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THE SITUATION ROOM

Interview With Israeli Prime Minister Benjamin Netanyahu; President Obama's Mideast Challenge

Aired September 22, 2009 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: He tried today to light a fire under the Israeli and the Palestinian leaders, telling them plainly that -- quote -- "It's time to move forward."

Our White House correspondent, Dan Lothian, has been covering these talks here in New York today.

He seemed frustrated, Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: He really was frustrated.

But the White House said that they did not have any grand expectations for today's meetings on Mideast peace talks, but there are clearly grand expectations for the future. President Obama says it's time to move forward, past the hate and the mistrust and achieve lasting peace in the Middle East.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas shake hands, but they remain deadlocked, unwilling to restart talks despite strong pressure from the U.S.

JAMES RUBIN, FORMER ASSISTANT SECRETARY OF STATE: I think it's a reflection of how difficult this really is. Not only can't we get negotiations started, but imagine how difficult it's going to be to deal with issues like Jerusalem or refugees, the big fundamental questions.

LOTHIAN: In his private meetings with the two leaders, President Obama expressed his frustration according to a senior administration official, adding that they clearly heard his tenor and tone. Publicly, President Obama praised and then prodded the Israelis and Palestinians.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Palestinians have strengthened their efforts on security, but they need to do more to stop incitement and to move forward with negotiations. Israelis have facilitated greater freedom of movement for the Palestinians and have discussed important steps to restrain settlement activity, but they need to translate these discussions into real action.

LOTHIAN: President Abbas is holding back until there's an Israeli settlement freeze, something Prime Minister Netanyahu won't fully embrace. And Netanyahu, a hard-liner, is unwilling to give up any part of Jerusalem.

President Obama urged compromise to get the ball rolling again.

OBAMA: ... to break the deadlock that has trapped generations of Israelis and Palestinians in an endless cycle of conflict and suffering. We cannot continue the same pattern of taking tentative steps forward and then stepping back. Success depends on all sides acting with a sense of urgency.

LOTHIAN: After a three-way meeting, special Mideast envoy George Mitchell called the effort positive and suggested the distance between the two sides is shrinking.

GEORGE MITCHELL, SPECIAL ENVOY FOR THE MIDDLE EAST: We have substantially and significantly progressed in reducing the number of issues on which there is disagreement, and we hope to complete that process in the near future.

(END VIDEOTAPE)

LOTHIAN: Now, several senior U.S. and Palestinian sources tell CNN that President Obama asked Palestinian President Abbas to drop settlements as a precondition for negotiations.

And another official tells CNN that the president told both leaders that they really need -- they shouldn't use the perfect or let the perfect formula stand in the way of their negotiations.

Now, Wolf, next week, the president has asked Senator Mitchell to meet with Palestinian and Israeli negotiators in Washington. And then he's also asked Secretary Clinton to give him an update on the negotiations by mid-October.

BLITZER: And, coming up, Dan, we're going to be speaking live with the prime minister of Israel, Benjamin Netanyahu. He will be my guest. That's coming up very soon right here in THE SITUATION ROOM.

It's been like a revolving door of diplomacy for President Obama here in New York today, with one meeting or speech after another. Things have been nonstop. He addressed the special summit on climate change at the United Nations, the president pledging that the United States would fully commit to an international response to global warming.

He was short, though, on specifics for preventing what he called irreversible catastrophe.

(BEGIN VIDEO CLIP)

OBAMA: We seek sweeping, but necessary change in the midst of a global recession, where every nation's most immediate priority is reviving their economy and putting their people back to work. And so all of us will face doubts and difficulties in our own capitals as we try to reach a lasting solution to the climate challenge.

(END VIDEO CLIP) BLITZER: Also on the president's agenda today, he met with the Chinese president, Hu Jintao. Their talks on the so-called sidelines of the U.N. come during a tense time in the relationship between the two countries.

And as you saw live here in THE SITUATION ROOM just moments ago, the president was a featured speaker at the Clinton Global Initiative forum under way here in New York. It's an annual event held by the former president of the United States.

Former President Clinton has launched a new public relations campaign, some are suggesting, just in time to promote his global initiative. He's been very busy and he's been giving a lot of interviews, at least over the course of these few days.

Let's bring in CNN's Brian Todd. He's working the story for us.

Some are suggesting, at least this week, it is Bill Clinton unplugged, Brian.

BRIAN TODD, CNN CORRESPONDENT: It certainly is, Wolf.

With that big high-profile in New York that you just mentioned, also five network interviews, and a detailed book on his years in the White House making news right now, Bill Clinton is again in the spotlight, and he's loving it. It's certainly, as you mentioned, Clinton unplugged, even when he's trying not to be.

(BEGIN VIDEOTAPE)

TODD (voice-over): A balancing act Bill Clinton style. He opens his annual meeting of the Clinton Global Initiative with a guest speaker you might have heard of. And a no fewer than five network talkers, the former president says repeatedly that he is not there to step on President Obama's toes or his wife's.

He says it on "LARRY KING LIVE"...

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Beyond that, I think I shouldn't say anything because I don't have any policy-making authority anymore.

TODD: ... and on "The Daily Show."

CLINTON: Given Hillary's job, I think you should always suck up to the boss.

TODD: But asked about the issues driving the day, Mr. Clinton still jumped in with both feet on a possible troop surge in Afghanistan...

CLINTON: What I think President Obama will want to do is to let the selection settle down, make it clear what the victor is.

TODD: ... and on "The Today Show," a thumbnail take on the Iranian president's emotional state. CLINTON: Ahmadinejad is lashing out at the world.

TODD: But is this Clinton-palooza crowding the stage, elbowing out a president and secretary of state who have serious business at hand at the U.N. and the G-20 summit this week?

