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LOU DOBBS TONIGHT

Benazir Bhutto Assassinated

Aired December 27, 2007 - 19:00   ET

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


KITTY PILGRIM, CNN CORRESPONDENT: Thanks, Wolf.
Tonight a stunning setback to U.S. policy, a terrorist kills Benazir Bhutto, Pakistan's pro-American opposition leader. We'll have complete coverage, all the day's news, much more straight ahead tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Thursday, December 27. Live from New York sitting in for Lou Dobbs, Kitty Pilgrim.

PILGRIM: Good evening, everybody. Chaos in Pakistan tonight after the assassination of former Prime Minister Benazir Bhutto; Bhutto was killed by a gunman in Rawalpindi who then blew himself up. The attack came less than two weeks before parliamentary elections in Pakistan. The assassination could turn into a major foreign policy crisis for President Bush. Bhutto's death may benefit terrorists based in Pakistan who are fighting U.S. and NATO troops in Afghanistan.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): This is believed to be the last picture of Benazir Bhutto before she was assassinated minutes after an election rally. Soon afterwards gunshots rang out hitting Bhutto in the neck and chest. This is the weapon believed to have been used to kill Bhutto. The gunman blew himself up killing at least 22 people. Many others were wounded.

President Musharraf immediately declared a three-day period of mourning. He vowed to root out the terrorists behind today's assassination. The attack came barely two months after tens of thousands of Pakistanis cheered Bhutto's return to Pakistan. But her enemies were quick to act. The former prime minister narrowly escaped a suicide bomb attack that killed nearly 150 people. Bhutto herself was fully aware of the risks she was taking.

BENAZIR BHUTTO, FMR. PRIME MINISTER: They will try to plot against me, but these are risks that must be taken. I'm prepared to take them.

PILGRIM: Bhutto vowed to help establish democracy in Pakistan. The State Department said her assassination will not deflect the United States from that goal.

TOM CASEY, STATE DEPT. SPOKESMAN: We are going to continue to work with President Musharraf. We're also going to continue to work with the Pakistan people's party and other moderate democratic elements in Pakistan.

PILGRIM: The Bhutto family is a dynasty that has been linked to political violence in the past. Her father was hanged. Two brothers died in mysterious circumstances. Tonight Pakistan is mourning Benazir Bhutto's death. Violence broke out in cities across Pakistan as thousands of her supporters clashed with police. That violence tonight is raising new questions about Pakistan's stability and whether the parliamentary elections scheduled for January 8th will go ahead.

(END VIDEOTAPE)

PILGRIM: The assassination of Benazir Bhutto is not the only political violence in Pakistan today. The attack came just hours after gunmen opened fire on supporters of another former prime minister, Nawaz Sharif, now four of those were killed in that attack near Islamabad airport. Several others wounded.

President Bush today called Bhutto's assassination a cowardly act by murderous extremists. President Bush later spoke with Pakistan's President Pervez Musharraf as violence flared across Pakistan. Ed Henry reports from near the president's ranch in Crawford, Texas -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Kitty, there are as you say enormous implications, ramifications for the Bush administration. All of this chaos will make it harder for Pakistan to focus in on the war on terror and hunt down Osama bin Laden.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We send condolences to all of the people of Pakistan on this tragic occasion.

HENRY (voice-over): A somber President Bush spoke from his Texas ranch to mark the death of Benazir Bhutto and send a tough message to those who murdered her.

BUSH: The United States strongly condemns this cowardly act by murderous extremists who are trying to undermine Pakistan's democracy. Those who committed this crime must be brought to justice.

HENRY: With chaos growing in the streets of Pakistan aides acknowledge Mr. Bush is concerned there is a risk the assassination will spark more violence.

SCOTT STANZEL, WHITE HOUSE SPOKESMAN: We would urge calm and hope that all the Pakistanis would mourn her death, celebrate her life and unite together in opposition to the types of extremists that are trying to stop the march of democracy.

HENRY: Mr. Bush was so alarmed about the situation that just hours after the assassination he called Pakistani President Pervez Musharraf. BUSH: We urge them to honor Benazir Bhutto's memory by continuing with the democratic process for which she so bravely gave her life.

HENRY: But it's unclear how committed Musharraf really is to those democratic reforms, especially with questions about whether Pakistan has misused billions of dollars in U.S. aid intended to crack down on extremists. And with Musharraf's government so unstable, a chief U.S. concern now is making sure Pakistan's nuclear weapons do not wind up in the hands of terrorists.

(END VIDEOTAPE)

HENRY: Now another big question of course is whether or not the scheduled elections of January 8th will in fact go forward. The Bush administration does not want to touch that, comment on that right now. They don't want to look like they're meddling in Pakistani affairs, especially given all the chaos on the ground. For now the Bush administration just saying they want to see at some point free and fair elections -- Kitty.

