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CNN IN THE MONEY

Foley Scandal Expected to Be Major Factor in Elections; U.N. Security Council Approves Sanctions Against North Korea

Aired October 14, 2006 - 13:00   ET

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


ANNOUNCER: From New York City America's financial capital. This is IN THE MONEY.
JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Welcome to our program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY, dollars versus Dennis as in house speaker Dennis Hastert and the Foley sex scandal. Just one potential trouble spot for Republican's as next month's midterm elections loom. They would like to get you focused on the economy instead. There is a story there. We'll discuss.

Also ahead the rising tide, the U.S. population is about to clear 300 million of us. Find out how demographic shifts are changing American's money picture.

And cut the fat or pay the price. New York City officials apparently have nothing better to do than to fiddle around with whether restaurants are able to continue to cook with trans fats. The city wants to outlaw them. We'll see if that is going to fly with customers. I have worked in New York City for 27 years. There's a lot of other stuff they ought to be focusing on besides whether or not the guy down the street cooks my burger with trans fats.

Joining me today a couple of IN THE MONEY veterans, Jennifer Westhhoven, Andy Serwer.

Talk about the economy. Retail sales number came out, which is not exciting to the average person. It's not even exciting to me. But it fits into a bit of mosaic, we have the Christmas shopping season ahead. We've had a little comedown in gasoline prices. Wall Street's perking along pretty well, earning season is starting now. Everybody is eyeing the guidance these big companies have been giving for the next quarter. It's like what have you done for me lately. And all this combines, I suppose, to pay a little bit of economic water color for the fourth quarter.

JENNIFER WESTHOVEN, "HEADLINE NEWS" CORRESPONDENT: Well I mean you've got the Dow at record highs, right? We have the deficit, the numbers look good. But I just wonder if those numbers are good enough for the Republicans really to look at -- to tout their success in the economy when most people aren't necessarily feeling it. Even when you look at those retail sales numbers, they're good, right, but they're not great by any means.

ANDY SERWER, EDITOR AT LARGE, "FORTUNE" MAGAZINE: I hate to sound like a skipping CD here, but I think it's all about - it's not a broken record. That's old school. I believe the whole thing is all about energy crisis now. The stock market is at a record high because the price of oil is below $58.00 a barrel, gasoline prices going down. I think that's the big thing. That's going to make people feel better in terms of the economy, in terms of the election. And so I think that that is really the thing to focus on at this point.

CAFFERTY: All right. Well, let's find out more about this. The symbol of the Republican Party is the animal that never forgets. If you don't know what I'm talking about, check out the cover of "Time Magazine."

SERWER: That's cute.

CAFFERTY: Even so, there is plenty that the Republicans would probably like to make you forget if they could. There are some problems. They got the Foley scandal. There's that ongoing war in Iraq, which seems to be getting more violent not less. You have the screwball over there in North Korea that's got everybody on edge. Some of the issues that might motivate voters during the upcoming midterm elections. But then there is the economy, for better or worse. There are some good things about the economy. The Republicans have a story to tell there, but it's hard to get their voices on the economy heard over some of this other staff. Greg Valliere is here now to look at how it all might play out at the polls. He is chief strategist at the Stanford Washington Research Group, and one of my favorite guests on this here program. Greg nice to see you.

GREG VALLIERE, STANFORD WASHINGTON RESEARCH GROUP: Thank you. Great to see you guys.

CAFFERTY: What's going to drive the election?

VALLIERE: Easy Mark Foley. I think that was the last straw. The economy, as you say, is good. I agree with Andy. That energy prices look good. But Foley seemed to really be the final piece of this puzzle. And people may not be able to relate to what's happening in Iraq. They didn't turn against the Republicans when Dick Cheney shot a guy. But people who have kids, people whom worry about predators can relate to this story.

CAFFERTY: And the leadership of the House of Representatives and even the White House are sort of saying, you know, Hastert doesn't have to resign even though this thing happened on his watch. We all regret that it happened, but let's just leave everybody in the old jobs that they're in and go blindly along. Are their underestimating the outrage of the American public on this thing?

VALLIERE: Jack they're tone deaf, just like a lot of bishops and monsignors. They are tone deaf and you know I don't say this with any glee, I'm not an advocate for one side or another but the polls don't lie. And the polls in the last week or so have turned dramatically, not only for the house but maybe even the Senate could be in play as well.

SERWER: But Greg isn't it really stupid to vote against your Republican Congressman because of the Foley scandal? I understand voting against Hastert if he's up for reelection because you disagree with him. What if it's an innocent GOP Congressman who had nothing to do with it? Are people that dumb?

