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THE SITUATION ROOM

Details of Failed Secret Plan That Could Have Prevented Iraq War; Interview With Benazir Bhutto

Aired September 27, 2007 - 17:00   ET

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


WOLF BLITZER, HOST: To our viewers, you're in THE SITUATION ROOM.
Happening now, new details of a failed secret deal that could have prevented the Iraq War.

What was Saddam Hussein demanding in exchange for leaving his country peacefully?

Also, fearless in the face of threats from Al Qaeda and the Taliban, Pakistan's former prime minister preparing to return to her country and challenging its military leader. I'll have a one-on-one interview with Benazir Bhutto.

And the flight from hell -- passengers trapped on the tarmac for hours, finally revolting when they've had enough.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

But up first, a major new development in the racially charged case putting Jena, Louisiana in the national spotlight. The last of six African-American teenagers charged in the beating of a white student may be released from jail any time now. The Reverend Al Sharpton saying that bail is being posted right now for Mychal Bell.

Let's go straight to CNN's Sean Callebs.

He's joining us live from Jena.

Any signs of Mychal Bell yet -- Sean?

SEAN CALLEBS, CNN CORRESPONDENT: No sign of Mychal Bell. We can tell you that both of Bell's parents have been here, as has the Reverend Al Sharpton. We know that the paperwork for the bond has been taken care of. A local bonding company actually putting up the money to have Mychal Bell released.

Now, Bell's defense team filed a couple of important documents with the appeals court today. The first one, to have Mychal Bell moved from the adult correction facility, where he has been held for the past nine months, into a juvenile facility. That has been done. And a second one, to have Bell released on bond. We know the judge in the case, J.P. Mauffray, set the bond at $45,000. The information we have, Wolf, within the hour, if possible, that Mychal Bell could be brought here, to the LaSalle Parish Courthouse, have his paperwork done, be processed here, then walk out the front door with the Reverend Al Sharpton, with his parents. That is what we are waiting on.

Now, earlier today, the district attorney in this case, Reed Walters, held a news conference. And he said he would not pursue charges against Bell as an adult. But he also raised some eyebrows with some locals here by saying that huge protests last week -- the massive demonstration, 15,000 to 20,000 people -- he said that that was peaceful because Jesus intervened.

(AUDIO GAP)

BLITZER: All right, we don't have that sound bite, that exchange, that little clip.

But what was the response when he said that?

And I was watching that news conference. It was a dramatic moment, Sean, when he said that thanks to Jesus Christ, that protest was peaceful and everything worked out.

CALLEBS: That's a great summation of what he said, Wolf.

Inside there were about 60 local residents, I'd say about 55 of which were white supporters of the D.A. They applauded when the district attorney said that. There were a couple of reverends in there, members of African-American churches here in the area. I had a chance to speak with one, David Sibley. And Sibley actually challenged the district attorney on that, saying that it was really unfair to say that it was Jesus who made the crowd so peaceful. The reverend pointing out there were no arrests, there no incidents, no broken windows, very little trash left on the street after 15,000 to 20,000 people.

I had a chance to speak with the reverend after the news conference and he said that it was actually an insult to the many people who came to demonstrate for civil rights. And he believes what the D.A. said is going to drive another wedge into this community. It's already been divided racially. Now he believes it could be polarized even more so because of the religious implications -- Wolf.

BLITZER: Sean, watching this story, a dramatic story, for us.

Thanks very much.

Sean Callebs on the scene.

A new wave of violence is sweeping across Iraq, with at least 50 people killed since yesterday. The attacks include this car bombing in Southwestern Baghdad. At least six people died in the attack and dozens were injured.

It comes less than two weeks after a group tied to Al Qaeda in Iraq vowed a new offensive in memory of the founder, Abu Musab al- Zarqawi, who died last year in a U.S. air strike. New details are emerging of a failed last minute deal that could have averted the war in Iraq -- negotiations to have Saddam Hussein go into exile.

Let's go to CNN's Brian Todd.

He's watching this story for us.

What are you learning about this deal and why it fell through -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, it's not exactly how the deal fell through, Wolf. But according to accounts we're getting there was knowledge of these discussions at the very highest levels.

(BEGIN VIDEO TAPE)

TODD (voice-over): A dramatic ultimatum on the eve of war.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: Saddam Hussein and his sons must leave Iraq within 48 hours. Their refusal to do so will result in military conflict.

TODD: But just weeks earlier, President Bush may have known Saddam Hussein was looking for a way out.

February 22nd, 2003 -- meeting with then Spanish prime minister, Jose Maria Aznar, at his ranch in Crawford, Texas, according to the Spanish newspaper "El Pais," Mr. Bush says: "The Egyptians are talking to Saddam Hussein. He seems to have indicated that he would be willing to go into exile if they would let him take $1 billion and all the information he would want regarding weapons of mass destruction."

