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President Bush Declassifies Key Parts of Intelligence Report; Did the Iraq War Worsen the Terror Threat; Senator George Allen Denies Using Racial Slurs

Aired September 26, 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, a secret report about Iraq and the war on terror now revealed. What did President Bush declassify and why did he do it now? It's 7:00 p.m. in Washington where fingers are pointing and political charges are flying.

Also this hour, a war of words in the war on terror. Pakistan's president accuses his counterpart Afghanistan of turning a blind eye to the Taliban. Tonight, my candid interview with Pervez Musharraf.

And is Osama bin Laden on the move right now in the mountains of Pakistan? We're going to tell you about a possible sighting of the al Qaeda leader just weeks ago.

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

Tonight, a new window into the global war on terror. President Bush has declassified key portions of a national intelligence estimate, a report that is giving critics of his Iraq war policy fresh ammunition. We're examining the documents and the politics surrounding them only weeks before the midterm congressional elections.

Our White House correspondent Elaine Quijano is standing by. First, though, to our justice correspondent, Kelli Arena -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, the government released a three-page summary of the key findings, but Democrats are still pushing for more. Now this report definitely talks about how the war in Iraq is inciting terrorists, but it goes way beyond that.

(BEGIN VIDEOTAPE)

ARENA (voice-over): The scrubbed version of the report pretty much mirrors what we've already heard from a variety of administration officials, but there's one point you don't hear much about, that five years into the war on terror, Muslims who identify themselves as jihadists are increasing both in number and geographic dispersion.

JOHN MCLAUGHLIN, CNN NATIONAL SECURITY ADVISER: You just as a matter of logic you have to assume if attacks are occurring in places like Bali and Madrid and London and Sharm el-Sheikh that there are larger numbers of people willing to commit suicide to achieve these aims.

ARENA: Intelligence officials say they pushed to keep the report secret. They say it is not something that's meant for public distribution, it's written for top-level policymakers, but Democrats are still pushing to make the whole thing public.

SEN. HARRY REID (D-NV), MINORITY LEADER: You can't release it piecemeal. It's another attempt by this administration to hide the truth from the American people.

ARENA: The portion of the report that caused such a ruckus in the first place had to do with the war in Iraq. The report says that the conflict is shaping a new generation of terrorist leaders and that it has become the cause celebre for jihadists. On the other hand, if fighters fail there or think they've failed, the report says that will hurt the movement.

MCLAUGHLIN: So it presents a very dynamic picture on Iraq.

ARENA: The war in Iraq is just one reason cited for the growth of extremism. Other reasons are the slow pace of reform in many Muslim nations and pervasive anti-U.S. sentiment.

(END VIDEOTAPE)

ARENA: Now any analyst will tell you, Wolf, intelligence reports almost always place more emphasis on the negative and this one is no exception. It says if current trends continue threats to U.S. interests at home and aboard will increase.

BLITZER: Well, that's negative. That's not very encouraging. Thanks, Kelli, for that.

Now, to the question -- why did the president go ahead and declassify parts of the terror report in response to a leak he seemed so outraged about. Let's bring in our White House correspondent Elaine Quijano. What are they saying at the White House, Elaine? Why now go ahead and release that document?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well Wolf, the decision to declassify comes at a time when President Bush is clearly on the defensive with that countdown clock ticking away until congressional midterms in November. Democrats have been trying to shine the spotlight on Iraq, of course, an issue that has been a political liability for Republicans.

So today we heard President Bush push back. After that meeting with Afghan President Hamid Karzai, President Bush launched into a full-floated defense of his Iraq policy and he argued that his decision to declassify parts of the NIE was not made for political reasons.

(BEGIN VIDEO CLIP) GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Once again, there's a leak out of our government, coming right down the stretch in this campaign. And it will create confusion in the minds of the American people, in my judgment, that's why they leaked it. And so we're going to -- I told the DNI to declassify this document. You can read it for yourself. We'll stop all the speculation, all the politics about somebody saying something about Iraq.

(END VIDEO CLIP)

QUIJANO: Now, even at that political debate continues, President Bush is preparing for another critical meeting tomorrow, he will be sitting down not just with Afghanistan's president, Hamid Karzai, but also another crucial ally for the U.S. in the war on terrorism, Pakistan's president, Pervez Musharraf -- Wolf.

BLITZER: And that will be a lively dinner indeed. Thanks, Elaine, for that.

And if you, our viewers would like to read the entire declassified report, you can find it online at the CNN Political Ticker. Here's how you do it, you go to CNN.com/Ticker.

We're also getting new details of what looked like a promising lead recently in the hunt for Osama bin Laden. Our Pentagon correspondent Barbara Starr has details -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, are there new hints about the whereabouts of Osama bin Laden?

(BEGIN VIDEOTAPE)

STARR (voice-over): U.S. intelligence sources tell CNN that two months ago there were signs of sudden activity in the remote mountain regions of Pakistan, where Osama bin Laden is thought to be hiding. Analysts describe signs of people and movement in an area where the pace of activity is normally predictable.

