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The Situation Room

Is Olmert's Support Slipping?; Iran Celebrates Mideast Cease- Fire

Aired August 14, 2006 - 19:00   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, Lou. And to our viewers, you're 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 tonight's top stories.
Happening now, it's 2:00 a.m. here in the Middle East. He says Hezbollah has been dealt a major blow, but hecklers accuse him of failures in Lebanon. Even with a cease-fire in place could Israel's leader become a casualty of war?

Hezbollah claims victory, shooting off fireworks over Beirut. They're also celebrating in Tehran. Is Iran the real winner? We'll have an exclusive report from inside Iran.

And there are new details on the alleged plot to blow up airliners out of the sky heading toward the United States and we have new details on the security dual, one security duel that could be useful. Would you be willing, though, to appear virtually naked if that could keep you safe?

I'm Wolf Blitzer in Jerusalem. You're in THE SITUATION ROOM.

The cease-fire is only hours old, but a war of words is raging over who won, who lost the bloody conflict between Israel and Hezbollah. From Hezbollah's leader Hassan Nasrallah, a declaration of victory and underscoring that defiance, militants light up the skies over Beirut with celebratory fireworks.

Here in Jerusalem, the prime minister, Ehud Olmert, says Hezbollah has suffered a crushing setback, but critics say this war was mismanaged, the Israeli campaign riddled with costly failures. Will the prime minister and Israel's unity government pay a price?

CNN's Jim Clancy is standing by in Beirut. Suzanne Malveaux is over at the White House. Let's begin our coverage this hour in northern Israel, CNN's Chris Lawrence on the scene -- Chris?

CHRIS LAWRENCE, CNN CORRESPONDENT: Wolf, right now the officers here on the ground are telling me that this is a fragile piece. These are just some of the Israeli vehicles that have pulled back from the border, but thousands of Israeli troops remain in southern Lebanon. Earlier today there were several skirmishes and we will now show you what it was like as the cease-fire took effect here in northern Israel. (BEGIN VIDEOTAPE)

(SOUNDS)

LAWRENCE (voice-over): The cease-fire has created peace, but not peace of mind.

UNIDENTIFIED MALE: It seems very fragile at the moment.

(SOUNDS)

LAWRENCE: Even after the cease-fire there were several skirmishes. Israeli soldiers shot and killed several suspected Hezbollah fighters who they say posed a threat to their forces in southern Lebanon.

UNIDENTIFIED MALE: That's why it's imperative that the vastly expanded UNIFIL and the Lebanese army take up their positions as quickly as possible.

LAWRENCE: The commander of U.N. peacekeepers met with Israeli and Lebanese officials on the border. They expect a multinational force of 15,000 fighters to start deploying there by early next week.

UNIDENTIFIED MALE: That buffer then makes the cease-fire hold.

LAWRENCE: Israeli officials say that until the United Nations takes over security, Israeli troops will engage Hezbollah guerillas only if they're threatened.

UNIDENTIFIED MALE: We are calling upon them to leave their weapons and walk away. Even if they don't leave their weapons we are not shooting them from the back.

(SOUNDS)

LAWRENCE: In northern Israel, the sound of mortars is giving way to the sound of mothers.

UNIDENTIFIED FEMALE: (INAUDIBLE)

LAWRENCE: Seagal Efrack (ph) and her family evacuated last month. They've come back to Kiryat Shmona. Their hometown was hit by 242 rockets since they left.

UNIDENTIFIED FEMALE: We hope there going to be peace, but I do not believe it and I think that it's not safe to be here.

LAWRENCE: Still, for the first time in more than a month there was peace and life on Israeli streets.

(END VIDEOTAPE)

LAWRENCE: No, it's not. Now, naturally, people are happy that rockets are no longer falling here in northern Israel, but because Hezbollah stood up to Israel for so long one Israeli woman told me she feels that Hezbollah leader Hassan Nasrallah's image has been elevated in the Islamic world and families here in northern Israel have not heard the last of him -- Wolf.

BLITZER: Chris, I know you've been speaking with rank and file Israeli soldiers, what do they say to you? Do they say they're relieved that the war basically could be over or that they were cheated out of a complete destruction, if you will, at least an effort to try to destroy Hezbollah?

LAWRENCE: Some say, Wolf, that they believe a cease-fire had to occur some time and that you don't get everything you want in a cease- fire. They did not get everything they wanted, but other Israeli soldiers were -- sounded somewhat disgruntled in the fact that two of their captured comrades have not come home. They felt that there should have been some guarantee that the two captured soldiers would be returned before a cease-fire was called.

BLITZER: Chris Lawrence on the scene for us in northern Israel, along the border with Lebanon. Thank you.

Hezbollah, meanwhile, calling this an outright victory, let's head to Beirut, Jim Clancy on the scene for us there -- Jim.

JIM CLANCY, CNN CORRESPONDENT: Well we'll get to those statements coming up in just a moment. It's important to really realize what happened on the streets today. It was like taking a lid off a pressure cooker. The bombs stopped falling, but there are serious questions that remain.

