainly, the Israeli Prime Minister Ehud Olmert is as well. He made a speech to the Israeli Parliament and through that to the Israeli people today. It was dubbed as one of the most important speeches of his political career.

Now, in this speech, he did say that his key aids in this conflict has actually been achieved, but the Israeli public is very cynical.

(BEGIN VIDEOTAPE)

HANCOCKS (voice-over): The military battle for Israel's prime minister is over for the time being. The political battle to keep his job has just begun.

Even before the guns fell silent, critics claim that Ehud Olmert had gone to war hastily and ill-prepared, resulting in high Israeli casualties. Olmert fought back Monday, saying the country was warned.

EHUD OLMERT, ISRAELI PRIME MINISTER (through translator): We did not delude anyone. We said we would pay a dear price and there would be rockets and there were.

HANCOCKS: Not everyone was prepared to listen. At least two Israeli lawmakers were escorted out of the Knesset for heckling. Olmert did promise during the month-long conflict his military would stop the rockets and he promised Hezbollah's would be crippled. Neither was achieved militarily. Diplomacy now takes over.

OLMERT (through translator): This U.N. resolution contains a series of obligations that should change fundamentally the situation along the northern border.

HANCOCKS: Olmert has already undergone trial by some media and he's been found guilty.

NITZAN CHEN, IBA, CHANNEL 1: There is the atmosphere for election, and therefore you can see that Olmert is in a big problem now, because he knows the vast majority of the Israeli population doesn't like the results of this war.

HANCOCKS: But his allies say it is far too soon to judge.

RA'ANAN GISSIN, ISRAELI SPOKESMAN: We have to wait for the outcome of the political process, for the outcome of the implementation or the U.N. Security Council resolution. We are just at the beginning of this road, and just set the principles.

HANCOCKS: At the start of the conflict, Olmert's ratings were sky-high. The Israeli public approved of his strong and immediate reaction to Hezbollah's kidnapping of two Israeli soldiers. One month gone and less than 50 percent in a recent newspaper poll thought he was doing a good job.

(END VIDEOTAPE)

HANCOCKS: Now, Olmert did acknowledge there were some shortcomings in the conduct of the war, but he said it was worth it to make sure that there wasn't a state within a state in Lebanon, and he did say, Wolf, that he takes full responsibility for this conflict.

BLITZER: This debate here in Israel, only just beginning. There are certainly going to be a lot of investigations into the conduct of this war. Thanks very much. Paula Hancocks reporting for us.

Chris Lawrence is now in northern Israel where many residents are welcoming the respite from Hezbollah rocket fire. Chris, no rockets, I take it, came into northern Israel today?

CHRIS LAWRENCE, CNN CORRESPONDENT: Not at all, Wolf.

After more than a month at war, there is peace here in northern Israel. But that doesn't necessarily mean peace of mind. You can take a look behind me and see one of the many Israeli tanks that made its way across the border with Lebanon and come back deeper now into Israel.

We have seen troop movements and artillery movements going back and forth across the border. Israel is starting to pull some of its weaponry out of southern Lebanon, but not in any real way. They expect to have a force there at least through the rest of the week until that United Nations force gets on the ground and can take over.

Even though the truce was called, there were skirmishes even after the truce. Within hours, Israeli troops got in a fight with Hezbollah guerrillas in southern Lebanon. Five Hezbollah guerrillas were shot. We understand at least one of them was killed, because Israel says they threatened the Israeli soldiers, on that side.

I spoke with one commander who said it is very hard for soldiers who just yesterday were fighting Hezbollah guerrillas to immediately switch to watching them walk away with their weapons but he said that's just what they have been told to do, and that's what he said they are doing. He says even if Hezbollah refuses to give up a weapon, the Israeli soldiers will not shoot them in the back.

Now, in another area as that goes on, on the Lebanese side, here in northern Israel, you are seeing a return to life in cities like Haifa, where people evacuated more than a month ago and are now coming back, just starting to see some of the businesses reopen.

Life starting to return to some of the streets in northern Israel, but there's also some trepidation. We spoke with one family who returned home today to Kiryat Shmona, who said even though they are coming home, they still do not feel safe and they are worried that this cease-fire may not hold -- Wolf.