Contacted by CNN, a senior Spanish official with knowledge of the meeting says there's a very high probability this account is accurate. No comment from the Egyptians.

As for the White House...

DANA PERINO, DEPUTY WHITE HOUSE PRESS SECRETARY: If you think back to that time, there were a lot of rumors. There were a lot of people floating ideas around about what may or may not happen. All diplomatic measures ran their course.

TODD: CNN previously reported that Saddam Hussein agreed to an offer of exile from the United Arab Emirates just three weeks before the invasion, but that the deal fell through.

On the Iraqi president's report talks with Egypt, analysts say he may not have had much technical knowledge of the WMDs to escape with and they say this deal shouldn't be viewed with too much hindsight.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: Certainly, in retrospect, a reasonable one to contemplate. But compared to what we were hoping for at the time, far worse of an outcome than Mr. Bush envisioned and thought likely after the U.S. invasion. (END VIDEO TAPE)

TODD: Now, at the time, State Department officials said they did know about the deal with the UAE that fell flew and at the time they thought it was a good idea. But on any talks between Saddam Hussein and the Egyptians on exile in exchange for $1 billion and his WMD knowledge, we could not get comment from the State Department -- Wolf.

BLITZER: And there are some other interesting details emerging from this Spanish newspaper -- Brian.

TODD: That's right. Now, this a transcript of the meeting that Spanish officials tell us was leaked to that newspaper. President Bush quoted by the paper saying Saddam is "a thief, a terrorist and a war criminal." That compared to Saddam, the late Serbian dictator, Slobodan Milosevic, would "be a Mother Teresa." And at one point, he says the Americans expect to be in Baghdad by the end of March, 2003. And, of course, as we said, the White House not commenting on the detail of this report.

BLITZER: They got there April 9th. That's when the statue went down, a couple of days earlier.

Thanks very much, Brian, for that.

Iraq's Sunni vice president met today with the country's top Shiite cleric, trying to build some support for a political reform plan. The vice president saying the cleric praised the initiative designed to end the sectarian violence that's tearing Iraq apart.

The Pentagon is reluctant to get into specifics of when it comes to planning the long-term U.S. military presence in Iraq. But there are some new, important clues coming in and they're coming from the secretary of defense himself.

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

He's watching this for us.

What is Robert Gates saying -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, you know, Wolf, Secretary Gates has said all along that any long-term U.S. presence in Iraq will be a fraction of the current force. And now we know what that fraction -- what fraction he has in mind, and it is one quarter.

(BEGIN VIDEO TAPE)

MCINTYRE (voice-over): Defense Secretary Robert Gates says he was just trying to reassure Americans that eventually there will be a much smaller U.S. force in Iraq when he gave this off the cuff estimate to Congress.

ROBERT GATES, SECRETARY OF DEFENSE: In my head, we're looking at a force that is, in terms of combat brigades, a fourth or so of what we have now.

MCINTYRE: A day later, Gates stressed he gave the forecast of a 75 percent cut off the top of his head, not after any thoughtful analysis. Still, it's not hard to do the math under his hopeful scenario. The current 20 combat brigades, along with support troops, equals roughly 160,000 troops. When the surge ends in July, there will be 15 brigades, and as many as 140,000 troops, including all the support. If all goes well, by 2009, the U.S., in theory, could be down to 10 brigades, with a total of 100,000 or so.

So five brigades, the 75 percent reduction Gates suggested, could be as low as 30,000 or as high as 70,000 troops, depending on the number of support personnel.

GATES: The last thing I'm going to do is give a number.

MCINTYRE: Gates could be a bit gun shy. He concedes now he never should have answered a question about whether invading Iraq was the right thing to do.

GATES: It's probably not very useful for me to speculate on that and I kind of wish I had earlier. I think it's a moot point.

(END VIDEO TAPE)

MCINTYRE: Twice now Secretary Gates has said he doesn't know if invading Iraq was the right decision. But he says it's all irrelevant now because he's focused entirely on dealing with the situation as it exists today -- Wolf.

BLITZER: Jamie McIntyre at the Pentagon.

Thanks, Jamie, very much.

Jack Cafferty has the day off.

He's at a book signing for his new best-seller, " It's Getting Ugly Out There."

Jack will be back tomorrow.

Up ahead, tough talk from the woman who used to rule Pakistan and hopes to do so again.

(BEGIN VIDEO CLIP)

BENAZIR BHUTTO, FORMER PRIME MINISTER OF PAKISTAN: I'm not afraid of either the Al Qaeda or the Taliban elements or the Pakistani military.

(END VIDEO CLIP)

BLITZER: My exclusive one-on-one interview with Benazir Bhutto.

That's coming up. Also, airline passengers trapped on the tarmac for hours finally revolting against the crew. We're going to show you what they did and the results.