PILGRIM: Ed, how big of a setback is this to the Bush administration foreign policy? What are they saying?

HENRY: It is a setback given the fact there's already been criticism of some of the U.S. aid, billions of dollars flowing to Pakistan, questions being raised about whether that money has been misused by the Pakistani government. It's highly unlikely the Bush administration is going to cut off any of that aid right now. It could only potentially exacerbate what's already a tender box, but given the questions out there, it's going to put even more pressure on the Bush administration because of the fact that this is such a pivotal country in already a volatile region -- Kitty.

PILGRIM: Thanks very much, Ed Henry. Thank you, Ed.

Well as Ed just mentioned, Pakistan plays a critical role in the U.S. campaign against radical Islamist terrorists in Afghanistan. More than half of the U.S. military supplies for the war in Afghanistan pass through Pakistan. Fighter jets based on aircraft carriers also use Pakistani air space to reach targets in Afghanistan. Barbara Starr reports from the Pentagon -- Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Kitty, the violence and instability in Pakistan now front and center for the Pentagon's part in the war on terror.

(BEGIN VIDEOTAPE)

STARR (voice-over): Pakistani forces are now on red alert as anti-government demonstrations spread. For the U.S. it's a high wire act with this critical ally in nuclear power. The U.S. has been funneling President Pervez Musharraf and his army billions of dollars in aid for years to fight extremists but the assassination is the clearest indication the strategy isn't working. Former CIA acting director and CNN analyst John McLaughlin says stability in Pakistan is in jeopardy.

JOHN MCLAUGHLIN, CNN NATIONAL SECURITY ADVISER: I think the bottom line is al Qaeda probably has a little more running room here because the country will be in such chaos in coming weeks that the capacity of authorities to focus on al Qaeda will be diminished.

STARR: The fundamental Pentagon concern Musharraf will be so consumed by the struggle to stay in power his army and security services will not pay enough attention to al Qaeda which already has found a growing sanctuary in Pakistani cities; an eerie prediction by Defense Secretary Robert Gates just last week.

ROBERT GATES, DEFENSE SECRETARY: Al Qaeda right now seems to have turned its face toward Pakistan.

STARR: Within hours of the assassination, Bush administration officials spoke to their counterparts in Pakistan urging them once again to have the Pakistani army step up its counter insurgency efforts against al Qaeda. Beyond al Qaeda itself, U.S. officials say former operatives in Pakistan's intelligence services loyal to al Qaeda could be responsible for the attack. If stability isn't quickly restored, analysts warn the breakdown of Pakistan could mean grave new risks.

STEPHEN COHEN, BROOKINGS INSTITUTION: At that point we begin to wonder who's got the nuclear weapons, who controls them, where are they at. We could be worried about that sooner if there's a break in the security barrier around those nuclear weapons and one or two of them get picked off by radicals of some sort or another.

(END VIDEOTAPE)

STARR: Now Congress had already put some limitations on aid to Pakistan, wanting to see more efforts on democratic reforms before it sent more money there but U.S. officials say right now there's a much more urgent concern, Kitty, and that is simply restoring law and order on the streets of that country -- Kitty.

PILGRIM: Barbara, you have spent considerable time on the Afghan/Pakistan border. What is the Pentagon saying about the role of the Pakistani military in quelling the Taliban in that area?

STARR: Well you know the Pentagon has really been focusing on trying to get the Pakistani army much more involved in counter insurgency efforts on the border, in other areas that Pakistan, where the U.S. believes al Qaeda and the Taliban are expanding their influence inside Pakistan, so a major priority is to help train the Pakistani army and equip them and have them go after al Qaeda with fundamental counter insurgency operations. U.S. commanders are very worried about that. They all, to amend say that is something that the Pakistan army for now is not doing the best job it can -- Kitty.

PILGRIM: Thanks very much, Barbara Starr. Thank you, Barbara.

Joining me now for more on the military implications of Benazir Bhutto's assassination is General David Grange, and General Grange is one of the country's most decorated former military commanders.

General Grange, what does this mean for security in the region, and specifically our troops in Afghanistan?

BRIG. GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well obviously it is very dangerous because of the nuclear situation, the weaponry, nuclear weaponry that Pakistan has. And so you know you hear -- we're concerned about Iran, for instance, achieving a nuclear capability. Well this one is there, it's a present danger and something could go wrong and it would cause regional conflict.

It also causes the mission in Afghanistan to be much more difficult than it has in the past because of the chaotic environment has increased in Pakistan which puts pressure on the ability to security forces do anything about Taliban or al Qaeda in the border area.

PILGRIM: You know, General Grange, President Musharraf has said (INAUDIBLE) Warizistan area his forces are working to minimize the influence of the Taliban in the area but there's been criticism as Barbara Starr just noted about the ability of the Pakistani forces to do that. Does that put our troops at more risk?