BLITZER: Chris Lawrence reporting for us from the border between Israel and Lebanon. Chris, we will be getting back to you.

Let's turn to the situation now in Lebanon, specifically in Beirut, and Hezbollah's new claim of victory and its hedging about disarmament. Jim Clancy is our man on the scene, once again, tonight. Jim, give our viewers the latest.

JIM CLANCY, CNN CORRESPONDENT: Well, it was a very interesting scene tonight, both well-organized and some impromptu celebrations here in the Lebanese capital. Hezbollah supporters out in force on the streets, following a speech by their leader. These people were going around in cars, chanting "Hezbollah, Hezbollah, Nasrallah, Nasrallah," clearly accepting the message from Hassan Nasrallah, the leader of Hezbollah that it was Lebanon that had won.

It was an interesting speech, a speech in which the Hezbollah leader cast himself really as representing all of Lebanon, sharing the victory with all of Lebanon. And if you listen to what he said, he wasn't at all shy about showing off his battle ribbons. Here's what he had to say.

(BEGIN VIDEO CLIP)

HASSAN NASRALLAH, HEZBOLLAH LEADER (through translator): We are facing a strategic and historic victory, and this is not an exaggeration. For Lebanon, all of Lebanon, for the resistance, for the nation, for the whole nation.

(END VIDEO CLIP)

CLANCY: Tens upon tens of thousands of refugees returned to their homes. What some of them saw when they finally got there, through massive traffic jams -- Wolf, you have to remember that virtually every major bridge and highway that leads from Beirut to the south -- and that's the direction all these refugees were going -- has been destroyed in this 30-day conflict, so when people tried to get anywhere, they found the going tough indeed.

When they got there, many people were seeing the ruins that have been created by this war. In fact, most of them saw it all along their routes back down to the south. There are lingering questions here and I think a part of Hassan Nasrallah's speech reflected that, lingering questions about just what he has cost Lebanon and how people are going to recover from it all.

Wolf, a very interesting note, and that is that during that speech, Hassan Nasrallah taking care of his power base. He said the government is going to have to take care of airports, the roads, the bridges, all those billions of dollars in damages that's been done. But he is going to take care of his own Shia Muslim supporters.

He's already got crews. I saw crews out in the streets in southern suburbs, two hours after the cease-fire with clipboards, taking notes from homeowners, shopowners, assessing the damage, and he says he is going to help them directly. Some of the people without homes are going to get a year's free rent plus a year's free furniture. Gives you an idea of how organized Hezbollah really is.

BLITZER: Hassan Nasrallah, one of the key players in this war. We're going to have a lot more on this coming up. Jim Clancy, thank you very much. Much more on this story coming up. Jack Cafferty is back in New York.

Welcome back, Jack. We missed you. You have got "The Cafferty File."

JACK CAFFERTY, CNN ANCHOR: Thank you, Wolf, good to be back -- well that's not true, but it's nice to be missed.

President Bush's approval rating has fallen back to its lowest level ever in one of the major polls. Only 33 percent of those surveyed in the latest AP/Ipsos poll approve of the way our president is doing his job. Sixty-four percent disapprove.

When it comes to where we are headed as a country, only 26 percent say the United States is headed in the right direction. Seventy-one percent say we are on the wrong track.

Meanwhile, the president's low approval numbers and the war in Iraq are causing particular trouble for Republican incumbents in the Northeast. Some think that Senator Joe Lieberman's loss last week in Connecticut's Democratic primary could be a preview of the angry feelings that some Republicans will face in the upcoming midterm elections.

So here's the question: How can Republicans running for reelection distance themselves from President Bush?" E-mail your thoughts to CaffertyFile@CNN.com, or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Jack, thank you.

Coming up here in THE SITUATION ROOM, much more on our top story. The guns fall silent, but the war of words marches on. I'll speak live with a senior Israeli foreign ministry official about who really won this battle with Hezbollah.

Plus, "Target: USA." In the wake of the foiled airline bombing plot, we check out other crucial areas where terrorists could strike. And we'll unveil some new airport screening devices that are able to see right through you.

