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AMERICAN MORNING

Secretary of State Rice Arrives in Georgia to Push for Emergency Peace Talks; Pervez Musharraf Expected to Resign; Obama Plane Emergency Landing; Michael Phelps Midas Touch; Secret Lives of Famous American Spies; Search For Energy Reaching New Depths; Wal-Mart Controversy Over Politics in the Workplace; Airlines Charging Soldiers for Checked Luggage

Aired August 15, 2008 - 06:00   ET

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


JOHN ROBERTS, CNN ANCHOR: Breaking news. Condoleezza Rice in the war zone. Peace agreement in hand. Can the U.S. broker a deal as Russia moves in to new Georgian territory?
A very clear message this morning from the Pentagon.

And hunting for oil in America under churches, homes, parks. A lot of money floating around.

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UNIDENTIFIED MALE: What a God we serve.

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ROBERTS: But not everyone is happy.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Hush money is what I've called it.

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ROBERTS: On this AMERICAN MORNING.

And good morning. Thanks very much for being with us on this Friday. It's the 15th of August. John Roberts together with Kiran Chetry. Good morning to you.

KIRAN CHETRY, CNN ANCHOR: Good to see you and we have a lot going on. Now, we continue to follow our top story, the latest breaking developments right now in the Russian invasion of Georgia.

Now we're just getting word that Secretary of State Condoleezza Rice landed in Georgia. A new cease-fire plan offering concessions to Moscow in hand allowing Russia's peacekeepers to stay in a disputed region of Georgia.

Meantime, there are conflicting reports over Russia's grip on the country. Georgia's president says that a third of his country is under Russian control. And dramatic video just released of Turkish journalists caught in the shooting between Georgian and Russian forces. We're going to have more for you on that in a couple of minutes.

But meanwhile, to Pakistan where it could be days before that country's president, Pervez Musharraf, resigns. Sources in the country say Musharraf is likely to step down before his political rivals kick off an effort to impeach him. Musharraf has been a key ally in the war on terror. There are concerns his departure could U.S. efforts to fight al-Qaeda and the Taliban in and around Pakistan.

Six gold medals in six events for Michael Phelps. He won the 200 meter individual medley. He also set his sixth world record of the game. He's swimming now for number seven. That will be tonight. He could tie Mark Spitz's 36-year record for most gold medals won in the Olympics. We're live in Beijing with a full recap for you a bit later -- John.

ROBERTS: Now back to our top story. And new developments in the Russian invasion of Georgia. Secretary of State Condoleezza Rice arrived in Georgia just moments ago with a new cease-fire deal in hand that would let Russian troops stay in the South Ossetia region.

Russia's foreign minister says, "Georgia can forger about regaining two contested regions. And Georgia's president, Mikheil Saakashvili, says a third of his country is still occupied.

Meantime, dramatic video just released of Turkish reporters caught in the shooting between Georgian and Russian forces on Sunday. One journalist was shot in the head.

Can't imagine what it's like to be caught in the middle of that. All four reporters are safely back in Turkey this morning. Our Frederik Pleitgen is live in the Georgian capital of Tbilisi for us again today.

Frederik, what's the reaction on the ground there from Georgian officials and the Georgian people to Condoleezza Rice's visit?

FREDERIK PLEITGEN, CNN BERLIN CORRESPONDENT: Well, Condoleezza Rice, John, is just now on her way already to the presidential palace here in Tbilisi where in a couple of moments she's going to be meeting with the Georgian president, with Mikheil Saakashvili, to present him with that cease-fire plan that, of course, holds a lot of very painful concessions to the Russian side by the Georgians. And that's one of the biggest problems the Georgians have with this.

They are telling us, both the people we're talking to and the Georgian government, that they're somewhat disappointed in the way the U.S. has handled this conflict. They say they weren't so much looking for more force from the United States, but they were looking for the U.S. to draw a red line towards the Russians earlier on in this conflict. They say in the early stages of the game the U.S. was too passive and now the Russians are in their territory and the Georgians say there is nothing even the U.S. can do about it, John. ROBERTS: And, Fred, the fact that Nicolas Sarkozy has been in the region, other officials have been in the region and Condoleezza Rice has just now getting there, you said that in the early going President Saakashvili was a little concerned that the U.S. was not quite strong enough with Russia, felt it gave them a green light. The fact that Condoleezza Rice is now coming more than a week after this conflict began, are they a little bitter about that?

PLEITGEN: Absolutely. They're very bitter about that. As you said, not only has the French president been here, but there have also been presidents from other nations here. In the meantime, we're now seven days into this conflict and this is the first time that a top-level U.S. administration official is coming to this country, which, of course, is one of the staunchest allies the United States has really in the world. They're contributing a large number of troops or have been to the campaign in Iraq.

Those have since been brought back here to help in the fighting against the Russian army. But there's no doubt that the Georgians, the people in Georgia here, and also in the Georgian government are very bitter about what they perceive to be a lack of force on the side of the U.S. administration, John.

ROBERTS: We'll see what she can accomplish while she is there on the ground in Tbilisi.

