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American Morning

Battle for Baghdad; Iran Offers More Talks; Patriots to Japan; Deadline Set

Aired August 24, 2006 - 06:00   ET

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

SOLEDAD O'BRIEN, CNN ANCHOR: Good morning. Welcome, everybody. It is Thursday, August 24. I'm Soledad O'Brien.
TONY HARRIS, CNN ANCHOR: And good morning, everyone. I'm Tony Harris in for Miles O'Brien.

Let's get you started with a look at headlines this morning.

O'BRIEN: U.S. and New Zealand officials say they will not negotiate for hostages. This follows the release of a videotape showing kidnapped journalists Olaf Wiig and Steve Centanni. Their captors are demanding the release of Muslims held prisoner by the United States.

HARRIS: More trouble at the nation's biggest oil field. BP says it is once again cutting production in Alaska's Prudhoe Bay. This time it's because of a faulty compressor that's used to handle natural gas during oil processing.

O'BRIEN: Double dose of bad news for the housing market, a new report this morning is expected to show a drop in new home sales last month. Yesterday, a separate report showed sales of previously owned homes were at their lowest level in two-and-a-half years.

HARRIS: How about this, Pluto a planet no more? It might happen. Astronomers will vote today on the new definition of a planet. Pluto is expected to be demoted to dwarf planet, a step below Earth and seven other classical planets.

O'BRIEN: Tropical Storm Debby becoming better organized in the eastern Atlantic. Forecasters say it could become a hurricane in about four days.

Brings us right to Chad Myers at the CNN Center, he's got the forecast for us.

Better organized, Chad, means becoming stronger, right?

CHAD MYERS, CNN METEOROLOGIST: Right. Yes, more organization means the air goes in at the bottom and out at the top and then it spreads away and it gets stronger and stronger.

You kind of think about it like a convection oven. A convection oven can cook a whole lot faster than a regular oven can. And then think of a bunch of storms that aren't working together, like a bag of beebees that you drop on the floor, they just scatter, they don't work together, so they don't end up getting any closer together, any stronger, they just kind of all bang against each other. And that's kind of what storms can do.

If they spin, like Debby is, it will get stronger. If they spin like this is about to later on today, it will get stronger and that will be Ernesto.

Tropical Storm Debby turning into Hurricane Debby, but moving right up in the middle of the central Atlantic and affecting no one, just making some big waves.

Now here is what we're watching here from the Windward Islands. There's Grenada there. The storm not really significant yet, no name, no number, but we do expect that to happen later on today as they fly an airplane through it.

(WEATHER REPORT)

Back to you.

O'BRIEN: Yes, how about that? Good for us, right?

MYERS: Right.

O'BRIEN: All right, Chad, thanks.

MYERS: You're welcome.

O'BRIEN: Dire warning to tell you about out of Baghdad, the U.S. ambassador to Iraq says sectarian violence could topple the government and cause chaos in the already fragile region. The warning comes from Zalmay Khalilzad. It comes in an opinion piece that he wrote for "The Wall Street Journal."

CNN's Michael Holmes is live for us in Baghdad.

Michael, good morning.

MICHAEL HOLMES, CNN CORRESPONDENT: Good morning to you, Soledad.

Yes, this comes as Operation Together Forward continues. Forty to 50,000 troops, U.S. and Iraqis, they have been undertaking in the last few weeks phase one of this massive operation. These forces moving into areas, searching, cordoning them off, searching them. So far we're told by U.S. officials that 28,000 buildings have been searched.

Death squad operations are part of the focus of this. Twenty-two of these operations have been carried out. Six death squad leaders, according to the Americans, have been caught and 31 death squad members have been caught, both Sunni and Shia.

This, of course, is trying to break up this sectarian violence that is ripping Baghdad apart and has caused so many deaths. Now it's interesting to note that since operations got under way, the death rate in those areas searched has dropped massively. And now phase two is about to start.

One thing that everyone will tell you is that the cliche time will tell applies here. Intelligence summaries say that a lot of these insurgents have simply left the area. And we're now seeing an increase in insurgent activity in other areas outside of Baghdad -- Soledad.

O'BRIEN: Let me ask you a question about all this violence, this relentless violence, it's caused these internal refugee camps. What are they like? I know you've had a chance to get an exclusive look.