And lawmakers outraged at the results of a secret test of border security. Find out what's making them so angry right now.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In Washington, the trouble with air travel is front and center right now, both in the Congress and over at the White House. The Bush administration is casting about for ways to try to solve the growing problem of flight delays. Take a look at this. Look at this. This is the map from the FAA Web site. Each dot represents a plane flying over the United States right now. You can see hundreds, even thousands, at any given moment.

Let's go to CNN's Kathleen Koch.

She's watching this story for us.

So what measures might we be seeing soon, Kathleen, to deal with this?

I think it's fair to say it's a crisis, these flight delays.

KATHLEEN KOCH, CNN CORRESPONDENT: Fair to say it's a crisis, but, Wolf, the adjective soon I don't think is going to apply here.

Now, today, there were hearings in the Senate. There were some hearings yesterday. And then there was supposed to be an announcement -- a presidential announcement of federal steps to reduce these record flight delays.

But what it actually turned out to be was announcement of a plan to come up with a plan to do something.

Now, the focus will be on the New York City airspace, because the delays there simply ripple across the system, slowing air traffic nationwide. So a panel does start meeting today to come up with ideas. And the Transportation Department says it's also going to try to find ways to strengthen its complaint system and get more monies for passengers who passengers who are bumped from flights.

But the transportation secretary says that concrete changes to reduce delays won't come until the end of the year.

(BEGIN VIDEO CLIP)

MARY PETERS, TRANSPORTATION SECRETARY: Air travel is down a little bit this time of year. It will peak up again around the holidays and we want to try to have some initial changes in place by then, but then certainly by next summer, so that travelers will have a more positive experience (INAUDIBLE).

(END VIDEO CLIP)

KOCH: Some numbers of the transportation committees in Congress are really frustrated. They say the FAA right now could start forcing changes in airline schedules to reduce delays. This could implement something called congestion pricing, that financially penalizes airlines that schedule too many flights at peak times.

For now, though, Transportation Department wants to avoid such steps, such so-called government intervention, and instead let market forces work -- Wolf.

BLITZER: Kathleen Koch reporting for us.

What an amazing picture that -- all those plane up in the sky right now.

KOCH: Isn't it?

BLITZER: Thanks, Kathleen.

Tales of flight delays -- they are nightmares. And they just -- they just keep on coming in. Last Valentine's Day at New York Kennedy airport, 21 JetBlue flights were stuck on the tarmac for more than five hours. One of them -- get this -- for more than nine hours. Sitting in that plane nine hours on the tarmac.

Let's go to our senior correspondent, Allan Chernoff.

He's got some details now. These extreme delays, they're awful.

What's going on?

Give us an example.

ALLAN CHERNOFF, CNN CORRESPONDENT: Wolf, the fact is that these delays continue. That Valentine's Day massacre happened on a very icy, freezing cold day. But you do not need cold weather to get trapped on board. Indeed, in the middle of the summer, just a few weeks ago, passengers on Continental Flight Number 1669 headed to Newark from New York took a detour to Baltimore, where they sat and sat and sat on the tarmac.

(BEGIN VIDEO TAPE)

CHERNOFF (voice-over): Diverted because of bad weather, the plane had been on the Baltimore tarmac for more than four hours, following a five hour flight. Passengers say the stench from a toilet backing up was beginning to fill the cabin.

CARLOS CIRINO, STRANDED PASSENGER: We had no food. No water. Nobody's telling us anything.

CAROLINE MURRAY, STRANDED PASSENGER: Right. Babies are crying.

CIRINO: Yes.

MURRAY: There was no toilet paper. There were people who were ill on the plane. There was a diabetic woman who needed food. There was a pregnant woman who needed food.

UNIDENTIFIED FEMALE: Why can't we just go to Newark?

CHERNOFF: Passengers had had enough -- enough of being trapped on board.

MURRAY: And we said it's time for to us stand up and demand to be let off this plane. So we stood up, we started clapping in unison, demanding to speak to the pilot, who refused to speak to us, refused to even come on the intercom.

CHERNOFF: They were banging on the overhead luggage compartments. Flight attendants threatened to call the police to make arrests.

MURRAY: We said please do. Call the police. Have them come rescue us because you're holding us hostage.

CHERNOFF: Armed airport police and customs officers came on board and marched passengers single file into a secure room in the terminal, where they were treated to pretzels and potato chips.

MURRAY: We were kept in that room for another two hours before we were put back on the plane and held for another hour. So we were held against our will for a total of eight hours after a five hour flight.

(END VIDEO TAPE)

CHERNOFF: Continental Airlines told CNN that passengers were kept on the plane because it was an international flight that needed to be processed by federal authorities, who were in short supply at the airport. Continental added: "We have written apologies for the delay to the customers for whom we have contact information, including travel vouchers as a good will gesture."

Wolf, those vouchers are $200 worth. Some of the passengers say, not enough.