(BEGIN VIDEOTAPE)

CLANCY (voice-over): Lebanon was one giant traffic jam from Beirut southward as people displaced by the fighting tried to go back to their homes over bombed-out roads and bridges. At the same time, Hezbollah leader Hassan Nasrallah appeared on television from an unknown location to claim that all the suffering had not been for nothing.

HASSAN NASRALLAH, HEZBOLLAH LEADER: (SPEAKING FOREIGN LANGUAGE)

CLANCY: We are facing a strategic and historic victory and this is not exaggeration, he told his audience. Nasrallah taking special care of his support base, pledging immediate aid to those whose homes have been damaged or destroyed. Teams of Hezbollah activists were already scouring the southern suburbs just hours after the cease-fire, assessing damage and promising help.

A major unanswered question remains, whether Hezbollah fighters will leave southern Lebanon and pull back above the Litani River.

NASRALLAH: (SPEAKING FOREIGN LANGUAGE)

CLANCY: Who comes today asking Hezbollah to disarm and give up their weapons to the government, Nasrallah declared? Senior political sources believe Hezbollah will not disarm in the south even though that is required as the Lebanese army and U.N. peacekeepers are to take over security. Whether Israel will accept that remains in doubt.

(SOUNDS)

CLANCY: Late night celebrants in Beirut blared horns and chanted for Hezbollah and its leader.

UNIDENTIFIED MALE: Hezbollah! Hezbollah!

CLANCY: But the party was eerily in contrast to the casualty count and the economic toll the war has caused.

(END VIDEOTAPE)

CLANCY: When you look at the number of homes and apartments that have been destroyed in this 30-day conflict, Wolf, it amounts to some 15,000 units. To replace all of those as Hassan Nasrallah has promised, he will need $1 billion. Where is he going to get that money?

Many people believe that money will be coming from Iran and it will help to cover what has been an embarrassing and surprising turn of events for Hezbollah and Iran and that is Israel's response to the kidnapped capture of two of its soldiers inside Israeli territory. That's the incident, of course, that triggered it all off. That's an incident that is still not resolved -- back to you.

BLITZER: There are plenty of analysts, plenty of officials especially back in Washington who are hoping that the Lebanese, the Christians, the Sunni Muslims and even some of the Shia will step back when all is said and done and really vent their anger toward Hassan Nasrallah and Hezbollah for creating this situation, by kidnapping those two Israeli soldiers and seeing so much of Lebanon destroyed. Is there any evidence you're seeing that this backlash against Hezbollah is developing on the streets of Beirut?

CLANCY: No, well, already during the conflict there had been a lot of other people in the other confessions, if you will, around Lebanon that felt that this was really a foolhardy move on his part. Now they also thought that Israel's response was far too harsh and they predicted at the time that it would drive people into his camp.

I was in the southern suburbs today, watched people's faces, watched how they responded when they came out and they looked at the damage. You could see that a lot of people were asking questions, how are we going rebuild. Nasrallah is giving them an answer to that, but I still think there's going to be some long-term questions about his leadership and the wisdom of this igniting this whole operation that has been so painful for Lebanon.

BLITZER: Jim Clancy in Beirut for us, thank you Jim.

The cease-fire comes after blood spilled for over a month on the battlefield. Lebanese security forces say 908 Lebanese people were killed in the conflict and more than 3,800 were wounded, most were civilians. Here in Israel the Israeli military says 167 Israelis were killed, about a third of them civilians, though Prime Minister Ehud Olmert is putting the official death toll at 159.

Eight hundred and sixty-five Israelis are reported wounded as a result of this month-long war. The White House says diplomacy is the victor in Lebanon and President Bush is portraying this as a setback for both Iran and Syria.

Let's turn to our White House correspondent Suzanne Malveaux -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, we saw the president, of course, very important pictures to the administration, meeting with his top national security team, but the bottom line here is that the president is very much in the same position that we're all in and that is, of course, to see just how long this cease-fire will hold. Still waiting to see whether or not the Lebanese government is really going to be able to disarm Hezbollah and whether or not this international force is really going to make very much of a difference. What we're seeing the president do here is essentially try to convince the American people that despite the challenges from Iran, from Hezbollah, from Hamas and also the violence in Iraq and Lebanon that Americans should have confidence, should have faith in what he is calling his freedom agenda.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There are terrorists who kill innocent people to stop the advance of liberty and that's the challenge of the 21st Century and the fundamental question for this country is do we understand the stakes and the challenge and are we willing to support reformers and young democracies and are we willing to confront terror and those who sponsor them and this administration is willing to do so.

(END VIDEO CLIP)

MALVEAUX: And Wolf, of course, the president also rejected the notion from Hezbollah and from Middle East experts that Hezbollah was the one who ultimately came out the winner in this conflict. That it was the United States and Israel coming out the losers. The president saying how can you consider that when it was a state within a state tucked away safely in southern Lebanon and eventually you're going to be replaced, but it is still a goal that it will be replaced. It is far from certain whether or not that is actually going to happen -- Wolf.