GRANGE: Well it does, but you know on Musharraf's -- he's walking a tight rope. He can only do so much without causing a civil war within the country. I mean these are tough tribal areas that he's trying to work out, negotiate with, establish some kind of rule of law in Pakistan itself. Could he do more? Probably, but it's a tough situation and now with the situation that currently exists it's even tougher but it is going to cause more demand. Push more demand on American troops, NATO troops in Afghanistan.

PILGRIM: We have 26,000 U.S. soldiers there, 26,000 NATO troops. Many say NATO should step up to the plate. Do you think that will happen or will the burden still be on U.S. forces?

GRANGE: Well regrettably I think much of the burden will be on U.S. forces. NATO should step up to the plate. There is a very large NATO mission from the creation of NATO years ago. I mean a lot of countries are involved. There's a lot of troops involved if you compare it to NATO operations in the past.

The problem is there are not enough NATO forces and many of the NATO forces don't fight. They are not allowed by their countries to do combat operations. Why haven't the military engaged if they're not allowed to fight? You might as well send a private security company in to do it.

PILGRIM: Thank you very much, General David Grange.

GRANGE: My pleasure.

PILGRIM: Still ahead more on the implications for this country of Benazir Bhutto's assassination. Also, Republican presidential candidates fight over national security after Bhutto's assassination. We'll have a special report on that. And illegal immigration has become a top election issue. The pro amnesty lobby is furious. We'll explain next.

(COMMERCIAL BREAK)

PILGRIM: We'll have much more on the assassination of Benazir Bhutto later in this broadcast.

Presidential candidates today offered their condolences. They also used today's tragic events to emphasize their own foreign policy experience and criticize their opponents. And while most of the candidates were focused on the Bhutto assassination there was a new effort to question candidates on the issue of illegal immigration.

Iowa talk radio stations are conducting a marathon discussion on this subject. And as Casey Wian now reports as usual open borders pro amnesty advocates are outraged.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Radio talk show hosts from across the country are holding a two-day marathon in Iowa focusing on illegal immigration, amnesty and the state's rapidly growing illegal alien population. As the Iowa caucuses near, only a few Republican candidates joined in. Polls show illegal immigration is a major issue among Iowa Republican voters.

UNIDENTIFIED MALE: We have got between 60 and 80,000 illegals here in the state.

FRED THOMPSON (R), PRESIDENTIAL CANDIDATE: I always said we need to be a nation with high fences and wide gates.

WIAN: The event is sponsored by the Federation for American Immigration Reform or FAIR, a group pushing for a crackdown on illegal immigration.

DAN STEIN, FEDERATION FOR IMMIG. REFORM: Nowhere do you see a voice of populous America stronger than on the immigration debate. It pits elites against basically the American people.

WIAN: FAIR also released a new study concluding that illegal immigration accounts for virtually all of the increase in Iowa's foreign-born population. FAIR estimates the number of illegal aliens in the state has jumped 130 percent since 2000. FAIR's study also estimates that illegal immigration cost Iowa taxpayers $241 million a year.

RON PAUL (R), PRESIDENTIAL CANDIDATE: If you subsidize something you get more of it. And we've been forced to subsidize illegal immigration; you know the promise of amnesty, the promise of birthright, citizenship, free medical care, free education, food stamps and getting on Social Security.

WIAN: Some critics accuse FAIR of using the talk radio marathon to demonize immigrants. CONNIE RYAN TERRELL, INTERFAITH ALLIANCE OF IOWA: Immigration reform is an incredibly complex issue and we definitely need to have conversation in this country about it, but it is not helpful to demonize and demoralize a group of people and to have them be targets.

WIAN: The mayor says critics are trying to stifle debates, discredit the organization by repeating baseless claims that it's a hate group. FAIR says it invited all of the presidential candidates, but so far only Republicans Ron Paul, Fred Thompson, and John McCain have participated.

(END VIDEOTAPE)

WIAN: While organizers hope more will join by the end of the marathon tomorrow, they say some candidates are reluctant to subject themselves to detailed questions on illegal immigration -- Kitty.

PILGRIM: It's such a critical issue for this nation, such a critical issue for this campaign. I can't believe that they can take that position.

WIAN: Well, Kitty, you know look what happened to Hillary Clinton on the issue of drivers' licenses for illegal aliens in New York. Her campaign was tripped by her statements on that. Many of the Republicans have had trouble because of their past support for amnesty. Other accommodations for illegal aliens, it's an issue that a lot of these candidates want to stay away from in detail right now -- Kitty.

PILGRIM: Thanks very much, Casey Wian. Thanks, Casey.

That brings us to tonight's poll. Do you believe any of the current presidential candidates have what it takes to solve the nation's illegal immigration crisis? Yes or no. Cast your vote LouDobbs.com. We'll bring you the results a little bit later in the broadcast.