HOLMES: Yes, we saw one here in Baghdad. There are 19 around the country. Now listen to these figures. Since February, the government here says that 250,000 Iraqis, a quarter of a million people, have been forced from their homes and neighborhoods because of what we were just talking about, this insurgent activity in Sunni neighborhoods. Shias warning them -- Shias being warned to get out or they'll be killed. In fact, they are being killed. And the reverse as well.

This has prompted, effectively, what relief organizations will call displaced persons, but they're essentially refugees within their own countries. We went to one camp, 800 people living in an area the size of two soccer fields would be the size of it. Some really heartrending scenes there, too, people whose lives have now changed perhaps forever. And we'll be having more on that later.

O'BRIEN: Michael Holmes for us this morning joining us from Baghdad.

Michael, thanks.

A new CNN poll asked Americans whether the war in Iraq has made us safer, made the U.S. safer, really, from terror attacks. Thirty- seven percent of those polled said, yes, it's made the U.S. safer. Fifty-five percent said, though, the war has made us less safe. Forty-three percent say the U.S. is safer from terrorism than it was before 9/11, 32 percent say about as safe and 25 percent say the U.S. less safe.

And when asked if police in their community are prepared for a terror attack, only 27 percent said yes. Seventy percent of the people polled said no.

The poll was conducted by Opinion Research Corporation for CNN -- Tony.

HARRIS: Thanks, but no thanks, that's basically the Bush administration's response to Iran's offer to begin negotiations on its nuclear program. The State Department saying Iran has fallen short of the conditions set by the U.N. Security Council.

CNN's Aneesh Raman is the only U.S. network television correspondent in Tehran.

And, Aneesh, what is your sense on the ground as to what the Iranian strategy is right now?

Good morning.

ANEESH RAMAN, CNN INTERNATIONAL CORRESPONDENT: Tony, good morning.

The U.S. response will come as no surprise to Iranian officials. The sense I'm getting on the ground is this, Iran is not going to suspend its nuclear program by the end of the month when it is required to do so by the U.N. Iran is aware, though, that after that deadline passes it does not immediately trigger action. The U.N. Security Council then has to debate what they should do, what kind of sanctions, if any, they should impose.

So Iran's response, which called for new talks, which called for a new formula to solve this, has given fodder to countries like Russia and China, key Iranian allies on that Security Council, to slow down the pace toward sanctions, to already say maybe we should open up a new round of talks.

So this response it seemed wasn't directed at the U.S., in fact directed pretty pointedly at Russia, at China, at countries that could prevent serious sanctions from coming. But the stage is set essentially for a diplomatic showdown. No indication Iran is going to stop its nuclear program -- Tony.

HARRIS: OK, so then the follow up I guess is what is this defiance all about? Is it about nuclear energy?

RAMAN: That's a large part of it is that Iranian officials not only have publicly stated they're pursuing a civilian nuclear program, believe they have the right to do it, and they have rallied a huge amount of domestic support. There are big issues in Iran, unemployment, inflation. Those issues now have been put aside. The public is concentrating on this in terms of what the government is telling them. So because of that, it will be hard for them to back down.

But also keep in mind the Israeli-Hezbollah conflict. Iran feels it won a vicarious victory there. Iran sees itself as a country that is rising in power. Iran's president has near hero status on the streets of Malaysia, Indonesia, Pakistan, Iran, Iraq in some areas. He has called for Israel to be wiped off the map.

So Iran sees itself as the champion voice for this new franchise, Muslims. And this is just another example of why they are being defiant, because they feel they need to be treated with respect -- Tony.

HARRIS: OK, Aneesh Raman for us in Tehran.

Aneesh, thank you.

Concerns over North Korea's recent missile test and its nuclear ambitions have Japan on edge. A Japanese news service reports Washington is offering Tokyo up to 80 more Patriot air defense missiles.

CNN's Atika Shubert is on the phone with us from Tokyo.

Atika, good morning.

ATIKA SHUBERT, CNN CORRESPONDENT: Good morning, Tony.

Well Japan's defense agency won't confirm that report, but they do say that Japan is likely to purchase more missiles from the U.S. if a new and larger defense budget is approved next week.