VALLIERE: Well you are using logic here this is not implacable. I've been traveling all around the country and the ads are brutal. The ads in congressional districts are my Republican opponent is good friends with Deny Hastert and --

The ads tie all these Republicans even though they're not even involved. The Republicans are going to unload in the next three weeks with their own negative ads emphising Speaker Pelosie and Chairman Rangle and all of that stuff.

SERWER: One of them was talking about Chappaquidick (ph). I mean that is grasping for straws I think.

VALLIERE: Absolutely. But no I think even though individual members of Congress aren't involved with Foley, they're some how tied to the leadership, and the leadership looks bad right now.

WESTHOVEN: I just want to talk a little bit about the economy, though. The deficit does look better. It looks like the president kept his promise to cut the deficit in half. The stock market is doing great. At the same time, though, these aren't necessarily issues that people can really connect to. So I feel if we hear Republicans a lot saying we want to talk about the economy, no one will let us, we have a great story here. But do they?

VALLIERE: No. If they can't spend the economy story, they haven't been able to for the last few years, I don't think they can in the next three weeks. The deficit story is all about receipt growth, it is not about spending restraint. But that's a great story. It's the least appreciated big economic story out there, how dramatically it's plunging and will continue to plunge. But they can't sell it. I'm afraid it's a rock and Foley, mostly the latter. The economy helps on the edges but I don't think it's enough.

CAFFERTY: Speaking of being tone deaf let's talk about the war in Iraq. John Warner, chairman of the armed services committee came back from a visit over there and says, the war is moving sideways and if things don't begin to change in two or three months, we have to look at a different course of action. He is one of President Bush's strongest allies when it comes to the war in Iraq.

Why is it that collectively the White House and Rumsfeld are not picking up on some of the things, for example, that are in Bob Woodward's book, about the fact that we're looking at not less violence in Iraq but more and it's going to get worse next year than it is this year. The army chief of staff saying that we're not going to look at a troop draw down there for probably another three or four years. Are they trying to give this election away?

VALLIERE: Well you have to wonder. And one other point to add to the litany of things you just mentioned Jack and that is Jim Baker over the past weekend said maybe there's something in the middle rather than cut and run or stay the course. That was a huge comment. I mean Baker is the consigliore for the Bush family. For Baker to say that there's maybe a middle course maybe in the case that there could be a way out of this. And they can say hey --

ANNOUNCER: This is CNN BREAKING NEWS.

FREDRICKA WHITFIELD, CNN ANCHOR: Hello I'm Fredricka Whitfield in the newsroom in Atlanta. Some breaking news coming out of the United Nations in New York are Richard Roth is there. Richard what's happening?

RICHARD ROTH, CNN CORRESPONDENT: Yes we are going to have a vote shortly in a matter of minutes at 1:30 New York time at the U.N. Security Council. Sanctions resolution at North Korea. The Ambassadors from China and the United States came out and told reporters just a short time ago that there is agreement. The sticking point to the end was this matter of cargo inspections. The resolution will say to countries to inspect as necessary all goods going in and out of North Korea. The idea is to stop materials and technology from going to North Korea that could be used to make and be used for nuclear weapons production.

The North Korea representative is around the U.N. hallway and says he has some thoughts and may want to comment on the resolution. Last time in July when a resolution was passed he called the council ambassadors all kinds of names in affect by saying they were using gangster like tactics against his country. We're going to have agreement after a day or two of harsh negotiations though conducted in a friendly nature here at the Security Council. Full agreement China, Russia and the U.S. and the others will have a vote in a matter of minutes.

WHITFIELD: All right. Now interesting Richard this full agreement coming six days after North Korea did this nuclear test which some dispute whether it did, indeed, happen or whether it didn't. U.S. sources are telling CNN that it did, indeed happen. Now, you had mentioned that there was some issues that Russia and China were hung up on. Do we know anything more about what kind of compromise was made between those countries?

ROTH: Well, it's not going to be mandatory for countries to inspect these goods. It's going to be as necessary. That type of language has been watered down from the original sanctions provisions. Other aspects of what the U.S. wanted were taken out. It's part of the negotiation. Again every country on board trying to avoid a Beijing, Moscow veto. That's what happens in these things. And the council is on record very quickly as condemning what North Korea did. Some people think it's taken six days for them to speak out at all. It takes longer to put international law on these resolutions on the books.

WHITFIELD: All right. U.S. Ambassador to the U.N. John Bolton saying this was a very significant step, the fact that the five permanent members and Japan had reached some sort of agreement. We're seeing now that in 20 minutes from now the entire council may be voting on this resolution.

ROTH: That is correct.