JOHN HARRIS, AUTHOR, "THE SURVIVOR: BILL CLINTON": Obama doesn't have any competition for that main platform in American politics. I don't think Bill Clinton has any obligation to not express himself, and it's clear he doesn't feel that he does either.

TODD: Following tension over last year's election battles with President Obama, Bill Clinton has gotten some of his mojo back this summer. His mission to North Korea, an insider's book putting him back in the political conversation.

How should the current White House occupant handle it?

MARK HALPERIN, "TIME": The key for Barack Obama and his people is to not overreact, know that this is Bill Clinton's week in the sun. If there's more controversy like this new book, maybe it's good that it all comes out at the same time.

(END VIDEOTAPE)

TODD: Now, analysts give the former president credit for showing some restraint in those interviews, giving those disclaimers that he's not there to influence policy. But, in the end, they all agree Bill Clinton just loves the attention, and anyone who thinks he's going to slowly fade to black just doesn't know him -- Wolf.

BLITZER: All right, Brian, thanks very much.

Let's bring in Jack Cafferty right now. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, the House is considering a piece of legislation at this hour that is designed to help more than one million jobless Americans, an emergency measure widely expected to pass that would extend unemployment benefits for an additional 13 weeks for people who live in states where the jobless rate tops 8.5 percent.

That includes 27 of the 50 states, plus the District of Columbia and Puerto Rico. This would be in addition to the 26 weeks of benefits most states offer and the federally funded extensions of up to 53 weeks that Congress approved last year.

As the recession drags on and the jobless rate gets worse and worse, lawmakers are under pressure to extend these benefits, with governors from 22 states calling on Congress to act quickly. It's estimated that there are now more than six potential workers for each job opening. And that's up from 1.7 when the recession began.

Critics say additional unemployment payments can be a disincentive to looking for work and that it could be counterproductive to extend benefits now, when the economy is actually showing signs of recovery. The bill's sponsor says it won't add to the deficit because it would extend a federal unemployment tax paid by employers and would require better reporting on new hires, so the government doesn't keep paying them unemployment benefits after they have found a job.

Senate Democrats say they will address this thing as quickly as the House votes. The House vote is expected to come later this evening. State unemployment checks are around $300 a week, average, plus another $25 from the stimulus act. The national unemployment rate now stands at 9.7 percent. It's expected to go above 10 percent for much of next year.

So, here's the question. Should the Congress keep extending unemployment benefits? Go to CNN.com/caffertyfile. Post a comment on my blog.

BLITZER: Jack Cafferty, thanks very much.

CAFFERTY: You're welcome.

BLITZER: We are going to go live to the prime minister of Israel, Benjamin Netanyahu. He's standing by live here in THE SITUATION ROOM -- when we come back, my interview with the prime minister.

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: A big day today, the president of the United States hosting a summit with the Israeli and Palestinian leaders right here in New York.

Let's get right to the Israeli prime minister, Benjamin Netanyahu. He's joining us.

Mr. Prime Minister, thanks very much for coming in.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: Good to be with you, Wolf.

BLITZER: The Russian president, Dmitry Medvedev, told our Fareed Zakaria the other day that he had an assurance from the Israeli president, Shimon Peres, that Israel has no intention of attacking Iran.

Is that true?

NETANYAHU: Well, I'm not going to deal with hypotheticals.

I think the important thing is to recognize that Iran's ambitions to acquire or develop nuclear weapons is a threat, not only to Israel, but to the entire world.

Remember, this is the country that sponsored terrorism worldwide. And imagine what would happen if these terrorists had a patron that had -- that gave them a nuclear umbrella, or, worse, actually gave them the nuclear weapon.

I think that these are catastrophic consequences. And it's the interests of the entire international community to make sure this doesn't happen.

BLITZER: So, are you willing to repeat what you have been quoted in the Israeli press as saying, that -- quote -- "all options" for Israel are on the table right now?

NETANYAHU: Well, I'm willing to say that -- what President Obama has said, namely, that all options are on the table is a position we support.

BLITZER: Have you been concerned at all about the Obama administration's diplomatic initiative in trying to reach out to Iran to see if that will secure some results?

NETANYAHU: Wolf, I have spoken to President Obama several times about this. And he assured me that the goal of all his activities, diplomatic and otherwise, is to ensure that Iran does not develop nuclear weapons.

And I think the goal is what counts. And, increasingly, I think people understand in Washington and certainly in -- certainly in Washington and elsewhere, in the major capitals, that the problem of Iran's acquiring nuclear weapons threatens everyone. It threatens world peace in a way that very few events could possibly threaten it.

I'm hopeful and I would like to believe that the international community understands that Iran has to be pressed strongly. There are ways of pressing this regime right now, because it's weak. It's weaker than people think. It doesn't enjoy the support of its own people.

BLITZER: How much time is there, Mr. Prime Minister?

NETANYAHU: Whatever time is there, Wolf, it's getting shorter, because Iran is moving ahead.

But this is a regime that is -- is susceptible to pressure. It's been exposed for what it is. It tyrannizes its own people. The Iranian people detest this regime, as has been plainly evident in the recent election fraud. But, equally, I think that Iran is susceptible because its economy is susceptible. And pressure -- the time for pressure is now, with or without talks.

BLITZER: Would you act unilaterally, without U.S. support?

NETANYAHU: Well, there you go again asking a hypothetical question.

I -- I would like to believe that the United States and the major powers of the world understand that this threat, that this danger threatens them as well. And you know what? From everything that I have seen and heard, speaking to President Obama, speaking to President Sarkozy this afternoon as well, speaking to all the major -- many of the major leaders of the world, I stand by that assessment.

Iran is certainly a grave threat to Israel, but it's a grave threat to international peace. It's a grave threat to America and to everyone else.

BLITZER: I want to read to you what -- some comments that the former national security adviser to then President Jimmy Carter, Zbigniew Brzezinski, wrote the other day.