Frederik Pleitgen for us this morning. Fred, thanks very much. We'll keep checking back with you throughout the morning.

A new missile defense deal between the United States and Poland is threatening to raise tensions between Moscow and Washington yet again. Ten American missile batteries will be placed inside Poland and in exchange for providing the base Poland would get a top of the line patriot air defense system that can shoot down shorter range missiles. Washington says that the shield is not a threat to Russia but an important agreement for the security of the United States and the security of its NATO allies.

CHETRY: Well, also new this morning, the first explanation about a $14,000 payment made to Rielle Hunter after she stopped working for John Edwards' campaign. And Edwards' associate telling the "Associated Press" the former presidential candidate's Political Action Committee paid her money to obtain 100 hours of videotape that she didn't use in the short Web movies she produced. Hunter had already been paid $100,000 for the program.

The "Most Politics in the Morning" now. Hillary Clinton's name will be put in nomination at this month's Democratic Convention in Denver. The move allows Clinton supporters to vote for her in a symbolic gesture. Barack Obama pushed for it saying it will bring the party together and heal some bitterness left over from the primary campaign. Both Hillary and Bill Clinton have prime speaking slots at the convention.

Barack Obama outraising John McCain in military donations. According to a nonpartisan research group, U.S. troops stationed abroad had given Obama six times more campaign money than McCain. Military analysts say this is a surprise because McCain is a war hero and troops traditionally vote Republican. McCain's campaign says he's been endorsed by more retired admirals and generals than Barack Obama has military donors.

ROBERTS: Six minutes after the hour. And a story that you'll hear first here on the "Most News in the Morning."

Hillary Clinton sending a letter to the major airlines today asking them not to charge military members for extra bags. She calls it unconscionable that service members traveling to or from a war zone are being charged to carry critical equipment. Clinton is asking Defense Secretary Robert Gates to have the Pentagon direct billed for any extra baggage charges. After we first reported this story earlier this week, American Airlines agreed to waive its fees.

Speaking of American Airlines, some news on that. Our Ali Velshi is here. Remember the old British American Airways?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes.

ROBERTS: Well, there may be back again.

VELSHI: And they've been trying to do this. It hasn't worked. British Airways and American Airlines announcing yesterday a new deal, including Iberia, by the way.

This is the third time they tried to make a go of this. Basically it's a co-chairing agreement so you can buy a ticket on American and you can extend it through on all the British Airways flights. More flights will be available.

The CEOs of both airlines say that it's a way to expand without, you know, buying new planes and trying to combat the fuel situation. Now, the last two times they tried to do this they were smacked down by regulators. But the regulatory world has changed with respect to airlines. And the biggest opposition that these two airlines are probably going to get right now is from Virgin Atlantic, Richard Branson's airlines. In fact, here's what Branson had to say about this deal.

He said the monster deal is, "If this monster monopoly is approved it will still be bad for passengers and bad for competition."

Now yesterday I spoke with the CEOs (ph). It's bad for the UK and the U.S. airline industry. Yesterday I spoke with the CEO of British Airways and asked him why he thought Richard Branson and Virgin were so opposed to this deal.

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WILLIE WALSH, CEO, BRITISH AIRWAYS: I think Virgin are concerned about our ability to be much more attractive to the consumer. This is a good story for the consumer. Might not be a good story for Richard Branson, but it's a good story for the consumer. And quite honestly, I haven't heard him come up with any new ideas, any new arguments that the ones that he's strutted out year in year out.

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VELSHI: British Airways and American both saying Richard Branson and Virgin don't have the right idea. They say this will result in easier transfers for passengers. They said that it shouldn't increase fares for passengers.

ROBERTS: Isn't it remarkable that even when he's upset, Richard Branson is still smiling.

VELSHI: That's absolutely right.

ROBERTS: The man has a good life.

Ali, thanks. We'll see you again soon.

VELSHI: OK.

ROBERTS: Kiran?

CHETRY: Michael Phelps has the Midas touch. The swimming sensation takes home another gold and braces for a big shot in history today. We're live in Beijing.

Also, the real story now revealed. Brand-new cockpit tapes suggest a scare on Barack Obama's campaign last month was a lot more serious than officials told us all.

(BEGIN VIDEO CLIP, OBAMA PLANE EMERGENCY TAPES)

PILOT: St. Louis approach Midex 8663. At this time we'd like to declare this an emergency and also have CFR standing by in St. Louis.

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CHETRY: Why the new developments are coming out now and what the airline is saying. You're watching the "Most News in the Morning."

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SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Any time the pilot says that something's not working where it's supposed to, you know, you make sure you tighten your seat belt.

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CHETRY: That was last month. Barack Obama called the unscheduled landing of his plane a little incident. Well, this morning we're learning from FAA control tower tapes that the situation was serious and pilots declared an emergency landing.

Our Jeanne Meserve joins us now from Reagan National Airport with more on the new developments. Hi Jeanne. JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Hi, Kiran. On July 7th when this happened, both the FAA and Midwest Airlines said the unscheduled landing in St. Louis was not caused by an emergency. But tower tapes, first obtained by ABC News tell a different tale.