BLITZER: Suzanne Malveaux at the White House, thank you.

Let's go to New York. Jack Cafferty is standing by with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, time flies when you're having this much fun. Only three months now, a little less actually, until the mid-term elections and it's clear the nation's security and safety is going to be a top concern for many voters. According to a new CBS poll, 17 percent of those surveyed think that terrorism is the most important problem facing this country and that's second only to the war in Iraq.

The issue of national security has traditionally been a strength for the Republicans and it proved an effective strategy for winning elections in 2002 and 2004. This time around both Republicans and Democrats will want to seize on the news of last week's foiled terror plot, foiled in Britain by the British, but that won't keep our American politicians from trying to grab a piece of the action.

Vice President Cheney has suggested that Democrats are weak on terror. Senate Democratic leaders insisted that come November voters won't buy the Republicans' arguments that they're stronger on national security. Senate Minority Leader Harry Reid said the Republicans have run this play one too many times.

So here's the question this hour. How will last week's terror scare affect the midterm elections? E-mail us at CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Thank you very much, jack. Jack Cafferty in New York.

And coming up, chilling new details about the plot to carry out airline attacks, planes coming to the United States. The attackers allegedly hoped to explode the planes as high as they could over the Atlantic. We have some new details.

Also, Iran's president says Israel should be destroyed and he's calling the United States Satan, but is Iran helping to arm enemies of both countries sending weapons to Hezbollah and Iraq? Iran answers in a CNN exclusive.

And some compare it to strip search security, an airport scanner that will see your bare body in the name of protecting you.

Live from Jerusalem. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Tonight, British security sources are revealing new details to CNN about the alleged plot to blow up U.S.-bound airplanes. They say the alleged plotters intended to use an electrical charge to detonate liquid explosives while the plane was at maximum cruising altitude. The goal, to ensure investigators would have a tough time finding evidence.

Just days after the foiled plot was announced, British authorities have now lowered their threat level a notch from critical to severe and they're following the money trail to Pakistan. CNN's Deborah Feyerick is joining us from London with more -- Deb.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, London investigators are focusing on a house in east London. They are confident, according to British security sources, that they will indeed find bomb-making materials or evidence thereof. They're also searching the woods where they believe some of the explosives may have been tested. And it's not just the physical evidence they're looking for, but also the financial evidence. (BEGIN VIDEOTAPE)

FEYERICK (voice-over): As Americans raised money to help victims of last year's deadly earthquake in Pakistan, the same relief effort was underway in Britain. The difference, British investigators now believe some of the money raised in the U.K. went not to victims, but to several of the terror suspects to carry out the jetliner plot.

(SOUNDS)

FEYERICK: The money was reportedly raised by a Pakistani charity that funds Islamic militants. A spokesman for the group Jamat Aldawat (ph) denies the charge and tells CNN they never sent anyone to Britain to raise donations. John Conyngham spent years investigating money laundering.

JOHN CONYNGHAM, CONTROL RISKS GROUP: It may well be of course that many or the vast majority of funds that were raised for this earthquake donations were coming from genuine people with genuine motivations wishing to help. We're talking about a very small percentage here where they may have decided to divert some of those funds for very different reasons.

FEYERICK: And it's not just the money that's under scrutiny. Lord Nasir Ahmed, a member of Parliament, is a leader among Britain's Pakistanis. He tells CNN at least four of the alleged plotters traveled to Pakistan telling their families they were going help the earthquake victims.

NASIR AHMED, MEMBER OF BRITISH PARLIAMENT: Anything could be possible. We don't have any facts. What is truth is that these young people went to Pakistan to help with the charitable cause. They were young. They may have got involved with something, which is illegal; they may not, so only God knows what happened.

(END VIDEOTAPE)

FEYERICK: Now experts say it would have been virtually impossible for these young Brits to avoid the Islamic militants since many of them were the ones actually running the earthquake rescue operations -- Wolf.

BLITZER: Deb Feyerick, thank you. The United States hopes to close down every hole that could give terrorists an open opportunity. That's also what America's neighbor to the north hopes to do as well. We want to talk a little bit more about an important question we're exploring.

How vulnerable is America to terrorist attacks? Our series is called "Target: USA". Our Zain Verjee is in Toronto right now with more on how Canada is battling homegrown terror -- Zain.

ZAIN VERJEE, CNN ANCHOR: Wolf, there are fears and many questions about homegrown terrorism in Canada. As you say, we're in Toronto to try and find out just how serious the threat actually is.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Music and maize, tourists and tailors, a popular stroll on one of the liveliest streets in Toronto. It's one of the most multicultural cities in the world where tolerance is practiced and preached.

(MUSIC)

VERJEE: But the colorful and delicate fabric that weaves together this unique city is being tested after an alleged homegrown terror plot was exposed.

TAREK FATAH, MUSLIM LEADER: We've got terrorism from the foothills of Tora Bora come down to the doorsteps of Toronto.