He said this. He said: "We," referring to the United States, "are not exactly impotent little babies. They have to fly over our airspace in Iraq. Are we just going to sit there and watch? If they fly over, you go up and confront them," Brzezinski writes. "They have the choice of turning back or not."

That's a pretty strong statement. What does it say about the current state of U.S.-Israeli relations when a former national security adviser writes something like that?

NETANYAHU: See, now you're asking me to comment on a hypothetical on a hypothetical. I'm not going to do that.

But I will tell you that the state of the U.S.-Israeli relations is very good, indeed. I was very pleased with the meeting hosted by President Obama today. For months, I have been calling for such a meeting, to put aside all these preconditions, and get on with the business of talking about peace.

It's very hard to make peace unless you talk about it, although we have been improving conditions on the West Bank, and life is getting a lot better there. But we can do a lot more if we talk to each other.

So, on Iran, I have given you my answer. But, on peace, I think the -- the possibilities are there. Let's just get on with it. Let's move. And I think that a good and firm U.S.-Israel relationship is the pivot of that peace and the pivot of security in the Middle East.

BLITZER: I want to get on and talk a little bit about the peace process.

But just give me an answer, if you can, to a sensitive question that a lot of people are asking, especially friends of Israel here in the United States. Who is a better friend of Israel, the former President George W. Bush, who had a very close relationship with you, or the current president, Barack Obama?

NETANYAHU: Let me tell you something about President Obama, because I think this should be fully appreciated.

He stood before the entire Muslim world. I don't know if a billion people heard him, but hundreds of millions of people in Muslim countries heard him. And he said: The bond between America and Israel is unshakeable. We are absolutely committed to Israel's security. I think that was a very important statement. And I think every president of the United States has had his contribution to Israeli- American relations and to the friendship between our countries. It is a very strong friendship, indeed. And I appreciated the president's comments in Cairo. And I appreciated his comments today, too.

(CROSSTALK)

BLITZER: I hear you saying you trust this president.

NETANYAHU: I think that President Obama's commitment to Israel has been expressed very loud, very clearly by him. And I think this reflects the underlying friendship between our two countries. It's very strong.

You know, I walk on the streets of -- well, New York, yes, but also the Midwest and every part of the United States. I have been in every part of it. I will tell you, it's warm -- heartwarming, because I see this tremendous, tremendous effusion of friendship towards Israel as a sister democracy, yes, often embattled by these dark forces of terrorism that embattle all of us.

And I think Israel has a terrific friend in America and the American people. And I want the American people to know that you -- they have a terrific friend in Israel. In the Middle East, you don't have that many friends, but we're definitely right at the top of the list.

BLITZER: In the first eight months of his administration, he's repeatedly appealed to you to freeze all settlement activity, and you have declined that request. Did anything change today?

NETANYAHU: I think what is important is that we're moving on to talk peace. And I hope to make peace.

Any time we have encountered an Arab leader who wanted to make peace, we made peace. Anwar Sadat came. Menachem Begin of the Likud made peace. The late King Hussein came. Yitzhak Rabin of Labor made peace. I'm telling you that, if Mr. Abbas, the leader of the Palestinian Authority, genuinely steps forward and says, we recognize the state of Israel, we're willing to make peace with the Jewish state, just that, the Jewish state, and it will be a peace of the recognition and security, then my government will make peace.

I'm no exception, because the people of Israel want peace. And I think people understand that now.

As to the question of settlements, I think that raising this condition, something that hasn't happened in 15 years of Israeli- Palestinian dialogue -- nobody put this precondition -- this is just costing us a great deal of time.

The issue of settlements has to be discussed at the end or in the context within these negotiations, not before. It has to be resolved. And we're prepared to look into this issue, as into other issues. But we have to talk in order to talk about it. That's obvious. And yet we haven't. For six months, we have been waiting to talk about talks. I say let's put that aside. Let's just get on with it and start the peace process again.

BLITZER: We're hearing from U.S. officials and Palestinian officials that the president gave them, the Palestinians, a commitment that, once the negotiations resume, they would resume where they left off, including such sensitive issues as the future of Jerusalem, allowing Jerusalem to -- at least part of it, to be under Palestinian control.

Is that even available to you? Is that even open to you, that Jerusalem could be a subject for these negotiations?

NETANYAHU: Well, you asked me two questions in that question.

The first is, will the talks continue where they left off? Well, there were no agreements. I mean, the previous government spoke for three years, but came to no agreements. And we were elected with a clear mandate to provide peace and security. And, of course, we will do that.

We will take into account the 15 years of Israeli-Palestinian negotiations, but we're -- we will be committed to the mandate that we received. And that mandate seeks to arrive at a better future for all of us. That is a future of peace for our children and for future generations of Israelis and Palestinians, and, for that matter, any Arab party in the Middle East. We're prepared to begin negotiations immediately or go anywhere.

(CROSSTALK)

NETANYAHU: Yes.

BLITZER: Are you ready to talk about Jerusalem?

(CROSSTALK)

NETANYAHU: Well, now the -- we have certain views about Jerusalem.

I think the fact that it's been united under Israeli sovereignty has ensured that, for the last four decades, all major faiths, Christianity, Islam, and Judaism, all monotheistic faiths, have enjoyed the great freedom of worship and access to their religious sites, something that hasn't happened before since the rise of the three monotheistic religions.

It's only under Israeli sovereignty that this city has been open to all religions. Jerusalem for us is our internal capital. We don't want to redivide it and see a Berlin Wall in the center of it. So, obviously, that's our position.

The Palestinians will raise their point of view. And that's clear. But we will talk about these things, but my position is well- known. BLITZER: You know this United Nations commission, which just came back with a scathing report suggesting that Israel, your military, committed war crimes or something close to that, crimes against humanity, perhaps, even, during the fighting in Gaza.

And I know you strongly disagree, but I want you to react to that United Nations report.