And later, the political fight over terror. Can Republicans use this latest incident to their advantage as they try to keep control of Congress? Live from Jerusalem, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Fifteen hours in a fragile cease-fire. It appears to be holding in Lebanon, between Lebanon and Israel and Hezbollah. The Ambassador Gideon Meir is joining us now here in Jerusalem. He's a senior official of the Israeli Foreign Ministry.

Ambassador, thanks very much for coming in.

This cease-fire, is it going to hold? I mean, what is the sense of the Israeli government?

GIDEON MEIR, ISRAELI FOREIGN MINISTRY: Definitely Israel is going to hold the cease-fire. The question is whether the Hezbollah will hold a cease-fire, whether it will not create provocation, another aggression like they did on July the 12th which actually bought about this whole war. So the question lies actually on the other side, not on the Israeli side.

BLITZER: The Hezbollah says it's not going to disarm. The Lebanese army, the government of Lebanon, says it's not going to disarm Hezbollah. The United Nations' beefed up presence is not going to disarm Hezbollah. So unless Hezbollah disarms voluntarily, which Hassan Nasrallah suggests, they're not about to do, as long as Israeli troops are in Lebanon -- and you're not going to leave while they still have their arms. It looks like it's -- at any moment this thing is going to explode again.

MEIR: According to the United Nations Resolution 1701, Israel will withdraw from Lebanon -- from south Lebanon gradually, while the international force, together with the Lebanese army and together with UNIFIL, will come in and replace the Israeli troops. Now, the disarming is not something which is immediate. It has to start. It's a procedure which has to be started, according to the resolution of the United Nations.

Now, here is a question which you are raising -- is the international community strong enough this time to implement its own resolution, a resolution that was adopted by the -- unanimously by the 15 members of the Security Council?

BLITZER: So what's the answer? Do you believe it is?

MEIR: I hope this time it is, because it was a big failure of the international community not to implement the United Nations Resolution 1559.

BLITZER: The Associated Press is now moving a story, saying -- quoting the Lebanese defense minister -- I'm reading it from the computer -- saying that Lebanon, the Lebanese army, will deploy 15,000 of its army troops to the north side of the Litani River by the end of this week. Now, you want them to go to the south side of the Litani River?

MEIR: Sure. This is also the decision of the resolution of the Security Council. So one must decide, do they comply with the United Nations resolution? Do they adhere with the United Nations resolution? Or do they do something different? Now it's a time for the international community to act and really to stand by its own resolution.

BLITZER: Now your prime minister says Israel won, Hezbollah lost. Is that right?

MEIR: I think so. Look, if you look today look at Lebanon, look at the destruction that this fanatic group brought about the people of Lebanon. I saw the fireworks tonight from Lebanon. What are they celebrating? Celebrating of killing Israeli innocents? What, celebrating the fact that so many...

BLITZER: I think what they're celebrating is that after 33, 34 days of warfare, Hezbollah stood up to the most powerful military in the region, and on the last day before a cease-fire, they were still able to launch 250 rockets into northern Israel.

MEIR: I don't like to quote myself, but two weeks ago, three weeks ago, I said to "The Boston Globe" and I'm quoted there, that the last day of the -- the day before the cease-fire, you would see like the Fourth of July fireworks, the grand finale. We knew that this was going to happen because we are fighting here a guerrilla -- a guerrilla warfare.

BLITZER: But a lot of people in Israel at the beginning thought a week, two weeks, Israel would crush Hezbollah and remove this threat.

MEIR: What we were witnessing here and what we were confronting -- a guerrilla -- a powerful army of terror, well-equipped with state of the art weapons by Iran which were shipped via Syria. You heard the president of the United States tonight linking Syria and Iran to the Hezbollah. This is what we are fighting, this is what we are confronting. And not only Israel. It's a problem of the entire Western world.

BLITZER: As you know, the recriminations, the blame game here in Israel, already starting. In the Knesset today, the opposition leader, Benjamin Netanyahu, the former prime minister of Israel, saying -- let me read to you what he said. He said, "There were many, many shortcomings in terms of identifying the threat, in terms of preparing to deal with this threat, in terms of running and conducting the war, in terms of dealing with the homefront. And certainly, without doubt, we will subsequently have to draw lessons and set the shortcomings right."