WHITFIELD: All right. Richard Roth at the U.N. thanks so much for that update. We're going to go back to the IN THE MONEY right now. And at 1:30 when that vote will be taking place we'll be able to update you on all the current information coming out of the U.N.

Back to IN THE MONEY right now.

(COMMERCIAL BREAK)

WESTHOVEN: By the time I introduce our next guest, two or three people will have joined our nation's population. The Census Bureau estimates that every 11 seconds we get a new legal American citizen and at that rate we are scheduled to hit the 300 million mark this Tuesday. There have been a lot of stories surrounding the milestone and here to talk to us about what it means for our country is William Frey. Welcome to the program. He's a topographer, visiting fellow at the Brookings Institution.

WILLIAM FREY, BROOKINGS INSTITUTION: Good to be with you.

WESTHOVEN: Thanks. A lot of people are approaching this milestone with some trepidation, there's fear that maybe we don't have enough jobs, maybe we don't have enough resources to support this. How do you think we should be greeting this big moment?

FREY: Well, I'm upbeat about the whole thing. After all we're a country in the developed world that's actually growing. That's not going to be the forecast for Europe; it is not going to be the forecast for Japan. They're going to be drying up, getting older and grayer and we're going to be very youthful. I think it's something to celebrate.

SERWER: William, people are moving around this country a little bit, though. I mean where do you see people going? Is it southeast? The west? How is that shaking out?

FREY: Well you know that changes from year to year, decade to decade. Right now it's southeast, it is Georgia, it is Carolinas, it is Florida, Nevada, Arizona. These are the real hot spots. When people get worried about growth, they point to those places. But what I always say is what about Michigan and upstate New York, North Dakota.

SERWER: Those place losing population actually or just slower?

FREY: They're slow growing. They have an out migration of U.S. citizens, long-term residents. But they're gaining because pf their fertility is enough to counteract that.

CAFFERTY: Let me throw the illegal immigration population into this equation, 300 million of us. And another million a year crossing our borders and entering the country illegally. It is estimated between 12 and 20 million illegal aliens exist in the country now. There are towns all around that are complaining about the impact on services from growing illegal alien populations. How does that fit into the big equation about the demands on the country, the resources, the tax dollars, et cetera?

FREY: This is an important issue. It's one that we have to face squarely. But I don't think we need to throw the baby out with the bath water in the sense that legal immigration is very good. A lot of these illegal immigrants are doing very important work in the United States. But I think we have to come to some consensus on how to put the brakes on it and how to deal with these 12 million -- I think it's more like 12 million who were already here in a reasonable way. It shouldn't be a political fight. It should be something that we have some reasonable conversation about.

WESTHOVEN: Tell us a little bit about some of the patterns of the people being born and coming to the country and how that's going to change everyday life in the next 50 years?

FREY: Well, I think what we're entering into is a new American melting pot, even without the illegal immigrants, we're going to have more people coming to the United States from different parts of the world, from Asia, from Latin America and we'll probably spread it out further. I think what this will do for us; number one is it helps us have a growing labor force as opposed to a declining labor force.

And secondly it makes our country much more diverse at a time when the economy is much more global. It helps us create those links with other countries. So it's about time I think that we get back into the melting pot mode. Most of the last 20th century, the last part of the 20th century we were a very naval gazing country. We didn't have a lot of immigrants; we were very inward looking with the baby boomers. But I think now that's going to change. And I think to the good.

SERWER: William, let me ask you. I want to go back to this geography question. I guess I'm kind of a geographer freak and if you go to the Great Plains, to the Dakota's or Nebraska, the amount of depopulation there is staggering. The states have been emptied out. It's just amazing. You see abandoned farms all over the place. Will people come there? I mean if you go to upstate New York you see immigrant populations moving up into these areas. Will that happen there even?

FREY: I think eventually that will happen. The Great Plains may be a different story. But upstate New York has a lot of infrastructure; they have a lot of good educational systems. I think when an immigrant comes to the United States, he or she is not so worried about living in the she-she parts of Manhattan or Georgetown. They want a nice life for their kids, make a good living. And I think that's going to be available in those places.

CAFFERTY: What about the tremendous loss of middle-income jobs, manufacturing jobs that we've seen happen across this country over the last 10 or 15 years? There's no sign that that trend is going to change. We're becoming more and more a service economy, less and less a manufacturing economy. Talk about the available jobs, the kinds of jobs that are waiting for the legal immigrants that come here and the competition with American citizens here in the country now for what few good paying jobs remain.