Illegal immigration is a major campaign issue as Casey just noted, but as we reported all year, the most successful initiatives against illegal immigration have been taken on the local level. Illegal immigration dominated the debate in several races in Virginia this year. The states also launched a number of anti-illegal immigration initiatives including closing a day labor center in Harridan (ph).

A new coalition of pro-border security group says it will lobby lawmakers to make sure more anti-illegal immigration laws are passed in 2008. A new census figure show the states with the fastest growing populations are on our southern border. Texas added half a million new residents this year.

California, the nation's most populous state, gained about 300,000 people. Nevada, Arizona, the country's fastest growing states, population increases almost three percent each. And of course we should point out the U.S. Census Bureau does not distinguish between illegal immigration and legal immigration. Straight ahead, closing arguments just ahead of the Iowa caucuses, Republican candidates talk tough on foreign policy. And Barack Obama's campaign takes a swing at Hillary Clinton's stand on the war on terror. We'll have that story.

And later tonight, a "CNN Special Investigation: Pakistan, Terror Central" plunge deeper into uncertainty by the assassination of Benazir Bhutto; more from Nic Robertson who has reported extensively on the war against Islamic terrorism, tonight at 11:00 Eastern.

(COMMERCIAL BREAK)

PILGRIM: We have much more on the chaos in Pakistan, Bhutto's assassination and Pakistan's role on the war on terror. We'll have that a bit later in the broadcast.

First new developments in the war on the middle class, our government is offering many late returns to millions of diligent American taxpayers who file early every year. The IRS says some three million of the early bird filers will have to wait until February to get their refunds because Congress took so long to work out changes in the alternative minimum tax. Now lawmakers' late action means the IRS won't start processing forms for the alternative minimum tax until well into the New Year.

There's new evidence that the mortgage crisis is escalating for middle class homeowners, the Mortgage Bankers Association says mortgage applications fell to a record low, dropping 7.6 percent last week.

And on another front in the mortgage meltdown, billions of dollars in write-offs from some of America's biggest lenders; Citigroup, Merrill Lynch, MorganStanley announcing that they're likely need to write down a total of more than $36 billion in losses tied to the deepening credit crunch, now you'll recall those same three companies already have turned to Chinese and Arab investors for bailouts to cover mortgage losses. Citigroup to the tune of $7.5 billion from the United Arab Emirates; Merrill Lynch turned to Singapore for a $5 billion bailout and MorganStanley just last week taking a $5 billion investment from the Chinese government.

We have time now for some of your thoughts and Louis in New York wrote, "Dear Lou Dobbs, As an Independent voter, I enjoy your daily evening show. I support your stand on illegal immigration and your justified outrage at the Bush administration's war on the middle class."

Thousands of viewers responding to a report that we heard last night about the crackdown on illegal immigration in Arizona; Maxine in South Carolina wrote to us. "Hello Lou, right on to the state of Arizona for enforcing federal immigration laws and other states should do the same. Keep it up."

And Ryan in Kentucky, "My praise to the great state of Arizona; their tough stance on illegal immigration will make a difference even all the way up here in Kentucky." We'll have more of your e-mails a little bit later in the broadcast. Each of you whose e-mail is read here will receive a copy of Lou Dobbs new book "Independents Day: Awakening the American Spirit." And it's a book that corporate America and the Democrats and the Republicans don't want you to read.

Coming up, a key ally in the war on terror in chaos, Pakistan facing extremists internally and along its borders, top foreign policy analysts will join us.

And terror politics, Republican candidates ramp up their battle over foreign policy. We'll have a full report on that and then senior political analyst Mark Halperin with his expert analysis of where the candidates stand in the final week leading up to the all-important Iowa caucuses.

Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Presidential candidates escalated their battle over foreign policy after the assassination of Benazir Bhutto. Republican candidates in particular fought over who is the most qualified to fight radical Islamist terrorism. Dana Bash reports from Des Moines, Iowa.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): In Iowa John McCain opened at town hall paying his condolences and playing up his experience.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I knew Benazir Bhutto. I know Musharraf very well. And if I were the president of the United States I would be on the phone right now and I would be meeting with the National Security Counsel.

BASH: In Florida, Rudy Giuliani talked terrorism.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: Each one of these events that happens reminds me that we have to do everything we can to prevent these terrorist attacks and we have to do everything we can to win this war that Islamic terrorists are perpetrating against us.

BASH: In New Hampshire Mitt Romney called for propping up moderate Islamic leaders.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: And we must come together in an effort in great haste and with great earnestness to help overcome the threat of the spread of radical violent jihad.

BASH: Fred Thompson also talked tough on terror.

THOMPSON: And it's a global conflict. Al Qaeda wants to bring western civilization to its knees.

BASH: Mike Huckabee declared it too early to discuss the impact of Benazir Bhutto's assassination and offered prayers.

MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: First of all let me begin by expressing on behalf of I think every American our sincere concerns and apologies for the horrible incident that has happened in Pakistan.