It looks like there's going to be a huge political uproar here in Israel.

MEIR: We are a democracy. We're a strong democracy. It's common wisdom in Israel -- it's common that after a war like this, we go through a soul-searching process. This is our strength, that we are able to go through this kind of a soul-searching. It's a strength of the Israeli democracy.

BLITZER: If the cease-fire collapses, what do you do?

MEIR: If the cease-fire collapses, if the Israeli soldiers will be attacked by the Hezbollah, we will have to respond out of self- defense. We have this permission given by the United Nations resolution.

BLITZER: Any idea when those two Israeli soldiers will be returned?

MEIR: No, the mechanism was actually set up, or the platform was set up by the United Nations resolution. The prime minister appointed today a very senior official to deal with it, and it's now a procedure which we'll go into together with international community.

BLITZER: Will you return Lebanese prisoners or Hezbollah prisoners in exchange for those two Israeli soldiers?

MEIR: This is not what is said in the resolution of the United Nations.

BLITZER: I know, but I'm asking you.

MEIR: They are too separate. I can't -- you don't -- you want me to put the carriage in before the horses. I can't.

BLITZER: Gideon Meir, Ambassador Gideon Meir, thanks very much for coming in.

MEIR: Thank you.

BLITZER: Up next, our other top story we're working on, last week's foiled airline terror plot. Washington and London loosened some airline restrictions today.

Plus, in the wake of the plot, Americans seem to be a little bit more jittery. We're going to take a closer look at some other areas where terrorists could attack.

Stand by for "Target: USA." We're live from Jerusalem. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

We will get back to our top story here in the Middle East in a few minutes.

But there's other important news we are following, including airport security. It's easing somewhat now in Britain, five days after authorities announced they had disrupted an alleged plot to blow up flights in the United States -- to the United States.

But many airline passengers there are still facing cancellations and huge delays. British officials now have downgraded the nation's terror threat level from critical to severe.

In return -- in turn, the U.S. lowered the threat level for flights from Britain from red -- or severe -- to orange -- or high -- in the United States.

The foiled terror plot in Britain is renewing America's focus on terrorism and America's fear. All day long, CNN has been reporting on homeland security and efforts to target the United States.

A key question: How can airports more effectively screen for liquids that can used, potentially, to make bombs?

CNN's Brian Todd got a firsthand look at some new technology that essentially bears all -- Brian.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: Wolf, I am standing in front of a device that may soon be in U.S. airports, a machine that could conceivably have picked up some of the tools that officials believe may have been used in the latest terror plot.

Now, this is a very controversial piece of technology, because all you have to do is walk right in front of it and it can see right through your clothes.

(voice-over): At London's Heathrow Airport, a weapon in the war on terror that can see through clothes carrying liquid explosives. Already used on more than one million passengers, these special X-rays can catch all kinds of contraband.

PETER KANT, VICE PRESIDENT FOR GOVERNMENT AFFAIRS, RAPISCAN SYSTEMS: Regular weapons, guns, knives, box-cutters and the like, but also unusual types of weapons, explosives, liquid explosives, gels.

TODD: The U.S. government owns four of them, but none are in use at America's airport. One look at our demonstrations reveals why. I am advised that, if I don't want my private areas shown, I should put a metal plate in my pants.

(on camera): But those would be seen normally on the screen here. I'm going to do that now, right before I get screened.

(voice-over): I step just in front of the machine, turn around. In just a few seconds, the monitor displays my humble contours.

Now, in this test, I am playing the role of a would-be terrorist. I try to hide a plastic lipstick container in my vest pocket. Busted. I sneak a sports drink, similar to one officials believe may have been used in the latest terror plot, into my pants pocket. Busted again.

UNIDENTIFIED MALE: There it is. Picked it up.

TODD: How about wires in a sealed sandwich bag hidden in my sock? On the monitor, they show up on my ankle.