Part of the movement may have been Arab fighters or Taliban trying to avoid the Pakistani military, but according to one official, there was a source in the region who saw someone, possibly bin Laden himself. There have been tips before, but this time it was all enough to persuade the U.S. intelligence community to once again order reconnaissance assets into a particular area of the tribal border region.

The high-tech hunt, using spy planes and sensors, essentially is aimed at putting an electronic fence around an area where bin Laden might be. Spy satellites are used to look for changes in the landscape below. For example, fresh tire tracks on a mountain pass could mean medical aid is being brought to bin Laden.

(END VIDEOTAPE)

STARR: Intelligence analysts say there is a new generation of highly classified sensors capable of looking for the most minute signs of communication. But the major challenge remains -- putting up that electronic fence before any signs of bin Laden evaporate -- Wolf.

BLITZER: Barbara Starr at the Pentagon. Thank you.

And I'm going to be speaking a lot more about the hunt for bin Laden and more in just a few minutes with the Pakistani president, Pervez Musharraf. He'll join us here in THE SITUATION ROOM. Joining us now in THE SITUATION ROOM Jack Cafferty -- Jack.

JACK CAFFERTY, CNN ANCHOR: Thank you, Wolf. President Bush has declassified what he calls key judgments of that national intelligence estimate. But guess what? There might be another one, a whole other report strictly about Iraq that they don't want us to see. The top Democrat on the House Intelligence Committee, Representative Jane Harman, says there's a second national intelligence document that's all about Iraq.

She says it's been kept in draft form so that it won't come out before the midterm elections. Republicans deny that. But according to the president, he decided to declassify parts of this current intelligence report, the one that calls all the brouhaha this week, to clear up speculation, including the part where some people said it was a mistake to go into Iraq, that the war in Iraq has increased the number of terrorists and made America less safe.

The question is this -- why do you think the Bush administration decided to declassify parts of the national intelligence estimate? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: You know it's very interesting, Jack, this NIE, it was completed earlier in the year, officially done in April.

CAFFERTY: Right.

BLITZER: And the president pointed out today, and this is why he supposedly is as angry as it is, it's only been leaked and a selective leak, if you will, making him and his administration's policies in Iraq look bad on the eve of these elections. That's why he says he decided to go ahead and release a summary of the whole thing.

CAFFERTY: I hear you, but we don't know who leaked it, do we?

BLITZER: No.

CAFFERTY: So...

BLITZER: But we do know it was on the front page of "The Washington Post" and "The New York Times" Sunday morning.

CAFFERTY: Oh absolutely. No, big story, and the timing is suspect to say the least. The other question is whether or not this second report exists and what's being done with that, but I guess we won't know the answers to that for a while.

BLITZER: They say they are still working on that one. CAFFERTY: Yes, check's in the mail.

BLITZER: Thanks very much. And to our viewers, if you want a sneak preview of Jack's questions, plus an early read on the day's political news and what's ahead right here in THE SITUATION ROOM, sign up for our daily e-mail alert. Just go to CNN.com/SituationRoom.

Coming up, Senator George Allen's campaign doing some major damage control again, we have details of new allegations about racial slurs, decades ago. Allegations Senator Allen calls ludicrously false.

Also, the Secretary of State Condoleezza Rice now locked in a high-profile, very unusual case of he says-she says with the former president, Bill Clinton.

Plus, my special interview with the Pakistani President Pervez Musharraf, a key White House ally in the war on terror. We'll find out why he disagrees with President Bush about the war in Iraq.

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

(COMMERCIAL BREAK)

BLITZER: Tonight, Senator George Allen is getting a crash course in damage control once again. The embattled Virginia Republican is vehemently denying he's used racial slurs against blacks or that he's a racist, but the allegations persist. Our national correspondent Bob Franken is covering Allen's latest controversy -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: In the political jargon, Wolf, campaigns like to stay on message, but it's fair to say that the Allen campaign has definitely been off message.

(BEGIN VIDEOTAPE)

FRANKEN (voice-over): Senator George Allen was doing his level best to stay out of the limelight. He's got plenty of wounds to lick, the macaca ones, the denying his Jewish ancestry ones, and the newest one, the charge from some former football teammates from his days at the University of Virginia in the early '70s.

DR. R. KENDALL SHELTON, FORMER ALLEN TEAMMATE: I feel then, now, that George was a racist.

FRANKEN: Dr. R. Kendall Shelton who is now a North Carolina radiologist is one of two who says that Allen used the "N" word often. Shelton claimed that Allen beheaded a deer in one incident in rural Virginia and asked where the nearest black house was.

UNIDENTIFIED MALE: George drove his van to that location, opened a large mailbox, and pushed the severed doe's head into the mailbox.

FRANKEN: This poisonous drum beat has transformed what was supposed to be an easy re-election for Allen. One of his top campaign officials tells CNN this race is competitive now. At their behest, other teammates have stepped forward to vigorously deny Allen was ever racist.

