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President Bush At The Pentagon Meeting With Senior Pentagon Officials; British Police Hunting For Possible Serial Killer; Concern By Sunni Leaders in Middle East That U.S. Pullout In Iraq Could Deteriorate Situation Further; World Awaits Scotland Yard Report On Princess Diana's Death

Aired December 13, 2006 - 14:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Hello, everyone. I'm Kyra Phillips at the CNN world headquarters in Atlanta.
DON LEMON, CNN ANCHOR: And I'm Don Lemon.

The president's at the Pentagon. In just a few minutes we expect to hear his latest thoughts on a way forward in Iraq.

PHILLIPS: Strong ties and strong disagreements. The Saudis make their feelings known about what happens next in Iraq.

LEMON: And leave it to Devo (ph). A heckled singer hits a sour note at La Scala.

Don't you head for the exits. We're just warming up, live right here in the CNN NEWSROOM.

Top brass at the Pentagon getting down to brass tacks on Iraq. President Bush is on the latest leg of his listening tour, and we're expecting to hear from him in just a few minutes.

Let's go to our senior Pentagon correspondent, Jamie McIntyre, for more -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Don, President Bush arrived here for his meeting with the top military brass, the chairman of the Joint Chiefs and the rest of the Joint Chiefs. The White House has released a photograph showing the meeting.

We can see in the photograph the national security adviser, Stephen Hadley, Vice President Dick Cheney, President Bush. And then outgoing defense secretary, Donald Rumsfeld, and the new defense secretary to be sworn in next week, Robert Gates. And they are going over the recommendations and some of the options that are being advanced by senior military leaders here at the Pentagon.

Among the things on the table is a discussion of whether or not the president ought to go against the advice of the Iraq Study Group and some of its own military commanders and dispatch a sizable additional force of U.S. troops to Iraq to try to bring the violence down so that a peace accord of some kind can take hold, the unification they are talking about that's so necessary in Iraq to move things forward. And there is real debate about that.

As I said, some of his own commanders say that more troops are not necessary, more U.S. troops are not necessary. But he also has heard advice from some retired military leaders and some outside experts who say the real -- the only real chance for success in Iraq is to have that large infusion of troops.

So it's one thing that President Bush is going to have to sort out, but he's getting a lot of conflicting advice. One reason, perhaps, that he has put off any decision on a new strategy for Iraq until next year -- Don.

LEMON: And the president has said that he would not necessarily take into account everything in this report, but just from the people in this room today and the meeting, does it show any indication, do you think, Jamie, that he may be taking the Iraqi Study Group -- the Iraq Study Group's report more seriously?

MCINTYRE: Well, you know, I think that the administration is taking the report very seriously. But they're also looking at all the options, and they're hearing today not just what the military thinks about what ought to be done in Iraq, but also what the chiefs think about the Iraq Study Group recommendations, which parts they think are worth pursuing and which parts they might have some questions about.

So it's all part of this deliberative process, and it's just going to take some time for the president to sort through it.

LEMON: Jamie McIntyre, thank you.

And we want to remind our viewers that we're expecting to hear from the president shortly, about 2:15. So as soon as that happens we'll bring it to you right here in the CNN NEWSROOM.

PHILLIPS: Can Iraqi security forces really turn the tables and take the lead? We're getting word they want to try, and soon.

Our senior international correspondent, Nic Robertson, has the latest now from Baghdad -- Nic.

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Well, Kyra, Iraq's national security adviser said that two weeks ago, when the prime minister, Nuri al-Maliki, met with President Bush in Jordan, he presented him with a plan that Iraqi security forces could take the leader for security in Baghdad, allowing U.S. troops to provide backup, but also at the same time pull out of the city. Now, the national security adviser said that this could happen as soon as the very near future, perhaps by the end of the year.

I was with Iraqi troops today to the west of Baghdad. And in that area they really did have only a very small handful of U.S. military advisers. But that is atypical for what's happening in Baghdad. There are other areas where there are intense sectarian divisions and infighting at the moment that's been flaring, particularly over the weekend and the past few days. There, a spokesman for the ministry of defense here said that the tensions were at boiling point and the military was too stretched to deal with it. And in the east of the city, in the Shia suburb of Sadr City, where there are 2.5 million people and the armed Mehdi militia essentially run that massive sprawling suburb, I spoke to an Iraqi army commander there, and I said, "Could you take control right now of that armed suburb?" And he said, "No, absolutely not."