BLITZER: What a nightmare, sitting on that plane for nine hours. All right.

Thanks very much.

Let's hope that doesn't happen any more.

Allan Chernoff reporting.

She says she's not afraid of Al Qaeda. But there's one thing she didn't want to tell me.

(BEGIN VIDEO CLIP)

BHUTTO: Well, we were supposed to keep it secret, but it's kind of an open secret now.

BLITZER: So you have you can confirm that for us?

BHUTTO: You're not letting me off the hook.

(END VIDEO CLIP)

BLITZER: Her news making admission in my one-on-one interview -- the former Pakistani prime minister, Benazir Bhutto.

She's here in THE SITUATION ROOM. We'll talk about her return to Pakistan from exile.

Also, stunning results from a secret government test of border security. We're going to show you what undercover agents were bringing across unchallenged.

Stick around.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Stunning results from a secret government test of border security -- undercover investigators crossing easily into the United States, carrying materials that should have raised terror alarms.

CNN's Brianna Keilar reports lawmakers are shocked.

BRIANNA KEILAR, CNN CORRESPONDENT: Wolf, terrorists have tried to get into the U.S. from Canada before and Congress wants to find out what's being done to stop them.

(BEGIN VIDEO TAPE)

KEILAR (voice-over): A duffel bag filled with simulated radioactive material and detonators -- the makings of a terrorist's dirty bomb. And in one of the many remote parts along the 5,000 mile border with Canada, an undercover Congressional investigator carries that bag past a border marker and right into the U.S.

GREGORY KUTZ, GAO: We actually crossed into Canada and attempted several times to enter the United States undetected.

KEILAR: And succeeded. In areas unmanned by border agents, between legal border crossings, the Government Accountability Office found U.S. roads running right alongside Canadian roads -- making the transfer of dangerous materials easy. And investigators found even legal crossings unmanned at night, where anyone could easily drive around closed gates. Only once out of four tries did investigators encounter Border Patrol agents.

JOHN COONEY, GAO: They did respond. They waited for us down the road. And the Border Patrol agent did a very good job of coming up and identifying himself and he satisfied himself that we were no threat.

KEILAR: On Capitol Hill Thursday, Senators wanted to know what's being done to protect the vulnerable U.S./Canada border.

SEN. MAX BAUCUS (D), MONTANA: I'm asking a specific question, what are you going to do specifically?

RONALD COLBURN, BORDER PATROL: We are getting there. We're bringing manpower. We're bringing UAS systems -- unmanned aerial systems, unmanned aerial vehicles. We're bringing aircraft. We're bringing boats and we're bringing more manpower and sensing systems.

KEILAR: Investigators conducted similar tests on the 1,900 mile U.S. border with Mexico. They found long stretches where there appeared to be no monitoring at all, along federal land, such as environmentally protected areas or Indian reservations. At one spot, they found a makeshift boat ramp on the U.S. side of the border, mirrored by another across the Rio Grande in Mexico. The investigators loitered there for 90 minutes unchallenged.

(END VIDEO TAPE)

KEILAR: While a lot of attention is paid to how bad security is along the border with Mexico, GAO officials told Congress it's actually much more secure than the border with Canada -- Wolf.

BLITZER: Brianna Keilar.

Thank you.

Brianna Keilar reporting.

Our Carol Costello is monitoring some other stories incoming into THE SITUATION ROOM right now -- Carol, what do you have?

CAROL COSTELLO, CNN CORRESPONDENT: A couple of things, Wolf.

Afghan officials say two Red Cross workers who have helped past kidnap victims have been kidnapped themselves. It happened in Afghanistan's Wardak Province, southwest of Kabul. The Red Cross workers there were trying to secure the release of a German captive when they went missing yesterday. The pair played a role in the release of a group of Christian hostages from South Korea last month. So far, no one has claimed responsibility for this abduction.

NASA's latest spacecraft is on its way on unprecedented journey into space. The Dawn spacecraft lifted off at the Kennedy Space Center in Florida this morning. It will travel three billion miles to study two bodies and an asteroid belt between Mars and Jupiter. Scientists hope the mission unlocks secrets to the early solar system. Dawn should reach the asteroid called Vesta in 2011 and the dwarf planet Ceres in four years later.

More money and lower rates are the cornerstones of a new law aimed at making college more affordable to poor and middle class students. President Bush signed the student aid legislation today at the White House. The measure boosts the maximum Pell grant to $5,400 a year by 2012. It also cuts interest rates on federally funded student loans in half, to 3.4 percent over the next four years. And discouraging news, though, for small business contractors who work on new homes. The latest government snapshot suggests the mortgage bomb -- the mortgage bomb hit demand for new homes harder than expected last month. The Census Bureau says the pace of new home sales fell 8 percent in August, to its lowest in seven years. The median price of a home also fell more than 7 percent from last year.