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PILOT: At this time we'd like to declare this an emergency and also have CFR standing by in St. Louis.

TOWER: I will show that and would you -- do you have a preference on runways? Would you like runway 3-0 right or runway 3-0 left?

PILOT: Well, which one is the longest?

TOWER: Runway 3-0 left.

PILOT: OK. We'd like 3-0 left and just for informational purposes, we have Senator Obama onboard the aircraft and his campaign.

TOWER: Roger that.

(END VIDEO CLIP)

MESERVE: Now, obviously, this plane landed safely. The National Transportation Safety Board in a preliminary report said the cause was the inside deployment of an emergency flight in the tail cone of the plane. Their investigation is continuing, but they found no sign of tampering.

As for how the FAA got it wrong, a spokesman for the agency says often preliminary information about an incident is incorrect. In this instance it was never clarified.

Kiran, back to you.

CHETRY: And just to refresh our memories, all's well that ended well. They landed on that runway and there were no problems?

MESERVE: That's absolutely correct. All was well.

CHETRY: All right. Jeanne Meserve for us this morning, thank you.

ROBERTS: 13 minutes after the hour. So you buy a house and then you meet Mr. Right and you get married. But when the relationship goes south, does he have a claim to the place that you paid for? Our legal analyst Sunny Hostin answers your questions.

Plus, counting down to history. Michael Phelps takes another gold medal at the Olympics and gets ready for one of the biggest moments of his career tonight.

We're live in Beijing. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK) ROBERTS: Welcome back to the "Most News in the Morning." The golden boy does it again. Michael Phelps wins his sixth gold medal in six tries. He won the 200 meter individual medley in world record time. He goes for gold medal number seven tonight, and that would tie Mark Spitz for the most number of gold medals in a single games.

Phelps helped push the United States back to the top of the medal count as well. The U.S. now has 43 overall medals compared to 37 for China, but China still has more gold. Australia in third place now with 20 total medals.

And it was a very successful day for the United States not only in the pool but the gym as well.

Larry Smith joins us now live from Beijing with an Olympic wrap. Gold, silver in the individual gymnastics there, Larry. Not a bad night.

LARRY SMITH, CNN SPORTS CORRESPONDENT: That's right. You know, after seeing China get many gold on Thursday. This time it was the American's time to take center stage.

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SMITH (voice-over): Nastia Liukin is the "it girl" in gymnastics beating friend and teammate Shawn Johnson for the individual all around gold medal in Beijing. It's the first gold medal for the U.S. gymnasts at these games and the first gold silver finish in the event in U.S. history.

Another chapter in the historic Beijing story of Michael Phelps, a six gold medal and world record breaking performance this time beating his closest rival by more than two seconds in the 200 meter individual medley. American Ryan Lochte took the bronze. Phelps will go for his seventh gold Saturday morning in Beijing that would tie Mark Spitz's hallowed record of seven gold medals from the 1972 games.

Rebecca Soni stole the show earlier in the Water Cube's pool, stunning Australian star Leisel Jones to break her world record and win gold in the 200 meter breaststroke.

Talk about making the most of a stroke of luck, Australian Libby Trickett made the 100 meter freestyle final only when a Chinese swimmer was disqualified. Trickett took silver on Friday beating the favorite Natalie Coughlin of the U.S. who settled for bronze.

The USA men's basketball team gets ready for an undefeated showdown with Spain after their most impressive win yet, a 92-69 victory over a Greek team that beat them in the world championships two years ago.

James Blake shocks the tennis world when he knocked off top seed Roger Federer in straight sets. His first win ever over the Swiss sends Blake to the semifinals. Serena and Venus Williams won't join him there. Both lost in their quarterfinal matches.

(END VIDEOTAPE) ROBERTS: However, Venus and Serena aren't done. They won their doubles match today and they will move on now to the quarterfinals. Let's go back to you.

ROBERTS: So what's the betting there? Is he going to do it tonight, gold medal number seven?

SMITH: Oh, I think so. Nothing's going to stop him at this point.

ROBERTS: I'll tell you. What a phenom (ph) that guy is. Larry, thanks very much. We'll check back in with you.

CHETRY: Excuse me, he's making it look too easy, you know.

ROBERTS: You got to know is not easy.

CHETRY: I know but --

ROBERTS: You know, if he's got to eat 12,000 calories worth of food a day, he's putting out a lot of energy in that pool.

CHETRY: You know, it's just gold, gold, gold.

ROBERTS: And he's doing these doubles too. He's swimming the qualifiers and then 35 minutes later swimming in the final. Wow, amazing.

CHETRY: That's right. Energized by that entire pizza keeps him going.

Well you bought it, you own it, right? Maybe not if you end up getting divorced. How sour relationships could sink the investments you made years before you said I do.

Hallowed ground.

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UNIDENTIFIED MALE: If I prayed over that ground, if I walked over that ground, something good was going to come from it.

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CHETRY: The church and neighborhood that are sitting on a gold mine.

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UNIDENTIFIED FEMALE: We're making a lot of millionaires up here.