But the machines have limitations. When I pour water into a sealed sandwich bag, place inside my belt line and in a sock, you can barely see it.

But the company behind this technology says, trained screeners would detect it. And the TSA says they have other methods to detect liquids.

Still, privacy advocates have seen enough.

MELISSA NGO, STAFF COUNSEL, ELECTRONIC PRIVACY INFORMATION CENTER: It's a virtual strip-search. What it is, is a detailed image of a person's body, so details that you can see genitalia.

TODD: What do passengers at New York's JFK Airport think?

UNIDENTIFIED FEMALE: That definitely seems like an invasion of privacy. And I would not be willing to do that.

UNIDENTIFIED MALE: I have been through it over in Europe, and I didn't mind.

TODD: Machine maker Rapiscan Systems says Heathrow Airport uses its devices as a secondary screening measure, segregating men and women with same-gender screeners in private rooms. Even then, passengers can choose between the see-through screen or a pat-down. And, according to Rapiscan, the vast majority choose the machines.

(on camera): So, is an efficient screener of terrorist tools or a huge invasion of privacy? Well, officials at this company and others are trying to come up with a middle ground, a device that will maintain privacy, but not lose any detection capability. And they hope to have a machine like that ready in a matter of months -- Wolf.

(END VIDEOTAPE)

BLITZER: Fascinating material.

Brian Todd, thank you.

So, how prepared is the U.S. to fend off a disabling cyber- attack? If terrorists took an emergency services computer system offline, could the U.S. quickly get back on its feet?

Our CNN Internet producer and cyber-crime analyst Alex Wellen is standing by with some analysis -- Alex.

ALEX WELLEN, CNN SENIOR INTERNET PRODUCER & CYBER CRIME ANALYST: Wolf, when we talk about steps to protect cyberspace, we are talking about much more than just the Internet.

(BEGIN VIDEOTAPE)

(BELL RINGING)

(APPLAUSE)

WELLEN (voice-over): Our banking and finance systems, air traffic control towers, and nuclear facilities, telecommunications, and transportation systems all rely on computers. If hackers targeted the nation's critical infrastructure, would the U.S. be prepared?

Security experts, including former high-level cyber-security officials at the White House and DHS, say, no. They fear the U.S. is no better prepared for the likes of what they call a cyber-Pearl Harbor than FEMA was for Hurricane Katrina.

Part of the problem is, the top cyber-security post and assistant secretary job in Homeland Security is vacant, and has been for more than a year. Given the likely pay cut and unique credentials, DHS admits it's a hard job to fill, with high turnover.

Since 9/11, four individuals have held the top cyber-security post. The first was former White House counterterrorism adviser Richard Clarke. Clarke helped assemble a national strategy to secure cyberspace. But critics argue that implementing the plan has not been a U.S. priority.

And where are we today? What if hackers targeted a U.S. power grid, for example? That very scenario was part of a full-scale U.S. cyber-security drill called Cyber Storm in February. But we still don't know the results. They are expected to be released this summer.

(END VIDEOTAPE)

WELLEN: The Department of Homeland Security tells us that cyber- security is, in fact, a priority. They tell us they are close to approving a candidate for that top cyber-security post, and that they have a number of cyber-security tests and programs in place.

As for Operation Cyber Storm, Homeland Security is still aiming to release the results in the coming weeks -- Wolf.

BLITZER: Alex, thank you very much.

Still to come, we're going to continue our focus on Target: USA. Do British authorities have the power to fight terror that U.S. officials don't? We will compare the laws, the tactics, and the differing views about what crosses the line.

Up next: Has the foiled terror plot in Britain helped President Bush and his party, as Election Day in the United States draws closer? There are new poll numbers out and perspective on the Republicans' strategy.

Live from Jerusalem, you are in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: During those discussions...

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Getting some news coming in from Gaza right now.

The Israeli military confirms that it has launched an airstrike against what it describes as an Islamic Jihad command center in Gaza -- this coming in from the IDF. The fighting in the southern part of Israel, in Gaza, has continued, almost nonstop, even while most of the focus of attention has been over these past 33, 34 days on the fighting in the northern part of Israel, namely, between Israel and Hezbollah in southern Lebanon.