VERJEE: Seventeen Canadian men arrested this summer, accused of plans to behead the prime minister, attack the Parliament, and blow up buildings. But some terror experts in Canada say the threat is exaggerated.

ERIC MARGOLIS, "TORONTO SUN" CONTRIBUTING EDITOR: I think these are a bunch of kids, literally young Muslim would-be Rambo's who were adolescent, shooting off their mouths, but I don't think this was in any way construed as a hotbed of terrorism.

VERJEE: But Canada has had its close calls. Just seven years ago Canadian intelligence helped foil a plot to blow up Los Angeles airport. U.S. Customs arrested millennium bomber Ahmed Ressam as he crossed the Canadian border into Washington State. And just last November the head of Canadian intelligence warns a terror strike is now probable.

So is Canada a fertile ground for recruiting terrorists? Muslim leaders say images from Iraq, Afghanistan, Lebanon and Gaza fuel frustration and anger. For a few, that anger can turn into violence.

FATAH: The predator imams who are trying to pick on young men use the plight of the Muslims to recruit them for their own political goals.

VERJEE: Not all Muslims here recognize that a serious problem is brewing in their own backyard, but at least one man offers this suggestion.

UNIDENTIFIED MALE: Mr. Bush (INAUDIBLE)...

(CROSSTALK)

UNIDENTIFIED MALE: ... bring us and we want to...

(CROSSTALK)

UNIDENTIFIED MALE: ... we want to kick his ass too.

(CROSSTALK)

(END VIDEOTAPE)

VERJEE: Wolf, most people we spoke to here in the Muslim community believe that this alleged plot is really just an isolated case. They told me that look, we just don't believe that there is the possibility of a widespread homegrown terrorism phenomenon here in Canada -- Wolf.

BLITZER: Thank you very much. Zain Verjee reporting from Toronto.

And there's a potentially very significant development happening in south Lebanon right now that could affect this cease-fire between Israel and Hezbollah. Let's go to the border. Chris Lawrence is on the scene with new information. Chris, what are you picking up?

LAWRENCE: Wolf, we heard several blasts over the last couple of minutes and we called the Israeli Defense Force to verify what they might be, thinking they might be rockets. The Israeli Defense Force said, no, it was a controlled exercise, but in verifying that information they also told us that at least 10 Katyusha rockets have landed in southern Lebanon just in the last few hours.

This could suggest two things. It does not -- we have not confirmed yet whether Hezbollah was responsible for launching those rockets only through the IDF that they have landed in southern Lebanon, but again, it suggests two things. If Hezbollah was behind it, it could suggest (A), that some parts of Hezbollah have refused to abide by the cease-fire arrangement and that, two, Israel may have pushed some of these forces so far north past the Litani River that those Katyusha rockets are no longer able to have the range and capability of hitting here in northern Israel. Of course, that also have to take into account that thousands of Israeli soldiers are still patrolling in that area of southern Lebanon -- Wolf.

BLITZER: If in fact Katyushas are coming in and Hezbollah's firing those Katyushas they're reaching south Lebanon, if they get into Israel, all bets are off. Israeli officials have told me that this cease-fire is toast, is history. We're going to watch this. Stand by, Chris. We're going to be following this breaking news throughout this program.

Also, we're following other important stories tonight in THE SITUATION ROOM. New technology that could do what x-rays can't, mainly expose hidden liquid explosives. We're going to test out some of those devices that essentially bare all. Do they offer a more effective way to screen out terrorists who want to target the USA? Our special coverage continues on that.

And we're also getting the first video of Fidel Castro since his intestinal surgery, an update on the Cuban leader and his condition. All that coming up.

Live from Jerusalem, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: To our viewers, you're in THE SITUATION ROOM where new pictures and information are arriving all of the time. Happening now, breaking news here in the Middle East. The Israel Defense Force is telling CNN at least 10 Katyusha rockets landed only moments ago in southern Lebanon. We're watching this story closely as the cease-fire had appeared to be holding 18 hours after it began, and Israeli troops started pulling out of southern Lebanon, but tonight also Hezbollah's leader suggesting he's in no rush to discuss disarming the militia group.

President Bush, meanwhile, blaming Iran and Syria for igniting the Middle East conflict by supporting Hezbollah guerillas and he says the conflict would have been even more dangerous if Iran had nuclear weapons. Ahead, an exclusive report from inside Iran about its Hezbollah connection.

And Britain has now lowered its terror threat level a notch, four days after disrupting an alleged plot to blow up flights headed to the United States. British security sources now telling CNN they're confident forensic evidence of explosives will be found in an area near where the alleged plotters were arrested.

I'm Wolf Blitzer in Jerusalem. You're in THE SITUATION ROOM.

The cease-fire between Israel and Hezbollah only about 18 hours old, but it's fragile and could be over with very, very soon. Let's bring in CNN's Chris Lawrence; he's on the border in northern Israel close to Lebanon where the IDF has just told him about a potentially deal-breaking development. Chris, update our viewers on what you have learned.