FREY: I think in the future what we have to be headed for is preparing people to be in a knowledge-based economy. That certainly means that we should rethink some of our immigration policy to make sure people who are coming into the United States are able to take advantage of that knowledge based economy, to add to what we already have here rather than displace people but also make sure that their children, all the new immigrants that come here have an opportunity to get an education. That gives them a pathway to that knowledge-based economy, to the middle class.

Our manufacturing here are going to be in knowledge-based industries, not in the old iron and steel industries. And that is where the future is. In the interim, I agree it's going to be tough for these people who are being displaced. We're going to have to figure out a way to get them in the right track. But the future is bright if we pay attention to these immigrants. Both our immigrant policy and what we do with them while they are here.

WESTHOVEN: All right. William Frey, thank you very much from the Brookings Institution as we try to sort out what's going to happen with our country as we hit the 300 million mark. And things start to really change in the country.

Coming up after the break, bugs in the system. Former HP CEO Carly Fiorina says the company had problems even before the spying scandal broke. We will get her take in her own words.

Plus, dining by the book. New York's considering a crackdown on trans fat, and the whole country is watching. See what happens when the government starts acting like your mom.

Plus CPR for your health plan. We will hear about a new group that's out to make sure your boss isn't in charge of your medical benefits.

(COMMERCIAL BREAK)

SERWER: They say timing is everything. Former Hewlett Packards CEO Carly Fiorina is out with a new book, just as her former employer is wash in controversy. It is about her career at HP and her ouster earlier last year. This week on "American Morning" Miles O'Brien and I sat down with Fiorina and asked her about her book, the HP board leak investigation and if she thinks former chairman Patty Dunn is being made a scapegoat.

(BEGIN VIDEOTAPE)

CARLY FIORINA, AUTHOR, "TOUGH CHOICES:" You know, your heart breaks for Patty. The health issues that she's dealing with, what you read in the front page every day. I think this whole situation, though, the leak, the investigation into the leak, the exposure of the investigation into the leak; all of this is symptomatic of personal agendas overtaking people's sense of responsibility for a public company. I think all of it is an example of breakdown in judgment and perspective and ethics. Never mind the legalities.

SERWER: Carly I want to ask you about that, though. The board of HP and top HP executives obviously very intelligent, sophisticated people. How did they end up engaging in this ludicrous Watergate like behavior? FIORINA: You know, I wrote a book about business because for me business is all about people. I started out as a secretary. And I have learned in the course of my business career that whether you're in the mailroom or the boardroom, people are people. And people sometimes become overwhelmed by their personal agendas and their personal animosities. People sometimes lose perspective about what the big picture and the big issue is. And sometimes people are unable to confront tough issues directly. Face to face, head on, on top of the table. And they go underground. That's part of human nature and human nature plays out in the boardroom sometimes as well.

MILES O'BRIEN, CNN CORRESPONDENT: You became an icon of the business world and a hero for a lot of women rising to the top as a woman of such a large company. Such a public role, in retrospect was it a mistake to be so public in that role or is that unavoidable?

FIORINA: Well you know in many ways it truly not my choice. I was brought in to transform an iconic company. And I was I many firsts. The first outsider, the first non-engineer, the first person who wasn't from Silicon Valley, I didn't come from the computer industry. By the way, I happened to be a woman and I was asked to lead a change, and change is always resistant. And so as a leader of change, I was going to become the target of opposition and critism. That's human nature. And I was also going to become the object of a lot of decision and speculation. It made my job harder in many ways, but I think in many ways it just came with the territory.

O'BRIEN: And what's next for you? Political office?

FIORINA: Public service is a possibility. I think there is some issues that matter to me like global poverty alleviation, competitiveness in education. But I would also go back into business again as well.

(END VIDEOTAPE)

SERWER: You can catch me and the rest of the "American Morning" crew every week day morning from 6:00 a.m. to 9:00 a.m. Eastern right here on CNN.

Coming up on IN THE MONEY bite me. New York is thinking about a ban on trans fat and other places are taking note. See if you want some politician telling you what you can eat.

Also ahead busting the golden handcuffs, find out how an author set out to do what a company won't.

And curb service. We will tell you about an invention that takes the stress out of parallel parking. "Brainstorm" is on the way.

(COMMERCIAL BREAK)

WHITFIELD: Hello I'm Fredricka Whitefield in Atlanta. The U.N. Security Council is meeting now to consider imposing sanctions against North Korea. A vote could come at any time. It's expected to happen at 1:30, just moments from now. A U.S. government report says air samples collected Wednesday tend to support North Korea's claim that it conducted a nuclear test.

