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THE SITUATION ROOM

U.S. Embassy in Syria Attacked; Interview With Former British Prime Minister Tony Blair; Debt Limit Battle Continues

Aired July 11, 2011 - 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: And to our viewers, you're in THE SITUATION ROOM.

Happening now: one former British prime minister among the alleged targets in Britain's exploding hacking scandal. We're going in depth this hour with another former prime minister, Tony Blair.

Plus, you're going to find out how easy it can be to hack a cell phone.

Also, a mob attacks the U.S. Embassy in Syria, unleashing a destructive rampage inside the compound. We're getting new details of the damage.

And added pressure and a change of tone from President Obama, saying he's ready to cut a deal with the Republicans on raising the debt limit as the clock ticks towards a possible U.S. default.

We want to welcome our viewers in the United States and around the world, breaking news, political headlines all straight ahead. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

The hacking scandal that killed one of Britain's biggest newspapers is spreading and spreading, and now reaching the highest levels of the government and Rupert Murdoch's media empire. There are now fresh allegations a former prime minister was a direct target of another Murdoch publication. And Murdoch himself is now trying to contain this exploding scandal.

We have in-depth coverage for you beginning with CNN's Fionnuala Sweeney. She's joining us with the latest.

What is the latest, Fionnuala?

FIONNUALA SWEENEY, CNN CORRESPONDENT: Well, the latest, Wolf, is that former British Prime Minister Gordon Brown is just the latest big-name added to a long list of phone-hacking victims, numbering as many as 4,000 by most accounts.

This is a scandal that's rocked Rupert Murdoch's media empire and also now includes alleged payments to police officers for information about well-known members of British society, including the royal family.

(BEGIN VIDEOTAPE)

SWEENEY (voice-over): The allegations of illegal hacking by News Corporation journalists now go far beyond the now-closed "News of the World."

"The Guardian" newspaper says Britain's former Prime Minister Gordon Brown's phone and bank account were harked by "The Sunday Times," another company owned by Rupert Murdoch. A competing tabloid reports that some 9/11 victims in the United States may also have had their phones hacked, and the BBC reported that a "News of the World" royal reporter had requisitioned cash to pay police guarding Britain's royal family for the royals' private phone numbers.

Now the paper's former editor Rebekah Brooks is expected to be questioned by police.

CHRIS BRYANT, BRITISH PARLIAMENT: If she had a shred of decency in her, she would have resigned if only because Milly Dowler's phone was hacked and her family was led to believe that she was still alive while she was editor of the newspaper.

SWEENEY: The mother and sister of the murdered teen met with British lawmakers on Monday and say they are still waiting to hear from the newspaper.

MARK LEWIS, DOWLER FAMILY LAWYER: There hasn't been an apology from Rupert Murdoch or From James Murdoch.

SWEENEY: Murdoch arrived in London on Sunday and says Brooks, now CEO of News International, is his priority, but his $12 billion bid for British broadcaster BSkyB is now in jeopardy.

LLOYD GROVE, THE DAILY BEAST: I don't know whether this will happen. The Labor Party is saying let's delay this. And, you know, the stock is plunging. So it could be a huge blow to News Corp.

(END VIDEOTAPE)

SWEENEY: Well, it is primarily a political business story, but essentially a personal one, and tonight Gordon Brown, the former British prime minister, his spokesman issued a statement saying -- quote -- "Gordon Brown has now been informed of the scale of intrusion into his family's life. The family has been shocked by the level of criminality and the unethical means by which personal details have been obtained. The matter is in police hands. The police have informed Mr. Brown is on Glenn Mulcaire's list and some time ago Mr. Brown passed all relevant information he had to the police," Glenn Mulcaire being a private investigator implicated in these findings.

Developments continue to be fast-moving, Wolf, with more revelations expected in the coming days. It seems that Britain's decades-long fascination with the tabloids and the resulting competition between newspapers for ever more sensational stories now threatens to engulf politicians, the public, the police, and not to mention the papers themselves -- Wolf.

BLITZER: It an amazing development, I must say. Thanks very much, Fionnuala, for that.

So how easy is it to hack into someone's cell phone, including yours? Our own Brian Todd has been investigating. What he discovered raising some serious security concerns for all of us, his report coming up later this hour.

The allegation that former British Prime Minister Gordon Brown was a target of media hackers is taking the scandal to a whole new level. I spoke about that in depth just a little while ago with Brown's predecessor, the former British Prime Minister Tony Blair.

(BEGIN VIDEOTAPE)

BLITZER: Let's -- let's talk a little bit about the scandal in England right now. It's shocking to me. I have read those tabloids. Did you have any idea "A" as prime minister, and "B" since you left office of the enormity of what's going on. They seem like a bunch of gangsters over there.

TONY BLAIR, FORMER BRITISH PRIME MINISTER AND QUARTET REPRESENTATIVE: Well, I mean, there's also some very good journalists out -- out in the U.K. as well. So, you know, one -- one shouldn't take this as meaning that all of British journalists...