LAWRENCE: Wolf, just in the last 10 minutes or so we learned from the IDF that at least 10 Katyusha rockets have landed in southern Lebanon. What we are now trying to determine is who launched those rockets. We have not yet been able to confirm whether it was Hezbollah and we would also have to confirm if it was whether this was something ordered from the top, so to speak, or whether this would be a faction of Hezbollah that is acting against the wishes of its leaders who have agreed to the cease-fire arrangement.

It does raise some interesting issues, though, when you think of what would be the response of the Israeli military if, perhaps, those rockets were to make it here where we are in northern Israel. On the other hand, it may suggest that Israeli forces have pushed Hezbollah fighters so far north, perhaps past the Litani River that those Katyusha rockets no longer have the range and capability of landing here in northern Israel. Again, right now we are speculating on some of those points, but those are the issues we hope to be investigating and getting some answers to as time goes by -- Wolf.

BLITZER: When you spoke to the IDF, the Israeli military commanders on the scene in northern Israel where you are right now, was there any immediate suggestion that the launching of these 10 rockets, even though they landed in south Lebanon where there are still thousands of Israeli troops, that this was a violation, if you will, of the cease-fire and could trigger a very, very tough Israeli response.

LAWRENCE: They did not directly make that link and they did not make that assertion. They simply confirmed that 10 Katyusha rockets had fallen just in the last few hours, but other Israeli officers that we have spoken to throughout the day have said that this is a fragile truce, that if Hezbollah were to attack that the truce would be over and Israel would retaliate to anything that Hezbollah came at it with.

You can see it on a smaller scale, Wolf, when you look at some of the skirmishes that happened today in southern Lebanon. The cease- fire was called, Hezbollah stopped sending the rockets into Israel. Israel stopped shelling southern Lebanon, but yet you still have these smaller skirmishes. Israeli soldiers and Hezbollah guerrillas engaging in some small arms fighting.

Israeli forces telling us that they believe some of these Hezbollah guerrillas posed a threat to the soldiers, their soldiers fired and shot and killed several Hezbollah guerrillas in southern Lebanon, but that small-scale fighting would not necessarily constitute a breach of this cease-fire. Whereas launching of rockets, that remains to be seen how Israeli commanders would look at something like that.

BLITZER: And Chris, I want to welcome in our international viewers on CNN INTERNATIONAL. They're joining us here in THE SITUATION ROOM, where we are following breaking news. The IDF, the Israel Defense Forces, saying that Hezbollah rockets, Katyusha rockets have been fired and they've landed not in northern Israel, but they have landed in south Lebanon. Ten, the IDF says 10 Katyusha rockets have been fired. It is unclear at this point who has launched these rockets. Chris Lawrence reporting it could be renegade Hezbollah troops. It could be the real thing and it is unclear if these were launched from further north and could only reach south Lebanon, unable to reach northern Israel.

Jim Clancy is watching all of this development with us. He's in Beirut right now. Jim Clancy, the IDF making a very serious allegation only within the past few minutes that 10 Katyusha rockets have been fired. They didn't make it to northern Israel, but they did land in south Lebanon. I don't know if you're hearing anything in Beirut about this yet. This has only happened, according to our Chris Lawrence, he's in northern Israel, within the past 10 minutes or so, but clearly, this is a potential deal breaker if Katyushas are being fired.

JIM CLANCY, CNN CORRESPONDENT: When you look at the situation, it is not, in the view of many people here, unexpected. Why?

Hassan Nasrallah, the leader of Hezbollah, said his army, his Hezbollah fighters, would continue to battle Israeli troops so long as they remained inside Israel. He said that tonight in a victory speech that they had won a strategic victory. It would only make sense that he would try or someone in his group might try unauthorized to show that they meant they were going to keep up those attacks on Israeli forces. So long as they see Lebanon as occupied territory by Israel, they have vowed to continue the fight. Now, he may be thinking, someone may be thinking, that this is going to try to push the Israelis out. That what they want to do is wait for the international peacekeepers to come in. This is going to create concerns, Wolf, not just for Israel, but for those peacekeeping forces in the Lebanese army that have yet to deploy down there. There's some hope that they can begin deploying by the end of the week.

BLITZER: There's no doubt that if the Israelis determined, Jim Clancy, and we have Chris Lawrence standing by as well in northern Israel, if the Israelis determine that Hezbollah is launching Katyusha rockets, even if they don't make it into northern Israel, but they only make it into south Lebanon, this will be seen by Israel as a violation of the terms of the cease-fire which until now has gone along relatively smoothly, a few minor incidents, certainly to be expected, but if in fact Katyushas are being fired again then I suspect, Jim Clancy, all bets are off and this cease-fire may be short lived, indeed, but give us your perspective right now on whether or not there are renegade Hezbollah unit, if you will, or this is a pretty tightly-knit organization controlled by Hassan Nasrallah and if there are Katyushas being fired, the order has come from the very top.