DOUG JONES, FORMER ALLEN TEAMMATE: Absolutely not. And all the time that I've known Senator Allen, I've never heard him use a disparaging word. I've never witnessed him act in an insensitive -- racially insensitive manner to anyone.

FRANKEN: Allen himself denies the charge.

SEN. GEORGE ALLEN (R), VIRGINIA: And it is completely false for them to say that that was part of my vocabulary then or since then or now.

FRANKEN: Allen has for years been criticized for the Confederate flag he once displayed in his office, but he also sponsored legislation that would officially apologize for slavery. As for his opponent, Democrat James Webb, his most notable comment has been no comment, until now.

UNIDENTIFIED MALE: The thing that I can say absolutely is I have never issued an ethnic or racial slur at someone.

(END VIDEOTAPE)

FRANKEN: It's George Allen who's accused of doing so, the latest in a string of controversies for a campaign whose slogan might well be -- no news is good news -- Wolf.

BLITZER: All right, Bob, thank you very much.

In the battle for Congress tonight, Republicans are hoping to take it to the bank, a mega fundraiser in the nation's capital, a vivid reminder that in campaigns, money matters.

Our senior national correspondent John Roberts is with the CNN Election Express back in Washington. He's following the money race. John, give our viewers a sense of what's going on behind you right now.

JOHN ROBERTS, CNN SR. NAT'L CORRESPONDENT: We're at the National Building Museum in Washington, D.C., Wolf, and we've pulled the big new CNN Election Express up in front, where Vice President Cheney is currently the guest of honor. He is hosting a $4-million fundraiser for the Republican Senatorial Campaign.

At the same time, by the way, President Bush is out on the fundraising trail again tonight. He's hosting an event for the congressional campaign committees of Iowa, Wisconsin, and Arkansas. And it's interesting, he's doing it at a private residence, and it's just a couple of doors down from Bill Clinton. I should point out too that this fundraiser tonight is the 101st for Vice President Cheney. He celebrated his 100th yesterday with some cake aboard Air Force Two.

BLITZER: We see that security tent behind you where the people are going into this event. Are the Democrats, John, getting any better as far as money is concerned in their race with the Republicans?

ROBERTS: They are, Wolf. You might remember that the Democrats were always better at raising soft money than Republicans. Republicans were always better at raising hard money than the Democrats. Of course, with the McCain/Feingold Bill, all of that changed and this is the first midterm election cycle where all the parties and the candidates can raise is hard money.

There are still those 527 organizations that can raise money outside of that stream, but these guys are -- these guys and these women are confined to just raising hard money. Here's the total for the Republicans. This includes the three national committees, Republican National Committee, their Senatorial Campaign Committee and the Congressional Campaign Committee as well as all of the individual candidates -- $878 million for this cycle -- the same group of people on the Democratic side, $757 million.

So you can see $113 million difference there, it would have been much greater say back in 2002 or 2004. And it's interesting to note too that with the Democratic Senatorial Campaign Committee chaired by Senator Schumer out of New York, they have actually raised more money than their counterpart run by Elizabeth Dole on the Republican side, so there are some bright spots here as far as fundraising goes for the Democrats -- Wolf.

BLITZER: Now which candidates have raised the most money this cycle?

ROBERTS: Well, the people who have raised the most money or the person who has raised the most money is not a candidate. It's President Bush. He's brought in about $170 million in some 68 fundraisers as of tonight. But in terms of the candidates themselves, it's always people on the Senate side that raise the most money.

He's the top five for you starting with number five. Number five, Bill Nelson of Florida; he's got about $16 million that he's raised. Next up Maria Cantwell, a Democrat of Washington; Jim Talent, Republican from Missouri. Number two on the list, Rick Santorum in a fight for his life in Pennsylvania, has raised $21 million. But take a look at who is number one.

This is a person who's going to cruise to victory on November 7, why does she need $47 million to defeat a little-known Republican candidate? Everybody thinks that Hillary Clinton is going to walk to victory; it's just how big a margin. So a lot of people are saying well this $47 million isn't necessarily for the senatorial campaign in New York. It's seed money for a possible run at the presidency in 2008 -- Wolf.

BLITZER: I think that's a fair assessment. John thanks very much. John Roberts and as we saw earlier Bob Franken, they are part of the best political team on television. Don't forget, you can now get constant updates from CNN's political team online with the CNN Political Ticker. Easy way to do it, go to CNN.com/Ticker.

And still to come tonight, right here in THE SITUATION ROOM, the Pakistani president, Pervez Musharraf, and his tensions with the White House and the leadership in Afghanistan. (INAUDIBLE) talk about the war on terror, the hunt for Osama bin Laden, my interview with Pervez Musharraf, coming up. You're going to want to see this.

And Condoleezza Rice versus Bill Clinton, an extraordinary spat between a secretary of state and a former president. We're going to check the harsh words and the accusations against the record.