NETANYAHU: Now you're being a diplomat.

I strongly disagree? I think this is preposterous. It's absurd. Israel was rocketed, pummeled for eight years by thousands of rockets that came from Gaza. We vacated all of Gaza, hoping that this thing would stop, and they fired not one rocket, but thousands of rockets, after we left Gaza.

So, what's a country to do? I mean, what would you do if thousands of rockets fell on -- Where are you talking from, Wolf, Washington, right? -- Washington, D.C., or any part of the United States? You know what the United States would do.

(CROSSTALK)

BLITZER: The argument, though, Mr. Prime Minister, was -- the argument in this U.N. report is that you overreacted, and, in the process, you killed a lot of civilians.

NETANYAHU: We overreacted, did we?

Well, let me tell you, after millions -- I million, a million or so of our people were under rocket fire, progressively larger and larger circles of rockets falling on our cities, we did what no -- no -- what every reasonable country would do. We tried to get at the rocketeers, those terrorists firing those missiles and rockets who placed themselves, embedded themselves in homes and schools and mosques, and you name it.

And we tried to target these people. We even sent them SMS text messages, telling the Palestinian civilians, please get out of harm's way, cellular phones, you name it. So, we did everything possible to minimize the loss of innocent civilian lives.

And yet the Hamas that -- actually was committing a double war crime, firing on civilians while hiding behind civilians. That's a double war crime. We're -- they're the ones who sort of get a free bill out of this biased U.N. report, and Israel, that is defending itself, is accused.

BLITZER: All right.

NETANYAHU: So, the terrorists are exonerated. The victims are accused. That's -- that's an upside-down world. And I think this does grievous harm to the battle against terrorism, because the terrorists are basically being told, you get a free ride. All you have to do is fire at a democracy from -- from built-up areas, from residential quarters, and you will get a clean bill of health. And I think it does a great disservice to peace, too, because we're asked to take risks for peace. The international community says, if you take risks for peace, we will support your right of self- defense. And yet we did just that. We vacated Gaza in the hopes of -- that this would advance peace.

And when we're rocketed with thousands of rockets and missiles from the places we vacated, people say Israel is the war criminal.

BLITZER: All right.

NETANYAHU: Come on. I mean, this is absurd.

BLITZER: If there is a trial at the International Court and the accusation is that Israel committed war crimes, or crimes against humanity in Gaza, will you cooperate with that?

NETANYAHU: Well, that's -- the question is, will any serious country cooperate with it?

I took note of the fact that the leading democracies that were in this U.N. commission, they -- they opposed this. They were against this mandate, because it looked like a kangaroo court in the first place, where Israel was basically hanged, drawn, and quartered morally and given an unfair trial to boot right at the start of these proceedings.

I think this is wrong. But understand this. It's not only we who will be damaged. It's you, too. I mean, American pilots, NATO pilots, let alone Russia and other countries that are fighting terrorists, are going to be put on the dock, too, because it's said that you cannot fight terrorists.

It means that all the terrorists have to do is put themselves in a residential quarter, and they receive immunity. And that's not something that any country fighting terrorism can accept. And I don't think you can accept it either.

BLITZER: Mr. Prime Minister, there was an op-ed article written in "The New York Times" back in July by an Israeli journalist named Aluf Benn, who writes for the "Haaretz" newspaper.

And, among other things, he said that President Obama is ignoring Israel, has not visited Israel, even though he's been to several Arab countries, and he's not reaching out to the Israeli people, the way he's reaching out to the Arab and Muslim world. He hasn't given any interviews, as far as I know, to the Israeli press, for example, or Israeli television.

Do you agree with that assessment?

NETANYAHU: I think that people should not rush to judgment.

I -- I think that these are two new administrations, my own new government and the new government in Washington. We have found a way to communicate. I think we have resolved a lot of the issues between us. We can have differences. That happens among the best of friends. It even happens in our own families.

But I think there's a -- there's a growing closeness that I have found. What people don't know -- and I -- and I'm not referring to the public diplomacy -- but I want to tell you something about private diplomacy. There's virtually not a day that goes by that the Obama administration and my own government don't communicate in a very -- on a very senior level on very important matters in a very confidential and respectful way.

And I say that advisedly. I'm choosing my words carefully. There's barely a day that goes by without that happening. So, that should give you some indication of the growing -- of the closeness of that relationship. And it's getting better, for sure. There's no question about it.

BLITZER: Because there was a very explosive charge in that same article on the op-ed page of "The New York Times."

And I will read it to you, because I want -- give you a chance to respond. It caused a huge commotion. This is what Aluf Benn wrote in "The New York Times."

"In Mr. Netanyahu's narrative, the president has fallen under the influence of top aides, in this case, Rahm Emanuel, the White House chief of staff, and David Axelrod, the White House adviser, whom the prime minister has called -- quote -- 'self-hating Jews.'"

Is that true?

NETANYAHU: No. No, it's not. I never -- I never called them any such thing. And I don't think that.

I have known Rahm Emanuel for some time. I just met David Axelrod today, in fact. And I think they're American patriots. They think of what is important for the United States. And they certainly bear no enmity to Israel.

They probably want the best for Israel, too. So, I think that this is -- and we can have, as we say, occasional differences of opinion. But I never called them those things, and I don't think that, and I'm -- I'm sorry that anyone has given credence to this kind of nonsense.

It's just...

(CROSSTALK)

BLITZER: Did you reach out to Rahm Emanuel and David Axelrod and reassure them that that -- that that was a lie?

NETANYAHU: Well, we immediately denied it. And, yes, we did reach out to them, of course.

BLITZER: Did you personally call them?

NETANYAHU: I didn't personally call them, but I had my aides communicate this to the White House as quickly as we could.

BLITZER: All right, let's move ahead and take and look and see where the situation goes from here. You have now met with the Palestinian president, Mahmoud Abbas.