So this plan is calling into question at least some military officials here in Baghdad, whether or not the Iraqi army is in a position to really do that and take control and lead for security in the whole of the city. No doubt, in some small areas they're essentially doing that. But across the whole city there are questions there -- Kyra.

PHILLIPS: Well, now we've been talking about the four U.S. senators in Baghdad. And we always question what kind of access they get, what kind of conversations they're having, how safe it is, and how long they actually stay. Can you tell us any details about their trip and how effective it could be?

ROBERTSON: Well, they do have very, very top security. They would be a prized target for insurgents or militias right now, senators McCain and Lieberman, Collins, Graham. And they met with Ambassador Khalilzad and got his assessment of the situation, but they also met with Iraq's prime minister, and that was perhaps one of their more telling meetings today.

There has been a lot of speculation about the prime minister here, is he in, is he out, is there a new political alliance that will try and oust him. President Bush says that he backs Nuri al-Maliki, that he's the man right now.

The prime minister told the delegation about his national reconciliation conference coming up next weekend, a plan, he says, to broaden the political base, bring in some of the disenfranchised groups, like the Sunni groups, perhaps even talk to those who have been involved in violence in the past who have reconciled their ways. He told them that he wanted to disarm the militias in the city.

These are all very, very big plans. He told them that he wanted to rebuild some of the country.

But there are serious questions over his ability to succeed and whether or not even this national reconciliation conference will really get off the ground in a significant way. There have been some meetings this week that indicate it might, but in the broad spectrum, nobody here is really holding their breath that this reconciliation conference that he told the senators about is really going to be a panacea for all of Iraq's problems right now -- Kyra.

PHILLIPS: All right. Nic Robertson live from Baghdad.

Thanks.

LEMON: Sunni versus Shia, a sectarian battle line in Iraq but a divide through much of the Middle East. And now potentially a flash point.

Saudi Arabia is said to be warning Washington it might take sides in Iraq if American troops pull out before the crisis is fully resolved. Reportedly, in a worst-case scenario, the Saudis would "intervene aggressively" on behalf of Iraqi Sunnis to prevent their being massacred by Iraq's Shiite majority.

A source tells CNN Saudi King Abdullah said as much to Vice President Cheney two weeks ago when Cheney made a sudden visit to Riyadh. A close look now at Iraq's neighbors and how they split along sectarian lines.

Most Muslims in Iran are Shiites, but Sunnis are in the majority in Saudi Arabia, Saudi and Jordan. We'll hear from Robert Jordan, former U.S. ambassador to the kingdom of Saudi Arabia, ahead in the CNN NEWSROOM.

PHILLIPS: "Total fear," one woman's term for the mood in Ipswich, England, where police are on the hunt for a possible serial killer. Five bodies found in 10 days. The latest just yesterday.

ITN's Juliet Bremner reports.

(BEGIN VIDEOTAPE)

JULIET BREMNER, REPORTER, ITN (voice-over): Still lying where they were dumped by the killer, the bodies of two more women, almost certainly missing prostitutes Paula Clennell and Annette Nicholls. They're just 150 yards apart.

Police believe that they were murdered somewhere else and then left in the undergrowth. When they were found, a moment filmed exclusively by ITV News, this area hadn't been searched, even though it was just a mile from the woods where the third body was discovered.

DET. CHIEF SUPT. STEWART GULL, SUFFOLK POLICE: We haven't found what appear to be murder scenes. What we are dealing with appear to be deposition sites. This is where the bodies have been dumped and left. So, clearly, we are still looking for murder scenes.

BREMNER: Detectives issued a new picture of Anneli Alderton today. Like all the other victims, she was naked.

One of the priorities of the forensic teams is to recover any of the clothing. They need to try and establish what happens between the time that the women disappeared and their bodies being found.

GULL: I do know that a number of the prostitutes do operate off streets, and it may be that they've arranged to meet a client, borrow a phone, and gone to meet them away from the red light district. So again, you know, we need to keep an open mind as to whether where they've been abducted from or where they got into a car willingly.

BREMNER: In the space of 15 hours yesterday, Suffolk police took more than 2,000 calls. Now a reward of a quarter million pounds has been offered by a national newspaper. STUART KUTTNER, MANAGING EDITOR, NEWS OF THE WORLD: Yes, they were prostitutes. Yes, they were sex workers, or whatever, you know, the current term is. But they were human beings first, and last. And that's -- you know, that's the attitude of the police, and that's certainly the attitude at the "News of the World."

BREMNER: Although three more women were reported missing overnight, all have been found well. What Suffolk police needs now is a breathing space.