That's a look at the headlines right now -- Wolf.

BLITZER: Thanks very much.

Carol, for that.

Up next, my exclusive interview with the former Pakistani prime minister, Benazir Bhutto. She's about to return to Pakistan from exile and try to return to power in the face of threats from Al Qaeda and on others. You're going to find out why she says she's not afraid.

Also, she had a job and insurance, but still ended up being crushed by medical bills -- and she's not alone. There are millions of people like her out there. You're going to find out why your insurance may simply not be enough. Dr. Sanjay Gupta will be joining us, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, the U.S. Senate debating a proposal to boost spending significantly on a children's health insurance program. Democratic lawmakers hoping to persuade President Bush to set aside his threat to veto the multi-billion dollar increase for the so-called SCHIP program. The Senate's vote expected in the next couple of hours.

Secretary of State Condoleezza Rice calling for global cooperation to combat climate change. She says countries must work together as they do against terror and the spread of disease. She spoke at a climate change conference here in Washington.

And Tropical Storm Lorenzo is churning off the Mexican Gulf Coast. Lorenzo is packing maximum sustained winds of 60 miles an hour. The storm is expected to reach the coast tomorrow morning.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Protests in Pakistan right now, about 1,000 people rallying in Lahore, calling for President Pervez Musharraf to be removed from office. He seized power back in a 1999 coup and has been a key but controversial U.S. ally in the war on terror. Today the president Pervez Musharraf formalized his candidacy for another term as president of Pakistan.

There are dozens of candidates seeking President Musharraf's job, but among some of the more formidable challengers is the country's former prime minister, the first female leader of Pakistan, she's about to return to her country from exile.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, the former prime minister of Pakistan, Benazir Bhutto. Prime minister, thanks very much for coming in.

BENAZIR BHUTTO, FORMER PAKISTAN PRIME MINISTER: Thank you.

BLITZER: You're going back to Pakistan, even though you know you're wanted there on corruption charges, among other things. When, first of all, will you go back to Pakistan?

BHUTTO: I'm leaving on the 17th of October and arriving on the 18th of October. It's 21 days to my departure and I can't wait to get back home.

BLITZER: What makes you think you'll be received any differently than another former prime minister who went back and was quickly kicked out, Nawaz Sharif?

BHUTTO: I'm in a different boat than Mr. Nawaz Sharif. He was sentenced for treason and tax evasion. I haven't been sentenced for any crime. And, secondly, Mr. Nawaz Sharif got the Saudis to stand guarantee for his release and said he wouldn't return for 10 years. I was offered the same deal, but I refused. And my husband stayed behind bars without a conviction for eight years. So, we are in two different boats. There are no guarantees.

BLITZER: Do you have assurances from President Musharraf that you will be allowed to stay in Pakistan?

BHUTTO: Well, General Musharraf has not given this assurance, but I know I can't be handed over to any third country. So the choice is either to let me be free or the choice is to try and lock me up.

BLITZER: And so when you get back to Pakistan, what's your game plan? You want to run for office?

BHUTTO: Yes, I want to go back and bring change. People want democracy, and there's a critical path in Pakistan's future, one fork between dictatorship and democracy, another between moderation, the issues of moderation and extremism. People want change. They want democracy. I think that we can undermine extremism through Democratic means.

BLITZER: You're a relatively young woman. How scared are you, though, because as you know, Osama bin Laden and other terrorists, they've attacked you in the past, and they clearly would like to go after you now.

BHUTTO: Yes, of course, they would like to go against me. There's a lot of threats because under military dictatorship and an anarchy situation has developed which the terrorists and Osama have exploited. They don't want democracy. They don't want me back.

BLITZER: They don't want a woman to be the prime minister of Pakistan either.

BHUTTO: And they don't believe in women governing nations. So, they will try to plot against me, but these are risks that must be taken, I'm prepared to take them.

BLITZER: Yeah, your family has a history unfortunately, a tragic history, of assassinations.

BHUTTO: I know the past has been tragic, but I'm an optimist by nature. I put my faith in the people of Pakistan. I put my faith in God. I see that what I am doing is for a good cause, for a right cause, to save Pakistan from extremists and militants and to build regional security. I know the dangers out there, but I'm prepared to take those risks.

BLITZER: Your father was killed at a political assassination.

BHUTTO: My father was killed. It was a very terrible moment in my life. But I also learned from him that one has to stand up for the principles they believe in. And I'm standing up for the principle of democracy. I'm standing up for moderation. And I'm standing up for hope for all the people in Pakistan who today are poor and miserable and really quite desperate.

BLITZER: Can you forge an alliance, an alliance of convenience, with President Musharraf that will allow the two of you to work together for the benefit of Pakistan?