(CROSSTALK)

BLITZER: I'm not saying all of British journalism is like that.

(CROSSTALK)

BLITZER: But that the -- the excesses that we're reading about, and I mean, did -- were you stunned by this?

BLAIR: You know, if I'm absolutely frank about it, I -- I think most -- we -- we've learned to live with a certain standard of behavior. And I think the reason why it's important now as a result of what has happened to open the whole thing up. And there's going to be a -- an inquiry in which we can look at the relationship between, you know, the media and people in public life, and politics, and so on.

I think there's a whole set of aspects of this that need to be looked at -- should be looked at. Because in the end you -- you want a free and vibrant press. And it's a vital part of a democracy. But I think what is really -- certainly has shocked the British people actually has -- has been the -- the absence of just basic standards in the way things are done. And...

BLITZER: Cause when you say -- it doesn't look like there are any standards. I mean, they -- they would intimidate politicians in an -- in a horrendous way some of these excesses. You understand that?

BLAIR: Well, I -- you know, I have -- I have got pretty long experience in dealing with...

(CROSSTALK)

BLITZER: Did they intimidate you?

BLAIR: I don't know about intimidate me, but if you were caught up in a media storm, you certainly knew you were in it.

BLITZER: I mean, did you know how powerful, you know, these tabloids were in terms of trying to scare politicians. And -- and warning them if you didn't do what they wanted, they were going to go after you?

BLAIR: Well, the -- the media is very powerful in the U.K. The media is powerful everywhere. And one of the things I think that any sensible investigation of this has got to look at, and try to do it dispassionately -- you know, the politicians have got their point of view. The media have got their point of view. There's always going to be an uneasy relationship between the two. There will be here. Never mind back in the U. K.

But what is important is to realize that in a world of 24 a day 7 day a week media with all the new technology and so on, and with the huge competitiveness there is in -- in the British media, people desperately get their stories, and -- and, you know, get ahead of the -- the competition. Unless you have some sort of framework within which people agree to operate, and everyone acknowledges that and abides by it, then -- then you -- you do get a pretty ugly situation.

BLITZER: But you saw some of the ugliness...

BLAIR: Yes, I found that.

BLITZER: You saw some of the ugliness when you were prime minister.

(CROSSTALK)

BLITZER: I guess the question is did you investigate what was going on?

BLAIR: It -- look. One of the -- the strange things about this is is all this has happened -- you know, all of this information had come out, and people have been aware -- obviously not aware of this -- specific instances. In other words, if this great fury had happened some years back, then yes, you could have used that as the opportunity then to say let's have a look at all of this.

I think frankly if anyone six months or a year ago had said I'm going to have now a major inquiry into how the press operates in the -- in the U. K. , and the relationship between the media and politicians, you would have found it very difficult. Just before I left office, I -- I actually made a speech. This was about four years ago now, exactly on these issues describing what I thought the problem was. And describing why I thought there had to be a debate.

And I have to say it wasn't a -- it wasn't one of my more successful experiences since. You know, at the time the mood just wasn't for investigating that at all. I think what this -- this has done is its opened the issue up. So let's open it up and look at it.

BLITZER: There's a story out there in England right now that you urged Gordon Brown the former prime minister to hold back in criticizing Rupert Murdoch and his empire in England, because he would come back and slam you if -- if he were to do so. Is that story true?

BLAIR: That is absolutely and categorically untrue.

BLITZER: What happened? I mean, what did you tell Gordon Brown.

BLAIR: I -- I didn't tell him anything in respect to...

BLITZER: You never discussed this issue with him?

BLAIR: No. I mean, the -- the issue for us in the -- in the U.K. has always been as politicians. And this is part of the -- the trouble. You know, you're a political leader. You're in a situation where the media are very powerful. And I think one of the things that my successor David Cameron was talking about the other day which was interesting in a way was just how -- when you are a major political leader, and you know, you're -- you're trying to fight elections. You're trying to govern the country. You could only communicate in the sense through the medium of -- of the media as it exists.

And it -- it's a difficult relationship to have. And at times, you know, I -- as I said the other day, I think if I go back over the last decades, you know, I don't think there's a single political leader in Britain who wouldn't have felt uncomfortable about the relationship at points, which is why it's a good idea to examine it. And then, you know, you can see how you -- you put it on more healthy footing.

BLITZER: Did you have any reason to believe you were hacked, your phone was hacked, your records were hacked? Anything along those lines?

BLAIR: I -- I don't. But I mean, I didn't have a mobile phone when I was prime minister which is probably just as well. But -- but I don't. But I -- I keep reading that it's possible that -- that I have been, but I honestly don't know about it.

BLITZER: I want to just read to you one paragraph that jumped out at me in "The New York Times" on Saturday. It involves your wife, Cherie. I will read it to you. This is from the New York Times on Saturday.