Juliet Bremner, ITV News, Ipswich.

(END VIDEOTAPE)

PHILLIPS: One of the women feared dead in Ipswich spoke with a British journalist just last week after the first three bodies were found and just before she herself vanished.

Here's 24-year-old Paula Clennell.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Why have you decided to come out tonight?

PAULA CLENNELL, WAS MISSING: Because I need the money. I need the money. You know?

UNIDENTIFIED MALE: Despite the dangers?

CLENNELL: Well, that has made me a bit weary about getting into cars. You know?

UNIDENTIFIED MALE: But you will do that tonight?

CLENNELL: Well, probably.

UNIDENTIFIED MALE: Have you noticed that there's fewer men around?

CLENNELL: Yes.

(CROSSTALK)

UNIDENTIFIED MALE: Because of what's happened?

CLENNELL: And less girls.

UNIDENTIFIED MALE: And less girls?

CLENNELL: Yes.

UNIDENTIFIED MALE: Is that because the clients think that there's police around, I suppose?

CLENNELL: Probably. I don't know. I think the girls are probably weary about coming out now. UNIDENTIFIED MALE: And tell me about your own experiences. Have you had any...

CLENNELL: I've had a couple. A couple of nasty experiences. But not nowhere near as bad as what's -- you know.

UNIDENTIFIED MALE: Have you been beaten up or...

CLENNELL: Once.

UNIDENTIFIED MALE: And when you -- and when you hear what's happened, just tell me -- I'm trying to get...

CLENNELL: It makes you feel sick.

UNIDENTIFIED MALE: All right.

CLENNELL: It does. It makes me feel sick.

(END VIDEO CLIP)

PHILLIPS: Well, Clennell's father says that he didn't even know that she was working as a prostitute. He said he's going through hell right now.

LEMON: The president is still listening. And today Defense Department honchos are doing the talking about a way forward in Iraq.

We're expect to hear from Mr. Bush on military options this hour. Live coverage right here in the CNN NEWSROOM.

PHILLIPS: And lost on Mount Hood. Now facing another major storm. The latest on the search for three missing hikers.

(COMMERCIAL BREAK)

PHILLIPS: The president of the United States, waiting for him to step up to the podium. Waiting for him to make remarks with regard to senior officials that he's been meeting with today discussing the evolving U.S. strategy in Iraq. He's been on a listening tour, as we've been telling you about.

We'll talk about President Bush meeting with leaders there at the Pentagon. We'll take it live as soon as he steps up to the podium.

LEMON: And conditions are treacherous and getting worse, but that's not stopping rescuers at Oregon's Mount Hood. They've been scouring the slopes the past three days for three stranded climbers. Fresh teams have since joined that search and the two camps -- and two camps are being set up.

One of the missing men was in a snow cave the last time anyone heard from him. And he said the other two had left to go get help. Rescuers also note they can only search so high.

(BEGIN VIDEO CLIP) CAPT. CHRIS BERNARD, 304TH RESCUE SQUADRON: We realize we have a ceiling at about 7,000 feet with weather and conditions that just -- man and machine are at their limits there. So that -- that's the rescue that we want to do. That's the -- you know, what we've been attempting now is trying to get through up there, get to that known point where we had that cell phone call.

We can't get there. So what we're doing is we're going to focus on the search. And we're going to look for those -- the other two missing climbers, and our resources are going to go to the lower elevations and search what we can and put mass effort into that.

(END VIDEO CLIP)

LEMON: Relatives of all three climbers are at the mountain saying they're holding strong and that rescue efforts have given them hope.

PHILLIPS: Behind bars. Jeffrey Skilling has begun serving his 24-year prison sentence for fraud and conspiracy.

The former CEO of Enron had hoped to stay free on bail while appealing his conviction, but an appeals court judge turned him down and ordered Skilling to report to prison immediately. Skilling's new home is a far cry from Houston. The low-security federal prison is in Waseca, Minnesota.

LEMON: Who is ripping off Jack the Ripper in eastern England? Five women found murdered in the past two weeks. British police warn working girls to stay off the street while they search for the culprit.

We've got the latest.

PHILLIPS: And we're waiting to hear from President Bush. Today Defense Department honchos are doing the talking about a way forward in Iraq. We're expecting to hear from Mr. Bush on military options this hour.

Live coverage from the CNN NEWSROOM.

(COMMERCIAL BREAK)

LEMON: We're waiting to hear from President Bush today. He's meeting with Defense Department honchos, talking about a new way forward in Iraq. Expecting a news conference from him.