No arrest so far in yesterday's Florida turnpike slayings. But investigators are revealing more details about the victims. A man, his wife and their two young sons were found shot to death along an isolated stretch of the highway. Authorities say the family moved to Florida from Texas just four months ago. And police are searching for their missing vehicle.

Dedication ceremonies are starting right now in Arlington, Virginia. You're looking at live shorts for the new U.S. air force memorial. President bush is scheduled to speak shortly. We'll bring that to you live right here on CNN.

We are now going to take you CNN International for its coverage of North Korea and the U.N. vote.

UNIDENTIFIED MALE: Swiftly as possible.

UNIDENTIFIED FEMALE: And the council will be responding at any moment we're watching that live pictures of the Security Council. As soon as the vote begins, we will bring it to you live. You see there ambassadors huddling and talking and waiting for the last of them to arrive so that they start this vote on a resolution imposing sanctions on North Korea for the nuclear test it conducted earlier this week. It's been six days since that test was conducted. And we see there that the Chinese ambassador speaking there. They're waiting for this vote. We'll bring it to you live as soon as it begins.

Meanwhile CNN has obtained a U.S. intelligence report that says the U.S. has found signs of radioactivity from the region where North Korea claims to have performed its nuclear test. More now is being done on preliminary findings, if confirmed; it will be the first verification that North Korea is indeed a nuclear nation.

More violence in Iraq. The body the of at least 40 people have been found in the last days, many decapitated and mutilated north of Baghdad. The death toll is mounting in what is believed to be a series of revenge killings. In Baquba seven people have also be killed in a mortar shell blast.

And back to the United Nations Security Council where we are watching live pictures as ambassadors get ready, the 15 permanent members of Security Council getting ready there for a vote. They say they have the five main permanent members have agreed on a draft resolution imposing sanctions on North Korea. We see that that is the Chinese and the French ambassador speaking. What we know is that they have reached agreement, they expect a unanimous vote on this resolution.

They have, indeed, reached an agreement. We don't know the specifics of what they reached or what they have decided that the resolution will look like. We know that it has undergone several revisions to address concerns by Russia and China in bringing in our senior U.N. Correspondent, Richard Roth also watching this live picture with us. Richard, at any moment it seems like they will have a unanimous vote.

ROTH: Yes. The resolution in fact is co-sponsored by all countries. This gives it more emphasis to show the unity of the council that it means business on this North Korea nuclear test. The council already days ago quickly came out with a statement in which it condemned what North Korea did. But then came the harder part of writing international law, legally binding measures under the U.N. umbrella. It will impose some sanctions and measures on the North Korean regime. China said he was pleased in comment a short time ago with U.S. Ambassador Bolton that a strong, forceful resolution was going to be on the books.

That its neighboring country North Korea and China is a main align at times, supplier of most of the country's energy and food. As we reported in recent hours, the key aspects of the disagreement regarded the inspection of cargo that under this resolution countries will be asked to do inspections as necessary. Now that is a softening of language. Originally it was going to be more mandatory, a stop and search of all cargo going in and out of North Korea. But to get China and Russia on board in this particular resolution rumble the U.S. and Britain had to adjust the language. It is standard procedure in the negotiating process here.

There you see the British as we are referring to them. And the council is about to do this resolution. And back on July 15th, it was again, a Saturday afternoon in New York when the Security Council passed its last resolution on North Korea warning Pyongyang on many things in that resolution not to test any device, do any types of weapons testing. That was after the surprise July multi missile launch and North Korea did not heed the counsel's word.

Now the Security Council is going to impose sanctions. North Korea has given no indications it will accept this resolution and follow the orders. The North Korean ambassador to the U.N. was in the hallways earlier today, CNN's producer Liz talked with the ambassador. He said he has some thoughts and he's been studying the text. He's hoping the council invites him to speak.

Last time in this very chamber, the North Korea ambassador did say a few words but then walked out shortly after he spoke to the council members. He totally rejected the resolution in public. Then he came out to the press microphones and said the Security Council was acting gangster-like in its measures. That's the ambassador himself sitting there in the front row there in the red seats, the observer seats. Those chairs are for countries that not members of the Security Council. The North Korean delegations do not appear in front of the press that often. There's always been questions about how much knowledge they have about what the country back home is doing or going to do.

They bear the brunt of the press avalanche after North Korean actions when the nuclear test, if that's indeed what it was, occurred earlier this week. There was a huge amount of press coverage on the doorstep of the North Korean mission to the United Nations that is in an office building a block or two from the U.N. Headquarters. At that point the North Korean ambassador Young didn't want to comment, the next day he said sanctions is not really fair, not a problem or it's not something that would be useful. He was opposed to sanctions that he knew were looming in the Security Council.

