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THE SITUATION ROOM

Senator Gordon Smith Changing His Stance on Iraq War; House Republicans May Have Been Negligent But Broke No Rules In Mark Foley Scandal; Dick Durbin Interview; Rumsfeld Saying Good-Bye To Pentagon Employees In Town Hall Meeting; Longtime Associate Of President Carter Resigns Over Controversial New Book; Dennis Ross Interview; War On Terror In Ethiopia

Aired December 8, 2006 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: 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 today's top stories.
Happening now, outgoing secretary of defense Donald Rumsfeld saying good-bye to Pentagon employees in his final town hall meeting. Speaking candidly about his tenure and the war that led to his resignation.

Also, Jimmy Carter accused of taking sides in his new book on the Israeli-Palestinian conflict. A top adviser to the former president has now resigned in protest. We'll hear why he thinks Carter's book is full of flaws.

And the House Ethics panel releasing its findings on the Mark Foley scandal.

Did Republican leaders and their aides try to cover-up the former congressman's conducted with young male pages?

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

All that coming up.

But first, President Bush now closing a week of harsh criticism and intense pressure on Iraq. And now a fellow Republican has turned bitterly against him.

And this hour, the president's approval rating remains in politically troublesome territory. In our brand new CNN poll, only 37 percent of the American public approve of the way the president is doing his job. Fifty-seven percent disapprove. The poll was conducted by Opinion Research Corporation.

Mr. Bush, meanwhile, met with Congressional leaders from both parties over at the White House this morning to talk about Iraq. And the war will certainly dominate his agenda in the coming week. A spokeswoman says Mr. Bush has meetings scheduled with State Department officials and outside experts on Monday, a teleconference with military commanders and the U.S. ambassador to Iraq on Tuesday and meetings Wednesday with senior defense officials over at the Pentagon.

Another blow for President Bush's policy on Iraq. This one was delivered by a Republican senator and a steadfast supporter of the war, that is, until now.

Let's turn to our senior political correspondent, Candy Crowley, Washington what is going on -- Candy.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Wolf, Senator Gordon Smith of Oregon describes himself as a silent supporter of the president's policies in Iraq. And now he is an outspoken opponent.

His speech on the floor late last night was part screed, part looking back at what happened. And it really was part of a look at a hope that never materialized.

(BEGIN VIDEO CLIP)

SEN. GORDON SMITH (R), OREGON: I welcome any idea now because where we are leaves me feeling much like Churchill, that we are paying the price to sit on the mountain that is little more than a volcano of ingratitude.

Yet, as I feel that, I remember the pride I felt when the statute of Saddam Hussein came down. I remember the thrill I felt when three times Iraqis risked their own lives to vote democratically in a way that was internationally verifiable as legitimate and important.

But now all of those memories seem much like ashes to me. I believe the president is guilty of trying to win a short war and not understanding fully the nature of the ancient hatreds of the Middle East.

I, for one, am at the end of my rope when it comes to supporting a policy that has our soldiers patrolling the same streets in the same way, being blown up by the same bombs, day after day. That is absurd. It may even be criminal.

(END VIDEO CLIP)

CROWLEY: Again, Senator Gordon Smith coming out of the state of Oregon, changing his mind about the war in Iraq. He was a supporter of it. Wolf, I think as you can see, this was a passionate speech and that quiet tone really sort of masked what was a brutal assessment of what's gone on.

BLITZER: And he says he no longer can support this war as a result of what he's seeing.

Candy, thank you very, very much.

Candy is going to have a lot more on this story coming up in our 7:00 p.m. Eastern hour.

The grim and gruesome toll keeps mounting in Iraq's capital, at the same time. A lot more bombings, many more random killings by death squads. In the past two days, police say they found more than 50 bodies.

Joining us now, our correspondent in Baghdad, Nic Robertson -- Nic, I know you've been getting out of that relatively, relatively secure area where you are right now.

Give our viewers a sense of what it's like to be out and about in Iraq these days.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Wolf, Friday is a day where there's very, very little traffic. There's a curfew. It's been a day when there's been so many attacks against the mosques. So that's why there's a curfew in place. Very few people out on the streets today.

We were also down on the river with the Iraqi police, where they run-river patrols, finding the bodies of many of these people that have been killed in the sectarian attacks. The feeling I get from talking to people here is real concern about the situation, is a frustration with their politicians. They feel that their politicians are spending too much time arguing amongst themselves, too much time over divisions which are opening up this sort of sectarian strife.

The government, though, says it is calling for a national reconciliation conference. And that's planned for about a week from now -- Wolf.