As you know, he's expected to make a decision and release some sort of statement on that report early January. As soon as his press conference happens, we will bring it to you live right here in the CNN NEWSROOM.

PHILLIPS: More snow today, more bitter whether tomorrow. The Northwest just can't seem to get a break, actually.

Rob Marciano, you've been tracking it all for us. ROB MARCIANO, CNN METEOROLOGIST: The second of three storms coming in today, Kyra. You're right about that, they can't get a break.

(WEATHER REPORT)

LEMON: A lot of firefighters, 3,000 strong, is the only thing standing between three small towns in southeast Australia and raging brushfires. About a million acres have burned in just one week across the island state of Tasmania and in Victoria.

The flames are fueled by high winds and tinder-dry brush, evidence of Australia's worst drought in more than a century. Soldiers and crews from neighboring New Zealand have joined the fight.

PHILLIPS: Here's how complicated that Russian spy mystery is getting. We now have questions about when Alexander Litvinenko was poisoned.

All along we thought that it happened at a meeting in London November 1st, but now two other Russians who were there are said to be disputing that. They are quoted in separate interviews as suggesting that the poisoning really took place two weeks earlier at another London meeting that all three attended. They also both deny, by the way, any involvement in Litvinenko's death.

LEMON: Opera becomes a soap opera at Milan's famed La Scala. A heckled tenor storms off stage and his understudy has to finish Aida in jeans. We're warming up our pipes for this one.

PHILLIPS: Also, changing course in Iraq. President Bush weighs the military options. We expect to hear from him live at the Pentagon this hour. We'll bring it to you.

(COMMERCIAL BREAK)

LEMON: Hello, everyone. I'm Don Lemon at the CNN world headquarters in Atlanta.

PHILLIPS: And I'm Kyra Phillips.

The singer stews as the audience boos. Then he leaves his understudy to take over in his jeans. It's opera as soap opera at La Scala. We promise to hit all the high notes on this one.

LEMON: Two more car bomb attacks in Baghdad today. At least 15 Iraqis killed, dozens wounded in violence targeting once again poor laborers in search of a day's work.

Just yesterday, a huge truck bombing killed 71 Iraqis, mostly day laborers. Also, today, two truck bombs killed seven Iraqi soldiers at their base near the northern city of Kirkuk.

PHILLIPS: President Bush needs a plan, but Iraqis already have one, at least for Baghdad. The government is planning for Iraqi forces to take the lead in securing the capital, pushing coalition troops to the edges to more of a supporting role. The prime minister's office says he briefed President Bush in their meeting last month in Jordan. Mr. Bush agrees Iraqis say they could act fairly quickly in the new year.

LEMON: There are a few more Americans in Baghdad today, and you might recognize them. Several members of Congress met with Prime Minister Nuri al-Maliki. They include Republican Senator John McCain and independent Democrat Joe Lieberman.

Now, as you may know, U.S. lawmakers have been pushing the Iraqi government to make more progress and to meet certain goals. Al-Maliki says the government is moving ahead with reconstruction and reconciliation.

The president is still listening, and today Defense Department honchos are doing the talking about a way forward in Iraq. We're expecting to hear from Mr. Bush on the military options this hour. We'll have live coverage right here in the CNN NEWSROOM.

PHILLIPS: The government is resisting calls to overhaul the nation's paper money to help the blind. Let's get details now from Susan Lisovicz. She's at the New York Stock Exchange.

(BUSINESS HEADLINES)

LEMON: If you step out, we might step in and take sides. That's Saudi Arabia's warning to Washington on the fight for Iraq. Details now from our Zain Verjee at State Department.

Hi, Zain.

ZAIN VERJEE, CNN STATE DEPT. CORRESPONDENT: Hi there, Don. There's a lot of concern by Sunni leaders and people in the Middle East that if there is a U.S. pullout in Iraq the situation is just going to deteriorate further.

It's also important to recognize that there is a huge amount of concern about Iran and the rise of the Shia groups in Iraq that would give Iran a bigger foothold in the region.

Now Vice President Dick Cheney had gone to Saudi Arabia and met with King Abdullah really to try and get support on getting the moderate element of the Sunnis in Iraq to come together and try and find some sort of political solution.

But one senior U.S. official tells CNN that in that meeting with the vice president, King Abdullah really read Dick Cheney the riot act saying it's the U.S.'s fault that the situation has gotten so ugly in Iraq, and he said, look, if the U.S. pulls out, Saudi Arabia is going to have no choice except to back the Sunnis in Iraq.