"Cherie Blair, wife of former British -- former Prime Minister, Tony Blair, was regularly tortured in print by the right leaning "Daily Mail," because she made no effort to cultivate it, and because it was not an admirer of her husband's labor government."

"In a stream of articles, the Mail portrayed her as greedy, profligate, and a follow of wacky alternative medicine regimes, selecting unflattering photos to make her look chunky and ill-dressed. Her mouth invariably curled in a strange rictus."

Do -- do you remember the way they tortured her...

BLAIR: Pretty much.

BLITZER: Was that accurate?

BLAIR: Pretty much.

BLITZER: And you had to live with that?

BLAIR: Well, you know, you -- look. It's a privilege to do the job. And you ended up being pretty rebuffed about these things. But I mean, the short answer to you is -- is -- and in a way I'm quite surprised how shocked you guys are -- are over here.

BLITZER: We're pretty shocked.

BLAIR: Yes. It's -- it's -- and -- and maybe we should...

BLITZER: I'm shocked that you're not shocked.

BLAIR: You know, I have lived with it for kind of 50 years at the top of politics full of -- and one of the things I think it's -- it's important in this since, you know, it's important to say this. Politicians are always going to think the media are out to get them. Okay? So you've got to leave all that to one side, even within myself.

And in addition, people are entitled to their views about political leaders. And they're entitled to dislike me, or my wife, or anyone else. I think what is important is to realize this is not about one group of newspapers, or one part of the media, or one type of procedure. Whether it -- you know, in this case hacking. It -- it's about a whole range of things that need to be looked at so that we -- we understand what's acceptable and what isn't acceptable.

Because in a way, you know, what I was trying to say to you earlier was that I think as a result of this over the years, you know, you tolerated what in a sense is intolerable. But you did it because look, when you're the prime minister you're running a country. This go out there every day and start complaining about the media, you know, the public say, "Well, that's bad. But get on with your job."

So in a way it's -- it's difficult for an existing prime minister, an existing political leader, you know, someone who's actually in office to have this type of debate. But I think now that this has happened, it may be the thing that in a curious way gives us the opportunity to get a more healthy relationship.

And -- and where the types of standards that -- that you guys I think probably do have here or some understand are -- are better assimilated and regarded as -- as natural and normal back home.

BLITZER: I hope so.

BLAIR: Yes.

(END VIDEOTAPE)

BLITZER: Tony Blair, by the way, is here in Washington. He's trying to jump-start Mideast peace talks. Is it too late?

We are going to talk about that, the crisis in Syria, much more of my interview with the former British Prime Minister Tony Blair later here in THE SITUATION ROOM.

Let's check in with Jack Cafferty. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Am I missing something? Aren't we talking about criminal behavior?

BLITZER: Correct.

CAFFERTY: That seemed to have been lost on the former prime minister. These people were hacking into personal things, e-mails and computers and cell phones.

BLITZER: And bribing police officers to get sensitive information.

CAFFERTY: Well, doesn't that go above and beyond the normal adversarial relationship that exists between the press and the media?

BLITZER: It absolutely does.

(CROSSTALK)

CAFFERTY: I hate to think that they were doing that kind of stuff on this side of the Atlantic.

On the other hand, doesn't Rupert Murdoch own a bunch of media properties in this country as well?

BLITZER: Yes, he does.

CAFFERTY: All right.

President Obama and Congressional leaders from both parties met behind closed doors at the White House this afternoon to discuss a deal on the debt ceiling, the second time in two days. All parties are still pretty far apart. Surprise.

Republicans and Democrats both laying down ultimatums. Republicans have said everything's on the table except tax increases. Democrats have said they will not agree to a deal based solely on spending cuts. The President has proposed his own deal -- a 10-year, $4 trillion plan that tilted about 4-to-1 in favor of spending cuts. Boehner said that was dead on arrival.

The clock is ticking. If they don't reach an agreement by August 2, the U.S. could default on some of its loans. That would send stock markets tumbling into a swoon. Interest rates would shoot sky-high. And the dollar would head toward worthless. Both sides of the debate know all this. Right now, it seems to be a game of chicken, doesn't it? Who is going to blink first? But this time, this time, the stakes couldn't be much higher. And it will be interesting to watch the head-on collision between politics as usual and the reality of financial default. They're juggling hand grenades here.

The president has ruled out signing a short-term extension of the federal debt ceiling. And with just a few weeks left now, the rhetoric more resembles schoolyard trash talk than statesmanship. And if you're not worried about the outcome of all this, you probably should be.

Here's the question: How do you see the debt ceiling issue being resolved?

Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: Thanks, Jack. Thanks very much.

We're going to be hearing from President Obama and Speaker John Boehner, and we're going to get more details on today's talks, where the two sides stand right now in raising the U.S. debt ceiling.