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CHETRY: Now they just have to get it out. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK) CHETRY: Welcome back to the "Most News in the Morning." It's Friday and it means we're taking your questions in our legal hotline. Our legal analyst Sunny Hostin is here.

And today's question is about, you know, what do I get to keep if things go sour? It's from Terrance in Maryland writing on behalf of his mother who lives in Florida. And Terrance writes, "My mother is separated, but not legally. She owns her house and land. She brought this into the marriage. So (ph) does her spouse have any legal rights to claim the house and the property?"

SUNNY HOSTIN, AMERICAN MORNING LEGAL ANALYST: It depends is the short answer, Kiran. Florida is an equitable distribution state, which means courts decide what is fair, not necessarily equal. Even though she brought this house and land into the marriage, typically that would be a non-marital asset so she would keep it.

But let's say, Kiran, during the course of the marriage her spouse paid the mortgage every year for the past 10 years. Let's say he paid for a gut renovation. A court may decide it would not be fair to give him no claim and could convert that non-marital asset into a marital asset which means she wouldn't keep it.

The best, best option I think is to make an agreement, to come to an agreement with her spouse outside of the court, allow her to keep it, and then go to the court and ask the court to ratify that agreement. Most Florida courts will ratify an agreement that is reasonable and then she would be able to keep the house. But if not, if you leave it in the court's hands, it's possible that the court will take those plans and take that house away from her.

CHETRY: Wow, that's pretty interesting especially as you said, it depends on the state. There are other states where that wouldn't be an issue, right?

HOSTIN: Exactly, exactly. It really depends on the state. But in Florida, equitable distribution state and you really never know.

CHETRY: All right. Well, there's your answer, Terrance. So maybe they can hammer out an agreement.

HOSTIN: Yes.

CHETRY: As you said, sometimes it works out better to try to do that before you go to court.

HOSTIN: Self-help. Self help. Typically, even though I'm a lawyer and I don't want to take jobs out of, you know, out of my brethrens hands, typically, typically self-help can be the best option.

CHETRY: All right. Sunny, thanks. Good to see you.

ROBERTS: 23 minutes after the hours. From developing shark repellant to mustard remoulade, the secret life of Julia Child and other famous Americans revealed as spies in newly released government documents. Plus, emergency diplomacy overseas. Secretary of State Condoleezza Rice pushes a new cease fire in Georgia as our own Frank Sesno looks at the new Russian threat.

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FRANK SESNO, CNN SPECIAL CORRESPONDENT: If the Russians have decided to rebuild the empire, reassert control over the neighborhood, keep a heavy hand on all the oil and gas that could be pumped from central Asia, all bets may be off.

(END VIDEO CLIP)

ROBERTS: A look at what can be done to keep this latest conflict from totally boiling over. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: Never ever thought of Julia Child as mysterious. But guess what? Welcome back to the "Most News in the Morning."

Newly released government documents unveil a long list of Americans who served the government during World War II and went on to greater fame after it. But as our Brian Todd reports, none is more surprising, perhaps, than Julia Child.

BRIAN TODD, CNN CORRESPONDENT: Good morning, John and Kiran. There is fascinating new detail in these newly released papers from the files of the OSS, the precursor to the CIA. Now at certain points in these documents, you get the feeling you're going through a veritable who's who of 20th century American icons.

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TODD: She was the chirpy schoolmarm who made cooking on TV hip decades before Rachel Ray.

(BEGIN VIDEO CLIP)

JULIA CHILD, TV HOST: Today we are going to do breast of chicken in the French manner.

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TODD: But before she cooked up chicken breasts as the French chef on PBS, Julia Child helped concoct sharp repellant for the OSS, the Office of Strategic Services, America's chief spy agency during World War II and the forerunner of the CIA.

The National Archives just released 35,000 files of OSS operatives from the war including details of Julia Child's work as an administrative specialist behind enemy lines in Asia.

(on camera): This is the research room at the National Archives. Some of these documents are so sensitive that you can't use camera light in here. You have to use the natural sunlight coming in. We're going to show you Julia Child's OSS file from during World War II. This is a lot of it right here. She went by the name Julia McWilliams then. That was her maiden name.

This is a commendation from 1946 for her work behind the lines in China and in Sri Lanka. Talks about the resourcefulness industry and sound judgement that she used. It talks about how her drive and inherent cheerfulness despite long hours of tedious work served as a (INAUDIBLE) and greater effort for those working with her. Pretty impressive work, by the lady who later became the French chef.

(voice-over): 93-year-old Elizabeth McIntosh was a propaganda specialist for OSS and worked closely with Child, who she says had to keep track of spy teams.

ELIZABETH MCINTOSH, FORMER OSS OPERATIVE: She used to have great fun, calling them all sorts of nuts. Macadamia nuts. Some walnuts, key walnut and now often (INAUDIBLE).

TODD: The files reveal operatives who before and after the war were top actors, athletes, attorneys. Arthur Goldberg who later became a Supreme Court justice worked the labor unions behind the lines in Europe looking for recruits. Chicago White Sox catcher Moe Berg, a daring spy, who spoke several languages and tapped into the German's deepest held secrets.

UNIDENTIFIED MALE: He was sent over to determine whether -- how close the Nazis were to building an atom bomb.