It was also made clear, too, that it wouldn't be backing the al Qaeda terrorist element in Iraq, which is largely Sunni, but backing the tribal Sunni leaders in Iraq. U.S. officials did acknowledge though to CNN that a lot of those tribal leaders, the tribal elements in Iraq, are part of the insurgency. One U.S. official that we spoke to here today said you know that is the Saudi view, but what that really does, it shows how high the level of anxiety is that the level of concern the Saudis have if they're left, quote he said, "high and dry" that the U.S. would pull out.

He said that the U.S. wanted to be reassuring here that that was not the case, that would not happen. The U.S. wants Saudi Arabia really to provide a stabilizing effect. He said a doomsday scenario of any U.S. withdrawal of troops from Iraq anytime soon is just not anticipated -- Don.

LEMON: Zain, is there a concern that all Sunni-Arab countries would support Sunnis in Iraq?

VERJEE: Well, it is important to understand and recognize that in most of the countries in the Middle East, they're actually majority Sunni and not Shia. And there is a huge concern about the growing influence of Iran and Iran really extending its hand in some sort of crescent in the region, increasing and influencing events in Iraq, having increased control and Shia power in Iraq.

Iran also has backed Hezbollah in Lebanon, has been a destabilizing force as well, backing Palestinian militant groups like Hamas in the Israeli-Palestinian conflict as well. And also, the U.S. accuses Iran of pursuing a nuclear weapons program. Iran has said no, that's not the case. We have a right to a nuclear program and we're really pursuing nuclear energy.

But those are all the reasons that there's a concern in the region, that Iran could be a destabilizing force. Also in a lot of the Sunni-Arab countries in the Middle East they have Shia minorities and many of those minorities complain of being oppressed by the governments in that region and there is a fear by Sunni Arab leaders that worthy influence and power of Iran to grow, that those Shia minorities in their countries could also be destabilized -- Don.

LEMON: Zain Verjee at State Department and from the State Department to the Pentagon we want to tell our viewers we are waiting on a press conference from President Bush. A statement about the way forward in Iraq. That's expected at any moment now. As soon as it happens we'll bring it to you live right here in the CNN NEWSROOM.

PHILLIPS: Missing prostitutes found murdered in eastern England. It wasn't enough to keep one young woman off the streets. Has she become another victim in the Ipswitch killing spree? We'll update you on the investigation.

(COMMERCIAL BREAK)

LEMON: CSI Ipswitch, England. A quiet town now deserted at night as police search for a possible serial killer. Five bodies have turned up in the past ten days -- all the victims women, all stripped naked, all believed to be prostitutes.

Police see striking similarities among the crime scenes and suspect a lone killer is at work. Local sex workers are terrified they'll be next.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: All the girls are very scared at the moment. You know they actually are, some of them are actually very petrified to come out to work. It is obviously horrible what he's doing and he must be local because he knows the area far too well.

(END VIDEO CLIP)

LEMON: Police know the cause of death for only one of the victims. Anneli Alderton had been strangled. Two bodies found yesterday have yet to be identified but police believe they're two missing prostitutes. Britain's prime minister is offering condolences to the young women's families.

(BEGIN VIDEO CLIP)

TONY BLAIR, BRITISH PRIME MINISTER: We support the police fully in dealing with the horror of this situation and also with the entirely understandable fear that there is in the community.

I'm sure the whole House of Commons would want to send its sympathy to the people of Ipswich, to the people of the County of Suffolk and most particularly, of course, to the family and friends of the victims.

And I can assure, my honorable friend, we'll do everything we can to support the police in the difficult and challenging work that they do and I have every confidence that they'll perform their task well.

(END VIDEO CLIP)

LEMON: A British tabloid is offering almost half a million dollars for information leading to the killer's arrest.

Princess Di and the American billionaire -- as the world awaits a Scotland Yard report on Diana's death almost a decade ago, more names and claims are being leaked to the British press.

CNN's David Mattingly has the latest.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT (voice-over): The British newspaper "The Evening Standard" says a much-anticipated Scotland Yard report on the death of Princess Diana will reveal that U.S. intelligence was bugging her phones because of a friendship with wealthy American financier and philanthropist Theodore Forstmann.

But former acting director of the CIA, and now a CNN analyst John McLaughlin believes the couple was not targeted for U.S. wiretaps.