Now previous to this, Japan was planning to manufacture its own Patriot missiles under license from the U.S. by about 2008. But to speed up the process, it now appears that Japanese defense agency is proposing to buy them directly from the U.S. So clearly it's been in the works for a while, but the process has been sped up because of, as you mentioned, North Korea launching that barrage of missiles into the Sea of Japan last month -- Tony.

HARRIS: OK, Atika Shubert for us in Tokyo.

Atika, thank you.

O'BRIEN: Colorado authorities knew of John Mark Karr's fascination with the JonBenet Ramsey murder case five years ago. California detectives told Colorado authorities back in 2001 that Karr had a fascination with the 6-year-old girl's murder. It happened while Karr was under investigation in a child pornography case. Karr, meanwhile, remains in a Los Angeles jail. He is waiting to be transported to Colorado.

Happening in America this morning, more problems at the nation's largest oil field in Alaska, daily production at Prudhoe Bay has been reduced again from 200,000 to 110,000 barrels. A spokesman for oil giant BP says it's because a compressor has failed. It's expected to take several days to fix.

In West Virginia, the only survivor of the Sago Mine disaster is suing, along with families of two victims. Randy McCloy Jr. filed suit for an unspecified amount of money against the mine's owner and several other companies as well. McCloy was trapped for days after lightning triggered a methane explosion. That happened back in January. Twelve of his fellow miners died. The lawsuit charges that the owner of the mine should have known the conditions there were unsafe.

There's a state of emergency in Washington State because of the wildfires that are raging across that state. Nearly 3,000 firefighters are battling the biggest fire which recently doubled in size to about 120,000 acres.

Meanwhile, a wildfire is burning dangerously close to a Utah community this morning. The flames are scorching the hills above Perry. Some homes were evacuated in Brigham City.

And for the second time this week, strong storms blew right through Tucson, Arizona, toppling trees, leaving thousands of people without power. Downed power lines, in fact, fell on a couple of cars, dozens of car, really, trapping drivers and passengers inside those vehicles.

In Mississippi, a year after Hurricane Katrina, a lack of suitable housing still a major problem. FEMA's Director David Paulison met with students at D'Iberville on Wednesday and he promised them things will get better after one student complained about living in a trailer. Paulison told reporters that the agency is looking for alternatives.

And only in New York, two college buddies are trying to break the record for riding the entire New York City subway system. That's 468 stations, 650 miles for those of you who don't ride the subway a lot.

HARRIS: Right. Right.

O'BRIEN: The old record was 25 hours 11 minutes. The guys are hoping to do it in 24 hours.

HARRIS: Good luck.

O'BRIEN: Wow, that's a great way to spend your parent's money while you're in college.

HARRIS: Yes.

O'BRIEN: We're going to have those guys on later this morning. Hopefully they'll be able to break that record. Good for them.

HARRIS: Yes, what else is new?

O'BRIEN: Bring some attention to the New York City subway system.

HARRIS: How about that? Twenty-five hours...

O'BRIEN: It really could.

Still to come this morning, we're going to have the very latest on those FOX News journalists kidnapped in Gaza, new reaction this morning to that deadline that's been set by their captors.

HARRIS: And Tropical Storm Debby turning in the middle of the Atlantic. We will track the storm's path for you.

O'BRIEN: And standardized tests being sidelined. One university now has a new plan to eliminate the SATs.

Plus, Carrie Lee has got your business headlines.

Good morning.

CARRIE LEE, CNN CORRESPONDENT: Good morning. Thank you.

A big merger could be coming in the drugstore space. Also, more housing data out today. More signs of a slowdown? We'll have those stories and more coming up on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Happening this morning, BP says it is once again cutting production at Alaska's Prudhoe Bay, the nation's biggest oil field. This time it's because of a faulty compressor that's used to handle natural gas.

State of emergency in Washington State, firefighters there are battling several major fires. The biggest one has burned 200 square miles in north-central Washington.

And the Pentagon says that 12,000 extra soldiers in Iraq are helping to turn the tide of the increasing sectarian violence in Baghdad. U.S. ambassador to Iraq says securing Baghdad is the key to all of Iraq's future.