Are there going to be more direct meetings with you and the Palestinian leader without the United States in the room?

NETANYAHU: I hope so. And I think we should.

I said to Mr. Abbas today, listen, we're old hands. We have had many meetings in the past when I was prime minister during my first tenure, and I met him. And I respect him. And I think there is a lot we can do together.

Look, we have -- you know, we have lifted all these roadblocks in the West Bank, checkpoints. I've opened the Allenby Bridge on the Jordan River to allow the inflow of goods into the West Bank.

So life is getting better. The IMF is talking about a seven percent growth rate in the West Bank.

And guess what, Wolf?

I think we can top that. I think -- this is what we're doing. I mean we're easing those restrictions and opening up passage, even though there's a certain security risk involved, because I think that prosperity is good for peace. I don't think it's a substitute for a political peace, but I think it really enables it because young Palestinians see there -- there is a future there. I mean they -- they have jobs. They're -- there are investments. There are buildings sprouting out in Palestinian cities like Ramallah and Jenin and not missiles, as in Gaza, but, you know, high rises, apartment blocks, office buildings.

This is what I'd like to see. I'd like to see this dynamic of peace, prosperity and security. And if we meet, then we can -- we could get a lot more of this going and that's good for us. It's good for the Palestinians. It's good for peace.

BLITZER: Mr. -- Mr. -- Mr. Prime Minister, a year from now, will there be an agreement, a peace treaty, if you will, between the Israelis and the Palestinians?

NETANYAHU: Well, I -- I think -- I don't want to set a timetable on it or a stopwatch, but the sooner we get going, the sooner we'll get an agreement. If there is a willingness on the part of the Palestinians to remove the main obstacle to peace. And the main obstacle to peace is the persistent refusal to recognize Israel as the Jewish state -- the nation state of the Jewish people.

There are non-Jews living there and they have equal rights. The Arab citizens of Israel vote in the Knesset. They're represented in every form of life and have political rights. But -- equal political rights. But Israel is the state -- the nation state of the Jewish people. And I think if we're asked to recognize the Palestinian state as the nation state of the Palestinian people, then the least we expect from the Palestinians is to come right out and say yes, you know, it's over. Yes, we accept the state of Israel...

BLITZER: But if the Palestinians do that...

NETANYAHU: ...and this (INAUDIBLE).

BLITZER: If the Palestinians do that, Mr. Prime Minister, are you ready to bite the bullet and make the tough concessions that have to be made?

And everybody seems to know what the final agreement is going to look like.

Are you ready to make those territorial concessions and go back, sort of, close to the '67 line?

NETANYAHU: Well, I think we need to make sure that Israel can defend itself and defend the peace. Because even if the Palestinian leaders make that simple statement that they so far haven't made, that they recognize the Jewish state -- and I think that's imperative for peace -- it may take a long time for this to be internalized by the Palestinian people that have been subjected repeatedly to very harmful propaganda against Israel.

So we have to make sure that we can defend ourselves, that we don't have these Palestinian territories become the sites for the -- the launching of thousands of missiles and rockets, which is exactly what happened to us from the other areas we vacated.

We need a demilitarized Palestinian state that recognizes the Jewish state. That's the winning formula for peace.

Now, look, any time Israel was faced with an Arab leader that genuinely wanted peace, whether Anwar Sadat or -- or the late King Hussein, Israel made peace. And if President Abbas takes this forceful step, deciding that he wants to be a Sadat and not an Arafat, then he will find in me a partner for peace. And believe me, the Israeli people are yearning -- yearning is not -- praying, hoping that we have such a Palestinian partner on the other side.

BLITZER: Prime Minister Netanyahu, thanks very much for joining us.

And good luck to the Israelis, good luck to you, good luck to the Palestinians.

We'll be covering this story every step of the way.

We appreciate it very much.

NETANYAHU: Thank you, Wolf.

BLITZER: Mary Snow is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Mary, what's going on?

SNOW: Hi, Wolf.

Well, here in the U.S. stuck like sardines for hours in a plane filled with crying babies, broken toilets and desperate passengers -- it's the stuff of a nightmare and just one of the grievances heard today in a Capitol Hill hearing in support of a passenger Bill of Rights. Supporters hope that recent stories of stranded passengers will get a bill passed this year, after two years of defeat.

The families of the three American hikers who've been detained in Iran after walking across the border from Iraq are hoping for good news at this week's meeting of the U.N. The brother of one of the hikers says he's encouraged by a recent comment by Iranian President Mahmoud Ahmadinejad and hopes that the Iranians will bring the trio to New York and release them when Mr. Ahmadinejad speaks to the General Assembly tomorrow. A State Department spokesman says there's no indication of such a release.

The good news is that 2,400 workers are heading back to work as General Motors adds extra shifts to plants in three states. Now, the less than good news -- most of those workers will have to move hundreds of miles, leaving other G.M. plants still slated to be shut down. The extra shifts are needed to rebuild the inventory on car models sold during the government's Cash for Clunkers program -- Wolf.

BLITZER: Mary Snow, thanks very much.

Let's get to those devastating floods right now in the Southeast. Neighborhoods in the Atlanta area are simply swamped by several feet of murky, brown water. At least nine people are now dead, eight of them in Georgia. And officials say the danger won't let up until the floodwaters recede.

Take a look at this. It's a roller coaster track over at Six Flags. Remember what it used to look likes?

It's now submerged. The rain eased somewhat today, but there's more in the forecast and flood warnings still are in effect across the region. Many roads and some major highways have been shut down and Atlanta area schools are closed now for a second day. Georgia's governor, by the way, has declared a state of emergency in 17 counties and he's asked President Obama for federal aid.