BHUTTO: I have been trying to reach an understanding with General Musharraf to bring about a transition to democracy, and I was quite hopeful a few weeks ago, but now I'm getting a little worried, because time is running out. And unless General Musharraf can take concrete steps to show that we are moving forward, moving away from dictatorship towards democracy, it might be very difficult for us to reach an understanding.

BLITZER: What can you say about all the reports, widespread reports, that the two of you met secretly?

BHUTTO: Well, there were these widespread reports that we met secretly. And whenever we've had an opportunity to meet, we've had a good rapport, a good exchange of ideas, but there are people around him who don't want this understanding, who don't want him to make the political concessions that are necessary to facilitate the path towards democracy. I had asked him to take some steps for fair elections. Those remain unimplemented. There were certain other commitments. So, now I worry. I worry that time is running out and there's pressure on my party to join the other political parties and resign from parliament unless an accommodation is reached with General Musharraf.

BLITZER: So I just want to be precise. Are you now confirming that you did have these meetings in recent weeks and months with President Musharraf?

BHUTTO: Well, we were supposed to keep it secret, but it's kind of an open secret now.

BLITZER: So you can confirm that for us.

BHUTTO: You're not letting me off the hook. But sort of.

BLITZER: I will take that as a confirmation. Michael Scheuer is a former CIA analyst, he ran the bin Laden unit at the CIA. We spoke with him earlier today. He said you've been targeted in the past, including by Ramzi Yousef, who was the mastermind of the 1993 World Trade Center bombing, and you will be targeted again. I just want to get back to this point. You got be very worried. What kind of security will you have when you go back there?

BHUTTO: Well, I have raised the issue of my security with General Musharraf, and I've asked him to provide me the security that I'm entitled to as a former prime minister. I hope that he will provide me the security, because I have been a target of terrorists in the past. And I know I could be a target in the future.

BLITZER: Who are you more afraid of, the al Qaeda, Taliban elements who hate you, or elements in the Pakistani military?

BHUTTO: I'm not afraid of either the al Qaeda or the Taliban elements or the Pakistani military. But I think at the end of the day, the people who try and plot will use al Qaeda, will use Taliban, because Taliban and al Qaeda are the groups that will suffer the most major reverses if my party and I are returned to power. We fought them in the past because we want a stable Pakistan, a prosperous Pakistan and we can't get any stability with militancy and extremists.

BLITZER: President and you've had a strained relationship to put it mildly with President Musharraf. In his book he says that when you ran your party, you were chairperson for life in the tradition of the old African dictators. Strong words coming from him. And all the charges of corruption that your party was rife with corruption, your husband, what do you say to those allegations, which some, including Michael Scheuer, the former CIA analyst, said had a strong element of truth?

BHUTTO: Well, I would say that a person is innocent unless proved otherwise. There's no sentence against me. These are politically motivated charges. When the chief justice of Pakistan proved to be a problem, he was slapped with corruption charges. These are deliberate allegations made to detract attention from the institutionalized corruption of the military, transparency, international, a reputed international group has said that corruption under the military regime is far greater than it was under previous civilian predecessors.

BLITZER: You have called President Musharraf a dictator, and he runs a dictatorship. But as you know, the Bush administration, the U.S. government, has a strong relationship with -- with President Musharraf's government, and relies on the Musharraf government to cooperate in the war on terror, to provide some sense of stability, security, in that part of the world. What's your basic complaint with what the U.S. is doing right now? In other words, is the U.S. supporting a dictatorship?

BHUTTO: I certainly think that the United States is supported a dictatorship for its own short-term strategic reasons arising out of the war against terrorism. When Musharraf has been seen as a reliable ally. But last year President Bush went to Pakistan and made a pledge, to support democracy and free elections. And Condoleezza Rice yesterday gave a statement expressing her disappointment about the arrests of political activists. So, I think that the United States is gently trying to prod General Musharraf on to the path of greater democratization which I welcome.

BLITZER: But do you have any doubt that President Musharraf is committed to destroying al Qaeda which has gone after him on several occasions as well?

BHUTTO: Well, he says he's committed to destroying them.

BLITZER: What do you think?

BHUTTO: I don't think he's been very effective. I think the longer -- many people think the military is the solution. I don't. I think the situation has become anarchic and will continue to be anarchy because as long as there is a military dominated regime in Pakistan.

BLITZER: Benazir Bhutto, the former prime minister of Pakistan, you're a courageous woman, good luck when you go back.

BHUTTO: Thank you.

(END VIDEOTAPE)

BLITZER: Millions of Americans without health insurance, it's a growing crisis. But having coverage doesn't necessarily mean you're out of the financial woods. In fact, you could still go broke. Dr. Sanjay Gupta standing by live. He'll be here.

And in Myanmar, conditions growing deadlier by the day. Could pro-democracy demonstrations become a revolution? We're watching this story. You'll be watching it in a moment as well. We'll be right back.