Also: new details of a damaging attack on the United States Embassy in Syria.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: With the U.S. quickly approaching its legal debt limit, negotiations between President Obama and the Republican leadership to increase it are taking on an added urgency. The impasse prompted the president to hold his second news conference in less than two weeks, just ahead of more talks today over at the White House.

Let's go to the White House. Our White House correspondent, Jessica Yellin, is standing by.

I know you have been doing some reporting on what is going on. What's the very latest that you're hearing, Jessica?

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, the very latest is, according to my sources, during today's meeting, Republicans laid out for the president a number of cuts they would like to include in this debt deal, but it came up well short of the total cut goal that Republicans had set for themselves.

And Democrats argued that they can't even get the votes for this deal unless it includes some attempt to raise revenue.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): After a weekend of deadlock, the president made the case he's ready to cut a deal now.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We might as well do it now, pull off the Band-Aid, eat our peas.

(LAUGHTER)

OBAMA: You know, now is the time to do it.

YELLIN: He made it again.

OBAMA: Now is the time to deal with these issues. If not now, when?

YELLIN: And again.

OBAMA: What I have said to them is let's go.

YELLIN: But from Capitol Hill, it's clear the president's differences with Republicans haven't narrowed.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The president continues to insist on raising taxes, and they are just not serious enough about fundamental entitlement reform to solve the problem for the near to intermediate future.

YELLIN: In this meeting with congressional leaders, one big issue on the table, taxes. Will Republicans relent, either closing loopholes or allowing the Bush tax cuts for the wealthiest to expire at the end of 2012?

OBAMA: I want to be crystal clear. Nobody has talked about increasing taxes now. Nobody has talked about increasing taxes next year.

YELLIN: On the other side of the aisle, another big issue. Will Democrats relent and agree to changes in entitlement programs, like Medicare and Social Security?

OBAMA: The vast majority of Democrats on Capitol Hill would prefer not to have to do anything on entitlements, would prefer, frankly, not to have to do anything on some of these debt and deficit problems.

YELLIN: One compromise the president flatly ruled out, a short- term deal.

OBAMA: The things that I will not consider are a 30-day or a 60- day or a 90-day or a 180-day temporary stopgap resolution to this problem.

(END VIDEOTAPE)

YELLIN: Now, Wolf, the president has called the leaders back for another meeting tomorrow at 3:45 tomorrow afternoon here in the White House. He has asked them to come back every single day this week, until -- and perhaps next week, until they get a deal done. Their marching orders for tomorrow, figure out how they get from 1.7 roughly in spending cuts that they have come up with today about to the $2.4 trillion that they need for a deal. How do they close that gap? That's what the leaders have to figure out overnight and present the president with tomorrow -- Wolf.

BLITZER: I guess, if it were easy, it would have been done a long time ago. All right, thanks very much, Jessica, for that.

Let's get some analysis with our chief political analyst, Gloria Borger, who is here.

So, they have got to reach a deal, Gloria, by August 2, but the president says no short-term stopgap measures. So how do they break that logjam?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, let me see. There's got to be a way to do it, Wolf, because they all agree, as you say, that they have to do this by August 2.

Obviously, the issue, the key issue for the president, is the Republicans, and whether they are going to budge on taxes. Take a listen to what the president said today.

(BEGIN VIDEO CLIP)

OBAMA: I do not see a path to a deal if they don't budge, period. I mean, if the basic proposition is it's my way or the highway, then we're probably not going to get something done because we've got divided government.

(END VIDEO CLIP)

BORGER: I was speaking with a senior White House official today who said, well, there may be one way out of this mess, but it would be part of a smaller deal, not the big deal that the president has talked about, And that is closing some of these tax loopholes, but also extending the payroll tax cut. That way, if you're a Republican, you could say there are no net tax increases in this.

And maybe some of the more conservative Republicans would say, OK, under that circumstance, we could buy the closing of the loopholes, but, again, Wolf, that is only one option that's on the table. Many are out there.

BLITZER: Because closing some of those loopholes or eliminating some deductions, even for oil companies and for very, very wealthy institutions or individuals, as far as so many Republicans and some Democrats are concerned...

BORGER: Right.

BLITZER: ... that's seen as a tax increase.

BORGER: Right. BLITZER: But if you combine it with payroll tax cuts, an extension of those, then maybe there's some way, maybe there's some way you can get around it.

But, look, Wolf, Republicans believe many conservative Republicans believe there is no compromise on this issue, and you know why? Because 230-plus of them took a pledge and said, I will not vote to raise taxes. You have got 40 Republicans in the Senate who have done that, so how will they view a compromise of sorts if it does involve on the one hand closing loopholes?

Will they consider that a tax increase even if it's combined with some kind of tax cuts? You know, it's hard to tell. Everybody seems to agree, at least the leaders sitting around that table, that the job has to get done.

BLITZER: Yes. As I write in my blog at CNN.com/situationroom today, it's a high-stakes game of chicken they are playing right now, but they have got to come up with some sort of solution soon.