BLITZER: Is there a sense, though, among average Iraqis that these recommendations from the Iraq Study Group are really going to make a difference?

ROBERTSON: Certainly there are politicians here that say this is what they want, that they're very happy that they're going to get more control more quickly of Iraqi security forces. This has been one of their mantras, that they don't feel that they can deal with the militias, disarm the militias, unless they can offer the people something different. And that means having their own and stronger security forces.

There's a definite feeling here that it's a good idea to have the United States engage with Syria, engage with Iran, because both of those countries are interfering in Iraq and the United States is really, they say, out of the country's strong -- only strong enough that can tackle them.

But there's concern and many people fear now that what they're seeing here is the democracy that was going to be the way forward for Iraq and for the region being sacrificed for expediency, to get U.S. troops out. And there is -- there is a fear and a concern about that -- Wolf.

BLITZER: Nic Robertson on the scene for us in Baghdad.

Nic, thanks very much.

And we're going to have a lot more on Iraq coming up. But there's another story that has developed today here in Washington we want to follow-up on. House Republican leaders may have been negligent and turned a blind eye, but they broke no rules in the Mark Foley scandal.

Those are the findings of the House Ethics Committee, which has been investigating who knew what and when about the former Congressman's sexually explicit online messages to young Congressional pages.

Our Congressional correspondent, Andrea Koppel, is joining us from Capitol Hill now with a complete update -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, nine weeks and a day after the House Ethics Committee launched its investigation and conducted over 50 interviews, accumulating over 3,000 pages of transcribed interviews, they issued this enormous report here, the conclusion of which is that they failed, members of Congress and their staff failed to protect these young pages, but at the same time did not break any House rules and therefore will not be punished.

The report does say in a pattern of conduct that was exhibited among many individuals to remain willfully ignorant of the potential consequences of former Representative Foley's conduct with respect to House pages.

Still, it concludes: "The investigative subcommittee did not find that any current House members of employees violated the House code of official conduct."

Now, remember that former Congressman Foley resigned back in October after it first became reported in the news that he had exchanged sexually questionable e-mails with young pages.

Now, half of this report, the second half of it, contains copies of e-mails that were exchanged not only among members, staff here and other members here in Congress, but also many of those sexually graphic e-mails exchanged between Congressman Foley and those young pages.

Now, until today, Wolf, it was believed that this only dated back, this questionable behavior only dated back to about the year 2000, about six years ago. But now in this testimony we see that Jeff Trandahl, the former House clerk, says that he first directly confronted Foley about this behavior back in the mid-1990s.

Nevertheless, the Republican chairman of this Ethics Committee says in his opinion, they did -- the staffers did the best that they could under the circumstances.

(BEGIN VIDEOTAPE)

REP. DOC HASTINGS (R-WW), ETHICS COMMITTEE CHAIRMAN: Each of us on this investigative subcommittee recognizes that 20-20 hindsight is easy. And we recognize that doing the right thing in a sensitive situation can be very hard and difficult. But simply put, in situations such as the ones described in our report, doing the right thing is the only acceptable option.

(END VIDEO CLIP)

KOPPEL: But the increasing speaker of the House, Nancy Pelosi, didn't agree with that assessment. And in a written statement she said that it's deeply troubling that the Ethics Committee has found the failure of members and staff responsible for the safety of young men and women who serve as pages is not merely the exercise of poor judgment -- Wolf.

KOPPEL: Andrea, thank you.

Andrea on the Hill.

Let's get more now.

The House Ethics Committee report includes a compilation of instant messages and e-mail Foley exchanged with former pages. And a lot of those are fairly graphic, some very graphic.

Let's turn to our Internet reporter, Jacki Schechner -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, the House Ethics Committee is being very transparent by putting this entire process online. You can get it at their Web site. We've also got a link for you on the CNN Ticker.

There is an inclusion of the e-mails -- there are 16 separate exhibits and the e-mails are between Foley and a former page; also between that page and a staff assistant, raising some concerns, setting off some alarms.

The most graphic content we're talking about is about 104 pages of instant messages. That's separate from the e-mails. These were instant messages back and forth between Foley and, allegedly, a former page or page.

Some of the things like this, where Foley says, "Thank you for the photos. You're very handsome. You're a stud."

These are some of the less graphic conversations that we can show you. One where Foley says he has to get a loofa sponge, a nice sponge to make the skin smooth so we can shower together and the person says, "Yes, we could."

Foley says, "Nice."

Another one where he says, "ILY," meaning "I love you."

And the guy says, "Oh, ILY, too." I love you, too.

So these are some of the instant messages. We're talking about, again, 104 pages, some much more explicit than that. These are the ones that we can show you. And you can go to the CNN Ticker, where we've posted you an easy link -- Wolf.