BASH: GOP reaction varied, but the reality is, two candidates, John McCain and Rudy Giuliani, score best on national security and they got into an instant tussle to delicately capitalize on an issue that had receded. McCain even admitted to CNN it could help him.

MCCAIN: And I'm the one with the experience, the knowledge and the judgment, so perhaps it may serve to enhance those credentials.

BASH: Giuliani immediately connected the attack in Pakistan to his biggest strength, 9/11.

GIULIANI: America feels a strong sense of I think connection to something like this because of what happened to us.

BASH: But McCain bluntly challenged Giuliani's foreign policy experience.

MCCAIN: I think he did a great job post 9/11 in handling a post crisis situation. I don't know how that credential - how that provides one credentials to address national security issues.

BASH: It's hard to tell how Bhutto's assassination will affect the republican race but I can tell you this. The building where I'm standing was packed earlier with undecided republican voters here to see John McCain. They said that the events in Pakistan were a wake-up call that as much as they have been focusing on issues of tax and immigration, that the war on terror is still a giant challenge and it may hold more weight now on how they pick the republican nominee for president. Dana Bash, CNN, Des Moines, Iowa.

KITTY PILGRIM, CNN ANCHOR: Coming up later in the program, Barack Obama on the attack blasting Hillary Clinton on her stand on terrorism and Hillary Clinton strikes back, a special report we have coming back.

Tonight Pakistan stands on the brink of disaster after the assassination of Benazir Bhutto. Radical Islamic terrorists along the border with Afghanistan, Pakistan's arsenal of nuclear weapons potentially at risk. Joining me now is Christine Fair, senior political scientist at the Rand Corporation and Ashley Tellis, senior associate at Carnegie Endowment for International Peace. And thank you both for being with us this evening. Mr. Tellis, let me start with you. What do you believe this means for the political stability of Pakistan and the implications for U.S. policy?

ASHLEY TELLIS, CARNEGIE ENDOWMENT: I think what it does is it takes us further away from the normalcy that we would like to see returned to Pakistan. The distance from normalcy means that the war on terror is hampered and the kind of political transition that we would like to see towards a moderate regime becomes even more difficult.

PILGRIM: Christine, is this a setback for the Bush administration and their policy? They were, after all, hoping for some kind of a power sharing agreement with Bhutto and Musharraf and now that is dashed.

CHRISTINE FAIR, RAND CORPORATION: Well, to be clear, there was very little chance that Benazir Bhutto was going to emerge from that election as prime minister. I think the real objective was that Musharraf was hoping to have a reasonably fair and free election through which he could legitimize his government. A number of changes to the constitution was made. He really needed to do something to increase the patina, if you will, of the democracy so he could be emboldened in trying to fight the war on terror with a greater sense of popular support.

PILGRIM: President Musharraf had declared a state of emergency. There were some issues with his moving towards democracy, Mr. Tellis. Do you believe that now it will move in more of a direction away from democracy at this point? It will have to, to maintain stability?

TELLIS: It doesn't have to come to that. In fact, ideally, I hope he makes the right decision of moving as quickly as possible towards an election. The problem though is that one of the principal parties in Pakistan, Benazir Bhutto's people's party, is without a leader right now. Under these circumstances, whether you can have an election that represents the popular will is really an open question.

PILGRIM: Let me read you a comment that Benazir Bhutto wrote upon her return to her country after years in exile. She was very critical of the Musharraf government. She didn't withhold any criticism of the Musharraf government. This is what she wrote, "I have long claimed that the rise of extremism and militancy in Pakistan could not happen without support from elements within the current administration. My return to my country poses a threat to the forces of extremism that have thrived under a dictatorship. They want to stop the restoration of democracy at any price." And yet the Musharraf government is the government that is our ally on terror. Is that not a contradiction?

TELLIS: It is a contradiction and I think it is true to at least one proposition in her e-mail, which is that elements of the Pakistani government has been at least in dalliance with some of the extremists groups. My own sense is that Musharraf has tried to take some steps in the direction of moving Pakistan to normalcy but my judgment is that he hasn't done enough.

PILGRIM: Christine Fair, we've sent billions in aid to President Musharraf's government and hoping that the war on terror will be pushed along. We heard from our correspondent earlier that Pakistan has not come up to expectations in terms of quelling terrorist activity in Waziristan. Do you believe that we will be able to get results or do you think that this will begin deteriorate and the pressure will be on U.S. forces going forward?

FAIR: Well I think in the big picture we have to remember that even though we spent $10 million, and there may be a temptation to say we haven't struck the best bargain. What we do get from Pakistan is an uninterrupted access to move our fuel from Karachi port into Afghanistan. It's always important to remember that. That being said, addressing the issue that you raised, I think as Dr. Tellis has mentioned, the Pakistani military and some of the associated outfits that it uses like the frontier corps has demonstrated a solid instability to deal with the insurgency over the belt that connects Pakistan to Afghanistan. So even if Pakistan's will to go after the militant elements that are ensconced in that area, it's certainly the case militarily, the Pakistan armed forces are not up to that job.