BORGER: But, you know in, a way, Wolf, it's almost more than politics right now for the Republican Party. I think it's become sort of theological, this no new taxes pledge. If it were just politics, they all might have come up with a big deal because in everyone's interest to reduce the deficit and look like they are doing what's right for the country.

But at a certain point, you have got Republican presidential candidates out there saying they are not for a debt limit extension. What do you do when it crosses from politics to kind of theology and the party starts getting narrower and narrower on this one particular issue?

BLITZER: If it's theology, they will not reach a deal. If it's politics, they can reach a deal.

(CROSSTALK)

BORGER: We will see.

BLITZER: All right, Gloria, thanks very much.

U.S. relations with Damascus may be skidding to new lows right now. Protesters attack the United States Embassy in Syria for the third time in four days. I will ask the former British Prime Minister Tony Blair what that means for Syria's embattled government.

(COMMERCIAL BREAK)

BLITZER: There's widespread damage at the United States Embassy in Syria, where a pro-government mob staged an hour-long attack with some demonstrators scaling a fence and managing to get inside the compound.

They broke windows, knocked out security cameras and painted graffiti on the walls. Our foreign affairs correspondent, Jill Dougherty, is getting new details for us over at State Department.

What else are you hearing, Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: And also there's a diplomatic side to this, Wolf, and that is it's really the furthest that any U.S. official has gone so far.

Secretary of State Hillary Clinton saying the president, Assad, has lost legitimacy. That came after the Syrian government apparently retaliated for a controversial visit by the U.S. ambassador to a Syrian town last Friday that was the scene of a major crackdown on demonstrators.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): The State Department calls it a mob, 300 people attacking the U.S. Embassy in Damascus. Some got over the walls onto the embassy roof. They broke windows, spray-painted, knocked out security cameras.

Meanwhile, two blocks away, another crowd made it over the walls of the ambassador's residence, broke windows, spray-painted, threw food. The attacks, the State Department charges, appeared to be incited by a Syrian TV station heavily influenced by the government, and they came after crowds threw stones, eggs and tomatoes at the embassy over the weekend.

The violence appeared to be retaliation for U.S. Ambassador Robert Ford's provocative visit to the city of Hama, where he was greeted by anti-government protesters. Sunday Ford demanded the Syrian government protect the embassy and its staff, as international law requires.

For Secretary of State Hillary Clinton, the attacks against the U.S. embassy were the last straw with Syrian President Bashar al- Assad.

HILLARY CLINTON, SECRETARY OF STATE: From our perspective he has lost legitimacy. Let me also add that if anyone, including President Assad, thinks that the United States is secretly hoping the regime will emerge from this turmoil to continue its brutality and repression, they are wrong. President Assad is not indispensable, and we have absolutely nothing invested in him remaining in power.

(END VIDEOTAPE)

DOUGHERTY: Now, Secretary Clinton stopped short of calling for Assad to step down, but she also made no secret of the fact that the U.S. does not want him to continue in office. Nevertheless, the U.S. continues to say that it's up to the Syrians themselves to decide whether he stays or whether he goes -- Wolf.

BLITZER: Jill Dougherty, thank you. The attack in Damascus, as well as stalled Middle East peace talks, were also part of my interview with the former British prime minister, Tony Blair.

(BEGIN VIDEOTAPE)

BLITZER: Can you believe that the regime there apparently authorized hundreds of anti-American protesters storming the U.S. embassy in Damascus?

BLAIR: I'm afraid in a way I can believe it. I mean, I think the regime there is increasingly desperate, but what they've got to understand is that it won't work in the end. The lesson from all around this region is that the less regimes are prepared to engage in a process of evolution, which is seen by the people as legitimate, then in the end they're going to be at risk and probably swept away.

BLITZER: Because you met with the president of Syria, Bashar al- Assad. Should the international community deal with him the way it's been dealing over these past several months with Moammar Gadhafi of Libya?

BLAIR: It's not possible to take the same action. I mean, the...

BLITZER: Why?

BLAIR: Well, that's a good question, but I think because there is no real consent for military action in respect to Syria. I mean, it's just -- you wouldn't get the same support.

BLITZER: What about rhetorically, just saying, "You must go"?

BLAIR: Well, I think we're at that stage, frankly.

BLITZER: I haven't heard the United States government say about Bashar al-Assad what it has said about Moammar Gadhafi.

BLAIR: Because I think there's still a residual hope somewhere that he -- because he's often talked the language of reform and talked the language of major change within his country. The trouble is it never seems to happen.

And in the end a regime such as the Assad regime in Syria, it's not sustainable. And I think the key thing from all that has happened in the Arab Spring is to realize that, if something rationally and logically isn't sustainable, then the fact that it's being temporarily sustained doesn't mean it's going to go on, carry on being sustained.

BLITZER: So do I hear you say, Tony Blair, say that it's time for Bashar al-Assad to step down? Is that your personal opinion?

BLAIR: It's not my place, but I can't see how the current situation with him in charge is sustainable.