(BEGIN VIDEO CLIP)

GOV. SONNY PERDUE (R), GEORGIA: This morning, also, I have transmitted a letter to the president to -- of the United States -- asking for an emergency declaration. The kind of lives lost, the kind of property damage we've had, the kind of expenses that our -- our local governments will face in recovering from this, I think, is worthy of a presidential declaration and we've asked for that. The president, obviously, is in -- is in New York at the United Nations. And we hope to speak to his office later today. But we've already put a call in, as well as transmitting a letter requesting that presidential declaration as soon as possible.

(END VIDEO CLIP) BLITZER: Let's get some more now on the historic flooding from CNN's Betty Nguyen.

BETTY NGUYEN, CNN CORRESPONDENT: I'm in a neighborhood that has seen severe flooding because of all of this recent rainfall.

I'm standing in water that's, I don't know, close to my knees. But if you look a little bit down the street, you see a fire hydrant that's partially underwater. And back behind that are a number of homes that saw, really, some major damage because of the flooding.

One homeowner told me that he saw the water inside his home that was up to five feet high. He said furniture was floating around and he was really trying to do his best to save what he could.

I also saw another man who was dragging old photos -- photo albums down the street in an inner tube, trying to salvage what he could. And I took a moment to talk to him because, you know, these homeowners are really dealing with a lot of loss and -- and it's difficult when you lose some things that simply cannot be replaced.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: My wife and I went back to the house and tried to salvage the photo albums and trying to -- to straighten up some of the furniture. It just flooded the interior about four or five feet. And so it's pretty devastating. But the photos, you know, we can't replace. The -- the personal items, such as furniture and things like that, the -- the property, we can -- we can -- we can replace.

(END VIDEO CLIP)

NGUYEN: So as you see, there are just some things you simply cannot replace. And people are doing their best to salvage what they can.

The governor of Georgia has declared some 17 counties a state of emergency. There have been a number of deaths. And right now, the rain has stopped. That is something that people are very thankful for. But the problem is we're expecting more rain in the future. Hopefully, people can clean up as much as they can and save as much as they can before the rains start back up again -- Wolf.

BLITZER: All right, Betty.

Thanks very much.

And keep -- be careful out in the Southeast.

Let's get to the health care debate right now and lingering questions hovering over one U.S. congressman.

Let's go straight to our CNN national political correspondent, Jessica Yellin -- Jessica, what's going on? JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, this is about Arkansas Democrat Mike Ross. He is the Blue Dog House Democrat who led the rebellion against the more liberal version of the House's health reform plan.

Well, now Ross is answering questions about his ties to a company that has a stake in the health care debate. That company is run by Stephen LaFrance, an Arkansas man who owns several chains of pharmacies. It seems Ross made out pretty well when he sold his own hometown pharmacy to LaFrance in 2007. In fact, LaFrance paid $420,000 for the pharmacy in 2007. And CNN has confirmed that's just under 50 percent more than the most recent appraised value of that property. And an independent real estate tracking service shows that the prices in the community had not changed much during the time that that price went up so high for the sale.

Now, public records show Ross also made an additional $500,000 to $1 million selling the pharmacy's other assets to the same businessman.

Wolf, this all came to light because of a report by the independent investigative news service called ProPublica.

And the question really at the heart of all this is has Congressman Ross' fierce criticism of some of the health care plans been influenced by his ties to this industry?

In a statement, Ross says: "I have never done a favor for the buyer of the pharmacy." He calls this "gotcha politics." And he says, look, the sale price was not inflated because he invested more than $300,000 in the business.

Now, Ross also tells us he welcomes additional debate and he also believes in health care reform.

One thing to note, Wolf, the statement does not address the $500,000 to $1 million extra that Ross and his wife received from the buyer. The company itself that bought the pharmacy, they did not respond to our requests for a comment -- Wolf.

BLITZER: What a story.

Jessica, thanks for bringing it to us.

Jessica Yellin reporting.

The South Carolina governor's wife is putting her life now on paper.

Will she tell all about her husband's extramarital affair?

Stand by.

And "Late Late Show" host Craig Ferguson tells me a thing or two about wearing kilts.

(COMMERCIAL BREAK)

BLITZER: It's his first visit to the United States since taking power some 40 years ago, but the welcome mat hasn't exactly been rolled out for the Libyan leader, Moammar Gadhafi, especially after the Lockerbie bomber's controversial release from that prison in Scotland. But he may have finally found a place to say. We're talking about Gadhafi.

CNN's Mary Snow is joining us.

She's got the details.

What are you hearing -- Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, a call to the Libyan mission tonight confirmed Libyan leader Moammar Gadhafi is, in fact, in New York City. Gadhafi has had a number of doors shut on him in terms of where he can stay. Tonight, there are reports that he has pitched a tent on property belonging to Donald Trump. It's about an hour north of New York City, in Westchester County.

We called The Trump Organization and they issued a statement saying: "We have business partners and associates all over the world. The property was leased on a short-term basis to Middle Eastern partners who may or may not have a relationship to Mr. Gadhafi. We are looking into the matter."

Now, State Department officials say tonight there are no limitations on Gadhafi's visa that would prevent him from traveling to Westchester County, since it's close enough to the U.N. radius. Officials say it's believed he'll be holding meetings there, but not staying in the tent overnight.

Now, several weeks ago there had been plans for Gadhafi to stay in Englewood, New Jersey, but protests killed that plan. A request to pitch a tent in New York City was also denied.

Now, Gadhafi is scheduled to be at the U.N. General Assembly for the first time in his 40 years of power. And as Wolf just mentioned, families of PanAm 103 bombing victims plan to protest. They're furious the convicted bomber in the case received a hero's welcome in Libya last month, after he was released by Scotland because he's dying of cancer. And many families that we spoke to expect to be at that -- be protesting tomorrow.

BLITZER: Yes, it should be lively here in New York, with a lot of these protests, not only against Gadhafi and Libya, but other protests against the Iranian president, Mahmoud Ahmadinejad, who's coming here, as well.

All right, thanks very much.