In the past, in the early 90s, North Korea could count on China to block any significant action against North Korea. But in the days before the test, the Chinese ambassador said if they go ahead and test, China was not going to protect North Korea this time here at the United Nations. China knew it wouldn't be able to stand in the way of public opinion, and the powers of U.S., Britain, France, and even Russia wanting to do something about the threat of proliferation after North Korean.

The council also knows it has to deal with Iran in another nuclear crises of sorts, though Iran is certainly not gone ahead and set its test to the nuclear devise. They said they have not tested a nuclear device. They said, listen, we're not going to pursue a nuclear bomb. They say they're doing their nuclear program for peaceful energy uses. They have not been per claiming as North Korea has for quite some time that they possess nuclear weapons.

There is in these proceedings here at the United Nations, there can be a vote right at the start, then formal speeches. Sometimes there are speeches with a vote nestled in among 15 countries speaking. The Security Council, five permanent members met privately before this session. The 10 non-permanent members who don't like being dictated to but understand they are lesser powers here. They only served for two years and don't have veto rights like the big five, they were then called in at noon. Once they are told that the big five agree, there really isn't much after that. That's, indeed, what happened here at the United Nations.

UNIDENTIFIED FEMALE: And, Richard, give us a little sense of the divisions that led to the delay in this vote. Basically, we saw two camps of countries, the permanent members of the Security Council. On the one hand we have the United States, Britain and France and on the other hand we have China and Russia. What were the differences between them, there was also an element of distrust.

ROTH: Well, the difference is it cropped up whether it was a Lebanon resolution, the North Korea resolution of July. It's really where things stand in the world now with China and Russia looking to blunt what they see as U.S. aggression or force or prominence in the Security Council and Britain siding with the U.S. of late in the last few years. France joining the U.S. and the U.K.

And the differences range from a variety of issues, maybe it is technically in nature in the language but the over riding themes are there really should be more dialogue with North Korea in this case and less threatening words or measures. It is not every day though that a country tests a nuclear device, and many say it's beyond belief that China and Russia would be not acting in a forceful manner. But they like to leave room for follow-up measures if the country doesn't comply. They don't like countries in their view backed into a diplomatic corner.

Since the Iraq war has taken place with what those nations say was illegal use of the council by avoiding the council and not getting the U.N. authority, they've always been upset when the U.S. especially wants to get tough in any corner of the world. China also is also worried that at some points they always fear that the U.N. would come after them should there be human rights violations or some other problems that comes up, especially since they're now in the Chinese backyard there in North Korea.

These are some of the issues. At the heart of this resolution was that China did not want mandatory stop and search provisions included in this resolution for all goods going in and out of North Korea. So there are more none military sanctions included in this measure. All member states under the text shall prevent the direct or in direct supplies sail or transfer to North Korea through their territories or nationals, any battle tanks, armored combat vehicles, warships, all items, materials, goods, technology that will be listed by a U.N. sanctions committee that will have to be formed that may take 14 days.

Then we'll get a better idea of how things may proceed. As the council members have sat down, we're going to be very close to a vote. There will be some procedural documenting and numbering and accounting that will take place. At some point the council president who in this case for the month of October is Kenso (ph) of Japan. He's the former U.N. Humanitarian Chief, but he is now for the last few years serving as his country's U.N. ambassador. He's calling the meeting to commence. But I am going to keep talking here because there will be a little bit more dialogue that you might not want to hear there unless you're a fan of U.N. Bureaucracy.

Each member country is allowed to have two or three members of their delegations sit in the chairs behind them. So Japan would be the one to say is everyone ready for a vote and then all the countries would put their hands in the air because we have been told obviously it's unanimous with every country now sponsoring this resolution. The use of force whether the U.S., Britain or a coalition of the willing might want to use force to make sure these sanctions are put into effect and see that North Korea accepts them, that's still been a concern of China even though the U.S. disputes heatedly any use of force behind this resolution.

UNIDENTIFIED FEMALE: Richard, we're just now listening to the Japanese ambassador. Japan did take a very strong view of this, and they have imposed sanctions of their own, haven't they?

ROTH: That's right. They've stalled their own trade and economic sanctions. Japan is the angriest. Obviously they're in the nuclear missile range of North Korea. They've been joining with the U.S. step by step here to push for the toughest possible measures. It was Japan who added on early elements in this resolution since removed things and previsions such as banning flights, all takeoffs and landings inside North Korea territory, and plus banning all travel of all North Korean leadership officials. Those were eventually watered down and removed from this resolution.