At the same time, other disturbing news coming in from Gaza, very disturbing news -- two of our colleagues, journalistic colleagues, this time from the FOX News Channel, have been kidnapped in Gaza, two reporters kidnapped, two journalists kidnapped, according to the FOX News Channel itself.

We have a statement from the Committee to Protect Journalists in New York that says: "We are gravely concerned about our colleagues' safety and call for their immediate and unconditional release. These are well-established journalists who are not participants in the conflict. They should be treated accordingly, and freed."

We hope they are, very, very soon. We will continue to watch the situation in Gaza, which remains a source of grave concern.

Getting back to the terror threat against the United States, in the days since that foiled terror plot in Britain was revealed, the political attacks in Washington have only intensified. Consider the statement by the congressman heading up the Republican battle to try to keep control of the House of Representatives.

Congressman Tom Reynolds says, "National Democrats are stone-cold guilty of engaging in a reckless and irresponsible pattern of neglect for the security of our citizens."

That prompted House Democratic Leader Nancy Pelosi to fire right back with these strong words. She says: "Mr. Reynolds false statements are a desperate attempt -- desperate attempt -- to -- voters from the Republicans' record of failure on security." And she adds, "Americans deserve a serious focus on national security, not the Republicans' opportunistic and cynical politics of fear."

Meanwhile, a CBS News poll taken after the terror arrests in Britain shows, 17 percent of Americans now cite terrorism as the most important problem facing the country. That's up seven percent in July. And the only other issue that ranks higher is the situation in Iraq. That's at 28 percent -- the war, of course, another potentially critical factor in the fall battle for control of the U.S. Congress.

And take a look at this. While concerns about terror have risen, public opinion about the president's handling of the terror threat has stayed the same. Fifty-one percent approve now. That's the same back as in July.

For more on the terror -- politics of the terror -- the politics of terror in this election year, let's bring in our senior analyst, Jeff Greenfield -- Jeff.

JEFF GREENFIELD, CNN SENIOR ANALYST: Well, Wolf, there is no doubt what the Republican game plan for November is. It's to paint the Democrats as the party of retreat, unwilling or unable to face the hard reality of what it means to fight America's enemies.

That game plan was effective two years ago and four years ago. What about this time?

(BEGIN VIDEOTAPE)

GREENFIELD (voice-over): It's not as though we haven't seen parties gain traction based on wartime loyalty. For decades after the Civil War, Republicans urged citizens to vote the way you shot, equating Democrats with the Confederacy.

And, during World War II, Franklin Roosevelt had no hesitancy in appearing regularly at military installations to remind voters he was indeed commander in chief.

KARL ROVE, SENIOR ADVISER TO PRESIDENT BUSH: Our goal is victory.

GREENFIELD: And there's nothing secret about the current GOP approach. It was proclaimed back in June by top Republican strategist Karl Rove, when he said of the increasingly anti-war Democrats -- quote -- "They may be with you for the first shots, but they are not going to be with you for the tough battles."

And he directly linked a withdrawal from Iraq to increased danger at home, saying that -- quote -- "It would provide a launching pad for terrorists to strike the United States and the West."

Those words, remember, came nearly two months before Ned Lamont defeated Senator Lieberman in the Connecticut Democratic primary, and before British authorities thwarted the alleged plot to blow up airliners. After those events, GOP chairman Ken Mehlman was eager to redefine the choice this fall, in the wake of increasing unpopularity of the war in Iraq.

KEN MEHLMAN, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: The choice in this election is not between stay the course and cut and run. It's between win by adapting and cut and run.

GREENFIELD: Back in 2002, when the September 11 memories were still fresh, Republicans were able to win control of the Senate by unseating Democrats who they claimed had not backed the president. In 2004, with the Iraq war already losing support, they effectively painted John Kerry as inconsistent and uncertain in the war on terror.

But the GOP faces a different challenge this year. A number of Republicans have openly broken with the administration on the war, not just Nebraska Senator Chuck Hagel, who has always been a skeptic, but congressmen like Minnesota's Gutknecht, who returned from a trip to Iraq to say that the situation in Baghdad was more dangerous than he had been led to believe, or North Carolina conservative Walter Jones, who advocates withdrawal, or former House Speaker Newt Gingrich, who has been sharply critical of the war's conduct.