BLITZER: So you think he should go? BLAIR: Well, I'm...

BLITZER: I mean, you're Tony Blair; you're a private citizen.

BLAIR: Absolutely, and I'm trying to be diplomatic about it. But I can't -- and it's not for me to jump ahead of what the present leaders are saying. But he's got a choice, and he's had this choice all the way through. And so far at each stage he's failed to make the right choice. And the choice is either to set out a process of genuine constitutional change in this country that will probably end up with a different regime.

BLITZER: But you're under no illusions. You don't think he's going to make that real bold gesture for democracy and reform and change? You think it's too late for him?

BLAIR: I think it is, frankly, yes.

BLITZER: Well, let's move on and talk a little bit about why you're here in Washington. Is it too late to get the Israeli- Palestinian peace process going, because a lot of us who watched this story unfold for so many years are pretty depressed right now?

BLAIR: No, here it's not too late, and actually strangely, because of the changes in the region, the convulsions that are happening, change in Egypt, changes you say in Syria now, there actually is an opportunity, if we're smart and intelligent about it, to put together a set of principles that can guide a framework for negotiation.

BLITZER: Will you come up with a blueprint, if you will, to try to jump start these negotiations?

BLAIR: I'm not sure it's going to be possible to do that right tonight, but we are in the process of discussing how it is you would set up a framework of principles that would make this a credible negotiation, bring the parties back to the negotiating table.

And President Obama, when he set out in his speeches here in America a short time ago, the types of principles that would allow us to make progress in this. I think we've got to take that.

BLITZER: Is that the basis for...

BLAIR: Yes. I think that's got to be the basis.

BLITZER: What the president said in his State Department speech?

BLAIR: Right.

BLITZER: Pre-'67 lines with mutually agreed land swaps, that's the blueprint?

BLAIR: I think the blueprint is, yes, to recognize you're not going to go back to precisely the same borders of '67 because of the changes that have taken place, but '67 borders with mutually-agreed, negotiated swaps is obviously the right way forward, but then you've got security issues. Israel obviously will want to protect security, and particularly with the changes in the region, will be even more anxious about that.

We've got Jerusalem, absolutely vital issue for both parties and, of course, refugees.

BLITZER: Prime Minister, thanks very much, and good luck.

BLAIR: Thank you.

(END VIDEOTAPE)

BLITZER: So how easy would it be for a hacker to get into your cell phone? Guess what? It turns out it's a lot easier that so many of us once realized.

(COMMERCIAL BREAK)

BLITZER: Let's get some more now on the British hacking scandal that's spread to the highest levels of the government with former prime minister Gordon Brown now revealed to be among the targets.

But it's not just politicians and celebrities who are vulnerable. Anyone, anyone with a cell phone, could easily be hacked. Our in- depth coverage continues right now with CNN's Brian Todd.

Brian, you've been looking into this story, because almost everyone probably watching us right now, they have voice mail. They have a cell phone. What is going on?

BRIAN TODD, CNN CORRESPONDENT: Well, they call this practice phreaking your phone, phreaking with a "P-H." From tapping into people's easy-to-guess pass codes, to tricking a target's phone into thinking that a hacker is the subscriber, we found it surprisingly, disturbingly easy to get into a given voice mail.

(BEGIN VIDEOTAPE)

TODD (voice-over): For "News of the World" reporters to have allegedly hacked into the voice mail of murder victim Milly Dowler, of celebrities or terror victims, experts say they wouldn't have to be experts.

KEVIN MAHAFFEY, LOOKOUT MOBILE SECURITY: There are a lot of easy-to-use techniques and freely available tools that can help hackers get access to your phone.

TODD: In speaking with telecom and cybersecurity experts, we picked up three basic techniques hackers can use to get into your voice mail. First, they can dial into your voicemail network, keep trying default pass codes like 1111.

ROBOTIC VOICE: Enter password and pound sign.

(BEEPING) ROBOTIC VOICE: Log-in incorrect. Try again.

TODD: Many cell-phone providers give users default pass codes to retrieve voice mails, and many users either never bother to change them or change them to bad pass codes like their birthdays, information that can be obtained from places like Facebook.

We spoke with Anup Ghosh, founder of Invincea, a cybersecurity company.

(on camera) A second method for hacking into someone's voicemail is to spoof your phone number to make someone's voice mail think that it's their own phone accessing the voice mail. To do that you sometimes can go to a Web site that lets you get a spoof phone number. And Anup Ghosh and I are going to do that.

(voice-over) We buy a spoof account on Spoofcard.com, a legitimate Web site for pranksters. It allows us to call any number we want, make it seem like it's coming from any number we want. Then, from another phone, we call Anup's cell phone, disguised as his own number.

ANUP GHOSH, FOUNDER/CEO, INVINCEA: So I'm going to ignore this phone call.

TODD (on camera): Ignore the call.

OK.