BLITZER: All right, Jacki.

Jacki Schechner reporting.

Thank you.

There's a disturbing developing story happening in Chicago right now.

Let's turn to Carol for some details -- Carol.

CAROL COSTELLO, CNN ANCHOR: Yes, we have very little information, but I'm going to give you what I have right now.

CL-TV reporting that police are responding to reports of a shooting with multiple injuries. Now, this is happening at the Ogleby Transit Center. That's an above ground train station west of downtown Chicago. The train station is at the bottom of a high rise building. It's believed the shooter is somewhere in that building.

The trains have been evacuated. Some of the metro service there has been stopped for now. And, of course, that high rise building

BLITZER: Has been evacuated.

We're not sure exactly who police are looking for or exactly where. Some reports are saying that there is a lockdown in the building. Some people are still in their offices. But we can't confirm that.

We're trying to get more details on this story. But as you can see by the number of emergency vehicles, it's a pretty serious situation -- Wolf.

BLITZER: All right, Carol, we'll stay on top of it with you.

Thank you.

Jack Cafferty will be back next week.

Up ahead, Donald Rumsfeld's swan song. The outgoing defense secretary saying good-bye to Pentagon employees. A frank and sometimes emotional exchange.

Also, Illinois Senator Dick Durbin -- he was among the lawmakers taking about Iraq today over at the White House with President Bush.

Dick Durbin standing by to join us live.

Plus, the controversy over Jimmy Carter's new book.

Is the former president and Middle East peace broker now taking sides in the Israeli-Palestinian conflict, as a former top adviser of his is now charging?

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

(COMMERCIAL BREAK)

BLITZER:

Illinois Democratic Senator Dick Durbin was among them.

he's joining us now live from Capitol Hill.

He's the incoming number two in the Senate majority. But that we'll talk about in a little bit.

Senator Dick Durbin, thanks very much.

Were you reassured that the president has got a strategy, got a plan to work with Democrats to turn the page, if you will, as far as the war in Iraq is concerned?

SEN. DICK DURBIN (D-IL), DEMOCRATIC WHIP: No. The president was offering to meet with us on a regular basis -- that's a good thing -- on a bipartisan basis, both House and the Senate, to talk about issues.

But when it came to the issue of Iraq, I left there with the very real impression that the president may change some tactics -- in his words -- but in terms of embracing a change in strategy such as the Iraq Study Group proposed, he didn't make any suggestion today that he was willing to do that.

BLITZER: In fact, we heard from his outgoing defense secretary, Donald Rumsfeld, over at the Pentagon, and he certainly signaled he doesn't want to see that kind of change, at least the change that you and other critics would like to see.

Listen to what Rumsfeld said.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, SECRETARY OF DEFENSE: I can't think of a thing that anyone's thought of that General Pace and General Abizaid and those folks have not been working on and analyzing and studying and adjusting to over time. And we have every chance in the world of succeeding in both those countries, but only if we have the patience and only if we have the staying power.

(END VIDEO CLIP)

BLITZER: All right, what do you make of that?

He wants patience.

DURBIN: You know, that's the reason why I'm glad that Secretary Rumsfeld has decided to end his public career. We really need a new approach. What we heard from him in his closing comments is consistent with what he said before. It means if he would have stayed in that job, we would just expect more of the same.

Now we're hoping that the president, who made a decision to change that secretary, will also make a decision to change the course. Only the president, as commander-in-chief, has the power to make that decision.

BLITZER: We heard a very emotional, dramatic statement on the Senate floor last night from Republican Senator Gordon Smith.

I want to play a little clip for you, Senator Dick Durbin, and we'll talk about it afterward.

(BEGIN VIDEO CLIP)

SEN. GORDON SMITH (R), OREGON: I, for one, am at the end of my rope when it comes to supporting a policy that has our soldiers patrolling the same streets in the same way, being blown up by the same bombs, day after day. That is absurd. It may even be criminal.

I cannot support that anymore.

(END VIDEO CLIP)

BLITZER: You've known Senator Smith for some time. When he uses the word criminal, I haven't heard you use the word criminal. I haven't even heard John Murtha, a top critic in the House of Representatives, use the word criminal.

But what do you make of this?

DURBIN: First, let me say something about Gordon Smith, my Republican colleague from Oregon. He is widely respected. He's a thoughtful man. He's an independent thinker. I know that what he read on the Senate floor is something he personally wrote. I actually went up to him ahead of time. I didn't know the topic of his speech and I saw that he had written it out in his own hand.