Two FOX News journalists captured in Gaza say they are in fairly good condition. A militant group issued a 72-hour deadline yesterday demanding that the U.S. release Muslim prisoners in exchange for the men.

CNN's Chris Lawrence is in Jerusalem with more on this story.

Chris, good morning.

CHRIS LAWRENCE, CNN CORRESPONDENT: Hey, good morning, Soledad.

Just today I spoke with a U.S. consul general, and he said what a lot of people have been saying since that videotape surfaced yesterday, that was the first time he had heard of this group. A lot of people caught by surprise and not sure who they are. He speculated that possibly this could be a small cell, not a major group.

Most of the other major groups in Gaza that have had situations like this before and that have been responsible for kidnappings before had distanced themselves from this one. Islamic Jihad said that kidnapping journalists silenced the voice of freedom and justice. They have experienced oppression. It would not wish this on anyone else. Popular Resistance Committee said that we should protect journalists because they're the ones telling the true story of the Palestinian people.

This group, the Holy Jihad Brigade, to set a deadline of Saturday afternoon for an exchange of prisoners. They say they want prisoners from -- Muslim prisoners from American jails released, and in exchange, they would release their prisoners.

I posed that question and asked the consul general just a few hours ago what he thought of that proposal.

(BEGIN VIDEO CLIP)

DAVID WALLES, AMERICAN CONSUL: Our position of course is that we don't make concessions to kidnappers. We don't intend to do that. But at this point we're still just working all of the angles. I've been in touch with President Abbas. And I met with him and he is cooperating with us, as are his security forces.

(END VIDEO CLIP)

LAWRENCE: One of the key things in the -- in this written demand that was written in Arabic, when I spoke with the consul general and others, is that it's not very legible. It's random thoughts, verses from the Quran. It's very hard to really understand and decipher exactly what is meant by this communication.

But one thing that he focused on was the fact that it says if you fulfill our condition, than we will too. But if you don't, then we will wait and you will have to wait, too, or you could wait, too. There doesn't seem to be an implicit threat in this letter. And that may be one good sign for the safety as everyone negotiates to get those two journalists freed as soon as possible -- Soledad.

O'BRIEN: Chris Lawrence is in Jerusalem for us this morning.

Chris, thanks. That could be, I guess, a little bit of good news there, depending on how that's read. Thanks, Chris.

HARRIS: And time now to get another check of the forecast. Chad Myers is at the CNN Center in Atlanta.

Chad, good morning.

MYERS: Tony, what are you doing up there?

HARRIS: Hanging out with Soledad, you know.

MYERS: Bringing rain.

HARRIS: And bringing the rain.

MYERS: Yes, exactly.

O'BRIEN: Is that who I blame?

MYERS: Yes.

HARRIS: How about that? Yes, yes, it's me. It's just all of -- yes.

MYERS: Yes, it was great while Rick was up there.

O'BRIEN: Yes, Rick didn't have any rain.

MYERS: And then all of a sudden you show up and it rains.

HARRIS: You're going to keep going with this for a while?

MYERS: That's all right. Hey, you know what, all rain -- all sunshine and no rain makes a desert, and I don't think people wanted to live in the desert in the city.

(WEATHER REPORT) Back to you guys.

HARRIS: Crazy hot.

MYERS: Yes, it is.

HARRIS: All right, Chad, thank you.

MYERS: You're welcome.

HARRIS: And still to come, thinking of buying or selling your home? New numbers out today, what you need to know.

And Ride Aid is in a bid to buy up its competitors. We'll tell you what it could mean for your favorite neighborhood drugstore.

Stay with us here on AMERICAN MORNING. We'll be right back.

(COMMERCIAL BREAK)

O'BRIEN: A look now at some of the most popular stories on CNN.com.

Syria's president is denouncing the deployment of U.N. troops along his country's border with Lebanon. President Assad says the move, which is part of the cease-fire agreement, would create problems between the two countries.

Tracking Osama bin Laden. A former CIA official says the al Qaeda leader is probably hiding in Pakistan. We've certainly heard that before. The official, though, says the U.S. would have to be "extraordinarily lucky" -- that's a quote -- to find him in a country that he knows so well.