They are now inviting the North Korean representative to just come to the table. This is the North Korea ambassador with his delegation now approaching the table. He will be given the right to comment afterward. It doesn't necessarily mean that, but they will also invite the republic of South Korea. Of course in interesting time, it was just yesterday that South Korea's Foreign Minister Moon was officially confirmed to be the next secretary-general of the United Nations effective January 1st. He's not in the council chamber.

I believe that could be the ambassador. But Moon as secretary- general says he wants to go to North Korea to help mediate this dispute to bring his experience and knowledge of the situation to the issue. It remains to be seen whether the big five powers on the council want him to get involved even though Ambassador Bolton of the U.S. has said a new pair of eyes, new people, it could help.

He said yesterday in his first press conference here that he hopes it's a strong, forceful resolution. He represented South Korea at nuclear talks with the north. Of course in this resolution included is yet another endless plea from the Security Council for North Korea to return to what are called six-party talks. Six countries in a dialogue with North Korea. North Korea walked away from those talks once again. It's been a stop and start mechanism to keep the dialogue going.

Let's listen here as they get to the possible vote here. They'll first announce, I believe, and ask if everyone is ready for the vote. Let's take a listen.

UNIDENTIFIED MALE: Having no objection, it is so decided. Will those in favor of the draft resolution contained in document s/2006/805 please raise their hands. Thank you. The result of the voting is as follows; the draft resolution received 15 votes in favor. The draft resolution has been adopted as resolution 1718, 1718, 2006. I shall now give the floor to those members of the council who wish to make statements following the voting. I give the floor to the representative of the United States.

JOHN BOLTON, U.S. AMBASSADOR TO U.N: Thank you, Mr. President. We welcome the adoption of Resolution 1718. The proclaimed test of a nuclear device by the democratic peoples republic of Korea unquestionably poses one of the gravest threats to international peace and security that this council has ever had to confront. Today, we are sending a strong and clear message to North Korea and other would-be proliferations that there will be serious repercussions in continuing to go pursue weapons of mass destruction.

Three months ago, this council sent an unequivocal and unambiguous message to the DPRK, suspend your ballistic missile program, stop your procurement of materials related to weapons of mass destruction, and verifiably dismantle your nuclear weapons and existing nuclear programs. Security Council Resolution 1695 also demonstrated to North Korea that the best way to improve the livelihood of its people and end its international isolation was to stop playing games of brinkmanship, comply with the demands of the Security Council, return to the six-party talks, and implement the terms of the joint statement from the last round of those talks.

Sadly, the regime in Pyongyang chose a disturbingly different path. It answered the Security Council's demands with yet another direct threat to international peace and security, proclaiming to the world that it conducted a successful nuclear weapons test. And with its actions the North Korean regime has once again broken its word, provoked an international crisis and denied its people the opportunity for a better life.

Mr. President, three months ago, the United States council, the members of this body to be prepared for further action. In the event that North Korea failed to make the strategic decision to give up its pursuit of weapons of mass destruction and comply with Resolution 1695. We are pleased that the Security Council is united in condemning the actions by the regime and Pyongyang and taking clear, firm and punitive action in passing this resolution.

Thus, proving to North Korea and others that the Security Council is prepared to meet threats to international security with swift resolve. This resolution demands action. Acting under Chapter 7, it is imposed punitive sanctions on Kim Jong-Il's regime. It has broad provisions deciding that members state shall not engage in any trade with the DPRK, not only for items with good contribute to their nuclear weapons and other WMD programs. But for high-end military equipment as well.

The United States will rely on a number of control lists already in place as a baseline to implement the decision by the Security Council to ban trade with North Korea in WMD related materials, including lists published by the nuclear suppliers group, the missile technology control regime and the Australia group. To further this goal, this resolution also prevents the travel of government officials in the DPRK who were known to be involved in their WMD efforts.

This resolution also targets other illicit activities of the regime and includes a ban on trade and luxury goods. It targets the way Kim Jong-il finances his weapons of mass destruction programs through criminal activities like money laundering, counterfeiting and the selling of narcotics. It imposes a binding requirement on all member states to take action against those activities and freeze the assets of entities and individuals of the DPRK involved.

The resolution also provides for a regime of inspection to ensure compliance with its provisions, building on the existing work of the proliferation security initiative. The resolution imposes other strict demands on the DPRK, requires him not to conduct any further nuclear test or launch of a ballistic missile. It demands that North Korea abandon all of its WMD programs, including nuclear, chemical and biological weapon programs in a complete verifiable and irreversible manner.