TODD: And remember this guy? The actor who played the corrupt cop in "The Godfather"?

(BEGIN VIDEO CLIP, THE GODFATHER")

STERLING HAYDEN, ACTOR: Take all of them. Stand him up. Stand him up straight.

(END VIDEO CLIP)

TODD: In real life, his name was Sterling Hayden. As an OSS operative running agents behind the lines in Europe, he went by John Hamilton, and was the toughest, most courageous spy you can imagine. One document saying he has shown an almost reckless disregard of his own life where duty is involved.

WILLIAM CUNLIFFE, NATIONAL ARCHIVES: You'll see in his file he is trying to outrun or chase -- they're being chased by the Germans. His driver is killed and they flee to their sailboats to get away and get out of German control.

(END VIDEOTAPE)

TODD: Some of those commendations for Sterling Hayden, who was then known as Captain Hamilton, you really have to see to believe. They describe him running agents through enemy-infested waters, of winning ambushes almost single-handedly disabling German operations of the Croatian coast. It's the stuff of Hollywood, but none of it is made up. And, of course, Sterling Hayden went on to have a great acting career after the war.

John and Kiran, back to you.

CHETRY: Fascinating stuff. Brian Todd, thanks.

Well, crossing the half hour now, updating our top stories.

Secretary of State Condoleezza Rice arriving in Georgia just about a half hour ago. She's pushing a new cease-fire agreement, and it includes apparent concessions to Moscow by allowing Russian troops to stay in the disputed South Ossetia region that preserve Georgian borders. This as Georgia's president says a third of his country is occupied by Russia.

And dramatic video showing Turkish journalists under Russian fire. Bullets shredding their cars. The camera rolls. Those journalists are safe this morning.

Troops serving more than one tour in Iraq are at an increased risk for mental health problems, according to new reports. Most units headed to Iraq have more than half of their soldiers serving multiple deployments. Researchers say that more time exposed to the violence in Iraq is increasing serious mental health problems as well as drug and alcohol abuse and a record number of suicides. The military says it is stepping up efforts to identify and treat troubled troops.

The FAA finds American Airlines $7.1 million. The agency claiming American flew planes 58 times after problems were reported with the autopilot systems. It also says the airline violated drug testing rules. American Airlines calls the fine, quote, "excessive and says it will contest it."

And back to our top story this morning. The Russian invasion. The military muscle flexing is now raising some concern that Moscow may be going back to its old, imperialist ways. Is it looking to expand its empire? CNN's Frank Sesno joins us now from Washington with that.

Hi, Frank.

FRANK SESNO, CNN CORRESPONDENT: Good morning, Kiran. Well, that's the concern. And it wasn't supposed to be this way, of course. But the concern being that a resurgent Russia fueled by its oil wealth, throwing its weight around, openly intervening.

(BEGIN VIDEOTAPE)

SESNO (voice-over): This is the nightmare. That a resurgent Russia waging a hot war could rekindle the cold war. A superpower rivalry all over again. The nightmare that when Bush saw Putin's soul he suffered from wishful thinking or just got it wrong.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I looked the man in the eye. I found him to be very straightforward and trustworthy.

SESNO: A lot's happened since then. Putin's accused of cracking down on democracy and the press taking over the energy sector, shutting off the gas in the middle of the winter to pressure his neighbors. But Russia's invasion of Georgia changes the game. And shatters any illusion that the two men who were side by side at the Olympics just a few days ago are playing by the same rules.

If the Russians have decided to rebuild the empire, reassert control over the neighborhood, keep a heavy hand on all the oil and gas that could be pumped from Central Asia, all bets may be off. There were plenty of warning signs, but we were focused on al Qaeda, war in Iraq, and China rising. While we worried about $100 a barrel of oil, enriching regimes in Iran and Venezuela, it was in Russia where oil mixed with resentment and ambition and memories of faded glory. And now, this.

(END VIDEOTAPE)

SESNO: And so it's bad enough what's happening in the neighborhood. But the potential consequences of the nightmare are compounded by the energy equation here. Because Central Asia's oil and gas was supposed to be plentiful and stable. An alternative to Middle Eastern oil with pipelines, the one through Georgia which was only completed three years ago bypassing Russia's power politics. Those hopes along with so many things now thrown very much up in the air.

Kiran?

CHETRY: It's true. Thanks so much, Frank Sesno.

JOHN ROBERTS, CNN ANCHOR: Alina Cho joins us now with other stories new this morning.

Good morning to you.

ALINA CHO, CNN CORRESPONDENT: Good morning to you. Happy Friday. Good morning, guys. Good morning, everybody. New this morning, Saudi Arabia and its rulers cannot be sued for financing the September 11th attacks. On Thursday, a Manhattan Appeals Court backed to lower court ruling that tops out the lawsuit by 9/11 victims and their families. The plaintiffs have argued that the Saudi government gave money to Muslim charities that in turn gave material support to al Qaeda. The Appeals Court ruled that Saudi Arabia is protected by sovereign immunity.