It came from the heart. And when he says that he believes this must come to an end, I know it's heartfelt. And when he says that it's gone beyond the limit of making a bad policy decision, I think he's right.

You know, we thought that perhaps the 3,000 soldier, American soldiers to die in Iraq wouldn't occur until after January 1st, but at the pace that we're losing American soldiers in December, sadly, it may happen sooner.

BLITZER: So, Senator, is it all over? Should the U.S. simply cut its losses and get out of there and try to prevent more Americans from dying?

DURBIN: We ought to follow the Iraq Study Group. These 10 wise men and women who sat down, five Democrats and five Republicans, gave us a good strategy. They gave us a good course. It really would start bringing American soldiers out of Iraq, redeployed and on their way home. It would put a burden on the Iraqis to stand up and defend their own country, to get their government in shape. And it would open up new diplomatic channels.

I think it is a thoughtful recommendation. I'm sorry the Bush administration has not embraced it.

BLITZER: We've got to leave it right there.

Senator Dick Durbin, thanks very much for coming in.

DURBIN: Thank you, Wolf.

BLITZER: And still to come, Donald Rumsfeld speaking candidly about his tenure over at the Pentagon and about the war that ultimately led to his resignation.

Plus, he's a former president and Nobel Peace Prize winner.

So why are critics now accusing Jimmy Carter of bias when it comes to the Middle East?

The controversy over his new book. There are new developments today.

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

(COMMERCIAL BREAK)

BLITZER: It was candid and emotional -- the outgoing defense secretary, Donald Rumsfeld, saying good-bye to Pentagon employees in a town hall meeting today. He spoke of both his highs and lows and the troubled war that led to his resignation.

Let's turn to our senior Pentagon correspondent, Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Wolf, the formal sendoff for Donald Rumsfeld will be a week from today, with all the military honors that you would expect. But today was a chance for Rumsfeld to say good-bye to the Pentagon, and for some of the employees here to say good-bye to him.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): Donald Rumsfeld's final Pentagon town hall meeting was sprinkled with some classic Rumsfeldian moments.

UNIDENTIFIED FEMALE: Mr. Secretary, how do you want history to remember you?

RUMSFELD: My goodness. Better than the local press.

MCINTYRE: Rumsfeld was greeted with a standing ovation as he entered the Pentagon auditorium for his swan song. And he exits the stage unbowed and unapologetic for what his critics say were serious missteps and misjudgments, particularly about Iraq.

RUMSFELD: I wish I could say that everything we've done here has gone perfectly. But that's not how life works, regrettably.

MCINTYRE: Rumsfeld was the briefingest defense secretary ever, with more than 600 media appearances. Despite his frequent complaints about news coverage, he tossed a bouquet to the Pentagon press corps on this way out.

RUMSFELD: As a group, they may well be, year to year, the most professional press corps in the Washington, D.C. area. Now, considering the competition, I'll leave it to you to determine exactly what kind of a compliment that is.

MCINTYRE: Regrets?

He has a few.

RUMSFELD: You know, clearly the worst day was Abu Ghraib and seeing that -- that what went on there and feeling so deeply sorry that that happened. And I guess my best day, I don't know, may be a week from Monday.

MCINTYRE: That's when Robert Gates takes over and Rumsfeld retires, perhaps to write a book.

RUMSFELD: I have never written a book. I always thought I was too young to write a book. I can't use that anymore. I might. I might. I'll have to think about it.

MCINTYRE: He wrapped up his hour long session with an impassioned plea not to throw in the towel on Iraq and warning that pulling out U.S. troops precipitously would be a terrible mistake.

RUMSFELD: But, by golly, it -- something important isn't easy and this isn't easy. And by golly it's important and we'd better do it right.

(END VIDEOTAPE)

MCINTYRE: When he leaves office on the 18th of this month, he'll be two weeks shy of being the longest serving defense secretary ever, a distinction that will still be held by Robert McNamara, who, like Rumsfeld, also left after presiding over an increasingly unpopular war -- Wolf.

BLITZER: All right, Jamie, thank you.

Jamie is at the Pentagon.

Coming up, a former top adviser to Jimmy Carter speaking out, making serious allegations about the former president's new book and bias when it comes to Israel and the Palestinians. We'll tell you what's going on today.

Plus, an exclusive report from a remote battleground in the war on terror. Barbara Starr has been there. She'll report.

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

(COMMERCIAL BREAK)

BLITZER: And to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time.

Happening now, the House Ethics Committee releasing its report on the Mark Foley scandal, saying there's no evidence Republican leaders or their aides violated any rules in their handling of the former Congressman's explicit e-mails to male pages. But it also says the leadership was, in fact, negligent for not protecting the young men and that some individuals appeared to remain willfully ignorant of the situation.