It is our understanding that the DPRK's full compliance with this resolution and the successful resumption of the six-party talks would lead to the council acting to go lift the measures imposed by the resolution. At the same time, we need to be prepared if North Korea, again, decides to ignore the Security Council and continue its pursuit of weapons of mass destruction and the means to deliver them. That is why it is important that the United States and other member states have the opportunity at any point in time to strengthen measures against North Korea and return to the council for further action. As we pursue a diplomatic solution, we are also reassuring your allies in the region that America remains committed to their security. In response to North Korea's provocation, we will seek to increase our defense cooperation with our allies, including cooperation on ballistic missile defense to protect against North Korean aggression and cooperation to prevent North Korea from importing or exporting nuclear or other missile technologies.

Our goals remain clear, peace and security in northeast Asia and nuclear free Korean Peninsula. We will support our allies in the region, we will work with the Security Council and together we will ensure that North Korea faces serious consequences if it continues down its current path. Let me end with a final point.

This resolution provides a carve out for humanitarian relief efforts in North Korea. The reason is clear. The concern of the Security Council is with the regime in Pyongyang, not the starving and suffering people of North Korea. We hope that North Korea implements and complies fully with the provisions of this resolution in the hope that its people can have a brighter future.

Thank you, Mr. President.

UNIDENTIFIED MALE: We thank the representative of the United States for his statement. We now call the representative of France.

JEAN MARC DE LA SABLIERE, FRENCH AMBASSADOR TO U.N: Thank you, Mr. President. The Security Council by adopting 1718 today has provided a firm reply to the announcement of last Monday of the nuclear test by DPRK. This firm reply voices the universal condemnation of this extremely grave act and the unanimous determination of the international community regarding the behavior of Pyongyang. This resolution under Chapter 7 has a number of strong measures having to do with military programs of DPRK.

In particular, missile programs and WMDs. It was necessary in particular to put an end to the importing and exporting by DPRK of products associated with these programs. As well as to ensure the effectiveness of these measures through cooperation I states, proceeding under international law with inspections of cargo to and from DPRK. Given the challenge posed by North Korea and in any context where we must confront other proliferation crises, it was essential for the international community to be united and to be extremely firm.

The Security Council, threw its anonymous decision has clearly demonstrated that the conduct of North Korea will not be tolerated. We understand that full compliance by DPRK with this resolution and the successful resumption of the six-party talks would prompt the council to act to lift measures imposed by this resolution.

Thank you.

UNIDENTIFIED MALE: I thank the representative of France for this statement. I now give the floor to the representative of China.

WANG GUAGYA, CHINESE AMBASSADOR TO U.N: Mr. President, the Security Council has just adopted the resolution of the on DPRK, on October 9, 2006, the Democratic peoples republic of Korea conducted a nuclear test in disregard of the common opposition of the international community. This is not conducive to peace and stability in northeast Asia. The ministry of foreign affairs of China issued a statement on the same day and expressed firm opposition to this act. Proceeding from the overall interests of bringing back denurclearization of the (INAUDIBLE) and the continuing peace and stability on the Korean (INAUDIBLE) in northeast Asia, China supports the Security Council in making a firm and appropriate response.

We believe that the act of the Security Council should both indicate the firm position of the international community and the help creating neighboring conditions for the final peaceful solution. As the resolution has basically reflected the above spirit, the Chinese has voted in favor of this resolution. China would like to reiterate here that sanction itself is not the end. As is stipulated by the resolution, if the DPRK complies with the relevant requests of the resolution, the Security Council will suspend all the sanctions against DPRK.

At the same time, we wish to point out that China does not approve of inspecting cargo to and from the DPRK. We, therefore, have resolutions about the relative provisions of the resolution. China strongly urges the countries concern to responsible attitude in this regard. On the reframing from taking any provocative steps that may intensify the tension.

Mr. President, the Chinese government has all along committed itself to bringing about denuclearization of the Korean Peninsula and the returning peace and stability on the Korea Peninsula and Northeast Asia. We want a peaceful resolution on the nuclear issue on the Korean Peninsula through diplomatic means. China has made enormous efforts for this end. Initiated the six-party talks and the pushed the parties concerned to reach the joint statement of September 2005.

Though there has appeared that active development of DPRK nuclear tests our above policies remain unchanged. We still believe that the six party talks are the realistic means for handling the relevant issues. We also firmly oppose the use of force. China has noted with satisfaction that in condemning DPRK nuclear tests, the parties concerned have all indicated the importance of adhering to diplomatic efforts.

Mr. President, China believes that under the current circumstances we shall unswervingly stick to the objective of the denuclearization of the Korean Peninsula and resolving the issue through peaceful dialogue and negotiation, avoid any acts that may cause escalation of the tension and a situation out of control and stability on the Korean Peninsula in Northeast Asia.

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