GHOSH (via phone): This is Anup Ghosh. Please leave a message. I'll return the call when I can.

TODD: You hit star.

ROBOTIC VOICE: You have one unheard message.

TODD: So we were able to hear your voice mails just now, a very simple process if you just dial a series of numbers.

GHOSH (on camera): That's absolutely right. I have a PIN set up on my voicemail account, but if I'm dialing my voicemail account from my phone, I get straight into it.

TODD (voice-over): Some carriers require you to give a pass code to access your voicemail from your own phone. Some don't, making it easier for hackers. A third method to hack into a voicemail...

MAHAFFEY: They can call your network operator and pretend to be you and say that they lost your password and that they need to get access to your account, provide information such as your Social Security number, your date of birth and your mother's maiden name, and they would be able to get access to your full account.

(END VIDEOTAPE)

TODD: So how do you protect yourself? Experts say you can call your phone carrier and set a pass code for your account itself so that, even if a hacker knows a lot of that personal information about you -- your birthday, your mother's maiden name -- they don't know that one pass code.

Experts say you should also keep changing your passwords for every account you have, maybe as often as you change your toothbrush, maybe every few months or so -- Wolf.

BLITZER: People change their toothbrush every for few weeks or some rich people every few days...

TODD: Right.

BLITZER: ... for that matter. What about information that you put on Facebook or other social media?

TODD: Experts say you really have to limit that. You have to limit yourself to who you accept on your Facebook account and the information that you put on. It's an absolute gold mine for hackers. It's so easy to get on -- that information on a Facebook and Twitter account, things like that. Limit it. Just don't put everything out there, and too many people do that all the time.

BLITZER: Brian, thanks very much. Good reporting. Good advice, as well.

Inside it may look like Vegas. Outside you're in a Florida strip mall. You're going to find out why these street-side casinos are now becoming a sure bet for controversy and closure.

(COMMERCIAL BREAK)

BLITZER: Luck may be running out for strip malls -- strip-mall casinos in Florida. Police are shutting them down almost as fast as they open. Here's CNN's -- CNN Money's Poppy Harlow.

(BEGIN VIDEOTAPE)

POPPY HARLOW, CNN CORRESPONDENT (voice-over): Welcome to Florida? This isn't the Vegas strip. It's a strip mall. Between barber shops and massage parlors, so-called sweepstakes cafes are popping up across the country. They've got the markings of a casino: free food, dark rooms. Some open 24 hours.

(on camera) Does it feel like gambling to you a little bit?

UNIDENTIFIED FEMALE: Yes. That's what I like about it.

HARLOW: But are they casinos? Law enforcement thinks so, and they're shutting them down, because here in Florida only certainly highly-regulated operators are allowed to run casinos.

UNIDENTIFIED MALE: In our opinion it's clearly gambling.

HARLOW: Owners say that's not the case.

MEGAN CRISANTE, SWEEPSTAKES CAFE OWNER: It looks like a duck, talks like a duck, walks like a duck. but it's not a duck.

HARLOW: And in every one you'll find a sign like this.

(on camera) Just to give you a sense of how many of these sweepstakes cafes there are, you've got one right here. You've got two across the street. They would not let us in. They would not talk to us. Right around the corner here, you've got another.

(voice-over) Here's how the sweepstakes cafes work. They're filled with regular computers that have special game programs on them. To play, you buy a phone card or Internet time. A $20 card gets you $20 worth of play.

The cafe owners claim it's not gambling, because the customers are buying a phone card or time on the Internet, and the game is just a sweepstakes promotion for the product. But you can still lose money, just like in a slot machine.

UNIDENTIFIED FEMALE: I ended up losing 15 bucks.

HARLOW (on camera): Do most people come to these establishments to use the Web?

UNIDENTIFIED MALE: No.

HARLOW: Or are they coming to play?

UNIDENTIFIED MALE: They -- they come to play the games.

HARLOW: We went out to find where does all this software come from?

DON FIECHTER, WORLD TOUCH GAMING: I sell the computers pre- loaded with software to businesses that intend to promote their products.

HARLOW (voice-over): Don Fiechter runs World Touch Gaming and sells these terminals for 1,500 bucks a pop.

FIECHTER: I get a fraction of a penny per entry revealed.

HARLOW: Making it a lucrative business for software developers and store owners, who can bank up to $40,000 a day.

FIECHTER: It actually says that the total prizes over the next 1,000 entries will total $39.55.

HARLOW: Owners call it pre-determination. The machine is programmed for specific wins at specific times. It is not random, which makes it different from a slot machine. But as we found, not every place operates their cafes that way, and now many are getting raided by cops.

PETER NEHR, FLORIDA STATE REPRESENTATIVE: They wear, like, flack suits and come with guns blazing.

HARLOW: Florida State Representative Peter Nehr actually opened a sweepstakes cafe only to have it shut down two months later.

NEHR: It's not a gambling operation. It is a retail business who uses sweepstakes to promote their business.