Also, President Bush focusing in on the war in Iraq with a series of meetings scheduled next week in the wake of this week's report that repudiates his handling of the war. The president will huddle with State Department officials, outside expects, military leaders on the ground in Iraq, as well as senior defense officials over at the Pentagon.

And Secretary of State Condoleezza Rice skeptical about a key recommendation by the Iraq Study Group that the U.S. seek help from Iran and Syria to stabilize Iraq. Rice says if those two nations truly want to help, they will act on that because, in her words, it's in their interests.

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

Former President Jimmy Carter is responding to the controversy flaring over his new best seller on the Middle East. A long time associate has now resigned in protest, calling the book one sided and inflammatory. President Carter says he's not anti-Israel, he's simply he says trying to spur the peace process forward.

Let's turn to our Brian Todd, he's watching this controversy unfold -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, the former president has said he wanted his new book to be provocative. He may not have counted on this.

(BEGIN VIDEOTAPE)

TODD (voice-over): A former president, now stands accused of taking sides, by some of those who worked closest with him on Middle East peace. Among Jimmy Carter's critics, Emory University Professor Ken Stein, who just resigned as a Carter Center fellow. He tells CNN Carter's new book, "Palestine Peace not Apartheid" distorts history.

KENNETH STEIN, RESIGNED FROM CARTER CENTER: I don't believe that a former president of the United States has special privilege or prerogative to write history and perhaps invent it.

TODD: What is your problem with this title, "Palestine Peace not Apartheid"?

STEIN: There's too much emotion in the Arab-Israel conflict already and I think this adds heat rather than light. When you use the word apartheid, what you're doing is you're saying that what Israel is doing to the Palestinians in the territories is equivalent to what happened to the blacks in South Africa.

TODD: President Carter claims he's not insinuating that Israel is perpetrating racial apartheid, but...

JIMMY CARTER, FORMER PRESIDENT OF THE UNITED STATES: Israel has penetrated and occupied, confiscated and colonized major portions of the territory belonging to the Palestinians.

TODD: As for the inaccuracies Stein alleges are in the book, most deal with dates or events. Carter says he fact checked the book with a prominent Middle East journalist and an Emory University history professor who also works at the Carter Center. But Stein also suggests Carter took material without attribution.

STEIN: Two of the maps that appear on page 148 of the book are very similar, are incredibly similar, to two maps that appeared in Dennis Ross' memoir, "The Missing Peace."

TODD: But Stein is clear, he is not accusing Jimmy Carter of plagiarism. As for the former president?

CARTER: My maps came from an Atlas that's publicly available.

(END VIDEOTAPE)

TODD: We tried to contact the firm that Carter says he got those maps from, it's called the Applied Research Institute in Jerusalem to see if they got those maps from Dennis Ross. We were unable to reach that company. A spokeswoman for President Carter's publisher, Simon and Schuster, says they are tracking all of these accusations, but they stand by the president's book -- Wolf.

BLITZER: Brian, thank you for that. And as Brian just reported, Professor Stein at Emory suggests the former president's book contains several maps that are extremely similar to those in a memoir by a top veteran of Middle East policy.

And joining us now is Dennis Ross, he's the former chief U.S. Middle East negotiator. He's the author of "The Missing Peace, The inside Story of the Fight for Middle East Peace." An important book on the subject. Dennis thanks very much for coming in. So who is right, the former president of the United States, Jimmy Carter, or Ken Stein who worked with him for a long time, a man you know quite well?

DENNIS ROSS, AUTHOR, "THE MISSING PEACE": Well, look, I'm not going to get into a debate over who is right, other than to say that in terms of what I have seen from the book, and I have to be clear, I haven't read the book, but I looked at the maps.

BLITZER: You haven't read "Palestine Peace not Apartheid"?

ROSS: I haven't had a chance to read it yet, but I looked at the maps and the maps he uses are maps that are drawn basically from my book. There's no other way they could -- even if he says they come from another place. They came originally from my book. BLITZER: We're going to put them up on the screen on the wall behind you. But the whole notion, what's the big deal if he lifted maps from your book and put them in his book?

ROSS: You know, the attribution issue is one thing, the fact that he's labeled them as an Israeli interpretation of the Clinton idea is just simply wrong. The maps were maps that I created because at Camp David and then with the Clinton ideas, we never presented maps, but we presented percentages of withdrawal and we presented as well criteria for how to draw the lines. So after I left the government, when I wrote this book, I actually commissioned a mapmaker, to take those and produce them for the first time.