What we've seen as a result of some of their less capable military actions has been a response among the populous. This resulted in a wider spread insurgency far beyond what is traditionally considered to be the tribal belts.

PILGRIM: With this extremist element in Pakistan, Dr. Tellis, how much do you worry about Pakistan's nuclear capacity and falling into the wrong hands?

TELLIS: I think at the moment, the threat is not as acute as people sometimes think. But there is an enduring problem and the enduring problem is that the ranks of the Pakistan military, especially at lower levels, have become increasingly penetrated by people with radical ideas, who, if given the opportunity, might not stop at doing something that is particularly dangerous and that is the contingency that we always have to worry about. It's something that will occupy both the Pakistani state and the United States for actually many years to come.

PILGRIM: Christine Fair, how do you think the U.S. should proceed in terms of foreign policy going forward in this moment of crisis?

FAIR: Well my concern has been, and has been a concern of many people around town, that right now our policy is not related to Pakistan. It's really focused on one person and that's Musharraf. I think this crisis, just as much as any other crisis that Pakistan has confronted in recent months, demonstrates that the United States needs to have a policy to engage the country of Pakistan, not simply Musharraf and his primary institution, the army.

I think that what we see is a lot of scrambling. Folks really don't know what to make of the Benazir Bhutto assassination and what is going to be but what is very clear, is that we need to have a strategy that moves beyond Musharraf.

I think Dr. Tellis is right to raise the issue of elections. It's important to have elections soon because we don't want President Musharraf to use this as opportunity to strengthen his personal control over the country. That being said, a number of things have to be put into place to ensure free and fair elections. Obviously, the PPP has to be able to nominate a successor and get out there and make their case made.

We should really be pushing for a reconstitution of the Supreme Court and the reinstatement of the Supreme Court justices that were ousted. In other words, there are several structural and institutional changes that the United States should be pushing for right now.

PILGRIM: Is the time right for that though in this moment of crisis? Isn't that extremely difficult? Shouldn't that have been done previously?

FAIR: Well, see this is a dilemma we always have with Pakistan. Everyone always says we need to defer this, because now is not the right time. Six years into this mess, we're still saying now is not the right time. There's always an excuse to defer those things that need to be done.

I think it's important that the United States seem to be supporting execution institutions, not persons. This would be I think an important departure from the policy up to now which is very much focused on President Musharraf and his primary institution, the army.

PILGRIM: Thank you very much, Christine Fair and Ashley Tellis. Thank you for your analysis this evening.

TELLIS: Thank you.

PILGRIM: Coming up, Obama campaign goes on the attack; the Clinton campaign hits back. We'll have a special report.

Also, Mitt Romney places his bets on the early primaries with closing arguments in New Hampshire.

And top political analysts Mark Halperin will join us with campaign insights.

We'll have all of that when we come back. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Senator Barack Obama today went on the offensive in Iowa and the Clinton campaign immediately hit back. Obama's campaign blasted Senator Clinton's foreign policy record and Clinton accused the Obama campaign of baseless allegations. Jessica Yellin reports on the tough battle between Senator Obama and Senator Clinton.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CORRESPONDENT: In the final push to the caucuses, a representative of the Barack Obama campaign seemed to link Benazir Bhutto's death to Hillary Clinton's 2002 vote on the Iraq war. While Clinton has claimed her foreign policy experience makes her the stronger candidate, Obama's top strategist, David Axelrod, turned that claim against here.

DAVID AXELROD, OBAMA CHIEF STRATEGIST: I think and people need to judge where these candidates were and what they've said and what they've done on these issues. I mean she was a strong supporter in the war in Iraq, which we would submit is one of the reasons why we were diverted from Afghanistan, Pakistan, al Qaeda, who may have been players in this event today. That's a judgment she'll have to defend.

YELLIN: The Clinton campaign had a fierce reaction saying, "This is a time to be focused on the tragedy of the situation. No one should politicizing the situation with baseless allegations." All this happened the same day Barack Obama unveiled his newly honed closing argument with stinging jabs at Senator Clinton.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: You can't at once argue that you're the master of a broken system in Washington and then offer yourself as the person to change it.

YELLIN: And at John Edwards and his confrontational rhetoric.

OBAMA: There's no shortage of anger and bluster and bitter partisanship out there. We don't need more heat. We need more light.

YELLIN: Before a wrapped standing room only crowd, Obama made an impassioned call to caucus for him insisting he will end the red-blue divide in Washington and even change history.