On our Political Ticker, another hurdle has been cleared toward allowing a temporary replacement for the late Ted Kennedy in the United States Senate. The Massachusetts Senate now has approved a bill allowing the governor to fill the seat temporarily until a special election is held in January. The bill now goes back to the statehouse and the Senate for a final vote before heading to Governor Deval Patrick's desk. He says he will sign it into law.

Meantime, the "Boston Globe" is endorsing former Governor Michael Dukakis as the best choice to serve as that interim senator. The newspaper cites the former Democratic nominee's experience and the fact that he doesn't have any future political ambitions.

A new blow for the embattled governor of New York State, David Paterson. A new poll shows six out of 10 New York State voters say the Democrat doesn't have the leadership skills to hold the state's top office. The Sienna College Research Institute survey comes on the heels of reports that President Obama has urged Governor Paterson not to run to keep his job.

Former eBay chief executive Meg Whitman today officially declared her candidacy for governor of California, running on her successful business experience. California has just slashed expenditures because of the recession. And she proposes to continue cutting another $15 billion from the state budget and eliminating 17 percent of the state's employees.

The wife of the South Carolina governor, Mark Sanford, is now writing a book. She'd have plenty to put in a tell-all after her husband admitted an affair with a woman from Argentina. But Jenny Sanford says she's writing an inspirational memoir about keeping your integrity during life's difficult times. Ballantine Books says Mrs. Sanford's memoir will be available in May.

Remember, for the latest political news any time, you can always check out CNNPolitics.com.

Let's check in with Lou Dobbs to see what's coming up at the top of the hour -- Lou?

LOU DOBBS, CNN ANCHOR: Wolf, thank you very much.

A new world order -- is that all President Obama wants?

He's also taking on global warming, Mideast peace and a whole host of other really big issues.

Is it too much and just what is he accomplishing?

Also, is the government really convinced that American citizens need to be talked to like children when it comes to the environment?

The Energy secretary has a lot of explaining to do.

And the governor of Massachusetts will now decide who will fill the late Ted Kennedy's Senate seat and the rumor is Michael Dukakis. Yes, that Michael Dukakis.

Join us for all of that, a fascinating debate and much more, coming right up at the top of the hour here on CNN -- Wolf, back to you. BLITZER: We'll see you then, Lou.

Thank you.

Let's check in with Jack Cafferty again for "The Cafferty File."

CAFFERTY: Did he just say Michael Dukakis?

BLITZER: He might be the interim senator.

CAFFERTY: How did they -- how do you suppose they came up with that name?

BLITZER: Well, you know, he doesn't want -- he hasn't any big political ambitions. He can serve as senator for a few months.

CAFFERTY: Well and there's a reason he doesn't have big political ambitions.

BLITZER: Until January.

CAFFERTY: The question this hour: Should Congress keep extending unemployment benefits?

The House is expected to vote this evening on another extension of unemployment benefits. Then it will go to the Senate. They vow to take it up right away.

Mary in Alabama says: "Obama needs to continue extending unemployment benefits until he gets reelected. Otherwise, he might be a one-termer."

Steve in Chula Vista, California: "Their idea to extend the unemployment tax on business to cover more weeks of unemployment is a job killer. As a small business owner in California, I'm hanging on by a thread and may not make it if things don't turn around soon. To extend and adding more taxes deters us from doing any hiring. The jobs lost won't be easily replaced."

Ray writes: "If anybody thinks unemployment is a disincentive to looking for work, they really should try it. Some people are so out of touch with reality in this situation, it's not like there are decent or even not decent jobs out there. Day laborers don't even get hired. Unemployment's 13.5 percent in Nevada. Thank God for the little money that I get."

B. in Pennsylvania writes: "Yes, I think they ought to extend unemployment. I remember back during the Reagan years when I got laid off. If it was not for Congress extending unemployment, I wouldn't have made it. If we can find money to bail out Wall Street, then we ought to find money to help people who lost their jobs because of Wall Street."

Stephanie in Florida says: "No. I've known people on unemployment. The hardworking ones were off it as soon as possible -- took the first available job even if it was a bad one. The lazy ones stayed on it as long as they were allowed. Extending it would only help the people who didn't plan on finding a new job anyway and are too picky to find any job that pays."

Jimmy writes: "Of course they should, Jack. Unemployment benefits are the best stimulus check the government can give, since the money goes directly back into the economy via living expenses that many Americans are struggling to pay."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile or you can go down the street to the 7-Eleven. Maybe it's there -- Wolf.

BLITZER: Maybe not.

You know what, and I'm on Twitter.

CAFFERTY: Yes, I -- I know you are.

And you Tweet while you're there, don't you?

BLITZER: I Tweet during the course of the show sometimes I tell...

CAFFERTY: Now how many followers or whatever it is do you have?

BLITZER: Thousands of them, you know.

CAFFERTY: Thousands?

BLITZER: We want a few more, though.

CAFFERTY: Really?

BLITZER: Yes.

CAFFERTY: Are there any like naked pictures of you on that site?

BLITZER: No.

(LAUGHTER)

BLITZER: Jack, thank you.

CAFFERTY: Oh, you're welcome.

BLITZER: Yes, well -- he's a Scotsman who's proud to be an American -- the host of "The Late Late Show," Craig Ferguson, talked to me earlier today about his new book and more, including lessons we can all learn from that all-American sport of baseball.

(BEGIN VIDEOTAPE)

BLITZER: With a great picture of Craig Ferguson on the book's cover.

Thanks very much for coming in, Craig. CRAIG FERGUSON, HOST, "LATE LATE SHOW": Because I -- I would have worn the kilt if you -- if I'd have known how much you liked it.

BLITZER: We'd have had -- was it was great?

Do you have it with you here in the (INAUDIBLE)?

FERGUSON: I can maybe get it later if you want to go out.