BLITZER: And then he put virtually the same map in his book without saying this came from you. I want you to listen to what he said specifically about this. Listen to this.

(BEGIN VIDEO CLIP)

CARTER: I've never seen Dennis Ross' book. I'm not knocking it, I'm sure it's a very good book, but my maps came from an atlas that's publicly available. And I think it's the most authentic map that you can get.

(END VIDEO CLIP)

BLITZER: You heard his explanation how-- would you say your maps wound up in his book.

ROSS: Well, the reality is the place he got it from, had to get it from mine. I published it before, number one. Number two, you would think that if you wanted to write about the facts of what went on, you would go to a book where a participant actually wrote them and then developed the maps in light of what we had put on the table. Now, again, if the purpose is to say, you're presenting facts, then you should present facts. To say that his map is an Israeli interpretation of the Clinton ideas is simply not true. These were the Clinton ideas. If he were to say that...

BLITZER: On that point, he's told me that he understands better what happened at Camp David, where you were one of the principal negotiators, than the former president himself. I want you to listen to this exchange that we had the other day, right here in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

CARTER: I hate to dispute Bill Clinton on your program, because he did a great and heroic effort there. He never made a proposal that was accepted by Barak or Arafat.

BLITZER: Why would he write that in his book if he said Barak accepted and Arafat rejected it?

CARTER: I don't know. You can check with all the records, Barak never did accept it. (END VIDEO CLIP)

ROSS: That's simply not so.

BLITZER: Who is right, Jimmy Carter or Bill Clinton on this question which is so relevant as to whether or not the Israelis at Camp David at the end of the Bill Clinton administration accepted the proposals the U.S. put forward?

ROSS: The answer is President Clinton. The Israelis said yes to this twice, first at Camp David, there were a set of proposals that were put on the table that they accepted. And then were the Clinton parameters, the Clinton ideas which were presented in December, their government, meaning the cabinet actually voted it. You can go back and check it, December 27th the year 2000, the cabinet voted to approve the Clinton proposal, the Clinton ideas. So this is -- this is a matter of record. This is not a matter of interpretation.

BLITZER: So you're saying Jimmy Carter is flat wrong.

ROSS: On this issue, he's wrong. On the issue of presenting his map as an Israeli interpretation of the Clinton ideas, that's simply not so.

BLITZER: What about this issue that is part of the title of his book that Israel in effect has created an apartheid on the West Bank in the Palestinian territories?

ROSS: You know obviously I disagree with that. You know I would, as a general point, Wolf, I would say everybody's entitled to their own opinion. They are not entitled to their own facts. One of the reasons I wrote this book was to lay out what had actually happened. We live in a world, especially in the Middle East, where part of the reason we have a conflict is because we have mythologies and you can't reconcile the mythologies. You want to make peace, you have to reconcile to reality.

BLITZER: The -- and when I interviewed him, he said he hopes this book does spark a serious debate. Earlier today, though, he says that U.S. politicians, the news media are intimidated by the Israel lobby in the United States and they really don't speak out forcefully on the Palestinian question. Listen precisely to what he said.

(BEGIN VIDEO CLIP)

CARTER: There's a tremendous intimidation in this country that has silenced our people, and it's not just individuals, it's not just folks that are running for office. It's the news media as well.

(END VIDEO CLIP)

BLITZER: What do you say to that charge, that's a very serious charge.

ROSS: Well, has it silenced him at this point or did it silence him up until now? Are we to presume that everything he has said up until today was a function of intimidation and now he's not intimidated?

BLITZER: So your bottom line on his book, "Palestine Peace not Apartheid", because it is sparking a lot of controversy out there.

ROSS: My bottom line is if you put something in here that I can see without question is not what the reality was, not what the fact was, that is in a sense, helping to promote a mythology, not a fact. I can -- look, we have to understand a certain history here. President Carter made a major contribution to peace in the Middle East. That's the reality.

BLITZER: In 1978 and '79, the Camp David Accords.

ROSS: And the Egyptian/Israeli Peace Treaty, there's no question about that. I would like him to meet the same standard that he applied then to what he's doing now.

BLITZER: Dennis Ross, thanks very much for coming in.

ROSS: You're welcome.

BLITZER: And still to come, is one of America's closest Arab allies actually working against the U.S. in Iraq. We'll have details of some disturbing allegations about Saudi Arabia and the insurgency.

And CNN Pentagon correspondent Barbara Starr with an exclusive report from Ethiopia, how the war on terror is unfolding in a remote corner of Africa. You're going to want to see this. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In one of Washington's -- is one of Washington's closest Arab allies actually helping to bankroll the chaos that's threatening to derail the U.S. military mission in Iraq? Let's turn to our justice correspondent, Kelli Arena -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: You know Wolf, there's been a lot of discussion about the Iraq Study Group report. Now one thing that's been tucked away and rarely heard about is a reference to Saudi Arabia and a suggestion that Saudi citizens are actually helping to fund the Iraqi insurgency.