HARLOW: But Sheriff Coates (ph) isn't buying it, and he's ordering them shut left and right.

(on camera) W hat games do you like to play?

UNIDENTIFIED FEMALE: The winning one.

HARLOW (voice-over): In Pinellas County, Florida, Poppy Harlow, CNN Money.

(END VIDEOTAPE)

BLITZER: Prince William and Catherine, they certainly get a warm welcome, and they leave with a lasting impression. We're going to tell you how the British royals captivated California.

(COMMERCIAL BREAK)

BLITZER: Back to Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour is: "How do you see the debt ceiling issue being resolved?"

Greg in Arizona: "The question of raising the debt ceiling has been resolved for weeks: it will be raised. The only purpose of these 11th-hour meetings is to come up with the best way to spin the announcement of an agreement so both sides can then claim victory and hedge their position with the voters, when the reality of spending cuts and tax hikes takes effect."

Ed in Texas writes, "Reductions in spending and tax increases are both necessary to reduce the deficit and the debt. That seems rational, which also means it won't happen."

Pat in Michigan: "If Congress had any sense, and they don't, they would cut all programs by 10 percent for the foreseeable future; reduce tax deductions on all brackets 10 percent from what they are now; let our allies who we pay to be our allies know the faucet is shut off until we get our house in order; have no new programs until the budget is balanced. And then when we have a surplus, fund Social Security back to full benefits. We share the burden together or we go down in flames together."

Joe in Texas writes, "It won't be resolved. They'll just increase it, and then they'll add more debt. It won't be resolved until the dollar is worthless."

James writes, "I see the debt ceiling, deficit and political folly in general being solved by the American people deciding enough is enough. You'll know that when you see American people doing what the people in the Middle East, Greece and other countries have already shown the courage to do. The Democrats won't cut spending. The Republicans are living in some cutesy fantasy world where the rich have forgotten that, if the middle class goes under, so does the wealth of this nation."

And Russ in Pennsylvania writes, "History knows and shows that Congress will just kick the can down the road. At some point that poor can is going to find said road ends where the precipice begins. We should probably wish that poor can well while we can, as continued spending by government will cost us our own cans, as well."

If you want to read more on this, go to my blog: CNN.com/CaffertyFile -- Wolf.

BLITZER: See you tomorrow, Jack. Thank you. Jack Cafferty with "The Cafferty File."

Even the stars were starstruck. Prince William and Catherine shine in Hollywood and make their mark in a very different part of Los Angeles. Their whirlwind U.S. tour coming up next.

(COMMERCIAL BREAK)

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

In China, the joint chiefs chairman, Mike Mullen, is greeted by an honor guard as he arrives for a four-day visit.

In Switzerland, gymnasts jump during an event.

In England, an image of Harry Potter is cut into a cornfield.

Here in Washington, the CNN D.C. bureau softball team poses after making it into the final four of a tournament. Congratulations to Dean (h) for a great season, and congratulations to NBC's local affiliate, WRC, for winning the tournament.

"Hot Shots," pictures coming in from around the world.

The Duke and Duchess of Cambridge are now back home in the U.K. after captivating California and Canada. CNN's royal correspondent, Max Foster, reports on their triumphant tour.

(BEGIN VIDEOTAPE)

MAX FOSTER, CNN CORRESPONDENT (voice-over): After taking Canada by storm, it was time to visit California. The duke and duchess invited some friends around to the consul general's house where they were staying.

The next morning, it was off to Santa Barbara for a game of polo. The duke was, in his own words, looking forward to letting loose after a busy few days. His team won. And a proud duchess presented her husband with a trophy and a kiss.

On Saturday night, they hit the red carpet.

(on camera) Well, the duchess has arrived, and she hasn't disappointed.

(voice-over) The dress by Alexander McQueen wowed the Hollywood A-listers inside.

From the red carpet to skid row. On Sunday the couple threw themselves into an art class with kids from this very deprived neighborhood, the artistic duchess showing her skills.

And their last engagement was a war veterans' job fair.

(on camera) So this is the final stop on this very successful North American royal tour, but in many ways this is the most important stop, particularly for the duke.

PRINCE WILLIAM, DUKE OF CAMBRIDGE, UNITED KINGDOM: This is the last event on our tour of North America, but to my mind it is one of the seriously most important. This is because it's about men and women who, of their own free will, choose to put their life on the line for their country. They are the frontline of a remarkable relationship between the United Kingdom, the United States and Canada, which has safeguarded our freedoms for a century.

FOSTER (voice-over): The public would have liked to have got closer to the couple in America, but the trip has confirmed them as the biggest stars on the planet right now.

Max Foster, CNN, Los Angeles.

(END VIDEOTAPE)

BLITZER: That's it for me. I'm Wolf Blitzer in THE SITUATION ROOM. For our international viewers, "WORLD REPORT" is next. In North America, "JOHN KING USA" starts right now.