Well, if you have some problems with dropped calls on your new iPhone 3G listen up. That's the new model. Sources with Apple and AT&T say a faulty chip inside the phone is making the calls disconnect. Imagine that. Well, it's been a worldwide problem for users of the new iPhone model. Both companies are now working on a software fix and hopefully it will be ready next week.

Netflix is back up and running. The online movie rental service was hit by some technical problems, and for most in the past three days -- well, unable to send out DVDs to its customers. Netflix says the problem was fixed last night and regular deliveries will resume this morning.

You should also know that if you're one of the 8 million plus customers affected that Netflix will offer you some sort of discount.

And Donald Trump is bailing out Ed McMahon. Trump says he will buy McMahon's Beverly Hill's mansion to save it from foreclosure and he will let McMahon keep living there. Good for him. Trump says he's never actually met McMahon but is acting out of compassion. No word on the purchase price, but the home was recently listed for $4.6 million. McMahon hasn't worked for about 18 months because of a neck injury. You may recall that he defaulted on $4.8 million in mortgage loans. He still has a variety of other debts to deal with, too.

But Trump apparently says that when he was in business school, he used to watch McMahon, who was of course Johnny Carson's sidekick, every night. That's why he wanted to help.

CHETRY: There's something not right about him having to worry about that type of stuff at his age and, you know, being a legend.

CHO: At 85, yes. So, he'll be able to keep living there.

ROBERTS: So here's Donald.

CHO: That's right.

ROBERTS: (INAUDIBLE) for him that's just walking around money, too.

CHO: It is, really.

CHETRY: Hope he had it in his back pocket. Thanks a lot, Alina.

CHO: You bet.

ROBERTS: The search for energy reaching new depths. Homeowners in Texas are opening up their backyards. And a church is even getting in on the act. The new look at the urban drilling boom.

CHETRY: War zone. Jeanne Moos looks at what happens when reporters become part of the story. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: 38 minutes after the hour. Issue number one this morning, gasoline down again this morning. Falling nearly a penny. The average now $3.77 a gallon. And Texas is seeing a major boost in drilling in urban areas. Modern day Jed Clampetts are jumping at the chance to make money while their yards become searching grounds for gas and oil.

As Ed Lavandera tells us, even a church is taking advantage after a discovery that was like manna from heaven.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT (voice-over): Bishop Kenneth Spears always thought gifts from God came from above. He never really imagined he'd find one under his pulpit. BISHOP KENNETH SPEARS, FIRST SAINT JOHN BAPTIST CHURCH: I want to believe that if I prayed over that ground, if I walked over that ground, something good was going to come from it.

LAVANDERA: And then you find out you're sitting on a bunch of natural gas?

SPEARS: I found out was sitting on a bunch of natural gas. I said, what a God we serve.

LAVANDERA: The First Saint John Missionary Baptist Church in Fort Worth, Texas, sits on one of the largest natural gas fields in the country. There are now more than 7,000 gas wells all over Fort Worth. Never before has such a massive residential area been the epicenter of an urban drilling bonanza. Even actor Tommy Lee Jones has touted the drilling effort.

UNIDENTIFIED FEMALE: You know, we're making a lot of millionaires up here in the Barnett Shale Area.

LAVANDERA: Bishop Spears' church signed a drilling lease and got a $32,000 bonus. And as the congregation worships, natural gas is pulled out of the ground below them. That brings in between $3,000 and $10,000 a month in royalties.

(on camera): Energy companies are literally going door to door negotiating for access to drill under people's homes in exchange for those checks. And thousands of people have already signed on.

DON YOUNG, COMMUNITY ACTIVIST: A few people can get rich.

LAVANDERA: But opponents like Don Young say the promises of people getting rich aren't true.

YOUNG: The divide and conquer strategy by going around and giving everybody enough money to keep them quiet, so to speak. Hush money, is what I've call it.

UNIDENTIFIED FEMALE: The pipeline, they told me, would be here right under my trees.

LAVANDERA: Jerry Horton says she rejected a $12,000 offer from Chesapeake Energy to bury a pipeline through her front yard. Now the company is suing her, claiming eminent domain. Her 100-year-old oak trees would be chopped do. And she worries the pipelines are a safety hazard.

UNIDENTIFIED FEMALE: We don't need to destroy our homes, all of our trees, and blow ourselves up. Who's going to be here to enjoy the gas then?

LAVANDERA: Chesapeake Energy insists the pipelines are necessary, without which no one would profit. Bishop Kenneth Spears' church will use their profits to help pay for a new sanctuary. And they pray the gas keeps flowing from below. Ed Lavandera, CNN, Forth Worth.

(END VIDEOTAPE)

CHETRY: Well, can your employer tell you who to vote for? What Wal- Mart employees are saying the company told them in group meetings behind the scenes? So did Wal-Mart cross the line? We'll investigate.

And we have Reynolds Wolf with us today. He's tracking extreme weather for us.

Hello, Reynolds.