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

(COMMERCIAL BREAK)

BLITZER: Zain Verjee is joining us now with a quick look at some other important news making headlines -- Zain.

ZAIN VERJEE, CNN ANCHOR: Wolf, we are just getting word of several Israeli air strikes in southern Gaza. Hospital officials say a building collapsed killing a 14-year-old Palestinian girl nearby. Seven other children outside the building reportedly were injured. The Israeli army says it fired at a house that was hiding a tunnel being used to smuggle weapons. It says people inside were warned to leave.

It took just three hours for a federal jury to reach its verdict today in a lawsuit of the painkiller Vioxx; jurors found that there just wasn't enough evidence to link the drug to a Kentucky man's heart attack. He sued Vioxx maker Merck & Co.. This is the third Vioxx- related federal lawsuit against Merck to go to trial. More than 14,000 cases are pending in the United States.

Police and protesters on Capitol Hill today, at least 71 demonstrators rallying against the Iraq war were arrested. The protesters held sit-ins, prayer services and sing-alongs in the Capitol complex, including in the Senate Hart Office Building. Organizers say today's events in Washington were part of nearly 400 Iraq war protests taking place across the country this week.

And fire crews are trying to stop a massive wildfire from destroying hundreds of homes in southern California. The 143,000-acre fire is burning in the Los Padres National Forest. (INAUDIBLE) today water across a road near a remote mountain community. That's forced firefighters to call in reinforcements and aircraft -- Wolf.

BLITZER: Zain thanks very much.

Just ahead, my interview with the Pakistani President, Pervez Musharraf. We'll talk about the war on terror, the hunt for Osama bin Laden, his rocky relationship with neighboring Afghanistan and why he disagrees with President Bush. He says the war in Iraq has made the world a more dangerous place.

Plus, he said-she said. The secretary state's rhetoric to the former president, Bill Clinton, they have some very different ideas about who did more to try to stop al Qaeda.

Stay with us. 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 the time.

Happening now -- is someone exposing government secrets to smear Republicans this campaign year? President Bush says yes. He said someone leaked portions of an intelligence report so that fear can factor into the way you vote in the midterm elections -- the president now declassifying parts of that report so you can decide for yourself.

Also, the blame game, who dropped the ball when it came to catching or killing Osama bin Laden, the Clinton administration in the end of its term or the Bush administration from the start? There's a bitter battle brewing between Condoleezza Rice and Bill Clinton.

And in terms of politics, it's the long kiss goodbye, Tony Blair saying so long after so many years as prime minister.

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

They are two of the most critical allies the United States has in the war on terror, and there's a growing rift between them. The Pakistani president, Pervez Musharraf, and the Afghan president, Hamid Karzai, will come face-to-face at a White House dinner with the president of the United States tomorrow.

Once again, let's bring back our White House correspondent, Elaine Quijano. Set the stage a little bit, what we can anticipate, Elaine.

QUIJANO: Well, Wolf, that rift that you mentioned has to do with the resurgence of Taliban activity along the Pakistan/Afghanistan border. Both sides -- we have heard both countries in recent days point their finger of blame at each other for that resurgence of activity. Well, today in the East Room of the White House, we heard Afghan President Hamid Karzai say that he understands very well the political environment that exists in his country.

He said we understand the problems and difficulties facing his country. Nevertheless, those tensions remain, and it is those tensions that President Bush will try to diffuse tomorrow when he sits down with both these leaders, as you noted, critical allies in the war on terrorism. President Bush will try to convince these two leaders of these critical countries that it is in their mutual interests to work more closely together to fight Islamic extremists -- Wolf.

BLITZER: Elaine, thank you.

And tonight, President Musharraf is offering a very candid glimpse into his tensions with Hamid Karzai and his tensions with President Bush, even as the three proclaim their commitment to finding Osama bin Laden and winning the war on terror and Musharraf's disagreeing with the White House and the effect of the war in Iraq in terrorism. It's all in his new book, entitled "In The Line Of Fire".

Mr. President, thanks very much for coming in.

PRES. PERVEZ MUSHARRAF, PAKISTAN: You're welcome.

BLITZER: I want you to listen to this exchange I had with President Bush in New York last week on the hunt for Osama bin Laden and al Qaeda leaders. Listen to this.

(BEGIN VIDEO CLIP)

BLITZER: If you had good actionable intelligence in Pakistan where they were, would you give the order to kill him or capture him...

BUSH: Absolutely.

BLITZER: ... go into Pakistan?

BUSH: Absolutely.

BLITZER: Even though the Pakistanis say...

BUSH: Absolutely.

BLITZER: ... that's their sovereign territory.

BUSH: We would take the action necessary to bring him to justice.

(END VIDEO CLIP)

BLITZER: Very blunt words from President Bush. Irrespective of your sovereignty, if they knew where bin Laden was in Pakistan, they would go in there.