JOHN MCLAUGHLIN, FORMER ACTING CIA DIRECTOR: Once this report comes out, in all likelihood, it will turn out that there are one or two possibilities. One is that this was a total garble and that there's nothing at all to it, or the other is that there is some rational and benign explanation for what has been reported.

MATTINGLY: A spokesman for Forstmann says the two were good friends. A source familiar with that friendship tells CNN Forstmann met Diana at a London party in the early '90s, as her marriage to Prince Charles was ending. The two became fast friends with the older Forstmann frequently acting as a confidante and an adviser.

But "The Evening Standard" also reports that U.S. intelligence raised security concerns and played a role in canceling a U.S. vacation Diana and Princes William and Harry planned to take at Forstmann's home in the Hamptons in the summer of 1997. The paper does not name its sources for the alleged surveillance of the couple, or suggest a reason. It is reporting could not be independently confirmed.

On Monday, the National Security Agency released a statement saying: "NSA did not target Princess Diana's communications."

MCLAUGHLIN: If her name appears in NSA files it's just in -- because she's referred to in some legitimate communication they were monitoring. It's conceivable that U.S. intelligence had an eye on someone that had a relationship with her, but it seems highly unlikely to me. It just doesn't make sense.

MATTINGLY: But even in the absence of fact or context, nine years after her death, Princess Di's life and her associations continue to generate intrigue and speculation. The introduction of the name Ted Forstmann, a high-profile billionaire with Republican connections, raises new questions and what-ifs for royal watchers like author Gerald Strober.

GERALD STROBER, ROYALS AUTHOR: He certainly is a very reputable, major businessman the United States. There would seem to be no reason whatsoever, other than perhaps the political reason, for the Clinton administration, to try to eavesdrop on his conversations.

MATTINGLY: The answers -- or perhaps, even more questions -- will come when the Scotland Yard report is released on Thursday.

David Mattingly, CNN, Atlanta.

(END VIDEOTAPE)

PHILLIPS: Live pictures from the Pentagon right now. Getting ready -- actually, it looks like we're getting a two-minute warning right now. President Bush met with the senior defense officials here at the Pentagon, continuing a discussion of evolving U.S. strategy for Iraq. That meeting is part of his effort just to round up a variety of opinions on the war since the Iraq Study Group was released, as you know, within the past week-and-a-half.

Bush had been expected to make a speech on a new direction in Iraq before the Christmas holiday, but now we are being told the White House has said that announcement has been postponed until next month.

Jamie McIntyre monitoring this also from the Pentagon. What do you think? Do you think that is a for-sure, Jamie, that even though he met with high-ranking military leaders there at Pentagon that he will not come forward and say, look, this is the new U.S. strategy for Iraq?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Oh, he's definitely not going to be announcing the strategy today. And it's not clear at all that they'd be -- how far they've gotten in really determining what the way ahead is. Presumably, President Bush got a good briefing from the members of the Joint Chiefs of Staff.

That's who you see standing at podium there: General Schoomaker, the Army chief of staff; Admiral Mullen, the chief of Naval operations; General Moseley, the Air Force chief; and the General Conway, the Marine Corps commandant. We are not seeing Peter Pace yet, the chairman of the Joint Chiefs, or Admiral Giambastiani who is the vice chairman. Presumably, they're still with the president.

But the whole purpose of this session today was not necessarily to give President Bush the answer to the problem in Iraq, but to discuss the options and to give him the benefit of their military advice.

It is the exercise that Peter Pace, the chairman of the Joint Chiefs, have been going through now since September of having a meetings in which the chiefs hash this all out and in which they brought in more junior officers, but officers with frontline experience. And now we see -- we see them...

PHILLIPS: We'll go ahead and take the president, Jamie.

MCINTYRE: OK, let's do that, yes.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ...Secretary of Defense Rumsfeld and the chairman of the Joint chiefs, Pete Pace, the Joint Chiefs of Staff, vice president -- I thank these men who wear our uniform for a very candid and fruitful discussion about the -- about how to secure this country and how to win a war that we now find ourselves in.

We spent a lot of time talking about a new way forward in Iraq to help the Iraqi government confront and defeat the enemies of a free Iraq. We all agree it is in our nation's interest that we help this government succeed.

We recognize that there are enemies that would like to topple this young democracy so they can have safe haven from which to plot and plan attacks against moderate nations in the Middle East, as well as attacks against the United States. It is in our interest that we help this government succeed.