The party will also face an electorate that, if the polls are right, is more likely to see Iraq as a distraction from, not an essential part of, the war on terror.

(END VIDEOTAPE)

GREENFIELD: And there's also this question: Do the Connecticut Democrats who beat Lieberman represent a national party trend?

Well, here's one possible measure. Among Democratic senators up for reelection this year who have been relatively supportive of the war in Iraq, Lieberman is the only one who faced a serious primary challenge -- Wolf.

BLITZER: Jeff, the whole Lieberman defeat last week in the Democratic primary in Connecticut, there are already plenty of analysis -- analysts who are suggesting maybe that was overblown, the impact.

What's your sense of what the Lieberman defeat last week means?

GREENFIELD: I think it was overblown, which we often tend to do.

Look, any time a three-term incumbent gets beaten in his own party, that's news. But to put this on a -- a massive grassroots organization, and ignore the fact that Lamont was rich enough to put $4 million or $5 million into his own campaign, or that Lieberman was unique among Democrats, in supporting not just the original decision to go to war, but had stood with the president's execution of that policy longer than any other Democrat, I think that does tend to overstate it.

We are going to know in two years if anti-war Democrats get really tough on people like Biden, Hillary Clinton, Evan Bayh, and others who have been relatively supportive of a muscular foreign policy -- Wolf. BLITZER: All right, thank you very much, Jeff Greenfield, in New York.

Coming up: Will security nightmares haunt voters on Election Day? We're going to have more on the politics of terror when J.C. Watts and Donna Brazile square off in our "Strategy Session."

That's coming up, plus all the latest on the situation here in the Middle East.

(COMMERCIAL BREAK)

BLITZER: The midterm elections are only three months away. Will the war on terror be the deciding factor for voters? And, if so, will it be Republicans or Democrats who benefit?

Joining us now from Washington, our CNN contributor and Democrat strategist, Donna Brazile, and our CNN political analyst and former Congressman J.C. Watts.

Guys thanks so much for coming in.

Let me read to you this quote from Tom Reynolds. He's the congressman who is in charge of trying to make sure Republicans maintain the majority in the House.

He said this. He said, "National Democrats are stone-cold guilty of engaging in a reckless and irresponsible pattern of neglect for the security of our citizens."

Donna Brazile, that's powerful accusation. But, as you know, it's one that Republicans have made before, and oftentimes resonates with voters.

DONNA BRAZILE, CNN POLITICAL ANALYST: Well, Wolf, it did resonate in 2002 and 2004.

But I don't believe this old playbook will work in 2006, for obvious reasons: the war in Iraq. Most Americans are witnessing what's happening in Iraq each and every day. Also, they know that the Republican majority has failed to implement all the recommendations of the 9/11 Commission. So, while the Republicans are dusting off their old political playbooks, voters are looking for change. They want a new direction.

And, this time around, Ms. Pelosi and other Democrats are hitting right back. The Democrats are not going to take these assaults lying down.

BLITZER: Here's what Senator Jack Reed of Rhode Island -- he's a Democrat -- he's a member of the Armed Services Committee.

J.C. Watts, listen to what he told me yesterday on "LATE EDITION."

(BEGIN VIDEO CLIP, "LATE EDITION WITH WOLF BLITZER") SEN. JACK REED (D), RHODE ISLAND: This plot uncovered this week shows how adaptive, how innovative, how cunning our adversaries are. And, so, we have to continually be on our guard, and continually invest more and more into homeland security. That has not been done by the administration.

(END VIDEO CLIP)

BLITZER: All right, J.C. is there -- is this a two-edged sword? Are a lot of American voters going to say: You know what, this administration got involved in a war in Iraq that's not necessarily directly involved in the war on terror, and, in the process, didn't spend enough, do enough to fight al Qaeda and other terrorists"?

J.C. WATTS, CNN POLITICAL ANALYST: Well, Wolf, I continue to believe that you cannot separate Iraq and the war on terror.