BLITZER: Next time. The next time you come on the -- in THE SITUATION ROOM.

FERGUSON: Maybe later we can go for a snack.

BLITZER: Maybe.

FERGUSON: I'll wear the kilt.

BLITZER: You'll wear the kilt...

FERGUSON: Who knows where the night will end up?

BLITZER: We can just walk around Manhattan like...

FERGUSON: We'll walk around. People will be like hey, it's Wolf and the late night guy.

BLITZER: Yes.

You know, I -- I was really moved in reading, really, the introduction. You dedicate this book to your parents. But -- but you write over here, right in the preface, you talk about your little boy playing baseball.

FERGUSON: Yes.

BLITZER: And you write this: "I rejected that he loves this most American game. He will know from an early age that failure is not disgrace. It's just a pitch that you missed and you'd better get ready for the next one." And then you write: "My son and I are Americans. We prepare for glory by failing until we don't."

FERGUSON: Yes.

BLITZER: Which is a really important lesson.

FERGUSON: That's why baseball makes America the greatest country in the world, because you teach your children early -- we teach our kids early, swing and you miss. It doesn't matter, go again. No, here's what you did then, look what you did that -- you know, look what went wrong and go again. Get ready.

And Bobby Thompson, who had, arguably, the greatest homer ever in the history of baseball so far, was from Glasgow in Scotland. So it seemed a nice way of tying it in for me. If Bobby Thompson had not come -- if his family had not come from Scotland to the United States, perhaps he would not have learned -- he certainly wouldn't have played baseball and he wouldn't have learned about that philosophy, that most American of philosophies, which is failure is not disgrace.

(END VIDEOTAPE)

BLITZER: Interesting stuff. It's a very good book, indeed.

Craig Ferguson joined me earlier.

They may look like something out of your gerbil cage, but they are called -- get this -- Survivaballs.

Is there a global warming connection?

Jeanne Moos will check it out. It's "Moost Unusual."

And a portrait of baseball Hall of Famer Tommy Lasorda is placed in the Smithsonian in Washington, D.C. -- just one of today's Hot Shots.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some Hot Shots.

In Iran, troops wear special gear as they marched in a parade remembering the Iraq/Iran War of the '80s.

In Kabul, Afghanistan, a family takes a stroll in the park.

In Washington, D.C. A portrait of the baseball Hall of Famer Tommy Lasorda is placed in The Smithsonian.

And in Kazakhstan, at the zoo, check it out -- a 40 day old lion cub makes his first appearance in front of the news media. He didn't look nervous.

Hot Shots -- pictures worth a thousand words.

Some of us have experienced bomb shelters, hurricane drills and tornado warnings. Now, some protestors have invented something to protect them from -- well, anything that comes along.

In her "Moost Unusual" way, CNN's Jeanne Moos explains.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: (voice-over): They look like a bunch of beached balls.

(BEGIN VIDEO CLIP FROM YOUTUBE.COM/SURVIVABALL)

UNIDENTIFIED MALE: An amazing new product that just might save your life -- the Survivaball.

(BEGIN VIDEO CLIP, COURTESY BRANDON JORDAN)

UNIDENTIFIED MALE: So today, we're launching Balls Across America.

UNIDENTIFIED FEMALE: Everybody ready with the turtle position in case of a terrorist attack.

(END VIDEO CLIP)

MOOS: Maybe they were mistaken for a terrorist attack -- 21 Survivaballs preparing to head up river toward the U.N. Where world leaders were talking climate change. No wonder first one police boat showed up, then several more.

MIKE BONANNO, YES MEN CO-FOUNDER: They had a helicopter above us with a guy like tethered outside the helicopter like this, ready to leap.

MOOS: The Survivaball stunt, brought to you by the Yes Men, who not so coincidentally are promoting their new movie featuring anti- corporate stunts they've pulled, like impersonating a Dow Chemical spokesman, managing to fool the BBC.

(VIDEO CLIP)

(BEGIN VIDEO CLIP FROM "THE YES MEN FIX THE WORLD," COURTESY RENEGADE PICTURES)

ANDY BICHLBAUM, FAKE SPOKESMAN: For the first time, Dow is accepting full responsibility for the Bhopal catastrophe.

(END VIDEO CLIP)

MOOS: Frequently cited as the world's worst industrial disaster.

In honor of the U.N. Climate Summit, the Yes Men put out a fake copy of "The New York Post" and followed that with this -- a water- borne assault on the U.N. by Survivaballs meant to help mankind survive.

(BEGIN VIDEO CLIP FROM YOUTUBE.COM/SURVIVABALL)

UNIDENTIFIED FEMALE: Ice age, hurricanes, droughts.

UNIDENTIFIED MALE: It's a gated community for one.

(END VIDEO CLIP)

MOOS: Not a very comfortable one.

UNIDENTIFIED MALE: You may have to tuck in a little bit.

MOOS (on camera): It doesn't make me look fat, though?

UNIDENTIFIED MALE: No. You're looking good.

MOOS: Am I inflating?

UNIDENTIFIED MALE: You're inflating. UNIDENTIFIED MALE: Some of these actually fit much better.

MOOS (voice-over): And those the Survivaball protest was accompanied by the song, "I Will Survive"...

(VIDEO CLIP)

MOOS: ...the protest didn't survive long. Minutes after wading into the water, the Survivaballs were in retreat and one of the two main Yes Men was cuffed and taken away.

UNIDENTIFIED MALE: No, here, I'm coming around the back.

UNIDENTIFIED MALE: I'm in right behind you.

UNIDENTIFIED MALE: Excuse me?

MOOS (on camera): Yes?

UNIDENTIFIED MALE: It actually goes over your head like this.

MOOS: Oh. Oh, sorry.

(voice-over): This is one climate change protest that ended up on the rocks.

(VIDEO CLIP)

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: Thank you, Jeanne.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.

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