MUSHARRAF: Well, my comments are -- I have been giving my comments that this is a sensitive area. And our decision is that we operate on our side of the border and U.S. forces and allies operate on the other side.

Now, having said that, we are hunting Osama and Zawahiri together. We are on the hunt, we are on the lookout for him. When we locate him, we have to take action, we have to take effective action to do away with him.

BLITZER: What would be wrong if the United States tried to capture or kill bin Laden or Ayman al-Zawahiri, his number two, in Pakistan?

MUSHARRAF: Well, it is a very sensitive issue. We should not be discussing how and who is to deliver the blow, but whenever we locate him, we have to deal with him. And let's leave it at that and let's not get into the sensitivities of who and how it will be done.

BLITZER: But you've discussed -- you're a very candid, blunt president. You've discussed many sensitive issues in your new book, which we'll talk about. I'm trying to get an understanding. If the United States has certain technical means, military means, special operations forces, Hellfire missiles from Predator drones or whatever to get the job done, perhaps talents that the Pakistani military or the intelligence community doesn't have, you're close allies with the United States. Why not let the U.S. do that?

MUSHARRAF: I can assure you that all of the weapons that you're talking of are available and we use them, and we use them effectively whenever we locate al Qaeda on our side of the border. And let it remain at that. We will use anything that is required to deal with the situation.

BLITZER: Why is it OK, Mr. President, for the U.S. to operate in neighboring Afghanistan and try to hunt for al Qaeda or Taliban leaders, but it wouldn't be OK to operate in Pakistan?

MUSHARRAF; Please don't compare Pakistan with Afghanistan. Pakistan is a very, very stable country. We have a strong government. We have a strong military. We have a strong intelligence system. And everything in Afghanistan had broken down, so how can you compare the two?

We don't want our sovereignty to be violated, whereas, in Afghanistan, there was an issue of terrorism within Afghanistan after 9/11 and that law and order was totally broken down. It was warlordism going on. It was -- the situation in Afghanistan was various warlords were controlling different parts of Afghanistan. How can you compare that with Pakistan?

BLITZER: Because some U.S. officials -- and you know this very well -- they fully support you. They have total confidence in you as the president of Pakistan. But there's a lot of concern about others in Pakistan, especially in the intelligence service, even within the military, that there could be moles that would tip off al Qaeda or Taliban if the U.S. shared certain very sensitive information it could pick up. You're familiar with this?

MUSHARRAF: Yes, I am familiar, but I don't agree with that at all. Anyone who knows our intelligence services, anyone who knows our military, they will not say that. And in any case, we exchange the most sensitive issues, more sensitive information already. There is total coordination in the intelligence and the operational level also.

BLITZER: But even there have even been some threats against you from within your own military or your intelligence service. You've arrested certain people.

MUSHARRAF: Yes.

BLITZER: So presumably is there a threat there?

MUSHARRAF: No, no. That happened so many years back, and that happened at the very low level. And in a force which is about 600,000, if you combine Army, Navy, Air Force, if there are about five, six individuals who have done that, there is not such an alarming issue. And that were the lower ranks. No officer was involved. The armed forces of Pakistan are commanded by officers. Actions are taken by officers, decisions are taken by officers. So these were some people who got affected by what was happening around, and these were individual acts of terrorism.

BLITZER: Let me read to you a sentence from an article that Peter Bergen, our CNN terrorism analyst, wrote in "The Washington Post" on September 10th.

"The key to the resurgent Taliban can be summarized in one word: Pakistan. The Pakistani government has proved unwilling or incapable (or both) of clamping down on the religious militia, even though the headquarters of the Taliban and its key allies are in Pakistan."

MUSHARRAF: Now this is absolute -- shows ignorance of realities on the ground. This is not the reality. Taliban were created in '95 in Afghanistan. They took over the whole of (INAUDIBLE) 90 percent.

Who were they? Were they from Pakistan? It is the same Mullah Omar, his same coterie, the same people who are doing this.

BLITZER: There are people who are suggesting, Mr. President, that Mullah Mohammed Omar, the leader of the Taliban, is actually in a Quetta, in Pakistan.

MUSHARRAF: This is most ridiculous. In Quetta, in Pakistan, it's the provincial headquarters. There is a corps headquarters, there are two divisions. There is a provincial government functioning, and there is an intelligence set up of CIA and ISI. I must say this. Both of them are inefficient if they don't even know that Mullah Omar is there.

BLITZER: Well, let me press you on that. The CIA and ISI, the Pakistani Intelligence Service, they're together, working in Quetta right now? So you -- the ISI and the CIA are in Quetta right now?

MUSHARRAF: Yes, sir. Yes, sir. Exactly.

BLITZER: So, you are cooperating with the CIA in Quetta?

MUSHARRAF: Everywhere.

We -- whenever we track down terrorists, wherever they are, we get technical support from your people.

BLITZER: The last time you and I spoke was in March. And you said this. You said, about President Hamid Karzai, the man you're going to have dinner with tomorrow night at the White House, with President Bush, you said then that President Karzai -- and I'm quoting now -- "is totally oblivious of what is happening in his own country."