REYNOLDS WOLF, CNN METEOROLOGIST: Hello, Kiran. This morning, we're watching this area of disturbed weather through parts of the Caribbean now. Right now crossing over parts of Puerto Rico. There is a possibility that over the next 12 to 24 to 48 hours this could become a named storm. We'll have that coming up in a few moments. You're watching CNN, the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: Well, the birthday cards are in the mail this morning for the material girl. It is Madonna's 50th birthday tomorrow. So we can expect to see some tributes firing up today. The world-renown singer has sold 200 million albums globally. The most successful female solo artist in music history.

CHETRY: How about it? She turns 50 and she's got bigger biceps than Reynolds Wolf.

ROBERTS: Slam.

CHETRY: I'm teasing. So, Reynolds, I mean, she does have big, big arms for a girl, right?

WOLF: Yes. And you know, that's -- I'm not going to go there.

ROBERTS: Leave it alone. Stop.

WOLF: Some of the female persuasion can say that about another female. But as John and I both know, guys, it's a no-no. Here's that line. And you're trying to give me to cross it, not going to happen. Thanks, by the way, for having me follow Madonna.

ROBERTS: You have to admit, though, Reynolds -- I mean, she's in amazing condition. Amazing.

WOLF: She's amazing. Absolutely amazing condition. But the idea that I'm following Madonna -- I mean, what's next? Are you going to have a big foot after me or something?

CHETRY: Probably. That was the original plan.

(WEATHER REPORT)

ROBERTS: All right. You said you wanted big foot, right?

WOLF: Oh, sure. Bring him on.

ROBERTS: Well, they say it's proof that he does exist. A picture that's surfacing a big foot. Is it a hoax, or is it the real thing?

CHETRY: War zone. Jeanne Moos looks at what happens when reporters become part of the story. You're watching the "Most News in the Morning."

(COMMERCIAL BREAK)

CHETRY: We're showing what happens when war reporting and the actual combat itself come together. We just saw a shot of you as well, when you were...

ROBERTS: Israel.

CHETRY: In Lebanon-Israeli border during that conflict.

ROBERTS: Right.

CHETRY: And John Roberts, of course know this from experience just how dicey it can get sometimes.

ROBERTS: It can. It can at times. It's not just bullets that we have to dodge, though. Reporters have to be on the lookout for everything from hippo jaws and cat claws as well. Our Jeanne Moos has got all the close calls from the silly to the serious.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Americas now have a different Georgia on their minds, thanks to all the war reporting. Reporting that has led to some close calls. For instance, this Georgian State TV reporter got shot during a live shot. Actually, the bullet just grazed her and she kept on reporting despite the bloody wrist.

Another close call caught on tape happened as a soldier, who had stolen some TV gear, pointed a gun at the guy pointing the camera.

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

MOOS: Shots were fired in the air.

It's not unusual for close calls to get on the air when reporters put themselves in the thick of things. CNN's Zain Verjee got hit with a tear gas canister in Kenya.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: They will stop firing back.

MOOS: It left a big, ugly bruise. And now, almost seven months later --

VERJEE: It left a scar that, you know, sometimes I show off.

MOOS (on camera): Like I'm not going to ask you to show me the scar.

VERJEE: No. It's the shape of the canister.

MOOS (voice-over): A canister someone picked up and handed to her as a memento, now sits on a shelf at home. Sometimes, a close call just feels close. For instance, when reporters feared gas attacks during the first Gulf War.

UNIDENTIFIED MALE: Please put on your gas masks.

UNIDENTIFIED MALE: Do you smell anything?

UNIDENTIFIED MALE: No.

MOOS (on camera): Now, a reporter doesn't have to be in a war zone or trouble spot to have a close call. I had my own close encounter at the circus. I was mopping the mouth of Kozo (ph), the hippo.

She seems to like to be mopped. Just kidding.

(voice-over): But the giant jaws of a hippo were no match for the claws of this cat.

UNIDENTIFIED FEMALE: Now, as part of their setting, a couple of (INAUDIBLE), right?

MOOS: Sometimes it's the crowd that turns on you. For instance, outside a British soccer match --

PEDRO PINTO, CNN INT'L SPORTS ANCHOR: The atmosphere here has been fantastic over the last hours.

MOOS: It got even more fantastic for CNN's Pedro Pinto. Massly outnumbered, Pedro says he didn't attack back.

PINTO: Since I do need my face for work.

MOOS: So did this reporter covering an alleged real estate scam when he got whacked with a plastic bottle.

UNIDENTIFIED FEMALE: Why do I have to --

UNIDENTIFIED MALE: That's not appropriate.

UNIDENTIFIED FEMALE: I don't give a (EXPLETIVE DELETED).

MOOS: Then her husband arrived. Still, no close call seems closer than when a giant snake comes calling up the weather man's shorts.

UNIDENTIFIED FEMALE: Oh, my God! (INAUDIBLE)

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

ROBERTS: Wal-Mart, caught in controversy over politics in the workplace.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Barack Obama's name was mentioned in the meeting.

(END VIDEO CLIP)

ROBERTS: Is the world's largest retailer pushing its employees to take sides?

And "Big Foot's" back. What some are calling photogenic proof of the mythical beast. But is it a hairy hoax? On the "Most News in the Morning."