CLANCY: Number one, this is an extremely tight-knit organization. An organization that is based in villages and we may have to wait 24 hours or at least 12 hours to see what the fallout is. It may be that someone has misinterpreted the words of Hassan Nasrallah and taken it into their own hands. In reality a lot of these units, the village fighting units, don't have any command and control. They know what their job is. They know they're supposed to resist any Israeli occupation and they go ahead. I think if we can clarify the situation in the coming hours and see any kind of a response coming from Hezbollah, it would serve to understand more about what is going on here.

We're going have to wait and see to get some clarification on this, Wolf, because we know that the statement has been made. They are going to continue to resist the Israeli occupation and that's how they see the continued presence of Israeli troops there, but would they risk this cease-fire so close to getting the Israelis to willingly pull out of south Lebanon. This is an important factor for Hassan Nasrallah. His entire identity is built on the fact that he drove Israeli troops out. He brought them back in, of course, with that kidnap capture plot that went across into Israel. It ignited this whole conflict.

Tonight if he's putting that in jeopardy, a withdrawal in jeopardy, I think it's of concern to Hezbollah as well as the rest of Lebanon and Israel.

BLITZER: Jim Clancy, I'm going have you stand by in Beirut. Chris Lawrence, please stand by in northern Israel. We are following the breaking news. The Israel Defense Forces, the IDF, saying that 10 Katyusha rockets have landed in south Lebanon, the same kind of rockets that Hezbollah has been using over these past 33, 34 days in this war. We're checking the story. We're getting more details. We're not going to go away long from it. A potential deal breaker in what had been relative quiet during these first hours of this U.N.- brokered cease-fire.

We're also following other stories tonight, including that CNN exclusive. Iran has a warning to the United States, don't meddle in Iranian affairs, that from the country's chief nuclear negotiator, who also answers the question of whether or not Iran is arming enemies of both Israel and of the United States. We are going to go to Tehran.

And how much would you give to stay safe on your next flight. Would you allow airport screeners to see your bear body? A new technology does just that. Ryan Todd has been testing it out. We'll have his report live from Jerusalem. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We're following a breaking story out of the Middle East here. The Israeli Defense Forces reporting that 10 Katyusha rockets have been fired and landed in south Lebanon, didn't make it across the border into northern Israel. Katyusha rockets with all of the markings of Hezbollah. The IDF checking this story. We're checking it as well. Potentially a deal breaker as far as the cease- fire brokered by the United Nations is concerned, potentially a very, very significant development. We'll go back to the scene and get more information as it comes in.

Meanwhile, Iran is closely watching all of the events here in the Middle East, especially in Lebanon, but how closely is Iran involved in Lebanon? How much might it be helping Hezbollah? With a CNN exclusive our Aneesh Raman, the only U.S. network reporter in Iran right now. Aneesh?

ANEESH RAMAN, CNN CORRESPONDENT: Wolf, in Iran continued denials that the country is arming Hezbollah.

(BEGIN VIDEOTAPE)

RAMAN (voice-over): For every Hezbollah rocket fired on northern Israel comes an allegation that it came from Iran and now the head of the country's Supreme National Security Council, in an exclusive interview with CNN, responds.

(on camera): Is Iran at all arming Hezbollah?

ALI LARIJANI, IRANIAN NATL. SECURITY COUNCIL (through translator): Hezbollah does not need Iranian weapons. You can find anything on the market. The type of weapons Hezbollah uses are not that hard to find. And by the way, the Americans haven't admitted that they're supplying Israel with weapons.

RAMAN (voice-over): It seems the Iranian strategy, for every question about their actions, comes a response that challenges the United States. When asked about comments made by the U.S. ambassador to Iraq, Zalmay Khalilzad, that Iran is festering civil unrest there, Larijani said it was the opposite.

LARIJANI (through translator): Yes, they want civil war. This is not an analysis. We have information. The same ambassador you just mentioned had a meeting not long ago with terrorist groups inside Iraq. He asked for three things: one, to aim their guns away from the U.S. forces; two, to aim their guns at the Iraqi Shias; and three, to aim their weapons at Iran.

RAMAN: A startling accusation he says came from Sunni insurgents. Interesting because Iran is a Shia nation. In Iran, there is no doubt this day that Hezbollah won the war, that Iran is now in a stronger regional position, and they feel the U.S. must respect that.

LARIJANI (through translator): I think the Americans are wise enough not to entangle themselves with Iran. They're still struggling in Iraq. What did they gain in Lebanon? Can anyone claim that Israel has won in Lebanon? Why should the U.S. act unwisely? We're prepared for all the eventualities.

RAMAN: Including the August 31st deadline set by the United Nations for Iran to suspend its uranium enrichment. Larijani says there are no plans to do that, leaving Iran on a collision course with the west.

RAMAN (on camera): Iran sees itself now as a, if not the, rising power in the region and the main voice that can challenge the United States -- Wolf.

(END VIDEOTAPE)

BLITZER: Aneesh Raman in Tehran, thank you very much.

And one more note on Iran -- the country strictly controls expression and access to the Internet, and yet the Iranian president, Mahmoud Ahmadinejad, appears to be taking a rather unusual step, launching his own weblog.

Our Internet reporter Jacki Schechner is standing by with details -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, that's right.