(END VIDEOTAPE)

YELLIN: Now Kitty, Senator Obama has maintained even today that he has run a different kind of campaign, a positive campaign. We asked his strategist, David Axelrod, did he really mean to suggest that Senator Clinton was somehow responsible for Benazir Bhutto's death. He said no, he didn't mean to suggest she was in any way directly complicit.

PILGRIM: Nevertheless Jessica, there's been a lot of sharp attacks this week and in Iowa, they don't take kindly to negative campaign. What's been the reaction?

YELLIN: Well so they say, the pundits are always insisting that Iowans don't like negative attacks but when you hear the candidates take these jabs at one another, the crowds go nuts. So it seems to do well in a stump which may explain why the candidates keep delivering them. Kitty?

PILGRIM: Thanks very much, Jessica Yellin.

Well, republican business man turned politician Mitt Romney today cut back on the attacks and did emphasize positive. He's pushing for wins in both early primary contests and he's hoping for a strong close in New Hampshire before heading to Iowa. Mary Snow reports from New Hampshire on the changing tone of the Romney campaign.

(BEGIN VIDEOTAPE)

MARY SNOW, CNN CORRESPONDENT: Apart from comments on the assassination of Benazir Bhutto, republican presidential hopeful Mitt Romney's closing arguments to New Hampshire voters is worth noting for what it didn't include, attacks against his republican rivals. Instead, he tried to strike a note of optimism.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: It's time for us to replace sense of concern and pessimism with a sense of optimism about our future because America's future is indeed going to be bright.

SNOW: The emphasis on being up beat comes on the heels of some stinging jabs targeted at Senator John McCain who's gaining ground in New Hampshire and Mike Huckabee who is surging in Iowa. Some liken it to a one-two punch for Romney. His once comfortable lead is threatened in these early states. One republican strategist suggests there may be a good reason for Romney to turn a corner.

DAVID WINSTON, REPUBLICAN STRATEGIST: So you see two candidates with relatively positive messages and in both cases, it's Romney taking the hit and run. His only response is to go negative.

SNOW: And he has. One main target is illegal immigration, a key issue for republicans. He's taking aim at Huckabee and McCain trying to portray them as advocating amnesty to the point where McCain campaign fired back saying Romney is in a tail spin. No attacks here in Manchester, just a passing reference to English only classrooms.

ROMNEY: I'm convinced to be successful in America, you have to speak the language of America and so we fought to get our kids English emergent.

SNOW: Romney's also emphasizing strengthening families. With his wife by his side, he took a subtle jab at some who have already made it to the White House.

ROMNEY: If I become your president, I will fight to strengthen the family here in our home and I won't embarrass you in the White House.

(END VIDEOTAPE)

SNOW: But to get to the courthouse, Romney acknowledges that it is crucial to win these early states and with his front runner status in jeopardy, he's been canvassing New Hampshire and he now heads to Iowa to make his case. Mary Snow, CNN, Manchester, New Hampshire.

PILGRIM: A reminder now to vote in tonight's poll, do you believe any of the current presidential candidates have what it takes to solve the nation's illegal immigration crisis? Yes or now? Cast your vote at LouDobbs.com. We'll bring you the results in just a few minutes.

Coming up at the top of the hour, a special edition of THE SITUATION ROOM with Wolf Blitzer and Wolf is here now with a preview. Wolf?

WOLF BLITZER, CNN ANCHOR: Thanks very much, Kitty.

We're watching the latest fall out from this incredible story, Benazir Bhutto saying months before her death who should be held responsible, if anything happens, two months specifically. Her message contained in a shocking e-mail with instructions for me to share it with the world if anything happened. It's an exclusive report. We're going to be sharing that with you. Also, we'll speak with an old friend of Benazir Bhutto. He knows this subject very, very well. Carol Costello will tell us about the security that apparently wasn't there when she was killed. All of that and a lot more coming up in the special edition of THE SITUATION ROOM. Kitty?

PILGRIM: Thanks very much, Wolf.

Also coming up, presidential candidates shifting focus after Bhutto's assassination in Pakistan. We will talk with top political analyst, Mark Halperin, co-author of "The Way to Win, Taking the White House in 2008." Stay with us.

(COMMERCIAL BREAK)

PILGRIM: Just days before the Iowa caucuses, the presidential candidate shifted focus; foreign policy, war on terror rising to the top of the agenda after today's assassination of Benazir Bhutto. Joining us now is Time Magazine's senior political analyst, Mark Halperin. He's also co-author of "The Way to Win, Taking the White House in 2008." Mark, thanks for joining us tonight.

MARK HALPERIN, SENIOR POLITICAL ANALYST: Good to be here.

PILGRIM: We did see a shift of topics. What issues are really resonating with the voters in Iowa right now?

HALPERIN: Well, every candidate I saw speak today of course opened his remarks with recognizing the gravity of the situation in Pakistan. But my sense is that is not going to dominate this election.