And you just referred to a lot that is happening in Afghanistan right now. Question: Is he still oblivious to what is happening in Afghanistan, or do you owe him an apology? MUSHARRAF: He is not oblivious. He knows everything, but he's purposely denying -- turning a blind eye, like an ostrich. He doesn't want to tell the world what is the facts for his own personal reasons. This is what I think.

BLITZER: Whatever his own personal...

MUSHARRAF: Because the fact is, this...

BLITZER: Whatever his own personal reasons, why would he not want to be blunt as you always are?

MUSHARRAF: There are -- in the governance in Afghanistan, there is a certain community which is feeling alienated. And this community has 50 to 60 percent representation of Afghanistan. And that is his problem. He has to balance out, and he is not being able to do that. And, therefore, he is trying to hide that everything is happening from Pakistan.

If he keep going wrong, I have been telling the world since three months, we are delaying. We are getting late. All this that I have read is what is happening in Afghanistan in all the provinces. This is a movement going on. This is a Pashtun uprising by the people going on. If he doesn't understand this, he will keep going there, and we are going to lose in Afghanistan.

BLITZER: You also write in the book this and I want to put it up on the screen, because it's a very sensitive point right now in the current debate in the United States. I will read to you what you write: "I never favored the invasion of Iraq, because I feared it would exacerbate extremism, as it has most certainly done. The world is not a safer place because of the war in Iraq. The world has become far more dangerous."

This is very different than what President Bush says, including today, in the aftermath of this debate over this latest U.S. National Intelligence Estimate of the impact of the war in Iraq on the war on terror.

Is there anything you want to revise or amend from this statement? Or do you stand by what you wrote in the book, as far as the war in Iraq and its effect on the global war on terrorism?

MUSHARRAF: Well, I stand by it, absolutely.

BLITZER: So, you disagree with the president of the United States?

MUSHARRAF: Well, I have stated whatever I had to, that this has -- it has made the world a more dangerous place.

BLITZER: So, you will have an interesting conversation with the president on that tomorrow, when you meet with him for dinner as well.

Pakistan is the first Muslim country that developed a nuclear bomb. From your perspective, is it OK if Iran follows your lead? MUSHARRAF: We developed it because of our security perspective, because of our threat perception. We don't believe that there should be any more nuclear proliferation. And we don't think that Iran has -- suffers from a perception that we suffered.

BLITZER: Let me read to you also from the book "In the Line of Fire."

You write this: "Those who habitually accuse us of not doing enough in the war on terror should simply ask the CIA how much prize money it has paid to the government of Pakistan." We asked the CIA how much prize money they have paid to the government of Pakistan. They have no comment.

We've asked former intelligence officials, who say that no such money was paid. They give rewards to individuals, but no prize money to Pakistan.

MUSHARRAF: Yes, I don't know whether this is to the government of Pakistan. I don't think I wrote to the government of Pakistan.

BLITZER: The book says, on page 237, "the government," "paid to the government of Pakistan."

You want to revise that?

MUSHARRAF: Yes. I think that, if it is written "government of Pakistan," yes.

BLITZER: Well, we have to, unfortunately, leave it there.

Mr. President, thanks very much...

MUSHARRAF: Thank you.

BLITZER: ...for coming in. Appreciate it very much.

MUSHARRAF: Thank you. Thank you very much.

(END VIDEOTAPE)

BLITZER: And still ahead tonight here in THE SITUATION ROOM, the war of words between Condoleezza Rice and former President Bill Clinton. His wife, Senator Hillary Clinton, is now weighing in. We'll have the latest. Plus, Tony Blair's long good-bye. CNN's Jeanne Moos shows us why some are saying at long last. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: And this just coming in, we have new pictures of that Israeli air strike in Gaza. Let's go back to Zain in Washington -- Zain?

VERJEE: Wolf, Palestinian hospital sources say a 13-year-old girl was killed and three other people wounded in these Israeli strikes, which is at Gaza's southern end. The Israel Defense Force says that it hit a building that was being used as a cover for weapons smuggling tunnel, a weapons smuggling tunnel and that residents were given a telephoned warning. Israelis also say that they drop leaflets ahead of time telling residents to leave. According to Palestinian sources, the Israeli army called one resident in this building about 20 minutes before the strike. Wolf?

BLITZER: All right, Zain, thank you.

And there are also new developments tonight in an increasingly public battle over who did more to stop al Qaeda, members of the Bush administration or their predecessors under Bill Clinton? CNN's Brian Todd is following this story. He's joining us live with the latest -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, an extraordinary brushback from a sitting secretary of state to a former president, prompted by Bill Clinton's combative exchange with FOX News on whether he did enough to pursue al Qaeda.

(BEGIN VIDEOTAPE)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I tried. So I tried and failed. When I failed, I left a comprehensive anti- terror strategy and the best guy in the country Dick Clark who got demoted.