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BLITZER: The senate is expected to vote in a couple of hours on plan to add billions of dollars to a popular children's health care program called S-CHIP. President Bush has promised to veto the spending increase if it clears the congress. But millions of Americans who do work, they have medical insurance, but guess what? They still find themselves increasingly facing financial ruin. How could this happen? Let's go to our chief medical correspondent, Dr. Sanjay Gupta. He's here in THE SITUATION ROOM with us. Explain what's going on? Because you think you have health insurance, but all of a sudden you realize you're going to go broke.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: This is probably one of the most important groups and a widely neglected group as well. While there's about 90 million people over the last couple of years who at times didn't have health insurance. The underinsured is a group that we're focusing on much more. These are people who are doing fine until they get sick and then they suddenly realize they have very high hospital bills. A largely growing group. We actually met one woman in Chicago who recently found herself in that predicament.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: They didn't discover 3669, and the next one, $525.11. There's one here for $1,200. This is so old that I'm not even sure what it's for. But it's for $305.25 which is sometimes more than I make in a week.

GUPTA (voice-over): Lisa Cristia is a cancer survivor. Diagnosed with tongue and throat cancer four years ago. These are just some of the medical bills that are still piling up. Even though she has health insurance.

LISA CRISTIA, CANCER SURVIVOR: I did have insurance. And I thought that it was enough and that it would cover me. And that the only battle that I would have to fight was the battle against cancer.

GUPTA: After going through $5,000 in savings and $14,000 in her 401(k), Lisa was still $65,000 in debt because of what her insurance didn't cover. Eventually she was forced to file for bankruptcy.

CRISTIA: I have fought what I thought was the fight of my life fighting cancer and now I had to fight these creditors and people harassing me every single day.

GUPTA: Lisa still needs follow-up and medications, and that means more medical bills. Bills she keeps in a box because she doesn't know when, or if, she can pay them.

CRISTIA: That's a lost future, you know? At 38 years old, I'm never going to be able to buy a house. I'm never going to be able to buy a brand new car. No matter how hard I work and how much money I make, my credit's completely ruined.

GUPTA: According to Ron Pollack, executive director of the consumer health advocacy group Families USA, Lisa's story is not unusual.

RON POLLACK, EXEC. DIR., FAMILIES USA: Health care costs is the number one cause for people declaring bankruptcy in the United States today.

GUPTA: A commonwealth fund study published two years ago estimates that 16 million adults were underinsured in 2003.

POLLACK: The average cost of family health coverage purchased through a group is more than $12,000 a year. So, even if you're making, say, $60,000 a year, that's one-fifth of your income devoted just to premiums. GUPTA: Lisa pays as much as she can, whenever she can. And knows now that having health insurance isn't enough if you get seriously ill.

CRISTIA: I think most Americans don't understand that we're one cancer diagnosis away from complete bankruptcy.

(END OF VIDEOTAPE)

GUPTA: As you heard again, it is the number one cause of bankruptcy. That's a remarkable statistic in and of itself and it's always in the top two issues as far as what people care about in this upcoming election, Wolf. People are paying attention. They're doing a lot of new health care plans. But Lisa, I mean she's going be bankrupt. She's a young woman. Her future was in that box I just showed you.

BLITZER: What a sad story. People have to really be careful and watch what kind of insurance they have to make sure they're not part of the millions who are underinsured. Sanjay, thanks very much. Important work you're doing.

Things get even uglier between monks and a lot of pro-democracy demonstrators and the government. In Myanmar, peaceful protests broken up by automatic weapons on this, the latest in a deadly situation.

And a 5-year-old Cuban girl in an international custody battle stretching from the U.S. to Cuba. Tonight, a judge makes a ruling. Stick around, you're in THE SITUATION ROOM.

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BLITZER: Right now, the government crackdown against protesters in Southeast Asia's largest country is growing deadlier. It's in Myanmar. That used to be called Burma. Soldiers there are firing into crowds and beating Buddhist monks. They're beating a lot of other people as well, with at least nine people reported killed. Let's go to our state department correspondent, Zain Verjee. She's watching all of this unfold. This is a pretty horrific situation, Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Yes, it is, Wolf. The world is demanding that Myanmar's military rulers end their crack down. But one day after all the verbal attacks from the United Nations, they appeared defiant and determined.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Soldiers reportedly firing at peaceful protesters, killing and wounding, beating up and arresting Buddhist monks, who are leading a huge charge against repressive military rule. From one eyewitness in a hotel --

UNIDENTIFIED FEMALE: The military guys went upstairs... and started beating one, or like five or ten people and then killed one of them and left them on the floor.

VERJEE: From another eyewitness on the streets --

UNIDENTIFIED FEMALE: In one corner they got around maybe five or seven people and started beating them so bad for almost five minutes. And then I think they took them and they put them back in trucks. And there was this one guy laying down on the floor, and he was dead.