On the democratic side, the very issues that the candidates are talking about, change versus experience is that dramatic issue difference in battle is I think much bigger than any issue. The war in Iraq has receded a little. Health care is a big issue.

On the republican side, I think electability is a big issue and I think people want a president who will lead the country in a new direction but a conservative direction. You see that playing out here in Iowa in one way between Huckabee and Romney, a very different race in New Hampshire.

PILGRIM: You know Mark, what really strikes me is the number of undecided voters still in Iowa and that means that it's pretty much wide open. As much polling as we do, there's still this wild card and actually I was kind of surprised by the numbers. I would like to put them up for our viewers. Democrats still trying to decide 34 percent. Republicans still trying to decide 40 percent. That's a big swing vote, isn't it?

HALPERIN: It's a huge undecided, maybe even historically large. Of course they're not all going to go in one direction but generally undecideds tend to break in one direction in plurality. I think in Iowa particularly on the democratic side, the polls are not that useful because that undecided is going to break in some way. On the republican side because we do have a two person race, Huckabee and Romney, undecided and also turn out. Who has ability to get their supporters out is going to be a big deal here at the end. It adds a layer of unpredictability to a race that's already on both sides has been almost historically unpredictable at least in modern times.

PILGRIM: We've seen Clinton going for sort of older women, and we've seen Obama going for young students. Is that a bit of gamble on turnout?

HALPERIN: It is for both because older women, particularly if the weather bad, you can see when I ever ask anyone from the Clinton campaign about turning out those older women, you can see them. They look a little bit like their biggest enemy is the meteorologists of America. If it's bad weather on caucus night, they're worried about getting the older women, first-time caucus goers in many cases out.

Younger voters, any politician who's ever relied on younger voters in almost every case has been disappointed. The Obama campaign is very sophisticated. They feel they reached out to those people better, more conclusively, than anyone ever has. They're not wholly reliant on those younger voters. They do have a lot of older voters and regular caucus going they hope forms a foundation on those younger people.

PILGRIM: This may be a test case on the youth vote and it will be interesting to see how it turns out. Mark, you know the sleeper candidate could play the role of spoiler, also. We have John Edwards and John McCain who may fulfill that prediction, correct?

HALPERIN: Well there's no question that here in Iowa, I've been saying, while Obama and Clinton get most of the headlines, don't count out John Edwards. He can win these caucuses. Ask anyone following this closely including people working for Clinton and Obama. They'll tell you that Edwards can win. That will really shake up this race. It would create a lot of uncertainty headed into New Hampshire because Edwards is not strong enough anywhere but Iowa right now to be the nominee. He's hoping to rocket out of here.

John McCain is hoping, as many other republicans are, to finish third in Iowa, if he can behind Romney and Huckabee and whatever order they finish. His strength is really in New Hampshire where he's putting pressure on Mitt Romney. And again John McCain once the front-runner given for dead as some but now many people are saying as likely as others to be the nominee. Again part of the unpredictable topsy-turvy nomination fights we're seeing on both sides.

PILGRIM: We appreciate your analysis on it. Mark Halperin, thank you very much.

Still ahead, the results of tonight's poll, more of your e-mails. Next, stay with us.

(COMMERCIAL BREAK)

PILGRIM: Now the results of tonight's poll. 75 percent of you do not believe any of the current presidential candidates have what it takes to solve the nation's illegal immigration crisis.

Time now for some of your thoughts.

Richard from Nebraska wrote to us, "I have become an avid fan of your show. I have been an independent for three years. Neither party represents the citizens' wills and desires. Keep up the good work. We need to get back to basics where each individual is responsible for their destiny not the government is acting on behalf of the people."

And Carol in California wrote, "Dear Lou, my husband and I want to be part of the solution instead of the problem so we are now proud Independents. That's Independent-American to be politically correct. Power to the people."

Vicky in Ohio, "Lou, I watch your show every night. I have been a Democrat for over 30 years but I don't trust any of the Democratic candidates. They told us they were going to change things in Washington. They have handed George Bush everything he has asked for without listening to the American people. I am going to register as an Independent ASAP."

Mary in Illinois, "We enjoy watching your program and it is so good to see someone with a common sense head on their shoulders!"

And on the assassination of Benazir Bhutto today, Jon in Florida wrote to us, "Without the Lou Dobbs show, I would not know who Benazir Bhutto was. I saw her interview prior to her heading for Pakistan. She was very well spoken and was most compelling. It is said that she is gone. Thank you for introducing her to us. She was courageous and knew the dangers, but she faced them head-on. Thank you again."

Each of you whose e-mail is read here receives a copy of Lou's new book "Independents Day, Awakening the American Spirit." This is the book that corporate America, the democrats and the republicans don't want you to read.

Thanks for being with us tonight. Please join us tomorrow.

For all of us here, thanks for watching. Good night from New York. A special edition of THE SITUATION ROOM starts right now.

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