TODD (voice-over): Condoleezza Rice fires back. Telling the editorial board of the "New York Post", we were not left with a comprehensive strategy to fight al Qaeda. But she stopped short of calling President Clinton a liar. And from the other side, this retort from President Clinton's wife.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: And I'm certain that if my husband and his national security team had been shown a classified report entitled bin Laden determined to attack inside the United States, he would have taken it more seriously than history suggests it was taken by our current president and his national security team.

TODD: So what does the record show? The 9/11 commission report does mention a plan to roll back al Qaeda launched after the 1998 embassy attacks in Africa.

P.J. CROWLEY, FORMER NSC SPOKESMAN: It's extensive planning through the Clinton administration and Richard Clark presented that delinda (ph) plan to Condi Rice in February 2001.

TODD: Delinda, then counter terrorism czar Richard Clark's initiative to go after al Qaeda's financial network, train and arm its enemies, take out its leaders. Clark did not return our calls and email. The 9/11 report says after Clark presented the plan to Rice, quote, "Rice and her then aide Stephen Hadley began to address the issues." SEAN MCCORMACK, STATE DEPT. SPOKESMAN: They took a look at this plan and decided that they needed -- there were missing components to it.

TODD: Like a detailed plan for dealing with Pakistan. A Clinton administration official concedes it was difficult to engage with Pakistan then because it had recently tested nuclear weapons. And Pervez Musharraf had taken over in a military coup. As for the classified report entitled "Bin Laden Determined to Strike in U.S.," that was shown to President Bush just one month before the September 11th attacks. One spectator to this blame game, New York's former mayor.

RUDY GIULIANI (R), FORMER NEW YORK MAYOR: The people to blame for September 11th are the terrorists who did it. Who are our enemies, who are at war with us. Not President Bush, not President Clinton.

(END VIDEOTAPE)

TODD: So was there a comprehensive anti-terror plan left for the Bush administration? It seems to depend on who you ask and your definition of comprehensive. The 9/11 Commission report is fairly even handed about this, saying while the Bush administration was initially lukewarm to Richard Clarke's plan. It did, in the month before 9/11, start to implement parts of it by exploring ways to work with al Qaeda's enemies and starting to pressure Pakistan to crack down on the Taliban -- Wolf?

BLITZER: Brian Todd, thank you very much.

Still ahead, Jack Cafferty wants to know: why do you think the Bush administration decided to declassify parts of that national intelligence estimate? Jack's standing by with "The Cafferty File."

Plus, the end of an era in British politics or at least the beginning of the end? Jeanne Moos on Tony Blair's long, long goodbye. Stay with us.

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BLITZER: Jack's back with "The Cafferty File." Jack?

CAFFERTY: Thank you, Wolf. The question this hour is why do you think the Bush administration decided to declassify parts of the national intelligence estimate?

Roger in Carpinteria, California: "Like always, the Bush administration's cherry-picking, using for political purposes, only those parts of the report which seem to support their views of things."

Mark in Black Horse, Colorado: "What declassified report? Do you really believe that anything the Bush administration releases would be critical of themselves? All the important content will never see the light of day." T in Omaha, Nebraska: "Bush will declassify his mother if he thinks he can spin the facts to make himself appear favorable. However, it does not work because the public knows his tactics very well."

Chris in Fairfax, Virginia: "So that CNN reporters won't take segments of the intelligence estimate out of context in their mad dash to smear the administration and put this nation in jeopardy."

Gerald in Las Vegas: "They don't declassify anything unless it has little value. It's just politics. Any voter needing that silly report to decide how to vote this fall shouldn't be allowed anywhere near a polling station."

And Robert in California, Desert Hot Springs: "George Bush has only released key parts. He must think we're part stupid."

If you didn't see your e-mail go to CNN.com/CaffertyFile. We post more of these online. You can read them there, and my colleague Mr. Blitzer assures me that many of you go there and do just that.

BLITZER: We know that for a basic fact. People love to read the e-mail that you're getting. It was totally predictable yesterday that they were going to declassify a summary, if you will, of this report.

CAFFERTY: Sure. It's a 35-page report, as I understand, and we got what, three pages, so there's 32 pages to wonder about.

BLITZER: The executive summary, they cleaned it up a little bit.

CAFFERTY: The cliff notes.

BLITZER: Thanks very much, Jack. Good to be in New York with you. The Bush administration may have declassified key judgments of that intelligence report on global terrorism. But did one blogger actually beat Mr. Bush to the punch? Our Internet reporter Jacki Schechner is joining us to explain -- Jacki?

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, it sure looks that way. Again, we said the key judgments are now available online, so we took a look at them and we compared them to a blog post that went up yesterday around noon.

The post is by a blogger who says he's a former veteran member of the U.S. intelligence community. And he says he got quotes from a current member of the U.S. intelligence community who the blogger tells us was, quote, "fed up with the manipulation of intelligence analysis to fit a political agenda." These were quotes that were not previously leaked to the mainstream media.