President Ahmadinejad already has a Web site in Farsi and English, but now he's launched a separate blog in Farsi, English, Arabic and French. And while we cannot confirm that he's actually blogging himself, that's what the site seems to suggest.

Now, it's not a very fancy site, but it does have some interesting features. There is a poll that asks if you think that the U.S. and Israel intend to trigger another world war by attacking Lebanon. There's more than 37,000 votes in this poll so far, and 59 percent of the voters say no.

There's only one entry on the blog so far. It's titled "Autobiography." It runs more than 2,000 words and is very hostile to the West and the United States, in particular. We spoke to two organizations today, Wolf, who track free speech around the world and they didn't say anything negative about the blog itself, but did say that they wished Iran would be better about allowing free speech online.

BLITZER: Jacki, thank you very much.

And coming up, we are following the breaking news out of the Middle East, the Israeli army saying 10 Katyusha rockets were fired and landed in south Lebanon, didn't make it across the border to northern Israel, potentially raising a huge threat to the cease-fire brokered by the U.N. That's only about 18 hours old. We are following the story and, get more information for you on that.

Also, targeting terrorists plotting to strike the USA -- could a device that bares all be a secret weapon, especially against liquid explosives. Our Brian Todd has been testing the newest technology.

And a security pop quiz, can you carry lip gloss onboard your next flight or not? Jeanne Moos will test your knowledge about rules that may test your patience. Stay with us.

(COMMERCIAL BREAK)

BLITZER: We've got more on the breaking news we've been following this hour. The IDF, the Israel Defense Forces, now saying 10 Katyusha rockets were fired and landed in south Lebanon only within the past several minutes. Didn't make it across the border into Israel.

We're checking to see if the Israelis regard this as a violation of the cease-fire that went into effect earlier in the morning. It could be a potential dealbreaker. We're watching the story very closely for you.

We're also watching other important news happening right now. Let's check in with our Betty Nguyen. She's got an update -- Betty.

BETTY NGUYEN, CNN ANCHOR: Hi there, Wolf. I want you to take a look at this. These are the first video images of Cuban President Fidel Castro since his surgery for intestinal bleeding two weeks ago. Cuba's state television today broadcast video of Castro receiving a bedside visit from his brother Raul and Venezuelan President Hugo Chavez yesterday. Castro is seen smiling and talking. Yesterday was his 80th birthday.

We are just getting word that Dell is recalling more than four million notebook computer batteries. It says they could overheat and actually catch fire. Dell says the batteries were made by Sony and put in notebooks that were shipped to stores between April 1, 2004 and July 18th of this year, so that's quite a span.

A Dell spokesperson says a short circuit could cause the batteries to possibly ignite. The recalled batteries are in some models of Dell Latitude, Inspiron, XTS and precision mobile workstation notebooks.

And the controversial war shrine that has been the scene of protests is getting a visit from Japan's prime minister. It is timed to coincide with the 61st anniversary of Japan's surrender in World War II. China and South Korea say the shrine in Tokyo which honors Japan's war dead, including convicted war criminals, glorifies Japan's past militarism -- Wolf.

BLITZER: Betty, thank you. We want to talk a little bit more now about a very important issue we've been exploring. How vulnerable is America to terrorist attacks? Today in a series called "Target USA," CNN is pondering that and other questions. Among them, what would you give up to ensure your safety on a plane?

Our Brian Todd has more on a controversial new technology that some are likening to an electronic strip search -- 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, 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 airports. 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 bottle 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 it 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, ELECTRONIC PRIVACY INFO CENTER: It's a virtual strip search. What it is, is a detailed image of a person's body, so detailed 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've been through it over in Europe, and I didn't like it.

TODD: Machinemaker 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.

(END VIDEOTAPE)

TODD: So is this an efficient screener of terrorist tools, or a huge invasion of privacy? 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.

BLITZER: All right, Brian, thank you.

Let's go to New York. Jack Cafferty's got "The Cafferty File" -- Jack.

CAFFERTY: You'll be allowed to board your flight in just a moment, Mr. Blitzer, but first we'd like you to put this metal plate down the front of your pants and step into our private screening room here. It's quite a world we live in.

The question we asked is how will last week's terror scare affect the midterm election? Martha in Hollywood, Florida writes: "Last week's terror scare will have no impact on midterm elections, because Americans are lazy, stupid and apathetic when it comes to the administration of this nation's government. Most don't even bother to vote. We not only need new leadership in this country, we need an involved, aware and educated citizenry."

Michelle in San Antonio, Texas: "It depends on how much the Republicans use this situation for political gain. Face it, all they've got to run on is terrorism and national security, so I predict they will try to scare us as much as possible and we'll be pummeled with foiled terror plots between now and November. Of course, they won't succeed without help from the media, who happily oblige by reporting what they're fed by this government without question."

T in Omaha, Nebraska: "It won't affect the outcome of the elections because Iraq will still be front and center, and if the Democrats ever wake up, they'll exploit the Iraq war to the hilt. Any Democrat who doesn't rub Bush's nose in the Iraq war should be voted out of office, just like Lieberman."