And I think most Republicans -- and I think there are some Democrats that believe that as well. And I think Joe Lieberman paid a price for believing that. You can't separate Iraq and the war on terror.

And I think, when you look at what's going on up there in Lebanon, with Hezbollah and the Israeli military, when you consider that, think about what that area would be, had the United States not been in Iraq, in Afghanistan. The entire Middle East would be converging on Israel.

But the fact that we're there, I think, has made a difference. And, so, I think the American people are thinking security. I think, when you see the type of statements made by Tom Reynolds, I think, you know, in terms of Washington politics, that is politics.

But it's also politics when you hear people calling the president a liar, and he manipulated the intelligence concerning Iraq.

You know, none of that does any good in keeping the American people safe. And I think, when you consider that what has been perpetuated, or the perception that Democrats don't care about national security, just like they say Republicans don't care about poor people, you know, Republicans aren't going to allow Democrats off the hook on national security, just like Democrats wouldn't allow Republicans off the hook in terms of dealing with poor people's issues.

BLITZER: Donna, I want you to respond to that, but also in the context of what we heard the president say within the past hour or so. He suggested, it really was unseemly for politicians in Washington to be trying to score political points on this gut issue of fighting terrorism.

BRAZILE: Well, I hope the president made that statement after consulting with the vice president.

I thought it was the vice president who held a rare press conference last week to comment on, of all things, not on British Petroleum stopping pumping gas in Alaska, but, rather, to comment on the Lieberman-Lamont race.

So, perhaps the Republicans should listen to the president, and not play politics with national security. But the Republicans have a long history of playing politics with national security. And the only difference this time is that Democrats are going to point out their record. And Democrats will talk to the American people about real security, and what it means to live in a world where we are not always seen as the bad buy.

BLITZER: Donna Brazile and J.C. Watts, and, as you saw earlier, Jeff Greenfield, they are all part of the best political team on television -- CNN, America's campaign headquarters.

Thanks, guys.

Coming up: There's no doubt huge explosions utterly destroyed a building in Baghdad. But the big question is, what caused it?

And what do the closest Muslim neighbors of the U.S. think about the war on terror? Zain Verjee went to Canada to get the answer. What she found, that's coming up in the next hour, right here in THE SITUATION ROOM.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Still to come: Do Republicans need to distance themselves from President Bush to win the November elections? And, if so, how do they do it? Your tips for the GOP coming up next in "The Cafferty File."

And, after 34 days of warfare, the guns are finally silent on both sides of the Israeli-Lebanese border. But what's ahead for Israel, for Lebanon, and Hezbollah? That's coming up right at the top of the hour.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jack Cafferty in New York -- Jack.

CAFFERTY: Thanks, Wolf.

President Bush's low approval ratings and the war in Iraq are causing problems for Republican incumbents trying to hold on to their jobs in the Northeast. The question is: How can Republicans running for reelection distance themselves from President Bush?

Janice writes from Long Beach, California: "Jack, the Republicans could try something for the American working class for a change, like closing our borders, giving us a wage increase, or starting impeachment, or stopping the illegal war. Those things might help get them reelected." Patricia of Palmdale, California: "I don't think too many Republicans are going to be reelected. But those who would like to stand up to President Bush need only to promise that, within 30 days of being elected, there will be a resolution bringing home the troops from Iraq. That might save their jobs."

Barry in West Palm Beach: "There is no way they can distance themselves from the president. Being puppets for the president connects them directly. My advice for all Republican candidates up for reelection, start booking advance long-term vacations to get the best price available."

Barb in Union City, Michigan: "Jack, sometimes, a truckload of 10-foot poles just isn't enough. But, if I was a Republican seeking reelection, I would have one parked nearby."

Ken in Richmond, Kentucky: "Get naked and speak in tongues."

And Lee in Fairfield, Ohio, writes: "Hey, Jack, welcome back. Boy, another vacation. Who do you think you work for, Congress?"

(LAUGHTER)

CAFFERTY: Wolf.

BLITZER: Jack...

(LAUGHTER)

BLITZER: ... thank you very much. Good to have you back from your vacation.

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