(BEGIN VIDEOTAPE)

ARENA (voice-over): Saudi Arabia, the Sunni-dominated kingdom, has for decades been a close ally of the United States. And, yet, the Iraq Study Group says that money from Saudi citizens is funding the Sunni insurgency in Iraq, which has contributed to the loss of nearly 3,000 American lives.

KENNETH POLLACK, SABAN CTR., BROOKINGS INST.: We've had consistent reports over the past 18 months from a variety of different sources, indicating that the Saudis have been providing some degree of support to a variety of different Sunni groups inside of Iraq. ARENA: Whether those Saudis know where their money is going is a matter of some debate. Saudi citizens and Muslims in general, for that matter, give a lot of money to charity.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: The Saudi government is quite attentive to trying to ensure that the flows of private money outside from Saudi Arabia to outside groups actually get to those for whom they are intended and that they aren't diverted to other kinds of purposes. For example, army insurgents aiding terrorists groups.

ARENA: But some experts suggest the Saudi government may not be as aggressive in that mission as the U.S. would like and argue it has a reason to take sides.

POLLACK: They are terrified that Iraq is going to fall into civil war. They are terrified that that civil war will spill over into Saudi Arabia. But they are also terrified that the Iranians backing the various Shia militias in Iraq will come up a big winner in a civil war.

ARENA: The Saudi government says it's not for the Sunnis or the Shia but for a unified and stable Iraq.

(END VIDEOTAPE)

ARENA: Now, unfortunately this is all very murky. Officials say that it's very difficult to track where the money is coming from. They say cash is actually carried in by courier across that very porous Iraqi boarder leaving no electronic trail -- Wolf.

BLITZER: Kelli thank you for that. Kelli Arena reporting. Let's check in with Lou Dobbs to see what's coming up right at the top of the hour -- Lou.

LOU DOBBS, CNN ANCHOR: Wolf thank you. Coming up at 6:00 p.m. eastern here on CNN, President Bush struggling to respond to the rising pressure to change policy in Iraq. Will the president change direction or stay the course? Three of the country's best political analysts join us. Also, new evidence tonight that corporate America's determination to export middle-class job to cheap overseas labor markets may be a strategy of failure. We'll have that report.

And the culture of corruption has been spreading rapidly not only Washington, D.C., but local and state government as well. The FBI reporting the number of government corruption cases has risen by 30 percent over the past four years. Is that an underestimate? We'll have that special report and a great deal more at the top of the hour. Please join us. Wolf, back to you.

BLITZER: Thank you very much for that, Lou. We'll be watching.

Still ahead, our Pentagon correspondent Barbara Starr with an exclusive report from Ethiopia. How the war on terror is unfolding in a remote corner in that continent.

Also, the Iraq Study Group issued an unprecedented blunt assessment of the Bush administration's policy in Iraq. We'll take a hard look at what the unstinting criticism could mean for the rest of President Bush's final term in office. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: President Bush says Iraq is a key battleground in the war on terror, but it's certainly not the only one. Right now, U.S. anti-terror efforts are under way in some surprising places. Our Pentagon correspondent Barbara Starr has this CNN exclusive.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, here in this remote corner of Ethiopia, we have found U.S. troops and a small corner of the war on terror.

(BEGIN VIDEOTAPE)

STARR (voice-over): It is a heart-stopping moment. A U.S. soldier surrenders his weapon to an Ethiopian commando. But, of course, this is a field exercise. Deep in western Ethiopia, about 30 U.S. soldiers are training this Ethiopian commando unit in anti- terrorism and infantry operations. This is all aimed at giving Ethiopia an improved capability to defend its borders at a time of rising tension in this region.

The U.S. soldiers act as the enemy force. The Ethiopian troops call to each other to plan their counterattack. As they move through the grass, the young troops are learning how to work as a team. The U.S. trainers are from a National Guard unit in Guam. Here, two different cultures, but a common understanding.

SGT. LEIF QUINENE, ARMY NATIONAL GUARD: I see a lot of motivated soldiers here. They want to learn so they can protect their country.

STARR: This commando training may be put to use sooner than anyone expects. Ethiopia is sending thousands of troops to its southern border with Somalia, many here believe the two countries are headed for war over a long-standing border dispute. The training here is a sign of which side the U.S. is already backing.