There have been a lot of violence in Iraq and the violence has been horrific. Scores of innocent men, women and children are being brutally killed by ruthless murderers. Our troops are engaged in offensive operations, and we mourn the loss of life. We are saddened by the loss of every single life amongst our servicemen and women. Our folks are very active in Al Anbar and in Baghdad, which is where the enemy is concentrated. Our commanders report that the enemy has also suffered. Offensive operations by Iraqi and coalition forces against terrorists and insurgents and death squad leaders have yielded positive results. In the months of October, November and the first week of December we have killed or captured nearly 5,900 of the enemy.

While our enemy is far from being defeated, there should be no doubt in anybody's mind that every day and night the Iraqi government and our brave men and women of the armed forces are taking the fight to the enemy, that in spite of the fact that I am conducting a strategic review of the best way forward in Iraq, there are a lot of operations taking place, day and night.

Yesterday, the secretary and the vice president and General Pace and I were on the Civets (ph) with General Casey. And he talking about the hard work our troops and Iraqi troops are doing to defeat these enemies.

I do want to say something to those who wear our uniform. The men and women in uniform are always on my mind. I am proud of them, I appreciate their sacrifices, and I want them to know that I am focused on developing a strategy that will help them achieve their mission.

Oh, I know there is a lot of debate here at home, and our troops pay attention to that debate. They hear that I am meeting with the Pentagon or the State Department, or outside officials, that my national security team and I are working closely with Iraqi leaders, and they wonder what that means.

Well, I'll tell what you it means, it means I am listening to a lot of advice to develop a strategy to help you succeed. There is a lot of consultations taking place, and as I announced yesterday, I will be delivering my plans after a long deliberation, after steady deliberation. I'm not going to be rushed into making a difficult decision, a necessary decision to say to our troops, we're going to give you the tools necessary to succeed and a strategy to help you succeed.

I also want the new secretary of defense to have time to evaluate the situation so he can provide serious and deliberate advice to me. I do want our troops to understand this though: that this government and this group of military leaders are committed to a strategic goal of a free Iraq that is democratic, that can govern itself, defend itself, and sustain itself and be a strong ally in this war against radicals and extremists who would do us harm.

Secondly, that our troops deserve the solid commitment of the commander-in-chief and our political leaders and the American people. You have my unshakable commitment in this important fight to help secure the peace for the long-term.

I pledge to work with the new Congress to forge greater bipartisan consensus to help you achieve your mission. I will continue to speak about your bravery and your commitment and the sacrifices of your families to the American people. We're not going to give up. The stakes are too high and the consequences too grave to turn Iraq over to extremists who want to do the American people and the Iraqi people harm.

I thank you for your service. I'm proud to be your commander-in- chief. We'll honor the sacrifices you are making by making sure your children and grandchildren can grow up in a more peaceful world. God bless.

I'll take a couple of questions.

A.P. man?

QUESTION: Mr. President, thank you.

You've been gathering advice, as you said, from leaders here and from leaders in Iraq. As you've gone through that extensive process, have you heard any new ideas at all, anything that would change your thinking?

BUSH: I've heard some ideas that would lead to defeat. And I reject those ideas, ideas such as leaving before the job is done, ideas such as not helping this government take the necessary and hard steps to be able to do its job.

I've heard interesting ideas. I won't share them with you, because I want to make sure I continue to collect those ideas and put them together in a strategy that our military and the commanders and our national security team understands will lead to an Iraq that can govern and sustain and defend itself.

I put off my speech -- actually, I was quite flexible about when I was going to give my speech to begin with, but -- and one of the main reasons why is I really do want the new secretary of defense to have time to get to know people and hear people and be a part of this deliberation. And he will not be sworn in until next Monday.

I also -- one of the interesting things about this experience is that there's a lot of ideas and lot of opinions. And I want to make sure I hear from as many of those ideas and opinions as possible.

Today I heard from some opinions that matter a lot to me. And these are the opinions of those who wear the uniform. These generals have spent a lot of time thinking about this issue. There is nobody who cares more about our troops than they do and nobody who wants us to achieve more -- to achieve our objectives than they do.

And it was a fascinating discussion we had. These are smart people and capable people and people whose judgment I listen to. And at the appropriate time, I will stand up in front of the nation and say, here's where we're headed.

But one thing people got to understand is we'll be headed toward achieving our objectives. And I repeat: if we lose our nerve, if we're not steadfast in our determination to help the Iraqi government succeed, we will be handing Iraq over to an enemy that would do us harm. The consequences of which, of leaving Iraq before the job is done, for example, would be grave for the American citizens.