VERJEE: Monasteries have been raided. Monks, locked down, unable to move. International media, banned from the country. Limiting pictures of the carnage. But dramatic images keep pouring out, shot on cell phones and smuggled out on the Internet. Triggering protests around the world. From Thailand, Sydney, Tokyo, the Philippines. The military rulers are unable to control the information revolution.

VINCENT BROSSEL, REPORTERS WITHOUT BORDERS: They are using very old-style propaganda things, counter to the Burmese journalists and activists who are using Internet and blogs, and Youtube and all the sort of technological ways to put their videos and images, and the information is going out very quickly.

VERJEE: The international community has condemned the violence. The U.S. has slapped new sanctions on the military government, freezing the assets of 14 senior officials, and banning them from doing business in the U.S. Secretary of State Condoleezza Rice, continues to speak out.

CONDOLEEZZA RICE, SECRETARY OF STATE: I can just assure you that the United States is determined to keep an international focus on the travesty that is taking place in Rangon.

VERJEE: It's unclear how much bloodier this may get or what the outcome will be as both sides face off.

BROSSEL: The government has no intention to stop this crackdown, and the bloodshed and the government -- and the demonstrators at the same time have a lot of courage and they have been waiting for many years to demonstrate and to be able to say what they think about this government.

(END OF VIDEOTAPE)

VERJEE: Myanmar's military leaders have agreed to let a U.N. envoy into the country to discuss the situation, that all started with protests over high fuel prices. Meanwhile, Wolf, Secretary of State, Condoleezza Rice, sat face to face today with Myanmar government officials as she was having a meeting with Asian leaders. Now, State Department officials were actually overheard saying the meeting ran a little bit late, because Rice was giving them hell. Wolf?

BLITZER: Zain, thanks very much, we're going to continue to stay on top of this story. Zain Verjee reporting.

Myanmar saw similar violence, by the way, nearly 20 years ago. A student-led uprising in 1988. Demonstrations started in March of that year initially calling for economic change but eventually demanding regime change. On August 8th more than 1,000 demonstrators were killed by military forces. The following month, the military junta deposed the socialist government, suspended the constitution and imposed a vicious crackdown on demonstrations, killing an estimated 3,000 people in the process.

You may remember the case of Elian Gonzalez. He was the young Cuban boy snatched from the arms of the people caring for him in Miami, and returned to Cuba back in the year 2000. Right now, there's another case in Florida, very similar to that one. This time it involves a 5-year-old girl and a judge is ruling in the matter. If she should go back to Cuba. Our national correspondent, Susan Candiotti, is in Miami. Susan?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Wolf, unlike the Elian Gonzalez case, this U.S./Cuban custody battle didn't create much of a stir in Miami. But just like Elian, a Cuban father has won a legal battle in a U.S. court.

(BEGIN VIDEOTAPE)

CANDIOTTI (voice-over): Cuban father Rafael Esquierdo came a long way to hear an American judge tell him he is not an unfit dad.

JERI B. COHEN, MIAMI-DADE CIRCUIT JUDGE: The court cannot deny Esquierdo custody of his child.

CANDIOTTI: Esquierdo say justice is served. After a month long custody battle, a judge ruled the quote, "Unsophisticated father did not abandon his 5-year-old child by failing to stop the girl's mother from bringing her to the U.S." Judge Jeri Cohen also dismissed claims Esquierdo was promised favorable treatment by Fidel Castro. A reference to the Elian Gonzalez controversy, that consumed Miami. An attempted suicide by the mother prompted the state of Florida to put the child in foster care. She has given up her parental rights but sides with Esquierdo. But the child's foster parents, a wealthy Cuban American Joe Cubas and his family, who adopted her half brother don't want to give her up.

JOE CUBAS, FOSTER PARENT: These two children have been together their entire lives. Again, through the best and worst moments of their lives. And it is our beliefs, as is the wishes of the children, that they remain together.

CANDIOTTI: He plans to appeal. Esquierdo's attorney argues the little girl belongs with her father.

IRA KURZBAN, FATHER'S ATTORNEY: And he deserves to have his child back. And we call upon the Cubas family to give it up, to stop keeping a child that's not theirs. They are not family.

CANDIOTTI: They chose to take her in temporarily, says Esquierdo. They should know I want her back.

(On camera): The ruling doesn't mean the Cuban dad will automatically get her back. There's another hearing next month to argue whether separating half brother and sister will cause irreparable psychological damage to the little girl. Wolf?

BLITZER: Susan Candiotti reporting. Susan, thanks.

We'll take a quick break. We'll be right back.

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BLITZER: That's it for us this hour. We'll be back in one hour, 7:00 p.m. Eastern. "LOU DOBBS TONIGHT" starts right now, Kitty Pilgrim sitting in. Kitty?

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