And the federal government is asking some Medicare recipients for their money back. We told you about this story yesterday. More than 200,000 people were supposed to -- not supposed to get those reimbursements for their monthly premiums. So 200,000 people, turns out to be a $50 million mistake.

HARRIS: Yikes!

O'BRIEN: And they're like, those checks, don't cash them.

HARRIS: Right.

LEE: Once you put the money out, hard to get it back.

HARRIS: Right, good luck with that one.

O'BRIEN: I just want some money on how much of that money they're going to get back.

HARRIS: That's right.

LEE: It's in the mail. It's on the way back. O'BRIEN: Yes.

HARRIS: No, no, it's really.

O'BRIEN: Yes, it's not going to happen.

HARRIS: How about this, Walgreens and CVS pharmacies could be getting some stiff competition.

Carrie Lee is here with your morning business headlines.

Carrie, good morning.

LEE: Thank you. Good morning.

Rite Aid reportedly striking a deal to buy the Eckerd and Brooks drugstore chains for anywhere between $2.5 to $3.4 billion. A couple of different reports on this. The boards of both companies have reportedly approved the transaction; however, it's not official yet, hasn't been officially announced. And the company isn't commenting. Now if this happens, the deal would put together about 1,800 stores to Ride Aid's existing 3,300 locations. Would still be smaller than Walgreens and CVS, but still, making it a bigger competitor. So that's the latest there.

Turning to Mickey D's. McDonald's president and chief operating officer abruptly resigned from the company yesterday. His name is Mike Roberts. And he was really one of the main successors to succeed CEO Jim Skinner. We're not exactly sure why this is happening, not hearing too much from the company.

"Wall Street Journal" reporting that in an e-mail to McDonald's employees, Roberts called his resignation a decision that "I believe is right for me" -- direct quote here, "my family, my career and the company at this time." So he is going to be succeeded by Ralph Alvarez, who is President of McDonald's USA.

Finally turning to the markets, little bit of selling yesterday. Dow down 41 points, the Nasdaq down 15, S&P down about 6. We got some housing data. Existing home sales for July fell by over 4 percent. This morning, Tony and Soledad, we'll get a look at new home sales and we're expecting another decline, down 2.7 percent.

HARRIS: About 10:00 a.m. this morning, is that when we're...

LEE: Ten a.m., exactly.

HARRIS: OK.

LEE: Exactly. And we know the housing market has been slowing, so getting some hard evidence on this. If the number is worse than expected, well then we could see more selling accordingly.

HARRIS: OK, Carrie, thank you.

LEE: My pleasure. HARRIS: Remember the SATs?

O'BRIEN: I do.

HARRIS: Sure, sure, sure. Well, they may be a thing of the past. George Mason University is becoming one of the first four-year public universities to drop the SATs and other standardized tests. But not for all students, only those with at least a 3.5 grade point average and who are in the top 20 percent of their class. Will this become part of a rolling trend? Well we will talk to the dean of admissions at George Mason and the education writer for "U.S. News & World Report." That's later in the show.

And more proof that things are changing each year. What is this, Soledad, Beloit College in Wisconsin takes a look at the world through the eyes of college freshman. Most teens entering the class of 2010 this fall were born in 1988.

O'BRIEN: My god!

HARRIS: Could I be any older?

That was after the Soviet Union fell. Hello. Smoking has never been allowed on U.S. airlines. Hello. Bar codes have always been on everything. Hello. They have rarely mailed anything using a stamp. And they never saw -- listen to this -- Bernard Shaw on CNN. Now you really missed something there.

O'BRIEN: Yes.

HARRIS: You really missed something. There you go.

O'BRIEN: 1988.

HARRIS: 1988.

LEE: Now I feel really old.

O'BRIEN: Yes, yes. Yes, we all do.

Moving on, shall we?

A look at the morning's top stories are straight ahead, including closing in on the five-year anniversary of the 9/11 attacks. Are we any safer today? There's a new poll out. We'll tell you what it says.

Plus, Baghdad in crisis, on the edge of civil war, we're going to take you live to the Iraqi capital.

Plus, say it isn't so, BP. More pumping problems have now been reported at Prudhoe Bay. We'll update you on what's happening there.

That's ahead on AMERICAN MORNING. We're back in a moment.

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