As we learned on September the 11th, the enemy has got the capacity to strike us. And there's no doubt in my mind a failure in Iraq would make it more likely the enemy would strike us. It would certainly make it more likely that moderate people around the Middle East would wonder about the United States' will.

Moderate people -- moderate governments in the Middle East would be making irrational decisions about their future. It would be a disaster for governments that have got energy resources to be in the hands of these extremists. They would use energy to extract blackmail from the United States.

And when you couple all that with a regime that doesn't like the United States having a nuclear weapon, you can imagine a world of turmoil. And we're not going to let it happen.

Karen?

QUESTION: You said you would reject plans that would lead to defeat. Would you put the Baker-Hamilton report in that category?

BUSH: No. My opinion of Baker-Hamilton hasn't changed. One, I appreciated their look. Secondly, I thought it was interesting that both Democrats and Republicans can actually work in concert to help achieve an objective.

And the objective they stated that was necessary in the report was a government that could defend itself, govern itself, sustain itself and serve as an ally in the war on terror. I thought there were some good ideas on there. And as I told both Baker and Hamilton and the American people after I received the report, I take every one of their considerations seriously.

QUESTION: Will you give the new defense secretary time to get more in the mix, what is the strategy that you are looking to build? Is it a military strategy for success in Iraq or a political one?

BUSH: I think that our military cannot do this job alone. Our military needs a political strategy that is effective and that includes things such as an oil law passed by the Iraqis, that basically says to the people, all of you, regardless of where you live or your religion, get to share in the bounty of our nation. It requires a reconciliation effort, including a rational deBaathification law.

QUESTION: Is that something that you can do with your strategy, is it?

BUSH: Absolutely. Absolutely. I can do that with my new strategy. I mean, it is -- I can hold people to account. It's something the military recognizes that they're not -- you know, that's not their job. It's my job to convince the Maliki government to make the hard decisions necessary to move his country forward.

But the good news is he agrees. In my conversations with him, I have said, you know, are you going to promote a unity government or will you be so, you know, divisive in your approach that you can't achieve the objectives that the Iraqi people expect you to achieve?

How do I know they expect you to achieve? They voted, 12 million of them actually went to the polls and expressed their opinions. And so there needs to be a political track. And we're working very hard with the Maliki government to achieve that political track. That's what I've been doing the last couple of days.

Matter of fact, today on the telephone I spoke to the two Kurdish leaders. These men have been outspoken about the desire to have a moderate governing coalition, which we support. I met with the major Sunni leader yesterday, all talking about how we hoped that there is political reconciliation and a commitment to a political process that says to the Iraqi people, you know, you count, you matter for the future of our country.

There needs to be an economic component. As you know, part of our successful strategies in parts of Iraq have been based on a clear, hold and build. Well, build means getting projects up and running in key parts of the country so that people see the benefits of either working with coalition forces and/or the benefits of supporting a government.

So, no. This is much more than a military operation. And finally, there's the foreign policy piece that's necessary. And we spend a lot of time in our government talking to people like Saudi Arabia, or Egypt, or Jordan, or Turkey, and sending messages, clear messages to countries like Syria and Iran. And I believe, for example, the Saudis are committed to a government that will bring peace and stability. And that's a unity government.

It's in their interest they do so. And we're working hard with them to figure out a strategy to help the Maliki government succeed. I'm pleased when the Iraqi leaders go to Saudi Arabia and talk to my friend the king of Saudi Arabia, and talk about how they can work together to achieve a stability. It's in Saudis' interests. It's in Jordan's interests.

It's in the Gulf Coast countries' interests that there be a stable Iran -- Iran that is capable of rejecting Iranian influence -- I mean, Iraq that is capable of rejecting Iranian influence. It's in our interests that we succeed in Iraq so that we can continue to send a clear message to those in Iran that are desirous of a free society that, "Freedom is possible in your neighborhood."

BUSH: And so, the stakes are high in this fight. Nobody knows that better than the gentlemen standing behind me.

They clearly understand the stakes that are confronted -- that confront this nation.

And I am proud to have listened to their points of view. And I'm proud to be working with them as they help lead the greatest military ever assembled; a military, by the way, in which we have got brave volunteers, people who understand the stakes of this fight saying, "I want to be in. I want to serve my country."

It's a remarkable period in American history right now. And as I deliberate the way forward, I keep in mind that we have got brave souls who need to know that we're in this fight with a strategy to help them achieve the objectives that we have got.

Listen, thank you all very much.

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