So we did a comparison and it looks like the language used in these key judgments is almost identical to the quote that turned up online. There was one quote that was missing from the key judgments that showed up on the blog and that says that threats to the United States were intrinsically linked to the U.S. success or failure in Iraq. But, again, the blogger says that he got quotes from the entire declassified reports and not just from the key judgments. You can go to CNN.com/ticker, our new political ticker to get more on this story. All of the links that we mentioned and the day's top political news -- Wolf?

BLITZER: All right, Jacqui, thank you. Let's find out what's coming up at the top of the hour on "PAULA ZAHN NOW." Soledad O'Brien is filling in for Paula tonight. Hi, Soledad.

SOLEDAD O'BRIEN, CNN ANCHOR: Hey Wolf, good evening to you.

Tonight we're going in-depth on tonight's breaking news, the newly declassified report about the war on terror. We'll take a look at both the security and the political implications of what that report says.

We're also going to take you in-depth on the controversy over how the U.S. treats alleged terrorists. A top panel of experts explores exactly what is and what is not torture. If you want to join me right at the top of the hour -- Wolf?

BLITZER: We will. Thank you, Soledad.

And still ahead tonight here in THE SITUATION ROOM, bye-bye, Tony Blair. Love him or hate him, many people are wishing the British prime minister well as he begins his long farewell from his post. Jeanne Moos is standing by. She'll be taking a look.

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BLITZER: Here's a look at some of the hotshots coming in from our friends over at the "Associated Press," pictures likely to be in your hometown newspapers tomorrow.

In Iraq, huge flames erupted when insurgents blew up this gas pipe line.

In Hebron on the West Bank, an Israeli soldier scuffles with a Palestinian man at a checkpoint.

In Montenegro, Defense Secretary Donald Rumsfeld arrives for talks with leaders of this new republic. Rumsfeld says he hopes Montenegro will send troops to support the U.S. efforts in Iraq and Afghanistan.

In China, a member of that country's special police force -- check this out -- breaks bricks over his head during an anti-terror drill.

Some of today's hot shots, pictures often worth 1,000 words.

He has a solid relationship with President Bush and has walked a rocky road with his own supporters. But even with all the cheers and jeers, many still say that when it comes to the British Prime Minister Tony Blair, breaking up is hard to do. Here's CNN's Jeanne Moos. (BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Tony Blair.

JEANNE MOOS, CNN CORRESPONDENT (voice-over): He is the Brit some Americans hate to love. Even some who hate his alliance with President Bush find Prime Minister Blair hard not to like.

TONY BLAIR, BRITISH PRIME MINISTER: Thank you.

MOOS: And this was his swan song to his own party after 12 years.

BLAIR: I know I look a lot older. That's what being leader of the Labour Party does for you. Actually, looking around, some of you look a lot older. That's what having me as the leader of the Labour Party does for you.

MOOS: It was a bittersweet speech.

BLAIR: And, of course, it's hard to let go. But it's also right to let go.

MOOS: It was the Labour Party's annual conference, a time to roll the video entitled "50 Reasons to be Proud of Labour."

Among them...

UNIDENTIFIED MALE: We've banned fox hunting.

MOOS: Labour may get the Fox vote, but when it comes to people, one poll puts the party at a measly 31 percent. Blair's likely successor, Gordon Brown had his big day ruined by Tony Blair's wife Cherie. While Gordon Brown was delivering his speech.

UNIDENTIFIED MALE: And it has been a privilege.

MOOS: Privilege to work with Tony Blair, a journalist overheard Cherie Blair saying...

UNIDENTIFIED FEMALE: Well, that's a lie.

MOOS: Something she later denied.

UNIDENTIFIED FEMALE: I hate to spoil your story, but I didn't say it and I don't believe it either.

MOOS: And since the Blairs live next door to Gordon Brown on Downing Street...

BLAIR: At least I don't have to worry about running off with the bloke next door.

MOOS: Before Tony Blair ran off, he almost got caught with a catch in his voice.

BLAIR: Wherever I am, whatever I do, I'm with you. You're the future now. So make the most of it.

MOOS: The party faithful applauded. Cherie shared the moment, and then they departed, and what music did the party choose to blare for Prime Minister Blair? A song called "Get It On."

Prime Minister Blair will govern until he steps down, some time in the next 12 months. Maybe "Get It On" should have been "Get On With It."

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: And that's very much for joining us. Remember we're here in THE SITUATION ROOM weekday afternoons four-to-six p.m. Eastern, back for another hour at seven p.m. Eastern. Tomorrow in THE SITUATION ROOM, the Reverend Jerry Falwell will find out why he says Hillary Rodham Clinton would motivate voters more than devil himself. Tomorrow, right here in THE SITUATION ROOM. Until then, thanks very much for joining us. I'm Wolf Blitzer in New York. Up next, "PAULA ZAHN NOW." Soledad O'Brien sitting in for Paula tonight -- Soledad?

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