(END VIDEOTAPE)

STARR: But the U.S. troops here are also training these young Ethiopian soldiers in very basic skills, like looking after each other on the battlefield -- Wolf.

BLITZER: Barbara Starr doing some exclusive and excellent reporting for us from around the world. Barbara, thank you.

Carol Costello is joining us with a closer look at some other stories making news. Carol?

COSTELLO: Hi Wolf, hello to you. I told you about that police investigating that shooting in downtown Chicago. Well, I have an update for you now. They say, quote, "The situation is over." Chicago television station WLS reports the situation is secure now, but three people were shot, two of them are in critical condition. The Chicago Fire Department says the incident happened on the 38th floor of the Citigroup Center just west of the Chicago River. Once more details are available, of course, I'll pass them along to you.

From Rockford, Illinois, news today that a 22-year-old man has been arrested and charged with plotting an attack on a shopping mall. An FBI-led anti-terrorism task force says Derrick Shareef planned to set off several grenades in garbage cans inside the mall. A task force spokesperson said they were alerted to Shareef's intentions several months ago. Says the public was never in imminent peril.

President Bush called Jeane Kirkpatrick a powerful intellect who helped America win the Cold War. Kirkpatrick died yesterday. She was the first female U.S. Ambassador to the United Nations under President Ronald Reagan. Kirkpatrick was a staunch anti-Communist conservative who began as a Democrat but later switched to the Republican Party. Jeane Kirkpatrick was 80 years old. A look at the headlines right now -- Wolf.

BLITZER: Knew her, covered her, she was an excellent, excellent woman. My deepest condolences, all of our deepest condolences to her family and friends. Thanks very much, Carol, for that.

Up ahead, the Iraq Study Group's report, more than just a roadmap for the way forward. Some say it's a slap in the face. Our Frank Sesno standing by. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's bring in our CNN special correspondent Frank Sesno. Frank, what a week this has been.

FRANK SESNO, CNN SPECIAL CORRESPONDENT: It really has. A pivot point really. And this Baker-Hamilton report in many ways, a sweeping critique of the Bush presidency.

(BEGIN VIDEOTAPE)

BUSH: I will take it very seriously and we will act on it in a timely fashion.

SESNO (voice-over): Little wonder the president is keeping his distance from the Iraq Report, it's a buzz saw right through his presidency. On the line and between the lines, it disputes just about everything he's fought and stood for in foreign policy. In Iraq, it says, things are grave and deteriorating. But it goes much deeper.

The report effectively says the driving neo-conservative belief that America can bring democracy to the Mideast through the projection of raw power was just wrong. The ability of the United States, the authors write, to influence events inside Iraq is diminishing. And by saying the war hasn't worked, the report all but says the Rumsfeld doctrine hasn't worked.

A cornerstone in both Afghanistan and Iraq, Rumsfeld's approach was fewer troops, a smaller footprint, get in and get out fast. And when things bogged down, stay the course. But the facts on the ground are dire, the report says. And making no changes would simply delay the day of reckoning.

The president says he's read it, but it couldn't have been fun. It openly rejects another key piece of his world view that rogue regimes, in this case Iran and Syria, should be isolated, intimidated, ignored, unless they change. Baker, Hamilton and company are realists. They say you have no choice but to do business with your adversaries. The Iraq Study Group is hardly perfect.

Only four days in Iraq, barely a peek outside the green zone, and no one on board who served, fought, or commanded there. But that sound you heard in Washington this week was the sound of a buzz saw. And it sliced right through more than three-and-a-half years of hope and history.

(END VIDEOTAPE)

SESNO: Three and a half years of hope and history, Wolf, and there's been a lot of -- unfair criticism, I think, of the Iraq Study Group. You know really do business with Syria? Really do business with Iran? Pull the combat troops out? How does that bring order out of chaos? But change is on the way, that's what Bob Gates is all about. But no one knows is whether any of it will work.

BLITZER: You spent a lot of time with Donald Rumsfeld, you did that excellent documentary for CNN Presents. You get the sense watching him today that he's broken at least in spirit to at least a certain degree over the outcome of this. It wasn't supposed to end this way for him.

SESNO: It wasn't supposed to end this way. And he really looked dispirited. His words were the same, he thinks ultimately they'll be borne out, that the American people will do the right thing and these decisions will be looked on in history in a positive way as having contributed to peace in the Middle East. But his spirit, his sound is very different as it should be.

BLITZER: Frank, thanks very much for coming in. Frank Sesno, thank you. And that's it for us. We're going to be back in one hour, 7:00 p.m. eastern. A lot more coming up in THE SITUATION ROOM. Meantime, let's go to Lou in New York -- Lou.

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