(COMMERCIAL BREAK)

ROBERTS: It's 55 minutes after the hour. An AMERICAN MORNING exclusive now. Senator Hillary Clinton is pressuring the airlines to stop charging soldiers and marines for checked luggage. In a letter to top airline executives, Clinton says any cost for extra baggage should be charged to the Department of Defense, direct billed to the Pentagon, not America's service members. Senator Barack Obama sent a similar message to the Defense Department.

On Wednesday, American Airlines dropped its policy of charging for a third piece of checked luggage when it comes to soldiers and marines.

CHETRY: Well, checking the "Political Ticker" this Friday. There's new information on the money trail from the John Edwards campaign to his admitted mistress, Rielle Hunter. An associate of Edwards says that the former presidential candidate's political action committee paid Hunter an additional 14 grand after she's finished working there. And that was for raw video that she shot but didn't use as a video producer. That was in addition to $100,000 Rielle had been getting paid for her work with the campaign.

Singer Jackson Brown suing John McCain and the Republican Party over the use of his famous song, "Running on Empty." A campaign ad used the song to mock Obama's suggestion that Americans check their tire pressure. Brown says that besides violating copyright laws, the use of his song suggests he backs McCain, which he does not. The McCain campaign says they had nothing to do with the ad. The Ohio Republican Party was behind it.

ROBERTS: T. Boone Pickens, the billionaire oil tycoon turned wind energy magnate, meeting with John McCain for breakfast this morning. Pickens says he's critical of both candidates' energy plans. The Texas billionaire says he's going to sit down and eat with Obama next.

And a history-making role calls for Hillary Clinton at the Democratic national convention. Her name will be officially put into nomination so delegates can hold a vote. She says it will bring, quote, "peace to the kingdom and be good for her supporters." A source from the Obama campaign says they always knew that it had to happen.

And for more up-to the-minute political news, just head to cnn.com/ticker.

CHETRY: What if your boss told you who to vote for? Some Wal-Mart voters say that's what their employers did. Our Randi Kaye investigates the claim and what the law has to say about it.

RANDI KAYE, CNN CORRESPONDENT: Good morning, John and Kiran. The featured special at Wal-Mart these days is not for its customers, but for its employees. And for some of the 1.5 million workers, the special sounds a lot like "vote Republican, stop Obama."

(BEGIN VIDEOTAPE)

KAYE (voice-over): The theory goes if Wal-Mart can help keep Obama out of the White House, that can also keep labor unions out of Wal- Mart. After all, Obama has supported a pro-labor measure called the Employee Free Choice Act and said he'd sign it if elected.

SEN. BARACK OBAMA (D), PRESIDENTIAL NOMINEE: I think that we should pass the Employee Free Choice Act that will make it easier for unions to organize, make it harder for companies to block unionization.

KAYE: And that could drive up Wal-Mart's costs. Wal-Mart employees like the one who sent us this e-mail say they were summoned to meetings in recent weeks. The e-mailer, a former department manager from Missouri, asked not to be identified for fear of retaliation.

He told us he attended a meeting led by his human resources director. "He verbally and with a PowerPoint presentation informed us that a Democratic government would be bad for Wal-Mart. We were basically told that we should vote Republican because they were against this bill and it would be better for Wal-Mart. Several people were offended because we felt like we were being told how to vote."

The company says the meetings were only to educate managers and hourly supervisors about the Employee Free Choice Act, and to explain why Wal-Mart is opposed to it. Some pro-labor groups say, yes, the company is violating election law and are demanding the Federal Election Commission investigate. Today, the groups filed a federal complaint against Wal-Mart.

Josh Goldstein with American Rights at Work says he's heard complaints from dozens of Wal-Mart employees.

JOSH GOLDSTEIN, AMERICAN RIGHTS AT WORK: Barack Obama's name was mentioned in the meeting, saying that he was a co-sponsor of this legislation. If he becomes president, that the Employee Free Choice Act would pass.

KAYE: Goldstein says the act would help workers bargain for higher wages and better working conditions. CNN obtained this memo from Wal- Mart's chief operating officer to the management team. It reads, "If anyone representing our company gave the impression we were telling associates how to vote, they were wrong and acting without approval. No matter what your personal political preferences might be, as a company, we will not take sides. KAYE (on camera): Did Wal-Mart break the law? Federal election rules do allow companies to advocate for a candidate. But only to stockholders, salaried managers and executives, not to hourly employees.

(voice-over): This law professor says Wal-Mart walked right up to the line but didn't cross it. Discussing consequences of an election, he says, is not illegal.

NATHANIEL PERSILY, COLUMBIA STATE UNIV. LAW PROFESSOR: They have to have crossed an objective threshold into expressly advocating for the election or defeat of a candidate. If they're just talking about legislation, if they're talking about the pros and cons of different candidates' positions, then there's nothing wrong with that.

KAYE: Wal-Mart says, "We believe that if the FEC looks into this, they will find what we've known all along, that we did nothing wrong."

(on camera): The company says it's political donations show it does work with leaders from both political parties. And we've confirmed the company donated this year more that $1 million combined to the Democrats and Republicans, unlike past years when Republicans got most of the cash.

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