Gerald in Las Vegas: "If Americans do a little research, they'll find most of these terror stories are false flag operations designed to gain control of our citizens. Our borders are unsecured, aliens cross with little interference, and our infrastructure is sold to foreign interests. If Americans don't do some homework, the elections will mean little."

And Tony in Gettysburg writes, "Although the people who watch CNN know better, the idiots that watch that other unmentionable network will believe the Bush administration's rhetoric on their success in Iraq and other things, including our security in this country. So I doubt that many from that bunch will vote the bums out. I hope I'm wrong."

If you didn't see your e-mail here, you can go to CNN.com/caffertyfile. We post a few more of these online. You can go check those out -- Wolf.

BLITZER: A lot of people do, Jack. Thank you very much.

Let's check in with Paula Zahn. She's standing by to tell us what's coming up right at the top of the hour. Hi, Paula.

PAULA ZAHN, CNN ANCHOR: Hi, Wolf, thanks. Coming up in just about six minutes from now, we're going to have the very latest on what appears to be a break in a very shaky Middle East cease-fire. And the alleged London bomb plot targeting transatlantic airliners. We are also going to continue CNN's daylong investigation "Target: USA." We have reporters all over the country showing us America's most vulnerable places. You will also see some amazing high-tech scanners that can even stop terrorists from smuggling everyday liquids that can eventually be turned into bombs. All that ahead coming up at the top of the hour -- Wolf.

BLITZER: We'll be watching, Paula, thanks very much.

Up next, Jeanne Moos sees the light side to some serious security questions. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Finally, you've heard about the carry-on confusion. Tonight our Jeanne Moos puts you to the test.

(BEGIN VIDEOTAPE) JEANNE MOOS, CNN CORRESPONDENT (voice-over): Is it OK to bring lipstick? Will gel shoe inserts have security following in your footsteps? Even airport employees have trouble keeping up with the latest rules.

UNIDENTIFIED MALE: I'm not an expert on that. Place it in the bin when you go through. No, no, no.

MOOS: We invite you to test your knowledge.

(on camera): It's the carry-on quiz.

(voice-over): What's allowed and what's not allowed.

(on camera): Bug spray.

UNIDENTIFIED MALE: No.

MOOS: Gel deodorant.

UNIDENTIFIED MALE: Sorry.

MOOS: Jell-O.

UNIDENTIFIED MALE: No.

MOOS: Lip gloss.

UNIDENTIFIED FEMALE: Yeah.

UNIDENTIFIED FEMALE: Yes.

MOOS: No.

Knitting needles.

(voice-over): For those "hmmm" items, you can always check by going to the Transportation Security Administration Web site, where there are lists and lists, but the rationale can be confusing.

(on camera): Gel-cap type pills.

UNIDENTIFIED MALE: Not allowed.

MOOS: All right. How about four ounces of Nyquil?

UNIDENTIFIED MALE: Not allowed.

MOOS: It's allowed now.

(voice-over): That's right, no gel-cap pills, but they just changed the rules to allow up to four ounces of non-prescription medicine.

(on camera): Contact lens solution.

UNIDENTIFIED FEMALE: No.

MOOS: Well, you know, they've changed it.

(voice-over): It's enough to confuse even a New York City policeman.

(on camera): Knitting needles.

UNIDENTIFIED MALE: No.

MOOS: Yes.

UNIDENTIFIED MALE: Really?

MOOS (voice-over): Knitting needles and nail clippers are now allowed.

(on camera): Mascara.

UNIDENTIFIED MALE: Yes.

MOOS: No.

(voice-over): We asked a spokesperson for the Transportation Security Administration.

(on camera): What's wrong with mascara? Why can't you take mascara? She said, "We want people to look as bad as possible." She was joking.

UNIDENTIFIED FEMALE: That would work.

MOOS: Lipstick.

UNIDENTIFIED MALE: No.

MOOS: You're allowed.

UNIDENTIFIED MALE: Not today.

MOOS: Yes, today.

UNIDENTIFIED MALE: No, no, no, some lipsticks yes and some no.

MOOS: That's correct.

(voice-over): Lipstick is OK. Liquid lip gloss isn't.

(on camera): Mascara, not allowed. Wrench under seven inches, allowed. Now, which one do you think I can do more damage with?

(voice-over): If only it was as easy as this cartoon. Another brave soldier in the war on terror, throwing out Chanel #5.

Forget Chanel. What about shoe gels?

UNIDENTIFIED MALE: No?

MOOS (on camera): You have to surrender your gel inserts.

UNIDENTIFIED MALE: Wow.

MOOS (voice-over): Jeanne Moos, CNN...

(on camera): I think those socks should not be allowed on the plane.

UNIDENTIFIED MALE: Oh, the SpongeBobs?

MOOS (voice-over): ... New York.

(END VIDEOTAPE)

BLITZER: That's it for us on THE SITUATION ROOM. Let's go to New York. Paula Zahn standing by -- Paula.

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